Exchange of Golar LNG Partners LP Incentive Distribution Rights
October 14 2016 - 8:38AM
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
Golar LNG (NASDAQ:GLNG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Golar LNG (NASDAQ:GLNG)
Historical Stock Chart
From Apr 2023 to Apr 2024