Navigator Holdings says its new pool has been set up just in time to capitalise on volumes coming out of its new US export facility.
The US-listed LPG carrier owner said the Luna Pool — formed in March with Pacific Gas and Greater Bay Gas — went live in the second quarter of this year.
Company chief executive Henry Deans said all 14 planned vessels had joined by the end of July.
"The pool has been formed just at the right time to enable the partners to capitalise on the growing volumes of ethylene for export from our Morgan's Point terminal," he told analysts on a conference call.
The 50:50-owned facility is run with Enterprise Products Partners.
Following the money
Navigator chief commercial officer Oeyvind Lindeman said: "The vessels of the pool will go where the money is.
"And, right now, it's associated with ethylene and particularly with the terminal because... suddenly, we have incremental supply of ethylene that needs tonnage.
"The global footprint of the pool is there because the voyages we do in ethylene are quite long. So most of them, I think bar one, are trading — or bar two — are trading ethylene today. The other two are doing ethane."
"It's a global pool. It just happens that most of the voyages stems [are] US."
The ethane section of the terminal is not part of the joint venture. That is entirely owned by Enterprise Products Partners.
Lindeman said: "The particularity there is that there are two jetties. And they both can load ethane and ethylene. So it lends itself to a beautiful situation whereby ships can co-load at the same place ethylene and ethane if the ship is capable.
"But so far, at least for the Luna Pool we have loaded four cargoes of ethylene, but co-loading is possible."
Refinancing efforts in full swing
Executives also told the conference call that they are focusing on refinancing.
This month, Navigator amended its terminal loan facility to enable the immediate drawdown of $34m.
In addition, the company is seeking to refinance one of its vessel loans to unlock an additional $30m for general corporate purposes. The refinancing is expected to be completed during the third quarter of the year.
Navigator continues to assess the capital markets for refinancing its existing $100m senior unsecured bond that matures in February 2021.
It said it has engaged financial advisors to "investigate opportunities".
Chief financial officer Niall Nolan said these efforts "will provide increased liquidity headroom of approximately $70m in addition to the $10m at June 30".
At that point, total debt stood at $860m.
"The company does not have any debt facilities maturing until 2022, except for our $100m Norwegian bond maturing in February of next year," Nolan said.
Capital markets reviewed
"We are currently assessing the capital markets for a potential refinance of this bond, as well as considering alternatives in the event that the capital markets are not available or not receptive."
He said: "I think given the current circumstances or the uncertainty surrounding Covid, it would be wise to keep as much liquidity headroom as we possibly can.
"So preference would be to refinance the full amount, but given the amount of headroom, we could have $120m of cash against a $40-odd million liquidity requirement."
Nolan concluded: "It is possible that we could have a lesser amount or refinance a lesser amount. But I think in the current climate, we would be wise to, at least in the first instance, refinance the full amount."
