GasLog Partners LP and GasLog Ltd. announced that they have approved entering into an agreement for the Partnership to purchase from GasLog 100% of the shares in the entity that owns and charters GasLog Geneva.
The aggregate purchase price for the Acquisition will be $211 million, which includes $1 million for positive net working capital balances to be transferred with the vessel. GasLog Partners expects to finance the acquisition with cash on hand, including proceeds from its recent preference unit offering, and the assumption of $155 million of GasLog Geneva’s existing debt. The Acquisition is expected to close in the third quarter of 2017 and is subject to satisfaction of certain customary closing conditions. The Board of Directors of GasLog, the Board of Directors of GasLog Partners and the Conflicts Committee of the Board have approved the Acquisition.
GasLog Geneva is a 174,000 cubic meter tri-fuel diesel electric liquefied natural gas carrier built in 2016 and operated by GasLog since delivery. The vessel is currently on a long-term time charter with a wholly owned subsidiary of Royal Dutch Shell plc through September 2023. Shell has two consecutive extension options which, if exercised, would extend the charter for a period of either five or eight years.
The Partnership believes that the Acquisition will be immediately accretive to unitholder distributions and is consistent with its strategy to grow cash distributions through dropdown and third-party acquisitions. GasLog Partners estimates that GasLog Geneva will add approximately $23 million to EBITDA(1) in the first 12 months after closing. Accordingly, the Acquisition purchase price represents a multiple of approximately 9.1x(2) estimated EBITDA.
Upon closing, the Acquisition will be supportive of GasLog Partners’ guidance to grow unitholder distributions at a 10% to 15% compound annual rate from IPO through 2017. The Partnership intends to recommend an annualized distribution of greater than $2.09 per unit by the fourth quarter of 2017.
Andy Orekar, Chief Executive Officer of GasLog Partners, stated, “I am very pleased to continue executing our growth strategy with this accretive dropdown transaction. GasLog Geneva represents the eighth LNG carrier the Partnership will have acquired from GasLog since our IPO, and this strategically attractive vessel plus its charter to Shell provide over six years of stable cash flows. The Acquisition expands the Partnership’s fleet to eleven wholly owned LNG carriers, extends our average remaining charter duration and significantly increases our revenues and EBITDA.”
Paul Wogan, Chief Executive Officer of GasLog, stated, “We continue to execute on our strategy of dropping vessels into GasLog Partners and recycling the capital to GasLog. This transaction values GasLog Geneva at a premium to book value, allowing us to strengthen our balance sheet and providing further funding for future profitable growth. Through our unit ownership and incentive distribution rights, we will benefit from future increases in GasLog Partners’ distributions, which should continue to enhance our cash flow, growth prospects and valuation. Based on the Partnership’s distribution growth guidance, GasLog’s annualized distributions received from GasLog Partners are expected to equal approximately $26 million by the fourth quarter of 2017, an increase of approximately 13% compared to the annualized distributions received in the fourth quarter of 2016.”