KNOT Offshore Partners LP (NYSE: KNOP) (the “Partnership”)
announced today that its wholly owned subsidiary, KNOT Shuttle Tankers
AS (“KST”), had entered into a share purchase agreement
(the “Share Purchase Agreement”) to acquire Knutsen
Shuttle Tankers 13 AS (“Knutsen 13”), the company that
owns the shuttle tanker Carmen Knutsen, from Knutsen NYK Offshore
Tankers AS (“KNOT”) for a purchase price of $145.0 million
less approximately $89.1 million of existing bank debt (the “Carmen
Knutsen Loan”), subject to certain post-closing adjustments. The
acquisition is expected to close on or before August 1, 2013, subject to
customary closing conditions.
The purchase price will be settled by way of a cash payment of
approximately $45.4 million, subject to post-closing adjustments, and
with seller financing provided by KNOT in the form of a loan in the
amount of approximately $10.5 million (the “Seller Loan”).
The existing senior loan facility related to the Fortaleza Knutsen and
the Recife Knutsen is being amended to increase borrowing
capacity by approximately $25.4 million, and the cash payment and
payment of the post-closing adjustments will be financed through
drawdowns made under this amended senior loan facility, as well as under
the existing loan facility related to the Bodil Knutsen.
The Carmen Knutsen Loan matures in January 2018 and has an annual
interest rate equal to 2.50% above LIBOR. The Seller Loan is
non-amortizing and matures in five years. Interest on the Seller Loan is
based on the six-month LIBOR plus a margin of 4.50% per annum.
The Carmen Knutsen is a 157,000 deadweight ton shuttle tanker,
built by Hyundai Heavy Industries and delivered to KNOT in January 2013.
It is operating under a five-year contract with Repsol Sinopec Brasil,
B.V. (“Repsol”), with a remaining firm contract period of
approximately 4.5 years. Repsol has the right to extend the charter term
for up to an additional three years.
The Board of Directors of the Partnership (the “Board”)
and the Conflicts Committee of the Board have approved the purchase
price and terms of the Share Purchase Agreement and the Seller Loan. The
Conflicts Committee retained an independent financial advisor to assist
with its evaluation of the acquisition.
The Partnership’s management believes that the acquisition will be
accretive to unitholders and has recommended that, upon completion of
the acquisition, the Board consider an increase in the quarterly cash
distribution of between $0.05 and $0.07, an increase of 13.3% to 18.7%
(annualized increase of between $0.20 and $0.28 from the current
annualized distribution rate of $1.50 per common unit), which would
become effective for the distribution with respect to the quarter ending
September 30, 2013. 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 that would make such an increase inadvisable.
About KNOT Offshore Partners LP
KNOT Offshore Partners LP owns, operates and acquires shuttle tankers
under long-term charters in the deepwater offshore oil production
regions of the North Sea and Brazil. KNOT Offshore Partners LP is
structured as a publicly-traded master limited partnership. KNOT
Offshore Partners LP’s common units trade on the New York Stock Exchange
under the symbol “KNOP.”
Forward-Looking Statements
This release contains forward-looking statements (as defined in Section
21E of the Securities Exchange Act of 1934, as amended) that reflect
management’s current views with respect to certain future events and
performance, including statements regarding the amount and timing of
future distribution increases per common unit, the timing, certainty and
effect of the completion of the acquisition of Knutsen 13 and the effect
of the acquisition on the Partnership’s financial condition, results
of operations and cash flow. The following factors are among those that
could cause actual results to differ materially from the forward-looking
statements, which involve risks and uncertainties, and that should be
considered in evaluating any such statement: potential failure of the
proposed acquisition to be completed; potential early termination of the
charter between Knutsen 13 and Repsol and inability to replace this
charter; greater than expected levels of operating expenses; and other
factors discussed in the Partnership’s filings from time to time with
the U.S. Securities and Exchange Commission, including its registration
statement on Form F-1. The Partnership does not intend to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Partnership’s expectations
with respect thereto or any change in events, conditions or
circumstances on which any such statement is based.
Copyright Business Wire 2013