Illustrative of how newbuild prices have shot up in the last two years, Øystein Kalleklev-led Avance Gas has just sealed a resale deal for two VLGCs for $120m each, ships it originally contracted for $78m back in April 2021.
Avance Gas has yet to reveal who has paid the $240m for the 91,000 cu m pair of ships, which are now due for delivery in the first half of next year, having been delayed from their original H2 this year delivery schedule.
Avance Gas did pay an extra $3m on each ship on top of the original $78m price tag to make them capable of carrying ammonia as well as being ready to run on ammonia as fuel when this feature becomes commercially available. Avance Gas expects to make a profit of $73m from the resales.
Furthermore, since these two ships were financed with a $135m sale and leaseback agreed in August 2022, Avance Gas has agreed with the financier to swap the lease from the two newbuildings to the sister ships 2022-built Avance Polaris and Avance Capella which are currently financed under a bank loan maturing in 2027.
Kalleklev, the CEO of Avance Gas, commented: “We are pleased to announce the $240m sale of our two remaining VLGC newbuilds which will generate both a very attractive book profit of about $73m and a cash release of approximately $160m.”
Kalleklev said his focus was on maximising shareholder value.
“While maximising shareholder value might seem less in vogue these days than in the past, it remains our number one priority and is our licence to operate as prudent stewards of our shareholders’ capital,” he said. “The transaction announced today highlights the sharp positive shift in outlook for the VLGC market and this has enabled us to pocket a sizeable profit and thus take some money of the table in an improved market.”
Clarksons Research’s Newbuild Price Index, which tracks a basket of prices across the main vessel types, is close to cracking 180 points, up close to 40% since end-2020, marking the highest levels since December 2008.
