Golar LNG Ltd. has announced the execution of a USD $1.125 billion financing agreement to fund the first 8 of its 13 newbuild vessels and FSRUs.
Golar has 11 LNG carriers of around 160,000 cbm on their newbuilding list, as well as two FSRUs of 170,000 cbm and 160,000 cbm respectively. The majority of the vessels are planned for delivery in 2015.
In Golar’s presentation at Marine Money week this summer, they note that their newbuilding plan is such that these vessels are delivered before global LNG liquefaction ramps up to full capacity over the coming years. The following graph shows this visually:
In addition, Golar LNG notes in their presentation that first generation tonnage will exit the market during that time frame, offsetting the addition of newbuild tonnage to the market.
Commenting on the financing agreement, Golar’s Chairman John Fredriksen said, “Golar has demonstrated its commitment to LNG Shipping and FSRUs with its newbuilding programme, on the back of extremely attractive long term market fundamentals. To have the support of the Korean ECAs to this extent, without requirement for contracts in place, enables Golar to take a more flexible and long-term approach to the LNG shipping market. To see so many of our relationship banks together with the Korea Finance Corporation and a number of new banks participating in this oversubscribed facility is both reassuring and welcome. Collectively they provide a strong footing for the company’s ambitious growth plans and we look forward to their on-going involvement in our business.”
The LNG carriers will be tri-fueled (gas/diesel/fuel oil) and are designed for a 19.5 knot charter speed.
The Financing Facility
The facility is divided into three tranches: A term loan of USD $450 million funded by a consortium of lenders and guaranteed by a 95% Korea Trade Insurance Corporation (“K-Sure”) policy; A term loan of USD $450 million funded by The Export Import Bank of Korea (“KEXIM”), and; A term loan of USD $225 million funded by a syndicate of commercial banks (the “Commercial Tranche”). The tranches have a 12 year repayment profile. In anticipation of entering into this financing, the Company had previously entered into interest rate swaps to hedge the majority of the loan such that the all-in interest cost for the initial seven years of the facility will be approximately 3.74%.
Citibank N.A, London Branch acted as Global Coordinator, Book Runner and Documentation Agent to the transaction. The Mandated Lead Arrangers are Citibank N.A London Branch, Danske Bank A/S, DvB Bank SE, The Export Import Bank of Korea, Nordea Bank Norge ASA, Korea Finance Corporation, Skandinaviska Enskilda Banken AB (publ) and SwedBank AB (publ).
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