GasLog Partners LP (NYSE:GLOP) ("GasLog Partners" or the
"Partnership") and GasLog Ltd. (NYSE:GLOG) ("GasLog") announced
today that they have entered into an agreement for the Partnership
to purchase from GasLog 100% of the shares in the entity that owns
and charters GasLog Seattle (the "Acquisition"). The aggregate
purchase price for the Acquisition will be $189 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
equity offering, and the assumption of GasLog Seattle's existing
debt. The Acquisition is expected to close in the fourth quarter of
2016 and is subject to satisfaction of certain closing
conditions.
GasLog Seattle is a 155,000 cubic meter tri-fuel diesel
electric liquefied natural gas ("LNG") carrier built in 2013 and
operated by GasLog since delivery. The vessel is currently on a
multi-year time charter with a wholly owned subsidiary of Royal
Dutch Shell plc ("Shell") through December 2020. Shell has two
consecutive 5-year extension options, which if exercised, would
extend the charter for a period of either 5 or 10 years.
The Partnership believes the Acquisition will be immediately
accretive to unitholder distributions and consistent with its
strategy to grow cash distributions through dropdown and
third-party acquisitions. GasLog Partners estimates that, assuming
full utilization, GasLog Seattle will add approximately $20 million
to EBITDA(1) and $10 million to distributable cash flow(1) in the
first 12 months after closing. Accordingly, the Acquisition
purchase price represents a multiple of approximately 9.4x
estimated EBITDA. The Board of Directors of GasLog, the Board of
Directors of GasLog Partners (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 approximately 5%
annualized increase in the Partnership's cash distribution per
unit. 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 announce the Partnership's third accretive
dropdown transaction. Acquiring this strategically attractive
vessel and its multi-year charter to Shell highlights GasLog
Partners' differentiated business model, which provides cash flow
stability with growth through acquisitions. The Acquisition extends
our average remaining charter duration and is consistent with our
track record of delivering a 10-15% CAGR from IPO in cash
distributions.
After closing the Acquisition, GasLog Partners will have a
dropdown pipeline of thirteen vessels and a strong balance sheet,
providing a highly visible path to future distribution
increases."
Paul Wogan, Chief Executive Officer of GasLog, stated, "I am
delighted that, despite challenging market conditions, we continue
to execute on our strategy of dropping vessels into GasLog Partners
and recycling the capital to GasLog. This transaction continues to
strengthen our balance sheet and provides further funding for
future profitable growth. We also benefit from increases in GasLog
Partners' distribution through our unit ownership and incentive
distribution rights, which should continue to enhance our
valuation."
(1)EBITDA and distributable cash flow are non-GAAP financial
measures. Please refer to Exhibit I for guidance on the underlying
assumptions used to derive EBITDA and distributable cash flow.
About GasLog Partners
GasLog Partners is a growth-oriented master limited partnership
focused on owning, operating and acquiring LNG carriers under
multi-year charters. Upon closing of the Acquisition, GasLog
Partners' fleet will consist of nine LNG carriers with an average
carrying capacity of approximately 149,500 cbm, each of which has a
multi-year time charter. GasLog Partners' principal executive
offices are located at Gildo Pastor Center, 7 Rue du Gabian, MC
98000, Monaco.
About GasLog
GasLog is an international owner, operator and manager of LNG
carriers providing support to international energy companies as
part of their LNG logistics chain. GasLog's consolidated fleet
consists of 27 LNG carriers (21 ships on the water and 6 on order).
GasLog also has an additional LNG carrier which was sold to a
subsidiary of Mitsui Co. Ltd. and leased back under a long-term
bareboat charter. Upon closing of the Acquisition, GasLog's
consolidated fleet will include nine LNG carriers in operation
owned by GasLog's subsidiary, GasLog Partners. GasLog's principal
executive offices are at Gildo Pastor Center, 7 Rue du Gabian, MC
98000, Monaco.
