Norway-based shipping firm Awilco LNG has signed a sale and leaseback deal with China Development Bank Financial Leasing (CDB Leasing) for its two 2013-built 156,000-cbm TFDE LNG carriers, WilForce and WilPride.
In December last year, Awilco LNG announced it has signed a term sheet with an Asian leasing firm to refinance the company’s two vessels.
The firm said in a statement issued on Friday that the documentation for the refinancing had been signed, and the sale/leaseback facility will be provided by CDB Leasing.
Awilco LNG did not provide the pricing details of the deal.
However, CDB Leasing said in a filling to the stock exchange dated May 9 that it has purchased the vessels from Awilco LNG for an amount not exceeding $200 million, and it has agreed to lease the ships for a period of 144 months.
The firm said the total amount of lease interest for the lease period is about $117.7 million, while the appraised value of the vessels is about $340 million in total.
Upon expiration of the lease period, Awilco LNG may purchase back the vessels from CDB Leasing at a consideration of not exceeding $44 million in nominal value, it said.
“Substantial” cost reduction
Awilco LNG said the new facility will enable a full take out of the company’s current sale/leaseback facilities.
The facility bears a longer amortization profile and a longer tenor than the current facility and the floating interest rate structure has a lower margin all of which “substantially” reduces the company’s running cost and cash break-even level, it said.
Awilco LNG will expense remaining capitalized expenses related to the previous financing in the first quarter of 2024.
This is compensated by the $10,000 per day per vessel reduction in cash break-even with the new financing, it said.
Awilco LNG expects the facility to close on delivery of the vessels to CDBL late second or early third quarter 2024, depending on customary closing conditions.
“We are pleased to mark the start of our long-term relationship with CDB Leasing with this transaction and are at the same time pleased to see our finance cost improve and support the Company’s commercial strategy,” Jon Skule Storheill, CEO of Awilco LNG, said.