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GasLog offers to buy GasLog Partners for $7.70/unit

Jan. 25, 2023 7:20 AM ETGasLog Partners LP (GLOP)By: Carl Surran, SA News Editor105 Comments

Towing liquefied gas tanker. Transportation of hydrocarbons by sea.

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GasLog Partners (NYSE:GLOP+9.6% pre-market Wednesday after GasLog Ltd. made an unsolicited non-binding proposal to acquire all outstanding units not already beneficially owned by GasLog Ltd.

According to an SEC filing, each common unit would receive overall value of $7.70/unit in cash, consisting in part of a special distribution of $2.33/unit in cash.

GasLog Ltd. currently owns more than 15.6M common units in GasLog Partners (GLOP).

GasLog Partners (GLOP) has "a big year ahead in 2023," DT Analysis writes in an article published on Seeking Alpha.

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Comments (105)

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Desert Wolf profile picture
Not much a common unt holder can do other than HOLD OUT All they need is to recruit a couple large GLOP Shareholders and she's done
GLOP IPO'd around $26.

In the future, I would suggest any/all LPs have a stipulation that they cannot be bought back by the issuer, or any related parties, for less than the IPO price.

This whole thing where they issue an LP, then later manipulate everything so they can buy it back for less than they initially sold it for, has to come to an end.
J Mintzmyer profile picture
@bondsmoker ,

Should probably be IPO minus distributions, but otherwise agreed! GLOP paid around $10 in dividends. Such a rule would suggest a $16 buyout...
@J Mintzmyer Great idea. But who gets a vote on it. Who votes that in? Made part of laws governing IPOs or LPs? In what countries? Bermuda? Where so many of the ocean dwellers call home?

The bigger problem with it conceptually is, it goes against the whole theory of stock markets and the risk of owning stocks in the first place. It's supposed to be an auction without guaranteed results. Something like that comes to mind after the initial "yeah, I could go for that, enough of this getting the rug pulled out from under me for less, LOTS less, than my cost". Which btw describes exactly my situation here, and with HMLP, and with...others.

But that's as far as my thinking takes me on it. Perhaps there's some way to discourage this sort of thing. I don't know...probably get some laws changed to permit legal action.
@J Mintzmyer in other words, "can't go broke breakin even"? ;)
J Mintzmyer profile picture
I'm opposed to the deal myself. I believe charter free NAV is $14-$17 and even after adjusting for some of the weaker legacy charters, we still arrive in about a $12/unit range.

Added more myself today. Considering some discount is warranted to the structure, I believe a pricing of over $10 would probably be reasonable to pass. $7.70 is insultingly low. The units traded higher just a couple months ago and traded heavily down in large part b/c of European forced selling due to confusion over the PTP taxation.
@J Mintzmyer

" The units traded higher just a couple months ago and traded heavily down in large part b/c of "

Oh, that was part of it. But you can bet GLOG was shorting against the box, to drive the price down right before the offer.
upnorthwi profile picture
@J Mintzmyer Sounds like HMLP again with the $4.25 and then $9.25. Their own ethics committee suggested a better offer near $12, and there was also a private offer that was higher that was turned down. I hope it comes up a bit, but I'm not betting the farm on it. My average is $8.73, so my loss won't be much.

So, here's how I see the buyout:

Current run-rate annual earnings, based on Q4 earnings: $2.96

Buyout price: $5.37

The buyout is NOT $7.70. Along with the $5.37 buyout, they are paying the accumulated, non-distributed earnings of $2.33. Earnings that they could have distributed all along, but chose not to - likely because they wanted to drive the market price down.

So: They want to pay $5.37 for a security which generates $2.96/year in income...

Hmmmm. 55% annual yield. Yeah, that's fair. I mean - most securities trade with a yield in the 55% range, no?
Pinched my nose and took a little baby position after @J Mintzmyer wrote an article about this stinker a few months ago. Biggest reason I didn't go bigger is I knew this management couldn't be trusted and would pull one over on shareholders at the first opportunity.

I'm up slightly based on the price I bought in at so no feel bads, but definitely feel vindicated in thinking the real value of this company will never be realized for shareholders with current ownership/management.
PianoCat profile picture
Another one bites the dust. CPLP is the next?

