Deal Description: On September 10, 2021, KNOT Offshore Partners LP (the “Partnership”) (NYSE: KNOP) consummated a transaction (the “IDR Exchange”) pursuant to an exchange agreement among the Partnership, KNOT Offshore Partners GP LLC (its general partner) and Knutsen NYK Offshore Tankers AS (“Knutsen NYK”), whereby Knutsen NYK contributed to the Partnership all of its incentive distribution rights (“IDRs”) in exchange for the issuance by the Partnership to Knutsen NYK of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled.

The Class B Units are a new class of limited partner interests which will not be entitled to receive cash distributions in any quarter unless common unitholders receive a distribution of at least $0.52 for such quarter (the “Distribution Threshold”).  For each quarter (starting with the quarter ending September 30, 2021) that the Partnership pays distributions on the common units that are at or above the Distribution Threshold, one-eighth of the Class B Units will be converted to common units on a one-for-one basis until such time as no further Class B Units exist. The Class B Units will generally vote together with the common units as a single class.

Baker Botts represented the Partnership in the IDR Exchange.  Evercore served as financial advisor and Richards, Layton & Finger, P.A. served as legal advisor to the Conflicts Committee.

The Baker Botts Team included:

Corporate: Catherine Gallagher (Partner, Washington, D.C.); Lee Neel Davis (Special Counsel, Washington, D.C.); Henry Klimowicz (Associate, New York); Tax: Jon Lobb (Partner, Houston); Snow Xue Rui (Associate, Dallas).

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