New York-listed Capital Product Partners has entered into an umbrella agreement to buy 11 LNG carriers from its sponsor Capital Maritime & Trading Corp for a total acquisition price of $3.13 billion.
CPLP entered into the deal with Evangelos Marinakis-led Capital Maritime and its general partner Capital GP.
Earlier this year, CPLP took delivery of its seventh LNG carrier in South Korea, Asterix I, which it also purchased from Capital Maritime.
Such as the first six LNG carriers which joined CPLP in 2021, Capital Gas, also owned by Evangelos Marinakis, manages the new LNG carrier as well.
Capital Gas recently took delivery of the 174,000-cbm ME-GA LNG carrier, Amore Mio I, chartered by QatarEnergy.
This is the first vessel out of 11 of these LNG carriers CPLP will buy under the new deal.
The other LNG carriers are Axios II (chartered by Bonny Gas transport), Assos (chartered by Tokyo LNG Tanker), Apostolos (chartered by Jera), Aktoras (chartered by BGT), Archimidis, Agamemnon, Alcaios I, Antaios I, Athlos, and Archon, according to CPLP.
These LNG carriers are scheduled for delivery from January 2024 to March 2027.
Name change
Following the closing of the umbrella agreement, CPLP intends to explore the disposal of its container vessels and abstain from acquiring additional container vessels.
Besides the deal, CPLP will change its name to Capital New Energy Carriers L.P. to reflect focus on LNG carriers and energy transition shipping, it said.
This name change is expected to become effective by December 31, 2023.
Further, the company, Capital Maritime, and the general partner have agreed to negotiate and jointly work with tax and other advisors to “agree terms for the conversion from a Marshall Islands limited partnership to a corporation with customary corporate governance provisions within six months of the closing of the umbrella agreement.”
In connection with the change of CPLP’s business focus to concentrate on the LNG carrier market, Capital Maritime agreed to grant to the company opportunities to order newbuild LNG vessels of which Capital Maritime becomes aware, and employment opportunities for LNG vessels of which Capital Maritime becomes aware, it said.
“Transformative” transaction
“We are very pleased to announce this transformative transaction for the partnership, which we expect to usher Capital Product Partners L.P. to a new chapter in its life as a public listed entity,” CEO Jerry Kalogiratos said.
“Upon completion of the 11 LNG/C fleet acquisition, we expect CPLP to transform, into one of the largest US-listed shipping companies in terms of enterprise value and the largest owner of two-stroke, latest generation LNG carriers compared to the current fleet of its US listed peers,” he said.
He said the company is “well positioned” to take advantage of the “strong” fundamentals of the LNG industry with six open LNG carriers delivering between 2026-2027 and rights of first refusal on a unique fleet of LCO2 and ammonia carriers.
Contracted revenues to rise to $3.1 billion
“We believe that this transaction, together with our stated intention to convert the partnership into a corporation and to review over time our capital allocation policy, should attract additional investor interest and allow our equity valuation to move closer to our peers,” Kalogiratos said.
Moreover, the acquisition of the 11 LNG carriers is expected to be “transformative” across all financial and qualitative metrics for the partnership.
“We expect our contracted revenues to increase by 87 percent to $3.1 billion, our revenue weighted charter duration to 7.2 years as of the closing date and the average age of our LNG fleet to decrease to 3.2 years by the time all LNGCs have been delivered in 2027,” he said.
“Finally, I am pleased to see our largest unitholder and sponsor, Capital Maritime, fully backstop at no additional cost and at a 9.6 percent premium to the last closing price a $500 million rights offering and offer an attractively priced $220 million seller’s credit to partly finance this transaction, while giving a right of first refusal on all LNG business and its new energy newbuilding vessels to CPLP,” Kalogiratos said.
“We believe that the rights offering with the Capital Maritime backstop will allow for all our unitholders to participate without execution risk in the transition of CPLP to an LNG and energy transition focused corporation, which we hope to become a bell weather for the industry,” Kalogiratos concluded.