Flex LNG to Buy Two LNG Carrier Newbuildings

Oslo-listed ship owner and operator Flex LNG has reached an agreement to purchase two 174,000 cbm LNG carrier newbuildings under construction at South Korea’s Hyundai Heavy Industries.

Under the deal, agreed on May 28, Flex LNG said it would pay “an attractive price” of USD 184 million per vessel.

The company added that payment terms “are favorable” with 20 per cent of amount due following signing of such agreement while remaining 80 per cent is due at delivery.

The newbuildings, to be named Flex Aurora and Flex America, are scheduled for delivery in June and August 2020, respectively.

Both newbuildings are fitted with Selective Catalytic Reduction (SCR) to comply with IMO Tier III regulation both in gas and liquid mode giving them high trading flexibility.

Furthermore, on May 28, Flex LNG received credit approval for a sale leaseback of the LNG carrier newbuilding Flex Rainbow with an undisclosed Asian lessor based on term sheet signed by the parties in March 2018.

The sale price under the lease is 75% of the relevant ship building price for Flex Rainbow and where the remaining 25% represent the advance hire for the ten-year lease period.

The developments were unveiled as part of the company’s financial report for the period ended March 31, 2018, in which Flex LNG said it was “disappointed by the financial performance in first quarter”.

The company’s revenues for the quarter were at USD 15.1 million, compared to USD 1.3 million reported in the first quarter of 2017. Net loss stood at USD 1.8 million, widening from a net loss of USD 1 million seen a year earlier, mainly due to weak utilization of the Flex Enterprise during the quarter as well as increased financing costs related to its USD 315 million term loan facility.

“Although we are disappointed by the financial performance in first quarter, we are pleased to be able to announce an attractive sale-leaseback of Flex Rainbow. This lease enables the Company to grow organically based on its existing paid-in equity by the acquisition of two additional high specification LNGC newbuildings at very attractive terms and conditions,” Øystein M Kalleklev, CFO at Flex LNG, said.

“The market for LNG transportation is cyclically recovering from lows experienced beginning of first quarter and we remain very confident about the long-term structural prospects for this market and are thus positioning for this up-turn with this accretive fleet expansion,” Kalleklev added.