A major operator of small LPG and chemical carriers is born following the merger between Epic Gas and Lauritzen Kosan.
BW Epic Kosan will control a fleet of 77 vessels that will range in size from 3,500 cbm to 12,000 cbm, including 53 owned ships. Some of them are capable of shipping ethylene.
The two companies said in a joint statement on Wednesday that the fleet – which will have a gross asset value of $900m – will have “significant commercial and technical capability” across pressurised, semi-refrigerated, refrigerated gas and petrochemical transports.
“This transaction combines two well reputed operators into a strong new entity in the sector,” Epic Gas chairman Andreas Sohmen-Pao said.
“We welcome our colleagues from Lauritzen Kosan and look forward to working together to build a great company delivering cleaner energy and feedstock to communities around the world.”
Lauritzen Kosan, the gas arm of Danish shipowner J Lauritzen, has agreed to swap its 34 LPG carriers for a 27% stake in the new entity.
Sohmen-Pao-chaired BW Group, which took a controlling stake in Epic Gas last year, will remain as the largest shareholder with 58%.
“This [deal] will help to improve operational efficiencies and deliver an enhanced service offering to our customers,” Lauritzen Kosan chairman Tommy Thomsen said.
“With a large and modern fleet spanning LPG and other petrochemical gases, BW Epic Kosan will be well positioned to deliver value for customers, while meeting IMO objectives for decarbonisation.”
J Lauritzen had close ties to compatriot product tanker operator Hafnia, which was taken over by BW Group in early 2019.
Big on LPG
The merger is the third major transactions in the LPG shipping sector this month initiated by Sohmen-Pao, who has been one of the most outspoken advocates for shipping decarbonisation.
On Monday, BW LPG – the VLGC arm of BW Group – became Avance Gas’ second largest shareholder after buying a 9.14% stake of the Oslo-listed peer.
BW Group also took 39.1% shares in Navigator Holdings, a leading player in the handysize segment, in a $197m deal during mid-December.
The Lauritzen Kosan transaction shows the shipping group’s “commitment to the LPG industry chain” and its “constructive view” on gas carriers, consolidation, Arctic Securities said.
The Norwegian investment bank said the deal also is a sign that BW is “supportive view on operational efficiencies and other synergies from scale”.
BW Epic Kosan will be headquartered in Singapore, where Epic Gas and BW Group are based. Copenhagen will serve as a regional office alongside offices in London, Manila and Tokyo.
Epic Gas’s current chief executive Charles Maltby and chief financial officer Uta Urbaniak-Sage will hold the same positions at the combined entity. Lauritzen Kosan chief executive Thomas Woidemann will lead its commercial operations.
As part of the transaction, which is expected to close by end-March, BW Epic Kosan has secured $250m financing for the Lauritzen Kosan fleet from SEB, Danske Bank, Nordea, Danish Ship Finance and Credit Agricole CIB.
The Epic Gas share price jumped on the news by 10% to reach NOK 17.2 ($1.98) during Wednesday morning trading. The company will still trade on the Euronext Growth Oslo market as the new entity after the merger.
