Teekay Tankers agrees to acquire 12 modern Suezmax tankers
Teekay Tankers Ltd. has agreed to acquire a fleet of 12 modern Suezmax tankers currently owned by Principal Maritime Tankers (Principal), a portfolio company of funds managed by affiliates of Apollo Global Management, LLC, for an aggregate purchase price of $662 million, the Company said in a press release.
The acquisition is expected to be immediately accretive to Teekay Tankers’ earnings, free cash flow and net asset value per share and, when combined with the Company’s existing fleet of 10 Suezmaxes, will make Teekay Tankers one of the largest owners of Suezmax tankers in the world. With an average age of only 5.5 years, the 12 Suezmaxes to be acquired will reduce the average age of Teekay Tankers’ fleet by 1.2 years. The vessels included in the transaction are scheduled to deliver to Teekay Tankers by the end of October 2015 and are expected to operate in the spot tanker market upon or soon after delivery.
Financing for this acquisition has been pre-arranged. Teekay Tankers has received commitments from four of its key lenders to provide a new debt facility of approximately $400 million to be secured by the acquired vessels. In addition, Teekay Tankers has agreed to issue new Class A common shares in the amount of $50 million to Principal, $30 million to Teekay Corporation and $60 million to a group of institutional investors, at a weighted average price of $6.76 per share. The remaining amount of the purchase price will be funded from Teekay Tankers’ existing liquidity. As at June 30, 2015, Teekay Tankers had liquidity of approximately $230 million, which included $37.3 million of net proceeds received during the second quarter of 2015 from the issuance of common units under the Company’s continuous offering program.
“The acquisition of this high quality, on-the-water fleet is strategically important for Teekay Tankers and provides significant commercial and financial benefits,” commented Kevin Mackay, Teekay Tankers’ Chief Executive Officer. ”Including the five Aframax tankers we acquired earlier this year, this acquisition will increase Teekay Tankers’ owned fleet by over 60 percent and solidifies our position as the largest owner and operator of mid-size crude oil tankers. This significant increase in our scale will allow us to further optimize our fleet efficiencies, enhance our service offering to both existing and new customers across more regions, and expand our presence in the evolving global Suezmax trade-routes. With a larger fleet, we are better positioned take advantage of the growing demand for Suezmaxes resulting from greater long-haul Suezmax movements from the Atlantic to Pacific basins as well as the niche intra-regional voyages that are increasingly stretching Suezmax tonnage supply.”
This acquisition transaction has been approved by the Board of Directors of both Teekay Tankers and Principal and is subject to customary closing conditions.
About Teekay Tankers
Teekay Tankers currently owns a fleet of 44 double-hull tankers, including 22 Suezmax tankers (including 12 acquired vessels expected to be delivered by October 2015), 12 Aframax tankers, seven LR2 product tankers and three Medium-Range (MR) product tankers, and has 11 time charter-in tankers. Teekay Tankers’ vessels are employed through a mix of short- or medium-term fixed-rate time charter contracts and spot tanker market trading. The Company also owns a Very Large Crude Carrier (VLCC) through a 50 percent-owned joint venture. In addition, Teekay Tankers owns a ship-to-ship transfer business and a minority interest of 9.3 percent in Tanker Investments Ltd. (OSE:TIL), which currently owns a fleet of 20 modern tankers, including five vessels expected to be acquired in the third quarter of 2015. Teekay Tankers was formed in December 2007 by Teekay Corporation as part of its strategy to expand its conventional oil tanker business.