BW LPG seeks "constructive dialogue" with Aurora

Photo courtesy of BW LPG.

(Reuters) BW LPG, the world's largest LPG shipper, has raised its stake in smaller rival Aurora LPG by 10% to 29.83%, however, it has declined to say if it plans to bid for Aurora.

If it crosses the 30% ownership threshold, a bid becomes compulsory.

"We don't comment on our future strategic direction or investment plans but we look forward to a constructive dialogue with Aurora's management team and board," BW LPG investor relations spokesman John Papaioannou told Reuters.

BW LPG also bought $6.9 MM worth of Aurora's senior unsecured bond, maturing on August 9, 2017.

Speaking of the the purchase of Aurora bonds, John Papaioannou said, "We see this purchase as a good way to protect our equity investment in the company."

Spot rates for very large gas carriers have dropped from around $50,000/day in January to currently below $10,000/day.

"Our view is that the market can remain low for the foreseeable future," Papaioannou said

"We see where demand growth is coming from and that is mainly export growth out of the US and natural export growth out of the Middle East (Saudi/Iran), and then you have some West African volume coming online but over the same corresponding period you have 25-30 new VLGCs in the water as well. So our view is that the market can remain low for the foreseeable future," Papaioannou said

The case for M&A was at best unclear, he said.

"To be honest we don't have any evidence that consolidation helps, perhaps it can, perhaps it doesn't."

"But from our view this is just an opportunity we had, to increase our position in Aurora at attractive prices. In general, this purchase is in line with our overall strategy to invest countercyclically and grow in market downturns."

BW LPG owns and operates 41 gas carriers, of which 36 are VLGCs and 5 LGCs.

Aurora LPG owns and operates 9 VLGCs.

Reporting By Ole Petter Skonnord; Editing by Terje Solsvik

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