Leif Hoegh & Co said it is looking to take Hoegh LNG Holdings private in a deal with US investment bank Morgan Stanley valuing the company at around $214m.
The Norwegian shipowner, which is Hoegh LNG's largest shareholder, said it plans to acquire the outstanding 50.4% of shares that it does not already own of the Oslo-listed outfit for NOK 23.50 ($2.75) per share.
Leif Hoegh & Co and funds managed by Morgan Stanley Infrastructure Partners (MSIP) have formed a 50:50 joint venture — Larus Holding Limited — to acquire the remaining shares of Hoegh LNG by way of amalgamation.
The share acquisition price reflects a premium of around 36% on the closing share price on Friday and 32% on the 30-day volume-weighted average share price.
The offer price is said to value the total share capital of the floating storage and regasification unit specialist at around NOK 1.8bn.
Hoegh LNG Holdings’ board said it has “approved unanimously” the amalgamation agreement and would recommend that the unaffiliated shareholders of the company to vote in favour of the transaction based on a recommendation from a special board committee consisting of the non-executive and independent directors.
The special board committee is said to have received a fairness opinion from Fearnley Securities, which said that the offer price per share represents “fair value for the shareholders”.
A shareholders meeting will take place on 30 March, at which a two-thirds majority will be needed to carry the motion.
Adjusted for the ownership of Leif Hoegh, this amounts to 30% of unaffiliated shareholders.
Hoegh LNG has also instructed Nordic Trustee, as trustee for its senior unsecured bond issues maturing in February 2022 and January 2025, to call a bondholders meeting.
This will consider certain amendments to the terms, relating to the delisting move.
The bondholders will be asked to waive their right to pre-payment, but will be granted a special put option, requiring Hoegh LNG to buy back at a price equal to 101% of par.
Maturity of the 2022 bond will be extended to August 2023, with an increase in the coupon from 5% to 5.5%.
There is also a proposal to inject $100m of equity into Hoegh LNG Partners to waive the de-listing put option until 1 April 2022.
Fearnley said the price for Hoegh LNG implies $200m for each uncontracted FSRU, which as with the GasLog deal is considered to be on the high side.
"However, there is strategic value in Hoegh beyond the steel that should be accounted for," the investment bank said.
"On our conservative LNG spot estimates, Hoegh LNG is unable to be profitable in 21 to 22."
The common shares of Hoegh LNG Holdings will be delisted from the Oslo Stock Exchange immediately following the completion of the transaction.
The transaction is anticipated to close in the first half of 2021. However, if the deal is not completed by 9 August or such later date, then it will not proceed.
Hoegh LNG said the common and preference units of Hoegh LNG Partners will remain outstanding and continue to trade on the New York Stock Exchange (NYSE) as before.
Credit Suisse International, DNB Markets and Morgan Stanley are acting as financial advisors to Leif Hoegh & Co and MSIP.
This is the second such deal in which a major LNG shipowner has teamed up with an investment bank to take their company private.
In late February, GasLog announced plans to merge with BlackRock’s Global Energy & Power Infrastructure team (GEPIF) in a deal that will see it delist from the NYSE.
