Odfjell forms shipping venture for LPG, ethylene

Odfjell has entered into an agreement with affiliates of Breakwater Capital and Oak Hill Advisors (the partners) to form a LPG and ethylene (LPG/E) shipping joint venture.

Further, Odfjell reports that it has exercised its option for construction of four 22,000 cbm LPG/E gas carriers at Nantong Sinopacific, scheduled for delivery between September 2016 and June 2017. The contract price in total is in the region of $200 million.

In the LPG/E gas carrier segment, Odfjell currently owns and operates two 2008-built 9,000 cbm vessels, has four 17,000 cbm vessels under construction at Nantong Sinopacific, scheduled for delivery between October 2015 and May 2016, and the option for four vessels now being exercised.

In accordance with the agreement, Breakwater and Oak Hill Advisors have jointly agreed to invest approximately $50 million as consideration for a 50.0% equity interest in Odfjell’s LPG/E business. Further, Odfjell and thepPartners have each agreed to commit approximately $50 million to finance the growth of the joint venture.

Completion of the joint venture agreement is subject to customary conditions for closing including execution of the shipbuilding contracts related to the vessels. It is expected that completion will occur within the next three months.

Odfjell and the partners aim through consolidation and partnerships with other first-class operators to build a leading LPG/E shipping platform founded upon second-to-none operational excellence, a modern and eco-friendly fleet and a long-term market perspective.

"Odfjell is delighted to have Breakwater Capital and Oak Hill Advisors as its partner in the shipping segment of LPG and ethylene," said Jan A. Hammer, CEO of Odfjell. "Together, we will enhance our growth opportunities and broaden our capabilities."