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Pettersen: move will give all shareholders a more flexible corporate structure.
BW Gas has secured a five-year unsecured revolving credit facility from BW Group, the holding company of its majority shareholders, ultimately the Sohmen family.
The new loan arrangement will refinance an existing $1.5bn revolving credit facility, a move that was triggered by a huge back tax bill of NKr3.9bn inflicted on the company by the government’s new regime.
The tax hit resulted in BW Gas breaking its equity ratio covenants, although the company was granted temporary waivers for a period of 15 months.
“An immediate effect of the refinancing will be a removal of the waivers granted on the equity covenants in the existing loan agreement,” BW Gas said.
Terms and conditions offered under the new facility had been granted on “an arms’ length basis” and were considered “competitive” compared to offers received from the main banks in the present loan agreement.
BW Gas did not disclose the pricing of the new facility.
However, chief executive Jan Håkon Pettersen said BW Group had arranged a $3bn facility against its stronger balance sheet and offered BW Gas $1.5bn on the same terms.
“We are very pleased that our majority owner has decided to back the company during difficult times,” Mr Pettersen said.
“The back tax has coincided with a turbulent credit environment and a challenging market for gas transportation. With a refinancing in place we believe that the uncertainty regarding the company’s immediate funding requirements has been removed.”
The group is also establishing a new parent company in Bermuda, BW Gas Ltd, which will launch a one-for-one share exchange offer for the existing parent BW Gas ASA.
The intention is then that BW Gas Ltd will be listed on the Oslo Stock Exchange. BW Gas expects this transaction to be completed by the third quarter of 2008 and it will be subject to 90% acceptance.
“This transaction to create a new Bermuda parent company will give all shareholders a more flexible corporate structure for future investment and growth,” Mr Pettersen explained.
“While existing assets in the Norwegian tonnage tax regime are expected to remain in Norway, the transaction will allow choice of domicile for new vessels to be made with due regard to stability and competitiveness.”
BW Gas will not be alone in having this kind of corporate structure.
Frontline Ltd, one of the world’s largest tanker operators, is a Bermudian company whose shares are listed in Oslo and New York, and which has management operations in Oslo and London.
Some shipowners, with BW Gas in the vanguard, are mounting a legal challenge over the constitutional validity of the retroactive tax move by the Norwegian government.
The back tax is expected to rauise a total of NKr21bn, although one-third of this sum would be ring-fenced for environmental shipping initiatives.
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