Fredriksen’s Avance Gas sells VLGC fleet to BW LPG for $1bn

BW LPG has agreed to purchase 12 very large gas carriers (VLGCs) from Avance Gas for $1.05bn, a deal which will leave Avance Gas with a fleet four medium-sized gas carriers (MGCs).

Avance said the deal for its eight 2015-built eco-VLGCs and four dual-fuel VLGCs built in 2022 and 2023 generates a gain on sale of around $310m-$320m. The sale will be settled with $585m in cash, novation of $132m of debt for two sale leaseback vessels, and around $332m in new BW LPG shares at $17.25 per share. 

The deal will make Avance the second-largest shareholder in BW LPG with around a 12.77% stake. The ships will be delivered throughout the fourth quarter of 2024, although consent will be required from charterers of three time charter parties, and lessors of the two sale leaseback facilities for Avance Polaris and Avance Capella.

Commenting on the sale, Øystein Kalleklev, CEO of Avance Gas Holding said: “The fleet of Avance Gas is today a bit sub-scale and we have therefore found it more attractive for our shareholders to take advantage of the relatively high second-hand prices and sell the VLGC fleet to BW LPG.”

BW LPG said the acquisitions boost its owned and operated VLGC fleet from 41 to 53 vessels, and the timing comes as it sees abating newbuild deliveries and growth in LPG export volumes.

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Andreas Sohmen-Pao, Chairman of the Board of BW LPG, commented, "This strategic transaction supports BW LPG's ambition to serve our customers with enhanced shipping and product delivery options in the fast-growing LPG space. The addition of these 12 vessels will result in an expanded fleet, greater flexibility, and are expected to be accretive to earnings based on our market view. They will also support our product trading and terminal activities”.