Höegh LNG Partners has purchased the Höegh Gallant floating storage and regasification unit (FSRU) for $370m from a Höegh LNG Holdings (HLNG) subsidiary.
The NYSE-listed company will finance the purchase price by cancelling a $140m demand note from Höegh LNG Holdings and will issue seller’s credit of $47m due in 18 months to its subsidiary.
There remains $183m of existing debt related to the Höegh Gallant, which will continue to be outstanding.
The unit was delivered from Hyundai Heavy Industries in November 2014, after which it began a charter to Höegh LNG Egypt (EgyptCo), which commenced in April and will terminate in April 2020. EgyptCo has a charter with state-owned Egyptian Natural Gas Holding Company that expires in April 2020.
Höegh LNG Partners estimates that the FSRU’s charter with EgyptCo will generate net annual contracted revenues of approximately $39m to $41m.
After EgyptCo’s charter expires or is terminated, Höegh LNG Holdings has the right to subsequently charter the vessel until July 2025 at a rate equal to 90% of the rate payable pursuant to the current charter with EgyptCo, plus any incremental taxes or operating expenses as a result of the new charter.
“The addition of the Höegh Gallant will increase the size of HMLP’s fleet from three to four FSRUs and diversify its operations,” said Richard Tyrrell, CEO and CFO of Höegh LNG Partners . “The transaction is consistent with Höegh LNG Partners’ strategy of growing distributions through accretive acquisitions.”