UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES
EXCHANGE ACT OF 1934
For the month of June 2015
Commission File Number 001-36433
GasLog Partners LP
(Translation of registrant’s name into English)
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): | o |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): | o |
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GasLog Partners LP (the “Partnership”) (NYSE: GLOP) and GasLog Ltd. (“GasLog”) announced on June 22, 2015 that they have entered into an agreement for the Partnership to purchase from GasLog, the sole member of the Partnership’s general partner, 100% of the shares of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., the entities that own and charter the Methane Alison Victoria , Methane Shirley Elisabeth and Methane Heather Sally , respectively, modern liquefied natural gas (“LNG”) carriers built in 2007, each with a capacity of 145,000 cubic meters, for an aggregate purchase price of $483.0 million (the “Acquisition”). The Acquisition is subject to the Partnership obtaining the funds necessary to pay the purchase price and the satisfaction of certain other closing conditions. The Partnership expects to finance the acquisition with a combination of equity and the assumption of the vessels’ existing credit facilities. Attached as Exhibit 10.1 is the share purchase agreement among GasLog Carriers Ltd., GasLog and the Partnership.
Audited combined financial statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., as of December 31, 2014 and for the period from April 4, 2014 (date of inception) to December 31, 2014 have been included in this report and attached hereto as Exhibit 99.1. Interim unaudited condensed combined financial statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., as of and for the three months ended March 31, 2015 have been included in this report and attached hereto as Exhibit 99.2.
Attached as Exhibit 99.3 is a copy of the unaudited pro forma combined financial information of the Partnership, which give effect to the Acquisition. Attached as Exhibit 99.4 is a press release announcing the Acquisition.
INCORPORATION BY REFERENCE
Exhibits 23.1, 99.1, 99.2, 99.3 and 99.4 to this Report on Form 6-K shall be incorporated by reference into our registration statement on Form F-3 (File No. 333-204616), initially filed with the Securities and Exchange Commission (the “SEC”) on June 1, 2015, as amended, to the extent not superseded by information subsequently filed or furnished (to the extent we expressly state that we incorporate such furnished information by reference) by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.
EXHIBIT LIST
Exhibit | Description | |
10.1 | Share Purchase Agreement among GasLog Carriers Ltd., GasLog Ltd. and GasLog Partners LP | |
23.1 | Consent of Deloitte LLP | |
99.1 | Audited Combined Financial Statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. as of December 31, 2014 and for the period April 4, 2014 (date of inception) to December 31, 2014 | |
99.2 | Interim Unaudited Condensed Combined Financial Statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. as of and for the three months ended March 31, 2015 | |
99.3 | Unaudited Pro Forma Combined Financial Information of GasLog Partners LP | |
99.4 | Press Release |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: June 22, 2015 | |||||
GASLOG PARTNERS LP | |||||
by | /s/ Andrew Orekar | ||||
Name: | Andrew Orekar | ||||
Title: | Chief Executive Officer |
Exhibit 10.1
SHARE PURCHASE AGREEMENT
Dated June 22, 2015
among
GASLOG CARRIERS LTD.,
GASLOG LTD.
and
GASLOG PARTNERS LP
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TABLE OF CONTENTS
Page | |
ARTICLE I | |
Interpretation | |
SECTION 1.01. Definitions | 2 |
ARTICLE II | |
Purchase and Sale of Shares; Closing | |
SECTION 2.01. Purchase and Sale of Shares | 9 |
SECTION 2.02. Closing | 9 |
SECTION 2.03. Place of Closing | 9 |
SECTION 2.04. Purchase Price for Shares | 9 |
SECTION 2.05. Working Capital Adjustment | 9 |
SECTION 2.06. Payment of the Purchase Price | 11 |
ARTICLE III | |
Representations and Warranties of the Buyer | |
SECTION 3.01. Organization and Limited Partnership Authority | 11 |
SECTION 3.02. Agreement Not in Breach of Other Instruments | 11 |
SECTION 3.03. No Legal Bar | 11 |
SECTION 3.04. Securities Act | 11 |
SECTION 3.05. Independent Investigation | 12 |
ARTICLE IV | |
Representations and Warranties Regarding the Sponsor | |
SECTION 4.01. Organization and Corporate Authority | 12 |
SECTION 4.02. Agreement Not in Breach | 12 |
SECTION 4.03. No Legal Bar | 12 |
ARTICLE V | |
Representations and Warranties Regarding the Seller and the GAS-nineteen Vessel Owner | |
SECTION 5.01. Organization Good Standing and Authority | 13 |
SECTION 5.02. Capitalization; Good and Marketable Title to GAS-nineteen Shares | 13 |
SECTION 5.03. GAS-nineteen Organizational Documents | 13 |
SECTION 5.04. Agreement Not in Breach | 13 |
SECTION 5.05. The GAS-nineteen Shares | 13 |
SECTION 5.06. No Legal Bar | 14 |
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SECTION 5.07. Litigation | 14 |
SECTION 5.08. Indebtedness to and from Officers, etc | 14 |
SECTION 5.09. Personnel | 15 |
SECTION 5.10. GAS-nineteen Contracts and Agreements | 15 |
SECTION 5.11. Compliance with Law | 15 |
SECTION 5.12. No Undisclosed Liabilities | 15 |
SECTION 5.13. Payment of Taxes | 16 |
SECTION 5.14. Permits | 16 |
SECTION 5.15. No Material Adverse Change in Business | 16 |
SECTION 5.16. Tax Classification | 16 |
ARTICLE VI | |
Representations and Warranties Regarding the Seller and the GAS-twenty Vessel Owner | |
SECTION 6.01. Organization Good Standing and Authority | 17 |
SECTION 6.02. Capitalization; Good and Marketable Title to GAS-twenty Shares | 17 |
SECTION 6.03. GAS-twenty Organizational Documents | 17 |
SECTION 6.04. Agreement Not in Breach | 17 |
SECTION 6.05. The GAS-twenty Shares | 17 |
SECTION 6.06. Litigation | 18 |
SECTION 6.07. Indebtedness to and from Officers, etc | 18 |
SECTION 6.08. Personnel | 18 |
SECTION 6.09. GAS-twenty Contracts and Agreements | 18 |
SECTION 6.10. Compliance with Law | 19 |
SECTION 6.11. No Undisclosed Liabilities | 19 |
SECTION 6.12. Payment of Taxes | 19 |
SECTION 6.13. Permits | 20 |
SECTION 6.14. No Material Adverse Change in Business | 20 |
SECTION 6.15. Tax Classification | 20 |
ARTICLE VII | |
Representations and Warranties Regarding the Seller and the GAS-twenty one Vessel Owner | |
SECTION 7.01. Organization Good Standing and Authority | 20 |
SECTION 7.02. Capitalization; Good and Marketable Title to GAS-twenty one Shares | 21 |
SECTION 7.03. GAS-twenty one Organizational Documents | 21 |
SECTION 7.04. Agreement Not in Breach | 21 |
SECTION 7.05. The GAS-twenty one Shares | 21 |
SECTION 7.06. Litigation | 21 |
SECTION 7.07. Indebtedness to and from Officers, etc | 22 |
SECTION 7.08. Personnel | 22 |
SECTION 7.09. GAS-twenty one Contracts and Agreements | 22 |
SECTION 7.10. Compliance with Law | 23 |
SECTION 7.11. No Undisclosed Liabilities | 23 |
SECTION 7.12. Payment of Taxes | 23 |
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SECTION 7.13. Permits | 23 |
SECTION 7.14. No Material Adverse Change in Business | 24 |
SECTION 7.15. Tax Classification | 24 |
ARTICLE VIII | |
Representations and Warranties Regarding the GAS-nineteen Vessel | |
SECTION 8.01. Title to GAS-nineteen Vessel | 24 |
SECTION 8.02. No Encumbrances | 24 |
SECTION 8.03. Condition | 24 |
ARTICLE IX | |
Representations and Warranties Regarding the GAS-twenty Vessel | |
SECTION 9.01. Title to GAS-twenty Vessel | 25 |
SECTION 9.02. No Encumbrances | 25 |
SECTION 9.03. Condition | 25 |
ARTICLE X | |
Representations and Warranties Regarding the GAS-twenty one Vessel | |
SECTION 10.01. Title to GAS-twenty one Vessel | 25 |
SECTION 10.02. No Encumbrances | 25 |
SECTION 10.03. Condition | 25 |
ARTICLE XI | |
Covenants | |
SECTION 11.01. Financial Statements | 26 |
SECTION 11.02. Expenses | 26 |
SECTION 11.03. Commercially Reasonable Efforts; Financing | 27 |
SECTION 11.04. Tests and Surveys | 27 |
SECTION 11.05. Further Assurances | 27 |
SECTION 11.06. Covenants of Sponsor and Seller Prior to Closing | 27 |
SECTION 11.07. Credit Facilities | 28 |
ARTICLE XII | |
Conditions to Closing | |
SECTION 12.01. Conditions to the Obligations of Sponsor, Seller and Buyer | 28 |
SECTION 12.02. Conditions to the Obligation of Buyer | 29 |
SECTION 12.03. Conditions to the Obligation of Sponsor and Seller | 29 |
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ARTICLE XIII | |
Amendments and Waivers | |
SECTION 13.01. Amendments and Waivers | 30 |
ARTICLE XIV | |
Indemnification | |
SECTION 14.01. Indemnity by the Seller | 30 |
SECTION 14.02. Limitation Regarding Indemnification | 31 |
SECTION 14.03. Indemnity by the Buyer | 31 |
SECTION 14.04. Exclusive Post-Closing Remedy | 32 |
ARTICLE XV | |
Termination | |
SECTION 15.01. Termination | 32 |
SECTION 15.02. Effect of Termination | 33 |
ARTICLE XVI | |
Miscellaneous | |
SECTION 16.01. Governing Law | 33 |
SECTION 16.02. Counterparts | 33 |
SECTION 16.03. Complete Agreement | 33 |
SECTION 16.04. Interpretation | 34 |
SECTION 16.05. Severability | 34 |
SECTION 16.06. Third Party Rights | 34 |
SECTION 16.07. Notices | 34 |
SECTION 16.08. Representations and Warranties to Survive | 35 |
SECTION 16.09. Remedies | 35 |
SECTION 16.10. Non-recourse to General Partner | 35 |
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SHARE PURCHASE AGREEMENT (the “ Agreement ”), dated as of June 22, 2015, is made by and among GASLOG LTD. (the “ Sponsor ”), a Bermuda exempted company, GASLOG CARRIERS LTD. (the “ Seller ”), a Bermuda exempted company and a wholly owned subsidiary of the Sponsor (and together with the Sponsor, and their affiliates other than the Buyer Entities, the “ Seller Entities ”) and GASLOG PARTNERS LP (the “ Buyer ”), a limited partnership organized under the laws of the Republic of the Marshall Islands.
WHEREAS the Seller is the registered owner and sole shareholder of record of all the authorised and issued share capital of GAS-nineteen Ltd., a Bermuda exempted company, with its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “ GAS-nineteen Vessel Owner ”) and such GAS-nineteen Vessel Owner is the registered owner of the Bermuda flagged LNG carrier the Methane Alison Victoria (the “ GAS-nineteen Vessel ”); the Seller is the registered owner and sole shareholder of record of all the authorised and issued share capital of GAS-twenty Ltd., a Bermuda exempted company, with its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “ GAS-twenty Vessel Owner ”), and such GAS-twenty Vessel Owner is the registered owner of the Bermuda flagged LNG carrier the Methane Shirley Elisabeth (the “ GAS-twenty Vessel”) ; and the Seller is the registered owner and sole shareholder of record of all the authorised and issued share capital of GAS-twenty one Ltd., a Bermuda exempted company, with its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “ GAS-twenty one Vessel Owner ,” and, together with the GAS-nineteen Vessel Owner and the GAS-twenty Vessel Owner, the “ Vessel Owners ”), and such GAS-twenty one Vessel Owner is the registered owner of the Bermuda flagged LNG carrier the Methane Heather Sally (the “ GAS-twenty one Vessel” and, together with the GAS-nineteen Vessel and the GAS-twenty Vessel, the “ Vessels ”).
WHEREAS the Buyer wishes to purchase from the Seller, and the Seller wishes to sell to the Buyer, all of the authorised and issued share capital of the GAS-nineteen Vessel Owner (the “ GAS-nineteen Shares ”) which are registered in the sole name of the Seller; and the Buyer wishes to purchase from the Seller, and the Seller wishes to sell to the Buyer, all of the authorised and issued share capital of the GAS-twenty Vessel Owner (the “ GAS-twenty Shares ”); and the Buyer wishes to purchase from the Seller, and the Seller wishes to sell to the Buyer, all of the authorised and issued share capital of the GAS-twenty one Vessel Owner (the “ GAS-twenty one Shares ” and, together with the GAS-nineteen Shares and the GAS-twenty Shares, the “ Shares ”) which are registered in the name of the Seller.
WHEREAS the GAS-nineteen Vessel is employed under a LNG time charter party dated May 29, 2014 entered into by Methane Services Limited, a company incorporated under the laws of England and Wales and whose registered office is at 100 Thames Valley Park Drive, Reading, Berkshire RG6 1PT, United Kingdom, as charterer (the “ Charterer ”) commenced on June 4, 2014 (as amended or supplemented, the “ GAS-nineteen Charter ”); the GAS-twenty Vessel is employed under a LNG time charter party dated June 4, 2014 by the Charterer commenced on June 11, 2014 (as amended or supplemented, the “ GAS-twenty Charter ”); and the GAS-twenty one Vessel is employed under a LNG time charter party dated June 19, 2014 by the Charterer commenced on
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June 25, 2014 (as amended or supplemented, the “ GAS-twenty one Charter ” and, together with the GAS-nineteen Charter, and the GAS-twenty Charter, the “ Charters ”).
WHEREAS the GAS-nineteen Vessel Owner and the Sponsor have entered into a commercial management agreement dated June 4, 2014 for the commercial management of the GAS-nineteen Vessel (the “ GAS-nineteen Commercial Management Agreement ”); the GAS-nineteen Vessel Owner and GasLog LNG Services Ltd. (the “ Manager ”) have entered into a ship management agreement dated June 4, 2014 for the technical management of the GAS-nineteen Vessel (“ GAS-nineteen Technical Management Agreement ,” and together with the GAS-nineteen Commercial Management Agreement, the “ GAS-nineteen Management Agreements ”); the GAS-twenty Vessel Owner and the Sponsor have entered into a commercial management agreement dated June 11, 2014 for the commercial management of the GAS-twenty Vessel (the “ GAS-twenty Commercial Management Agreement ”); the GAS-twenty Vessel Owner and the Manager have entered into a ship management agreement dated June 11, 2014 for the technical management of the GAS-twenty Vessel (the “ GAS-twenty Technical Management Agreement ,” and together with the GAS-twenty Commercial Management Agreement, the “ GAS-twenty Management Agreements )”; the GAS-twenty one Vessel Owner and the Sponsor have entered into a commercial management agreement dated June 25, 2014 for the commercial management of the GAS-twenty one Vessel (the “ GAS-twenty one Commercial Management Agreement ”); the GAS-twenty one Vessel Owner and the Manager have entered into a ship management agreement dated June 25, 2014 for the technical management of the GAS-twenty one Vessel (the “ GAS-twenty one Technical Management Agreement ,” and together with the GAS-twenty one Commercial Management Agreement, the “ GAS-twenty one Management Agreements ,” and the GAS-twenty one Management Agreements collectively with the GAS-nineteen Management Agreements and the GAS-twenty Management Agreements, the “ Management Agreements ”).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Interpretation
SECTION 1.01. Definitions. In this Agreement, unless the context requires otherwise or unless otherwise specifically provided herein, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:
“ Acquisition ” has the meaning given to it in Section 2.01.
“ Actual Adjustment ” means (x) the Purchase Price as adjusted by adding the Net Working Capital Adjustment as finally determined pursuant to 2.05(b), minus (y) the Estimated Closing Payment.
“ Agreement ” means this Agreement, including its preamble and schedules.
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“ Applicable Law ” in respect of any Person, property, transaction or event, means all laws, statutes, ordinances, regulations, municipal by-laws, treaties, judgments and decrees applicable to that Person, property, transaction or event and, whether or not having the force of law, all applicable official directives, rules, consents, approvals, authorizations, guidelines, orders, codes of practice and policies of any Governmental Authority having or purporting to have authority over that Person, property, transaction or event and all general principles of common law and equity.
“ Board of Directors ” means the board of directors of the Buyer.
“ Buyer ” has the meaning given to it in the preamble.
“ Buyer Entities ” means the Buyer and its subsidiaries.
“ Buyer Indemnitees ” has the meaning given to it in Section 12.01.
“ Charter ” has the meaning given to it in the preamble.
“ Charterer ” has the meaning given to it in the preamble.
“ Closing ” has the meaning given to it in Section 2.02.
“ Closing Date ” has the meaning given to it in Section 2.02.
“ Commission ” means the Securities and Exchange Commission.
“ Commitment ” means (a) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights or other contracts that could require a Person to issue any of its equity interests or to sell any equity interests it owns in another Person (other than this Agreement and the related transaction documents); (b) any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any equity interest of a Person or owned by a Person; and (c) stock appreciation rights, phantom stock, profit participation, or other similar rights with respect to a Person.
“ Conflicts Committee ” means the Conflicts Committee of the Board of Directors.
“ Covered Environmental Losses ” means all Losses suffered or incurred by the Buyer Entities by reason of, arising out of or resulting from:
(a) any violation or correction of violation of Environmental Laws; or
(b) any event or condition relating to environmental or human health and safety matters, in each case, associated with the ownership or operation by the Buyer Entities or the Seller Entities of the Vessel Owners and their assets (including, without limitation, the presence of Hazardous Substances on, under, about
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or migrating to or from the Vessel Owners or the disposal or release of, or exposure to, Hazardous Substances generated by or otherwise related to operation of the Vessel Owners and their assets), including, without limitation, the reasonable and documented cost and expense of (i) any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation or other corrective action required or necessary under Environmental Laws, (ii) the preparation and implementation of any closure, remedial, corrective action or other plans required or necessary under Environmental Laws and (iii) any environmental or toxic tort (including, without limitation, personal injury or property damage claims) pre-trial, trial or appellate legal or litigation support work;
but only to the extent that such violation complained of under clause (a) , or such events or conditions included in clause (b) , is proven to have occurred before the Closing Date; and, provided, that in no event shall Losses to the extent arising from a change in any Environmental Law after the Closing Date be deemed Covered Environmental Losses.
“ Credit Facility ” means the $325,500,000 facility agreement dated May 14, 2014 between the GAS-nineteen Vessel Owner, the GAS-twenty Vessel Owner, and the GAS-twenty one Vessel Owner as borrowers, the banks and financial institutions named as lenders therein, Citibank, N.A., London Branch as mandated lead arranger, Citibank, N.A., London Branch as bookrunner, Citibank International Limited as agent and Citibank N.A., London Branch as security agent and trustee, as amended and supplemented from time to time.
“ Encumbrance ” means any mortgage, lien, charge, assignment, adverse claim, hypothecation, restriction, option, covenant, condition or encumbrance, whether fixed or floating, on, or any security interest in, any property whether real, personal or mixed, tangible or intangible, any pledge or hypothecation of any property, any deposit arrangement, priority, conditional sale agreement, other title retention agreement or equipment trust, capital lease or other security arrangements of any kind.
“ Environmental Laws ” means all international, federal, state, foreign and local laws, statutes, rules, regulations, treaties, conventions, orders, judgments and ordinances having the force and effect of law and relating to protection of natural resources, health and safety and the environment, each in effect and as amended through the Closing Date.
“ Equity Interest ” means (a) with respect to any entity, any and all shares or other ownership interest and any Commitments with respect thereto, (b) any other direct equity ownership or participation in a Person and (c) any Commitments with respect to the interests described in (a) or (b).
“ Estimated Adjustment Amount ” means a good faith estimate of the Net Working Capital Adjustment, as determined by the Seller and calculated in accordance with this Agreement.
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“ GAS-nineteen Balance Sheet ” has the meaning given to it in Section 5.12.
“ GAS-nineteen Charter ” has the meaning given to it in the preamble.
“GAS-nineteen Commercial Management Agreement ” has the meaning given to it in the preamble.
“ GAS-nineteen Contracts ” means the GAS-nineteen Memorandum of Agreement, the Credit Facility and all related financing and security documents, the GAS-nineteen Charter and the GAS-nineteen Management Agreements.
“ GAS-nineteen Management Agreements ” has the meaning given to it in the preamble.
“ GAS-nineteen Memorandum of Agreement ” means the agreement dated May 29, 2014 between Brazil Shipping II Ltd. and GAS-nineteen Ltd. related to the sale of the Methane Alison Victoria .
“ GAS-nineteen Organizational Documents ” has the meaning given to it in Section 5.03.
“ GAS-nineteen Purchase Price ” has the meaning given to it in Section 2.04.
“ GAS-nineteen Shares ” has the meaning given to it in the preamble.
“GAS-nineteen Technical Management Agreement ” has the meaning given to it in the preamble.
“ GAS-nineteen Vessel ” has the meaning given to it in the preamble.
“ GAS-nineteen Vessel Owner ” has the meaning given to it in the preamble.
“ GAS-twenty Balance Sheet ” has the meaning given to it in Section 6.11.
“ GAS-twenty Charter ” has the meaning given to it in the preamble.
“ GAS-twenty Commercial Management Agreement ” has the meaning given to it in the preamble.
“ GAS-twenty Contracts ” means the GAS-twenty Memorandum of Agreement, the Credit Facility and all related financing and security documents, the GAS-twenty Charter and the GAS-twenty Management Agreements.
“ GAS-twenty Management Agreements ” has the meaning given to it in the preamble.
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“ GAS-twenty Memorandum of Agreement ” means the agreement dated June 4, 2014 between Brazil Shipping II Ltd. and GAS-twenty Ltd. related to the sale of the Methane Shirley Elizabeth .
“ GAS-twenty Organizational Documents ” has the meaning given to it in Section 6.03.
“ GAS-twenty Purchase Price ” has the meaning given to it in Section 2.04.
“ GAS-twenty Shares ” has the meaning given to it in the preamble.
“ GAS-twenty Technical Management Agreement ” has the meaning given to it in the preamble.
“ GAS-twenty Vessel ” has the meaning given to it in the preamble.
“ GAS-twenty Vessel Owner ” has the meaning given to it in the preamble.
“ GAS-twenty one Balance Sheet ” has the meaning given to it in Section 7.11.
