BW LPG Launches $300 Million Convertible Bond Offering to Support Fleet Expansion
BW LPG Limited has announced the launch of an offering of approximately $300 million in senior unsecured convertible bonds, with the proceeds expected to support the company’s ongoing fleet expansion program and broader corporate activities.
The company, which is listed on the Oslo Stock Exchange under the ticker BWLPG and on the New York Stock Exchange under the ticker BWLP, said the bonds will mature in 2031 and will be convertible into newly issued shares of BW LPG.
The financing initiative is intended to provide BW LPG with additional capital as it advances a newbuild program involving eight Panamax very large gas carriers, or VLGCs, being constructed in cooperation with Hyundai Heavy Industries. In addition to partly financing the vessel construction program, the company plans to use the net proceeds from the offering for general corporate purposes.
The launch of the convertible bond offering reflects BW LPG’s continued focus on fleet development and financial flexibility as the company positions itself to expand its operations in the global liquefied petroleum gas shipping market.
Convertible Bond Offering
The proposed senior unsecured bonds will have an aggregate principal amount of approximately $300 million and are scheduled to mature on September 9, 2031, unless they are previously converted, redeemed, purchased, or cancelled in accordance with the terms and conditions governing the securities.
Each bond will have a denomination of $200,000 and will be issued at par. BW LPG expects the bonds to carry an annual interest rate of between 2.00% and 2.50%.
Interest will be paid semi-annually in arrears in equal installments.
The final coupon rate and other terms of the transaction are expected to be determined through the bookbuilding process for the offering. BW LPG said the bookbuild would begin immediately following the announcement and could close at short notice, depending on investor demand and market conditions.
The company expects to announce the final terms of the offering separately after the completion of the bookbuilding process.
Settlement and delivery of the bonds are expected to take place on September 9, 2026, which will serve as the issue date for the securities.
Funding Eight New Panamax VLGCs
A principal purpose of the proposed financing is to partly support BW LPG’s newbuild program with Hyundai Heavy Industries for eight Panamax VLGCs.
The investment program represents an important component of BW LPG’s fleet development strategy. VLGCs play a central role in the transportation of liquefied petroleum gas and other gas products across international markets, connecting producing regions with major consuming markets.
By securing additional financing through the convertible bond offering, BW LPG is seeking to support its planned capital expenditure while retaining flexibility in how the company manages its broader financial resources.
The net proceeds from the transaction are also intended to be available for general corporate purposes. This could provide the company with additional financial capacity as it manages its existing operations, fleet investments, financing requirements, and other strategic priorities.
Convertible bonds can offer companies access to capital while providing investors with the potential to participate in future equity appreciation through the conversion feature of the securities.
Conversion Terms and Premium
The bonds will be convertible into new shares of BW LPG.
The initial conversion price will be established at a premium of between 35% and 40% above the share reference price. The reference price is expected to be based on the placement price of an existing BW LPG share determined through the concurrent delta placement associated with the transaction.
The conversion price will subsequently be adjusted downward by the amount of BW LPG’s cash dividend of $0.95 per share, which is expected to be paid on or around September 16, 2026.
The ex-dividend date for the payment is September 7, 2026.
In addition to this initial adjustment, the conversion price will be subject to customary adjustments consistent with market practice and the detailed provisions included in the bond terms.
BW LPG also said the bonds will contain dividend protection provisions. These provisions are designed to provide adjustments to the conversion price under circumstances described in the bond documentation, including the treatment of dividends in accordance with the bond terms.
The final conversion price will therefore be determined following the completion of the bookbuilding and pricing process, based on the applicable conversion premium and share reference price.
Redemption at Maturity
Unless the bonds are converted into shares, redeemed before maturity, or purchased and cancelled in accordance with their governing terms, BW LPG will redeem the securities at par on September 9, 2031.
The maturity date represents the scheduled end of the five-year financing instrument, giving investors a defined period during which they may retain the bonds, receive interest payments, and potentially convert their holdings into BW LPG shares if the relevant conditions make conversion attractive.
The bond terms also provide BW LPG with certain options to redeem the outstanding securities before the maturity date.
