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GasLog Partners announces acquisition of three vessels from GasLog Ltd.

GasLog Partners LP and GasLog Ltd. announced that they have entered into an agreement for the Partnership to purchase from GasLog, the sole member of the Partnership’s general partner, 100% of the shares in the entities that own and charter the Methane Alison Victoria, Methane Shirley Elisabeth and Methane Heather Sally, for an aggregate purchase price of $483 million (the “Acquisition”), which includes $3 million for positive net working capital balances to be transferred with the vessels. The three vessels subject to the Acquisition are modern liquefied natural gas (“LNG”) carriers built in 2007, each with a capacity of 145,000 cubic meters. 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.

GasLog acquired the Methane Alison Victoria, Methane Shirley Elisabeth and Methane Heather Sally from an affiliate of BG Group (“BG”) in June 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 terms of 4.5 years, 5 years and 5.5 years remaining, respectively. BG has the option to extend two of the three charters for an additional period of either three or five years following the initial charter period.

The Acquisition is another significant milestone for GasLog Partners and GasLog. The Partnership believes that the Acquisition is immediately accretive and is consistent with the strategy to grow cash distributions for the unitholders through accretive dropdowns and third-party acquisitions. The Partnership estimates that the vessels to be acquired will annually generate approximately $72 million of incremental contracted revenue over their initial charter terms, assuming full utilization, and approximately $50.8 million of estimated EBITDA(1) for the first 12 months after the closing of the Acquisition. Accordingly, the purchase price of the Acquisition represents a multiple of 9.4x estimated EBITDA for the first 12 months after the closing of the Acquisition. 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 7% to 10%. This increase, together with the previous increase with respect to the quarter ended March 31, 2015, will result in a cash distribution per unit of between 24% to 27% above the existing minimum quarterly distribution. The proposed increase would result in a cash distribution per unit of between $0.465 to $0.478 for the quarter ended September 30, 2015, or $1.86 to $1.91 on an annualized basis. 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.

Andy Orekar, Chief Executive Officer of GasLog Partners, stated, “I am very pleased to be announcing our second accretive dropdown acquisition since our IPO in 2014. The addition of these three vessels will significantly increase the size of the GasLog Partners’ fleet from five to eight vessels, increasing the scale and equity free float of the Partnership, which we believe will enhance the trading liquidity in the Partnership’s units.

The Acquisition adds approximately $352.9 million of contracted revenue and approximately $50.8 million of estimated EBITDA for the first 12 months after the closing of the Acquisition, assuming full utilization. Following this transaction, GasLog Partnerscontinues to have an identified dropdown pipeline of twelve additional vessels at GasLog, providing a highly visible path to sustainable growth. We believe GasLog Partners is well positioned to execute our strategy and continue growing cash distributions for our unitholders at a 10-15% CAGR from the IPO for the next several years.”

Paul Wogan, Chief Executive Officer of GasLog, stated, “This second major transaction between GasLog Ltd. and GasLog Partners validates the strategy we set out at the time of GasLog Partners’ IPO of financing at the Partnership level, when the cost of capital is attractive, to continue the growth of the GasLog fleet. GasLog has made significant progress since the GasLog Partners IPO last year, adding a number of vessels with long term contracts to the dropdown pipeline. We believe there is significant value to GasLog through our ownership of the limited partner units, the general partner and the incentive distribution rights in GasLog Partners. In just over a year since the GasLog Partners’ IPO, it is extremely pleasing that on completion of this transaction and subject to Partnership Board approval, the initial IPO distribution will have increased by between 24 and 27%, which we believe further enhances our sum-of-the-parts valuation.”


Source: GasLog


June 2015
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