Forward-Looking Statements
All statements in this press release that are not statements of
historical fact are "forward-looking statements" within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements that address
activities, events or developments that GasLog and GasLog Partners
expects, projects, believes or anticipates will or may occur in the
future, particularly in relation to our operations, cash flows,
financial position, liquidity and cash available for dividends or
distributions, plans, strategies, business prospects and changes
and trends in our business and the markets in which we operate. We
caution that these forward-looking statements represent our
estimates and assumptions only as of the date of this press
release, about factors that are beyond our ability to control or
predict, and are not intended to give any assurance as to future
results. Any of these factors or a combination of these factors
could materially affect future results of operations and the
ultimate accuracy of the forward-looking statements. Accordingly,
you should not unduly rely on any forward-looking statements.
Factors that might cause future results and outcomes to differ
include, but are not limited to, the following:
· general LNG shipping market conditions and trends,
including spot and long-term charter rates, ship values, factors
affecting supply and demand of LNG and LNG shipping, technological
advancements and opportunities for the profitable operations of LNG
carriers;
· continued low prices for crude oil and petroleum,
products;
· our ability to enter into time charters with new and
existing customers;
· changes in the ownership of our charterers;
· our customers' performance of their obligations under our
time charters and other contracts;
· our future operating performance, financial condition,
liquidity and cash available for dividends and distributions;
· GasLog Partners' ability to purchase vessels from GasLog
in the future;
· GasLog Partners' ability to leverage GasLog's
relationships and reputation in the shipping industry;
· our ability to obtain financing to fund capital
expenditures, acquisitions and other corporate activities, the
ability of our lenders to meet their funding obligations, and our
ability to meet our restrictive covenants and other obligations
under our credit facilities;
· future, pending or recent acquisitions of ships or other
assets, business strategy, areas of possible expansion and expected
capital spending or operating expenses;
· our expectations about the time that it may take to
construct and deliver newbuildings and the useful lives of our
ships;
· number of off-hire days, drydocking requirements and
insurance costs;
· fluctuations in currencies and interest rates;
· our ability to maintain long-term relationships with
major energy companies;
· our ability to maximize the use of our ships, including
the re-employment or disposal of ships no longer under time charter
commitments, including the risk that our vessels may no longer have
the latest technology at such time;
· environmental and regulatory conditions, including
changes in laws and regulations or actions taken by regulatory
authorities;
· the expected cost of, and our ability to comply with,
governmental regulations and maritime self-regulatory organization
standards, requirements imposed by classification societies, and
standards imposed by our charterers applicable to our business;
· risks inherent in ship operation, including the discharge
of pollutants;
· the availability of skilled labor, ship crews and
management;
· potential disruption of shipping routes due to accidents,
political events, piracy or acts by terrorists;
· potential liability from future litigation;
· our business strategy and other plans and objectives for
future operations;
· any malfunction or disruption of information technology
systems and networks that our operations rely on or any impact of a
possible cybersecurity breach; and
· other risks and uncertainties described in GasLog's
Annual Report on Form 20-F filed with the SEC on March 14, 2016 and
the Partnership's Annual Report on Form 20-F filed with the SEC on
February 12, 2016 and the Prospectus Supplement filed with the SEC
on August 3, 2016. Copies of both Annual reports, the Partnership's
Prospectus Supplement, as well as subsequent filings are available
at http://www.sec.gov.
GasLog and GasLog Partners undertake no obligation to update or
revise any forward-looking statements contained in this press
release, whether as a result of new information, future events, a
change in our views or expectations or otherwise. New factors
emerge from time to time, and it is not possible for us to predict
all of these factors. Further, we cannot assess the impact of each
such factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to be materially
different from those contained in any forward-looking
statement.
