SCF concludes LNGC project financing

Thursday, 26 November 2020
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Joint venture companies belonging to Sovcomflot (SCF Group), NYK Line and Samudera, have signed a $155 mill non-recourse credit facility.

This credit facility is valid for up to eight years and was signed with two leading international banks - MUFG Bank and Development Bank of Japan.

The facility will be used towards refinancing two LNGCs servicing the Indonesian Tangguh LNG plant, ’Tangguh Towuti’ and her sistership ’Tangguh Batur’, which are jointly owned and operated by SCF Group, NYK Line and Samudera.

Tangguh is managed by the Tangguh Production Sharing Contractors (TPSC), an international consortium. It is operated by BP and began LNG exports in 2009.

The designated annual output of extracted gas is 7.6 mill tonnes, which is exported to China, South Korea and the US, as well as being used domestically.

SCF has also released its results. For the nine months ending 30th September, the timecharter equivalent (TCE) revenue increased by 22.1% year-on-year to $1,069.8 mill, EBITDA was up 37.5% to $741.4 mill, maintaining LTM EBITDA at above $1 bill. Net profit more than doubled to $249.5 mill.

Positive dynamics were driven by continued and sustainable growth of the industrial business segments, as well as a strong performance of the conventional tanker fleet in the first half of the year.

For 3Q20, TCE revenue was up 1.6% to $287.1 mill, with EBITDA declining 1.6% to $162.8 mill and a decline in net profit of 10.9% to $23.1 mill, compared to 3Q19, reflecting a weaker conventional tanker market over the quarter and some one-off maintenance expenses.

SCF Group’s industrial business portfolio, which provides a long-term fixed income revenue stream, contributed $501.3 mill to the nine month TCE revenue, delivering 7.5% year-on-year growth.

This came as a result of two new LNGCs being employed under long-term contracts with international energy majors.

During 2020, SCF has, either directly or through its SMART LNG joint venture with NOVATEK, timechartered 17 icebreaking LNGCs to Arctic LNG 2, the project’s operator.

Some 14 were timechartered through SMART LNG during the nine months - four in January and 10 in September, 2020. A further three vessels were timechartered directly by SCF in October, 2020.

Combined, these 17 timecharters added about $14 bill of contract backlog attributable to SCF Group.

In September, 2020, SCF took delivery of ’SCF Barents’, a new 174,000 cu m LNGC, which is operated by Shell under a long-term timecharter agreement. A further LNGC, ’SCF Timmerman’, is scheduled to be delivered and start operations under a similar long-term time-charter with Shell in 1Q21.

In October, 2020, SCF conducted an initial public offering of 408,296,691 newly issued ordinary shares of a nominal value of RUB1 each, at a price of RUB105 per ordinary share and listed the shares on the Moscow Exchange.

The total net proceeds of the IPO, after expenses and stabilisation-related buy-back, were RUB38 bill (equivalent to $480 mill as of the date of issue.

The IPO’s proceeds will be used for general corporate purposes, including investments in new assets, with a focus on industrial projects, de-carbonisation and further deleveraging.

Bank loans

Also in October, the Group repaid secured bank loans with an outstanding balance as of the date of prepayment of $137.7 mill with scheduled maturity within 12 months from 30th September, 2020.

Earlier this month, SCF refinanced maturing loan obligations of $67.3 mill with existing lenders and further raised a $155 mill, in an up to eight years project finance facility, for its joint venture companies with partners NYK and Samudera, established to own and operate two LNGCs (see above).

Dividends for the 2019 year of RUB7,181.0 mill (equivalent to $96.8 mill), were declared and paid in August, 2020.

SCF targets paying dividends of 50% of its IFRS net profit, and reconfirmed its dividend guidance for the year ended 31st December, 2020 of $225 mill, subject to the Board of Directors and shareholders’ approval.

Commenting on the results, Igor Tonkovidov, SCF President and CEO, said: “SCF demonstrated an exceptionally strong performance with nine months net profit doubling, compared with last year. Furthermore, the Group was able to secure new industrial business with an additional $14 bill of future contracted revenues, booked in the LNG segment just over the past couple of months, fully in line with the Group’s strategy.

“This clearly shows the resilience of Sovcomflot’s business model to the pandemic-related operational challenges and to adverse and volatile market conditions. We are on track to achieve the budgetary targets for the full year 2020 and are well equipped to grow the business going forward, with the proceeds from the recent IPO of Sovcomflot shares, maintaining our strong focus on de-carbonisation and innovations.

I am deeply grateful to the whole of Sovcomflot team at sea and on shore for their efforts and perseverance during these challenging times,” he concluded. 

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