Golar to separate TFDE LNGCs into new company

Thursday, 06 January 2022
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Golar has formed Cool Company Ltd (CoolCo) to separate its fleet of modern TFDE LNGCs in co-operation with Singapore-based Eastern Pacific (EPS).

The company explained that CoolCo is planned to be a growth vehicle and consolidator of modern LNGCs to provide investors with direct market exposure to an expected continued strength in the LNG freight market.

As part of a terms agreement, CoolCo would acquire Golar’s eight TFDE LNGCs, raise equity and separately list on Euronext Growth in Oslo during the first quarter of this year.

CoolCo is also expected to takeover the commercial and technical departments, which manage the operation of Golar’s owned and operated LNGCs and FSRUs to become a fully integrated operating platform with a capacity for fleet growth.

The proceeds from a planned IPO will, together with a planned debt refinancing, be used to acquire the eight vessels from Golar, secure attractive financing and provide CoolCo with working capital to position the company for further growth.

Outstanding contractual debt associated with the eight vessels was $858 mill as of 30th September, 2021. In addition to a cash release, Golar said that it intended to retain about one third of CoolCo.

As part of the agreement, EPS has pre-subscribed for $150 mill in CoolCo equity based on an average TFDE ship valuation of $145 mill, making EPS the new company’s largest shareholder.

Active role

Alongside Golar, EPS will take an active role in the further development of CoolCo and will chair the Board.

Karl Fredrik Staubo, Golar CEO, explained: “We are encouraged by the strong underlying market fundamentals for LNG carriers. The Cool Company transaction will allow Golar to separate its shipping business and simplify its corporate structure, while maintaining significant and attractive exposure to the LNG carrier business.

“We are excited to develop Cool Company with Eastern Pacific Shipping. EPS is one of the world’s leading shipping companies and a first mover and global trendsetter in ordering LNG-fuelled tonnage in traditional shipping sectors like container, drybulk, car carriers and tankers.

“The terms agreement is consistent with the planned business separation of Golar’s shipping activities and previously announced strategy to focus activities and growth on our market leading FLNG business.

“Recent increases in global LNG prices have further increased the attractiveness of potential new liquefaction projects. Before considering growth projects, Adjusted EBITDA generated by the FLNG segment is expected to quadruple from current levels over the next two to three years, supported by additional production and commodity exposure on ’Hilli’ and contracted earnings from ’Gimi’,” he said.

Cyril Ducau, EPS CEO, added: “EPS is pleased to be adding LNG shipping to our diverse shipping portfolio. LNG will play an essential role as a commodity and marine fuel as the world transitions to cleaner energy solutions.

“Golar’s solid track record, mature platform, and like-minded vision made this investment an easy decision. As a provider of dual-fuel LNG tonnage across all our segments, EPS looks forward to taking a leading role in making CoolCo a world-class leader in LNG shipping, combining our complementary skills and expertise with Golar’s,” he concluded.

Clarksons Platou Securities acted as advisor to EPS and Golar. 

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