“ GAS-twenty one Charter ” has the meaning given to it in the preamble.
“ GAS-twenty one Commercial Management Agreement ” has the meaning given to it in the preamble.
“ GAS-twenty one Contracts ” means the GAS-twenty one Memorandum of Agreement, the Credit Facility and all related financing and security documents, the GAS-twenty one Charter and the GAS-twenty one Management Agreements.
“ GAS-twenty one Management Agreements ” has the meaning given to it in the preamble.
“ GAS-twenty one Memorandum of Agreement ” means the agreement dated June 19, 2014 between Brazil Shipping II Ltd. and GAS-twenty one Ltd. related to the sale of the Methane Heather Sally .
“ GAS-twenty one Organizational Documents ” has the meaning given to it in Section 7.03.
“ GAS-twenty one Purchase Price ” has the meaning given to it in Section 2.04.
“ GAS-twenty one Shares ” has the meaning given to it in the preamble.
“ GAS-twenty one Technical Management Agreement ” has the meaning given to it in the preamble.
“ GAS-twenty one Vessel ” has the meaning given to it in the preamble.
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“ GAS-twenty one Vessel Owner ” has the meaning given to it in the preamble.
“ GPHL ” means GasLog Partners Holdings LLC, a Marshall Islands limited liability company and wholly-owned subsidiary of the Buyer.
“ Governmental Authority ” means any domestic or foreign government, including federal, provincial, state, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, and includes any department, commission, bureau, board, administrative agency or regulatory body of any of the foregoing and any multinational or supranational organization.
“ Hazardous Substances ” means (a) each substance defined, designated or classified as a hazardous waste, hazardous substance, hazardous material, solid waste, contaminant or toxic substance under Environmental Laws; (b) petroleum and petroleum products, including crude oil and any fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof; (d) any radioactive material; and (e) any asbestos-containing materials in a friable condition.
“ IFRS ” has the meaning given to it in Section 5.12.
“ Losses ” means losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including, without limitation, court costs and reasonable attorneys’ fees and experts’ fees) of any and every kind or character; provided , however , that such term shall not include any special, indirect, incidental or consequential damages.
“ Management Agreements ” has the meaning given to it in the preamble.
“ Manager ” has the meaning given to it in the preamble.
“ MLP Guarantee ” means the guarantee to be executed by the Buyer and GPHL in favor of the Security Agent (as such term is defined in the Credit Facility) on or before the Closing Date with respect to the obligations of the GAS-nineteen Vessel Owner, the GAS-twenty Vessel Owner and the GAS- twenty one Vessel Owner under the Credit Facility.
“ Net Working Capital ” means, with respect to the Vessel Owners, those current assets of the Vessel Owners (on a combined basis), as of 11:59 p.m. on the day preceding the Closing Date that are included in the line item categories of current assets specifically identified on Exhibit A , less those current liabilities of the Vessel Owners (on a combined basis), as of 11:59 p.m. BST on the day preceding the Closing Date that are included in the line item categories of current liabilities specifically identified on Exhibit A , in each case, without duplication, and as determined in accordance with IFRS as applied on a consistent basis.
“ Net Working Capital Adjustment ” means (i) the amount by which Net Working Capital exceeds the Net Working Capital Threshold or (ii) the amount by which Net Working Capital is less than the Net Working Capital Threshold, as applicable;
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provided that any amount which is calculated pursuant to clause (ii) above shall be deemed to be a negative number.
“ Net Working Capital Threshold ” means U.S. dollars $3,000,000.
“ Parties ” means all parties to this Agreement and “ Party ” means any one of them.
“ Partnership Agreement ” means the Agreement of Limited Partnership of the Buyer dated May 12, 2014, as amended from time to time.
“ Person ” means an individual, entity or association, including any legal personal representative, corporation, body corporate, firm, partnership, trust, trustee, syndicate, joint venture, unincorporated organization or Governmental Authority.
“ Permits ” has the meaning given to it in Section 5.14.
“ Purchase Price ” has the meaning given to it in Section 2.04.
“ Securities Act ” means the Securities Act of 1933, as amended from time to time.
“ Seller ” has the meaning given to it in the preamble.
“ Seller Entities ” has the meaning given to it in the preamble.
“ Seller Indemnitees ” has the meaning given to it in Section 14.03.
“ Shares ” has the meaning given to it in the preamble.
“ Sponsor ” has the meaning given to it in the preamble.
“ Taxes ” means all income, franchise, business, property, sales, use, goods and services or value added, withholding, excise, alternate minimum capital, transfer, excise, customs, anti-dumping, stumpage, countervail, net worth, stamp, registration, franchise, payroll, employment, health, education, business, school, property, local improvement, development, education development and occupation taxes, surtaxes, duties, levies, imposts, rates, fees, assessments, dues and charges and other taxes required to be reported upon or paid to any domestic or foreign jurisdiction and all interest and penalties thereon.
“ Vessels ” has the meaning given to it in the preamble.
“ Vessel Owners ” has the meaning given to it in the preamble.
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ARTICLE ii
Purchase and Sale of Shares; Closing
SECTION 2.01. Purchase and Sale of Shares. The Seller agrees to sell to the Buyer, the Sponsor agrees to cause the Seller to sell to the Buyer and the Buyer agrees to purchase from the Seller for the applicable Purchase Price and in accordance with and subject to the terms and conditions set forth in this Agreement, the Shares which in turn shall result in the Buyer indirectly owning the Vessels (the “ Acquisition ”). The Seller shall transfer the Shares to GPHL, a wholly-owned subsidiary of Buyer, at Closing, unless Buyer shall before Closing nominate a different Buyer Entity to receive the Shares.
SECTION 2.02. Closing. On the terms of this Agreement and subject to the satisfaction or waiver of the conditions set forth in Article XII, the sale and transfer of the Shares and payment of the Purchase Price shall take place on the date that is five business days after the satisfaction or waiver of all of the conditions set forth in Article XII (other than those conditions to be satisfied on the Closing Date) (such date, the “ Closing Date ”) or such other date as the Sponsor, Seller and Buyer shall otherwise agree. The sale and transfer of the Shares is hereinafter referred to as “ Closing ”.
SECTION 2.03. Place of Closing. The Closing shall take place at Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco or any other place as designated by the Sponsor.
SECTION 2.04. Purchase Price for Shares. On the Closing Date, (i) the Buyer shall pay to the Seller (to such account and beneficiary being a Seller Entity as the Seller shall designate) the amount of U.S. dollars $161,000,000 (the “ GAS-nineteen Purchase Price ”) in exchange for the GAS-nineteen Shares, (ii) the Buyer shall pay to the Seller (to such account and beneficiary being a Seller Entity as the Seller shall designate) the amount of U.S. dollars $161,000,000 (the “ GAS-twenty Purchase Price ”) in exchange for the GAS-twenty Shares, and (iii) the Buyer shall pay to the Seller (to such account and beneficiary being a Seller Entity as the Seller shall designate) the amount of U.S. dollars $161,000,000 (the “ GAS-twenty one Purchase Price ” and, together with the GAS-nineteen Purchase Price and the GAS-twenty Purchase Price, the “ Purchase Price ”) in exchange for the GAS-twenty one Shares, in each case subject to adjustment pursuant to Section 2.05. The Purchase Price may be payable by Buyer in part, in lieu of cash, by the transfer of associated debt obligations of the Vessel Owners under the Credit Facility and the granting of the MLP Guarantee. The Buyer shall have no responsibility or liability hereunder for the Seller’s allocation and distribution of the Purchase Price among the Seller Entities.
SECTION 2.05. Working Capital Adjustment.
(a) No later than one Business Days prior to the Closing Date, the Seller shall deliver to the Buyer a calculation of the Estimated Adjustment Amount, and the Purchase Price payable on the Closing Date shall be adjusted by adding the Estimated Adjustment Amount (such adjusted amount, the “ Estimated Closing Payment ”).
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(b) As soon as practicable, but no later than 30 days after the Closing Date, Buyer shall prepare and deliver to the Seller a proposed calculation of the Net Working Capital, including the components thereof (the “ Proposed Calculations ”). If the Seller does not give written notice of dispute (a “ Dispute Notice ”) to Buyer within 30 days of receiving the Proposed Calculations, the Proposed Calculations shall be deemed to set forth the final Net Working Capital; provided , however , that the Dispute Notice may include only objections based on (x) noncompliance with the standards set forth in this Agreement for the preparation of the Net Working Capital or (y) mathematical errors in the calculation of the Net Working Capital. If the Seller gives a Dispute Notice to Buyer (which Dispute Notice must set forth, in reasonable detail, the items and amounts in dispute and all other items and amounts not so disputed shall be deemed final) within such 30-day period, Buyer and the Seller shall use commercially reasonable efforts to resolve the dispute during the 30-day period commencing on the date Buyer receives the Dispute Notice from the Seller. If the Seller and Buyer do not agree upon a final resolution with respect to such disputed items within such 30-day period, then the remaining items in dispute shall be submitted immediately to an independent accounting firm mutually acceptable to Buyer and the Seller. Any accounting firm so agreed (the “ Accounting Firm ”) shall be required to render a determination of the applicable dispute within 45 days after referral of the matter to such Accounting Firm, which determination must be in writing and must set forth, in reasonable detail, the basis therefor; provided that the Accounting Firm may (i) only consider those items and amounts as to which the Seller and Buyer have disagreed within the time periods and on the terms specified above and (ii) only make adjustments based on noncompliance with the standards set forth in this Agreement for the determination of the Net Working Capital. The determination made by the Accounting Firm with respect to the remaining disputed items shall not exceed or be less than the amounts proposed by the Seller and Buyer, as the case may be. The terms of appointment and engagement of the Accounting Firm shall be as agreed upon between the Seller and Buyer, and any associated engagement fees shall be borne 50% by the Seller and 50% by Buyer. The determination of such Accounting Firm shall be conclusive and binding for all purposes of this Agreement. Buyer and Seller shall provide each other reasonable access to financial and other records in connection with the determination of the Net Working Capital under this Section 2.05(b).
(c) Adjustment to Estimated Closing Payment:
(i) If the Actual Adjustment is a positive amount, Buyer shall pay to the Seller an amount equal to such positive amount by wire transfer or delivery of immediately available funds, in each case, within three Business Days after the date on which the Net Working Capital is finally determined pursuant to Section 2.05(b).
(ii) If the Actual Adjustment is a negative amount, Seller shall pay to Buyer an amount equal to such negative amount by wire transfer or delivery of immediately available funds, in each case, within three Business Days after the date on which the Net Working Capital is finally determined pursuant to Section 2.05(b).
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SECTION 2.06. Payment of the Purchase Price. The Purchase Price (to the extent paid in U.S. dollars) will be paid by the Buyer to the Seller by wire transfer of immediately available funds to an account and beneficiary being a Seller Entity designated in writing by the Seller.
ARTICLE
iii
Representations and Warranties of the Buyer
The Buyer represents and warrants to the Seller that as of the date hereof and as of the Closing Date:
SECTION 3.01. Organization and Limited Partnership Authority. The Buyer is duly formed, validly existing and in good standing under the laws of the Republic of the Marshall Islands, and has all requisite limited partnership power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Buyer, has been effectively authorized by all necessary action, limited partnership or otherwise, and constitutes legal, valid and binding obligations of the Buyer. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the Buyer.
SECTION 3.02. Agreement Not in Breach of Other Instruments. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, or conflict with, any agreement or other instrument to which the Buyer is a party or by which it is bound, the Certificate of Formation and the Partnership Agreement, any judgment, decree, order or award of any court, governmental body or arbitrator by which the Buyer is bound, or any law, rule or regulation applicable to the Buyer which would have a material effect on the transactions contemplated hereby.
SECTION 3.03. No Legal Bar. The Buyer is not prohibited by any order, writ, injunction or decree of any body of competent jurisdiction from consummating the transactions contemplated by this Agreement and no such action or proceeding is pending or, to the best of its knowledge and belief, threatened against the Buyer which questions the validity of this Agreement, any of the transactions contemplated hereby or any action which has been taken by any of the parties in connection herewith or in connection with any of the transactions contemplated hereby.
SECTION 3.04. Securities Act. The Shares purchased by the Buyer pursuant to this Agreement are being acquired for investment purposes only and not with a view to any public distribution thereof, and the Buyer shall not offer to sell or otherwise dispose of the Shares so acquired by it in violation of any of the registration requirements of the Securities Act. The Buyer acknowledges that it is able to fend for itself, can bear the economic risk of its investment in the Shares, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in all of the Shares. The Buyer understands that, when transferred to the
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Buyer at the Closing, none of the Shares will be registered pursuant to the Securities Act and that all of the Shares will constitute “restricted securities” under the federal securities laws of the United States.
SECTION 3.05. Independent Investigation. The Buyer has had the opportunity to conduct to its own satisfaction independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the Vessel Owners and the Vessels and, in making the determination to proceed with the transactions contemplated hereby, has relied solely on the results of its own independent investigation and the representations and warranties set forth in Articles IV, V, VI, VII, VIII, IX and X.
ARTICLE
IV
Representations and Warranties Regarding the Sponsor
The Sponsor represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 4.01. Organization and Corporate Authority. The Sponsor is duly incorporated, validly existing and in good standing under the laws of Bermuda, and has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Sponsor, has been effectively authorized by all necessary action, corporate or otherwise, and constitutes legal, valid and binding obligations of the Sponsor. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the Sponsor.
SECTION 4.02. Agreement Not in Breach. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, or conflict with, any agreement or other instrument to which the Sponsor is a party or by which it is bound, the Memorandum of Association and Bye-laws of the Sponsor, any judgment, decree, order or award of any court, governmental body or arbitrator by which the Sponsor is bound, or any law, rule or regulation applicable to the Sponsor.
SECTION 4.03. No Legal Bar. The Sponsor is not prohibited by any order, writ, injunction or decree of any body of competent jurisdiction from consummating the transactions contemplated by this Agreement and no such action or proceeding is pending or, to the best of its knowledge and belief, threatened against the Sponsor which questions the validity of this Agreement, any of the transactions contemplated hereby or any action which has been taken by any of the parties in connection herewith or in connection with any of the transactions contemplated hereby.
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ARTICLE V
Representations and Warranties Regarding the Seller and the GAS-nineteen Vessel Owner
The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 5.01. Organization Good Standing and Authority. The Seller is a Bermuda exempted company duly incorporated, validly existing and in good standing under the laws of Bermuda. This Agreement has been duly executed and delivered by the Seller, has been effectively authorized by all necessary action, corporate or otherwise, and constitutes legal, valid and binding obligations of the Seller. The GAS-nineteen Vessel Owner is a Bermuda exempted company duly registered, validly existing and in good standing under the laws of Bermuda. Each of the Seller and the GAS-nineteen Vessel Owner has full corporate power and authority to carry on its business as it is now, and has since its formation been, conducted, and is entitled to own, lease or operate the properties and assets it now owns, leases or operates and to enter into legal and binding contracts. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the Seller or the GAS-nineteen Vessel Owner.
SECTION 5.02. Capitalization; Good and Marketable Title to GAS-nineteen Shares. The GAS-nineteen Shares have been duly authorized and validly issued and are fully paid and nonassessable, and constitute the total issued and outstanding Equity Interests of the GAS-nineteen Vessel Owner. There are not outstanding (i) any options, warrants or other rights to purchase from the Seller any equity interests of the GAS-nineteen Vessel Owner, (ii) any securities convertible into or exchangeable for shares of such equity interests of the GAS-nineteen Vessel Owner or (iii) any other commitments of any kind for the issuance of additional shares of equity interests or options, warrants or other securities of the GAS-nineteen Vessel Owner.
SECTION 5.03. GAS-nineteen Organizational Documents. The Seller Entities have supplied to the Buyer true and correct copies of the organizational documents of the GAS-nineteen Vessel Owner, as in effect as of the date hereof (the “ GAS-nineteen Organizational Documents ”).
SECTION 5.04. Agreement Not in Breach. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, or result in a breach of, any of the terms and provisions of, or constitute a default under, or conflict with, or give any other party thereto a right to terminate any agreement or other instrument to which the Seller or the GAS-nineteen Vessel Owner is a party or by which it is bound including, without limitation, any of the GAS-nineteen Organizational Documents, any judgment, decree, order or award of any court, governmental body or arbitrator applicable to the GAS-nineteen Vessel Owner or the GAS-nineteen Contracts.
SECTION 5.05. The GAS-nineteen Shares. Assuming the Buyer or the applicable Buyer Entity has the requisite power and authority to be the lawful owner of
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the GAS-nineteen Shares, upon delivery to the Buyer or the applicable Buyer Entity at the Closing of instruments sufficient to evidence the transfer from the Seller to the Buyer (or the applicable Buyer Entity) of the GAS-nineteen Shares under the Applicable Laws of the relevant jurisdiction, or delivery of such GAS-nineteen Shares by electronic means, and upon or simultaneously with the Seller’s receipt of the GAS-nineteen Purchase Price, the Buyer or the applicable Buyer Entity shall own good and valid title to the GAS-nineteen Shares, free and clear of any Encumbrances, other than those arising under or in relation to the Credit Facility and the GAS-nineteen Charter or otherwise from acts of the Buyer Entities and an updated Register of Members of the GAS-nineteen Vessel Owner, certified by the Secretary of the GAS-nineteen Vessel Owner, shall be delivered to the Buyer. Other than this Agreement and any related transaction documents, the GAS-nineteen Organizational Documents, the Credit Facility and the GAS-nineteen Charter and restrictions imposed by Applicable Law, at the Closing, the GAS-nineteen Shares will not be subject to any voting trust agreement or other contract, agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rights or disposition of the GAS-nineteen Shares, other than any agreement to which any Buyer Entity is a party.
SECTION 5.06. No Legal Bar . The Seller is not prohibited by any order, writ, injunction or decree of any body of competent jurisdiction from consummating the transactions contemplated by this Agreement and no such action or proceeding is pending or, to the best of its knowledge and belief, threatened against the Seller which questions the validity of this Agreement, any of the transactions contemplated hereby or any action which has been taken by any of the parties in connection herewith or in connection with any of the transactions contemplated hereby.
SECTION 5.07. Litigation. (a) There is no action, suit or proceeding to which the GAS-nineteen Vessel Owner is a party (either as a plaintiff or defendant) pending before any court or governmental agency, authority or body or arbitrator; there is no action, suit or proceeding threatened against the GAS-nineteen Vessel Owner; and, to the best knowledge of the Seller, there is no basis for any such action, suit or proceeding.
(b) The GAS-nineteen Vessel Owner has not been permanently or temporarily enjoined by any order, judgment or decree of any court or any governmental agency, authority or body from engaging in or continuing any conduct or practice in connection with the business, assets or properties of the GAS-nineteen Vessel Owner.
(c) There is not in existence any order, judgment or decree of any court or other tribunal or other agency enjoining or requiring the GAS-nineteen Vessel Owner to take any action of any kind with respect to its business, assets or properties.
SECTION 5.08. Indebtedness to and from Officers, etc. The GAS-nineteen Vessel Owner will not be indebted, directly or indirectly, to any person who is an officer (save to the company secretary in respect of professional and transactional fees), director, stockholder or employee of the Seller or any spouse, child, or other relative or any affiliate of any such person, nor shall any such officer, director, stockholder, employee, relative or affiliate be indebted to the GAS-nineteen Vessel Owner.
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SECTION 5.09. Personnel. The GAS-nineteen Vessel Owner has no employees.
SECTION 5.10. GAS-nineteen Contracts and Agreements. Other than the GAS-nineteen Contracts, there are no material contracts or agreements, written or oral, to which the GAS-nineteen Vessel Owner is a party or by which any of its assets are bound.
(a) Each of the GAS-nineteen Contracts is a valid and binding agreement of the GAS-nineteen Vessel Owner, and to the best knowledge of the Seller, of all other parties thereto.
(b) The GAS-nineteen Vessel Owner has fulfilled all material obligations required pursuant to its GAS-nineteen Contracts to have been performed by it prior to the date hereof and has not waived any material rights thereunder, including payment in full of the purchase price for the GAS-nineteen Vessel, together with any other payments of the GAS-nineteen Vessel Owner due thereunder.
(c) There has not occurred any material default under any of the GAS-nineteen Contracts on the part of the GAS-nineteen Vessel Owner, or to the best knowledge of the Seller, on the part of any other party thereto nor has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of the GAS-nineteen Vessel Owner under any of the GAS-nineteen Contracts nor, to the best knowledge of the Seller, has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any other party to any of the GAS-nineteen Contracts.
SECTION 5.11. Compliance with Law. The conduct of business by the GAS-nineteen Vessel Owner does not and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any Applicable Laws of any country, province, state or other governing body, the enforcement of which would materially and adversely affect the business, assets, condition (financial or otherwise) or prospects of the GAS-nineteen Vessel Owner taken as a whole, nor has the GAS-nineteen Vessel Owner received any notice of any such violation.
SECTION 5.12. No Undisclosed Liabilities. Except for such liabilities, debts, obligations, encumbrances, defects, restrictions or claims of a general nature and magnitude that would arise in connection with the operation of LNG carriers of the same type as the GAS-nineteen Vessel in the ordinary course of business and obligations arising under the GAS-nineteen Contracts, the GAS-nineteen Vessel Owner (or the GAS-nineteen Vessel owned by it) has no liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for Taxes and interest, penalties and other charges payable with respect to any such liability or obligation) that: (i) have not been disclosed in writing to the Buyer Entities prior to the date hereof or (ii) have not been set forth in the unaudited balance sheet of the GAS-nineteen Vessel Owner as of March 31, 2015, provided to Buyer prior to the execution of this Agreement (the “ GAS-nineteen Balance
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Sheet ”). The GAS-nineteen Balance Sheet (A) was derived from and has been prepared in accordance with the underlying books and records of the GAS-nineteen Vessel Owner, (B) has been prepared in accordance with international financial reporting standards (“ IFRS ”) (subject to the absence of footnote disclosure) and (C) fairly presents the assets, liabilities (including reserves) and financial position of the GAS-nineteen Vessel Owner as of the date thereof.
SECTION 5.13. Payment of Taxes. The GAS-nineteen Vessel Owner has filed all foreign, federal, state and local income and franchise tax returns required to be filed, which returns are correct and complete in all material respects, and has timely paid all taxes due from it, and the GAS-nineteen Vessel is in good standing with respect to the payment of past and current Taxes, fees and other amounts payable under the laws of the jurisdiction where it is registered as would affect its registry with the ship registry of such jurisdiction.
