- GasLog Partners to benefit from a differentiated corporate and financial structure, being the first marine MLP to eliminate IDRs.
- GasLog in a transaction will receive 2,532,911 common units and 2,490,000 Class B units.
- The Class B units will be a new class of LP interest and will not receive any cash distributions until they convert into common units and will also have no voting rights.
- The transaction is expected to be immediately accretive to distributable cash flow per LP unit and to reduce the cost of capital, to facilitate growth objectives.
GasLog Ltd. and GasLog Partners LP (NYSE: GLOP) announced an agreement to eliminate the GP’s incentive distribution rights (“IDRs”) in exchange for newly issued limited partner (“LP”) units, says an article published in Globe News Wire.
What is in the agreement?
In exchange for the IDRs, GasLog will receive 2,532,911 common units and 2,490,000 Class B units. The transaction is expected to close on June 30, 2019.
The Class B units will be a new class of LP interest and will not be entitled to receive any cash distributions until they convert into common units.
No voting rights?
The Class B units also generally will not have voting rights until they convert into common units. The Class B units will become eligible for conversion on a one-for-one basis into common units at the GP’s option in six tranches of 415,000 units per annum on July 1 of 2020, 2021, 2022, 2023, 2024 and 2025.
Highlights of the transaction
The Board of Directors of GasLog, the Board of Directors of GasLog Partners (the “Board”) and the Conflicts Committee of the Board have each approved the transaction described above. Evercore advised the Conflicts Committee of the Board.
The highlights of the transaction are:
- Immediately accretive to the Partnership’s distributable cash flow per LP unit;
- Cash flow neutral based on current IDR distributions;
- Enhances GasLog Partners’ ability to pursue growth opportunities by reducing its expected cost of capital;
- Increases GasLog’s ownership in the Partnership, strengthening GP/LP alignment;
- Reduces complexity in GasLog’s structure and simplifies the presentation of financial results; and
- Reiteration of GasLog Partners’ distribution growth guidance of 2% to 4% for 2019
First marine MLP to eliminate IDRs
Andrew Orekar, Chief Executive Officer of GasLog Partners, stated that, GasLog Partners is poised to benefit from a differentiated corporate and financial structure, being the first marine MLP to eliminate IDRs.
“The transaction is expected to be immediately accretive to distributable cash flow per LP unit and to reduce our cost of capital, facilitating continued execution of our growth objectives. With no future IDR obligations, we reiterate our distribution growth guidance of 2% to 4% for 2019.”
Key enabler in achieving strategic goals
Paul Wogan, Chief Executive Officer of GasLog, stated that since its IPO in 2014, GasLog Partners has raised over $2.4 billion of capital and has been both a critical component for their growth and a key enabler in achieving their strategic goals.
“By removing the IDRs, we aim not only to simplify GasLog’s structure but also to reduce the Partnership’s expected cost of capital. GasLog Partners remains our preferred equity funding source and we believe that this transaction will contribute to its continued growth and success.”
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Source: Globenewswire
