As you likely know Gaslog LTD (GLOG) has made an offer to acquire Gaslog Partners (GLOP)
The letter on the non binding proposal, which is supposed to have been filed with the Gaslog LTD 13D, appears to have been left off the filing–I suspect it will appear sometime soon.
I am not aware of any danger to the issuers preferred stock–but holders need to aware of the potential transaction and act accordingly. GLOP preferreds and GLOG preferreds.
This note is simply to make sure investors are aware of the potential deal.
15 thoughts on “Attention Gaslog LTD and Gaslog Partners Investors”
I just took a 6% return on GLOP-A & B (bought back in Oct 22′) and bought GLOG-A, I have been burnt too many times by acquiring companies and screw the preferred holders.
Contrarian view – GLOP-B looks interesting, cumulative with an upcoming reset at a nice rate, to be established while the the Fed is still in its rate hike mode. Reset will be 2 weeks after the next Fed meeting so short rates should still be high. Worst case is a delisting with a nice coupon.
As I understand the “dividend determination date” will be on March 14, 1 business day before the next accrual period, which will be 8 days before the March 22 FOMC announcement. The rate floats quarterly thereafter. If delisted, the MINIMUM rate would be 6.10% (5.839 spread + 0.2611% offset with 3 month SOFR). Cumulative qualified dividend. Ex-dividend for the reset second quarter rate would be approximately June 7. Next “dividend determination date” would be June 14 – coincidentally the same day as the FOMC meeting. Just my opinion.
Please correct me if I have misunderstood.
I wrote that wrong. The next Fed meeting I was thinking of, was next week, not March.
Any information on delisting would be helpful. Where did you find the the minimum delisting rate linked to SOFR in the prospectus? I didn’t find any mention of either SOFR,, delisting, minimum rates, or 0.2611% offset when I ran a search through the January 9, 2018 Supplement to the October 10, 2017 Prospectus. Thanks!
Yes the March 15 rate reset date is 8 weeks after next weeks FOMC meeting.
There are no plans to delist. As Chris Fioretti mentioned in his post GLOG-A has traded on the NYSE for almost 2 years after the take private transaction. It was more a concern due to the delisting of PSB preferred after the take private transaction of PSB. If there is a merger with GLOG the decision to remain tradable will be in GLOG/GLOP’s court.
The 6.10% coupon was based on a worst case scenario with a zero short term interest rate as it has happened before. Purely a hypothetical. After June 30, 2023, 3 month LIBOR will no longer be quoted. 3 month SOFR will be used as a substitute with a 26.161 bp adjustment. So in the unlikely and purely theoretical case that interest rates went to zero again, i.e. worst case, the coupon would be = 3 month SOFR + 26.161 bp adjustment + 5.839% spread = 0.00 + 0.26161 + 5.839 = 6.10%. I will include a reference for the 26.161 SOFR adjustment below.
The next quarterly rest period begins March 15. The rate will be based upon the then (March 14) 3 month LIBOR rate. The 3 month LIBOR rate as of January 25 is 4.81457%.
The proposed merger is not necessarily a bad thing. GLOP has older ships which are reaching the end of their useful economic life and need replacement. GLOG on the other hand has 4 modern ships on order with longer term charters with credit worthy leasees. GLOP has 8 ships to be released this year. Excluding a prospective FSRU GLOG has one. So GLOG has less contract renewal risks. GLOG ships have longer term leases. And there could be a savings in administrative costs if there was a buyout/merger.
I notice GLOP has purchased 2.707 million preferred shares in the open market. That is a good thing. Hopefully they can continue to reduce the preferred shares outstanding.
Hope this helps. Sorry if my earlier post was confusing.
In accordance with its consultations and its protocol, following the March 5, 2021 announcement by the
UK Financial Conduct Authority that USD LIBOR would end, Bloomberg, as the vendor for the fallbacks in
ISDA documentation, published the following values as the long-term spread adjustments, based on
historical 5-year median spreads for between USD LIBOR and compounded averages of SOFR:
LIBOR tenor being replaced Spread applied to SOFR based rate (bps)
1-week USD LIBOR 3.839
1-month USD LIBOR 11.448
2-month USD LIBOR 18.456
3-month USD LIBOR 26.161
6-month USD LIBOR 42.826
1-year USD LIBOR 71.513
Thanks for your research and response. I lost track of the Libor / SOFR saga.
My new rule of thumb on the first whiff of go-dark / go-private situations is “Get out while you can.” So, my initial reaction on the GLOP news was to sell GLOP-B. I paused to look at the paperwork. GLOP-B is cumulative. It’s also very high-cost capital with the upcoming coupon bump.
