BW LPG Limited (NYSE:BWLP) shares fell 5.4% on Wednesday after the company announced the placement of $300 million in senior unsecured convertible bonds due in 2031.
The bonds can be converted into new BW LPG shares, with proceeds from the offering expected to be used partly to finance the company’s newbuild programme with Hyundai Heavy Industries and for general corporate purposes.
The newbuild programme covers eight Panamax very large gas carriers.
Convertible Bonds Carry 2.25% Annual Coupon
BW LPG issued the bonds at par in denominations of $200,000, with a fixed annual coupon of 2.25%.
Interest will be paid semi-annually in March and September, with the first payment scheduled for March 9, 2027.
The bonds are scheduled to mature on September 9, 2031, unless they are converted, redeemed or cancelled before that date.
Settlement of the offering is expected around September 9, 2026.
Initial Conversion Price Set at $30.4870 Per Share
The initial conversion price was set at $30.4870 per share, representing a 40% premium to the reference share price established through a concurrent placement of existing shares.
The conversion price was adjusted downward to account for BW LPG’s cash dividend of $0.95 per share, which is expected to be paid around September 16, 2026.
Conversion of the bonds into newly issued shares could increase the company’s outstanding share count. The extent of any future dilution will depend on whether and to what degree bondholders exercise their conversion rights.
Concurrent Share Placement Used for Hedging
Alongside the convertible bond transaction, the sole placement agent conducted a placement of existing BW LPG shares on behalf of certain bond subscribers seeking to hedge their market exposure.
BW LPG did not receive any proceeds from the concurrent placement because it involved existing rather than newly issued shares.
The supplied information does not specify the number of existing shares placed through the transaction.
BW LPG Sets Early Redemption Conditions
BW LPG may redeem all outstanding bonds at their principal amount after September 30, 2029, provided certain conditions are satisfied.
The company may also redeem the remaining bonds if 20% or less of the original principal amount remains outstanding.
Bondholders have the right to require early redemption at the principal amount on the third anniversary of issuance.
Early redemption rights also apply following specified events, including a change of control, a free float event or a delisting event.
The 5.4% decline in BW LPG shares followed the announcement of the convertible bond transaction. However, the extent to which individual terms of the financing or the concurrent placement contributed to the share-price movement cannot be established from the supplied information.