Teekay Corporation

Teekay Corporation

April 16, 2012 16:41 ET

Teekay Corporation Announces Sale of 13 Vessels to Teekay Tankers

HAMILTON, BERMUDA--(Marketwire - April 16, 2012) - 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.

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).

The table below summarizes the vessels to be sold as well as the time-charter out contract details:

Vessel Year
Class Employment Charter Expiry Charter Rate
Crude Oil Tankers
1. Zenith Spirit 2009 Suezmax Spot n/a n/a
2. Pinnacle Spirit 2008 Suezmax Time-charter Oct 30, 2014 $21,000
3. Summit Spirit 2008 Suezmax Time-charter Oct 30, 2014 $21,000
4. Godavari Spirit 2004 Suezmax Time-charter Dec 31, 2012 $21,000
5. Australian Spirit 2004 Aframax Time-charter Jan 30, 2016 $21,000
6. Axel Spirit 2004 Aframax Time-charter Dec 29, 2016 $19,500
7. Americas Spirit 2003 Aframax Time-charter Sep 30, 2015 $21,000
Product Tankers
8. Galway Spirit 2007 LR2 Spot n/a n/a
9. Limerick Spirit 2007 LR2 Spot n/a n/a
10. Donegal Spirit 2006 LR2 Spot n/a n/a
11. Hugli Spirit 2005 MR Time-charter Mar 1, 2015 $30,600*
12. Teesta Spirit 2004 MR Time-charter Mar 25, 2013 $21,500
13. Mahanadi Spirit 2000 MR Time-charter May 12, 2013 $21,500
* Charter rate covers incremental Australian crewing expenses of approximately $14,000 per day above international crewing costs.

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.

Conference Call

Teekay will not hold its own conference call; however, all shareholders and interested parties are welcome to listen to the conference call that Teekay Tankers management plans to hold on Tuesday, April 17, 2012 at 9:00 am (ET) to discuss the details of the transaction. The live Teekay Tankers conference call can be accessed by choosing from the following options:

  • By dialing (866) 322-8032 or (416) 640-3406, if outside North America, and quoting conference ID code 1594223.
  • By accessing the webcast, which will be available on Teekay Tankers' website at www.teekaytankers.com (the archive will remain on the website for a period of 30 days).

An accompanying presentation will also be available on Teekay Tankers' website at www.teekaytankers.com in advance of the conference call.

About Teekay Corporation

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.

Teekay's common stock is listed on the New York Stock Exchange where it trades under the symbol "TK".


This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management's current views with respect to certain future events and performance, including statements regarding: Teekay Corporation's pending sale of 13 conventional tankers to its subsidiary, Teekay Tankers, including purchase price, timing and certainty of completing the transaction, and the effect of this transaction on Teekay Corporation's financial leverage and liquidity, and voting and economic ownership interests in Teekay Tankers; Teekay Corporation's intention to offer future conventional tanker opportunities to Teekay Tankers under the proposed non-competition agreement; Teekay Corporation's ability to deploy proceeds from the transaction in new high-return growth acquisitions and projects; and market fundamentals in the offshore and LNG shipping sectors and the number of expected growth projects in these sectors. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: failure to satisfy the closing conditions or obtain the necessary consent for Teekay Corporation's pending 13 vessel sale to Teekay Tankers or unexpected results from the technical inspection of these vessels which would result in a change to the transaction purchase price; changes in production of or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly affecting overall vessel tonnage requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil or demand for shuttle tankers, FSOs and FPSOs; decreases in oil production by or increased operating expenses for FPSO units; trends in prevailing charter rates for shuttle tanker and FPSO contract renewals; changes affecting the offshore tanker market; shipyard production delays and cost overruns; changes in the Company's expenses; the Company's future capital expenditure requirements and the inability to secure financing for such requirements; the inability of the Company to complete future vessel sale transactions to its public company subsidiaries or to third parties; conditions in the United States capital markets; and other factors discussed in Teekay's filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2010. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

Contact Information

  • Teekay Corporation
    Kent Alekson
    Investor Relations Enquiries
    +1 (604) 844-6654