On December 21, China Merchants Energy Shipping Co., Ltd. (CMES) issued the “Announcement on Connected Transaction on Capital Increase of Subsidiary LNG Carrier Joint Venture Company”.
The announcement disclosed that CMES plans to increase the capital of China LNG Shipping (Holdings) Co., Ltd. (CLNG), a joint venture company in which CMES and COSCO SHIPPING Energy Transportation each hold a 50% stake, by no more than US$110 million. The capital will be used for the QatarEnergy’s LNG transportation project, for which CLNG won the bid, to lease two 271,000 cubic meter QC-Max LNG carriers for a period of 25+5 years.
CMES said that it has increased its earnings through long term contract stability and CLNG has won the bid for the long term LNG transportation project of two 271,000 cbm QC-Max vessels on 25+5 year charters in the second phase of the QatarEnergy’s LNG transportation project. The project, with a total investment of about US$730 million, is to be financed with 70%-75% financing, with the combined capital increase of the two shareholders not exceeding US$220 million.
According to the announcement, the eighth meeting of the seventh board of directors of CMES agreed to authorize the company to increase its capital in CLNG by no more than US$110 million in proportion to its equity.
According to the progress of the project, CLNG has established two wholly-owned single-ship companies in Hong Kong. The two single-ship companies have signed a ship construction agreement for two QC-Max LNG carriers with Hudong-Zhonghua Shipbuilding (Group) Co., Ltd., and signed a long-term charter agreement with QatarEnergy for two QC-Max LNG carrierss with a lease period of 25+5 years.
Recently, CMES has made its first capital increase to CLNG in the amount of US$32.975 million.