PLEASE NOTE THAT THIS STOCK EXCHANGE NOTICE HAS PREVIOUSLY BEEN DISTRIBUTED ON EURONEXT NOTC ON DECEMBER 8, 2021.
Himalaya Shipping is pleased announce it has today filed an application with the Oslo Stock Exchange for listing at the Euronext Growth. The first day of trading is expected to be around 22 December.
Market
The Capesize index rate has to date in 2021 been $33.5k per day which is 150% higher than the level in 2020. Spot rates peaked in September at $85k per day and are currently at $43k/day. The Company expects the Himalaya vessels to generate a premium of 30-40% on top of the Capesize index ship rate.
The dry bulk orderbook is at a 30 year low of 6%. Despite a very strong market in 2021, there have been few orders of new tonnage. New environmental regulations become effective in 2023. A vessel built before 2010 will in most instances have to reduce speed or to make other modifications to meet the new standards. The continuous tightening of the emission rules means that by 2025, as much as 60-70% of the fleet will need to reduce speed to meet the requirements. This will have significant impact on supply of dry-bulk vessels.
American Bureau of Shipping, the appointed classification society, recently calculated the expected Himalaya EEDI to 1,51, about 30% better than a 2021 built standard Newcastlemax. The Company’s expects its vessels to be among the 1% top vessels delivered, and the vessels are estimated to meet all emission requirements until 2035. This means that the Company is well positioned to benefit from the coming changes to the environmental framework in the shipping industry. We believe based on the current orderbook and the expected global trade growth, that fleet utilisation will further improve in the coming years.
Delivery and pre-delivery financing
Himalaya have signed term-sheets with various leasing institutions for pre-delivery and delivery financing of the twelve vessels at attractive terms. Himalaya has so far paid 10% of the total instalments for the twelve vessels. The sale and leaseback financing is expected to finance the remaining 90% of the instalments to the shipyard. The Company expects credit approval of these term-sheets to be granted and to enter into final documentation prior to the next shipyards instalments.
Charters
Himalaya has been approached by operators and end-users inquiring about chartering the vessels. The potential charterers appreciate the modern tonnage, as well as the reduced CO2 emissions from LNG. Himalaya aims to enter into index related charters for a significant part of its fleet. Hence, the Company will be positioned to benefit from a potential tightening market, with added premium, due to the Himalaya vessels’ size, fuel efficiency and potential LNG saving. The Company believes that the environmental impact the vessels will have will continue to strengthen the attractiveness of the Company’s vessels as the Company gets closer to delivery.
LNG propulsion
The Himalaya vessels have dual fuel LNG engines, meaning they can run on LNG or LSFO. The twelve Himalaya vessels, will when running on LNG, reduce the emission of 180.000 tonnes of CO2 pr year compared to standard capesize index vessels. This is equal to emissions from 40.000 cars and represent a 40% reduction in CO2 compared to similar index tonnage. The Company expects, based on feedback from serious charterers, that they will be willing to pay a premium on the Himalaya vessels due to these environmental aspects.
The current spot LNG prices are trading at a significant premium to traditional bunker fuel, however the long-term LNG prices are trading at a discount to oil. Lower LNG prices will give Himalaya a fuel cost benefit. The flexibility means we will be able to switch to the most economical fuel, taking into account fuel cost, CO prices, and environmental benefit. The LNG market is a seasonal market, where prices in the summer are significantly lower due to less heating demand and consequently the Company may be able to utilize these fluctuations to reduce fuel costs. The flexibility offered by the dual fuel engines, both in terms of potential savings, and future proofing the vessels, is expected to generate attractive returns on the extra $15 million these vessels costs compared to a standard Newcastlemax with scrubber. The vessels are designed with the optionality to convert to ammonia fuel, when such technology is proven and viable.
Return
The proposed financing structure will have a cash-breakeven including opex, debt service and G&A of around $22.5k per day, without any economic benefit from LNG fuel or reduced CO2 emissions. Based on full operation of all twelve ships at current spot capsize rates of $42k per day, with 35% premium for the ships, the expected payback of the total market cap is approx. 1.5 years.
Listing
The Company has filed its application for listing at Euronext Growth Oslo and expects that the first day of trading will be on or about 22 December 2021. The Company will trade under the ticker “HSHIP”. Himalaya also targets an up-listing to Euronext Expand during H1 2022. DNB Markets, a part of DNB Bank ASA will act as Financial Advisor in connection with the Listing. Ro Sommernes advokatfirma DA is acting as Norwegian legal counsel to the Company and MJM Limited is acting as Bermuda legal counsel to the Company.
For further information, please contact the contracted CFO, Vidar Hasund, at +47 913 61 726 / post@himalaya-shipping.com.
About Himalaya Shipping Ltd.
Himalaya Shipping Ltd. is an independent bulk carrier company, incorporated in Bermuda. The company has ordered 12 LNG dual fuelled Newcastlemax dry bulk carriers with delivery between Q2 2023 and Q4 2024.
Important notice:
This statement contains certain forward-looking statements (as such defined in Section 21E of the U.S. Securities Exchange Act of 1934, as amended) concerning future events, including possible issuance of equity securities of the Company. Forward-looking statements are statements that are not historical facts and may be identified by words such as "anticipate", "believe", "continue", "estimate", "expect", "intends", "may", "should", "will" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors, include, but are not limited to, the possibility that the Company will determine not to, or be unable to, issue any equity securities, and could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.
