NEW YORK, May 24, 2019 /PRNewswire/ -- On May 17, 2019, Brookfield Business Partners (NYSE:
BBU) published a letter requesting that the board of Teekay
Offshore Partners LP (NYSE: TOO) evaluate an offer to acquire the
remaining publicly traded units of TOO for $1.05 per unit, an all-time low. Teekay Offshore
is 73% owned by Brookfield Business Partners.
JDP is an investor in Teekay Offshore and has gathered
endorsements from a significant number of other funds and
individual minority unit holders to respond to BBU's public
letter.
JDP's Open Letter to the Teekay Offshore
Special Committee
JDP enthusiastically invested in TOO based on extensive due
diligence as well as believing in the goals and strategy outlined
in the Strategic Partnership with
Brookfield Presentation on July
27th, 2017 ("Sponsor Presentation",
see link).
Since BBU became TOO's financial sponsor, the company has
benefited enormously from BBU's significant capital investment and
board leadership. In 2018, Adjusted EBITDA increased ~50% over last
year and the Leverage Ratio has improved ~38% in the same period.
Further, management recently executed a refinancing of over 30% of
its debt structure at highly accretive rates and terms with an
expanded banking group.
JDP believes TOO is worth at least $4 per unit today based on a cash flow analysis
and peer comparisons. TOO's longer-term valuation is further
underpinned by its large $5.4 billion
charter backlog with investment grade counterparties, unique
duopolistic market position in its shuttle tanker fleet, high-spec
FPSOs, much improved balance sheet profile, and an "improved
offshore market" according to its CEO Ingvild Saether on April
30th, 2019.
It is our opinion that the reason for the disconnect between the
depressed stock price and fundamental value has been very poor
investor relations and confusion among the public unit holders
regarding BBU's continued commitment to respect minority investor
interests.
JDP and the investors listed in the response letter feel
betrayed that BBU CEO Cyrus Madon
would attempt to squeeze out minority unit holders at a price that
is a 58% discount to the $2.50 per
unit BBU initially paid for 60% of TOO in 2017.
This low offer was made just 20 months after committing to
"maximize shareholder value" in its 2017 Sponsor
Presentation. Further, BBU based its offer on a recent
distressed block trade transaction executed by Teekay Corporation
(NYSE:TK) that was forced by its own immediate refinancing
pressures.
JDP Managing Partner Jeremy Deal further commented, "We
encourage Brookfield Asset Management (NYSE:BAM) CEO Bruce Flatt to reconsider this transaction as it
would be incredibly harmful to the Brookfield reputation and brand."
About JDP Capital Management
JDP Capital Management is
a private value-based investment partnership founded in 2011 with
offices in New York and
Amsterdam.
Media contact:
info@jdpcap.com
(571) 523-5028
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SOURCE JDP Capital Management