KNOT Offshore Partners Expands Fleet with Hedda Knutsen Acquisition and Completes $225 Million Refinancing
KNOT Offshore Partners LP (NYSE: KNOP) has announced two significant financial and operational developments that strengthen its long-term position in the shuttle tanker market. The partnership has agreed to acquire the shuttle tanker Hedda Knutsen through its wholly owned subsidiary, KNOT Shuttle Tankers AS, while also completing a new $225 million senior secured credit facility to refinance debt associated with five vessels in its fleet.
Together, the transactions represent an important step in KNOP’s strategy to maintain a modern fleet, secure long-term contracted cash flows and improve the structure of its debt obligations. The acquisition adds a recently built shuttle tanker operating under a long-term charter in Brazil, while the refinancing extends the maturity profile of existing debt that was previously scheduled to mature in September 2026.
Acquisition of Hedda Knutsen
KNOP’s wholly owned subsidiary, KNOT Shuttle Tankers AS, has agreed to acquire Knutsen Canadian Chartering AS, the company that owns the shuttle tanker Hedda Knutsen. The seller is Knutsen NYK Offshore Tankers AS, and the transaction will bring ownership of the vessel into the KNOP fleet.
The agreed purchase price for the acquisition is $113.0 million. However, the transaction structure takes into account $89.4 million of outstanding indebtedness associated with the vessel, along with approximately $0.8 million in capitalized fees related to the credit facility secured by Hedda Knutsen.
As a result, the initial cost of the acquisition to KNOP is expected to be approximately $24.4 million. The final amount remains subject to customary post-closing adjustments, including adjustments related to working capital.
The acquisition provides KNOP with exposure to a modern shuttle tanker supported by a long-term charter arrangement with one of the world’s major offshore energy companies. The vessel is currently operating in Brazil, a strategically important market for offshore oil production and shuttle tanker activity.
Modern DP2 Suezmax Shuttle Tanker
The Hedda Knutsen is a 154,000-deadweight ton DP2 Suezmax-class shuttle tanker. The vessel was built by COSCO Shipping Heavy Industry and was delivered in 2024, making it one of the newer assets associated with KNOP’s expanding fleet.
Shuttle tankers play an important role in offshore oil transportation, particularly in regions where production facilities are located far from conventional pipeline infrastructure. These vessels are designed to transport crude oil from offshore production facilities to terminals and other destinations.
The DP2 classification of Hedda Knutsen provides the vessel with dynamic positioning capabilities, supporting safe and efficient operations in offshore environments. Dynamic positioning technology allows a vessel to maintain its position through the use of thrusters and computer-controlled systems, reducing reliance on conventional anchoring methods and supporting operations near offshore production units.
The Suezmax classification also provides the vessel with significant cargo-carrying capacity. At 154,000 deadweight tons, the Hedda Knutsen is designed to support large-scale offshore transportation requirements and is suited to the operational needs of major offshore producing regions.
The addition of a recently delivered vessel may also support KNOP’s objective of maintaining a modern and technologically capable shuttle tanker fleet. Newer vessels can offer operational advantages, including improved efficiency, advanced onboard systems and equipment designed to meet evolving industry requirements.
Long-Term Petrobras Charter Supports Cash Flow Visibility
A central feature of the acquisition is the long-term employment of the Hedda Knutsen in Brazil.
The vessel is operating under a time charter with Petrobras, providing KNOP with contracted employment for an extended period. The current fixed charter period is scheduled to expire in November 2034.
In addition to the existing fixed charter period, the charterer holds an option to extend the agreement for a further five years.
The long duration of the charter is expected to provide substantial visibility into the vessel’s future employment. For owners and operators of offshore support and transportation assets, long-term contracts can play an important role in reducing exposure to short-term market volatility.
Brazil remains one of the most important offshore oil-producing regions in the world, with significant production activity located in deepwater and ultra-deepwater areas. Shuttle tankers are a critical part of the logistics chain supporting offshore production, particularly where floating production facilities require regular transportation of crude oil.
The Hedda Knutsen acquisition therefore provides KNOP with an asset that combines modern vessel specifications with long-term employment in a major offshore energy market.
Independent Review and Board Approval
The proposed acquisition was approved by KNOP’s Board of Directors and its independent Conflicts Committee.
The involvement of the Conflicts Committee is particularly significant because the transaction involves the acquisition of an asset from Knutsen NYK Offshore Tankers AS. Independent governance procedures are designed to ensure that transactions involving related parties or affiliated organizations are evaluated appropriately and with consideration of the interests of the partnership and its stakeholders.
