Golar LNG Partners L.P.:GOLAR ESKIMO ACQUISITION

abarrelfullabarrelfull wrote on 07 Apr 2015 12:27
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December 15, 2014

Golar LNG Partners LP (NASDAQ: GMLP) (the "Partnership") announced today that it has entered into an agreement to acquire the ownership interests in the companies that will own and operate the Golar Eskimo, a floating storage and regasification unit ("FSRU"), from Golar LNG Limited ("Golar") for an aggregate purchase price of approximately $390.0 million. The Partnership will finance the purchase price with cash on hand, the proceeds of a $220.0 million loan from Golar and the assumption of outstanding bank debt in respect of the Golar Eskimo on the closing date of the acquisition (which the Partnership estimates will be approximately $162.8 million).

The Partnership believes it currently has a relatively low level of leverage and currently expects to refinance the loan from Golar before maturity with a combination of new debt and cash from operations.

The Golar Eskimo is being built by Korean shipyard Samsung Heavy Industries Co. Ltd. and is scheduled to be delivered in December 2014. The Partnership expects the Golar Eskimo acquisition to close in January 2015. The Partnership expects the Golar Eskimo to commence her service under a ten-year time charter (the "Golar Eskimo Time Charter") with the Government of the Hashemite Kingdom of Jordan ("Jordan") in the second quarter of 2015. The Golar Eskimo acquisition is subject the satisfaction of customary closing conditions.

The Partnership expects to enter into an agreement with Golar pursuant to which Golar will pay to the Partnership an aggregate amount of $22.0 million in six equal monthly installments starting in January 2015 and ending in June 2015 for the right to use the FSRU. In return the Partnership will remit to Golar any hire payments actually received with respect to the vessel during this period and, at Golar's request, charter the vessel to a third party prior to the earlier of the commencement of hire payments from Jordan under the Golar Eskimo Time Charter and June 30, 2015.

The Partnership estimates that the Golar Eskimo acquisition will generate annual contracted revenues, net of voyage expenses, commissioning, operating expenses and taxes, of approximately $45 million to $47 million with respect to the first five years of service under the Golar Eskimo Time Charter. The Partnership expects such annual contracted revenues to decrease to approximately $41 million to $43 million with respect to the second five-year period under the Golar Eskimo Time Charter. However, the Partnership may not realize these levels of estimated annual revenues from the acquisition of the Golar Eskimo.

The Partnership's board of directors (the "Board") is pleased that the Partnership has entered into this purchase agreement in connection with its sixth acquisition since the Partnership's initial public offering in April 2011 (the "IPO"). The Board and the conflicts committee of the Board (the "Conflicts Committee") have approved the purchase price for the Golar Eskimo. The Conflicts Committee retained a financial advisor to assist with its evaluation of the acquisition.

The Golar Eskimo acquisition is expected to be an accretive transaction and is consistent with the Partnership's growth strategy. As a result of the Golar Eskimo acquisition, the Partnership's management intends to recommend to the Board an increase in the Partnership's quarterly cash distribution of between $0.0275 and $0.0325 (or an annualized increase of between $0.11 and $0.13), which would become effective for the quarter ending March 31, 2015. Assuming the distribution increase is recommended and approved, it would increase the Partnership's total annualized distributions to between $2.30 and $2.32 per common unit, which would represent an increase of approximately 50% since the IPO. Any such increase would be conditioned upon, among other things, the closing of the Golar Eskimo acquisition, the approval of such increase by the Board and the absence of any material adverse developments or potentially attractive opportunities that would make such an increase inadvisable.


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