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Flex LNG to become gas giant through Exmar and Geveran merger

Flex LNG to become gas giant through Exmar and Geveran merger
Flex LNG is to acquire LNG vessels and other assets from Belgium’s Exmar and Fredriksen-led Geveran in a deal that will create one of the largest independent floating LNG infrastructure companies in the world.

After the transaction is completed, Flex will become known as Exmar LNG Ltd, which will have an enterprise value of $2.3bn, Flex said in a filing to the Oslo stock exchange today.

The two companies will receive equity in Exmar LNG in return for their asset divestments. Exmar will hold a 64.6% interest in Exmar LNG, with Geveran holding a 30.7% stake. Like its predecessor Flex, Exmar LNG will continue to be listed on the Oslo stock exchange.

The transaction is expected to close during the third quarter of this year, subject to due diligence and approvals from regulators, shareholders and other third parties.

Under Norwegian law, as majority shareholder Exmar is obliged to make a bid for the remaining shares in Exmar LNG within four weeks of the transaction closing. Geveran will not tender its shares in the mandatory offer.

Six LNG carriers, of which four are newbuildings, are included in the acquisition; plus five floating storage and regasification Units (FSRUs), including one still under construction that will become the world’s first regasification barge.

In addition, two floating liquefaction units (FLNG) will be acquired, one of which is Caribbean FLNG (pictured). The unit is scheduled to arrive in the first three months of 2016, and has secured a 15-year timecharter to Pacific Rubiales but has no employment lined up after start-up of Pacific Rubiales’ offshore gas play in Colombia was postponed this year due to “unfavourable market conditions”.

The deal also includes firm timecharters from “reputable companies” for the LNG carriers, which combined make up 80 years’ of employment for the units. The vessels have been fixed on timecharters that are 11 years long, on average.

The employment contracts included in the deal also comprise five different FLNG exclusivity agreements and four such deals for the FSRUs.

Nicolas Saverys, CEO and managing director of Exmar, is expected to become chairman of the board of Exmar LNG. Bart Lavent will be CEO of the new company; he is currently managing director of LNG upstream/downstream for Exmar.

“Since completing the restructuring of the company it was clear that the next step was to create strong partnerships with industry players to grow the company into a major force in the LNG value chain,” said David McManus, chairman of Flex LNG’s board of directors.

“This process started with the investment in the company by Geveran and I believe that now combining our efforts with Exmar, a company that has been at the forefront of the technological developments for decades, positions the company to maximise shareholders’ value in the long term.”

John Fredriksen added: “I have known Nicolas Saverys and Exmar for more than 30 years. They have developed an impressive technical platform within the LNG industry. Together I believe we are uniquely positioned to grow and
develop this company to the benefit of all shareholders. I am very enthusiastic about this partnership.”

Flex LNG will acquire 100% of the shares in Exmar Energy Hong Kong Limited in order to acquire two LNG carriers, five FSRUs and two FLNG units from Exmar. In return, the Belgian company will receive 323,723,775 new shares in Flex. Of these shares, up to 45,221,115 are callable by Flex contingent on the earnings of Caribbean FLNG. 

Geveran will transfer its two LNG carriers (still under construction) via special purpose vehicles to Flex in exchange for 49,566,724 shares.

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