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Is This Why The Hoegh LNG (HMLP) Stock Lost In Afterhours Trading?

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As of Tuesday after-hours trade, shares of Hoegh LNG Partners LP (HMLP) have lost -56.74% to $7.73. HMLP stock closed at $17.87 last trading session, declining -0.22%. In HMLP, the stock’s trading volume was 0.23 million shares, which is higher than the 0.11 million shares average day-to-day for the last 50 days. HMLP stock has declined by 3.53% over the past week; however, it has bit stabilized losing just -0.17% over the last month.

Stock prices of HMLP have increased by 9.30 percent in the last three months and by 56.48 percent thus far this year. In addition, the HMLP stock has earnings to price ratio of 8.95. Following an announcement that quarterly cash distributions would cease, HMLP stock fell.

Why HMLP discontinued the cash distribution?

A leading floating LNG service provider, Höegh LNG Holding Ltd. formed Höegh LNG Partners LP, a growth-oriented limited partnership. Ownership, operation and acquisition of floating storage and regasification units (“FSRUs”) and associated LNG infrastructure assets constitute the HMLP’s strategy. Including options, HMLP’s average remaining firm contract term for its five FSRUs as of March 31, 2021 is 8.3 years, which is the industry’s leading average.

Höegh LNG Board of Directors today announced that the Partnership’s quarterly cash distribution has been lowered to $0.01 per common unit.

  • The amount was less than the $0.44 distribution per common unit paid by HMLP in the first quarter of 2021.
  • HMLP’s common unitholders of record as of the close of business on August 6, 2021 will receive the first cash distribution in the new structure for the second quarter of 2021.
  • Despite a refinancing of the PGN FSRU Lampung credit facility, HMLP needs to conserve internal cash flow in order to resolve the ongoing issues.
  • As a result, HMLP intends to reduce its debt levels and improve its balance sheet using internal cash flow generated by the Partnership.
  • HMLP’s cumulative redeemable Series A preferred units at 8.75% remain unchanged for the current quarter at $0.546875.
  • HMLP’s all holders of 8.75% Series A preferred units by record as of August 9, 2021 will receive cash distributions on August 16, 2021 for the period between May 15, 2021 and August 14, 2021.

How HMLP Stock will proceed further?

A refinancing of the PGN FSRU Lampung credit facility, which was for closure by the end of the second quarter of 2021, has not yet been completed because the charterer of the vessel has not agreed to and countersigned certain customary documents. As a result, Höegh LNG (HMLP) is exposed to arranging alternative refinancing or restructuring the existing refinancing to avoid early maturity of the debt facility on September 29, 2021, as was originally planned for October 2021.

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