SECTION 5.14. Permits. The GAS-nineteen Vessel Owner has such permits, consents, licenses, franchises, concessions, certificates and authorizations (“ Permits ”) of, and has all declarations and filings with, and is qualified and in good standing in each jurisdiction of, all federal, provincial, state, local or foreign Governmental Authorities and other Persons, as are necessary to own or lease its properties and to conduct its business in the manner that is standard and customary for a business of its nature other than such Permits the absence of which, individually or in the aggregate, has not and could not reasonably be expected to materially or adversely affect the GAS-nineteen Vessel Owner or the GAS-nineteen Vessel, and the GAS-nineteen Vessel Owner has fulfilled and performed all its obligations with respect to such Permits which are or will be due to have been fulfilled and performed by such date and no event has occurred that would prevent such Permits from being renewed or reissued or that allows, or after notice or lapse of time would allow, revocation or termination thereof or results or would result in any impairment of the rights of the holder of any such Permit, except for such nonrenewals, nonissues, revocations, terminations and impairments that would not, individually or in the aggregate, materially or adversely affect the GAS-nineteen Vessel Owner or the GAS-nineteen Vessel, and none of such Permits contains any restriction that is materially burdensome to the GAS-nineteen Vessel Owner.
SECTION 5.15. No Material Adverse Change in Business. Since December 31, 2014, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, properties, business affairs or business prospects of the GAS-nineteen Vessel Owner, whether or not arising in the ordinary course of business, that would have or could reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the GAS-nineteen Vessel Owner.
SECTION 5.16. Tax Classification . The GAS-nineteen Vessel Owner has filed an election under U.S. Treasury Regulation Section 301.7701-3(c) to be classified as a disregarded entity for U.S. Federal income tax purposes, to be effective prior to the date hereof.
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ARTICLE VI
Representations and Warranties Regarding the Seller and the GAS-twenty Vessel Owner
The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 6.01. Organization Good Standing and Authority. The GAS-twenty Vessel Owner is a Bermuda exempted company duly registered, validly existing and in good standing under the laws of Bermuda. The GAS-twenty Vessel Owner has full corporate power and authority to carry on its business as it is now, and has since its formation been, conducted, and is entitled to own, lease or operate the properties and assets it now owns, leases or operates and to enter into legal and binding contracts. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the GAS-twenty Vessel Owner.
SECTION 6.02. Capitalization; Good and Marketable Title to GAS-twenty Shares. The GAS-twenty Shares have been duly authorized and validly issued and are fully paid and nonassessable, and constitute the total issued and outstanding Equity Interests of the GAS-twenty Vessel Owner. There are not outstanding (i) any options, warrants or other rights to purchase from the Seller any equity interests of the GAS-twenty Vessel Owner, (ii) any securities convertible into or exchangeable for shares of such equity interests of the GAS-twenty Vessel Owner or (iii) any other commitments of any kind for the issuance of additional shares of equity interests or options, warrants or other securities of the GAS-twenty Vessel Owner.
SECTION 6.03. GAS-twenty Organizational Documents. The Seller Entities have supplied to the Buyer true and correct copies of the organizational documents of the GAS-twenty Vessel Owner, as in effect as of the date hereof (the “ GAS-twenty Organizational Documents ”).
SECTION 6.04. Agreement Not in Breach. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, or result in a breach of, any of the terms and provisions of, or constitute a default under, or conflict with, or give any other party thereto a right to terminate any agreement or other instrument to which the GAS-twenty Vessel Owner is a party or by which it is bound including, without limitation, any of the GAS-twenty Organizational Documents, any judgment, decree, order or award of any court, governmental body or arbitrator applicable to the GAS-twenty Vessel Owner or the GAS-twenty Contracts.
SECTION 6.05. The GAS-twenty Shares. Assuming the Buyer or the applicable Buyer Entity has the requisite power and authority to be the lawful owner of the GAS-twenty Shares, upon delivery to the Buyer or the applicable Buyer Entity at the Closing of instruments sufficient to evidence the transfer from the Seller to the Buyer (or the applicable Buyer Entity) of the GAS-twenty Shares under the Applicable Laws of the relevant jurisdiction, or delivery of such GAS-twenty Shares by electronic means, and upon or simultaneously with the Seller’s receipt of the GAS-twenty Purchase Price, the
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Buyer or the applicable Buyer Entity shall own good and valid title to the GAS-twenty Shares, free and clear of any Encumbrances, other than those arising under or in relation to the Credit Facility and the GAS-twenty Charter or otherwise from acts of the Buyer Entities and an updated Register of Members of the GAS-twenty Vessel Owner, certified by the Secretary of the GAS-twenty Vessel Owner, shall be delivered to the Buyer. Other than this Agreement and any related transaction documents, the GAS-twenty Organizational Documents, the Credit Facility and the GAS-twenty Charter and restrictions imposed by Applicable Law, at the Closing, the GAS-twenty Shares will not be subject to any voting trust agreement or other contract, agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rights or disposition of the GAS-twenty Shares, other than any agreement to which any Buyer Entity is a party.
SECTION 6.06. Litigation. (a) There is no action, suit or proceeding to which the GAS-twenty Vessel Owner is a party (either as a plaintiff or defendant) pending before any court or governmental agency, authority or body or arbitrator; there is no action, suit or proceeding threatened against the GAS-twenty Vessel Owner; and, to the best knowledge of the Seller, there is no basis for any such action, suit or proceeding.
(b) The GAS-twenty Vessel Owner has not been permanently or temporarily enjoined by any order, judgment or decree of any court or any governmental agency, authority or body from engaging in or continuing any conduct or practice in connection with the business, assets or properties of the GAS-twenty Vessel Owner.
(c) There is not in existence any order, judgment or decree of any court or other tribunal or other agency enjoining or requiring the GAS-twenty Vessel Owner to take any action of any kind with respect to its business, assets or properties.
SECTION 6.07. Indebtedness to and from Officers, etc. The GAS-twenty Vessel Owner will not be indebted, directly or indirectly, to any person who is an officer (save to the company secretary in respect of professional and transactional fees), director, stockholder or employee of the Seller or any spouse, child, or other relative or any affiliate of any such person, nor shall any such officer, director, stockholder, employee, relative or affiliate be indebted to the GAS-twenty Vessel Owner.
SECTION 6.08. Personnel. The GAS-twenty Vessel Owner has no employees.
SECTION 6.09. GAS-twenty Contracts and Agreements. Other than the GAS-twenty Contracts, there are no material contracts or agreements, written or oral, to which the GAS-twenty Vessel Owner is a party or by which any of its assets are bound.
(a) Each of the GAS-twenty Contracts is a valid and binding agreement of the GAS-twenty Vessel Owner, and to the best knowledge of the Seller, of all other parties thereto.
(b) The GAS-twenty Vessel Owner has fulfilled all material obligations required pursuant to its GAS-twenty Contracts to have been performed by it prior to the date hereof and has not waived any material rights thereunder, including
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payment in full of the purchase price for the GAS-twenty Vessel, together with any other payments of the GAS-twenty Vessel Owner due thereunder.
(c) There has not occurred any material default under any of the GAS-twenty Contracts on the part of the GAS-twenty Vessel Owner, or to the best knowledge of the Seller, on the part of any other party thereto nor has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of the GAS-twenty Vessel Owner under any of the GAS-twenty Contracts nor, to the best knowledge of the Seller, has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any other party to any of the GAS-twenty Contracts.
SECTION 6.10. Compliance with Law. The conduct of business by the GAS-twenty Vessel Owner does not and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any Applicable Laws of any country, province, state or other governing body, the enforcement of which would materially and adversely affect the business, assets, condition (financial or otherwise) or prospects of the GAS-twenty Vessel Owner taken as a whole, nor has the GAS-twenty Vessel Owner received any notice of any such violation.
SECTION 6.11. No Undisclosed Liabilities. Except for such liabilities, debts, obligations, encumbrances, defects, restrictions or claims of a general nature and magnitude that would arise in connection with the operation of LNG carriers of the same type as the GAS-twenty Vessel in the ordinary course of business and obligations arising under the GAS-twenty Contracts, the GAS-twenty Vessel Owner (or the GAS-twenty Vessel owned by it) has no liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for Taxes and interest, penalties and other charges payable with respect to any such liability or obligation) that: (i) have not been disclosed in writing to the Buyer Entities prior to the date hereof or (ii) have not been set forth in the unaudited balance sheet of the GAS-twenty Vessel Owner as of March 31, 2015, provided to Buyer prior to the execution of this Agreement (the “ GAS-twenty Balance Sheet ”). The GAS-twenty Balance Sheet (A) was derived from and has been prepared in accordance with the underlying books and records of the GAS-twenty Vessel Owner, (B) has been prepared in accordance with IFRS (subject to the absence of footnote disclosure) and (C) fairly presents the assets, liabilities (including reserves) and financial position of the GAS-twenty Vessel Owner as of the date thereof.
SECTION 6.12. Payment of Taxes. The GAS-twenty Vessel Owner has filed all foreign, federal, state and local income and franchise tax returns required to be filed, which returns are correct and complete in all material respects, and has timely paid all taxes due from it, and the GAS-twenty Vessel is in good standing with respect to the payment of past and current Taxes, fees and other amounts payable under the laws of the jurisdiction where it is registered as would affect its registry with the ship registry of such jurisdiction.
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SECTION 6.13. Permits. The GAS-twenty Vessel Owner has such Permits of, and has all declarations and filings with, and is qualified and in good standing in each jurisdiction of, all federal, provincial, state, local or foreign Governmental Authorities and other Persons, as are necessary to own or lease its properties and to conduct its business in the manner that is standard and customary for a business of its nature other than such Permits the absence of which, individually or in the aggregate, has not and could not reasonably be expected to materially or adversely affect the GAS-twenty Vessel Owner or the GAS-twenty Vessel, and the GAS-twenty Vessel Owner has fulfilled and performed all its obligations with respect to such Permits which are or will be due to have been fulfilled and performed by such date and no event has occurred that would prevent such Permits from being renewed or reissued or that allows, or after notice or lapse of time would allow, revocation or termination thereof or results or would result in any impairment of the rights of the holder of any such Permit, except for such nonrenewals, nonissues, revocations, terminations and impairments that would not, individually or in the aggregate, materially or adversely affect the GAS-twenty Vessel Owner or the GAS-twenty Vessel, and none of such Permits contains any restriction that is materially burdensome to the GAS-twenty Vessel Owner.
SECTION 6.14. No Material Adverse Change in Business. Since December 31, 2014, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, properties, business affairs or business prospects of the GAS-twenty Vessel Owner, whether or not arising in the ordinary course of business, that would have or could reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the GAS-twenty Vessel Owner.
SECTION 6.15. Tax Classification . The GAS-twenty Vessel Owner has filed an election under U.S. Treasury Regulation Section 301.7701-3(c) to be classified as a disregarded entity for U.S. Federal income tax purposes, to be effective prior to the date hereof.
ARTICLE
vii
Representations and Warranties Regarding the Seller and the GAS-twenty one Vessel Owner
The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 7.01. Organization Good Standing and Authority. The GAS-twenty one Vessel Owner is a Bermuda exempted company duly registered, validly existing and in good standing under the laws of Bermuda. The GAS-twenty one Vessel Owner has full corporate power and authority to carry on its business as it is now, and has since its formation been, conducted, and is entitled to own, lease or operate the properties and assets it now owns, leases or operates and to enter into legal and binding contracts. No meeting has been convened or resolution proposed or petition presented and no order has been made to wind up the GAS-twenty one Vessel Owner.
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SECTION 7.02. Capitalization; Good and Marketable Title to GAS-twenty one Shares. The GAS-twenty one Shares have been duly authorized and validly issued and are fully paid and nonassessable, and constitute the total issued and outstanding Equity Interests of the GAS-twenty one Vessel Owner. There are not outstanding (i) any options, warrants or other rights to purchase from the Seller any equity interests of the GAS-twenty one Vessel Owner, (ii) any securities convertible into or exchangeable for shares of such equity interests of the GAS-twenty one Vessel Owner or (iii) any other commitments of any kind for the issuance of additional shares of equity interests or options, warrants or other securities of the GAS-twenty one Vessel Owner.
SECTION 7.03. GAS-twenty one Organizational Documents. The Seller Entities have supplied to the Buyer true and correct copies of the organizational documents of the GAS-twenty one Vessel Owner, as in effect as of the date hereof (the “ GAS-twenty one Organizational Documents ”).
SECTION 7.04. Agreement Not in Breach. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, or result in a breach of, any of the terms and provisions of, or constitute a default under, or conflict with, or give any other party thereto a right to terminate any agreement or other instrument to which the GAS-twenty one Vessel Owner is a party or by which it is bound including, without limitation, any of the GAS-twenty one Organizational Documents, any judgment, decree, order or award of any court, governmental body or arbitrator applicable to the GAS-twenty one Vessel Owner or the GAS-twenty one Contracts.
SECTION 7.05. The GAS-twenty one Shares. Assuming the Buyer or the applicable Buyer Entity has the requisite power and authority to be the lawful owner of the GAS-twenty one Shares, upon delivery to the Buyer or the applicable Buyer Entity at the Closing of instruments sufficient to evidence the transfer from the Seller to the Buyer (or the applicable Buyer Entity) of the GAS-twenty one Shares under the Applicable Laws of the relevant jurisdiction, or delivery of such GAS-twenty one Shares by electronic means, and upon or simultaneously with the Seller’s receipt of the GAS-twenty one Purchase Price, the Buyer or the applicable Buyer Entity shall own good and valid title to the GAS-twenty one Shares, free and clear of any Encumbrances, other than those arising under or in relation to the Credit Facility and the GAS-twenty one Charter or otherwise from acts of the Buyer Entities and an updated Register of Members of the GAS-twenty one Vessel Owner, certified by the Secretary of the GAS-twenty one Vessel Owner, shall be delivered to the Buyer. Other than this Agreement and any related transaction documents, the GAS-twenty one Organizational Documents, the Credit Facility and the GAS-twenty one Charter and restrictions imposed by Applicable Law, at the Closing, the GAS-twenty one Shares will not be subject to any voting trust agreement or other contract, agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rights or disposition of the GAS-twenty one Shares, other than any agreement to which any Buyer Entity is a party.
SECTION 7.06. Litigation. (a) There is no action, suit or proceeding to which the GAS-twenty one Vessel Owner is a party (either as a plaintiff or defendant) pending before any court or governmental agency, authority or body or arbitrator; there is
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no action, suit or proceeding threatened against the GAS-twenty one Vessel Owner; and, to the best knowledge of the Seller, there is no basis for any such action, suit or proceeding.
(b) The GAS-twenty one Vessel Owner has not been permanently or temporarily enjoined by any order, judgment or decree of any court or any governmental agency, authority or body from engaging in or continuing any conduct or practice in connection with the business, assets or properties of the GAS-twenty one Vessel Owner.
(c) There is not in existence any order, judgment or decree of any court or other tribunal or other agency enjoining or requiring the GAS-twenty one Vessel Owner to take any action of any kind with respect to its business, assets or properties.
SECTION 7.07. Indebtedness to and from Officers, etc. The GAS-twenty one Vessel Owner will not be indebted, directly or indirectly, to any person who is an officer (save to the company secretary in respect of professional and transactional fees), director, stockholder or employee of the Seller or any spouse, child, or other relative or any affiliate of any such person, nor shall any such officer, director, stockholder, employee, relative or affiliate be indebted to the GAS-twenty one Vessel Owner.
SECTION 7.08. Personnel. The GAS-twenty one Vessel Owner has no employees.
SECTION 7.09. GAS-twenty one Contracts and Agreements. Other than the GAS-twenty one Contracts, there are no material contracts or agreements, written or oral, to which the GAS-twenty one Vessel Owner is a party or by which any of its assets are bound.
(a) Each of the GAS-twenty one Contracts is a valid and binding agreement of the GAS-twenty one Vessel Owner, and to the best knowledge of the Seller, of all other parties thereto.
(b) The GAS-twenty one Vessel Owner has fulfilled all material obligations required pursuant to its GAS-twenty one Contracts to have been performed by it prior to the date hereof and has not waived any material rights thereunder, including payment in full of the purchase price for the GAS-twenty one Vessel, together with any other payments of the GAS-twenty one Vessel Owner due thereunder.
(c) There has not occurred any material default under any of the GAS-twenty one Contracts on the part of the GAS-twenty one Vessel Owner, or to the best knowledge of the Seller, on the part of any other party thereto nor has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of the GAS-twenty one Vessel Owner under any of the GAS-twenty one Contracts nor, to the best knowledge of the Seller, has any event occurred which with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any other party to any of the GAS-twenty one Contracts.
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SECTION 7.10. Compliance with Law. The conduct of business by the GAS-twenty one Vessel Owner does not and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not violate any Applicable Laws of any country, province, state or other governing body, the enforcement of which would materially and adversely affect the business, assets, condition (financial or otherwise) or prospects of the GAS-twenty one Vessel Owner taken as a whole, nor has the GAS-twenty one Vessel Owner received any notice of any such violation.
SECTION 7.11. No Undisclosed Liabilities. Except for such liabilities, debts, obligations, encumbrances, defects, restrictions or claims of a general nature and magnitude that would arise in connection with the operation of LNG carriers of the same type as the GAS-twenty one Vessel in the ordinary course of business and obligations arising under the GAS-twenty one Contracts, the GAS-twenty one Vessel Owner (or the GAS-twenty one Vessel owned by it) has no liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for Taxes and interest, penalties and other charges payable with respect to any such liability or obligation) that: (i) have not been disclosed in writing to the Buyer Entities prior to the date hereof or (ii) have not been set forth in the unaudited balance sheet of the GAS-twenty one Vessel Owner as of March 31, 2015, provided to Buyer prior to the execution of this Agreement (the “ GAS-twenty one Balance Sheet ”). The GAS-twenty one Balance Sheet (A) was derived from and has been prepared in accordance with the underlying books and records of the GAS-twenty one Vessel Owner, (B) has been prepared in accordance with IFRS (subject to the absence of footnote disclosure) and (C) fairly presents the assets, liabilities (including reserves) and financial position of the GAS-twenty one Vessel Owner as of the date thereof.
SECTION 7.12. Payment of Taxes. The GAS-twenty one Vessel Owner has filed all foreign, federal, state and local income and franchise tax returns required to be filed, which returns are correct and complete in all material respects, and has timely paid all taxes due from it, and the GAS-twenty one Vessel is in good standing with respect to the payment of past and current Taxes, fees and other amounts payable under the laws of the jurisdiction where it is registered as would affect its registry with the ship registry of such jurisdiction.
SECTION 7.13. Permits. The GAS-twenty one Vessel Owner has such Permits of, and has all declarations and filings with, and is qualified and in good standing in each jurisdiction of, all federal, provincial, state, local or foreign Governmental Authorities and other Persons, as are necessary to own or lease its properties and to conduct its business in the manner that is standard and customary for a business of its nature other than such Permits the absence of which, individually or in the aggregate, has not and could not reasonably be expected to materially or adversely affect the GAS-twenty one Vessel Owner or the GAS-twenty one Vessel, and the GAS-twenty one Vessel Owner has fulfilled and performed all its obligations with respect to such Permits which are or will be due to have been fulfilled and performed by such date and no event has occurred that would prevent such Permits from being renewed or reissued or that allows, or after notice or lapse of time would allow, revocation or termination thereof or
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results or would result in any impairment of the rights of the holder of any such Permit, except for such nonrenewals, nonissues, revocations, terminations and impairments that would not, individually or in the aggregate, materially or adversely affect the GAS-twenty one Vessel Owner or the GAS-twenty one Vessel, and none of such Permits contains any restriction that is materially burdensome to the GAS-twenty one Vessel Owner.
SECTION 7.14. No Material Adverse Change in Business. Since December 31, 2014, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, properties, business affairs or business prospects of the GAS-twenty one Vessel Owner, whether or not arising in the ordinary course of business, that would have or could reasonably be expected to have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the GAS-twenty one Vessel Owner.
SECTION 7.15. Tax Classification . The GAS-twenty one Vessel Owner has filed an election under U.S. Treasury Regulation Section 301.7701-3(c) to be classified as a disregarded entity for U.S. Federal income tax purposes, to be effective prior to the date hereof.
ARTICLE viii
Representations and Warranties Regarding the GAS-nineteen Vessel
The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 8.01. Title to GAS-nineteen Vessel. The GAS-nineteen Vessel Owner is the owner (beneficially and of record) of the GAS-nineteen Vessel and has good and marketable title to the GAS-nineteen Vessel.
SECTION 8.02. No Encumbrances. The assets of the GAS-nineteen Vessel Owner and the GAS-nineteen Vessel are free of all Encumbrances other than the Encumbrances arising under the GAS-nineteen Charter and the Credit Facility (including the associated finance and security documents).
SECTION 8.03. Condition. The GAS-nineteen Vessel is (i) adequate and suitable for use by the GAS-nineteen Vessel Owner in the manner that is standard and customary for a vessel of its type and age, ordinary wear and tear excepted; (ii) seaworthy in all material respects for hull and machinery insurance warranty purposes and in good running order and repair; (iii) insured against all usual risks, and in amounts, consistent with common industry practices; (iv) in compliance with applicable maritime laws and regulations; and (v) in compliance in all material respects with the requirements of its class and classification society; and all class certificates of the GAS-nineteen Vessel are clean and valid and free of recommendations affecting class; and the Buyer acknowledges and agrees that, subject only to the representations and warranties in this Agreement, it is acquiring the GAS-nineteen Vessel on an “as is, where is” basis.
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ARTICLE IX
Representations and Warranties Regarding the GAS-twenty Vessel
The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 9.01. Title to GAS-twenty Vessel. The GAS-twenty Vessel Owner is the owner (beneficially and of record) of the GAS-twenty Vessel and has good and marketable title to the GAS-twenty Vessel.
SECTION 9.02. No Encumbrances. The assets of the GAS-twenty Vessel Owner and the GAS-twenty Vessel are free of all Encumbrances other than the Encumbrances arising under the GAS-twenty Charter and the Credit Facility (including the associated fnance and security documents).
SECTION 9.03. Condition. The GAS-twenty Vessel is (i) adequate and suitable for use by the GAS-twenty Vessel Owner in the manner that is standard and customary for a vessel of its type and age, ordinary wear and tear excepted; (ii) seaworthy in all material respects for hull and machinery insurance warranty purposes and in good running order and repair; (iii) insured against all usual risks, and in amounts, consistent with common industry practices; (iv) in compliance with applicable maritime laws and regulations; and (v) in compliance in all material respects with the requirements of its class and classification society; and all class certificates of the GAS-twenty Vessel are clean and valid and free of recommendations affecting class; and the Buyer acknowledges and agrees that, subject only to the representations and warranties in this Agreement, it is acquiring the GAS-twenty Vessel on an “as is, where is” basis.
