Teekay LNG Partners L.P.

Teekay LNG Partners L.P.

October 06, 2010 16:05 ET

Teekay LNG Partners Intends to Acquire 50 Percent Interest in Two LNG Carriers

HAMILTON, BERMUDA--(Marketwire - Oct. 6, 2010) - Teekay LNG Partners L.P. (NYSE:TGP) -


  • Acquiring 50 percent interest in two LNG carriers on long-term, fixed-rate charters for an equity purchase price of approximately $70 million (including approximately $7 million of contributed working capital and other cash assets) and the assumption of approximately $100 million in pro rata debt relating to the vessels
  • Expected to provide the Partnership $10 million of incremental distributable cash flow per annum over the firm period of the charters, which have 12 and 15 years remaining, respectively
  • Equity purchase price to be financed with issuance by the Partnership of approximately 1,050,000 common units and cash of approximately $35 million from the Partnership's existing revolving credit facilities

Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today announced that it has reached an agreement in principle to acquire a 50 percent interest in two liquefied natural gas (LNG) carriers owned by Belgium-based shipping group Exmar NV (EXM:BB) for an equity purchase price of approximately $70 million (including approximately $7 million of working capital and other cash assets) plus the assumption of approximately $100 million in pro rata debt secured by these vessels. Exmar will retain a 50 percent ownership interest and continue to operate the two vessels.

The two vessels to be acquired are the 2002-built Excalibur, a conventional LNG carrier, and the 2005-built Excelsior, a specialized gas carrier which can both transport and regasify LNG onboard. Both vessels are on long-term, fixed-rate charter contracts to Excelerate Energy LP, a leading provider of LNG offshore solutions, for firm periods until 2022 and 2025, respectively.

The vessels are expected to generate distributable cash flow1 of approximately $10 million per annum for the Partnership over the firm period of the charter contracts. The equity portion of the purchase price is to be financed through the issuance of approximately 1,050,000 common units by the Partnership to Exmar and the remaining $35 million is to be financed by drawing on one of the Partnership's existing revolving credit facilities. The Partnership is not required and does not intend to raise any additional equity capital to finance this transaction.

1 Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-controlling interest, non-cash items, estimated maintenance capital expenditures, gains and losses on vessel sales, unrealized gains and losses from derivatives, non-cash income taxes and unrealized foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Distributable cash flow is not defined by U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by GAAP.

"This transaction provides the Partnership with an opportunity to accretively grow its portfolio of stable fixed-rate cash flows while also benefiting from Exmar's extensive experience in the specialized floating LNG regasification sector," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC, the Partnership's general partner. "We look forward to expanding our relationship with Exmar."

The proposed transaction with Exmar remains subject to the negotiation and execution of definitive documentation. There is no assurance that the proposed transaction will be completed on the terms described above or at all.

About Teekay LNG

Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation (NYSE: TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services under long-term, fixed-rate time-charter contracts with major energy and utility companies through its fleet of 15 LNG carriers, six LPG/Multigas carriers and 11 conventional tankers. Three of the six LPG/Multigas carriers are newbuildings scheduled for delivery in 2010 and 2011. In addition, Teekay LNG Partners has agreed to acquire an indirect ownership interest in one LNG carrier and one LNG regasification unit.

Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".

About Exmar

Exmar NV, headquartered in Antwerp, Belgium, is a diversified and independent shipping group serving the international gas and oil industry. Apart from providing the ships for the transportation of these products, it also performs studies and undertakes the management of commercial, technical and administrative activities for the oil and gas industry. Exmar strives to create shareholder value over the long term by balancing long- and short-term agreements to counteract volatility in the freight market, combined with providing services that are tailored to the needs of the customer. Exmar is quoted on Euronext Brussels (EXM).


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: completion of the acquisition of 50 percent interest in the vessels Excalibur and Excelsior upon the terms of the agreement in principle between the Partnership and Exmar NV; the amount of incremental distributable cash flow to the Partnership resulting from acquiring a 50 percent interest in the vessels Excalibur and Excelsior, based on their respective existing fixed-rate time-charter contracts; and the ability of the Partnership to finance the equity portion of the acquired interest in the vessels Excalibur and Excelsior without the requirement to raise additional equity capital. 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 of the parties to execute a definitive agreement and to complete the acquisition upon the terms of their agreement in principle; less than anticipated revenues or higher than anticipated costs or capital requirements related to the vessels in which the Partnership acquires an interest, including higher than anticipated drydocking costs; the potential for early termination of the long-term charter contracts for the vessels and the inability of the Partnership to renew or replace the charter contracts; changes in production of LNG or LPG, either generally or in particular regions that would impact the expected future growth in the global LNG transportation and regasification markets; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes to the amount or proportion of expenses denominated in foreign currencies; and other factors discussed in Teekay LNG Partners' filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2009. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

Contact Information

  • Teekay LNG Partners L.P.
    Kent Alekson
    Investor Relations Enquiries
    + 1 (604) 609-6442
    Teekay LNG Partners L.P.
    Alana Duffy
    Media Enquiries
    + 1 (604) 844-6631