Was wondering the same about CPLP.
Mercator1932 profile picture
You can't compare the two : Marinakis uses CPLP to sell his vessels at 10xEBITDA. This was no longer possible with GLOG/GLOP.
PianoCat profile picture
@Mercator1932 Yeah he keeps stripping cash away from CPLP. He probably has more than enough cash to make a lowball offer after all the dropdowns are completed. In the end he gets back all his ships 100% and keeps all the earnings to himself.
Desert Wolf profile picture
GLOP Closes at $8 today following GLOG $7.70 offer as a unit holder who has been fed a diet of $0.01 distributions
upnorthwi profile picture
HMLP all over again. It's been $2-$3 for the last 3 years, so they probably feel $7.70 is more than fair. I'd like more, but they're going to do whatever they want and the hell with the shareholders.

Russia's invasion of Ukraine upended the whole industry.

$7.70 is now way less than fair.

They only own around 33% - so its not a slam-dunk for them, the way it was with HMLP.
upnorthwi profile picture
@bondsmoker At least Morgan Stanley isn't involved either. I agree, 33% gives us a chance. Think they'll put it to a vote?

This is only completed with shareholders majority approval. Documents have to be prepared than sent to you to review and vote. One thing to mention, in the GLOG take private by BLK, preferred shares were allowed to vote. Never had seen that before. With the 3 series of GLOP, a lot more shares.

Will vote my preferred NO, if they are allowed.

Dumping GLOP/PRA immediately... sad to see it go, but I have no means in attempting to survive a potentially hostile takeover.

GLOP will be bought out - but almost certainly higher than today's market ($8) - likely $10 or so.
PianoCat profile picture
@bondsmoker $9 is my guess. 12.5% return in a few months for arbitragers is quite generous already.

Would love to see a bidding war though. Some other big money please come forth and offer $10/unit and I want to see these self-serving bastards lose their company.

Bidding war not likely to happen.

HMLP got a buyout offer of $12 - but the parent rejected it, and bought it out at $9.25 instead.

Yup. They can do that.
The stock has been pegged at $8 all day long with a volume of 3.78 Million, 17.5 times the previous 10 day volume. Something seems off. Pump & Dump?
Kasper Oestergaard profile picture
$10 maybe yes
$12 yes
$15 definitely yes

$7.70 HELL NO!!!
Gary Schuster profile picture
@Kasper Oestergaard The $7.70 offer is ridiculous. I'm guessing Gaslog management made that offer with the idea that some unit owners will think that it has some validity. When they come back with a higher offer these people may then think they have gotten a good price. I don't know what the price should be. The earnings for Q4 are predicted to be $0.79--GasLog Partners Q4 2022 Earnings Preview (NYSE:GLOP) | Seeking Alpha. Earnings will be increasing as ships are rechartered. If quarterly earnings stay at $0.79 then for a year they would be $3.16. Again profitability will be increasing. If we assume that annual earnings will soon be $4/unit then a purchase price of $16 would mean a forward PE of 4--practically stealing the partnership. No one should sell their units until the value of the units has been independently calculated. Of course Gaslog management has no credibility in calculating a "fair" offer price or in advising unit holders of anything. Please do not tell people that $15/unit is a "definite yes". $15/unit may be a fair price, but I suspect Gaslop is worth more.
Kasper Oestergaard profile picture
@Gary Schuster Agree. Their tactic is go in very low and people will subsequently be happy with $10. If they had started at $10 they would likely end up at $12.

On a net asset value basis (market value of assets minus liabilities), $GLOP is worth about $15 right now. P/E is not a good metric to use to put a price tag on a company as it only factors in the market value and earnings but ignores debt and preferred stock. You need to consider EV rather than just MV. If GLOP had low leverage and no preferreds, P/E would be more meaningful as a metric.
Is this $7.70 per unit PLUS the $2.33 in cash ?
PapaWhisky profile picture

“In connection with the proposed transaction, each Common Unit would receive overall value of $7.70 per Common Unit in cash, consisting in part of a special distribution by the Issuer of $2.33 per Common Unit in cash to be distributed to the Issuer’s unitholders immediately prior to the closing of the proposed transaction and the remainder to be paid by GasLog as merger consideration at the closing of the proposed transaction.”
Anthony Ruben profile picture
@Pope1973 no (the $7.70 consists in part of the $2.33)
@Anthony Ruben then why is it trading above 7.70...?
Mercator1932 profile picture
The combination of a special distribution and a cash amount, makes the bid price even lower.
(I have to pay 30% tax on the special distribution) :-)

Exactly. Very sneaky of them. Real buyout is $5.37

In addition to buyout at $5.37, they are agreeing to payout the income they've been retaining - retaining intentionally to drive income investors to sell, and make their buyout price look better than it is.

