BW LPG has sold one VLGC and bought another in a planned fleet renewal.
The New York and Oslo-listed company announced its 52% owned subsidiary, BW LPG India, has sold the 82,260-cbm BW Cedar (built 2007).
On a 100% basis, the sale is priced at about $65m.
The transaction is expected to generate a net book gain of about $33m and $51m in net cash after repayment of the existing bank loan.
The vessel will be delivered to the new owner in the first quarter of 2025.
In addition, the company has declared a purchase option for the 83,325-cbm BW Kizoku (built 2019), which is on time charter with BW LPG with the option to buy.
The Andreas Sohmen-Pao-backed owner exercised the option for a consideration of $69.8m.
The BW Kizoku is expected to be delivered in January and will continue to trade in the conventional BW LPG fleet.
BW LPG chief executive Kristian Sorensen said: “Through these transactions, we are renewing our fleet by capitalising on strong asset prices in the secondhand market for older vessels while acquiring a modern vessel at a competitive price translating to a newbuilding equivalent [in the mid-$80m region].
“This example of asset play shows the optionality and ability for value creation that our platform and business model provide.”
Arctic Securities’ analyst Kristoffer Barth Skeie described the transactions as “impressive”.
The price for the BW Cedar is 36% above Arctic’s estimate of $48m, according to a research note.
BW LPG shares rose as much as 3.7% to NOK 150.40 ($13.60) in Oslo on Tuesday.
The stock is trading at a discount to Arctic’s net asset value estimate of $15 per share.
Barth Skeie said: “If we adjust the valuation for the older vessels to reflect this transaction, we arrive at an NAV of $16.60 per share.
“Additionally, the company has declared a purchase option for BW Kizoku for a price of $69.8m — thus generating $22m of additional value based on broker quotes.”
Fearnley Securities analyst Fredrik Dybwad had pegged the value of BW Cedar at $57m.
Fearnley Securities generic quote for the BW Kizoku is $89m.
“Hence, with both the sale-and-purchase option exercise done above/below our generic quotes, the transaction is accretive to our NAV assessment prior to the transaction by approximately NOK 1.60 per share. Consequently, NAV increases to NOK 174 per share as a first take,” Dybwad said.
On 1 November, BW LPG took delivery of the 83,000-cbm BW Chinook (built 2015), the first in its $1bn acquisition of 12 VLGCs from Avance Gas.
As part of the first delivery, 1.35m shares in BW LPG were issued to Avance Gas, corresponding to about a 1% ownership share.
The 11 remaining vessels are scheduled for delivery before the end of the year — eight in November and three in December.
BW LPG will report third-quarter results on 2 December.
