GasLog Partners LP announces first option vessels acquisition from GasLog Ltd. for $328 mln
GasLog Partners LP and GasLog Ltd. announced today that they have entered into an agreement for the Partnership to purchase from GasLog, the sole member of the Partnership’s general partner and the Partnership’s majority unitholder, 100% of the shares in the entities that own and charter the Methane Jane Elizabeth and Methane Rita Andrea, modern liquefied natural gas (“LNG”) carriers built in 2006, each with a capacity of 145,000 cubic meters, for an aggregate purchase price of $328 million, the company said in its press release.
The Acquisition is subject to the Partnership obtaining the funds necessary to pay the purchase price and the satisfaction of certain other closing conditions. The Partnership expects to finance the acquisition with a combination of equity and the assumption of the vessels’ existing credit facilities. In addition, the Partnership has entered into a commitment letter with Citibank for a new $450 million credit facility to refinance the current credit facilities of the vessels currently owned by the Partnership as well as the facilities for the two LNG carriers being acquired.
GasLog acquired the Methane Jane Elizabeth and Methane Rita Andrea from an affiliate of BG Group (“BG”) in April 2014. GasLog supervised the construction of each ship and has provided technical management for the ships since delivery. The vessels are currently operating under long-term time charters with BG with initial terms of 5.5 and 6 years, respectively (through October 2019 and April 2020). BG has the option to extend either or both of the charters for an additional period of either three or five years following the initial charter period.
The Acquisition is a significant milestone for GasLog Partners and GasLog Ltd. as it marks the first transaction carried out by the two entities since GasLog Partners’ initial public offering (“IPO”) in May 2014. The Partnership believes that the Acquisition is immediately accretive and consistent with its strategy to grow cash distributions for its unitholders through accretive dropdown and third-party acquisitions. The Partnership estimates that the vessels being acquired will annually generate $47.7 million of incremental contracted revenue over their initial charter terms, assuming full utilization, and $34.5 million of EBITDA(1). The Board of Directors of GasLog, Board of Directors of the Partnership (the “Board”) and the Conflicts Committee of the Board have approved the Acquisition.
Following the completion of the Acquisition, the Partnership’s management intends to recommend to the Board an increase in the Partnership’s quarterly cash distribution per unit of between $0.05625 and $0.06250, an increase of approximately 15% above the existing minimum quarterly distribution and an annualized increase of between $0.225 and $0.250 per unit. When combined with the existing minimum quarterly cash distribution of $0.375, this proposed increase results in a cash distribution of between $0.43125 to $0.43750 per quarter. Any such increase would be conditioned upon, among other things, the closing of the Acquisition, the approval of such increase by the Board and the absence of any material adverse developments or potentially attractive opportunities that would make such an increase inadvisable.