GasLog Partners announces acquisition of GasLog Greece LNG carrier

The carrier is a 174 000 m₃ tri-fuel diesel electric LNG carrier that was constructed in 2016, and has been operated by GasLog ever since it was delivered. It is currently on a long-term time charter with a wholly owned subsidiary of Royal Dutch Shell through March 2026. Shell has the option to extend the charter by an additional five years.

The aggregate purchase price for the acquisition will be US$219 million. This includes US$1 million for positive net working capital balances to be transferred with the vessel. GasLog Partners is expecting to fund the acquisition with cash on hand, including proceeds from its recent equity offering, and the assumption of US$151 million of the LNG carrier’s existing debt. The acquisition is expected to close in 2Q17, and is subject to the satisfaction of a number of customary closing conditions. The boards of both parties, as well as the conflicts committee, have approved the acquisition.

In the statement, the partnership claims that it believes that 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 utilisation – the GasLog Greece will add approximately US$24 million to EBITDA, and US$13 million to distributable cash flow in the first 12 months after closing. Accordingly, the acquisition purchase price represents a multiple of approximately 9.1x estimated EBITDA.

When it closes, the acquisition will support GasLog Partners’ guidance to grow unitholder distributions at a 10 – 15% compound annual rate since IPO. In conjunction with the announcement, the partnership affirms this growth guidance, which would result in an annualised distribution of US$2.09 per unit or higher by 4Q17.

The Chief Executive Officer of GasLog Partners, Andy Orekar, said: “I am very pleased to announce the Partnership's fourth accretive dropdown transaction. Acquiring this strategically attractive vessel and its charter to Shell with nine years remaining highlights GasLog Partners' differentiated business model, which provides cash flow stability with growth through acquisitions. The acquisition expands the Partnership's fleet to 10 wholly owned LNG carriers, extends our average remaining charter duration and significantly increases our EBITDA and distributable cash flow. After closing the acquisition, GasLog Partners will have a dropdown pipeline of 12 vessels, providing a visible path to future distribution increases."

The Chief Executive Officer of GasLog, Paul Wogan, added: “I am delighted that we continue to execute on our strategy of dropping vessels into GasLog Partners and recycling the capital to GasLog. The proceeds from the sale, which values GasLog Greece at a premium to book value, will strengthen our balance sheet and provide 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 cash flow, growth prospects and valuation. Based on the Partnership's growth guidance, GasLog's annualised distributions received from GasLog Partners are expected to equal approximately US$25 million or higher by the fourth quarter of 2017."