Capital Product Partners seals $3.1 billion acquisition of 11 LNG carriers amid strategic transformation
After its recently announced pivot towards the LNG shipping sector, New York-listed shipowner Capital Product Partners L.P. has closed the umbrella agreement initiated last November, paving the way for the acquisition of 11 newbuild liquefied natural gas carrier vessels.
As reported by Offshore Energy, CPLP, a Marshall Islands master limited partnership, entered into an umbrella agreement with Capital Maritime & Trading Corp. and Capital GP on November 13, 2023, providing for the acquisition of eleven newbuild LNG carriers from Capital Maritime.
“CPLP today entered into 11 share purchase agreements to acquire 100% of the equity interests in each vessel-owning company of the vessels,” CPLP said on Thursday, December 21.
The total acquisition price for the 11 vessels stands at an impressive $3.13 billion. Each vessel boasts a substantial capacity of 174,000 cbm and is either built or under construction at Hyundai Heavy Industries Co., and Hyundai Samho Heavy Industries Co. Ltd., South Korea.
Based on the latest update, the company closed the acquisition of the owning company of LNG carrier Amore Mio I, and the vessel was delivered to the partnership. The partnership paid an aggregate acquisition price of $141.7 million for the vessel.
Furthermore, the partnership is poised to continue its acquisitions, with an additional six vessels expected to join the fleet upon completion of construction. The ships in question are LNG/Cs Axios II, Assos, Apostolos, Aktoras, Archimidis, and Agamemnon.
A deposit of 10% of the aggregate acquisition price, totaling $174.4 million, has been paid to Capital Maritime, with the remainder set to be settled upon delivery, reaching a cumulative $1,569.6 million.
Simultaneously, the acquisition of 100% equity interests in the vessel-owning companies of the LNG carriers Alcaios I, Antaios I, Athlos, and Archon has been concluded. An aggregate purchase price of $138.1 million was paid for these vessels, and the partnership has assumed the obligations of the respective shipbuilding contracts with Hyundai, with an additional $909.9 million expected in pre-delivery and delivery installments.
To finance a portion of these acquisitions, CPLP carried out a $500.0 million rights offering. The offering garnered subscriptions for 445,988 common units at an exercise price of $14.25 per common unit. Capital Maritime purchased 34,641,731 common units for an aggregate amount of $493.6 million, solidifying its ownership of 72.3% of the common units outstanding.
In addition, Capital Maritime issued an unsecured seller’s credit of $220.0 million, featuring an annual interest rate of 7.5% and a maturity date of June 30, 2027.
Post-closing, CPLP plans to dispose of its container vessel fleet signaling an exit from the market entirely. The partnership has also committed to a change of name and aims to convert from a Marshall Islands limited partnership to a corporation with customary corporate governance provisions by June 21, 2024.
Furthermore, Capital Maritime has granted Capital Product Partners exclusive rights, including first refusal on transfers of LNG/C vessels, newbuild opportunities, and employment options in the LNG carrier sector. Additionally, the company was also offered first refusal on transfers of liquid CO2 carriers and two ammonia carriers the company recently ordered until Capital Maritime and its affiliates own at least 25% of outstanding common units, with similar employment rights if Capital Product Partners acquires one of these vessels.
“We are very pleased to see the closing of this very important first step in the transformation of the Partnership into a one of the largest US-listed owners of two stroke, latest generation LNG carriers. Together with the other steps that we have laid out such as the transformation of the partnership into a corporation, we hope to over time attract additional investor interest and allow our equity valuation to move closer to our peers,” Jerry Kalogiratos, Chief Executive Officer of CPLP’s General Partner, said.
CPLP currently owns 23 vessels, including eight LNG carrier vessels, 12 Neo-Panamax container vessels, and three Panamax container vessels. It has agreed to acquire an additional 10 LNG carriers between 2024 to 2027.