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KNOT Offshore Partners agrees suezmax dropdown

KNOT Offshore Partners (KNOP) has acquired a company that owns the shuttle tanker, Synnøve Knutsen, from parent Knutsen NYK Offshore Tankers (KNOT) for a purchase price of $119m, less $87.7m of outstanding indebtedness.

pThe 153,000 dwt suezmax was delivered by Hyundai Heavy Industries in October 2020 and is the Partnership’s eighteenth vessel. The vessel is operating in Brazil under a five-year time charter with Equinor Shipping, providing fixed-rate firm employment through to at least the first quarter of 2027. Equinor has options to further extend the charter for up to 15 additional years.

KNOP is a New York-listed shuttle tanker spinoff of KNOT, a joint venture formed in 2010 by TS Shipping Invest (TSSI) and Nippon Yusen Kaisha (NYK).

The dropdown deal has been financed on a non-dilutive basis using borrowings under a new and separate ten-year sale and leaseback agreement with a Japanese-based lessor for the 2013-built aframax shuttle tanker, Torill Knutsen.

The gross sales price was $112m and a portion of the proceeds was used to repay the outstanding loan and cancelation of the interest rate swap agreements related to the vessel. After repayment of the loan and related interest rate swaps, the partnership realised net proceeds of approximately $40m, of which $31m was used towards the acquisition.

Gary Chapman, CEO of the KNOP, commented: “By successfully executing this dropdown with an attractively priced sale-leaseback, we are pleased to strengthen our distribution coverage and lengthen our average remaining charter duration, while also meaningfully reducing our medium-term refinancing needs and adding the surplus proceeds raised to our pool of liquidity. This dropdown demonstrates not only our ability to deliver accretive fleet growth, but also our commitment to acting in the best interests of our unitholders keeping the priority of our distribution in mind.”

Adis Ajdin

Adis is an experienced news reporter with a background in finance, media and education. He has written across the spectrum of offshore energy and ocean industries for many years and is a member of International Federation of Journalists. Previously he had written for Navingo media group titles including Offshore Energy, Subsea World News and Marine Energy.
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