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Dorian LPG to BW LPG: “What part of ‘no’ do you not understand?”

Written by Nick Blenkey
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JUNE 27, 2018 — Stamford, CT, headquartered Dorian LPG Ltd. (NYSE: LPG) has completed three financing agreements yielding aggregate proceeds of $65.1 million — and has reacted to the latest merger approach from BW LPG (see earlier story) by again offering to discuss buying BW LPG’s ECO ships.

Dorian LPG has used the proceeds from the financings to repay all remaining outstanding amounts due under a bridge loan facility with DNB Capital LLC. The financings have a fixed interest rate of 6% with tenors of 6 to 7 years.

John Hadjipateras, Chairman and Chief Executive Officer of Dorian LPG, commented, “We are pleased to have completed these financing transactions and to have fully repaid the DNB bridge loan facility. Dorian LPG is well positioned to perform through the cycle, including upcoming environmental regulations, with a well-capitalized balance sheet and a fleet of modern fuel efficient VLGCs that have delivered premium returns.”

In addition, in response to the letter sent by BW LPG Ltd. restating its unsolicited and conditional proposal to combine with Dorian in a stock-for-stock transaction, Mr. Hadjipateras commented:

“We have received today’s letter restating BW LPG’s proposal that has already been rejected by our board. Our board has been and will remain responsive to the views of our shareholders. Of note, to date, we have received letters from shareholders (other than the BW Group) representing less than 5% of our outstanding shares showing openness to a combination, including from a shareholder that has a long-term position in BW LPG. In contrast, our board, whose members are beneficial owners of more than 25% of our outstanding shares, has unanimously concluded that BW LPG’s proposal undervalues Dorian and is not in the best interests of Dorian and its shareholders. To cite a few key financial metrics, the proposed transaction would be dilutive to Dorian’s shareholders’ earnings in 2018, would create a more leveraged enterprise from Dorian’s perspective and fails to recognize that Dorian’s equity contribution to the combined enterprise would exceed 50% of the total, based on 2018 relative EBITDA and existing debt levels.”

“Also contrary to BW LPG’s assertion, we have not declined to engage with BW LPG. Rather, we have offered to meet with BW LPG to discuss an acquisition of BW LPG’s ECO-ships, to no avail. Our board is always open to opportunities that would enhance value for our shareholders and we are in regular communication with them. BW LPG’s wish to have Dorian’s shareholders subsidize its fleet renewal is not a reason compelling enough to divert us from our strategy to serve our own shareholders.”

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