Teekay Tankers Ltd.

Teekay Tankers Ltd.

August 05, 2015 08:30 ET

Teekay Tankers Agrees to Acquire 12 Modern Suezmax Tankers; Expects Immediate Accretion Upon Delivery

HAMILTON, BERMUDA--(Marketwired - Aug. 5, 2015) -


  • Agreed to acquire 12 modern Suezmax tankers from Principal Maritime for $662 million.
    • Acquiring on-the-water vessels, delivering at the right point in the tanker market cycle to take advantage of the strong spot tanker market.
    • Accretive to earnings, free cash flow and net asset value per share.
    • Solidifies Teekay Tankers' position as the largest owner and operator of mid-size crude oil tankers.
    • Reduces average age of Teekay Tankers' fleet by 1.2 years.
  • Acquisition is fully financed and will not materially impact Teekay Tankers' financial leverage; increases the Company's dividend capacity.

Teekay Tankers Ltd. (Teekay Tankers or the Company) (NYSE:TNK) today announced that it 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 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. "Teekay Tankers will become one of the largest owners of modern Suezmax tankers at the right point in the tanker market cycle when positive market fundamentals support continued strength in spot tanker rates. 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."

Mr. Mackay continued, "Arranging bank and equity financing with strategic investors ahead of the closing of the transaction and increasing our exposure to the strengthening spot tanker market has numerous financial benefits for our investors. The transaction is expected to further increase our ability to generate significant free cash flow, which has enabled Teekay Tankers to reduce its net debt to book capitalization(1) from 72 percent at the end of 2013 to approximately 56 percent, giving pro forma effect to this acquisition and the associated debt and equity financings. With our financial leverage continuing to decline from strong cash flow generation, and since this acquisition is accretive to both free cash flow per share and net asset value per share, we believe this transaction will increase our dividend capacity and create long-term value for our shareholders."

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.

Teekay Tankers' common stock trades on the New York Stock Exchange under the symbol "TNK."

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 pending acquisition of 12 Suezmax tankers, including completion of the vessel acquisitions, delivery dates for the vessels, aggregate purchase price, debt and equity financing for the acquisition, and the intended trading of the vessels; the impact of the acquisition on the Company's earnings, free cash flow, net asset value, financial leverage, ability to further optimize fleet efficiencies, position in the mid-size tanker segment and service offering to new and existing customers, and dividend capacity; future tanker market fundamental and forecasted continued strength in spot tanker rates; increased demand for Suezmax tonnage; and the Company's ability to create long-term shareholder value. 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: changes in the production of, or demand for, oil or refined products; changes in trading patterns significantly affecting overall vessel tonnage requirements, including a discontinuation of the trend towards longer-haul movements from the Atlantic to the Pacific basins; greater or less than anticipated levels of tanker newbuilding orders and deliveries and greater or less than anticipated rates of tanker scrapping; changes in global oil prices; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; satisfaction of closing conditions to the vessel acquisitions; delays in or failure to take delivery of the 12 Suezmax tankers the Company has agreed to acquire; the ability of the Company to complete the debt and equity financings for the vessels; the ability of the Company to successfully integrate the vessels, continue productive employment of the acquired vessels and the ability of the Company to operate the acquired assets and business profitably; changes in interest rates and the financial markets; increased costs; and other factors discussed in Teekay Tankers' filings from time to time with the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31, 2014. 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.

1 Net debt to book capitalization which is the total net debt of the Company divided by its net debt plus shareholders' equity is a non-GAAP financial measure used by some investors to measure the financial strength of a company.

Contact Information