Major LNGC player Flex LNG has continued its vessels’ refinancing strategy.
The company recently signed an amendment under the ‘Flex Enterprise’ $150 mill facility to convert the non-amortising term loan tranche of $83.7 mill to a non-amortising revolving credit facility.
Thus Flex LNG’s revolving credit facility capacity has increased from $330 mill as at the end of the third quarter to $413.7 mill. The amendment is effective from 4Q24.
In addition, the charterer of ‘Flex Courageous’ and ‘Flex Resolute’, agreed to amend and extend the existing timecharters, to include a new firm period from 2029 to 2032, following the last two year option under the original timecharter contract.
The contract addendum includes additional options for the extension of each vessel by up to seven years in periods of two years, two years and three years.
However, ‘Flex Constellation’s’ charterer revealed that the extension option under the timecharter will not be taken up. She is expected to be re-delivered from the existing contract late in 1Q25.
New charter
Following her re-delivery, the vessel will be marketed for both short and long-term contracts.
Commenting on the 3Q24 results, Øystein Kalleklev, CEO of Flex LNG Management, said: "Third quarter results came in as expected. Revenues were $90.5 mill in line with guidance of ~$90 mill, adjusted EBITDA was $70.4 mill, spot on guidance of ~$70 mill and our average timecharter equivalent (TCE) rate was $75,426 per day, also in line with guidance of $75,000 to $77,000 per day.
“Adjusted net income, where we only include realised gains and losses on derivatives, came in at $28.7 mill, corresponding to an adjusted earnings per share (EPS) of $0.53.
“The slump in interest rates during the third quarter on the back of the sharp interest rate cut by Fed, adversely affected our ordinary earnings due to $10.5 mill in unrealised losses on interest rate swaps. However, we utilised this window to significantly increase our hedging duration at a favourable time and recouped more than the third quarter unrealised loss just in the month of October alone.
“During this winter season, the freight market has come under pressure, due to a combination of high fleet growth, relatively small arbitrage between Europe and Asia, marginal intra-month arbitrage disincentivising floating storage, while export volume growth remained lacklustre at about 1%.
“Hence, we have seen spot rates behaving totally differently from the seasonal norm in the fourth quarter with spot rates for modern tonnage being pushed down to the $20,000s where you effectively trade steam tonnage out of the market.
“As we have 100% charter coverage for the year and a substantial backlog, our exposure to the spot market is limited to one ship, ‘Flex Artemis’, on a variable timecharter linked to the spot market rates. Hence, we expect only marginal changes in the fourth quarter with revenues expected to come in close to $90 mill, versus $90.5 mill in the third quarter.
“We are also pleased to announce additional backlog with the extension of ‘Flex Courageous’ and ‘Flex Resolute’. These two LNG carriers commenced a 3+2+2 year timecharter with a supermajor during first quarter of 2022, where the charterer during the first quarter utilised its first extension option from 2025 to 2027.
“We have now agreed an amendment of the timecharter where we have added a firm three-year period from 2029 to 2032 and where the charterer has the right to extend the time charter for additional periods until 2039.
“Since reporting in August, we have executed the announced $430 mill refinancing where we have improved our overall financing terms, while at the same time raising net cash proceeds of $97 mill.
“As we closed the last JOLCO financing of ‘Flex Endeavour’ on 3rd October, our pro-forma cash following this refinancing subsequent to quarter-end was $450 mill," he said.
