GasLog Partners and GasLog 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 Solaris.
The aggregate purchase price for the Acquisition will be $185.9 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 and the assumption of $117 million of Solaris’ existing debt. The Acquisition is expected to close in the fourth 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.
Solaris is a 155,000 cubic meter tri-fuel diesel electric liquefied natural gas carrier built in 2014. The vessel is currently on a multi-year time charter with a wholly owned subsidiary of Royal Dutch Shell plc through June 2021. Shell has two consecutive extension options which, if exercised, would extend the charter for a period of either five or ten years.
The Partnership believes that the Acquisition will be immediately accretive to distributable cash flow per unit and is consistent with its strategy to grow cash distributions through dropdown and third-party acquisitions. GasLog Partners estimates that Solaris will add approximately $20 million to EBITDA(1) in the first 12 months after closing. Accordingly, the Acquisition purchase price represents a multiple of approximately 9.2x(2) estimated EBITDA.
Andy Orekar, Chief Executive Officer of GasLog Partners, stated, “I am very pleased to continue executing our growth strategy with this accretive dropdown transaction. Solaris represents the ninth LNG carrier the Partnership will have acquired from GasLog since our IPO, and its multi-year charter to Shell will provide incremental visible cash flows. The Acquisition will expand the Partnership’s fleet to 12 wholly owned LNG carriers, increase our contracted days to approximately 90% for 2018 and 72% for 2019, and significantly grow our contracted 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 Solaris 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.”
(1)EBITDA is a non-GAAP financial measure. Please refer to Exhibit I for guidance on the underlying assumptions used to derive EBITDA.
(2)Acquisition multiple is calculated using net purchase price of $184.9 million.