Exchange of Golar LNG Partners LP Incentive Distribution Rights
October 14 2016 - 8:33AM
Golar LNG Limited (NASDAQ: GLNG)
and Golar GP LLC (collectively, "Golar") announced today that they
have entered into an agreement with Golar LNG Partners L.P. ("Golar
Partners" or "the Partnership") to exchange all of the existing
incentive distribution rights ("Old IDRs") for (i) the issuance of
a new class of incentive distribution rights ("New IDRs") and an
aggregate of 2,994,364 common units and an aggregate of 61,109
general partner units on the closing date of the exchange (the
"Closing") and (ii) an aggregate of up to 748,592 additional common
units and up to 15,278 additional general partner units
(collectively, the "Earn-Out Units") that may be issued subject to
certain conditions described below (collectively, the
"Transaction"). The Earn-Out Units represent an aggregate of
20% of the total units to be issued in connection with the
Transaction. If the Partnership issues the Earn-Out Units,
the Partnership will have issued to Golar an aggregate of 3,742,956
common units and 76,387 general partner units in connection with
the Transaction.
The Partnership will issue to
Golar 50% of the Earn-Out Units if the Partnership pays a
distribution of available cash from operating surplus pursuant to
the terms of the Partnership's agreement of limited partnership, as
amended and restated in connection with the Transaction (the
"Partnership Agreement"), on each of the outstanding common units
of the Partnership (the "Common Units") equal to or greater than
$0.5775 per Common Unit in respect of each of the quarterly periods
ended December 31, 2016, March 31, 2017, June 30, 2017 and
September 30, 2017. The Partnership will issue to Golar the
remaining 50% of the Earn-Out Units if the Partnership has issued
the first 50% of the Earn-Out Units and the Partnership pays a
distribution of available cash from operating surplus pursuant to
the terms of the Partnership Agreement on each of the outstanding
Common Units equal to or greater than $0.5775 per Common Unit in
respect of each of the quarterly periods ended December 31, 2017,
March 31, 2018, June 30, 2018 and September 30, 2018.
The terms of the New IDRs are
effective with respect to the distribution for the quarter ended
December 31, 2016, payable in February 2017. The New IDRs
provide for distribution "splits" between the IDR holders and the
holders of Common Units equal to those applicable to the Old IDRs,
which have been cancelled. However, the New IDRs provide for higher
target distribution levels, as set forth in the table below. In
addition, in connection with the Transaction, the minimum quarterly
distribution will be $0.5775 per common unit (or $2.31 per unit on
an annualized basis).
The following table compares the
target distribution levels and distribution splits between the
general partner and the holders of Common Units under the Old IDRs
and under the New IDRs:
|
Old IDRs
(Cancelled)
|
New IDRs
|
|
Total Quarterly
Distribution Target Amount
|
Marginal
Percentage Interest in Distributions
|
Total Quarterly
Distribution Target Amount
|
Marginal
Percentage Interest in Distributions
|
|
Common
Unitholders
|
General
Partner
|
IDR
Holders
|
Common
Unitholders
|
General
Partner
|
IDR
Holders
|
Minimum Quarterly Distribution |
$0.3850 |
98% |
2% |
0% |
$0.5775 |
No
Change |
First Target Distribution |
Up to $0.4428 |
98% |
2% |
0% |
Up to $0.6641 |
Second Target Distribution |
Above $0.4428 up
to $0.4813 |
85% |
2% |
13% |
Above $0.6641 up to $0.7291 |
Third Target Distribution |
Above $0.4813 up
to $0.5775 |
75% |
2% |
23% |
Above $0.7291 up to $0.8663 |
Thereafter |
Above $0.5775 |
50% |
2% |
48% |
Above $0.8663 |
After this reset Golar will have a
total of 22,934,678 units including common and general partner
units and including a total of 763,870 Earn-Out Units. Based
on the October 13, 2016 closing price the value of this stake is in
excess of $470 million. The common units and the associated annual
distribution income receivable from Golar Partners of approximately
of $49.9 million per annum, provides an attractive security package
for a potential commercial bank refinancing of the whole or the
major part of the convertible bond due in March 2017.
For the Partnership this
Transaction reduces its cost of equity and better positions it to
pursue acquisitions from Golar that add revenue backlog, reduce
exposure to expiring time charters and grow its distribution
capacity. As a holder of 33% of the common units in Golar Partners,
Golar is likely to benefit from these developments.
Golar expects to enter into
preliminary discussions with Golar Partners regarding the potential
acquisition of an interest in the FLNG unit, the Golar Hilli, which is on schedule to commence its 8
year contract with Perenco Cameroon by September 30, 2017.
However, there can be no assurance
that the Partnership will acquire an interest in the Golar Hilli.
Any such acquisition would be dependent on the attractiveness of
the overall financing package, including the pricing of any equity
financing, and the approval of the boards of directors of the
Partnership and Golar.
FORWARD LOOKING
STATEMENTS
This press release contains certain forward-looking statements
concerning future events and Golar's operations, performance and
financial condition. Forward-looking statements include, without
limitation, any statement that may predict, forecast, indicate or
imply future results, performance or achievements, and may contain
the words "believe", "anticipate", "expect", "estimate", "project",
"will be", "will continue", "will likely result", "plan", "intend"
or words or phrases of similar meanings. These statements involve
known and unknown risks and are based upon a number of assumptions
and estimates that are inherently subject to significant
uncertainties and contingencies, many of which are beyond Golar's
control. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Important
factors that could cause actual results to differ materially
include, but are not limited to, those factors listed from time to
time in the reports and other documents Golar files with the United
States Securities and Exchange Commission.
New factors emerge from time to
time, and it is not possible for Golar to predict all of these
factors. Further, Golar cannot assess the impact of each such
factor on its business or the extent to which any factor, or
combination of factors, may cause actual results to be materially
different from those contained in any forward-looking statement.
Golar does not intend to release publicly any updates or revisions
to any forward-looking statements contained herein to reflect any
change in Golar's expectations with respect thereto or any change
in events, conditions or circumstances on which any such statement
is based.
Hamilton, Bermuda
October14, 2016
Enquiries:
Golar Management Limited: + 44 207 063 7900
Brian Tienzo
Stuart Buchanan
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Golar LNG via Globenewswire
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