With private equity help, Odfjell exercises newbuild options

MAY 16, 2015 — Here’s another example of private equity investing in newbuilding opportunities. Norway’s Odfjell SE reports that it has entered into an agreement with affiliates of Breakwater Capital and Oak Hill Advisors to form a liquefied petroleum gas and ethylene (LPG/E) shipping joint venture.

Odfjell also reports that it has exercised its option for construction of four 22,000 cu.m LPG/E gas carriers at China’s Nantong Sinopacific shipyard, 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 cu.m vessels, has four 17,000 cu.m 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% equity interest in Odfjell’s LPG/E business. Further, Odfjell and the Partners 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.

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

Jeppe Jensen of Breakwater Capital says: “We are pleased to be an integral part of a strong platform within the LPG/Ethylene segment. The combination of a modern fuel efficient fleet and two first class partners such as Odfjell and Oak Hill Advisors represented the perfect entry opportunity in a sector we have been and are excited about.”

SEB has acted as sole financial advisor and Thommessen has acted as legal counsel to Odfjell. Reed Smith LLP has acted as legal counsel to Oak Hill Advisors.

Breakwater Capital is an investment platform focused upon equity and credit opportunities exclusively within the maritime sector.

Oak Hill Advisors, L.P. is a leading independent investment firm with investment offices in New York and London and more than 20 years of experience investing in North America and Europe. Oak Hill Advisors has approximately 180 employees and more than $22 billion of capital under management. Oak Hill Advisors employs a fundamental, value-oriented investment strategy in making credit and equity investments on behalf of a diverse, global investor group.