Under the proposed terms, the company may redeem all, but not only some, of the outstanding bonds at their principal amount from September 30, 2029, under specified circumstances.
One of these circumstances relates to the value of the shares underlying the bonds. BW LPG may exercise the redemption option if the parity value of the underlying shares reaches or exceeds $260,000 on at least 20 dealing days during a period of 30 consecutive dealing days.
The relevant 30-day period must end no more than five dealing days before BW LPG provides the redemption notice to bondholders.
The company may also redeem all of the bonds if 20% or less of the aggregate principal amount originally issued remains outstanding.
These provisions could allow BW LPG to simplify its capital structure under certain circumstances as the number of outstanding bonds declines or as the value of the underlying shares changes.
Investor Early Redemption Rights
Bondholders will also receive certain protections and early redemption rights under the proposed terms.
Holders will be entitled to require early redemption of their bonds at the principal amount on the third anniversary of the bond issue.
In addition, investors may be entitled to require early redemption if certain specified corporate events occur.
These events include a change of control of BW LPG, a free float event relating to the company’s shares, or a delisting event involving the shares.
The precise definitions and conditions associated with these events are set out in the bond terms.
The provisions are intended to establish circumstances under which bondholders can seek repayment of their principal before the scheduled 2031 maturity date.
Concurrent Delta Placement
In connection with the convertible bond offering, the sole placement agent intends to organize a concurrent placement of existing BW LPG shares.
The transaction, referred to as the Concurrent Delta Placement, is expected to take place at the same time as the placement of the bonds.
According to the company, the placement agent will organize the share placement solely outside the United States and will target non-U.S. persons participating in offshore transactions in accordance with the Category 2 requirements of Rule 903 of Regulation S under the U.S. Securities Act of 1933, as amended.
The Concurrent Delta Placement will be conducted on behalf of certain subscribers to the bonds that wish to sell existing BW LPG shares in short sales.
These transactions are intended to help such bond investors hedge the market risk associated with their investment in the convertible bonds.
The placement price for the shares is expected to be determined through an accelerated bookbuilding process conducted by the sole placement agent.
BW LPG emphasized that it will not receive any proceeds from the sale of shares through the Concurrent Delta Placement.
The share transaction is therefore separate from the capital being raised directly through the convertible bond offering.
Accelerated Bookbuilding Process
The bonds will be offered through an accelerated bookbuilding process.
This process will be directed solely at institutional investors that are not U.S. persons and are located outside the United States in transactions relying on Regulation S under the Securities Act.
The offering will also exclude investors in Australia, Canada, Japan, South Africa, and other jurisdictions where the offering or sale of the securities would be prohibited under applicable law.
The accelerated bookbuilding structure allows the terms of the offering to be determined based on investor demand over a compressed time period.
BW LPG said the bookbuilding process would commence immediately after the announcement and could close at any time on short notice.
The final terms are expected to be determined following completion of the bookbuild later on the day of the announcement or during the following morning before European markets open.
A separate announcement is expected to provide details regarding the final principal amount, coupon, conversion terms, and other key elements of the transaction once investor demand and pricing have been finalized.
Supporting BW LPG’s Growth Strategy
The approximately $300 million financing initiative provides BW LPG with a new source of capital as it advances its planned vessel expansion program.
The proceeds are expected to partly finance the construction of eight Panamax VLGCs with Hyundai Heavy Industries, while also supporting general corporate purposes.
The convertible bond structure combines fixed-income characteristics, including regular interest payments and repayment at maturity, with an option for investors to convert the bonds into BW LPG shares.
For BW LPG, the transaction is designed to provide long-term funding extending to 2031 while supporting the company’s planned investment program.
With settlement expected on September 9, 2026, the company is moving quickly to finalize the transaction through the accelerated bookbuilding process.
Once completed, the offering is expected to provide BW LPG with additional financial resources to support its newbuild program and ongoing corporate activities, while the concurrent delta placement is intended to enable participating bond investors to manage the market exposure associated with the convertible securities.
The final outcome of the offering, including the definitive interest rate, conversion price, and final transaction terms, will be announced separately following the completion of the bookbuilding process.
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