The Partnership announced today that its wholly owned subsidiary, KNOT Shuttle Tankers AS, has entered into agreements with our Sponsor, Knutsen NYK Offshore Tankers AS (KNOT), to simultaneously:
- acquire from KNOT the shuttle tanker, Tuva Knutsen; and
- sell to KNOT the shuttle tanker, Dan Cisne (the “Dan Cisne Sale” and, together with the Tuva Knutsen Acquisition, the “Transaction”).
These transactions will be effected by the purchase and sale of the entities which own the respective vessels. The purchase price for the Tuva Knutsen Acquisition is $97.5 million less $69.0 million of outstanding debt plus $0.4 million of capitalized fees related to the credit facility secured by the Tuva Knutsen. The sale price for the Dan Cisne Sale is $ 30 million. These purchase and sale prices are due to be set off, with the result that a net payment of $ 1.1 million is due to be paid by KNOT to the Partnership, subject to customary adjustments relating to working capital. Completion is expected to take place on the date of this release.
The Tuva Knutsen, a 153,000-deadweight ton DP2 Suezmax class shuttle tanker, was built by COSCO Shipping Heavy Industry and delivered in 2021. The vessel is operating in Brazil on a charter contract with TotalEnergies, for which the current fixed period expires in February 2026, and for which the charterer holds options for a further 10 years. As a term of the Transaction, KNOT has effectively guaranteed the hire rate for the vessel until August 2031 on the same basis as if TotalEnergies had exercised its options through such date, thus providing the Partnership with 7 years of fixed employment for Tuva Knutsen.
The Transaction was approved by the Partnership’s Board of Directors and independent Conflicts Committee, who were supported by an outside independent financial advisor and outside legal counsel.
Derek Lowe, CEO of the Partnership, commented, “We are pleased to have agreed the swap of the Dan Cisne for the Tuva Knutsen, which provides growth for the fleet without a requirement for new funding, while also increasing our pipeline of long-term contracts. This swap reduces our average fleet age and increases our fleet’s concentration in the most in-demand shuttle tanker class. We remain focused on generating certainty and stability of cashflows from long-term employment with high-quality counterparties, and are confident that continued operational performance and execution of our strategy can create unitholder value in the quarters and years ahead. This vessel swap decisively addresses a long-standing challenge for the Partnership and represents an important milestone on KNOP’s path forward.”