ARTICLE X
Representations and Warranties Regarding the GAS-twenty one Vessel
The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing Date:
SECTION 10.01. Title to GAS-twenty one Vessel. The GAS-twenty one Vessel Owner is the owner (beneficially and of record) of the GAS-twenty one Vessel and has good and marketable title to the GAS-twenty one Vessel.
SECTION 10.02. No Encumbrances. The assets of the GAS-twenty one Vessel Owner and the GAS-twenty one Vessel are free of all Encumbrances other than the Encumbrances arising under the GAS-twenty one Charter and the Credit Facility (including the associated finance and security documents).
SECTION 10.03. Condition. The GAS-twenty one Vessel is (i) adequate and suitable for use by the GAS-twenty one Vessel Owner in the manner that is standard and customary for a vessel of its type and age, ordinary wear and tear excepted; (ii) seaworthy in all material respects for hull and machinery insurance warranty purposes
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and in good running order and repair; (iii) insured against all usual risks, and in amounts, consistent with common industry practices; (iv) in compliance with applicable maritime laws and regulations; and (v) in compliance in all material respects with the requirements of its class and classification society; and all class certificates of the GAS-twenty one Vessel are clean and valid and free of recommendations affecting class; and the Buyer acknowledges and agrees that, subject only to the representations and warranties in this Agreement, it is acquiring the GAS-twenty one Vessel on an “as is, where is” basis.
ARTICLE XI
Covenants
SECTION 11.01. Financial Statements. The Seller Entities agree to cause the Vessel Owners to provide access to the books and records of the Vessel Owners to allow the Buyer to prepare at the Buyer’s expense any information, review or audit the Buyer reasonably believes is required to be furnished or provided by the Buyer pursuant to applicable securities laws, including in connection with obtaining Buyer’s financing for the Acquisition and the filing of a registration statement with the Commission in connection therewith. The Seller will (a) provide the Buyer or the Buyer’s auditors access to the Seller’s work papers and (b) use its commercially reasonable efforts to assist the Buyer with any such information, review or audit and to provide other financial information reasonably requested by the Buyer or its auditors, including the delivery by the Seller Entities of any information, letters and similar documentation, including reasonable “management representation letters” and attestations.
SECTION 11.02. Expenses. All costs, fees and expenses incurred in connection with this Agreement and the related transaction documents (including those related to the MLP Guarantee) shall be paid by the Buyer, including all costs, fees and expenses incurred in connection with conveyance fees, recording charges and other fees and charges applicable to the transfer of the Shares. Sponsor and Buyer shall enter a letter agreement related to certain rights and obligations related to certain depot spares prior to Closing substantially in the form attached hereto as Exhibit B. In addition:
(i) all costs and expenses incurred by the Buyer to load the Vessel with fuel oil, lubricating oil, greases, fresh water and other stores necessary to operate the Vessel after the Closing shall be for the Buyer’s account;
(ii) all unused fuel oil, lubricating oil, greases, fresh water, and other stores on the Vessels at the Closing shall become the Buyer’s property after the Closing without extra payment;
(iii) all spare parts and spare equipment, including spare tail-end shafts, spare propellers and propeller blades, if any, belonging to the Vessel Owners at the time of Closing used or unused, and on board shall become the Buyer’s property after the Closing, and spares on order are to be included; and
(iv) subject to the provisions of Section 2.05, all bank account balances, cash, current assets and current liabilities of the Vessel Owners at the
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time of Closing shall remain the assets of the Vessel Owners and shall not be transferred to the Seller Entities in connection with Closing.
SECTION 11.03. Commercially Reasonable Efforts; Financing . On the terms and subject to the conditions of this Agreement, each of the Sponsor, Seller and Buyer shall use its commercially reasonable efforts to cause the Closing to occur, including taking all commercially reasonable actions necessary to comply promptly with all legal requirements that may be imposed on it or any of its affiliates with respect to the Closing and to obtain any such consents required to be obtained by it in connection with the transfer of the Vessel Owners. Sponsor and Seller shall also provide such reasonable cooperation in connection with the arrangement of the Buyer’s financing as may be reasonably requested by Buyer, including providing information and documents, and other actions that are or may be customary in connection with comparable financing transactions. Each of Sponsor, Seller and Buyer shall not, and shall not permit any of their respective affiliates to, take any actions that would, or that could reasonably be expected to, result in any of the conditions set forth in Article XII not being satisfied (including obtaining any consent, authorization, order or approval of, or any exemption by, any Governmental Authority required to be obtained or made by Sponsor, Seller or Buyer in connection with the acquisition of the Vessel Owners or the taking of any action contemplated by this Agreement in accordance with its terms).
SECTION 11.04. Tests and Surveys . The Seller and the Sponsor will grant to the Buyer the right, exercisable at the Buyer’s risk and expense, to make such surveys, tests and inspections of the Vessels as the Buyer may deem desirable, so long as such surveys, tests or inspections do not damage the Vessels or interfere with the activities of the Seller Entities or the Charterer thereon so long as the Buyer has furnished the Seller and the Sponsor with evidence that adequate liability insurance is in full force and effect.
SECTION 11.05. Further Assurances . From time to time after the date of this Agreement, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and will do all such other acts and things, all in accordance with Applicable Law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record title to the interests distributed, contributed and assigned by this Agreement or intended so to be and (c) to more fully and effectively carry out the purposes and intent of this Agreement.
SECTION 11.06. Covenants of Sponsor and Seller Prior to Closing . From the date of this Agreement to the Closing Date, Sponsor and Seller shall cause the Vessel Owners to conduct their business in the usual, regular and ordinary course in substantially the same manner as previously conducted. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Closing, except
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with the prior written consent of Buyer, the Sponsor and Seller shall not permit the Vessel Owners to:
(a) enter into any contracts or other written or oral agreements;
(b) (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) purchase, redeem or otherwise acquire any shares of capital stock or any other securities of the Vessel Owners or any options, warrants, calls or rights to acquire any such shares or other securities; or
(c) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or exchangeable for, any shares of its capital stock, or any stock options, warrants, calls or rights to acquire any such shares, voting securities or convertible securities or any stock appreciation rights or other rights that are linked in any way to the price of the Shares or the value of the Vessel Owners or any part thereof.
SECTION 11.07. Credit Facilities . The Sponsor, Seller and Buyer shall use, and shall cause their respective subsidiaries to use, commercially reasonable efforts to execute the MLP Guarantee and any other amendments to the Credit Facility as may be required in connection with the Closing of the transactions contemplated by this Agreement.
ARTICLE XIi
Conditions to Closing
SECTION 12.01. Conditions to the Obligations of Sponsor, Seller and Buyer . The obligations of Sponsor, Seller and Buyer to effect the Closing shall be subject to the satisfaction or waiver by Sponsor, Seller and Buyer on or prior to the Closing Date of the following conditions:
(a) no Governmental Authority shall have entered any order that remains in effect which would restrain, enjoin or otherwise prevent the performance of this Agreement or the consummation of any of the transactions contemplated hereby in accordance with the terms of this Agreement;
(b) all approvals of Governmental Authorities required to consummate the transactions contemplated by this Agreement shall have been obtained;
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(c) no Applicable Law shall have been enacted by any Governmental Authority which prohibits the consummation of the Closing; and
(d) the MLP Guarantee and any other amendments to the Credit Facility required in connection with the Closing of the transactions contemplated by this Agreement in such form as the Majority Lenders (as such term is defined in the Credit Facility) may require have been entered into.
SECTION 12.02. Conditions to the Obligation of Buyer . The obligation of Buyer to effect the Closing shall be subject to the satisfaction or waiver by Buyer on or prior to the Closing Date of each of the following conditions:
(a) the availability, in the Buyer’s sole discretion, of sufficient funds to pay the Purchase Price and other costs associated with the Acquisition;
(b) each of the representations and warranties of Seller contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date, with the same effect as if those representations and warranties had been made on and as of the Closing Date except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty need only be so true and correct as of such date, and except to the extent the failure to be so true and correct would not be material;
(c) Seller Entities shall have duly performed and complied in all material respects with all covenants and agreements contained in this Agreement that are required to be performed or complied with by Seller Entities at or before the Closing; and
(d) the results of any searches, surveys, tests or inspections conducted pursuant to Section 11.04 are, in the reasonable opinion of the Buyer, satisfactory.
SECTION 12.03. Conditions to the Obligation of Sponsor and Seller . The obligation of Sponsor and Seller to effect the Closing shall be subject to the satisfaction or waiver by Sponsor and Seller on or prior to the Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Buyer contained in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date, with the same effect as if those representations and warranties had been made on and as of the Closing Date except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty need only be so true and correct as of such date, and except to the extent the failure to be so true and correct would not be material; and
(b) Buyer Entities shall have duly performed and complied in all material respects with all covenants and agreements contained in this Agreement that are required to be performed or complied with by Buyer Entities at or before the Closing.
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ARTICLE Xiii
Amendments and Waivers
SECTION 13.01. Amendments and Waivers. This Agreement may not be amended except by an instrument in writing signed on behalf of each party hereto. By an instrument in writing the Buyer, on the one hand, or the Sponsor and Seller, on the other hand, may waive compliance by the other with any term or provision of this Agreement that such other party was or is obligated to comply with or perform.
ARTICLE XiV
Indemnification
SECTION 14.01. Indemnity by the Seller. From and after the Closing, the Seller shall be liable for, and shall indemnify the Buyer and each of its subsidiaries and each of their directors, employees, agents and representatives (the “ Buyer Indemnitees ”) against and hold them harmless from, any Losses, suffered or incurred by such Buyer Indemnitee:
(a) by reason of, arising out of or otherwise in respect of (i) any inaccuracy in, or breach of, any representation or warranty (without giving effect to any supplement to any disclosure schedules after the date hereof or qualifications as to materiality or dollar amount or other similar qualifications), or (ii) a failure to perform or observe any covenant, agreement or obligation of, the Seller Entities in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Seller Entities;
(b) with respect to any fees, expenses or other payments incurred or owed by the Seller Entities or the Vessel Owner to any brokers, financial advisors or comparable other persons retained or employed by it in connection with the transactions contemplated by this Agreement;
(c) by reason of, arising out of or otherwise in respect of obligations, liabilities, expenses, cost and claims relating to, arising from or otherwise attributable to the assets owned by the Vessel Owner or the assets, operations, and obligations of the Vessel Owner or the businesses thereof, in each case, to the extent relating to, arising from, or otherwise attributable to facts, circumstances or events occurring prior to the Closing Date;
(d) with respect to any Covered Environmental Losses relating to the Vessel Owners to the extent Sponsor or Seller is notified by Buyer of any such Covered Environmental Losses within five years after the Closing Date;
(e) with respect to any Losses to the Buyer arising from:
(i) the failure of the Buyer, immediately after the Closing
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Date, to be the owner of such valid leasehold interests or fee ownership interests in and to the Vessel Owners and Vessels as are necessary to enable the Buyer to own and operate the Vessel Owners and Vessels in substantially the same manner that the Vessel Owners and Vessels were owned and operated by the Seller immediately prior to the Closing Date; or
(ii) the failure of the Vessel Owners to have by the Closing Date any consent or governmental permit necessary to allow the Vessel Owners to own or operate the Vessels in substantially the same manner that the Vessels were owned and operated by the Seller Entities immediately prior to the Closing Date;
in each of clauses (i) and (ii) above, to the extent that the Sponsor or Seller is notified by the Buyer of such Losses within three years after the Closing Date; or
(f) with respect to all federal, state, foreign and local income tax liabilities attributable to the operation of the Vessel Owners prior to the Closing Date, but excluding any federal, state, foreign and local income taxes reserved on the books of the Buyer on the Closing Date.
SECTION 14.02. Limitation Regarding Indemnification .
(a) The aggregate liability of the Seller under Section 14.01(d) above shall not exceed $5,000,000. Furthermore, no claim may be made against the Seller for indemnification pursuant to Section 14.01(d), unless the aggregate dollar amount of all claims for indemnification pursuant to such section shall exceed $500,000, in which case the Seller shall be liable for claims for indemnification only to the extent such aggregate amount exceeds $500,000. The limitations set forth in this Section 14.02 shall also apply to any claim under Section 14.01(a)(i) to the extent related to environmental or health and human safety matters.
(b) The aggregate liability of the Seller under Section 14.01 above shall not exceed $483,000,000.
(c) The aggregate liability of the Buyer under Section 14.03 below shall not exceed $483,000,000.
(d) Except as otherwise set forth in this Article XIV or in Section 16.08, the indemnification obligations set forth in this Article XIV shall survive until the expiration of the applicable statute of limitations.
SECTION 14.03. Indemnity by the Buyer. From and after the Closing, the Buyer shall be liable for, and shall indemnify the Seller and Sponsor and their respective subsidiaries and each of their directors, employees, agents and representatives (the “ Seller Indemnitees ”) against and hold them harmless from, any Losses, suffered or incurred by such Seller Indemnitee:
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(a) by reason of, arising out of or otherwise in respect of (i) any inaccuracy in, or breach of, any representation or warranty (without giving effect to any supplement to the disclosure schedules occurring after the date hereof or qualifications as to materiality or dollar amount or other similar qualifications), or (ii) a failure to perform or observe any covenant, agreement or obligation of, the Buyer Entities in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Buyer Entities;
(b) with respect to any fees, expenses or other payments incurred or owed by the Buyer Entities to any brokers, financial advisors or comparable other persons retained or employed by it in connection with the transactions contemplated by this Agreement; or
(c) with respect to any payments made by the Sponsor and its subsidiaries, other than Buyers and its subsidiaries, under the Credit Facility after the Closing.
SECTION 14.04. Exclusive Post-Closing Remedy. From and after the Closing, and except for any remedies for wilful misconduct or actual fraud or for payments under Section 2.05, the rights and remedies set forth in this Article XIV shall constitute the sole and exclusive rights and remedies of the Parties under or with respect to the subject matter of this Agreement.
ARTICLE XV
Termination
SECTION 15.01. Termination . This Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual written consent of the Sponsor, Seller and Buyer;
(b) by Seller and Sponsor, on the one hand, or Buyer, on the other hand, by written notice to the other, if:
(i) the Closing shall not have occurred by July 31, 2015, unless such date is extended by the mutual written consent of Sponsor, Seller and Buyer;
(ii) a Governmental Authority has entered any permanent order which restrains, enjoins or otherwise prevents the performance of this Agreement or the consummation of any of the transactions contemplated hereby in accordance with the terms of this Agreement; or
(iii) an Applicable Law has been enacted by any Governmental Authority which prohibits the consummation of the Closing;
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33 |
provided that no Party may terminate this Agreement pursuant to this Section 15.01(b) if that Party has breached its obligations under this Agreement in a manner that shall have proximately caused the failure of the Closing to occur by such date;
(c) by Seller and Sponsor if either of the conditions set forth in Section 12.03(a) or 12.03(b) are not satisfied, and such failure shall not have been cured within 30 days following written notice of such failure;
(d) by the Buyer if:
(i) either of the conditions set forth in Section 12.02(b) or 12.03(c) are not satisfied, and such failure shall not have been cured within 30 days following written notice of such failure; or
(ii) the results of any searches, surveys, tests or inspections conducted pursuant to Section 11.04 are, in the reasonable opinion of the Buyer, unsatisfactory.
SECTION 15.02. Effect of Termination . In the event of the termination of this Agreement pursuant to Section 15.01, this Agreement shall become void and have no effect, without any liability to any Person in respect hereof or the transaction contemplated hereby on the part of any Party, or any of its directors, officers, employees, agents, legal and financial advisors, representatives, stockholders, or affiliates; provided, however , that the agreements contained in Section 11.02 (Expenses), this Section 15.02 and Article XVI shall survive the termination of this Agreement.
ARTICLE
XVI
Miscellaneous
SECTION 16.01. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed wholly within such jurisdiction without giving effect to conflict of law principles thereof other than Section 5-1401 of the New York General Obligations Law, except to the extent that it is mandatory that the law of some other jurisdiction, wherein the Vessels are located, shall apply.
SECTION 16.02. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute but one and the same instrument.
SECTION 16.03. Complete Agreement. This Agreement and Schedules hereto contain the entire agreement between the parties hereto with respect to the transactions contemplated herein and, except as provided herein, supersede all previous oral and written and all contemporaneous oral negotiations, commitments, writings and understandings.
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34 |
SECTION 16.04. Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 16.05. Severability. If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any governmental body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be made and necessary provision added so as to give effect, as nearly as possible, to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.
SECTION 16.06. Third Party Rights. Except to the extent provided in Article XV, a Person who is not a party to this Agreement has no right to enforce or to enjoy the benefit of any term of this Agreement.
SECTION 16.07. Notices. Any notice, claim or demand in connection with this Agreement shall be delivered to the parties at the following addresses (or at such other address or facsimile number for a party as may be designated by notice by such party to the other party):
(a) if to GASLOG CARRIERS LTD., as follows:
GasLog Carriers Ltd.
c/o GasLog Monaco S.A.M.
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
Attention: Legal
Facsimile: +377 9797-5124
(b) if to GASLOG LTD., as follows:
GasLog Ltd.
c/o GasLog Monaco S.A.M.
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
Attention: Legal
Facsimile: +377 9797-5124
(c) if to GASLOG PARTNERS LP, as follows:
GasLog Partners LP
c/o GasLog Monaco S.A.M.
Gildo Pastor Center
7 Rue du Gabian
MC 98000, Monaco
Attention: Andrew J. Orekar (Chief Executive
Officer)
Facsimile: +377 9797-5124
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35 |
and any such notice shall be deemed to have been received (i) on the next working day in the place to which it is sent, if sent by facsimile or (ii) forty eight (48) hours from the time of dispatch, if sent by courier.
SECTION 16.08. Representations and Warranties to Survive. All representations and warranties contained in this Agreement shall survive the Closing and shall remain operative and in full force and effect after the Closing, regardless of (a) any investigation made by or on behalf of any Party or its affiliates, any Person controlling any Party, its officers or directors, and (b) delivery of and payment for the Shares, for a period of three years from the date of this Agreement. At the end of such three year period, such representations and warranties will terminate, and no claim may be brought in respect of such representations and warranties under Article XV or otherwise, except for claims that have been asserted prior to such date.
SECTION 16.09. Remedies. Except as expressly provided in Section 14.04, the rights, obligations and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Except as expressly provided in this Agreement, nothing in this Agreement will be considered an election of remedies.
SECTION 16.10. Non-recourse to General Partner. Neither the Buyer’s general partner nor any other owner of Equity Interests in the Buyer shall be liable for the obligations of the Buyer under this Agreement or any of the related transaction documents, including, in each case, by reason of any payment obligation imposed by governing partnership statutes.
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36 |
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the date first above written.
GASLOG CARRIERS LTD., | |||
by | |||
/s/ Simon Crowe | |||
Name: Simon Crowe | |||
Title: Director |
GASLOG LTD., | |||
by | |||
/s/ Paul Wogan | |||
Name: Paul Wogan | |||
Title: Chief Executive Officer |
GASLOG PARTNERS LP, | |||
by | |||
/s/ Andrew J. Orekar | |||
Name: Andrew J. Orekar | |||
Title: Chief Executive Officer |
|
Exhibit A - Net Working Capital Line Items
Current Assets | ||||
Trade and other receivables | ||||
Inventories | ||||
Due from related parties | ||||
Prepayments and other current assets | ||||
Cash and cash equivalents | ||||
Total Current Assets (A) | $ |
Current Liabilities | ||||
Trade accounts payable | ||||
Due to related parties | ||||
Other payables and accruals | ||||
Total Current Liabilities (B) | $ | |||
Net Working Capital (A)-(B) | $ |
|
Exhibit B – Letter Agreement
GasLog Partners LP
June 22, 2015
To the attention of:
GasLog LNG Services Ltd.
GasLog Carriers Ltd.
Re: Allocation of Depot Spares
Ladies and Gentlemen:
Within this agreement (the “ Agreement ”), reference is made to the Letter of Agreement (the “ Letter of Agreement ”) dated June 19, 2014, attached hereto as Annex A, among Methane Services Limited, GasLog LNG Services Ltd. (“ GasLog Services ”) and GasLog Carriers Ltd. (the “ Seller ”), the Share Purchase Agreement (the “ Purchase Agreement ”) dated June 4, 2015 among the Seller, GasLog Ltd. and GasLog Partners LP (the “ Buyer ”, and together with GasLog Services and the Seller, the “ Parties ”) relating to the sale of the share capital of the companies that own the Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally (together, the “ Vessels ”), the Ship Management Agreement (such agreement, including as it may be subsequently amended, the “ GAS-nineteen Ship Management Agreement ”) dated June 4, 2015 between GAS-nineteen Ltd. and GasLog Services, the Ship Management Agreement (such agreement, including as it may be subsequently amended, the “ GAS-twenty Ship Management Agreement ”) dated June 11, 2015 between GAS-twenty Ltd. and GasLog Services, the Ship Management Agreement (such agreement, including as it may be subsequently amended, the “ GAS-twenty one Ship Management Agreement ”, and together with the GAS-nineteen Ship Management Agreement and the GAS-twenty Ship Management Agreement, the “ Ship Management Agreements ”) dated June 25, 2015 between GAS-twenty one Ltd. and GasLog Services and the letter agreement regarding the allocation of depot spares dated September 29, 2014 between Buyer, GasLog Services and GasLog Carriers (the “ First Depot Spares Letter ”) related to the earlier acquisition by Buyer of the Methane Rita Andrea and the Methane Jane Elizabeth (the “ Earlier Two Vessels ”).
WHEREAS, pursuant to the Letter of Agreement, GasLog Services may purchase and remove any of the items (the “ Depot Spares ”) listed in Appendices A and B to the Letter of Agreement that are currently held at the warehouse located at 8146 Big Lake Road, Lake Charles, Louisiana 70605 (the “ Warehouse ”), and in any case must purchase and remove all of the Depot Spares by March 31, 2020 (the “ Removal Date ”), in each case at the purchase prices set forth in such appendices (the “ Listed Prices ”); and
WHEREAS, pursuant to the Purchase Agreement, the Buyer has agreed to purchase the share capital of the companies that own the Vessels from the Seller;
|
NOW, THEREFORE, the Parties hereto agree as follows, to be effective upon closing of the transactions contemplated by the Purchase Agreement:
(a) GasLog Services shall act under the Ship Management Agreements on behalf of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., on an equal and ratable basis with other vessels subject to the Letter of Agreement in the GasLog Ltd. fleet and the Earlier Two Vessels subject to the First Depot Spares Letter in the Buyer’s fleet, in any further negotiations or discussions with Methane Services Limited regarding the Depot Spares and GasLog Services shall not agree to any amendment, modification or waiver of the Letter of Agreement without the written consent of Buyer.
