Odfjell Exits Gas Market with Sale of Ethylene Carriers
Odfjell Gas Shipowning, a wholly owned subsidiary of Norwegian shipping and storage operator Odfjell, has agreed to sell two ethylene/liquified petroleum gas (LPG) carriers to Singapore’s BW Epic Kosan (BWEK), marking its exit from the gas carrier business. The two vessels, named Bow Guardian and Bow Gallant, were both built at a South Korean shipyard in 2008.
Financial terms were not disclosed, but Odfell said the sale would be settled partly in cash, which will be used to fully repay mortgaged loans on the ships, and partly by the issuing of shares in BWEK. On completion, Odfjell will own 4.3% of BWEK and will be eligible to buy up to another 362,611 shares, subject to certain conditions being fulfilled within 18 months of the vessels being delivered. The transaction is expected to close before Oct. 31.
Odfjell said as far back as 2016 that its ambition was to exit the gas segment when the timing was right because of challenges with its newbuilding program. The shipper re-entered the market in 2012 with the purchase of two LPG/ethylene carriers and in 2014 finalized an agreement with investment groups Breakwater Capital and Oak Hill Advisors to form joint venture Odfjell Gas.
In 2014, Odfjell also exercised options for four LPG/ethylene carriers at Nantong Sinopacific Offshore & Engineering in China, adding to four ships that were ordered in 2013. In total, the company anticipated that the eight ships would be delivered from 2016 to 2017. But, two years later, facing substantial delays on the ordered vessels, it cancelled four, saying it was probable that it would cancel the remaining units as well.
In March this year, Odfjell acquired the other 50% stake in Odfjell Gas from Breakwater Capital and Oak Hill Advisors for $16.7 million.
Author: Elaine Burridge, Freelance Journalist
