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KNOT Offshore Partners LP Announces Refinancing of Long Term Debt

June 10, 2014

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP ("KNOT" or the "Partnership") (NYSE: KNOP) announced today that certain subsidiaries of the Partnership (the “borrowers”) have entered into new senior secured credit facilities in order to refinance the Partnership’s total long term bank debt. The senior secured credit facilities consist of a $20.0 million revolving credit facility and $360.0 million in aggregate principal amount of term loans. Loans under the senior secured credit facilities will bear interest at a rate per annum equal to LIBOR plus a margin of 2.125%. The term loans will mature in June 2019. The term loans are repayable in 20 consecutive equal quarterly installments commencing in September 2014. The revolving facility terminates in June 2019. The reduced margin is equivalent to a cost reduction of $1.9 million per annum before refinancing costs. Further, the new loan facilities have an improved repayment profile compared to the existing facilities.

The loans will be borrowed by the borrowers, guaranteed by the Partnership and secured by the Partnership’s vessels. Proceeds of the term loans will be used to refinance the Partnership’s existing bank debt of $ 327 million and to repay the seller’s credit to Knutsen NYK Offshore Tankers AS in the amount of $10.6 million (including interest) related to the acquisition of the Carmen Knutsen. The remaining amount will be used to pay transaction expenses and for general partnership purposes. Closing of the new senior secured credit facilities, which is anticipated to occur in the second half of June 2014, is subject to the execution of security documents and satisfaction of customary closing conditions.

As the Partnership’s management considers that the refinancing will generate savings on financing costs, the management has on that basis recommended to the board of directors of the Partnership that, upon closing of the senior secured credit facilities, the board consider an increase in the Partnership’s quarterly cash distribution of $0.02, an increase of 4.6 % (annualized increase of $0.08 from the current annualized distribution rate of $1.74 per common unit), which would become effective for the distribution with respect to the quarter ending September 30, 2014. Any such increase would be conditioned upon, among other things, the closing of the senior secured credit facilities, approval of such increase by the board and the absence of any material adverse developments that would make such an increase inadvisable.

KNOT owns, operates and acquires shuttle tankers under long-term charters in the offshore oil production regions of the North Sea and Brazil. KNOT is structured as a master limited partnership. KNOT’s common units trade on the New York Stock Exchange under the symbol “KNOP.”

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements, which include statements related to increases in the Partnership’s distributions to unitholders and the closing of the senior secured credit facilities and the anticipated use of proceeds therefrom, are based upon the current beliefs and expectations of KNOT’s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The information set forth herein should be read in light of such risks. KNOT does not assume any obligation to update the information contained in this press release.

Source: KNOT Offshore Partners LP

Source: KNOT Offshore Partners LP

KNOT Offshore Partners LP

Arild Vik

Chief Executive Officer and Chief Financial Officer

Telephone: 44 7581 899 777

http://knotoffshorepartners.com/

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