(b) GasLog Services shall procure Depot Spares under the Letter of Agreement as necessary for use on the Vessels during the term of the Ship Management Agreements on behalf of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., and GasLog Services shall act with respect to the Vessels on an equal and ratable basis with other vessels subject to the Letter of Agreement in the GasLog Ltd. fleet and the Earlier Two Vessels subject to the First Depot Spares Letter in the Buyer’s fleet. GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. shall reimburse GasLog Services for the Listed Prices of any such procured Depot Spares in accordance with the Ship Management Agreements.
(c) Should either or both of the Ship Management Agreements be terminated on or prior to the Removal Date, this Agreement shall remain in effect and GasLog Services shall continue to grant GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. access to procure the Depot Spares, on an equal and ratable basis with other vessels subject to the Letter of Agreement in the GasLog Ltd. fleet and the Earlier Two Vessels subject to the First Depot Spares Letter in the Buyer’s fleet, at the Listed Prices of any such procured Depot Spares.
(d) If the Warehouse becomes unavailable prior to the Removal Date and GasLog Services is required to transfer the Depot Spares to a new storage location, the Buyer shall pay or cause to be paid to GasLog Services one-half of any costs associated with such transfer.
(e) On the Removal Date:
(i) | GasLog Services and Buyer shall, acting in good faith, ratably divide and allocate the remaining Depot Spares such that the Buyer shall be responsible for all costs and liability associated with removing one-half (or the nearest possible allocation to one-half) (or, for clarity, as of the date of this Agreement, five-sixths when the three Vessels are combined with the Earlier Two Vessels under the First Depot Spares Letter) of the then remaining Depot Spares (the “ Buyer Depot Spares ”) from the Warehouse, GasLog Services shall convey title to the Buyer Depot Spares to the Buyer, and the Buyer shall pay to GasLog Services the Listed Prices for the Buyer Depot Spares; or |
(ii) | acting in good faith, the Parties shall then agree to an alternative equitable allocation of any then remaining Depot Spares and the purchase consideration therefor. |
|
The Parties recognize and agree that the only section of the Letter of Agreement to which this Agreement applies is the section of the Letter of Agreement entitled “Depot Spares”. Further, the Parties recognize and acknowledge the First Depot Spares Letter remains in full force and effect.
This Agreement shall not be altered or otherwise amended except pursuant to an instrument in writing executed and delivered by each of the parties hereto.
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Sincerely, | |||
On behalf of GasLog Partners LP | |||
By: | |||
Name: | Andrew J. Orekar | ||
Title: | Chief Executive Officer |
[ Signature Page to Depot Spares Side Letter ]
|
Acknowledged and agreed to | ||||
as of the date set forth above: | ||||
On behalf of GasLog LNG Services Ltd. | ||||
By: | ||||
Name: | Graham Westgarth | |||
Title: | Director |
[ Signature Page to Depot Spares Side Letter ]
|
Acknowledged and agreed to | ||||
as of the date set forth above: | ||||
On behalf of GasLog Carriers Ltd. | ||||
By: | ||||
Name: | Simon Crowe | |||
Title: | Director |
[ Signature Page to Depot Spares Side Letter ]
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No. 333-204616 on Form F-3 and No. 333-203139 on Form S-8 of our report dated June 22, 2015 related to the combined financial statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. as of December 31, 2014 and for the period from April 4, 2014 (date of inception) to December 31, 2014, appearing in this Form 6-K of GasLog Partners LP dated June 22, 2015.
/s/ Deloitte LLP
London, United Kingdom
June 22, 2015
Exhibit 99.1
INDEX TO COMBINED FINANCIAL STATEMENTS
Page | |
Report of Independent Auditors – Deloitte LLP | F-2 |
Combined statement of financial position as of December 31, 2014 | F-3 |
Combined statement of profit or loss and other comprehensive
income for the period April 4, 2014 (date of inception) to December 31, 2014 |
F-4 |
Combined statement of changes in owners’ equity for the period
April 4, 2014 (date of inception) to December 31, 2014 |
F-5 |
Combined statement of cash flows for the period April 4, 2014 (date of inception) to December 31, 2014 | F-6 |
Notes to the combined financial statements | F-7 |
F- 1 |
|
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Owners of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
We have audited the accompanying combined financial statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. (the “Company”), all of which are under common ownership and common management, which comprise the combined statement of financial position as of 31 December 2014, and the related combined statements of profit or loss and other comprehensive income, changes in owners’ equity, and cash flows for the period from April 4, 2014 (date of inception) to December 31, 2014, and the related notes to the combined financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”); this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 31 December 2014, and the results of its operations and its cash flows for the period from April 4, 2014 (date of inception) to December 31, 2014 in accordance with IFRS.
/s/ Deloitte LLP
London, United Kingdom
June 22, 2015
F- 2 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Combined statement of financial position
As of December 31, 2014
(All amounts expressed in U.S. Dollars)
Note | December 31, 2014 | |||||
Assets | ||||||
Non-current assets | ||||||
Vessels | 3 | 460,571,640 | ||||
Total non-current assets | 460,571,640 | |||||
Current assets | ||||||
Trade and other receivables | 4 | 325,097 | ||||
Inventories | 732,822 | |||||
Due from related parties | 11 | 1,908,066 | ||||
Prepayments and other current assets | 335,170 | |||||
Short-term investments | 4,000,000 | |||||
Cash and cash equivalents | 20,053,647 | |||||
Total current assets | 27,354,802 | |||||
Total assets | 487,926,442 | |||||
Owners’ equity and liabilities | ||||||
Owners’ equity | ||||||
Share capital | 5 | 36,000 | ||||
Contributed surplus | 5 | 139,500,000 | ||||
Retained earnings | 6,627,066 | |||||
Total owners’ equity | 146,163,066 | |||||
Current liabilities | ||||||
Trade accounts payable | 1,628,978 | |||||
Due to related parties | 11 | 8,964,948 | ||||
Other payables and accruals | 7 | 7,708,581 | ||||
Total current liabilities | 18,302,507 | |||||
Non-current liabilities | ||||||
Borrowings | 6 | 323,460,869 | ||||
Total non-current liabilities | 323,460,869 | |||||
Total owners’ equity and liabilities | 487,926,442 |
F- 3 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Combined statement of profit or loss and other comprehensive income
For the period April 4, 2014 (date of inception) to December 31, 2014
(All amounts expressed in U.S. Dollars)
Note |
For the period ended
December 31, 2014 |
|||
Revenues | 39,129,327 | |||
Vessel operating costs | 9 | (8,842,056 | ) | |
Depreciation | 3 | (9,292,425 | ) | |
General and administrative expenses | 8 | (618,343 | ) | |
Profit from operations | 20,376,503 | |||
Financial costs | 10 | (5,907,026 | ) | |
Financial income | 7,589 | |||
Total other expenses, net | (5,899,437 | ) | ||
Profit and total comprehensive income for the period | 14,477,066 |
F- 4 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Combined statement of changes in owners’ equity
For the period April 4, 2014 (date of inception) to December 31, 2014
(All amounts expressed in U.S. Dollars)
Share
capital |
Contributed
surplus |
Retained
earnings |
Total | ||||||||||
Capital contributions | 36,000 | 139,500,000 | — | 139,536,000 | |||||||||
Profit for the period | — | — | 14,477,066 | 14,477,066 | |||||||||
Total comprehensive income for the period | — | — | 14,477,066 | 14,477,066 | |||||||||
Dividend declared | — | — | (7,850,000 | ) | (7,850,000 | ) | |||||||
Balance at December 31, 2014 | 36,000 | 139,500,000 | 6,627,066 | 146,163,066 |
F- 5 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Combined statement of cash flows
For the period April 4, 2014 (date of inception) to December 31, 2014
(All amounts expressed in U.S. Dollars)
For the period
ended December 31, 2014 |
||||
Cash flows from operating activities: | ||||
Profit for the period | 14,477,066 | |||
Adjustments for: | ||||
Depreciation | 9,292,425 | |||
Financial costs | 5,907,026 | |||
Financial income | (7,589 | ) | ||
29,668,928 | ||||
Movements in operating assets and liabilities: | ||||
Increase in trade and other receivables | (322,475 | ) | ||
Increase in inventories | (732,822 | ) | ||
Change in related parties, net | (908,706 | ) | ||
Increase in prepayments and other current assets | (335,170 | ) | ||
Increase in trade accounts payable | 1,514,435 | |||
Increase in other payables and accruals | 7,202,890 | |||
Cash provided by operations | 36,087,080 | |||
Interest paid | (4,728,304 | ) | ||
Net cash provided by operating activities | 31,358,776 | |||
Cash flows from investing activities: | ||||
Payments for vessels | (469,650,000 | ) | ||
Financial income received | 4,967 | |||
Purchase of short-term investments | (8,870,000 | ) | ||
Maturity of short-term investments | 4,870,000 | |||
Net cash used in investing activities | (473,645,033 | ) | ||
Cash flows from financing activities: | ||||
Payment of loan issuance costs | (2,660,096 | ) | ||
Borrowings drawdowns | 325,500,000 | |||
Capital contributions | 139,500,000 | |||
Net cash provided by financing activities | 462,339,904 | |||
Increase in cash and cash equivalents | 20,053,647 | |||
Cash and cash equivalents, beginning of the period | — | |||
Cash and cash equivalents, end of the period | 20,053,647 | |||
Non Cash Investing and Financing Activities: | ||||
Payment for vessels through related parties | 151,588 | |||
Financing costs included in liabilities at the end of the period | 130,021 | |||
Capital expenditures included in liabilities at the end of the period | 62,477 | |||
Dividend declared but not paid | 7,850,000 |
F- 6 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Notes to the combined financial statements
As of December 31, 2014 and for the period April 4, 2014 (inception) to December 31, 2014
(All amounts expressed in U.S. Dollars)
1. Organization and Operations
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. (the “Group” or the “Companies”) were each incorporated in Bermuda on April 4, 2014, as wholly owned subsidiaries of GasLog Carriers Ltd. (the “Parent”), itself wholly owned by GasLog Ltd. (“GasLog”).
On June 4, 2014, June 11, 2014 and June 25, 2014, the Group acquired three 145,000 cbm steam-powered liquefied natural gas (“LNG”) carriers from a subsidiary of BG Group plc (“BG Group”) for an aggregate cost of $468,000,000 (of which $465,000,000 was paid at closing while the payment of the remaining $3,000,000 will be made upon receipt of the relevant spares and before the end of the initial term of the charter party agreements) and chartered those vessels back to Methane Services Limited, a subsidiary of BG Group, for an average six year initial term. The vessels acquired are the 2007 built Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally . GasLog supervised the construction of all three vessels at Samsung Heavy Industries Co. Ltd. shipyard in Korea, for BG Group and has provided technical management for the ships since their delivery. These transactions were accounted for as asset acquisitions.
The agreement for the purchase of the three vessels and separate agreements to charter the vessels back to BG Group for an average six year initial term did not include the acquisition of activities required to operate a vessel neither did it transfer any such services to the Group. No business processes were part of the acquisition of the vessels. Commercial management of the vessels acquired is being provided by GasLog, whereas prior to the acquisition the commercial management was under the direction of BG Group. Although the technical manager of the vessels (GasLog LNG Services Ltd., a wholly owned subsidiary of GasLog) remains the same before and after the acquisition, new technical management contracts were entered into with the new vessel-owning entities upon the acquisition of the vessels (i.e., the technical management contracts were not transferred in the acquisition). Last, with the exception of the existence of long-lived assets (the vessels) and the charter party agreements entered into by the new vessel-owning entities with BG Group, the transferred assets do not include intellectual property, access to necessary materials or rights, employees, management systems and processes or access to customers. In other words, except for the vessel and the charter party agreements, no other inputs and no processes were transferred to the Group as components to this acquisition. Based on the absence of processes attached to the inputs, the transaction was considered an asset acquisition.
GasLog LNG Services Ltd. (“GasLog LNG Services” or the “Manager”), a related party and a wholly owned subsidiary of GasLog, incorporated under the laws of the Bermuda, provides technical services to the Group’s vessels.
As of December 31, 2014, the Group structure was as follows:
Name |
Place of incorporation |
Date of
incorporation |
Principal
activities |
Vessel |
Cargo
Capacity (cbm) |
Delivery
Date |
||||||
GAS-nineteen Ltd. | Bermuda | April 4, 2014 | Vessel-owning company | Methane Alison Victoria | 145,000 | June 4, 2014 | ||||||
GAS-twenty Ltd. | Bermuda | April 4, 2014 | Vessel-owning company | Methane Shirley Elisabeth | 145,000 | June 11, 2014 | ||||||
GAS-twenty one Ltd. | Bermuda | April 4, 2014 | Vessel-owning company | Methane Heather Sally | 145,000 | June 25, 2014 |
2. Significant Accounting Policies
Statement of compliance
The combined financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (the “IASB”).
Basis of preparation
The combined financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
F- 7 |
|
The principal accounting policies are set out below.
The combined financial statements are expressed in U.S. dollars (“USD”), which is the presentation currency of the Group and the functional currency of each of the three Companies forming the Group because their vessels operate in international shipping markets, in which revenues and expenses are primarily settled in USD and the Group’s most significant assets and liabilities are paid for and settled in USD.
On June 22, 2015, the Companies’ board of directors authorized the combined financial statements for issuance and filing.
Basis of combination
The accompanying combined financial statements include the accounts of the legal entities comprising the Group as discussed in Note 1. All significant intra-group transactions and balances are eliminated on combination.
Accounting for revenues and related operating expenses
Revenues comprise revenues from time charters for the hire of the Group’s vessels earned during the period in accordance with existing contracts.
A time charter represents a contract entered into for the use of a vessel for a specific period of time and a specified daily charter hire rate. Time charter revenue is recognized as earned on a straight-line basis over the term of the relevant time charter starting from the vessel’s delivery to the charterer, except for the off-hire period, when a charter agreement exists, the vessel is made available and services are provided to the charterer and collection of the related revenue is reasonably assured. Unearned revenue includes cash received prior to the balance sheet date relating to services to be rendered after the balance sheet date. Accrued revenue represents income recognized in advance as a result of the straight-line revenue recognition in respect of charter agreements that provide for varying charter rates.
Time charter hires received in advance are classified as liabilities until such time as the criteria for recognizing the revenue as earned are met.
Under a time charter arrangement the vessel operating expenses such as management fees, crew wages, provisions and stores, technical maintenance and insurance expenses and broker’s commissions are paid by the vessel owner, whereas voyage expenses such as bunkers, port expenses, agents’ fees, and extra war risk insurance are paid by the charterer.
Vessel operating costs are expensed as incurred, with the exception of commissions, which are recognized on a pro-rata basis over the duration of the period of the time charter.
Financial income and costs
Interest income, interest expense and other borrowing costs are recognized on an accrual basis.
Foreign currencies
Transactions in currencies other than USD are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in other currencies are retranslated into USD at the rates prevailing at that date. All resulting exchange differences are recognized in the combined statement of profit or loss in the period in which they arise.
Deferred financing costs
Commitment, arrangement, structuring, legal and agency fees incurred for obtaining new loans or refinancing existing facilities are recorded as deferred loan issuance costs and classified contra to debt.
Deferred financing costs are deferred and amortized to financial costs over the term of the relevant loan, using the effective interest method. When the relevant loan is terminated or extinguished, the unamortized loan fees are written-off in the combined statement of profit or loss.
Vessels
Vessels are stated at cost less accumulated depreciation and any accumulated impairment loss. The initial cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition.
The cost of a LNG vessel is split into two components, a “vessel component” and a “drydocking component”. Depreciation for the vessel component is calculated on a straight-line basis, after taking into account the estimated residual values, over the estimated useful life of this major component of the vessels. Residual values are based on management’s estimation about the amount that the Group would currently obtain from disposal of its vessels, after deducting the estimated costs of disposal, if the vessels were already of the age and in the condition expected at the end of their useful life.
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The LNG vessels are required to undergo a drydocking overhaul every five years to restore their service potential and to meet their classification requirements that cannot be performed while the vessels are operating. The drydocking component is estimated at the time of a vessel’s delivery from the previous owner and is measured based on the estimated cost of the first drydocking, subsequent to its acquisition, based on GasLog’s historical experience with similar types of vessels. For subsequent drydockings actual costs are capitalized when incurred. The drydocking component is depreciated until the next drydocking.
Costs that will be capitalized as part of the future drydockings will include a variety of costs incurred directly attributable to the drydock and costs incurred to meet classification and regulatory requirements, as well as expenses related to the dock preparation and port expenses at the drydock shipyard, general shipyard expenses, expenses related to hull, external surfaces and decks, expenses related to machinery and engines of the vessel, as well as expenses related to the testing and correction of findings related to safety equipment on board. Drydocking costs do not include vessel operating expenses such as replacement parts, crew expenses, provisions, lubricants consumption, insurance, management fees or management costs during the drydocking period. Expenses related to regular maintenance and repairs of our vessels are expensed as incurred, even if such maintenance and repair occurs during the same time period as our drydocking.
Management estimates the useful life of its vessels to be 35 years from the date of initial delivery from the shipyard. The Group’s vessels are depreciated from the date of their acquisition through their remaining estimated useful life.
The useful lives and the depreciation method are reviewed annually to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from the Group’s vessels. The residual value is also reviewed at each financial period end. If expectations differ from previous estimates, the changes are accounted for prospectively in earnings in the period of the change and future periods.
Ordinary maintenance and repairs that do not extend the useful life of the asset are expensed as incurred.
When vessels are sold, they are derecognized and any gain or loss resulting from their disposals is included in earnings.
Impairment of vessels
All vessels are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of a vessel exceeds its recoverable amount, an impairment loss is recognized in the combined statement of profit or loss. The recoverable amount is the higher of a vessel’s fair value less cost of disposal and “value in use”. The net selling price is the amount obtainable from the sale of a vessel in an arm’s length transaction less the costs of disposal, while “value in use” is the present value of estimated future cash flows expected to arise from the continuing use of a vessel and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual vessels. Each vessel is considered to be a single cash-generating unit. The net selling price of the vessels is estimated from market-based evidence by appraisal that is normally undertaken by professionally qualified brokers.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Inventories
Inventories represent lubricants on board the vessel and are stated at the lower of cost calculated on a first-in, first-out basis, and net realizable value.
Financial instruments
· | Cash and cash equivalents |
Cash represents cash on hand and deposits with banks which are repayable on demand. Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash with original maturities of three months or less at the time of purchase that are subject to an insignificant risk of change in value.
F- 9 |
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· | Short-term investments |
Short-term investments represent short-term, highly liquid time deposits placed with financial institutions which are readily convertible into known amounts of cash with original maturities of more than three months but less than 12 months at the time of purchase that are subject to an insignificant risk of change in value.
· | Trade receivables |
Trade receivables are carried at the amount expected to be received from the third party to settle the obligation. Bad debts are written off during the year in which they are identified. An estimate is made for doubtful receivables based on a review of all outstanding amounts at each reporting date.
· | Borrowings |
Borrowings are measured at amortized cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement of the borrowings is recognized in the statement of profit or loss over the term of the borrowings.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of the combined financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses recognized in the combined financial statements. The Group’s management evaluates whether estimates should be made on an ongoing basis, utilizing historical experience, consultation with experts and other methods management considers reasonable in the particular circumstances. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future.
Key sources of estimation uncertainty are as follows:
Vessel lives and residual value: Vessels are stated at cost, less accumulated depreciation. The estimates and assumptions that have the most significant effect on the vessel carrying amount relate to the estimation of the useful life of an LNG vessel of 35 years and the residual value.
An increase in the estimated useful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge, and an increase in the estimated useful life of a vessel would also extend annual depreciation charge into later periods. A decrease in the useful life of a vessel or its residual value would have the effect of increasing the annual depreciation charge.
The residual value of each vessel is equal to the product of its lightweight tonnage (“LWT”) and an estimated scrap rate per LWT.
If regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the vessel’s useful life will be adjusted to end at the date such regulations become effective. The estimated residual value of a vessel may not represent the fair market value at any one time partly because market prices of scrap rates tend to fluctuate.
Vessel cost: The Group recognizes drydocking costs as a separate component of the vessel’s carrying amounts and amortizes the drydocking cost on a straight-line basis over the estimated period until the next drydocking. If the vessel is disposed of before the next drydocking, the remaining balance of the drydock component is written-off and forms part of the gain or loss recognized upon disposal of vessels in the period of disposal. The Group expects that its vessels will be required to be drydocked in approximately 60 months after their delivery from the shipyard, and thereafter every 30 or 60 months will be required to undergo special or intermediate surveys and drydocked for major repairs and maintenance that cannot be performed while the vessels are operating. The Group amortizes its estimated drydocking component until the next drydocking unless the Group intends to drydock the vessels earlier as circumstances arise. Management estimates the drydocking component on acquisition of a vessel, as costs to be incurred during the first drydocking at the drydock yard, subsequent to its acquisition, for a special survey and parts and supplies used in making such repairs that meet the recognition criteria, based on historical experience with similar types of vessels. For subsequent drydockings actual costs are capitalized when incurred.
Impairment of vessels: The Group evaluates the carrying amounts of its vessels to determine whether there is any indication that those vessels have suffered an impairment loss. If any such indication exists, the recoverable amount of vessels is estimated in order to determine the extent of the impairment loss, if any.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The projection of cash flows related to vessels is complex and requires management to make various estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been historically volatile. In assessing the fair value less cost to sell of the vessel, the Group obtains vessel valuations from independent and internationally recognized ship
F- 10 |
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brokers on an annual basis or when there is an indication that an asset or assets may be impaired. If an indication of impairment is identified, the need for recognizing an impairment loss is assessed by comparing the carrying amount of the vessels to the higher of the fair value less cost to sell and the value in use.
