Capital Link Insights
Navigator Gas has secured a $205.8 million financing package for two newbuild liquefied gas carriers under construction in China, marking the company’s first use of a Japanese Operating Lease with Call Option (JOLCO) structure as it advances a broader fleet expansion program.
Navigator Holdings Ltd. (NYSE: NVGS), announced today that the financing will support two vessels being built at Jiangnan Shipyard and China Shipbuilding Trading Co. under contracts signed in 2024. Both ships are scheduled for delivery in 2027.
As part of the arrangement, Navigator Gas has first secured a pre-delivery bridge loan of up to $164.6 million from BNP Paribas’ Tokyo Branch. The facility will cover as much as 80% of the company’s installment payments to the shipyard during the construction phase.
Once the vessels are delivered, the bridge financing will be refinanced through a $205.8 million long-term sale and leaseback transaction structured as a JOLCO. The company noted the arrangement will finance the full purchase price of both vessels while providing competitive funding terms.
The transaction represents NVGS’s first use of a JOLCO structure, a financing mechanism widely used in Asian shipping markets that combines Japanese equity investment with lease financing and purchase options. Under the agreement, the vessels will be sold upon delivery to special purpose entities acting as lessor owners and immediately chartered back to NVGS subsidiaries Navigator Polaris L.L.C. and Navigator Proxima L.L.C. through bareboat charters.
Navigator Gas will continue to control the commercial and technical management of the vessels, including crewing, maintenance, insurance and operational management. The company will also retain purchase options under the lease agreements, with the final option exercisable 8,5 years after delivery of each vessel.
The financing package includes customary security arrangements covering both the construction and post-delivery phases, including assignments of shipbuilding contracts and refund guarantees.
Gary Chapman, Chief Financial Officer, commented:
“This financing reflects our continued commitment to disciplined capital allocation and our ability and desire to access diverse and cost-effective funding solutions. The structure provides long-term financing, and the introduction of the JOLCO structure into Navigator’s portfolio marks a further step in the evolution of our funding strategy, again backed by high-quality financial partners whose support we greatly value. This financing also now marks the completion of funding for four of our six newbuild vessels on order, with financing for the remaining two vessels progressing well.”
About Navigator Gas
Navigator Holdings Ltd. (described herein as “Navigator Gas” or the “Company”) is the owner and operator of the world’s largest fleet of handysize liquefied gas carriers and a global leader in the seaborne transportation services of petrochemical gases, such as ethylene and ethane, liquefied petroleum gas (“LPG”) and ammonia and owns a 50% share, through a joint venture, in an ethylene export marine terminal at Morgan’s Point, Texas on the Houston Ship Channel, USA. Navigator Gas’ fleet consists of 54 semi- or fully-refrigerated liquefied gas carriers, 24 of which are ethylene and ethane capable. The Company plays a vital role in the liquefied gas supply chain for energy companies, industrial consumers and commodity traders, with its sophisticated vessels providing an efficient and reliable ‘floating pipeline’ between the parties, connecting the world today, creating a sustainable tomorrow.
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