Teekay Corporation (NYSE:TK) (Teekay or the Company) announced today that it has reached an agreement to sell to its publicly-traded subsidiary, Teekay Tankers Ltd. (NYSE:TNK) (Teekay Tankers), 13 of the Company's 17 directly-owned conventional tankers and related time-charter contracts, debt facilities and other assets and rights, for an aggregate purchase price of approximately $455 million, the Company said on Monday.
Transaction Summary:
- Teekay to sell to Teekay Tankers a fleet of seven crude oil tankers and
six product tankers, along with related time-charter out contracts, debt
facilities and an interest rate swap, for an aggregate price of
approximately $455 million.
- As partial consideration, Teekay will receive $25 million in new Teekay
Tankers Class A shares at a price of $5.60 per share.
- Nine of the 13 vessels to be sold currently operate under fixed-rate
time-charters.
- The sale includes the assumption by Teekay Tankers of outstanding debt
of approximately $180 million in term loans and approximately $290
million in available revolving credit facilities, of which approximately
$40 million will be undrawn.
- Teekay will grant Teekay Tankers a right of first refusal on any
conventional tanker opportunities developed by Teekay for a period of
three years from the closing date.
- Additional details of the transaction will be provided by Teekay Tankers
management during a conference call scheduled for Tuesday, April 17,
2012 at 9 am (ET).
As part of the transaction, Teekay and Teekay Tankers will enter into a non-competition agreement, which will provide Teekay Tankers with a right of first refusal to participate in any future conventional crude oil tanker and product tanker opportunities developed by Teekay for a period of three years from the closing date of this transaction.
As partial consideration for the sale, Teekay will receive $25 million of newly issued shares of Teekay Tankers Class A common stock, and the remaining amount will be settled through a combination of cash payments to Teekay and the assumption by Teekay Tankers of existing debt secured by the acquired vessels. The number of Teekay Tankers Class A common shares to be issued to Teekay was determined based on an aggregate value of $25 million and a price per share of $5.60, which represents the trailing 20-day volume-weighted average price for the period immediately preceding today's announcement of the transaction (inclusive of April 16, 2012). As a result of this share issuance, Teekay's economic interest in Teekay Tankers will increase from approximately 20 percent to approximately 25 percent and its voting interest as a result of its combined ownership of Class A and Class B shares will increase from approximately 51 percent to approximately 53 percent.
"We are pleased to have structured a transaction with Teekay Tankers which preserves the integrity of our strong conventional tanker franchise and retains Teekay's extensive commercial conventional tanker footprint and liquidity within the Teekay family," commented Peter Evensen, Teekay's President and Chief Executive Officer. "The sale of nearly all of Teekay Parent's directly-owned conventional tanker fleet is an important deleveraging event which we believe positions the Company well for further investment in high-return growth projects. Given the strong fundamentals in our growing fixed-rate businesses, notably our offshore and LNG shipping segments, we are confident in our ability to find new opportunities to enhance our profitability and shareholder value."
The transaction has been approved by Teekay Corporation's Board of Directors. A Conflicts Committee, comprised of the independent members of Teekay Tankers' Board of Directors, negotiated the transaction on behalf of Teekay Tankers and retained DNB Markets as its financial advisor, which also provided a fairness opinion to the Teekay Tankers Conflicts Committee in connection with this transaction. The transaction, which is subject to final documentation, receiving relevant third party consents, and other customary closing conditions, is expected to be completed in the second quarter of 2012.
Teekay Corporation is an operational leader and project developer in the marine midstream space. Through its general partnership interests in two master limited partnerships, Teekay LNG Partners L.P. (NYSE:TGP) and Teekay Offshore Partners L.P. (NYSE:TOO), its controlling ownership of Teekay Tankers Ltd. (NYSE:TNK), and its fleet of directly-owned vessels, Teekay is responsible for managing and operating consolidated assets of over $11 billion, comprised of approximately 150 liquefied gas, offshore, and conventional tanker assets. With offices in 16 countries and approximately 6,400 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world's leading oil and gas companies, and its reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.
Transaction Summary:
- Teekay to sell to Teekay Tankers a fleet of seven crude oil tankers and
six product tankers, along with related time-charter out contracts, debt
facilities and an interest rate swap, for an aggregate price of
approximately $455 million.
- As partial consideration, Teekay will receive $25 million in new Teekay
Tankers Class A shares at a price of $5.60 per share.
- Nine of the 13 vessels to be sold currently operate under fixed-rate
time-charters.
- The sale includes the assumption by Teekay Tankers of outstanding debt
of approximately $180 million in term loans and approximately $290
million in available revolving credit facilities, of which approximately
$40 million will be undrawn.
- Teekay will grant Teekay Tankers a right of first refusal on any
conventional tanker opportunities developed by Teekay for a period of
three years from the closing date.
- Additional details of the transaction will be provided by Teekay Tankers
management during a conference call scheduled for Tuesday, April 17,
2012 at 9 am (ET).
As part of the transaction, Teekay and Teekay Tankers will enter into a non-competition agreement, which will provide Teekay Tankers with a right of first refusal to participate in any future conventional crude oil tanker and product tanker opportunities developed by Teekay for a period of three years from the closing date of this transaction.
As partial consideration for the sale, Teekay will receive $25 million of newly issued shares of Teekay Tankers Class A common stock, and the remaining amount will be settled through a combination of cash payments to Teekay and the assumption by Teekay Tankers of existing debt secured by the acquired vessels. The number of Teekay Tankers Class A common shares to be issued to Teekay was determined based on an aggregate value of $25 million and a price per share of $5.60, which represents the trailing 20-day volume-weighted average price for the period immediately preceding today's announcement of the transaction (inclusive of April 16, 2012). As a result of this share issuance, Teekay's economic interest in Teekay Tankers will increase from approximately 20 percent to approximately 25 percent and its voting interest as a result of its combined ownership of Class A and Class B shares will increase from approximately 51 percent to approximately 53 percent.
"We are pleased to have structured a transaction with Teekay Tankers which preserves the integrity of our strong conventional tanker franchise and retains Teekay's extensive commercial conventional tanker footprint and liquidity within the Teekay family," commented Peter Evensen, Teekay's President and Chief Executive Officer. "The sale of nearly all of Teekay Parent's directly-owned conventional tanker fleet is an important deleveraging event which we believe positions the Company well for further investment in high-return growth projects. Given the strong fundamentals in our growing fixed-rate businesses, notably our offshore and LNG shipping segments, we are confident in our ability to find new opportunities to enhance our profitability and shareholder value."
The transaction has been approved by Teekay Corporation's Board of Directors. A Conflicts Committee, comprised of the independent members of Teekay Tankers' Board of Directors, negotiated the transaction on behalf of Teekay Tankers and retained DNB Markets as its financial advisor, which also provided a fairness opinion to the Teekay Tankers Conflicts Committee in connection with this transaction. The transaction, which is subject to final documentation, receiving relevant third party consents, and other customary closing conditions, is expected to be completed in the second quarter of 2012.
Teekay Corporation is an operational leader and project developer in the marine midstream space. Through its general partnership interests in two master limited partnerships, Teekay LNG Partners L.P. (NYSE:TGP) and Teekay Offshore Partners L.P. (NYSE:TOO), its controlling ownership of Teekay Tankers Ltd. (NYSE:TNK), and its fleet of directly-owned vessels, Teekay is responsible for managing and operating consolidated assets of over $11 billion, comprised of approximately 150 liquefied gas, offshore, and conventional tanker assets. With offices in 16 countries and approximately 6,400 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world's leading oil and gas companies, and its reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.