I.M. Skaugen ASA, Oslo (IMS) and GATX Capital Corp. of USA has established another 50/50 joint venture and, on this basis we have entered into a preliminary agreement with the Zhonghua Shipyard in Shanghai, China, for an order of 2 more ethylene LPG vessels. The previous order for 4 vessels of 8,400 cbm size ethylene LPG gas carriers are at the same yard, and the new order is part of the option agreement program that we have with the shipyard. The agreement for 2 vessels is subject to our formal declaration of the option as well as miscellaneous customary issues regarding the shipbuilding contract. We plan to clear all these and make the contract with the shipyard firm by June this year.
The 2 new vessels are of 10,000 cbm size and have about 20 % more cargo carrying capacity than our previous order for 4 vessels made in August 2000. With a contract price of USD 21.5 million per vessel the delivered cost is only about 2.7 % higher than the 8,400 cbm vessels ordered last year.
IM Skaugen will issue a maximum of NOK 124 million convertible bond in the Norwegian bond market to provide part of the risk capital for the project. This will be arranged through Pareto Securities ASA which has put together a guarantee consortium for the amount of NOK 124 million on April 25, 2001. As per the partnership agreement with GATX Capital have joined the project and on same basic terms as they did with the four 8,400 cbm vessels ordered at the same yard last year.
The weighted average cash cost of capital for this project, inclusive of all the related risk capital is estimated by us to be approx. 7.2%.
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