Cool Company Limited, the NYSE and Euronext Growth Oslo listed company announced it has exercised its option to acquire two newbuild 2-stroke LNG carriers from affiliates of EPS Ventures Ltd (“EPS”).
The state-of-the-art MEGA LNG carriers (the “Newbuilds”) are scheduled to deliver from Hyundai Samho Heavy Industries (“HHI”) in Korea in September and December of 2024. The Newbuilds have a cargo capacity of 174,000 cbm, a GTT Mark III Flex Membrane cargo tank system, reliquification, air-lubrication and shaft generators. Each of the two Newbuilds is being acquired under the pre-existing purchase option price of approximately $234 million, a discount of approximately 10% to current quoted market value for comparable newbuild vessels. The initial exercise price is approximately $57 million per vessel, while approximately $134 million of the remaining $177m is due upon delivery of each of the vessels. The expected closing date and payment of the option exercise is Monday July 3, 2023.
The Newbuilds, to be named Kool Tiger and Kool Panther, are expected to be funded with a combination of cash on hand, including cash that was recently released from the sale of the Golar Seal, and debt financing for which CoolCo has received a commitment letter from a financing institution. This debt financing, which is subject to customary approvals, is on a fixed rate per day basis for 10 years with a minimum loan-to-value of 80% and an implied interest rate of around 6%. We do not anticipate needing to raise additional equity to finance the two Newbuilds.
“We look forward to welcoming these state-of-the-art vessels into the CoolCo fleet at a material discount to their current market value. Their 2024 delivery date makes the vessels especially attractive, with comparable vessels ordered today only being delivered in the 2027/28 timeframe. The vessels’ best-in-class design and boil-off rate make them highly attractive to charterers who benefit from the ability to operate efficiently at a range of speeds with reduced emissions,” Richard Tyrrell, CEO of Cool Company commented to the deal.
Furthermore, he added “With the vast majority of the global LNG carrier orderbook already committed to liquefaction projects coming online in the years ahead, few, if any, modern LNG carriers are expected to be available for time charter employment during the late 2024 window when the vessels deliver. We are currently in discussions to forward fix the vessels on long-term time charters and expect to do so well in advance of delivery at levels that reflect current market strength.”