BW LPG Ltd. has agreed to acquire 12 modern very large gas carriers (VLGC) from Avance Gas Holdings in a cash-and-stock deal for $1.05 billion, Singapore-based BW said on Aug. 15.

BW will acquire a fleet comprising four 91,000 Bcm capacity dual fuel VLGCs, of which two are 2022-built and two are 2023-built, and eight 2015-built 83,000 Bcm VLGCs of which six are scrubber-fitted.

BW’s transaction will be funded through the issuance of 19.282 million new BW shares to Avance Gas, a cash consideration of $585.4 million, of which $368 million is to fund the repayment of the existing bank debt of 10 vessels.

Remaining debt of $132 million pertaining to two sale-leaseback vessels is to be novated with new contracts. Additionally, the $235.4 million cash portion of the deal will be paid from BW's available cash resources and $350 million will be financed by a shareholder loan from BW Group, BW LPG’s largest shareholder.

Following the issuance of the total share consideration, Avance Gas will become a 12.77% shareholder in BW. Avance Gas will have a 40 calendar day lock-up period in respect of the consideration shares received following delivery of each vessel.

BW is expected to increase its net leverage ratio from 7% in first-quarter 2024 to a range of 30% to 35%, maintaining a robust balance sheet to support continued shareholder distributions.

The transaction will add significant scale to BW LPG’s fleet. It increases the number of owned and operated VLGCs to 53 from 41, of which 22 are LPG dual fuel.

“This further solidifies BW LPG’s position as the world’s leading owner and operator of VLGCs, with the largest number of LPG dual-fuel powered VLGC’s,” the company said. “This fleet expansion comes at an opportune time with VLGC newbuild deliveries abating and continued growth in global LPG export volumes.”

Closing of the transaction will take place on a vessel-by-vessel basis targeted to be completed by Dec. 31.

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