Golar LNG's new share sale should buy it time to complete the initial public offering of power unit Hygo Energy Transition, even if conditions are unfavourable in the first quarter of 2021.
The New York-listed LNG carrier company said on Wednesday it was selling 11m shares to pay down debt.
The deal was priced at $8.75 per share on Thursday, giving proceeds of $96.25m.
Norwegian investment bank Fearnley Securities said: "Golar now has the ability to wait out the Hygo IPO should the market not be fully open in the first quarter."
A final investment decision on the Sergipe plant in Brazil and potential new announcements across the wide pipeline Hygo sits on would support and improve the pre-IPO valuation of between $1.8bn and $2.1bn, Fearnley believes.
Valuation gap to narrow
"With Golar LNG priced below [the] Hygo IPO valuation we expect [the] share to narrow [the] valuation gap post-placement," analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart said.
Golar has said it is still committed to the spin-off.
The IPO was delayed after Hygo's former chief executive Eduardo Antonello was implicated in a bribery scheme in his native Brazil.
The company cleared Antonello of any wrongdoing during his tenure with Golar after an internal investigation.
The share cash will partially repay a $150m Golar Power term loan and a $30m Golar LNG Partners loan.
More cash coming
At the end of the third quarter, Golar LNG's unrestricted cash was reduced to $80m.
But Golar management has stressed that it has liquidity coming from charters, ship sales and refinancings worth $140m.
Based on the fourth quarter charter rate guidance of $50,000 per day, and with two-thirds of the fleet covered for 2021, Fearnley is expecting a smaller cash burn from the LNG carrier fleet.
The LNG market has continued to firm this week.
Product prices have continued to gain whilst supply disruptions have continued in both east and west, Fearnley said.
Turning to Asia
"Further, expectations of lower temperatures in the Northern hemisphere have supported shipping demand and have kept rates flat for yet another week," the bank's analysts added.
Activity remains high, but a lack of available tonnage in the west, coupled with Panama delays has forced charterers to look to Asia for tonnage, the analysts believe.
"Looking ahead, availability is expected to remain tight for the coming weeks as the imbalance of availability between basins persists. We see this lasting until the next wave of redeliveries in late January," they said.
