Cool Company Exercises Purchase Options for Two Newbuild LNG Carriers with Delivery in 2024

Cool Company Limited (NYSE: CLCO) on Wednesday announced it has exercised purchase options for the acquisition of two newbuild LNG carriers scheduled to deliver next year.

The company highlighted the vessels’ attractive delivery schedule and purchase price that is approximately 10% below current market value.

The state-of-the-art 2-stroke LNG carriers will have a cargo capacity of 174,000 cbm, a GTT Mark III Flex Membrane cargo tank system, reliquification, air-lubrication and shaft generators. They are currently under construction at Hyundai Samho Heavy Industries in Korea in September and December of 2024.

“We look forward to welcoming these state-of-the-art vessels into the CoolCo fleet at a material discount to their current market value,” said Richard Tyrrell, CoolCo’s CEO. “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.”

The options, which were due to expire at the end of the month, were held with affiliates of its majority shareholder EPS Ventures, owning a 58.2% stake in the company. EPS is part of Singapore-based Eastern Pacific Shipping.

Each of the two vessels, named Kool Tiger and Kool Panther, is being acquired under the pre-existing purchase option price of approximately $234 million, representing a discount of approximately 10% compared to quoted values 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.

CoolCo plans to fund the vessels with cash on hand and debt financing, which has 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%. No additional equity is expected to be needed.

“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,” said Tyrrell. “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.”

CoolCo owns a fleet of 11 LNG carriers and has an additional 8 LNG carriers and 9 Floating Storage & Regasification Units (FSRUs) under management. The company’s shares began trading on the NYSE under the ticker “CLCO” on March 17, 2023.

Separately, the company has also announced that a syndicate of existing lenders has approved a $70 million increase in debt amount and a reduction in interest rate margin for one of its bank facilities. The additional funding will be used to fund the LNGe conversion of five vessels, including retrofits with sub-coolers for LNG boil-off reliquefaction under a recently announced contract with HD Hyundai Global Service.

“The improved terms of the Facility speak to our strong financial position, a source of true competitive advantage under current credit conditions,” said John Boots, CoolCo’s CFO. “The upgrades that make up the LNGe conversion process put our TFDE vessels firmly into the top tier of all TFDEs in the market, with boil-off rates that make these upgraded vessels extremely competitive with 2-stroke vessels, further improving CoolCo’s ability to take advantage of the strong demand for high-quality, modern LNG carriers.

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up