KNOP stated that the Board of Directors and the independent Conflicts Committee were supported during the process by an outside independent financial advisor and outside legal counsel.
The use of independent financial and legal advisors provides additional external support for the evaluation of the transaction. Such advisors can assist with matters including transaction valuation, financial analysis, legal documentation and the assessment of transaction terms.
Following completion of the acquisition and customary post-closing adjustments, Hedda Knutsen will become part of KNOP’s portfolio of shuttle tanker assets.
Completion of $225 Million Loan Refinancing
Alongside the acquisition announcement, KNOP also confirmed the completion of a new $225 million senior secured credit facility.
The financing was entered into on August 7, 2026, by KNOP subsidiaries that own five vessels: Tordis Knutsen, Vigdis Knutsen, Lena Knutsen, Anna Knutsen and Brasil Knutsen.
The Vigdis Knutsen has been renamed Ametista Brazil by its current bareboat charterer.
The new financing facility was arranged with DNB Bank ASA acting as Agent on behalf of the lending group.
The principal purpose of the new facility was to refinance existing term loans associated with the five vessels. Those existing loans totaled approximately $225.8 million and were scheduled to mature in September 2026.
By replacing the existing debt with a new senior secured credit facility, KNOP has extended the maturity of the financing and reduced the immediate refinancing pressure associated with the approaching September 2026 maturity date.
The closing of the new $225 million senior secured credit facility took place on August 25, 2026.
New Facility Extends Debt Maturity to 2031
The new credit facility consists of a term loan that will be repaid through 20 consecutive quarterly installments.
The financing structure also includes a balloon payment of $111.1 million, which will be due when the facility reaches maturity in June 2031.
The repayment schedule spreads a portion of the debt reduction over the life of the facility while leaving a significant final payment due at maturity. This structure provides KNOP with a defined financing horizon extending several years beyond the maturity date of the previous loans.
The five-year maturity extension is an important component of the refinancing. The previous term loans were due to mature in September 2026, while the new facility has a final maturity in June 2031.
The longer financing period may provide the partnership with greater flexibility in managing its capital structure and planning future financing activities.
Interest Rate and Security Structure
The new senior secured credit facility bears interest at an annual rate equal to SOFR plus a margin of 1.65%.
SOFR, or the Secured Overnight Financing Rate, is widely used as a benchmark interest rate in U.S. dollar-denominated financial markets. The total borrowing cost under the facility will therefore vary depending on movements in SOFR, in addition to the fixed 1.65% margin.
The facility is guaranteed by KNOP and secured by mortgages on the five vessels financed under the transaction.
The use of vessel mortgages provides lenders with security over the underlying maritime assets. The five vessels serving as collateral are Tordis Knutsen, Vigdis Knutsen—currently operating under the name Ametista Brazil for its bareboat charterer—Lena Knutsen, Anna Knutsen and Brasil Knutsen.
This secured financing structure is common within the maritime sector, where vessels frequently serve as significant tangible assets supporting debt facilities.
Strategic Impact for KNOP
The acquisition of Hedda Knutsen and completion of the $225 million refinancing demonstrate two complementary elements of KNOP’s broader financial and operational strategy.
The acquisition adds a modern vessel with long-term contracted employment through November 2034, with the possibility of an additional five-year charter extension. The transaction also requires an initial acquisition cost of approximately $24.4 million after accounting for outstanding indebtedness and capitalized financing fees.
Meanwhile, the refinancing replaces debt that was approaching maturity with a facility extending through June 2031. The new financing provides a defined repayment schedule and establishes a longer-term debt structure for five vessels within KNOP’s fleet.
Together, the developments position KNOP to continue operating a portfolio of specialized shuttle tankers while maintaining long-term relationships with major customers in offshore energy markets.
The Hedda Knutsen transaction further increases the partnership’s presence in Brazil, where offshore production continues to create demand for specialized marine transportation assets. Its long-term Petrobras charter provides a substantial period of contracted employment, while the vessel’s 2024 delivery adds a relatively new asset to the fleet.
At the same time, the completion of the refinancing removes the near-term September 2026 maturity associated with the previous $225.8 million of term loans. The replacement facility, which closed on August 25, 2026, establishes a new maturity date in June 2031 and provides financing secured by five of KNOP’s vessels.
With both transactions moving forward, KNOP is strengthening its combination of modern maritime assets, long-term charter exposure and extended debt financing. The acquisition and refinancing underline the partnership’s continued focus on managing its fleet and capital structure in support of its long-term operations in the global offshore shuttle tanker market.
Source Link: https://www.businesswire.com/
