Avance Gas sells ammonia-ready dual fuel VLGC newbuilds

Norwegian shipping company Avance Gas has agreed to sell its two remaining 91,000 cbm dual fuel newbuildings scheduled for delivery next year.

The company said that the two newbuildings would be sold for $240 million en bloc. The buyer of the vessels was not disclosed.

The very large gas carriers (VLGCs) are being built by Hanwha Ocean, formerly known as Daewoo Shipbuilding and Marine Engineering (DSME). They were ordered back in April 2021 at a price of approximately $78 million each.

Avance Gas said that they have since been upgraded with capex of about $3 million each enabling them to load ammonia cargoes as well as being ready to run on ammonia as fuel when this feature becomes commercially available.

The newbuildings, hull numbers 2367 and 2368 with the intended name Avance Castor and Avance Pollux, were originally scheduled for delivery in the third and fourth quarter of 2023. However, their delivery has been delayed for March and May 2024, respectively.

Hanwha Ocean has been contracted to build a total of six 91,000 cbm VLGCs for the company over the past few years.

Two LPG dual-fuel newbuilds, Avance Polaris, and Avance Capella, were delivered in 2022. Avance Rigel and Avance Avior were delivered earlier this year and have been built as ammonia-fuel-ready, while the remaining two, Avance Castir and Avance Pollux are designed to carry ammonia and be ammonia-ready.

Avance Gas expects to book a profit of about $73 million from the sale, net of all delivery and transaction costs. The cash release from the sale is expected to be $120 million as the company has already paid about $47 million in milestone payments to the yard.

Furthermore, since these two ships have been financed with a $135 million Sale-and-Leaseback agreed in August 2022, Avance Gas has agreed with the financier to swap the lease from the two newbuildings to the sister ships Avance Polaris and Avance Capella (built 2022) which are currently financed under a bank loan maturing in 2027.

“Such refinancing of Avance Polaris and Avance Capella is expected to be carried out during first quarter of 2024 and this will further increase our cash by approximately $41 million. The refinancing will also extend the maturity of the financing of Avance Polaris and Avance Capella from 2027 to
2034,” the company said.

Following this refinancing, Avance Gas will have no loans maturing prior 2028. As such, the cash release from the sale of the ships and swap of the sale-and-leaseback agreement is expected to be in total $160 million. 

Avance Gas owns and operates a fleet of fourteen VLGCs and two dual-fuel newbuildings for delivery in 2024 and four Mid-Sized Gas Carriers scheduled for delivery in 2025 and 2026.