Tuesday, November 30

Norwegian shipping company sued for fraud in the USA

Billions of dollars evaporated in an instant when Höegh LNG Partners collapsed on the New York Stock Exchange after a dramatic dividend cut. Now both the shipping company and several Höegh tops have been sued for allegedly misleading their own shareholders.

SUBJECT: Höegh LNG Partners. The picture shows the gas cargo ship Höegh Grace, which is owned by the parent company Höegh LNG Holdings.

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Two shareholders in the gas company Höegh LNG Partners have sued the company, as well as some former and current bosses and board members, for share fraud.

It emerges from the quarterly report of the company’s main owner, Höegh LNG, which was published on Thursday this week. The lawsuit was filed in a New Jersey district court in October-November.

The plaintiffs claim that the company failed to provide the market with significant information before dramatically cutting the quarterly dividend per share from NOK 3.9 to less than one øre on 27 July this year.

The share fell over 64 percent when the market opened the next day, and has subsequently fallen another 24 percent. Values ​​of NOK 3.8 billion have evaporated.

“Höegh LNG Partners believes the allegations are unfounded, and intends to defend itself vigorously against them,” the report said.

– We have no further comments, says CFO and acting CEO of Höegh LNG Partners, Håvard Furu, to E24.

Shipowner Morten W. Høegh previously represented the owner family on the board of Höegh LNG Partners, but resigned only weeks before the dividend cut.

Former CEO Sveinung Støhle announced his resignation in mid-October. Furu does not want to disclose which individuals have been sued.

– Have any financial claims been made in connection with the lawsuit?

– No, says Furu.

Got trouble with loan and shipping contract

Höegh LNG Partners was established by the Höegh LNG Group in 2014, and owns and operates four gas cargo vessels.

The business model has been about attracting favorable financing by distributing stable dividends from long-term freight contracts for natural gas.

The company is structured as a limited partnership, a form of company that was long very popular among American investors due to tax benefits, and has previously been used by, among others, John Fredriksen’s Seadrill and Tor Olav Trøim’s Golar LNG.

This summer’s unexpected dividend cut was partly explained by the fact that the shipping company struggled to land the refinancing of the LNG vessel Lampung, and thus had to save on its own cash.

Lampung’s charterer had refused to sign the necessary documents to secure the new credit facility, and then tried to terminate the entire lease.

Thus, alternative financing had to be secured before the existing loan matured at the end of September, and Höegh LNG Partners warned that this short deadline would provide worse terms than those originally negotiated.

In addition, the announcement stated that the parent company Höegh LNG Holdings had announced that it would not extend its credit line to the “partnership” of 85 million dollars after maturity in January 2023.

“In light of these factors, as well as current conditions in the FSRU market (a type of gas cargo ship, editor’s note) that may increase the risk of renegotiation, the board believes that the company should use its internally generated cash flow to reduce debt levels and strengthen the balance sheet.” was it in the message.

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On the way to the stock exchange with a new company

The American law firm Levi & Korsinsky is now looking for more participants in a class action lawsuit against Höegh LNG Partners, and encourages everyone who bought shares between 19 August 2019 and 27 July 2021 to register.

This is the period in which the plaintiffs believe that the shipping company has provided false or misleading information about its own operations, operations and future prospects.

“The Covid-19 pandemic was not the only or fundamental cause of the company’s problems in Indonesia. In 2019, before the pandemic, there was already very little demand for the company’s gas “, it is stated in the lawsuit, which is reproduced on Yahoo Finance.

The legal battle in the USA comes at the same time as the Norwegian shipping family Høegh is preparing the listing of the car shipping company Höegh Autoliners on Euronext Growth.

AGAINST STOCK EXCHANGE WITH NEW COMPANY: Morten W. Høegh and the family.

In a statement on Friday, Höegh Autoliners confirms that plans are moving forward, and expects to ring the stock market bell on 29 November.

The company is priced at NOK 2.8 billion in advance of a planned capital raising of just over NOK 1 billion.

Received strong criticism after forced redemption

This spring, Höegh LNG disappeared from the Oslo Stock Exchange after a very controversial forced redemption by the other shareholders from the Høegh family and the American major bank Morgan Stanley.

The case caused outrage because Høegh and Morgan Stanley used a transactional structure called “amalgamation”, which meant that it only needed two-thirds acceptance to be able to forcibly redeem the rest.

For Norwegian companies, a requirement of 90 percent applies, but Höegh LNG could circumvent this since it was registered in Bermuda.

Private investor and former Skagen manager Kristian Falnes was among those who reacted, describing the maneuver as a robbery of minority owners’ assets.

– They circumvent the regulations by calling it a merger, Falnes said, among other things.

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The Höegh family and Morgan Stanley devour Höegh LNG: – A straight overpass

– Are you going to invest in Höegh Autoliners?

– I have not seen much of it, but I have signed up for an investor presentation next week, and will listen to the message, Falnes says to E24.

NOT LONG-TERM: Kristian Falnes reacted strongly to being forcibly redeemed in Höegh LNG, but will not rule out that he invests with the Høegh family again.

– I was reasonably annoyed at the way Höegh LNG was taken off the stock exchange, and thought the price offered was far below real values, says Falnes.

– Do you consider that the case has weakened the Høegh family’s trust in the Norwegian investor community?

– You almost have to ask the Norwegian investor community about that. But I think it was poor corporate governance, and it is clear that it gives many disadvantages in my book when you handle a case in that way, says Falnes.

When criticism leveled at the company in March, chairman Morten W. Høegh pointed out that all relevant rules had been followed, and that external legal and financial advisers had concluded that the offer was “fair”.

Morten W. Høegh has not yet responded to E24’s inquiry about the lawsuit against Höegh LNG Partners.

Reference-www.aftenposten.no

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