Teekay LNG Partners Announces $100 Million Common Unit Repurchase Program and Results of Special Meeting
December 19 2018 - 6:55AM
Teekay GP LLC, the general partner of Teekay LNG Partners L.P.
(Teekay LNG or the Partnership) (NYSE:TGP), has today announced
that its Board of Directors has authorized a common unit repurchase
program for the repurchase of up to $100 million of Teekay LNG’s
common units. Common units may be repurchased in the open
market or privately-negotiated transactions or otherwise at times
and prices considered appropriate by the Partnership. The timing of
any purchases and the exact number of common units to be purchased
under the program will be dependent on market conditions and other
factors. The Partnership intends to establish a trading plan
pursuant to Rule 10b5-1 under the U.S. Securities Exchange Act
relating to the repurchase of its common units under the program.
The Partnership also announced the outcome of
the special meeting of common unitholders held yesterday. All
proposals, including the proposal to allow Teekay LNG to elect to
be treated as a corporation, instead of a partnership, for U.S.
federal income tax purposes, were approved by unitholders. As
a result, effective January 1, 2019, Teekay LNG will be treated as
a corporation for U.S. federal income tax purposes and common and
preferred unitholders will receive Form 1099s instead of Schedule
K-1s relating to distributions taxable as dividends commencing in
2019. Teekay LNG will remain a master limited partnership,
and all other provisions of the Partnership’s limited partnership
agreement remain in effect.
“We believe that Teekay LNG’s common units
represent compelling value and repurchasing them is currently the
best investment we can make as the unit price does not fully
reflect the underlying value of our business, our large and
diversified contract portfolio totaling $10.6 billion(1) of forward
revenues, and the strong LNG carrier market fundamentals, which is
resulting in higher cash flows for the Partnership,” commented Mark
Kremin, President and Chief Executive Officer of Teekay Gas Group
Ltd. “This new common unit repurchase program is another
component of our previously announced balanced capital allocation
strategy, which will see the Partnership delever its balance sheet
as a priority while also providing investors with a 36 percent
increase in ongoing distributions, commencing in 2019. This
repurchase program will enable the Partnership to return some of
the additional capital generated from the current strong LNG
carrier market and early newbuilding deliveries to create long-term
value for unitholders.”
Mr. Kremin continued, “We are pleased that
unitholders voted in favor of the amendment to our U.S. tax
structure effective for the 2019 taxation year as we continue to
believe that this will make Teekay LNG a more attractive
investment, particularly for larger institutional investors.”
(1) As of October 1, 2018, based on existing contracts but
excludes extension options; includes proportionate share of
equity-accounted joint ventures.
About Teekay LNGTeekay LNG Partners is one of
the world’s largest independent owners and operators of LNG
carriers, primarily providing LNG and LPG marine transportation
services largely under long-term, fee-based charter contracts
through its interests in 49 LNG carriers (including six
newbuildings), 22 mid-size LPG carriers, seven multigas carriers
and two conventional tankers. The Partnership’s interests in these
vessels range from 20 to 100 percent. In addition, the Partnership
owns a 30 percent interest in a regasification facility, which is
currently under construction. Teekay LNG Partners was formed by
Teekay Corporation (NYSE: TK) as part of its strategy to expand its
operations in the LNG and LPG marine transportation sectors.
Teekay LNG Partners’ common units and preferred
units trade on the New York Stock Exchange under the symbols “TGP”,
“TGP PR A” and “TGP PR B”, respectively.
For Investor Relations enquiries
contact:Ryan HamiltonTel: +1 (604) 609-2963Website:
www.teekay.com
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,
among other things, regarding: the amounts and timing of potential
repurchases of Teekay LNG’s common units under the Partnership’s
common unit repurchase program; the underlying value of Teekay
LNG’s common units; future forward revenues; the strength of the
LNG carrier market; the effects of Teekay LNG’s amendments to its
U.S. federal income tax status, including greater appeal to certain
investors; and Teekay LNG’s guidance on 2019 cash distributions.
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: future trading prices
and volumes of the Partnership’s common units; potential shipyard
and project construction delays, newbuilding specification changes
or cost overruns; changes in production of LNG or LPG, either
generally or in particular regions; changes in trading patterns or
timing of start-up of new LNG liquefaction and regasification
projects significantly affecting overall vessel tonnage
requirements; greater or less than anticipated levels of vessel
newbuilding orders and deliveries and greater or less than
anticipated rates of vessel scrapping; changes in applicable
industry laws and regulations and the timing of implementation of
new laws and regulations; the potential for early termination of
long-term contracts of existing vessels in the Partnership's fleet;
higher than expected costs and expenses; the inability to secure
new charters at higher rates; actual levels of quarterly
distributions and common unit repurchases approved by the general
partner’s Board of Directors; the inability of charterers to make
future charter payments; the inability of the Partnership to renew
or replace long-term contracts on existing vessels; the
Partnership’s or the Partnership’s joint ventures’ ability to
secure or draw on financings for its vessels; 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, 2017. 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.
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