KNOT Offshore Partners LP (NYSE:KNOP) recently reported that its wholly owned subsidiary, KNOT Shuttle Tankers AS, has agreed to acquire KNOT Shuttle Tankers 34 AS, the company that owns the shuttle tanker, Tove Knutsen, from Knutsen NYK Offshore Tankers AS. The purchase price of the Acquisition is $117.8 million, less $93.1 million of outstanding indebtedness and will be financed on a non-dilutive basis using cash on hand and borrowings under KNOP’s existing revolving credit facility.
The Tove Knutsen is a 153,000 dwt DP2 Suezmax class shuttle tanker, built by shipbuilder Hyundai Heavy Industries and delivered in September 2020. The vessel is operating in Brazil under a seven-year time charter with Equinor Shipping Inc., providing fixed-rate firm employment through to at least the fourth quarter of 2027. The charterer has options to further extend the charter for up to 13 additional years. On closing, the Tove Knutsen will become the partnership’s seventeenth vessel.
The acquisition is expected to close by December 31, 2020, subject to customary closing conditions.
New $25 million revolving credit facility
The partnership also announced that it has entered into a new $25 million revolving credit facility with Shinsei Bank, Limited. The facility will be available to the partnership until November 2023 and can be prepaid at any time. The margin payable on the facility is lower than the partnership’s current average margin of 2.1% over LIBOR.
Gary Chapman, CEO of the partnership, commented, “We are pleased to return to growth with a dropdown that materially strengthens KNOP’s long-term contract coverage and provides a further layer of stability and support for our consistent distribution without diluting our existing equity. The cashflow from this newly acquired vessel provides significant forward visibility and will help support distribution coverage for our unitholders in the years ahead. We are also proud to welcome Shinsei Bank to our lender group, further diversifying our access to capital with the addition of another leading Japanese financial institution.”