Teekay LNG Partners L.P. (NYSE:TGP) -
Highlights
-- Teekay LNG Partners and Marubeni Corporation joint venture agrees to
acquire ownership of eight LNG carriers from A.P. Moller-Maersk for an
aggregate purchase price of approximately $1.402 billion.
-- Transaction expected to be accretive to Teekay LNG's distributable cash
flow per unit.
-- Financing for the transaction secured through new loan facilities and a
portion of Teekay LNG Partners' existing liquidity.
Teekay LNG Partners L.P. (Teekay LNG or the Partnership) today
announced that its joint venture (the Joint Venture) with Marubeni
Corporation (Marubeni) has agreed to acquire ownership interests in
eight liquefied natural gas (LNG) carriers from Denmark-based
global conglomerate, A.P. Moller-Maersk A/S, for an aggregate
purchase price of approximately $1.402 billion.
The transaction includes the acquisition by the Joint Venture of
100 percent ownership interests in six LNG carriers and 26 percent
ownership interests in two additional LNG carriers, as detailed in
the following table:
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LNG Carrier Year Delivered Ownership
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1.Maersk Meridian 2010 100%
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2.Woodside Donaldson 2009 100%
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3.Maersk Magellan 2009 100%
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4.Maersk Arwa 2008 100%
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5.Maersk Marib 2008 100%
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6.Maersk Methane 2008 100%
-----------------------------------------------
7.Maersk Qatar 2006 26%
-----------------------------------------------
8.Maersk Ras Laffan 2004 26%
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Five of the eight LNG carriers to be acquired are currently
operating under long-term, fixed-rate time-charter contracts, with
an average remaining firm contract period duration of approximately
17 years, plus extension options. The other three vessels are
currently operating under short-term, fixed-rate time-charters;
however, one of these charters includes an extension option which,
if exercised, would increase the number of acquired vessels on
long-term, fixed-rate charters to six. Based on the acquired
vessels' current employment, the acquisition is expected to be
accretive to Teekay LNG's distributable cash flow (1) per unit.
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. 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.
To finance this transaction, the Joint Venture has secured loan
facilities, which on a combined basis total approximately $1.12
billion. The remaining $280 million of the purchase price is
expected to be financed with equity contributions from Teekay LNG
and Marubeni, commensurate with the respective Joint Venture
ownership interests of 52 percent and 48 percent. As a result,
Teekay LNG's pro rata portion of the equity contribution is
expected to be approximately $146 million, which will be funded
from Teekay LNG's existing liquidity which totaled approximately
$480 million as at September 30, 2011.
In addition, the owners of the remaining interests in the two
LNG carriers in which the Joint Venture is acquiring 26 percent
interests will have the right to require the Joint Venture to
acquire up to all of such remaining interests.
"Working with our joint venture partner Marubeni, we are pleased
to announce Teekay LNG's largest acquisition of on-the-water
vessels to date," commented Peter Evensen, Chief Executive Officer
of Teekay GP LLC, the Partnership's general partner. "The eight
acquired vessel interests will increase the total number of vessels
in which we have ownership interests, including committed
newbuildings, to 45 vessels, and the time-charter contracts
acquired with these vessels will broaden our customer base and add
further stable cash flows to our existing large portfolio of
long-term fixed-rate contracts. With three of the vessels currently
employed on short-term time-charters, the Partnership should
benefit from the strong near-term demand for LNG carriers. With an
average age of only four years, we are acquiring a modern,
well-maintained fleet that has been operated by one of the leaders
in global shipping."
The transaction has been approved by the Teekay LNG, Marubeni
and A.P. Moller-Maersk boards of directors and is expected to close
by early 2012, subject to customary closing conditions including
consent from charterers and approval from relevant regulatory
authorities. Teekay Corporation will take over technical management
of the acquired vessels after a transition period.
About Teekay LNG Partners L.P.
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 primarily under long-term,
fixed-rate charter contracts with major energy and utility
companies through its fleet of 21 LNG carriers (including one LNG
regasification unit), five LPG/Multigas carriers and 11
conventional tankers. Teekay LNG Partners' interests in these
vessels ranges from 33 to 100 percent. Two of the LNG carriers are
newbuildings scheduled for delivery in 2011 and 2012. One of the
LPG/Multigas carriers is a newbuilding scheduled for delivery in
2011. In addition, Teekay LNG Partners, through its joint venture
with Marubeni, has agreed to acquire ownership interests in eight
LNG carriers and expects this transaction to close by early
2012.
Teekay LNG Partners' common units trade on the New York Stock
Exchange under the symbol "TGP".
About Marubeni Corporation
Marubeni Corporation is involved in the handling of products and
provision of services in a broad range of sectors. These areas
encompass importing and exporting, as well as transactions in the
Japanese market, related to food materials, food products,
textiles, materials, pulp and paper, chemicals, energy, metals and
mineral resources, transportation machinery, and include offshore
trading. Marubeni's activities also extend to power projects and
infrastructure, plants and industrial machinery, finance, logistics
and information industry, and real estate development and
construction. Additionally, Marubeni conducts business investment,
development and management on a global level.
Marubeni's common stock traded on the Tokyo Stock Exchange.
About A.P. Moller-Maersk A/S
The A.P. Moller - Maersk Group is a worldwide conglomerate. The
Group operates in some 130 countries and has a workforce of some
108,000 employees. In addition to owning one of world's largest
shipping companies, the Group is involved in a wide range of
activities in the energy, logistics, retail and manufacturing
industries.
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 and certainty of completion of the Joint Venture's pending
acquisition of the ownership interest in LNG carriers from A.P.
Moller-Maersk A/S; the effect of the acquisition on the
Partnership, including on the Partnership's stability of cash flows
and expected accretion to the Partnership's distributable cash flow
per unit; the aggregate purchase price to be paid by the Joint
Venture for the ownership interests; anticipated rechartering rates
of acquired vessels on short-term charter contracts; the potential
exercise of an extension option on one of the three acquired
vessels operating under short-term time-charter contracts; and the
future technical management of the vessels in which ownership
interests will be acquired.
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: less than anticipated
revenues or higher than anticipated costs or capital requirements
related to the vessels in which the Partnership, through the Joint
Venture, acquires an interest, including higher than anticipated
drydocking costs; the potential for early termination of the
charter contracts for the vessels and the inability of the Joint
Venture to renew or replace the charter contracts; failure to
satisfy the closing conditions of the transaction, including
obtaining approvals from the charterers and relevant regulatory
authorities; the potential election by owners of remaining
interests in two of the LNG carriers in which the Joint Venture is
acquiring 26 percent interests to exercise their rights to require
the Joint Venture to acquire up to all of such remaining interests,
or exercise their rights to acquire from A.P. Moller-Maersk the
remaining 26 percent interest they do not currently own; 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, and spot LNG shipping
rates; changes in applicable industry laws and regulations and the
timing of implementation of new laws and regulations; events
delaying or preventing the transition of technical management of
the vessels to be acquired; the inability of Teekay LNG, Marubeni
or the Joint Venture to secure longer-term financing for the
acquired vessel interests; 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/A for the fiscal year
ended December 31, 2010. 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.
Contacts: Teekay LNG Partners L.P. Kent Alekson Investor
Relations Enquiries + 1 (604) 609-6442www.teekaylng.com
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