Flex LNG in sale and charter back move

Thursday, 02 May 2019
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Flex LNG has agreed a sale and charter back deal with Hyundai Glovis for the LNGCs ‘Flex Endeavour’ and ‘Flex Enterprise’.

Under the terms of the deal, Flex LNG will sell the vessels for $420 mill gross, or $300 mill net adjusted for a non-amortising and non-interest bearing seller's credit of $120 mill.

The two LNGCs will be timechartered back to subsidiaries of Flex LNG for 10 years. The company will also have options to acquire the vessels during the timecharter period.

At the end of the 10-year charter, Flex LNG will have the right to acquire the vessels and Hyundai Glovis will have the right to sell the vessels back to Flex LNG for $150 mill, net of the $120 mill seller's credit.

The existing shipmanagement agreements will be novated to Hyundai Glovis.

This transaction remains subject to customary closing conditions and is expected to close in the third quarter of 2019.

As a result of the sale, the existing mortgage loans for the two vessels totaling around $194 mill will be prepaid and the transaction will thus significantly increase Flex LNG’s liquidity.

At the same time, Flex LNG said that the $250 mill bank facility agreement for ‘Flex Constellation’ and ‘Flex Courageous’, announced on 28th February, 2019, have now been signed.

The funds will be available for drawdown in connection with the scheduled deliveries in June and August, respectively.

Øystein Kalleklev, Flex LNG CEO, said: "We are pleased to announce a partnership with Hyundai Glovis, a top-tier global logistics and distribution company. The transaction secures us long-term financing at attractive terms and will significantly boost our cash position by more than $100 mill.

“With the two financings, we are very well capitalised to take delivery of our remaining newbuildings. Cash break-even levels of less than $50,000 on average for these two financings demonstrate our ability to raise competitive and long-term financing from a diverse set of funding sources,” he said. 

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