Flex LNG, the growing LNG shipping company with four vessels operating and nine others on order and whose largest shareholder is a company controlled by Norwegian magnate John Fredriksen, said it completed a sale-and-charterback transaction for two vessels.
Flex completed the transaction with Hyundai Glovis Co. of South Korea, a logistics company that normally specializes in car-shipping vessels.
The Flex deal involved the 174,000 cubic metres capacity LNG carriers “Flex Endeavour” and “Flex Enterprise”. Planning for the transaction was first disclosed in April 2019.
Under the agreement, Flex LNG sold the vessels to Hyundai Glovis for a combined gross sum of $420 million, with a net consideration of $300M adjusted for a non-interest bearing seller's credit of $120M in total.
Flex explained that both carriers were then charted back for a period of 10 years.
Flex, which is listed on the Oslo bourse in Norway and the New York Stock Exchange, will have options to acquire the vessels during the term of the time-charters.
At the end of the 10-year charter period, Flex will have the right to acquire the vessels and Hyundai Glovis will have the right to sell them back to Flex for a total consideration of $150M, net of the $120M seller's credit.
The “Flex Endeavour” and “Flex Enterprise” were, together with sister ship, the “Flex Ranger”, financed under a $315m term loan facility due in 2023.
In addition to the Hyundai Glovis deal, Flex said it also closed the refinanced the remaining payment tranche for the “Flex Ranger”, and the total outstanding of $294M under the $315M facility has been prepaid in full.
Other terms and conditions are similar to the $250M financing for the 174,000 cubic metres capacity “Flex Constellation” and “Flex Courageous” announced in February 2019.
“We are very satisfied with the successful closing of the Glovis sale-and-charterback according to plan, and highly appreciate the close and good working relationship with Hyundai Glovis throughout this process,” said Oystein Kalleklev, Chief Executive of Flex LNG Management AS.
“In connection with the Glovis SCB we also decided to improve our capital structure by refinancing ‘Flex Ranger’ at better terms and conditions,” he added.
“The two transactions improve our financial flexibility to return earnings to our shareholders when market conditions improve,” stated Kalleklev.