Norwegian shipping company Avance Gas, under John Fredriksen, has agreed to sell two 91,000 m3 liquefied petroleum gas (LPG) dual-fuel-powered very large liquefied gas carriers (VLGCs) newbuildings to an undisclosed buyer for $240 million, with delivery scheduled for 2024.
It is understood that the above two VLGCs were built by Hanwha Ocean formerly known as Daewoo Shipbuilding and Marine Engineering (DSME).Avance Gas ordered them from DSME in April 2021 at a cost of about $78.9 million per vessel, with a total order value of about $158 million. Both vessels have undergone upgrades worth about $3 million to enable them to carry ammonia cargoes and to be converted to ammonia-powered vessels in the future, meaning that the total value of the two vessels has increased to about $164 million, the owner said.
The new vessels, hull numbers 2367 and 2368 with the intended names “Avance Castor” and “Avance Pollux”, were originally scheduled for delivery in the third and fourth quarters of 2023, respectively. However, their delivery dates have been postponed to March and May 2024, respectively.
Over the past few years, Hanwha Ocean has built a total of six 91,000 m3 class VLGCs for the company. Two new LPG dual-fuel-powered vessels, the Avance Polaris and Avance Capella, have been delivered in 2022.Two ammonia-ready VLGCs, the Avance Rigel and Avance Avior, were delivered earlier this year.Two new vessels, the Avance Castir and the Avance Pollux, are designed for ammonia transportation and can run on ammonia fuel.
Excluding all delivery and transaction costs, Avance Gas expects to profit approximately $73 million from the sale. The sale is expected to release $120 million in cash as the company has already made a nodal payment of approximately $47 million to the shipyard.
In addition, as the two traded vessels have entered into sale and leaseback agreements worth US$135 million in August 2022, Avance Gas has entered into an agreement with the financiers to exchange the charters of the two new vessels for sister vessels, the Avance Polaris and Avance Capella (built in 2022), which are currently financed by a bank loan maturing in 2027, and the refinancing is expected to take place in the first quarter of 2024, with the term of the facility extending from 2027 to the first quarter of 2024. Avance Capella” (built in 2022). The vessels are currently financed by a bank loan maturing in 2027 and the refinancing is expected to take place in the first quarter of 2024, with the term of the facility extending from 2027 to 2034.
Avance Gas currently owns and operates a fleet of 14 VLGCs and two dual-fuel newbuildings to be delivered in 2024, with four additional 40,000 m3 medium-sized LPG/ammonia carriers scheduled for delivery in 2025 and 2026.