@Mercator1932 There is no end to the disgusting, unethical, actions by shipping parent companies to enrich themselves off their partners
Hoegh tried the same the first time at about $4.25 and closed at over $9. I don't think this is over. Of course, earnings come out tomorrow from GLOP and a month later GLOG has to publish their earnings because their preferred A is still outstanding and publicly traded. Remember this crookedness when you think of BLACKROCK.....they are behind it.

Yeah - and this time its even more certain to fail.

Market price of HMLP after the offer stayed right at $4.25 - often a few cents below.

GLOP immediately trading above the offer price. Market more confident now that it can defeat this kind of offer, thanks to HMLP experience.
PapaWhisky profile picture
What is the MLP/GP "Take-Under Playbook"?

Cut the distribution; and/or
Push dropdowns (=Transfer of assets from the GP to the MLP)

Collapse the unit price

Deleverage the MLP to the sole benefit of the GP

Buy the beaten-up MLP very cheaply

Nailed it.

The only way this dynamic can end - next time any investment bank puts forth an IPO of an MLP - investors get in their face and tell them to F themselves.
vote no!
Selling long dated CALLs may be a play here keep the premium while the shares are sold. May need to do some more DD first.
@rusty13 I thought of the same. And might just try something very short dated rather than far out. You don't want to still be involved in an option play if a merger intervenes before the expiration date. Gets sticky. If a covered call you have to understand what exactly you are obligated to deliver and at what price. This is why I insist on knowing when a merger is likely.
@ginsaw From my past experience and if my memory is correct my shares were sold at the B/O price and I kept the premium. I don't mind taking the risk as it'll give me knowledge on how these will react. That's if my memory doesn't get any worse lol..

I just looked - not very compelling premiums on the options.
Florida17 profile picture
GLOG is buying out for $7.70 a share. It is a disappointment. Such a cheap price for a double digit firm. This much of a price pressure to keep the stock price low (from $8.55 to $6.00 for the last several weeks) while it suppose to go up is now understood. Kudos to fantastic GLOG and its super smart board!!
@Florida17 I find your comment interesting. Is there anything that can be done? What do you think the outcome will be?
Florida17 profile picture
@susanmreynolds in my opinion not much can be done by the retail investors at this point.. Some are in this form saying class action but I am unsure about that.. We will first wait if they will have another offer.
At the end of the day “this is an offer rate” which sort of a signal to the market to show intention of GLOG at such a low price. Market reacted by moving the stock up but I think that this is not a game that retail investors play.. maybe some funds, especially hedge funds, may increase the current price which is currently around $8 to put more pressure on GLOG to re-consider their offer rate but this is just a “maybe”opinion.
The float rate of GLOP has been increasing and that may explain the meaningless retraction from $8.55 to low $6. That is what I meant in my previous comment. But these are my humble opinion only not an investment advise.

"his much of a price pressure to keep the stock price low (from $8.55 to $6.00 for the last several weeks) while it suppose to go up is now understood."

Exactly. Played out the same with HMLP. I should have recognized it, and bought like crazy in the $6's.
Anthony Ruben profile picture
Right idea, wrong price (too low).
Vote NO!
PapaWhisky profile picture

My GLOP preferreds !!

Whatever will become of them ?
@PapaWhisky Good question. In my limited experience, preferred shareholders are not treated fairly.

GLOG-A preferred is fine, two years after GLOG common went private with BLK. Would also think the GLOP preferreds will continue to pay and only question is will GLOG delist the preferred after the buyout.

Don’t think they will because they could have done it with the GLOG-A, but we’ll see.

Long GLOG-A and all series of the GLOP preferreds, no plans on selling a single share.

@PapaWhisky I now suspect I did the right thing to limit my GLOP (about the worst tickers ever - GLOP and GLOG - sounds like a couple Neanderthal hunting buddies) to only the C series. Wanted those others, but was concerned about what might happen.

Delistings btw are an occupational hazard for those in preferreds when private equity replaces the original sponsor or issuer, in my opinion. If one doesn't get you, the guys they eventually sell the outfit to might. A successor might have quite different standards. Do we ever think of that? Once they go down this road, these things get swapped, sold and otherwise circulate around.

And yeah, I routinely vote NO on all this stuff, not that my little retail vote matters worth a twit...

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