EXHIBIT I
Non-GAAP Financial Measures
EBITDA and distributable cash flow
EBITDA is defined as earnings before interest income and
expense, taxes, depreciation and amortization. EBITDA, which is a
non-GAAP financial measure, is used as a supplemental financial
measure by management and external users of financial statements,
such as investors, to assess our financial and operating
performance. The Partnership believes that this non-GAAP financial
measure assists our management and investors by increasing the
comparability of our performance from period to period. The
Partnership believes that including EBITDA assists our management
and investors in (i) understanding and analyzing the results of our
operating and business performance, (ii) selecting between
investing in us and other investment alternatives and (iii)
monitoring our ongoing financial and operational strength in
assessing whether to continue to hold our common units. This
increased comparability is achieved by excluding the potentially
disparate effects between periods of interest, taxes, depreciation
and amortization, which items are affected by various and possibly
changing financing methods, capital structure and historical cost
basis and which items may significantly affect results of
operations between periods.
EBITDA has limitations as an analytical tool and should not be
considered as an alternative to, or as a substitute for, or
superior to profit, profit from operations, earnings per unit or
any other measure of financial performance presented in accordance
with IFRS. Some of these limitations include the fact that it does
not reflect (i) our cash expenditures or future requirements for
capital expenditures or contractual commitments, (ii) changes in,
or cash requirements for our working capital needs and (iii) the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on our debt. Although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in
the future, and EBITDA does not reflect any cash requirements for
such replacements. It is not adjusted for all non-cash income or
expense items that are reflected in our statement of cash flows and
other companies in our industry may calculate this measure
differently than we do, limiting its usefulness as a comparative
measure.
Distributable cash flow with respect to any quarter means EBITDA
after considering financial costs for the period, excluding
amortization of loan fees, estimated drydocking and replacement
capital reserves established by the Partnership. Estimated
drydocking and replacement capital reserves represent capital
expenditures required to renew and maintain over the long-term the
operating capacity of, or the revenue generated by our capital
assets. Distributable cash flow is a quantitative standard used by
investors in publicly-traded partnerships to assess their ability
to make quarterly cash distributions. Our calculation of
Distributable cash flow may not be comparable to that reported by
other companies. Distributable cash flow is a non-GAAP financial
measure and should not be considered as an alternative to profit or
any other indicator of the Partnership's performance calculated in
accordance with GAAP.
For the entities owning GasLog Seattle, estimated EBITDA and
distributable cash flow for the first 12 months of operation
following the completion of the Acquisition is based on the
following assumptions:
· closing of the Acquisition in the fourth quarter of 2016
and timely receipt of charter hire specified in the charter
contracts;
· utilization of 363 days per year and no drydocking;
· vessel operating and supervision costs and charter
commissions per current internal estimates; and
· general and administrative expenses based on management's
current internal estimates.
We consider the above assumptions to be reasonable as of the
date of this press release, but if these assumptions prove to be
incorrect, actual EBITDA and distributable cash flow for the
entities owning the vessels could differ materially from our
estimates. The prospective financial information was not prepared
with a view toward public disclosure or with a view toward
complying with the guidelines established by the American
Institute of Certified Public Accountants, but, in the view of
management, was prepared on a reasonable basis and reflects the
best currently available estimates and judgments. However, this
information is not fact and should not be relied upon as being
necessarily indicative of future results, and readers of this press
release are cautioned not to place undue reliance on the
prospective financial information. Neither our independent auditors
nor any other independent accountants have compiled, examined, or
performed any procedures with respect to the prospective financial
information contained above, nor have they expressed any opinion or
any other form of assurance on such information or its
achievability and assume no responsibility for, and disclaim any
association with, such prospective financial information.
Contacts:
Simon Crowe Chief Financial Officer Phone: +44
203 388 3108 Jamie Buckland Head of Investor Relations Phone: +44
203 388 3116 Email: ir@gaslogltd.com
Samaan Aziz Investor Relations Manager Phone: +1
212 223 0643 Email: ir@gaslogmlp.com
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