Teekay Corporation
NYSE : TK

Teekay Corporation

September 29, 2014 16:15 ET

Teekay Corporation Intends to Increase Dividend by 75-80 Percent; Future Increases Linked to Growing Cash Flows from Two MLP Subsidiaries

HAMILTON, BERMUDA--(Marketwired - Sept. 29, 2014) - Teekay Corporation (Teekay or the Company) (NYSE:TK) today announced that its Board of Directors has approved the adoption of a new dividend policy under which the Company intends to distribute to its shareholders a majority of the cash flows it receives from ownership in its publicly-traded subsidiaries. Once implemented, Teekay's quarterly dividend payment will be primarily based on the cash flow contributions from the Company's general partnership (GP) and limited partnership (LP) interests in its two master limited partnerships (MLPs), Teekay LNG Partners L.P. (Teekay LNG) and Teekay Offshore Partners L.P. (Teekay Offshore), together with other dividends received, after deductions for parent company level corporate general and administrative expenses and any reserves determined to be required by the Company's Board of Directors. The new dividend policy is expected to take effect for the quarter immediately following the anticipated sale of the Petrojarl Knarr FPSO unit to Teekay Offshore and its contract start-up, both of which are currently scheduled to occur during the fourth quarter of 2014.

"Based on the cash flow growth expected to be generated by our combined GP and LP ownership interests following the dropdown of the Knarr FPSO to Teekay Offshore, we intend to increase Teekay's annualized cash dividend to between $2.20 and $2.30 per share effective for the first quarter of 2015, which represents an increase of approximately 75 and 80 percent above our current annualized dividend of $1.265 per share," commented Peter Evensen, Teekay's President and Chief Executive Officer. "In subsequent quarters, we intend to base our cash dividend on an initial target coverage ratio in the range of 1.15x to 1.20x. Over time, as we dropdown or sell the remaining Teekay Parent legacy operating assets, we expect to reduce our target coverage ratio."

"Our new dividend policy represents the next step in Teekay's transformation towards a pure-play general partnership structure and reflects our commitment to generate sustainable long-term value for our shareholders," Mr. Evensen continued. "Once implemented, the new dividend policy will enable Teekay shareholders to directly benefit from cash flow growth of our daughter subsidiaries, including our two general partnership interests, both of which are in the early stages of the 50 percent incentive distribution rights tier, or high-splits. With our existing backlog of over $4.5 billion of known growth capital expenditures at Teekay Offshore and Teekay LNG, we expect that Teekay's dividend will further grow by approximately 20 percent per annum over the three years following the dropdown of Knarr FPSO and initial dividend increase. In addition, with the strong industry fundamentals in our offshore and gas businesses, both partnerships are actively bidding on new projects which, if successful, could provide further potential upside to Teekay's future dividends."

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 $12 billion, comprised of approximately 185 liquefied gas, offshore, and conventional tanker assets. With offices in 15 countries and approximately 6,700 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".

FORWARD LOOKING STATEMENTS

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: the timing for implementation of the Company's new dividend policy, the amount of the initial dividend increase from the current level, and expected increases over the three years following the initial dividend increase; the target coverage ratio used to determine future quarterly dividends following the implementation of the Company's new dividend policy and the anticipated change in the target coverage ratio as the Company's remaining legacy operating assets are dropped down or sold; the anticipated sale of the Petrojarl Knarr FPSO unit to Teekay Offshore; future cash flow growth from the Company's daughter companies; and the dividend contributions of any future projects awarded to the Company's daughter companies.

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: the amount of future distributions by the Company's daughter subsidiaries to the Company; the amount of Teekay Parent and daughter subsidiary expenses; the amount of cash reserves established by the Company's Board of Directors; actual coverage ratios determined by the Company's Board of Directors; continued operation of the Company's and the daughter subsidiaries' vessels; changes in production of or demand for oil, petroleum products, LNG and LPG, either generally or in particular regions; 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, FSO and FPSO units; decreases in oil production by, or increased operating expenses for, FPSO units; trends in prevailing charter rates for shuttle tanker and FPSO contract renewals; the potential for early termination of long-term contracts and inability of the Company to renew or replace long-term contracts or complete existing contract negotiations; delays in commencement of operations of FPSO and FSO units at designated fields; greater or less than anticipated levels of LNG/LPG carrier newbuilding orders or greater or less than anticipated rates of LNG/LPG carrier scrapping; changes in capital expenditure requirements of the Company and its publicly-traded subsidiaries' and the inability to secure financing for such requirements; failure by Teekay LNG and Teekay Offshore to secure charter contracts for currently uncommitted newbuildings; potential delays in the commencement of operations of the Petrojarl Knarr FPSO unit and potential failure of the FPSO unit to be sold to Teekay Offshore; the inability of the Company to complete vessel sale transactions to its publicly-traded subsidiaries or to third parties; failure of the respective Board of Directors of the general partners of Teekay Offshore and Teekay LNG to approve future distribution increases; 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, 2013. 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
    Ryan Hamilton
    Investor Relations Enquiries
    +1 (604) 844-6654
    www.teekay.com