IMHO, the new ownership, if it has some free cash flow, would have an incentive to decrease out-of-pocket costs by doing partial calls or open market buying, which you had mentioned they were doing.
So I am less pessimistic on GLOP-B than I initially was. We’ll have to see how they structure the buyout after they firm up the details.
They won’t be delisted. Company being acquired by GLOG, which completed their take private transaction nearly 2 years ago. GLOG-A has continued to trade on the NYSE because financials are being reported and are in compliance. Same will be true for the GLOP preferreds.
This was just a knee jerk (over)reaction and a good opportunity.
Good observation Chris.
Re: GLOG-A, GLOP-A, GLOP-B, GLOP-C
The letter is a beginning of a long journey. Not an end.
I would like to know if the financing for the proposed buyout/merger will be in any way senior to the preferred payout and to the equity of the preferred for GLOG and/or GLOP. That is to say, how would the proposed merger affect the credit worthiness/security of the preferred? I did not notice language about the preferreds in the letter or press release.
No mention in the letter if the GLOP preferreds, as orphan preferreds, will continue to be listed or not. That is TBD.
Preferred holders will not vote and essentially have no representation in the proposed buyout.
Will this be handled in accordance with Greek laws?
Disclosure: I own GLOG pfd and GLOP pfd
Ditched my Glop-A at a small profit- really tired of sweating these. If they drop, and end-up being good, will probably buy back it or others.
Not happy about that. I’ve held GLOGprA in a taxable account since 2016 with a cost basis of $8.94 and I’m not eager to trigger a taxable event by selling. I guess I need to just watch and if I don’t see the phrase ‘delist’, just sit tight. Thoughts?
Despite a few SA writers who boasts GLOP common has turned around “nicely”, the Founder sold all his position and retired. I sold all my GLOP A, B and C taking some profits, but continue to hold GLOG-A, with cost basis slightly under par. For many weeks or months, GLOG-A was valued under par, while GLOP-B rallied because of the reset. I got too many risky holdings not even counting the busted ALIN-E, which I added shares right before it got stopped paying dividends. The old HMLP-A now delisted as HMLPF certainly risky. Legacy shares of NGL-B and C, dividends suspended for sometime but with some hope the risky CEO may survive as natural gas price seems to recovering from lack of energy sources in Germany and many other European nations. The consolation was previously announced when the CEO owner made an announcement. TO eliminate administrative overhead, GLOG and GLOP. He was a decent man IMHO. He could suspend dividends on GLOP preferreds. I sold some GLOP preferreds and replaced the proceeds with GLOG-A. I intend to hold GLOG-A and enjoy the reasonably safe dividends and HOPING HMLPF survives. Even FRGAP (moderate position) could face possible delisting. There was a positive by a young and newbie SA writer on Safe Bulkers, B and C and common for some. Apparently Schwab pointed out its violation of the pathetic SEC regulation, for lacking outside independent member of the board of Directors. The two super Honest Greek brother made attempt to offer certain share of the common with some preferreds to anyone who wish to buy something like 20%, if I recall correctly. ITS EBITDA income and profit margin seems to superior to some other Bulkers cited by the author and Diana Shipping, whose DSX returned to be trading comfortably above par. CMRE Preferreds are fine. Not terribly worried about the ATCO-H delisting risks. SEAL A and B, TNP D, E and F seems to recovering nicely. Fearless owner COO of Antonio Tsako may have learned the lesson of installing anti pollution device on his new large scale ships. Glad that SOHO hotel has announced dividends to the preferreds and baby bonds. I realize that the risks of getting delisted like the grocery chain CDR-C and B. SA writer wrote about the God awful Wheeler (I tried to forget the SYMBOL; sold both of two preferreds with good chuck of LOSS before they suspended the divvies or filed for bankruptcy. Apparently the dividends of CDR C and B was not “yet” suspended. LOL.
John after years of being in shipping preferred and common I found them to be a high risk area of the market where I mostly traded and didn’t hold long term. See what has happened to KNOP. I currently hold one of the SEAL’s and that is enough for me in the high risk bucket.
Something is shaking
The F to F preferreds are down 2.2 to 3.36% while the common is up 14.6% today.
I plan to scour the prospectus for the preferreds to understand the preferreds move, but I hope that someone smarter than me comments on this.
donocash–I didn’t find any particular protection in the prospectus. A merger is NOT a liquidation per the prospectus. Not saying something bad will happen–just that folks need to be aware.