Norway's Awilco LNG has reached a deal with CCB Financial Leasing (CCBFL) to ease covenant requirements in the downturn in the segment.
The Oslo-listed company said the amendments are temporary measures relating to the sale and leaseback contracts for its two 156,000-cbm tri-fuel diesel-electric LNG carriers WilPride and WilForce (built 2013).
The minimum cash covenant of $10m has been reduced to $2m, while the positive working capital financial covenant has been waived.
This applies from 1 July to 31 December this year.
The moves are "precautionary" measures as a result of the current weak market conditions in LNG transport as a consequence of Covid-19, leading to a temporary reduction in demand for energy, the company said.
Markets forecast to improve
Analysts are expecting an improvement in the market in the second half of 2020 as the world reopens from lockdowns and economies recover, however.
Jon Skule Storheill, CEO of Awilco LNG, said: "We are very pleased with the support CCBFL has shown the company in this extraordinary and temporary situation, underlining the excellent cooperation and positive relationship between the parties."
In January the financial leases on the ships were refinanced and they were chartered back on a bareboat basis for up to 10 years.
Fearnley Securities said the shipowner was sitting on $22m in cash at the end of the first quarter, with an estimated second quarter cash balance of $14m.
The company has been the subject of interest from tanker owner Navig8 Group in recent weeks.
The group has acquired a 19.6% slice in a series of share purchases, making it the second-biggest investor after Awilco AS on 38.6%.
Navig8 has been developing interest in the LNG sector for some time and it now looks as if it has finally decided to put some money to work in a counter-cyclical play, market sources said.
The tanker operator is not thought to have made any proposals to management and its stake is viewed as passive for the time being, allowing it to learn about the sector.
