The existing bank loan has an outstanding amount of $75.6 mill with a balloon amount of $69.5 mill due at maturity in August, 2018.
The new senior secured credit facility will consist of a $100 mill term loan facility with Mitsubishi UFJ Lease & Finance (Hong Kong) and will have a fixed tenor of seven years.
Closing of the UFJ Facility is anticipated for May, 2017, subject to documentation and the customary closing conditions. KST14 will be the borrower under the UFJ Facility, which will be guaranteed by the Partnership.
The UFJ Facility is repayable in 28 consecutive quarterly instalments with a balloon payment of $58.5 mill due at maturity. It will bear interest at a rate per annum equal to LIBOR plus a margin of 2.2%, which is a 30 basis point reduction compared to the interest rate under the existing ‘Hilda Knutsen’ facility.
The refinancing will significantly decrease the Partnership’s balloon payments due in the second half of 2018, KNOT said.
John Costain, CEO/CFO, said; “The refinancing of the ‘Hilda Knutsen’ facility will make a significant liquidity contribution to the Partnership. We are securing long-term financing on attractive terms, addressing our refinancing risks and at the same time further diversifying our funding universe.
“This refinancing should enable the Partnership to pursue a ninth dropdown from its sponsor, Knutsen NYK Offshore Tankers subject to approval by the conflicts committee and Partnership’s board of directors. We anticipate that Knutsen NYK will offer to us the opportunity to purchase the shuttle tanker ‘Vigdis Knutsen’ when she commences her long-term charter with a subsidiary of Shell, which is expected to occur in early April, 2017.
“‘Vigdis Knutsen’ is a brand new shuttle tanker and the sister vessel of ‘Tordis Knutsen’, which was acquired by the Partnership on 1st March, 2017. A ninth dropdown would result in the Partnership’s growing its fleet to comprise 13 advanced modern shuttle tankers, a 225% fleet growth since the Partnership was listed on NYSE in April, 2013,” he concluded.
In addition, the Partnership announced that its general partner appointed Richard Beyer to replace Hiroaki Nishiyama on the board commencing 1st April, 2017.
Beyer has been a member of the board of directors of the Partnership’s general partner and KNOT Offshore Partners UK since 2013 and is a director of NYK Group Europe and NYK Energy Transport (Atlantic).
Before joining NYK Group Europe, Beyer was a senior legal adviser to BP Shipping. He was admitted as an English solicitor in 1995.