John Fredriksen’s Flex LNG has closed the refinancing of three vessels, including a pair on a sale-and-leaseback deal with Hyundai Glovis.
Oslo and US listed Flex first announced plans for the $420m leaseback for the 173,000-cbm Flex Endeavour and Flex Enterprise (both built 2018) in April and today said the transaction had been completed.
A third ship, the Flex Ranger (built 2018), which was financed under the same $315m term loan has now been refinanced under a new facility.
The $100m of fresh debt is split between a $$50m term loan and a $50m revolver.
It carries a lower interest rate of 2.25% compared to the 2.85% under the old debt, a statement said.
Oystein Kalleklev, chief executive if Flex LNG Management, said the sale-and-leaseback move improved the company’s capital structure and generated over $100m in excess cash.
“The two transactions improve our financial flexibility to return earnings to our shareholders when market conditions improve,” he said.
The Glovis deal is the second time Flex, despite Fredriksen’s ability to secure conventional debt, has used a leaseback structure. The first was with a Chinese counterpart.
While Fredriksen companies generally have access to bank debt in a constrained market, Kalleklev said in April the 10-year tenor of the leaseback is double what is typical for traditional loans.
Kalleklev reasoned a capital-intensive business such as LNG shipping means companies need several sources of funds to avoid being overly reliant on the stressed banking market.
