GasLog Ltd. (GasLog) has completed the acquisition of three ships from Methane Services Ltd. (MSL), an affiliate of BG Group, and agreed to acquire an additional three LNG carriers from the same company and to charter those ships back to MSL for six-year initial terms on average.
The time charters back to MSL for the vessels will be staggered with terms of 5.5 years, 6 years and 6.5 years, similar to the vessels acquired from MSL earlier, so that the vessels do not redeliver at the same time. MSL will also have options to extend the term of the time charters for two of the ships for a period of either three or five years at its election.
The vessels to be acquired from MSL are 2007 built sister ships of the three vessels acquired before. GasLog supervised the construction of all six sister ships and has provided technical management for the ships since delivery.
The aggregate cost to GasLog for the three ships party to the transaction is expected to be approximately $468 million.
Each LNG carrier to be acquired is modern, steam powered and has a capacity of 145,000 cubic meters. The company estimates that upon their acquisition, these ships will represent approximately $425 million of incremental contracted revenue over their initial charter terms and add over $50.0 million per annum to GasLog’s EBITDA1. For the year ended December 31, 2013, the company had consolidated revenues of $157.2 million and consolidated profit of $56.9 million.
Paul Wogan, CEO of GasLog, commented, “This transaction supports our strategy of consolidating the LNG carrier market by acquiring high quality assets. The ships will be chartered back to an affiliate of BG Group, thus increasing our backlog of contracted revenue to almost $3 billion. This strengthens our underlying business and provides a very strong base from which to continue to expand our fleet in the future. We expect the transaction to be accretive to our earnings and support increased dividend capacity. This transaction also further strengthens our long-standing relationship with BG Group.”
The closing of the transaction is subject to the satisfaction of certain conditions, including the completion of definitive documentation and necessary financing. GasLog expects the transaction to close in the third quarter 2014.
In connection with the transaction, GasLog has obtained commitments from Citibank, N.A., London Branch, for a $325.5 million credit facility and a bridge loan facility. Although GasLog has obtained the bridge loan facility to maximize transactional certainty, it may pursue one or more alternative capital-raising transactions to fund a portion of the vessel purchase price, in which case it would not expect to borrow under the bridge loan facility.
GasLog, April 11, 2014