Frontline 2012 to take stake in VLGC operator Avance

AUGUST 22, 2013 — VLGC (Very Large Gas Carrier) operator Avance Gas Holding Ltd. is set to get more ships and a new shareholder: John Fredriksen’s Frontline 2012.

Stolt-Nielsen Gas, Sungas Holdings Ltd. and Transpetrol Shipping Ltd. had been equal owners of the Avance Gas VLGC fleet, but Transpetrol announced its withdrawal in July, taking back two ships that it had contributed and reducing the fleet to six ships.

Today, Stolt-Nielsen Limited (OSE: SNI) reported that an outline agreement has been reached that will see Frontline 2012 become a shareholder in Avance Gas. Following the expected transaction, Frontline 2012, Stolt-Nielsen Gas and Sungas will exercise equal control over Avance,

As part of deal, Frontline 2012 and AGHL will enter into discussions regarding the purchase by Avance of eight 83,000 cu. m VLGC newbuilds from Frontline 2012. The ships have been ordered by Frontline 2012 from the Jiangnan Changxing Shipyard in China, with deliveries expected to take place between mid 2014 and end 2015.

Commenting on the transaction, Niels G. Stolt-Nielsen, Chief Executive Officer of Stolt-Nielsen Limited, said, “The acquisition of shares in AGHL by Frontline 2012 is a further step in AGHL’s consolidation strategy of the VLGC market. With three strong owners, it is the company’s plan to continue to focus on second-hand tonnage, mergers and acquisitions. With rising U.S. exports of LPG from shale gas resources and with continued growth in LPG exports from the Middle East and West Africa, the dynamics of this transportation market are improving in line with our expectations. It is the owners’ plan to do an OTC listing in Oslo followed by an IPO.”

The Chairman of Frontline 2012, John Fredriksen, said in a comment, “We are pleased to be able to enter into a deal with Stolt-Nielsen and Sungas. We will get immediate market exposure to what today is a healthy freight market. With its existing six modern VLGCs, a solid operation, and strong owners, Avance Gas is well positioned to grow and act as a major consolidator in the large LPG market.”

It is Frontline 2012’s intention to dividend out approximately 20% of the shares it receives in AGHL directly to its shareholders in order to secure an immediate OTC listing of AGHL.