Minority shareholders shun BW Gas rights issue

Tony Gray - Monday 23 March 2009

MINORITY shareholders in BW Gas have largely shunned the Oslo-listed company’s rights issue, resulting in the Sohmen family’s majority stake increasing to more than 90%. The dominance of the family’s shareholding has encouraged analysts to question whether BW Gas should remain a public company. Subscriptions were received for only 10.6m of the 85.4m shares on offer to minority shareholders at NKr18.50 each, a take up rate of 12.5%.

Minority shareholders’ reluctance to commit to the rights offering will result in the Sohmen family increasing its already dominant stake in BW Gas from 76.2% to just above 90%. The rights issue for minority shareholders only was designed to allow them to avoid dilution of their position in BW Gas following the restructuring that sees the company acquiring four LNG carriers from the Sohmen family in exchange for shares. The four vessels — the 148,471 cu m, 2006-built LNG Lokoja, the 148,452 cu m, 2007-built LNG Kano, the 148,534 cu m, 2008-built LNG Ondo and the 148,565 cu m, 2008-built LNG Imo — were valued at $720m.

BW Gas is paying for the vessels, all of which are fixed on 20.5-year charters to Nigeria LNG and are already managed by the company, by issuing 273.5m shares valued in the deal at NKr18.5 each, the same level as the rights offering to minority shareholders. It could not be established at the time of going to press whether John Fredriksen, who is BW Gas’s second largest shareholder through Geveran Trading’s 5.3% stake, participated in the rights offering. However, analysts thought it unlikely that Mr Fredriksen would have participated given that BW Gas’s share price has been below the NKr18.5 level of the rights offer for the past month, as well as the prospect of the Sohmen family tightening their grip on the company.

Mr Fredriksen has been critical of the restructuring proposal put forward by BW Gas and the Sohmen family since it was announced in January. BW Gas’s holding company is registered in Bermuda and under Bermudian law there is no obligation for the Sohmen family, having reached 90%, to make a mandatory offer to minority shareholders and take the company private. However, one analyst commented: “In reality, my gut feeling is that there is no longer a reason for the company to be quoted. “It is possible the Oslo Stock Exchange may decide the shares are not widely enough spread and say ‘we don’t want you listed’.”

Source:Lloyd's List