Debt Financing


The focus of BW LPG’s financial strategy is to ensure that the company has adequate liquidity appropriate to its goals, strategy and risk profile. LPG shipping is a seasonal and cyclical industry that requires the company to have a robust capital structure. 

BW LPG aims for leverage ratio of 50-60% in order to maximise shareholder value, subject to maintaining sufficient financial flexibility to provide reasonable assurance as to the ability to meet financial obligations taking into consideration the potential for changing economic conditions. BW LPG regularly monitors and manages its capital requirements in light of changes to economic and industry conditions. 

In determining financing appropriate to business growth and investments, BW LPG considers a range of financing options typically available from the private or public debt and equity markets, giving consideration to the overall business strategy, the appropriateness of products to the specific financing need and the broader context of the organization and its balance sheet and capital commitments, and also considering economic conditions at that time and projected into the future.

Current Loan Facilities

In November 2013, BW LPG Holding Limited, a subsidiary of BW LPG, entered into a USD 700 million Senior Secured Term Loan and Revolving Credit Facility (the IPO Facility). In February 2015, BW LPG Holding Limited entered into a USD 400 million Senior Secured Term Loan Facility to finance seven of the company’s newbuilding vessels (the ECA Facility). The IPO Facility and the ECA Facility together are referred to as the “Facilities”.


The IPO Facility has a term of seven years from the date of drawdown of the IPO Facility, consisting of a USD 500 million term loan facility (the Term Loan) and a USD 200 million revolving credit facility (the RCF), whereas the ECA Facility has a term of 12 years from each drawdown (seven drawdowns in total – one for each newbuilding vessel)

The Term Loan under the IPO facility is amortised to a balloon amount of 125.0 million to be fully repaid on the final maturity date in November 2020. The RCF is not amortising and any amount drawn can be repaid, and any amount undrawn can be drawn / re-drawn, throughout the term of the IPO Facility.

The ECA Facility is amortised to a balloon amount representing 33% of each drawdown to be fully repaid on the final maturity date of the respective drawdowns. Final Maturity of the ECA Facility is expected in Q2 2028. 


Interest on the drawn amounts under the IPO facility is payable at a margin of 1.9% over LIBOR until maturity of the IPO Facility in November 2020, whereas that for the ECA Facility, the interest payable is at a margin of 1.7% over LIBOR till maturity of each drawdown.

Security package

The IPO Facility is secured against a portfolio of assets owned by the Company. The ECA Facility is secured against the seven newbuilding vessels financed by the Facility. The Company can move any security vessel out of the security package by providing another similar vessel as substitution or by repaying or cancelling an amount in the Facilities equal to the fair market value of the security vessel withdrawn divided by the fair market value of all security vessels multiplied by the outstanding amount or commitment under the Facilities. 


The Company is required to comply with loan-to-value covenants and a number of financial covenants.

The key covenants that are to be maintained under both the Facilities are as follows:

1.   Fair Market Value of the Security Vessels to be equal to or is higher than 125% of the outstanding loan amount;

2.   Adjusted Equity Ratio to be equal to or higher than 35%;

3.   Adjusted Equity to be equal to or more than USD 350 million; and

4.   Cash and Cash Equivalents added to available credit lines under existing facilities to be at all times more than USD 50 million.

Note:   (i) Adjusted Equity Ratio is Adjusted Equity expressed as a percentage of the sum of Liabilities and Adjusted Equity.

(ii) Adjusted Equity is the total equity as presented in the company’s consolidated financial statements after adjusting the vessels’ values to their Fair Market Values.

(iii) Cash and Cash Equivalents are as presented in the Company’s consolidated financial statements.

Neither the IPO Facility nor the ECA Facility prohibits the Company from paying dividends so long as an event of default has not occurred and the Company is not, and after payment of dividend would not be, in breach of any covenant. Both the Facilities also do not contain restrictions beyond the financial covenants against incurring further external financing.

Both our financing Facilities contain certain change of control provisions. Pursuant to the change of control provisions, if Sohmen family interests cease to hold more than 50% in BW Group; BW Group ceases to hold more than 35% in the Company; or another person or entity than BW Group acquires more than 50% in the Company; the Facilities must be cancelled and repaid in full. The Company has a general undertaking in the Facilities to remain listed at all times on the Oslo Stock Exchange or any other exchanges acceptable to the lenders.

The Company has at all times the option to be released from all obligations under the Facilities by repaying and cancelling all amounts under the Facilities without any premium or penalty.