GasLog Acquires Glasgow
The liquefied natural gas (LNG) carriers operators GasLog Partners and GasLog announced that the Boards of Directors of both companies and the Conflicts Committee of GasLog Partners have approved entering into an agreement for the Partnership to purchase from GasLog 100% of the shares in the entity that owns and charters the GasLog Glasgow.
According to a press release from the company, the aggregate purchase price for the Acquisition will be $214 million, which includes $1 million for positive net working capital balances to be transferred with the vessel.
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 drop-downs and third-party acquisitions.
GasLog Partners estimates that the GasLog Glasgow will add approximately $23.5 million to EBITDA in the first 12 months after closing.
Accordingly, the Acquisition purchase price represents a multiple of approximately 9.1x estimated EBITDA. Upon closing, the Acquisition will be supportive of GasLog Partners' guidance of 2% to 4% year-on-year distribution growth in 2019.
The GasLog Glasgow is a 174,000 cubic meter tri-fuel diesel electric LNG carrier built in 2016 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 through June 2026. Shell has the option to extend the charter for a period of five years.
Andy Orekar, Chief Executive Officer of GasLog Partners, stated, "I am very pleased to announce the accretive acquisition of the GasLog Glasgow. This 2016-built vessel is highly complementary to our strategy and its charter to Shell provides over seven years of stable cash flows at attractive fixed charter terms.
The Acquisition will expand the Partnership's fleet to 15 wholly owned LNG carriers, significantly grow our contracted EBITDA and increase our contracted days to approximately 92% for 2019 and 74% for 2020."
Paul Wogan, Chief Executive Officer of GasLog, stated, “We continue to execute on our strategy of dropping vessels into GasLog Partners in order to recycle capital back to GasLog to fund our capital programme. In turn, this leads to further growth opportunities for the Partnership. Since the inception of the Partnership in 2014 – when we had a dropdown pipeline of 12 vessels with multi-year charters – we have sold 12 vessels to the Partnership. Today, our pipeline of future growth opportunities for GasLog Partners is 11 vessels. With the equity recycled to GasLog, we remain solidly on track to deliver on our target to more than double our consolidated run-rate EBITDA by 2022.”
GasLog Partners expects to finance the Acquisition from its available sources of liquidity, including proceeds from its 8.500% Series C Cumulative Redeemable Perpetual Fixed to Floating Rate Preference Units issued in November 2018, and the assumption of the GasLog Glasgow’s $134 million of existing debt. The Acquisition is expected to close early in the second quarter of 2019 and is subject to the satisfaction of certain customary closing conditions.