Our estimates of basic market value assume that our vessels are all in seaworthy condition without a need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information available from various industry sources, which may include:
• | reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values; |
• | news and industry reports of sales of similar vessels; |
• | news and industry reports of sales of vessels that are not similar to our vessels, where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates; |
• | approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated; |
• | offers that we may have received from potential purchasers of our vessels; and |
• | vessel sale prices and values of which we are aware through both formal and informal communications with vessel owners, vessel brokers, industry analysts and various other shipping industry participants and observers. |
As of December 31, 2014, the carrying amounts of the Group’s vessels were higher than the estimated charter free market values and the Group concluded that events and circumstances triggered the existence of potential impairment of the vessels. As a result, the Group performed the impairment assessment of its vessels by comparing the discounted projected net operating cash flows for these vessels to their carrying value. The significant factors and assumptions the Group used in its discounted projected net operating cash flow analysis included, among others, operating revenues, off-hire revenues, drydocking costs, operating expenses, management fees estimates and the discount rate. Revenue assumptions were based on contracted time charter rates up to the end of life of the current contract of each vessel as well as the estimated average time charter equivalent rates for the remaining life of the vessel after the completion of its current contract. The estimated daily time charter equivalent rates used for non-contracted revenue days are based on a combination of (i) recent charter market rates, (ii) conditions existing in the LNG market as of December 31, 2014, (iii) historical average time charter rates, based on publications by independent third party maritime research services, and (iv) estimated future time charter rates, based on publications by independent third party maritime research services that provide such forecasts. Recognizing that the LNG industry is cyclical and subject to significant volatility based on factors beyond our control, management believes the use of revenue estimates, based on the combination of factors (i) to (iv) above, to be reasonable as of the reporting date. In addition, the Group used an annual operating expenses escalation factor and estimates of scheduled and unscheduled off-hire revenues based on the Manager’s historical experience. All estimates used and assumptions made were in accordance with the Group’s internal budgets and historical experience of the shipping industry. The value in use for the vessels calculated as per above was higher than the carrying amount of these vessels and consequently, no impairment loss was recognized.
Adoption of new and revised IFRS
(a) | Standards and amendments in issue not yet adopted |
At the date of authorization of these combined financial statements, the following standards and amendments relevant to the Group were in issue but not yet effective:
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers , which applies to all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. IFRS 15 specifies how and when an IFRS reporter will recognize revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18 Revenue , IAS 11 Construction Contracts and a number of revenue-related interpretations. The standard is effective for annual periods beginning on or after January 1, 2017 but early adoption is permitted. Management is currently evaluating the impact of this standard on the Group’s combined financial statements.
In December 2014, the IASB issued amendments on IAS 1 Presentation of Financial Statements to address perceived impediments to preparers exercising their judgment in presenting financial reports. The amendment of IAS 1 provides clarification to the preparers that: i) the information provided should not be obscured by aggregating or providing immaterial information; ii) the list of line items to be presented in the statements can be disaggregated and aggregated as relevant; and iii) understandability and comparability should be considered when determining the order of the notes. These amendments are effective for annual periods beginning on or after January 1, 2016. Management anticipates that these amendments will not have any material impact on the Group’s combined financial statements.
F- 11 |
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The impact of all other IFRS standards and amendments issued but not yet adopted is not expected to be material.
3. Vessels
The movement in vessels is reported in the following table:
Vessels | ||||
Cost | ||||
As of April 4, 2014 (date of inception) | — | |||
Additions | 469,864,065 | |||
As of December 31, 2014 | 469,864,065 | |||
Accumulated depreciation | ||||
As of April 4, 2014 (date of inception) | — | |||
Depreciation expense | 9,292,425 | |||
As of December 31, 2014 | 9,292,425 | |||
Net book value | ||||
As of December 31, 2014 | 460,571,640 |
The vessels have been pledged as collateral under the terms of the Group’s bank loan agreement (Note 6).
On June 4, 2014, June 11, 2014, and June 25, 2014, the Group acquired the 2007 built Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally respectively from a subsidiary of BG Group (Note 1).
4. Trade and Other Receivables
Trade and other receivables consisted of the following:
As of December
31, 2014 |
||||
Trade receivables | 68,688 | |||
VAT receivable | 9,566 | |||
Accrued income | 2,622 | |||
Insurance claims | 196,600 | |||
Other receivables | 47,621 | |||
Total | 325,097 |
As of December 31, 2014, the fair values of the Group’s financial assets approximated their carrying amounts. Also, as of December 31, 2014, no material receivable balances were past due or impaired, and therefore no allowance was necessary .
5. Owners’ Equity
Since their inception, the capital of each of the Companies consists of 12,000 authorized common shares with a par value of $1 per share, all of which have been issued and are outstanding, resulting in a total owners’ capital of $36,000. Each share is entitled to one vote.
Capital contributions represent capital contributed by the owner of each of the Companies in excess of par value to partially finance the acquisition of each vessel.
6. Borrowings
Borrowings as of December 31, 2014 consist of the following:
As of December
31, 2014 |
||||
Amounts due after one year | 325,500,000 | |||
Less: unamortized deferred loan issuance costs | (2,039,131 | ) | ||
Total | 323,460,869 |
F- 12 |
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Bank loans:
Citibank, N. A. London Branch
On May 14, 2014, in connection with the acquisition of the three LNG carriers from BG Group, GasLog signed a loan agreement of $325,500,000 with Citibank N.A. London Branch (the “Credit Facility”), acting as security agent and trustee for and on behalf of the other finance parties. The Credit Facility has a two year maturity without intermediate payments bearing interest at LIBOR plus a margin and $108,500,000 was drawn on June 3, 2014, on June 10, 2014 and on June 24, 2014 to partially finance the deliveries of the Methane Alison Victoria, the Methane Shirley Elisabeth and the Methane Heather Sally , respectively. The aggregate balance outstanding under the Credit Facility as of December 31, 2014, was $325,500,000 and is repayable in full in June 2016 without intermediate payments.
The obligations under the Credit Facility are secured by a first priority mortgage over the vessels, a pledge of the share capital of the respective vessel owning companies and a first priority assignment of earnings related to the vessels, including charter revenue, management revenue and any insurance and requisition compensation. Obligations under the Credit Facility are guaranteed by GasLog and GasLog Carriers Ltd. The Credit Facility includes customary respective covenants, and among other restrictions it includes a fair market value covenant pursuant to which an event of default could occur under the Credit Facility if the aggregate fair market value of the collateral vessels (without taking into account any charter arrangements) were to fall below 120% of the aggregate outstanding principal balance under the Credit Facility. The Group was in compliance with the required minimum security coverage as of December 31, 2014.
GasLog, as corporate guarantor for the Credit Facility is also subject to specified financial covenants on a consolidated basis. These financial covenants include the following as defined in the agreement:
(i) | net working capital (excluding the current portion of long-term debt) must be not less than $0; |
(ii) | total indebtedness divided by total capitalization must not exceed 75%; |
(iii) | the ratio of EBITDA over debt service obligations (including interest and debt repayments) on a trailing 12 months’ basis must be no less than 110%; |
(iv) | the aggregate amount of all unencumbered cash and cash equivalents must exceed the higher of 3% of total indebtedness or $20,000,000 after the first drawdown; |
(v) | GasLog is permitted to pay dividends, provided that it holds unencumbered cash equal to at least 4% of its total indebtedness; and |
(vi) | GasLog’s market value adjusted net worth must at all times be not less than $350,000,000. |
Compliance with the financial covenants is required on a semi-annual basis and GasLog was in compliance as of December 31, 2014.
Borrowings Repayment Schedule
The maturity table below reflects the principal repayments of the borrowings outstanding as of December 31, 2014 based on its repayment schedule:
As of December 31,
2014 |
||||
Not later than one year | — | |||
Later than one year and not later than three years | 325,500,000 | |||
Later than three years and not later than five years | — | |||
Later than five years | — | |||
Total | 325,500,000 |
The weighted average interest rate, for the Credit Facility, as of December 31, 2014 was 2.86%.
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As the Credit Facility bears interest at a variable interest rate, the fair value of the Credit Facility as of December 31, 2014 is equal to the amount outstanding of $325,000,000.
7. Other Payables and Accruals
An analysis of other payables and accruals is as follows:
As of December 31,
2014 |
||||
Unearned revenue | 6,114,750 | |||
Accrued legal and professional fees | 60,000 | |||
Accrued vessel management expenses (Note 11) | 118,752 | |||
Accrued purchases | 166,615 | |||
Accrued off-hire | 69,395 | |||
Accrued crew costs | 504,222 | |||
Accrued interest | 427,736 | |||
Accrued financing costs | 17,955 | |||
Other payables and accruals | 229,156 | |||
Total | 7,708,581 |
As of December 31, 2014, the fair values of the Group’s financial liabilities approximated their carrying amounts. The unearned revenue represents charter hires received in advance in December 2014 relating to January 2015.
8. General and Administrative Expenses
An analysis of general and administrative expenses is as follows:
For the period ended
December 31, 2014 |
||||
Travel and accommodation | 9,686 | |||
Legal and professional fees | 32,202 | |||
Commercial management fees (Note 11) | 591,000 | |||
Foreign exchange (gains)/losses, net | (14,545 | ) | ||
Total | 618,343 |
9. Vessel Operating Costs
An analysis of vessel operating costs is as follows:
For the period ended
December 31, 2014 |
||||
Management fees (Note 11) | 1,026,470 | |||
Crew wages | 4,484,331 | |||
Technical maintenance expenses | 1,063,251 | |||
Provisions and stores | 360,857 | |||
Insurance expenses | 576,225 | |||
Brokers’ commissions | 489,117 | |||
Bunkers’ consumption | 61,077 | |||
Vessels’ tax | 483,601 | |||
Other operating expenses | 297,127 | |||
Total | 8,842,056 |
10. Financial Costs
An analysis of financial costs is as follows:
F- 14 |
|
For
the period ended
December 31, 2014 |
|||
Amortization of deferred loan issuance costs | 750,986 | ||
Interest expense on loans | 5,140,022 | ||
Other financial costs | 16,018 | ||
Total financial costs | 5,907,026 |
11. Related Party Transactions
The Group has the following balances with related parties which are included in the combined statement of financial position:
Amounts due from related parties
As
of December 31,
2014 |
|||
GasLog LNG Services (a) | 1,908,066 | ||
Total | 1,908,066 |
Amounts due to related parties
As
of December 31,
2014 |
|||
GasLog Carriers Ltd. (b) | 8,373,948 | ||
GasLog Ltd. (c) | 591,000 | ||
Total | 8,964,948 |
(a) | The balance of $1,908,066 represents prepayments made to the Manager to cover operating expenses of the Group of $2,647,166 net of amounts owed for management services of $739,100. |
(b) | The balance of $8,373,948 consists of (a) $7,850,000 dividend declared in December 2014 and (b) $523,948 payments made by the Parent on behalf of the Group that remain outstanding as of December 31, 2014. |
(c) | The balance of $591,000 represents outstanding commercial management fees. |
The Group had the following transactions with related parties which have been included in the combined statement of profit or loss for the period ended December 31, 2014:
Company | Details | Account |
For the
December 31, 2014 |
GasLog Ltd. | Commercial management fee (i) |
General and administrative
expenses |
591,000 |
GasLog LNG Services Ltd. |
Management fees and other
vessel management
expenses (ii) |
Vessel operating costs | 1,026,470 |
GasLog LNG Services Ltd. | Other vessel operating costs | Vessel operating costs | 33,840 |
(i) | Commercial Management Agreements |
Upon delivery of each vessel, the Group entered into commercial management agreements with GasLog pursuant to which GasLog provides certain commercial management services, including chartering services, consultancy services on market issues and invoicing and collection of hire payables, to the Group. The annual commercial management fee under the agreements is $360,000 for each vessel payable quarterly in advance in lump sum amounts.
(ii) | Ship Management Agreements |
F- 15 |
|
Upon delivery of each vessel, the Group entered into ship management agreements with GasLog LNG Services that provide for the following:
• | Management Fees – A fixed monthly charge of $46,000 per vessel was payable by the Group to the Manager for the provision of management services such as crew, operational and technical management, procurement, accounting, budgeting and reporting, health, safety, security and environmental protection, insurance arrangements, sale or purchase of vessels, general administration and quality assurance. |
• | Superintendent Fees – A fee of $1,000 per day was payable to the Manager for each day in excess of 25 days per calendar year for which a superintendent performed visits to the vessels. |
• | Annual Incentive Bonus – Annual Incentive Bonus might be payable to the Manager, at the Group’s discretion, for remittance to the crew of an amount of up to $72,000 based on key performance indicators predetermined annually and contain clauses for decreased management fees in case of a vessel’s lay-up. |
The management fees are subject to an annual adjustment, agreed between the parties in good faith, on the basis of general inflation and proof of increases in actual costs incurred by the Manager. Each management agreement continues indefinitely until terminated by either party.
12. Commitments and Contingencies
Future gross minimum revenues receivable upon collection of hire under non-cancellable time charter agreements are as follows (30 off-hire days are assumed when each vessel will undergo scheduled drydocking; in addition early delivery of the vessels by the charterers or any exercise of the charterers’ options to extent the terms of the charters are not accounted for):
As of December 31,
2014 |
||
Not later than one year | 66,078,750 | |
Later than one year and not later than three years | 144,189,750 | |
Later than three years and not later than five years | 142,217,250 | |
Later than five years | 32,414,750 | |
Total | 384,900,500 |
The Group is counter guarantor for the acquisition from BG Group depot spares with an aggregate value of $3,000,000. These spares should be acquired before the end of the initial term of the charter party agreements.
Various claims, suits and complaints, including those involving government regulations, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, environmental claims, agents and insurers and from claims with suppliers relating to the operations of the Group’s vessels. Currently, management is not aware of any such claims or contingent liabilities requiring disclosure in the combined financial statements.
13. Financial Risk Management
The Group’s activities expose it to a variety of financial risks, including market risk, liquidity risk and credit risk.
Market risk
Interest rate risk: Interest rate risk is the risk that interest costs will fluctuate due to changes in market interest rates. The Group’s financial income and operating cash flows fluctuate based on changes in market interest rates as the Group has loans that bear interest at floating rates. At December 31, 2014, the Group has not hedged any of its future variable rate interest exposure relating to the Credit Facility.
Interest rate sensitivity analysis: During the period ended December 31, 2014, if interest rates had increased or decreased by 10 basis points with all other variables held constant, the increase/decrease, respectively, in interest expense on the Credit Facility would have amounted to approximately $182,340.
F- 16 |
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Currency Risk: Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the functional currency of the Companies where the transactions were initiated. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to general and crew costs denominated in Euros. The Group does not hedge movements in exchange rates but management monitors the exchange rate fluctuations on a continuous basis. As an indication of the extent of our sensitivity to changes in exchange rate, a 10% increase in the average euro/dollar exchange rate would have decreased our profit and cash flows during the period ended December 31, 2014 by $367,984, based upon our expenses during the period.
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses.
The Group manages its liquidity risk by having secured credit lines and by receiving capital contributions to fund its commitments and by maintaining cash and cash equivalents.
The following tables detail the Group’s expected cash flows for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. Variable future interest payments were determined based on an average LIBOR plus the margins applicable to the Group’s Credit Facility.
*(excludes Unearned revenue as it is not a financial liability)
The amounts included above for variable interest rate instruments are subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.
The Group expects to be able to meet its current obligations resulting from financing and operating its vessels using the liquidity existing at year end and the cash generated by operating activities. The Group expects to be able to meet its long-term obligations resulting from financing its vessels through cash generated from operations.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge its obligations and cause a financial loss. The Group is exposed to credit risk in the event of non-performance by any of its counterparties. To limit this risk, the Group deals exclusively with financial institutions and customers with high credit ratings.
As
of December
31, 2014 |
||
Cash | 20,053,647 | |
Short-term investments | 4,000,000 | |
Trade and other receivables | 325,097 |
For the period ended December 31, 2014, all of the Group’s revenue was earned from one customer, a subsidiary of BG Group and accounts receivable were not collateralized; however, management believes that the credit risk is partially offset by the creditworthiness of the Group’s counterparty and the fact that the hire is being collected in advance. The Group did not experience credit losses on its accounts receivable portfolio during the period ended December 31, 2014. The carrying amount of financial assets recorded in the combined financial statements represents the Group’s maximum exposure to credit risk.
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Management monitors exposure to credit risk, and they believe that there is no substantial credit risk arising from the Group’s counterparty.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.
14. Capital Risk Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to pursue future growth opportunities. Among other metrics, the Group monitors capital using a debt to capitalization ratio, which is total debt divided by total equity plus total debt. The total debt to capitalization ratio is as follows:
As of December 31, 2014 | ||
Total debt | 323,460,869 | |
Total owners’ equity | 146,163,066 | |
Total capitalization | 469,623,935 | |
Total debt/total capitalization ratio | 68.88% |
15. Taxation
Under the laws of the country of the vessels’ registration, the Group is not subject to tax on international shipping income. However, it is subject to registration and tonnage taxes, which are included in vessel operating costs in the combined statement of profit or loss.
Under the United States Internal Revenue Code of 1986, as amended (the “Code”), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Group, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
The Group did not qualify for this exception for the period ended December 31, 2014. During the period ended December 31, 2014, the Group has not made any U.S. port calls, and hence did not have U.S. source gross transportation income.
16. Subsequent Events
The Group has evaluated transactions for consideration as subsequent events through June 22, 2015, which is the date these financial statements were authorized for issuance.
GasLog Partners LP and GasLog announced on June 22, 2015 that they have entered into an agreement for the Partnership to purchase from GasLog, the sole member of GasLog Partners LP’s general partner, 100% of the shares of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., the entities that own and charter the Methane Alison Victoria , Methane Shirley Elisabeth and Methane Heather Sally , respectively, modern LNG carriers built in 2007, each with a capacity of 145,000 cubic meters, for an aggregate purchase price of $483,000,000 (the “Acquisition”). The Acquisition is subject to GasLog Partners LP obtaining the funds necessary to pay the purchase price and the satisfaction of certain other closing conditions.
F- 18 |
Exhibit 99.2
INDEX TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
Page | ||
Unaudited condensed combined statements of financial position as of December 31, 2014 and March 31, 2015 | F-2 | |
Unaudited condensed combined statement of profit or loss and other comprehensive income for the three months ended March 31, 2015 | F-3 | |
Unaudited condensed combined statement of changes in owners’ equity for the three months ended March 31, 2015 | F-4 | |
Unaudited condensed combined statement of cash flows for the three months ended March 31, 2015 | F-5 | |
Notes to the unaudited condensed combined financial statements | F-6 |
F- 1 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Unaudited condensed combined statements of financial position
As of December 31, 2014 and March 31, 2015
(All amounts expressed in U.S. Dollars)
Note | December 31, 2014 | March 31, 2015 | |||||||
Assets | |||||||||
Non-current assets | |||||||||
Vessels | 3 | 460,571,640 | 458,883,270 | ||||||
Total non-current assets | 460,571,640 | 458,883,270 | |||||||
Current assets | |||||||||
Trade and other receivables | 4 | 325,097 | 4,702,572 | ||||||
Inventories | 732,822 | 808,820 | |||||||
Due from related parties | 11 | 1,908,066 | 27,143,849 | ||||||
Prepayments and other current assets | 335,170 | 691,481 | |||||||
Short-term investments | 4,000,000 | — | |||||||
Cash and cash equivalents | 20,053,647 | 247,065 | |||||||
Total current assets | 27,354,802 | 33,593,787 | |||||||
Total assets | 487,926,442 | 492,477,057 | |||||||
Owners’ equity and liabilities | |||||||||
Owners’ equity | |||||||||
Share capital | 5 | 36,000 | 36,000 | ||||||
Contributed surplus | 5 | 139,500,000 | 139,500,000 | ||||||
Retained earnings | 6,627,066 | 10,421,255 | |||||||
Total owners’ equity | 146,163,066 | 149,957,255 | |||||||
Current liabilities | |||||||||
Trade accounts payable | 1,628,978 | 1,110,250 | |||||||
Due to related parties | 11 | 8,964,948 | 861,000 | ||||||
Other payables and accruals | 7 | 7,708,581 | 16,756,630 | ||||||
Total current liabilities | 18,302,507 | 18,727,880 | |||||||
Non-current liabilities | |||||||||
Borrowings | 6 | 323,460,869 | 323,791,922 | ||||||
Total non-current liabilities | 323,460,869 | 323,791,922 | |||||||
Total owners’ equity and liabilities | 487,926,442 | 492,477,057 |
F- 2 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Unaudited condensed combined statement of profit or loss and other comprehensive income
For the three months ended March 31, 2015
(All amounts expressed in U.S. Dollars)
Note |
For
the three months
ended March 31, 2015 |
|||
Revenues | 15,656,216 | |||
Vessel operating costs | 9 | (4,737,742 | ) | |
Depreciation | 3 | (4,234,121 | ) | |
General and administrative expenses | 8 | (230,169 | ) | |
Profit from operations | 6,454,184 | |||
Financial costs | 10 | (2,661,406 | ) | |
Financial income | 1,411 | |||
Total other expenses, net | (2,659,995 | ) | ||
Profit and total comprehensive income for the period | 3,794,189 |
F- 3 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Unaudited condensed combined statement of changes in owners’ equity
For the three months ended March 31, 2015
(All amounts expressed in U.S. Dollars)
Share
capital |
Contributed
surplus |
Retained
earnings |
Total | |||||||
Balance at January 1, 2015 | 36,000 | 139,500,000 | 6,627,066 | 146,163,066 | ||||||
Profit for the period | — | — | 3,794,189 | 3,794,189 | ||||||
Total comprehensive income for the period | — | — | 3,794,189 | 3,794,189 | ||||||
Balance at March 31, 2015 | 36,000 | 139,500,000 | 10,421,255 | 149,957,255 |
F- 4 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Unaudited condensed combined statement of cash flows
For the three months ended March 31, 2015
(All amounts expressed in U.S. Dollars)
For the three
months ended March 31, 2015 |
||||
Cash flows from operating activities: | ||||
Profit for the period | 3,794,189 | |||
Adjustments for: | ||||
Depreciation | 4,234,121 | |||
Financial income | (1,411 | ) | ||
Financial costs | 2,661,406 | |||
10,688,305 | ||||
Movements in operating assets and liabilities: | ||||
Increase in trade and other receivables | (4,380,097 | ) | ||
Increase in inventories | (75,998 | ) | ||
Change in related parties, net | (2,373,020 | ) | ||
Increase in prepayments and other current assets | (356,311 | ) | ||
Decrease in trade accounts payable | (745,780 | ) | ||
Increase in other payables and accruals | 5,875,032 | |||
Cash provided by operations | 8,632,131 | |||
Interest paid | (756,782 | ) | ||
Net cash provided by operating activities | 7,875,349 | |||
Cash flows from investing activities: | ||||
Short-term deposits with related party | (23,835,964 | ) | ||
Financial income received | 4,033 | |||
Maturity of short-term investments | 4,000,000 | |||
Net cash used in investing activities | (19,831,931 | ) | ||
Cash flows from financing activities: | ||||
Dividend payment | (7,850,000 | ) | ||
Net cash used in financing activities | (7,850,000 | ) | ||
Decrease in cash and cash equivalents | (19,806,582 | ) | ||
Cash and cash equivalents, beginning of the period | 20,053,647 | |||
Cash and cash equivalents, end of the period | 247,065 | |||
Non Cash Investing and Financing Activities: | ||||
Payment for vessels through related parties | 607,187 | |||
Payment for financing costs through related parties | 112,066 | |||
Financing costs included in liabilities at the end of the period | 33,805 | |||
Capital expenditures included in liabilities at the end of the period | 2,001,041 |
F- 5 |
|
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd.
