Avance Gas Holding Ltd: Avance Gas agrees to sell two newbuildings for $240 million at a $73 million estimated profit

08 Dec 2023 07:01 CET

Hamilton, Bermuda
December 8, 2023

Avance Gas Holding Ltd ("Avance Gas" or the "Company") (OSE: AGAS) today
announce that it has agreed to sell its two remaining 91,000 cbm dual fuel
newbuildings scheduled for delivery next year. The buyer has agreed to pay $240
million en bloc for the two newbuildings when they are delivered from the yard
i.e., ex-yard delivery. The newbuildings, Hull number 2367 and 2368 with
intended name Avance Castor and Avance Pollux, were originally scheduled for
delivery in the third and fourth quarter of 2023 but has been delayed with
expected delivery now scheduled for March and May 2024, respectively.

The newbuildings were contracted in April 2021 at price of approximately $78
million each. They have since been upgraded with capex of about $3 million each
for the ships to be able to load ammonia cargoes as well as being ready to run
on ammonia as fuel when this feature becomes commercially available. Hence,
Avance Gas expect 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 we have already paid about $47 million in milestone
payments to the yard in accordance with the Ship Building Contract.

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. Following this refinancing, Avance Gas will have no loans maturing prior
2028 given the recent announced $43 million refinancing of the VLGC Pampero.

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, or slightly above
$2 per share. The parties have signed and executed a Memorandum of Agreement in
relation to the sale of the ships. The sale is therefore only subject to certain
closing conditions, in line with industry standards.

Øystein Kalleklev, CEO of Avance Gas, commented:
"We are pleased to announce the $240 million sale of our two remaining VLGC
newbuilds which will generate both a very attractive book profit of about $73
million and a cash release of approximately $160 million. While we were looking
forward to expanding and renewing our fleet with these two high spec
newbuildings, our focus is maximizing shareholder value. While maximizing
shareholder value might seem less in vogue these days than in the past, it
remains our number one priority and is our license to operate as prudent
stewards of our shareholders' capital. The transaction announced today
highlights the sharp positive shift in outlook for the VLGC market and this has
enabled us to pocket a sizeable profit and thus take some money of the table in
an improved market.

Once the transaction has been completed which is expected to occur during second
quarter of 2024, Avance Gas will evaluate returning a substantial part of the
cash proceeds to its shareholders. We raised $65 million in an equity issue in
April 2021 to finance the acquisition of these two newbuildings of which $49
million has been utilized as pre-delivery capex. Given the fact that we already
hold a substantial cash position, we will therefore consider reducing our paid-
in capital to make such return of capital to our shareholders more tax efficient
than through ordinary dividends."

For further queries, please contact:
Media contact:
Øystein Kalleklev, CEO
Tel: +47 23 11 40 00

Investor and Analyst contact:
Randi Navdal Bekkelund, CFO
Tel: +47 23 11 40 00

ABOUT AVANCE GAS Avance Gas operates in the global market for transportation of
liquefied petroleum gas (LPG). The Company is one of the world's leading owners
and operators of very large gas carriers (VLGCs) and owns twenty LPG ships
consisting of fourteen modern VLGCs including the two dual fuel LPG VLGCs for
delivery and resale in 2024 and four dual fuel MGCs for delivery in 2025 and
2026.

For more information about Avance Gas, please visit www.avancegas.com
(https://nor01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.avancegas.
com%2F&data=05%7C01%7Crandi.navdal%40avancegas.com%7C1a4da74097b646ec222d08dbf74
b4d4a%7C73cb7203e06f49e08fa31680d8406af5%7C1%7C0%7C638375675010200984%7CUnknown%
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ed=0)

This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act

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