Hoegh LNG Partners wraps up $15.5 million Lampung FSRU debt refinancing

New York-listed Hoegh LNG Partners has finally completed a refinancing of the commercial tranche of its PGN FSRU Lampung debt facility.

The limited partnership said in a statement on Friday it had closed the refinancing of the commercial tranche’s outstanding amount of $15.5 million in full.

HMLP said in September it had signed a deal with its lenders to defer the maturity date of the commercial tranche of its Lampung FSRU debt facility.

This deal gave the firm more time to conclude a refinancing of this tranche. The lenders agreed to defer the maturity date of the commercial tranche from September 29, 2021, until January 14, 2022.

In November, HMLP received commitment letters and a term sheet for refinancing of the commercial tranche, parent Hoegh LNG said in its third-quarter report last month.

Cash restrictions

To remind, HMLP said in August it had filed a countersuit against Indonesian state-owned gas firm PT Perusahaan Gas Negara (PGN), a unit of Pertamina, over issues related to the Lampung FSRU charter.

The vessel serves a 20-year charter deal with PGN LNG, a unit of PGN, off the southeast coast of Sumatra in Indonesia. Hoegh LNG manages the FSRU while the limited partnership owns it.

HMLP said the refinanced PGN FSRU Lampung debt facility’s commercial tranche would amortize with equal quarterly installments to zero by June 2026.

Also, the refinanced Lampung facility includes certain restrictions on the use of cash generated by PGN FSRU Lampung as well as a cash sweep mechanism.

“Until the pending arbitration with the charterer of PGN FSRU Lampung has been terminated, canceled or favorably resolved, no shareholder loans may be serviced and no dividends may be paid to the partnership by the subsidiary borrowing under the Lampung facility, PT Hoegh LNG Lampung,” it said.

Furthermore, each quarter, 50 percent of the PGN FSRU Lampung’s generated cash flow after debt service must be applied to pre-pay outstanding loan amounts under the refinanced Lampung facility, applied pro rata across the commercial and export credit tranches.

PT Hoegh LNG Lampung would retain the remaining 50 percent and pledge it in favor of the lenders until the completion of pending arbitration with the charterer of PGN FSRU Lampung, the partnership said.

As a consequence, no cash flow from the PGN FSRU Lampung would be available for the partnership until the completion of the arbitration.

However, this limitation does not prohibit the partnership from paying distributions to preferred and common unitholders, it said.

Hoegh LNG deal

Floating player Hoegh LNG recently revealed plans to buy all publicly held common units of HMLP.

Under the buyout offer, a wholly-owned subsidiary of Hoegh LNG would purchase all publicly held common units of the partnership in exchange for $4.25 in cash per common unit.

If approved, the transaction would take effect through a merger of HMLP with the unit of Hoegh LNG.

This move also follows a deal by Leif Hoegh and funds managed by US-based Morgan Stanley Infrastructure earlier this year.

The two firms formed a 50/50 joint venture named Larus Holding as part of plans to take Hoegh LNG private. They completed the deal in May this year.

Hoegh LNG’s fleet consists of ten modern FSRUs and two LNG carriers while HMLP operates five of these vessels.

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