Norwegian shipowners withdraw from the shipping market and sell AGAS vessels
John Fredriksen's Avance Gas Holding Ltd (OSE: AGAS), one of the world's leading owners of very large gas carriers (VLGC), has announced a complete exit from the shipping market through a series of strategic asset sales.
Oystein Kalleklev, chief executive of Avance Gas Holding, outlined plans to dissolve the company by May next year. These include:
1. Sell the fleet
VLGC Fleet: Sale of 12 VLGCS to BW LPG Ltd for $1.05 billion in a combination of cash and shares. Medium liquefied gas Carrier (MGC) fleet: Sale of four MGCS to Exmar LPG BV for $282.4 million.
2. Capital return
The company announced a hefty dividend of $3.50 per share for the third quarter, totaling $268 million. Cumulative dividends for the first nine months of the year reached $7.0 per share, totaling $536 million. In addition, the Company plans to return the remaining cash and BW LPG shares to shareholders upon completion of the transaction and expects to retain approximately $264 million in cash and $250 million in BW LPG shares upon liquidation.
Avance Gas expects to complete liquidation in May 2025. Before that, the company will complete the delivery of the fleet, the dissolution of employees and the liquidation of the special purpose vehicle (SPV) through the last financial report and the extraordinary general meeting.
Kalleklev made it clear on the third-quarter earnings call: "Our goal is to return money to where it belongs, which is shareholders."
According to Kalleklev, upon completion of the asset sale, the company will hold approximately $518 million in distributable funds, split almost equally between cash and BW LPG shares. The allotment ratio of these shares is one quarter BW LPG for each Avance Gas share. Ultimately, the company will pay a final dividend and wind up after the first quarter of 2025 earnings.
Shipping market cycles are volatile, and Avance Gas chose to complete the exit at a time when asset values are high and market demand is strong, fully demonstrating its accurate grasp of market timing.
The VLGC market continues to strengthen in 2024, with 12-month charter day rates for 82K CBM LPG carriers averaging $45,490 / day to date, only slightly below last year's average of $47,404 / day since 2019. In terms of asset prices, 91K CBM VLGC new shipbuilding prices have soared, reaching $123 million per vessel in November, compared with about $113 million at the end of last year.
The strength and industry position of BW LPG and Exmar as buyers, respectively, further ensured the successful completion of the Avance Gas transaction. In particular, through the transaction with BW LPG, Avance Gas became the second largest shareholder of the latter, and the capital exit was accompanied by strategic continuity.
At the same time, he also revealed that the company is laying off staff and liquidating several special purpose vehicles (SPVS), but the overall cost is negligible. "Liquidation is more about filling out some paperwork," he admits. "It's a cheap operation. There's no golden parachute."
When Avance Gas's last ship is delivered and its last dividend is paid out, the company will officially come to an end. But it's not the end of the story - as a classic case of capital operations, Avance Gas's exit provides a valuable lesson for every player in the industry: how to accurately achieve the strategic goal of exit in a volatile market and create lasting value for shareholders.
In the new era of green transformation and high cost of the global shipping market, in the future, this strategy of retreating to advancing and precise layout may be followed by more enterprises. The story of Avance Gas is an inspiration and a reminder that true success, both forward and backward, lies in the height of strategy and precision of execution.
Oystein Kalleklev, chief executive of Avance Gas Holding, outlined plans to dissolve the company by May next year. These include:
1. Sell the fleet
VLGC Fleet: Sale of 12 VLGCS to BW LPG Ltd for $1.05 billion in a combination of cash and shares. Medium liquefied gas Carrier (MGC) fleet: Sale of four MGCS to Exmar LPG BV for $282.4 million.
2. Capital return
The company announced a hefty dividend of $3.50 per share for the third quarter, totaling $268 million. Cumulative dividends for the first nine months of the year reached $7.0 per share, totaling $536 million. In addition, the Company plans to return the remaining cash and BW LPG shares to shareholders upon completion of the transaction and expects to retain approximately $264 million in cash and $250 million in BW LPG shares upon liquidation.
Avance Gas expects to complete liquidation in May 2025. Before that, the company will complete the delivery of the fleet, the dissolution of employees and the liquidation of the special purpose vehicle (SPV) through the last financial report and the extraordinary general meeting.
Kalleklev made it clear on the third-quarter earnings call: "Our goal is to return money to where it belongs, which is shareholders."
According to Kalleklev, upon completion of the asset sale, the company will hold approximately $518 million in distributable funds, split almost equally between cash and BW LPG shares. The allotment ratio of these shares is one quarter BW LPG for each Avance Gas share. Ultimately, the company will pay a final dividend and wind up after the first quarter of 2025 earnings.
Shipping market cycles are volatile, and Avance Gas chose to complete the exit at a time when asset values are high and market demand is strong, fully demonstrating its accurate grasp of market timing.
The VLGC market continues to strengthen in 2024, with 12-month charter day rates for 82K CBM LPG carriers averaging $45,490 / day to date, only slightly below last year's average of $47,404 / day since 2019. In terms of asset prices, 91K CBM VLGC new shipbuilding prices have soared, reaching $123 million per vessel in November, compared with about $113 million at the end of last year.
The strength and industry position of BW LPG and Exmar as buyers, respectively, further ensured the successful completion of the Avance Gas transaction. In particular, through the transaction with BW LPG, Avance Gas became the second largest shareholder of the latter, and the capital exit was accompanied by strategic continuity.
At the same time, he also revealed that the company is laying off staff and liquidating several special purpose vehicles (SPVS), but the overall cost is negligible. "Liquidation is more about filling out some paperwork," he admits. "It's a cheap operation. There's no golden parachute."
When Avance Gas's last ship is delivered and its last dividend is paid out, the company will officially come to an end. But it's not the end of the story - as a classic case of capital operations, Avance Gas's exit provides a valuable lesson for every player in the industry: how to accurately achieve the strategic goal of exit in a volatile market and create lasting value for shareholders.
In the new era of green transformation and high cost of the global shipping market, in the future, this strategy of retreating to advancing and precise layout may be followed by more enterprises. The story of Avance Gas is an inspiration and a reminder that true success, both forward and backward, lies in the height of strategy and precision of execution.