Notes to the unaudited condensed combined financial statements
For the three months ended March 31, 2015
(All amounts expressed in U.S. Dollars)
1. Organization and Operations
GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. (the “Group” or the “Companies”) were each incorporated in Bermuda on April 4, 2014, as wholly owned subsidiaries of GasLog Carriers Ltd. (the “Parent”), itself wholly owned by GasLog Ltd. (“GasLog”).
On June 4, 2014, June 11, 2014 and June 25, 2014, the Group acquired three 145,000 cbm steam-powered liquefied natural gas (“LNG”) carriers from a subsidiary of BG Group plc (“BG Group”) for an aggregate cost of $468,000,000 (of which $465,000,000 was paid at closing while the payment of the remaining $3,000,000 will be made upon receipt of the relevant spares and before the end of the initial term of the charter party agreements) and chartered those vessels back to Methane Services Limited, a subsidiary of BG Group, for an average six year initial term. The vessels acquired are the 2007 built Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally . GasLog supervised the construction of all three vessels at Samsung Heavy Industries Co. Ltd. shipyard in Korea, for BG Group and has provided technical management for the ships since their delivery. These transactions were accounted for as asset acquisitions.
GasLog LNG Services Ltd. (“GasLog LNG Services” or the “Manager”), a related party and a wholly owned subsidiary of GasLog, incorporated under the laws of the Bermuda, provides technical services to the Group’s vessels.
As of March 31, 2015, the Group structure was as follows:
Name |
Place
of
incorporation |
Date
of
incorporation |
Principal
activities |
Vessel |
Cargo
Capacity (cbm) |
Delivery
Date |
||||||
GAS-nineteen Ltd. | Bermuda | April 4, 2014 |
Vessel-
owning company |
Methane
Alison Victoria |
145,000 | June 4, 2014 | ||||||
GAS-twenty Ltd. | Bermuda | April 4, 2014 |
Vessel-
owning company |
Methane
Shirley Elisabeth |
145,000 | June 11, 2014 | ||||||
GAS-twenty one Ltd. | Bermuda | April 4, 2014 |
Vessel-
owning company |
Methane
Heather Sally |
145,000 | June 25, 2014 |
2. Basis of Presentation
These unaudited condensed combined financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). Certain information and footnote disclosures required by International Financial Reporting Standards (“IFRS”) for a complete set of annual financial statements have been omitted, and therefore, these unaudited condensed combined financial statements should be read in conjunction with the Group’s audited combined financial statements for the period ended December 31, 2014.
The accompanying unaudited condensed combined financial statements include the accounts of the legal entities comprising the Group as discussed in Note 1. All significant intra-group transactions and balances are eliminated on combination.
The unaudited condensed combined financial statements have been prepared on the historical cost basis. The same accounting policies and methods of computation have been followed in these unaudited condensed combined financial statements as applied in the preparation of the Group’s audited combined financial statements for the period ended December 31, 2014. On June 22, 2015, the Companies’ board of directors authorized the unaudited condensed combined financial statements for issuance and filing.
The critical accounting judgments and key sources of estimation uncertainty were disclosed in the Group’s combined financial statements for the period ended December 31, 2014.
The unaudited condensed combined financial statements are expressed in U.S. dollars (“USD”), which is the presentation currency of the Group and the functional currency of each of the three Companies forming the Group because their vessels operate in international shipping markets, in which revenues and expenses are primarily settled in USD.
F- 6 |
|
Adoption of new and revised IFRS
(a) | Standards and interpretations adopted in the current period |
No standards and amendments relevant to the Group that were adopted in the current period had a material impact on the Group’s financial statements.
(b) | Standards and amendments in issue not yet adopted |
At the date of authorization of these unaudited condensed combined financial statements, the following standards and amendments relevant to the Group were in issue but not yet effective:
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers , which applies to all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. IFRS 15 specifies how and when an IFRS reporter will recognize revenue as well as requiring such entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18 Revenue , IAS 11 Construction Contracts and a number of revenue-related interpretations. The standard is effective for annual periods beginning on or after January 1, 2017 but early adoption is permitted. Management is currently evaluating the impact of this standard on the Group’s combined financial statements.
In December 2014, the IASB issued amendments on IAS 1 Presentation of Financial Statements to address perceived impediments to preparers exercising their judgment in presenting financial reports. The amendment of IAS 1 provides clarification to the preparers that: i) the information provided should not be obscured by aggregating or providing immaterial information; ii) the list of line items to be presented in the statements can be disaggregated and aggregated as relevant; and iii) understandability and comparability should be considered when determining the order of the notes. These amendments are effective for annual periods beginning on or after January 1, 2016. Management anticipates that these amendments will not have any material impact on the Group’s combined financial statements.
The impact of all other IFRS standards and amendments issued but not yet adopted is not expected to be material.
3. Vessels
The movement in vessels is reported in the following table:
Vessels | ||
Cost | ||
As of January 1, 2015 | 469,864,065 | |
Additions | 2,545,751 | |
As of March 31, 2015 | 472,409,816 | |
Accumulated depreciation | ||
As of January 1, 2015 | 9,292,425 | |
Depreciation expense | 4,234,121 | |
As of March 31, 2015 | 13,526,546 | |
Net book value | ||
As of December 31, 2014 | 460,571,640 | |
As of March 31, 2015 | 458,883,270 |
The vessels have been pledged as collateral under the terms of the Group’s bank loan agreement (Note 6).
On June 4, 2014, June 11, 2014, and June 25, 2014, the Group acquired the 2007 built Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally respectively from a subsidiary of BG Group (Note 1).
F- 7 |
|
4. Trade and Other Receivables
Trade and other receivables consisted of the following:
As of December
31, 2014 |
As of March 31,
2015 |
||||
Trade receivables | 68,688 | 78,772 | |||
VAT receivable | 9,566 | 19,954 | |||
Accrued income | 2,622 | — | |||
Insurance claims | 196,600 | 4,546,456 | |||
Other receivables | 47,621 | 57,390 | |||
Total | 325,097 | 4,702,572 |
As of March 31, 2015, no material receivable balances were past due or impaired, and therefore no allowance was necessary .
5. Owners’ Equity
Since their inception, the capital of each of the Companies consists of 12,000 authorized common shares with a par value of $1 per share, all of which have been issued and are outstanding, resulting in a total owners’ capital of $36,000. Each share is entitled to one vote.
Contributed surplus represents capital contributed by the owner of each of the Companies in excess of par value to partially finance the acquisition of each vessel.
6. Borrowings
Borrowings consist of the following:
As of December
31, 2014 |
As of March 31,
2015 |
||||
Amounts due after one year | 325,500,000 | 325,500,000 | |||
Less: unamortized deferred loan issuance costs | (2,039,131 | ) | (1,708,078 | ) | |
Total | 323,460,869 | 323,791,922 |
The main terms of the Group’s loan facility have been disclosed in the combined financial statements for the period ended December 31, 2014.
7. Other Payables and Accruals
An analysis of other payables and accruals is as follows:
As
of December
31, 2014 |
As
of March 31,
2015 |
||||
Unearned revenue | 6,114,750 | 5,917,500 | |||
Accrued legal and professional fees | 60,000 | — | |||
Accrued vessel management expenses (Note 11) | 118,752 | — | |||
Accrued purchases | 166,615 | 2,778,465 | |||
Accrued off-hire | 69,395 | 5,577,293 | |||
Accrued crew costs | 504,222 | 373,309 | |||
Accrued interest | 427,736 | 1,985,458 | |||
Accrued financing costs | 17,955 | — | |||
Other payables and accruals | 229,156 | 124,605 | |||
Total | 7,708,581 | 16,756,630 |
8. General and Administrative Expenses
F- 8 |
|
An analysis of general and administrative expenses is as follows:
For
the three
months ended March 31, 2015 |
|||
Legal and professional fees | 20,929 | ||
Commercial management fees (Note 11) | 270,000 | ||
Foreign exchange (gains)/losses, net | (60,760 | ) | |
Total | 230,169 |
9. Vessel Operating Costs
An analysis of vessel operating costs is as follows:
For
the three
months ended March 31, 2015 |
|||
Management fees (Note 11) | 414,000 | ||
Crew wages | 1,960,349 | ||
Technical maintenance expenses | 1,399,838 | ||
Provisions and stores | 163,802 | ||
Insurance expenses | 258,103 | ||
Brokers’ commissions | 155,155 | ||
Vessels’ tax | 229,762 | ||
Other operating expenses | 156,333 | ||
Total | 4,737,342 |
10. Financial Costs
An analysis of financial costs is as follows:
For
the three
months ended March 31, 2015 |
|||
Amortization of deferred loan issuance costs | 346,902 | ||
Interest expense on loans | 2,299,482 | ||
Other financial costs | 15,022 | ||
Total financial costs | 2,661,406 |
11. Related Party Transactions
The Group has the following balances with related parties which are included in the combined statement of financial position:
Amounts due from related parties
As
of December
31, 2014 |
As
of March 31,
2015 |
||||
GasLog LNG Services (a) | 1,908,066 | 3,271,885 | |||
GasLog Carriers Ltd. (b) | — | 23,871,964 | |||
Total | 1,908,066 | 27,143,849 |
F- 9 |
|
Amounts due to related parties
As
of December
31, 2014 |
As
of March 31,
2015 |
||||
GasLog Carriers Ltd. (c) | 8,373,948 | — | |||
GasLog Ltd. (d) | 591,000 | 861,000 | |||
Total | 8,964,948 | 861,000 |
(a) | The balances represent prepayments made to the Manager to cover operating expenses of the Group of $3,744,504 (December 31, 2014: $2,647,166) net of amounts owed for management services of $472,619 (December 31, 2014: $739,100). |
(b) | The balance outstanding consists of funds transferred to the Parent for purposes of cash management. |
(c) | The balance consists of (a) $7,850,000 dividend declared in December 2014 and (b) $523,948 payments made by the Parent on behalf of the Group that remain outstanding as of December 31, 2014. |
(d) | The balance represents outstanding commercial management fees. |
The Group had the following transactions with related parties which have been included in the unaudited condensed combined statement of profit or loss for the three months ended March 31, 2015:
Company | Details | Account |
For
the three
months ended March 31, 2015 |
|
GasLog Ltd. | Commercial management fee (i) | General and administrative expenses | 270,000 | |
GasLog LNG Services Ltd. | Management fees and other vessel management expenses (ii) | Vessel operating costs | 414,000 | |
GasLog LNG Services Ltd. | Other vessel operating costs | Vessel operating costs | 89,850 |
(iii) | Commercial Management Agreements |
Upon delivery of each vessel, the Group entered into commercial management agreements with GasLog pursuant to which GasLog provides certain commercial management services, including chartering services, consultancy services on market issues and invoicing and collection of hire payables, to the Group. The annual commercial management fee under the agreements is $360,000 for each vessel payable quarterly in advance in lump sum amounts.
(iv) | Ship Management Agreements |
Upon delivery of each vessel, the Group entered into ship management agreements with GasLog LNG Services that provide for the following:
• | Management Fees – A fixed monthly charge of $46,000 per vessel was payable by the Group to the Manager for the provision of management services such as crew, operational and technical management, procurement, accounting, budgeting and reporting, health, safety, security and environmental protection, insurance arrangements, sale or purchase of vessels, general administration and quality assurance. |
• | Superintendent Fees – A fee of $1,000 per day was payable to the Manager for each day in excess of 25 days per calendar year for which a superintendent performed visits to the vessels. |
• | Annual Incentive Bonus – Annual Incentive Bonus might be payable to the Manager, at the Group’s discretion, for remittance to the crew of an amount of up to $72,000 based on key performance indicators predetermined annually and contain clauses for decreased management fees in case of a vessel’s lay-up. |
The management fees are subject to an annual adjustment, agreed between the parties in good faith, on the basis of general inflation and proof of increases in actual costs incurred by the Manager. Each management agreement continues indefinitely until terminated by either party.
12. Commitments and Contingencies
Future gross minimum revenues receivable upon collection of hire under non-cancellable time charter agreements are as follows (30 off-hire days are assumed when each vessel will undergo scheduled drydocking; in addition early delivery of the vessels by the charterers or any exercise of the charterers’ options to extent the terms of the charters are not accounted for):
F- 10 |
|
As of March 31, 2015 | |||
Not later than one year | 50,561,750 | ||
Later than one year and not later than three years | 144,189,750 | ||
Later than three years and not later than five years | 142,217,250 | ||
Later than five years | 30,442,250 | ||
Total | 367,411,000 |
The Group is counter guarantor for the acquisition from BG Group of depot spares with an aggregate value of $3,000,000. These spares should be acquired before the end of the initial term of the charter party agreements. As of March 31, 2015, the Manager had purchased depot spares of $1,523,068.
Various claims, suits and complaints, including those involving government regulations, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, environmental claims, agents and insurers and from claims with suppliers relating to the operations of the Group’s vessels. Currently, management is not aware of any such claims or contingent liabilities requiring disclosure in the unaudited condensed combined financial statements.
13. Subsequent Events
The Group has evaluated transactions for consideration as subsequent events through June 22, 2015, which is the date these financial statements were authorized for issuance.
GasLog Partners LP and GasLog announced on June 22, 2015 that they have entered into an agreement for the Partnership to purchase from GasLog, the sole member of GasLog Partners LP’s general partner, 100% of the shares of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., the entities that own and charter the Methane Alison Victoria , Methane Shirley Elisabeth and Methane Heather Sally , respectively, modern LNG carriers built in 2007, each with a capacity of 145,000 cubic meters, for an aggregate purchase price of $483,000,000 (the “Acquisition”). The Acquisition is subject to GasLog Partners LP obtaining the funds necessary to pay the purchase price and the satisfaction of certain other closing conditions.
F- 11 |
Exhibit 99.3
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On June 22, 2015, GasLog Partners LP (“we”, “our”, “us”, “GasLog Partners” or the “Partnership”) entered into a share purchase agreement to purchase from GasLog Carriers Ltd., a direct subsidiary of GasLog Ltd. (“GasLog”), 100% of the ownership interests in GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., the entities that own the Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally , respectively, for an aggregate purchase price of $483,000,000. As consideration for this acquisition, the Partnership will pay GasLog $157,500,000, representing the difference between the $483,000,000 aggregate purchase price and the $325,500,000 of outstanding indebtedness of the acquired entities before taking into account any net working capital adjustment under the share purchase agreement in order to maintain the agreed working capital position in the acquired entities of $3,000,000 at the time of acquisition. We refer to this transaction as the “Pending Vessel Acquisition”. In connection with the Pending Vessel Acquisition, Gaslog will notify the lenders under the Citibank Facility which relates to the Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally .
The unaudited pro forma financial information gives effect to the following transactions:
Acquisition of three vessel-owning entities by the Partnership
· | The Partnership’s purchase from GasLog Carriers Ltd., a direct subsidiary of GasLog, 100% of the ownership interests in GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., the entities that own the Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally (the “Drop-down vessels”), respectively, for an aggregate purchase price of $483,000,000. As consideration for this acquisition, the Partnership will pay GasLog $157,500,000, representing the difference between the $483,000,000 aggregate purchase price and the $325,500,000 of outstanding indebtedness of the acquired entities. |
· | The assumption of $325,500,000 of outstanding indebtedness in respect of the Drop-down vessels, as a result of the purchase of the ownership interests of the entities that own the Drop-down vessels. |
Basis of Preparation
We are controlled by GasLog which currently owns limited partnership units representing a 40.53% partnership interest and a 2.0% general partner interest in us, and owns and controls our general partner. As a result, the acquisition will be accounted for as a reorganization of companies under common control and the pro forma financial information reflects the Pending Vessel Acquisition as if it had taken place on the date of incorporation of the entities, and as a result, the carrying amounts of assets and liabilities included are based on the historical carrying amounts of such assets and liabilities recognized by GasLog. The vessel owning entities to be acquired by the Partnership were incorporated by GasLog on April 4, 2014 and the vessels owned by those entities were acquired by GasLog from BG Group in June 2014; therefore, no unaudited pro forma financial information is presented for periods prior to the period ended December 31, 2014. The vessel owning entities to be acquired by the Partnership had no operations before the vessels owned by those entities were acquired in June 2014.
The unaudited pro forma condensed combined and consolidated statement of financial position as of March 31, 2015 assumes the aforementioned transactions occurred on March 31, 2015. The unaudited pro forma condensed combined and consolidated statements of profit or loss for the three months ended March 31, 2015 and for the year ended December 31, 2014 assume the aforementioned transactions occurred on April 4, 2014, which is the date of inception of the vessel owning entities to be acquired. Please refer to the accompanying notes to the unaudited pro forma financial information for further explanation.
P- 1 |
|
The unaudited pro forma condensed combined and consolidated statement of financial position as of March 31, 2015 is based on (i) the combined and consolidated statement of financial position of GasLog Partners as of March 31, 2015 included in the Partnership’s Form 6-K which was filed with the Securities and Exchange Commission (the “SEC”) on April 30, 2015 and (ii) the combined statement of financial position of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. as of March 31, 2015 included in Exhibit 99.2 to this Form 6-K. The unaudited pro forma condensed combined and consolidated statement of profit or loss for the three months ended March 31, 2015 is based on (i) the interim unaudited condensed combined and consolidated statement of profit or loss of GasLog Partners for the three months ended March 31, 2015 included in the Partnership’s Form 6-K filed with the SEC on April 30, 2015 and (ii) the interim unaudited condensed combined statement of profit or loss and other comprehensive income of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. for the three months ended March 31, 2015 included in Exhibit 99.2 to this Form 6-K. The unaudited pro forma condensed combined and consolidated statement of profit or loss for the year ended December 31, 2014 is based on (i) the combined and consolidated statement of profit or loss of GasLog Partners for the year ended December 31, 2014 included in the Partnership’s Annual Report on Form 20-F which was filed with the SEC on February 17, 2015 and (ii) the combined statement of profit or loss and other comprehensive income of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. for the period from April 4, 2014 (date of inception) to December 31, 2014 included in Exhibit 99.1 to this Form 6-K. The adjustments reflected in the unaudited pro forma financial information are based on currently available information and certain estimates and assumptions that we believe are reasonable and supportable. Management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the above transactions, and that the pro forma adjustments in the unaudited pro forma financial information give appropriate effect to the assumptions. However, actual amounts may differ from those presented in the unaudited pro forma financial information and the unaudited pro forma financial information does not purport to show what the Partnership’s historical results actually would have been had the Pending Vessel Acquisition occurred as of the assumed dates and does not purport to project what the Partnership’s future results will be.
The unaudited pro forma financial information should be read together with the Partnership’s Annual Report on Form 20-F, which was filed with the SEC on February 17, 2015, the Partnership’s interim unaudited condensed combined and consolidated financial statements on Form 6-K filed with the SEC on April 30, 2015, and the annual combined financial statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. and the interim unaudited condensed combined financial statements of GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. included in Exhibits 99.1 and 99.2, respectively, to this Form 6-K.
The unaudited pro forma financial information does not purport to present the Partnership’s results of operations had the aforementioned transactions actually been completed at the dates indicated.
