BW LPG Limited reported the placement of a $300 million senior unsecured convertible bond offering, and its shares declined 5.4% on Wednesday following the announcement.
The notes, issued at par in $200,000 denominations, are due in 2031 and are convertible into newly issued ordinary shares. Company statements indicate the bond proceeds will be used in part to finance BW LPGs newbuild program with Hyundai Heavy Industries for eight Panamax very large gas carriers (VLGCs), with the remainder earmarked for general corporate purposes.
The bonds carry a fixed annual coupon of 2.25%, with interest payable semi-annually in March and September. The first interest payment is scheduled for March 9, 2027. The initial conversion price for the bonds was set at $30.4870 per share, which the company said represents a 40% premium to the reference share price used in a concurrent placement of existing shares.
BW LPG adjusted that conversion price downward to reflect a cash dividend of $0.95 per share, payable around September 16, 2026. The company also disclosed that, concurrently with the bond placement, the sole placement agent arranged a sale of existing shares on behalf of certain bond subscribers seeking to hedge their market risk. BW LPG stated it did not receive proceeds from that concurrent placement of existing shares.
Under the terms disclosed, the notes will mature on September 9, 2031, unless they are previously converted, redeemed, or cancelled. BW LPG retains an option to redeem all outstanding bonds at their principal amount after September 30, 2029, provided certain conditions are met or if 20% or less of the original principal amount remains outstanding.
Bondholders are afforded the right to require early redemption at the principal amount on the third anniversary of issuance. Early redemption can also be demanded upon the occurrence of specified events, including a change of control, a free float event, or a delisting event. The company expects settlement of the transaction to take place around September 9, 2026.
Context and mechanics
The securities were placed at par and denominated in $200,000 notes. Their fixed-rate coupon of 2.25% and semi-annual interest schedule create a predictable cash interest burden for BW LPG until conversion, redemption, or maturity. The conversion feature grants investors the ability to convert into new equity at the stated conversion price, which has been adjusted to reflect an announced cash dividend.
Market reaction
Following the announcement of the convertible bond offering and concurrent hedging-related sale of existing shares, BW LPGs stock fell 5.4% on the day of the disclosure.
Settlement and timelines
- Expected settlement date: around September 9, 2026.
- Scheduled maturity date: September 9, 2031.
- Optional company redemption: after September 30, 2029, subject to conditions or if 20% or less of original principal remains.
- Bondholder early redemption rights: on the third anniversary of issuance or upon specified corporate events.