Kinder Morgan signs contract with Philly Tankers for the construction of four Tier II tankers
Kinder Morgan, Inc. today announced it is expanding its growing fleet of Jones Act product tankers and has signed a definitive agreement valued at an all-in price of $568 million with Philly Tankers LLC to take assignment of contracts for the construction of four, new 50,000-deadweight-ton, Tier II tankers to be constructed at the Aker Philadelphia Shipyard in Philadelphia, Pennsylvania. The transaction requires approval of shareholders holding 80 percent of the shares of Philly Tankers AS. Philly Tankers AS is the parent of Philly Tankers LLC. Shareholders accounting for over 85 percent of Philly Tankers AS’ outstanding shares have already entered into irrevocable voting undertakings approving the transaction. An extraordinary general meeting of the shareholders of Philly Tankers AS will be scheduled in August 2015 for formal shareholder approval of the transaction.
Each LNG-conversion-ready tanker will have a capacity of 337,000 barrels. The vessels will be delivered to Kinder Morgan between November 2016 and November 2017 and placed in United States domestic service, commonly referred to as the Jones Act trade. The first two that are scheduled for delivery, in late 2016 and early 2017, are under long-term contract to a creditworthy oil company. Contract discussions for the two tankers to be delivered by late 2017 are ongoing with other creditworthy counterparties, and executed contracts are expected to be completed by early 2016. Approximately 10 percent of each vessel’s all-in price will be paid upon construction start, with the pro-rata balance due upon each ship’s delivery.
These four new vessels will increase Kinder Morgan’s Jones Act tanker fleet to 16 ships by late 2017, of which 14 are under long-term contracts with strong, creditworthy counterparties.