P- 2 |
|
GasLog Partners LP
Unaudited Pro Forma Condensed Combined and Consolidated Statement of Financial Position
(Expressed in U.S. Dollars)
As of March 31, 2015 | ||||||||||||||||||
GasLog Partners
Historical |
GAS-nineteen
Ltd., GAS- twenty Ltd. and GAS-twenty one Ltd. Historical |
Pro forma
adjustments |
GasLog
Partners Pro forma |
|||||||||||||||
Assets | ||||||||||||||||||
Non-current assets | ||||||||||||||||||
Other non-current assets | 2,086,401 | — | — | 2,086,401 | ||||||||||||||
Vessels | 844,454,190 | 458,883,270 | — | 1,303,337,460 | ||||||||||||||
Total non-current assets | 846,540,591 | 458,883,270 | — | 1,305,423,861 | ||||||||||||||
Current assets | ||||||||||||||||||
Trade and other receivables | 1,069,930 | 4,702,572 | — | 5,772,502 | ||||||||||||||
Inventories | 1,063,169 | 808,820 | — | 1,871,989 | ||||||||||||||
Prepayments and other current assets | 534,531 | 691,481 | — | 1,226,012 | ||||||||||||||
Short-term investments | 4,000,000 | — | — | 4,000,000 | ||||||||||||||
Due from related parties | — | 27,143,849 | (337,126 | ) | [1c] | 26,806,723 | ||||||||||||
Cash and cash equivalents | 42,559,356 | 247,065 | — | 42,806,421 | ||||||||||||||
Total current assets | 49,226,986 | 33,593,787 | (337,126 | ) | 82,483,647 | |||||||||||||
Total assets | 895,767,577 | 492,477,057 | (337,126 | ) | 1,387,907,508 | |||||||||||||
Owners’/Partners’ equity and liabilities | ||||||||||||||||||
Owners’/Partners’ equity | ||||||||||||||||||
Owners’ equity | — | 149,957,255 | 19,408,652 | [1e] | — | |||||||||||||
— | — | (157,500,000 | ) | [1a] | — | |||||||||||||
— | — | (11,865,907 | ) | [1b] | — | |||||||||||||
Common unitholders | 328,362,771 | — | (303,414 | ) | [1e] | 328,059,357 | ||||||||||||
Subordinated unitholders | 75,829,006 | — | (18,356,012 | ) | [1e] | 57,472,994 | ||||||||||||
General partner | 6,129,042 | — | (749,226 | ) | [1e] | 5,379,816 | ||||||||||||
Total owners’/partners’ equity | 410,320,819 | 149,957,255 | (169,365,907 | ) | 390,912,167 | |||||||||||||
Current liabilities | ||||||||||||||||||
Trade accounts payable | 1,767,311 | 1,110,250 | — | 2,877,561 | ||||||||||||||
Due to related parties | 445,688 | 861,000 | (337,126 | ) | [1c] | 170,335,469 | ||||||||||||
— | — | 157,500,000 | [1a] | — | ||||||||||||||
— | — | 11,865,907 | [1b] | — | ||||||||||||||
Other payables and accruals | 15,372,410 | 16,756,630 | — | 32,129,040 | ||||||||||||||
Borrowings – current portion | 20,997,008 | — | — | 20,997,008 | ||||||||||||||
Total current liabilities | 38,582,417 | 18,727,880 | 169,028,781 | 226,339,078 | ||||||||||||||
Non-current liabilities | ||||||||||||||||||
Borrowings – non-current portion | 446,790,664 | 323,791,922 | — | 770,582,586 | ||||||||||||||
Other non-current liabilities | 73,677 | — | — | 73,677 | ||||||||||||||
Total non-current liabilities | 446,864,341 | 323,791,922 | — | 770,656,263 | ||||||||||||||
Total owners’/partners’ equity and liabilities | 895,767,577 | 492,477,057 | (337,126 | ) | 1,387,907,508 |
P- 3 |
|
GasLog Partners LP
Unaudited Pro Forma Condensed Combined and Consolidated Statement of Profit or Loss
(Expressed in U.S. Dollars)
For the three months ended March 31, 2015 | ||||||||||||||||||||
GasLog Partners
Historical |
GAS-nineteen
Ltd., GAS- twenty Ltd. and GAS- twenty one Ltd. Historical |
Pro forma
adjustments |
GasLog
Partners Pro forma |
|||||||||||||||||
Revenues | 32,578,056 | 15,656,216 | — | 48,234,272 | ||||||||||||||||
Vessel operating costs | (6,917,683 | ) | (4,737,742 | ) | — | (11,655,425 | ) | |||||||||||||
Depreciation | (6,831,539 | ) | (4,234,121 | ) | — | (11,065,660 | ) | |||||||||||||
General and administrative expenses | (1,991,018 | ) | (230,169 | ) | (441,000 | ) | [1d] | (2,662,187 | ) | |||||||||||
Profit from operations | 16,837,816 | 6,454,184 | (441,000 | ) | 22,851,000 | |||||||||||||||
Financial costs | (3,949,800 | ) | (2,661,406 | ) | — | (6,611,206 | ) | |||||||||||||
Financial income | 9,414 | 1,411 | — | 10,825 | ||||||||||||||||
Total other expenses, net | (3,940,386 | ) | (2,659,995 | ) | — | (6,600,381 | ) | |||||||||||||
Profit for the period | 12,897,430 | 3,794,189 | (441,000 | ) | 16,250,619 | |||||||||||||||
Earnings per unit attributable to the
Partnership, basic and diluted: |
||||||||||||||||||||
Common unit | 0.67 | — | — | 0.59 | [1f] | |||||||||||||||
Subordinated unit | 0.31 | — | — | 0.59 | [1f] | |||||||||||||||
General partner unit | 0.52 | — | — | 0.66 | [1f] |
P- 4 |
|
GasLog Partners LP
Unaudited Pro Forma Condensed Combined and Consolidated Statement of Profit or Loss
(Expressed in U.S. Dollars)
For the year ended December 31, 2014 | ||||||||||||||||||||
GasLog
Partners Historical |
GAS-nineteen
Ltd., GAS- twenty Ltd. and GAS- twenty one Ltd. Historical for the period April 4, 2014 (date of inception) to December 31, 2014 |
Pro forma
adjustments |
GasLog
Partners Pro forma |
|||||||||||||||||
Revenues | 119,040,364 | 39,129,327 | — | 158,169,691 | ||||||||||||||||
Vessel operating costs | (23,937,598 | ) | (8,842,056 | ) | — | (32,779,654 | ) | |||||||||||||
Depreciation | (24,638,752 | ) | (9,292,425 | ) | — | (33,931,177 | ) | |||||||||||||
General and administrative expenses | (5,763,788 | ) | (618,343 | ) | (967,148 | ) | [1d] | (7,349,279 | ) | |||||||||||
Profit from operations | 64,700,226 | 20,376,503 | (967,148 | ) | 84,109,581 | |||||||||||||||
Financial costs | (27,486,292 | ) | (5,907,026 | ) | — | (33,393,318 | ) | |||||||||||||
Financial income | 33,004 | 7,589 | — | 40,593 | ||||||||||||||||
Loss on interest rate swaps | (8,078,240 | ) | — | — | (8,078,240 | ) | ||||||||||||||
Total other expenses, net | (35,531,528 | ) | (5,899,437 | ) | — | (41,430,965 | ) | |||||||||||||
Profit for the period | 29,168,698 | 14,477,066 | (967,148 | ) | 42,678,616 | |||||||||||||||
Earnings per unit attributable
to the
Partnership, basic and diluted: |
||||||||||||||||||||
Common unit | 0.75 | — | — | 1.36 | [1f] | |||||||||||||||
Subordinated unit | 0.56 | — | — | 1.05 | [1f] | |||||||||||||||
General partner unit | 0.66 | — | — | 1.28 | [1f] |
P- 5 |
|
GasLog Partners LP
Notes to unaudited pro forma financial information
(Expressed in U.S. Dollars, except unit data)
The unaudited pro forma financial information gives pro forma effect to the following:
1. | Pro Forma Adjustments and Assumptions |
(a) | We have adjusted the unaudited pro forma condensed combined and consolidated statement of financial position as of March 31, 2015 to reflect the purchase from GasLog Carriers Ltd., a direct subsidiary of GasLog, 100% of the ownership interests in GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd., the entities that own the Methane Alison Victoria , the Methane Shirley Elisabeth and the Methane Heather Sally , respectively, for an aggregate purchase price of $483,000,000. As consideration for this acquisition, the Partnership will pay GasLog $157,500,000, representing the difference between the $483,000,000 aggregate purchase price and the $325,500,000 of outstanding indebtedness of the acquired entities, before taking into account any net working capital adjustment under the share purchase agreement in order to maintain the agreed working capital position in the acquired entities of $3,000,000 at the time of acquisition. The Pending Vessel Acquisition is subject to the Partnership obtaining the funds necessary to pay the purchase price and the satisfaction of certain other closing conditions. As such, the consideration of $157,500,000 is presented as a pro forma adjustment to “Due to related parties”. |
(b) | Reflects the working capital adjustment under the share purchase agreement which represents the net working capital (current assets less current liabilities) of the entities to be acquired at carrying amounts as of March 31, 2015 less the agreed working capital threshold of $3,000,000, as calculated in the table below: |
Pro forma
adjustments (in U.S. dollars) |
|||
Current assets as of March 31, 2015 | 33,593,787 | ||
Less: Current liabilities as of March 31, 2015 | (18,727,880 | ) | |
Net working capital of entities to be acquired | 14,865,907 | ||
Less: Agreed working capital threshold | (3,000,000 | ) | |
Working capital adjustment | 11,865,907 |
(c) | Reflects a reclassification of related party balances to be presented on a net basis. Upon reorganization, GasLog Partners will be in a net receivable position with GasLog LNG Services Ltd. and therefore the amount payable as of March 31, 2015 by GasLog Partners to GasLog LNG Services Ltd. has been reclassified to conform to the overall net receivable position. |
(d) | The Partnership is currently party to an administrative services agreement (the “Administrative Services Agreement”) with GasLog, pursuant to which GasLog provides certain management and administrative services related mainly to the requirements of the Partnership as a listed entity.. The Administrative Services Agreement requires the Partnership to pay a service fee of $588,000 per vessel per year in connection with providing services under this agreement. The unaudited pro forma condensed combined and consolidated statements of profit or loss for the three months ended March 31, 2015 and the year ended December 31, 2014 have been adjusted to reflect the expense associated with this agreement as if the Pending Vessel Acquisition had occurred on April 4, 2014 (note that the pro forma adjustment for the year ended December 31, 2014 is calculated from June 2014, the date that GasLog purchased the vessels from the BG Group). |
(e) | Reflects the deemed distribution of excess consideration paid to GasLog over the aggregate net assets of the contributed entities GAS-nineteen Ltd., GAS-twenty Ltd. and GAS-twenty one Ltd. (adjusted for the working capital adjustment based on the working capital position of the entities to be acquired as of March 31, 2015) has been allocated proportionately to common, subordinated and general partner unitholders based on the number of common, subordinated and general partner units respectively which were held by GasLog on the transaction date (as presented in the following table): |
P- 6 |
|
Pro forma
adjustments (in U.S. dollars) |
||||
Aggregate cash consideration to be paid to GasLog in exchange for acquisition of vessel owning entities | 157,500,000 | |||
Plus: Working capital adjustment (working capital position at carrying amounts less $3,000,000 to be maintained) | 11,865,907 | |||
Less: Net assets assumed (at carrying amounts) | (149,957,255 | ) | ||
Deemed distribution to GasLog (excess of cash consideration paid over carrying value of net assets assumed) | 19,408,652 | |||
Distributable to GasLog’s outstanding: | ||||
Common units (162,358 units held by GasLog) | 303,414 | |||
Subordinated units (9,822,358 units held by GasLog) | 18,356,012 | |||
General partner units (400,913 units held by GasLog) | 749,226 |
(f) | The Partnership calculates earnings per unit by allocating reported profit for each period to each class of units based on the distribution policy for available cash stated in the partnership agreement as generally described in our Annual Report on Form 20-F filed with the SEC on February 17, 2015. |
Basic earnings per unit is determined by dividing net income reported at the end of each period by the weighted average number of units outstanding during the period. Diluted earnings per unit is equal to basic earnings per unit since there are no potential ordinary units assumed to have been converted in common units.
Earnings per unit is presented for the period in which the units were outstanding, with earnings calculated as follows:
For the year ended
December 31, 2014 |
For the three months ended
March 31, 2015 |
|||||||||||||||
Historical | Pro forma | Historical | Pro forma | |||||||||||||
Profit for the year | 29,168,698 | 42,678,616 | 12,897,430 | 16,250,619 | ||||||||||||
Less: | ||||||||||||||||
Profit attributable to GasLog’s operations* | (14,624,569 | ) | (14,624,569 | ) | — | — | ||||||||||
Partnership’s profit | 14,544,129 | 28,054,047 | 12,897,430 | 16,250,619 | ||||||||||||
Partnership’s profit attributable to: | ||||||||||||||||
Common unitholders | 8,713,197 | 15,784,053 | 9,618,609 | 8,513,797 | ||||||||||||
Subordinated unitholders | 5,540,049 | 10,337,287 | 3,020,872 | 5,838,813 | ||||||||||||
General partner | 290,883 | 561,082 | 257,949 | 325,012 | ||||||||||||
Incentive distribution rights** | — | 1,371,625 | — | 1,572,997 | ||||||||||||
Weighted average units outstanding (basic and diluted) | ||||||||||||||||
Common units | 11,618,495 | 11,618,495 | 14,322,358 | 14,322,358 | ||||||||||||
Subordinated units | 9,822,358 | 9,822,358 | 9,822,358 | 9,822,358 | ||||||||||||
General partner units | 437,569 | 437,569 | 492,750 | 492,750 | ||||||||||||
Earnings per unit (basic and diluted) | ||||||||||||||||
Common unitholders | 0.75 | 1.36 | 0.67 | 0.59 | ||||||||||||
Subordinated unitholders | 0.56 | 1.05 | 0.31 | 0.59 | ||||||||||||
General partner | 0.66 | 1.28 | 0.52 | 0.66 |
* Represents loss/(profits) earned prior to the Partnership’s initial public offering on May 12, 2014 and the profits of GAS-sixteen Ltd. and GAS-seventeen Ltd. for the period prior to their transfer to the Partnership on September 29, 2014. Whilst these profits are reflected in the Partnership’s financial statements because the transfers to the Partnership reflect a reorganization of entities under common control, such amounts are not attributable to the Partnership’s operations.
** Represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. GasLog holds the incentive distribution rights (“IDRs”) following completion of the Partnership's initial public offering. The IDRs may be transferred separately from any other interests, subject to restrictions in the partnership agreement. Based on the nature of such right, earnings attributable to IDRs cannot be allocated on a per unit basis.
P- 7 |
Exhibit 99.4
GasLog Partners LP Announces Acquisition of Three Vessels from GasLog Ltd. for $483 Million
Monaco – June 22, 2015 – GasLog Partners LP (NYSE: GLOP) (“GasLog Partners” or the “Partnership”) and GasLog Ltd. (NYSE: GLOG) (“GasLog”) announced today that they have entered into an agreement for the Partnership to purchase from GasLog, the sole member of the Partnership’s general partner, 100% of the shares in the entities that own and charter the Methane Alison Victoria, Methane Shirley Elisabeth and Methane Heather Sally , for an aggregate purchase price of $483 million (the “Acquisition”), which includes $3 million for positive net working capital balances to be transferred with the vessels. The three vessels subject to the Acquisition are modern liquefied natural gas (“LNG”) carriers built in 2007, each with a capacity of 145,000 cubic meters. The Acquisition is subject to the Partnership obtaining the funds necessary to pay the purchase price and the satisfaction of certain other closing conditions. The Partnership expects to finance the acquisition with a combination of equity and the assumption of the vessels’ existing credit facilities.
GasLog acquired the Methane Alison Victoria, Methane Shirley Elisabeth and Methane Heather Sally from an affiliate of BG Group (“BG”) in June 2014. GasLog supervised the construction of each ship and has provided technical management for the ships since delivery. The vessels are currently operating under long-term time charters with BG with terms of 4.5 years, 5 years and 5.5 years remaining, respectively. BG has the option to extend two of the three charters for an additional period of either three or five years following the initial charter period.
The Acquisition is another significant milestone for GasLog Partners and GasLog. The Partnership believes that the Acquisition is immediately accretive and is consistent with the strategy to grow cash distributions for the unitholders through accretive dropdowns and third-party acquisitions. The Partnership estimates that the vessels to be acquired will annually generate approximately $72 million of incremental contracted revenue over their initial charter terms, assuming full utilization, and approximately $50.8 million of estimated EBITDA (1) for the first 12 months after the closing of the Acquisition. Accordingly, the purchase price of the Acquisition represents a multiple of 9.4x estimated EBITDA for the first 12 months after the closing of the Acquisition. The Board of Directors of GasLog, Board of Directors of the Partnership (the “Board”) and the Conflicts Committee of the Board have approved the Acquisition.
Following the completion of the Acquisition, the Partnership’s management intends to recommend to the Board an increase in the Partnership’s quarterly cash distribution per unit of between 7% to 10%. This increase, together with the previous increase with respect to the quarter ended March 31, 2015, will result in a cash distribution per unit of between 24% to 27% above the existing minimum quarterly distribution. The proposed increase would result in a cash distribution per unit of between $0.465 to $0.478 for the quarter ended September 30, 2015, or $1.86 to $1.91 on an annualized basis. Any such increase would be conditioned upon, among other things, the closing of the 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.
Andy Orekar, Chief Executive Officer of GasLog Partners, stated, “I am very pleased to be announcing our second accretive dropdown acquisition since our IPO in 2014. The addition of these three vessels will significantly increase the size of the GasLog Partners’ fleet from five to eight vessels, increasing the scale and equity free float of the Partnership, which we believe will enhance the trading liquidity in the Partnership’s units.
The Acquisition adds approximately $352.9 million of contracted revenue and approximately $50.8 million of estimated EBITDA for the first 12 months after the closing of the Acquisition, assuming full utilization. Following this transaction, GasLog Partners continues to have an identified dropdown pipeline of twelve additional vessels at GasLog, providing a highly visible path to sustainable growth. We believe GasLog Partners is well positioned to execute our strategy and continue growing cash distributions for our unitholders at a 10-15% CAGR from the IPO for the next several years.”
Paul Wogan, Chief Executive Officer of GasLog, stated, “This second major transaction between GasLog Ltd. and GasLog Partners validates the strategy we set out at the time of GasLog Partners’ IPO of financing at the Partnership level, when the cost of capital is attractive, to continue the growth of the GasLog fleet. GasLog has made significant progress since the GasLog Partners IPO last year, adding a number of vessels with long term contracts to the dropdown pipeline. We believe there is significant value to GasLog through our ownership of the limited partner units, the general partner and the incentive distribution rights in GasLog Partners. In just over a year since the GasLog Partners’ IPO, it is extremely pleasing that on completion of this transaction and subject to Partnership Board approval, the initial IPO distribution will have increased by between 24 and 27%, which we believe further enhances our sum-of-the-parts valuation.”
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
_________________
(1) | EBITDA, which represents earnings before interest income and expense, taxes, depreciation and amortization, is a non-GAAP financial measure. Please refer to Exhibit I for guidance on the underlying assumptions used to derive EBITDA. |
About GasLog Ltd.
GasLog is an international owner, operator and manager of LNG carriers. GasLog’s fully-owned fleet includes 22 LNG carriers (including 14 ships in operation and 8 LNG carriers on order) and GasLog has four LNG carriers operating under its technical management for third parties. GasLog Partners LP, a master limited partnership formed by GasLog, owns a further five LNG carriers. GasLog’s principal executive offices are at Gildo Pastor Center, 7 Rue du Gabian, MC 98000, Monaco. GasLog’s website is http://www.gaslogltd.com .
About GasLog Partners LP
GasLog Partners LP is a growth-oriented master limited partnership focused on owning, operating and acquiring LNG carriers under long-term charters. Before giving effect to the proposed vessel acquisition discussed above, GasLog Partners LP’s fleet consists of five LNG carriers with an average carrying capacity of 151,000 cbm, each of which has a multi-year time charter. For more information, please visit the GasLog Partners LP website at http://www.gaslogmlp.com .
Forward-Looking Statements
All statements in this press release that are not statements of historical fact are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that address activities, events or developments that Gaslog and GasLog Partners LP expect, project, believe or anticipate will or may occur in the future, particularly in relation to Gaslog and GasLog Partners LP’s operations, cash flows, financial position, liquidity and cash available for dividends or distributions, plans, strategies and business prospects (including the “GasLog 40:17 Vision”), and changes and trends in GasLog and GasLog Partners LP’s business and the markets in which they operate. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from the GasLog and GasLog Partners LP’s expectations and projections. Accordingly, you should not unduly rely on any forward-looking statements. Factors that might cause future results and outcomes to differ include:
● | LNG shipping market conditions and trends, including spot and long-term charter rates, ship values, factors affecting supply and demand of LNG and LNG shipping and technological advancements; | |
● | our ability to enter into time charters with new and existing customers; | |
● | changes in the ownership of our charterers; | |
● | our customers’ performance of their obligations under our time charters; | |
● | changing economic conditions and the differing pace of economic recovery in different regions of the world; | |
● | our future financial condition, liquidity and cash available for dividends and distributions; | |
● | our ability to obtain financing to fund capital expenditures, acquisitions and other corporate activities, the ability of our lenders to meet their funding obligations, and our ability to meet the restrictive covenants and other obligations under our credit facilities; |
● | our ability to enter into shipbuilding contracts for newbuildings and our expectations about the availability of existing LNG carriers to purchase, as well as our ability to consummate any such acquisitions; | |
● | our expectations about the time that it may take to construct and deliver newbuildings and the useful lives of our ships; | |
● | number of off-hire days, drydocking requirements and insurance costs; our anticipated general and administrative expenses; | |
● | fluctuations in currencies and interest rates; | |
● | our ability to maximize the use of our ships, including the re-employment or disposal of ships not under time charter commitments; | |
● | environmental and regulatory conditions, including changes in laws and regulations or actions taken by regulatory authorities; | |
● | requirements imposed by classification societies; | |
● | risks inherent in ship operation, including the discharge of pollutants; | |
● | availability of skilled labor, ship crews and management; |
● | potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists; | |
● | potential liability from future litigation; and | |
● | other risks and uncertainties described in the GasLog’s Annual Report on Form 20-F filed with the SEC on March 26, 2015 and GasLog Partners LP’s Annual Report on Form 20-F filed with the SEC on February 17, 2015. Copies of both Annual Reports, as well as subsequent filings, are available online at http://www.sec.gov . |
GasLog and GasLog Partners LP do not undertake to update any forward-looking statements as a result of new information or future events or developments except as may be required by law.
Contacts:
Simon Crowe
Chief Financial Officer
Phone: +44-203-388-3108
Jamie Buckland
Head of Investor Relations
Phone: +44-203-388-3116
Email: ir@gaslogltd.com
EXHIBIT I
Non-GAAP Financial Measures
EBITDA . EBITDA is defined as earnings before interest income and expense, gain/loss on interest rate swaps, taxes, depreciation and amortization. EBITDA, which is a non-GAAP financial measure, is used as a supplemental financial measure by our management and external users of financial statements, such as investors, to assess our financial and operating performance. We believe that this non-GAAP financial measure assists our management and investors by increasing the comparability of our performance from period to period. We believe that including EBITDA assists our management and investors in (i) understanding and analyzing the results of our operating and business performance, (ii) selecting between investing in us and other investment alternatives and (iii) monitoring our ongoing financial and operational strength in assessing whether to continue to hold our common units. This increased comparability is achieved by excluding the potentially disparate effects between periods of interest, gains/losses on interest rate swaps, taxes, depreciation and amortization.
EBITDA has limitations as an analytical tool and should not be considered as an alternative to, or as a substitute for, or superior to profit, profit from operations, earnings per unit or any other measure of financial performance presented in accordance with IFRS. Some of these limitations include the fact that it does not reflect (i) our cash expenditures or future requirements for capital expenditures or contractual commitments, (ii) changes in, or cash requirements for our working capital needs and (iii) the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements. It is not adjusted for all non-cash income or expense items that are reflected in our statement of cash flows and other companies in our industry may calculate these measures differently than we do, limiting its usefulness as a comparative measure.
For the entities owning the three LNG carriers we are purchasing, estimated EBITDA for the first twelve months of operation following the completion of the Acquisition is based on the following assumptions:
· | closing of the Acquisition in the early third quarter of 2015 and timely receipt of charter hire specified in the charter contracts; |
· | utilization of 363 days per year and no drydocking; |
· | vessel operating and supervision costs and charter commissions per current internal estimates; and |
· | general and administrative expenses based on management’s current internal estimates. |
We consider the above assumptions to be reasonable as of the date of this press release, but if these assumptions prove to be incorrect, actual EBITDA for the entities owning the vessels could differ materially from our estimates. The prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants. Neither our independent auditors nor any other independent accountants have compiled, examined, or performed any procedures with respect to the prospective financial information contained above, nor have they expressed any opinion or any other form of assurance on such information or its achievability and assume no responsibility for, and disclaim any association with, such prospective financial information.