Teekay Tankers To Buy 13-Tanker Fleet

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
455MM
Description

Plans to purchase fleet of 13 double-hull conventional oil & product tankers and related time-charter contracts, debt facilities and other assets and rights.

Teekay Tankers Ltd., Hamilton, Bermuda, (NYSE: TNK) plans to acquire a fleet of 13 double-hull conventional oil and product tankers and related time-charter contracts, debt facilities and other assets and rights from Teekay Corp. (NYSE: TK) for approximately $455 million.

As partial consideration, Teekay will receive $25 million in new Teekay Tankers Class A shares issued at a price of $5.60 per share. Acquisition 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.

Nine of the 13 vessels to be acquired currently operate under favorable fixed-rate time-charters. Immediately following the transaction, Teekay Tankers' fixed coverage is expected to increase from approximately 29% to approximately 43% for the 12 months commencing July 1.

Teekay Tankers chief executive Bruce Chan says, “We are pleased to announce Teekay Tankers' most significant transaction since its initial public offering. The addition of 13 modern vessels nearly doubles our fleet size and provides a larger and broader platform for Teekay Tankers in the mid-size crude oil tanker segment. The transaction also introduces product tankers into our fleet mix, a segment which we believe has favorable fundamentals. In addition, the substantial time-charter coverage that we are acquiring with these vessels increases our estimated fixed-cover for the 12-month period commencing July 1, 2012 from approximately 29% to approximately 43%, which provides further downside protection for Teekay Tankers' full payout dividend during this period and is well-aligned with our outlook for improving spot tanker market fundamentals in 2013.”

DNB Markets is financial advisor to Teekay Tankers.

The deal is expected to be completed in the second quarter of 2012.