Awilco LNG Surges as Teekay Deal Finds Funding

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August 5, 2013

Awilco-LNG-289-485(Bloomberg) Awilco LNG ASA, the Norwegian owner and operator of liquefied natural gas vessels, rose the most in more than two months after a deal with Teekay LNG Partners LP (TGP) eased concerns about funding a new ship.

Shares in the Oslo-based company rose as much as 18 percent, the most since May 28, and increased 11 percent to 15.5 kroner as of 11:17 a.m. in the Norwegian capital. More than 29,000 shares have traded so far today, about twice the three-month average daily volume.

Awilco LNG agreed to sell a 155,900-cubic meter ship under construction to Teekay LNG for $205 million and will then pay $50 million upfront to charter the vessel as part of a five-year contract.

“With about $140 million in remaining capex on the vessel, the net proceeds of $155 million removes all financing uncertainty,” analysts at Pareto Securities AS said in a note. The deal also “provides the company with some flexibility with regards to securing a contract.”

Awilco LNG, which owns three LNG vessels, will add two more ships to its fleet in the third and fourth quarters as it seeks to benefit from increasing demand. LNG is natural gas cooled to minus 160 degrees Celsius (minus 256 degrees Fahrenheit) so it takes up 600 times less space for transportation.

“We’re very pleased with the terms and structure of this facility,” Awilco LNG Chief Executive Officer Jon Skule Storheill said in the statement. “It fully funds the vessel and provides us with an option for our second newbuilding scheduled for delivery during Q4 2013.”

Awilco LNG canceled a previously announced $240 million bank facility, it said. Awilco ASA is the company’s largest shareholder, with a 33.7 percent stake, according to data compiled by Bloomberg.

By Stephen Treloar, Copyright 2013 Bloomberg.


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