KNOT Offshore Partners To Acquire Knutsen Shuttle Tankers 13 AS - Quick Facts

(RTTNews) - KNOT Offshore Partners LP (KNOP) announced that its wholly owned subsidiary, KNOT Shuttle Tankers AS or KST, had entered into a share purchase agreement to acquire Knutsen Shuttle Tankers 13 AS, the company that owns the shuttle tanker Carmen Knutsen, from Knutsen NYK Offshore Tankers AS or KNOT for a purchase price of $145.0 million less approximately $89.1 million of existing bank debt or "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 or "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.

The Board of Directors of KNOT Offshore Partners and the Conflicts Committee of the Board have approved the purchase price and terms of the Share Purchase Agreement and the Seller Loan.

KNOT Offshore Partners 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.