BW LPG (BWLPG) Investor Update summary

Strategic Transaction Overview

• BW LPG is acquiring 12 modern VLGCs from Avance Gas for $1.05 billion, increasing its fleet by 44% to 53 vessels, including 22 LPG dual-fuel ships.

• The deal is structured as ship-for-share plus cash, with 19.282 million new shares issued, $585.4 million in cash, and $132 million in assumed debt; $350 million of the cash is a BW Group shareholder loan.

• Avance Gas will become the second largest shareholder in BW LPG, holding 12.77% post-transaction, with a 40-day lock-up on shares after each vessel's delivery.

• All acquired vessels are modern, averaging 6.8 years old, including four 91K CBM dual-fuel VLGCs (built 2022–2023) and eight 83K CBM VLGCs (built 2015), six of which are scrubber-fitted.

• Transaction closing is on a vessel-by-vessel basis, targeted for completion by 31 December 2024, subject to consents from lessors and charterers.

Financial Details and Impact

• Total transaction value is $1.05 billion, with $500 million in debt and $333 million in new shares.

• Cash payment totals $585.4 million, funded by $235 million from cash resources and $350 million from a BW Group shareholder loan.

• Net leverage ratio will rise from 7% to 30–35% post-transaction, optimizing the balance sheet while supporting robust shareholder distributions.

• Share count increases by 15%, while earnings potential rises by 44%, making the deal accretive.

• Illustrative pro forma dividend yield potential remains strong at various spot rates, with a cash break-even at $22,000–$23,100/day and a 93% payout ratio maintained.

Strategic Rationale, Market Position, and Outlook

• The acquisition solidifies BW LPG as the world's largest VLGC operator, with the highest number of dual-fuel and scrubber-fitted vessels, and a 14% share of the global VLGC fleet.

• Enhances commercial scale, operational leverage, and earnings potential in a robust VLGC market, with significant synergy and improved dividend capacity anticipated.

• Supports long-term commitment to LPG shipping and dual-fuel technology, reducing emissions and costs.

• Market fundamentals remain strong, with U.S. and China LPG export growth, high Asian demand, and newbuild deliveries abating; fleet growth over the next 18 months is less than 5% of the total VLGC fleet.

• Dual listing on Oslo and NYSE has improved stock liquidity, investor base, and capital market platform, facilitating this transaction.