Business Context and Reporting Period
This Form 6-K filing by Golar LNG Limited, dated August 5, 2009, announces a major corporate restructuring and a planned equity offering. The company is creating a new Bermuda-based subsidiary, Golar LNG Energy Limited ("Energy"), to house assets not employed on long-term charters. The remaining parent company, Golar, will retain a low-risk profile focused on long-term chartering.
Key Financial Metrics and Transaction Details
- Asset Transfer Value: The gross value of assets transferred from Golar to Energy (excluding the "Golar Freeze" vessel) is USD 824 million based on book values as of June 30, 2009.
- Debt Obligations: The debt obligations of the transferred subsidiaries (excluding "Golar Freeze") total USD 487 million.
- Net Consideration: The net consideration due to Golar from Energy is USD 337 million.
- Equity Settlement: USD 337 million of the net consideration will be settled by Energy issuing 168.5 million new ordinary shares to Golar at a subscription price of USD 2.00 per share.
- Private Placement: Energy intends to raise USD 150 million through a private placement of 75 million new shares (plus a potential 10 million share "greenshoe" option) at USD 2.00 per share.
- Ownership Dilution: If the private placement is successful, Golar's ownership in Energy will dilute from 100% to approximately 69%.
- Forward Revenue: The remaining Golar entity has forward revenues of approximately USD 1.9 billion secured from solid counterparties.
Material Changes and Asset Allocation
The restructuring separates Golar's portfolio into two distinct entities:
- Golar LNG Energy Limited (New Subsidiary): Will hold 4 modern LNG carriers, 3 vessels built in the 1970s, a 50% interest in another 1970s vessel, a 13.6% interest in LNG Ltd., the current project portfolio, and certain financial obligations including swap arrangements. It will also acquire the "Golar Freeze" vessel (scheduled for FSRU conversion) via a USD 31 million seller's credit.
- Remaining Golar LNG Limited: Will retain 5 LNG carriers (including "Golar Freeze" pending conversion) and focus on long-term charters. It will retain risks and benefits associated with leasing arrangements for specific 1970s vessels.
Outlook, Management Commentary, and Risks
Strategic Rationale: The restructuring aims to create an aggressive, well-funded mid-stream LNG company (Energy) focused on regasification, liquefaction, transport, and trading, while the parent company maintains a high dividend capacity with minimal capital expenditure requirements.
Management: Energy will be managed by Golar Management (UK) Ltd., with Mr. Oscar Spieler recruited as the person overall responsible for Energy's administration.
Contingencies: Completion of the restructuring is conditional upon Energy successfully raising the USD 150 million in new equity. The private placement is fully underwritten by World Shipholding Inc., Golar's largest shareholder.
Listing Plans: Energy intends to list on the Oslo OTC market following the private placement, with a full listing on a recognized stock exchange planned before the end of 2009.
Key Facts for Investor Verification
- Confirmation that the USD 150 million private placement by Energy is successfully closed.
- Verification of the market value of the 13.6% stake in LNG Ltd. as of July 31, 2009, which affects the final consideration calculation.
- Assessment of the negative value of interest rate swaps transferred to Energy as of July 31, 2009.
- Timeline for the conversion of the "Golar Freeze" vessel to an FSRU and the exercise of the option to reacquire it.
- Confirmation of the listing status of Energy on the Oslo OTC market and subsequent full exchange listing.