NEW YORK, June 25, 2019 /PRNewswire/ -- On
June 21, 2019, Teekay Offshore (NYSE:
TOO) announced an updated valuation figure for the Company's
consolidated assets of $5.3 billion
across 60 vessels or approximately $2.80 per unit, net of all obligations.
JDP Managing Partner Jeremy Deal commented: "While there are
many ways to value a business, one of the easiest is to simply look
at the net book asset value. In a leasing business with a large
moat such as TOO's, over time, management should be able to achieve
a premium over net book asset value. Otherwise the company can
improve its market value by selling assets, retiring debt or
returning the excess cash to shareholders."
As of March 31, 2019 TOO reported
total liabilities and preferred equity of $4.2 billion for a net asset value of
$1.1 billion or approximately
$2.80 per unit assuming 410 million
shares outstanding. Note this value is 2.6X higher
than the $1.05 per unit that majority
owner Brookfield Business Partners (NYSE: BBU) offered for the
remaining units in an unfair attempt to disadvantage minority
investors.
With stable contracted run-rate Adjusted EBITDA of over
$700 million, as well as over
$850 million in new long-term debt
facilities to finance growth, TOO is positioned to reward owners
for their patience. Adjusted EBITDA has consistently hit new
all-time highs over the past year and this is before a full
recovery in the North Sea and Offshore Brazil drilling markets.
Further, TOO's leverage ratio has been reduced down to its
long-term target range and its blended debt maturity profile has
been significantly extended.
Brookfield, just 20 months ago,
touted itself as a white knight savior who reshaped Teekay
Offshore's capital structure through a $610
million cash injection at $2.50 per unit. Unfortunately, Brookfield has now shown its true colors with
an attempt to squeeze out remaining small shareholders at the
all-time low price of $1.05.
JDP will not accept a distressed a price which simply ignores
both stated hard asset value, and/or going concern value that we
believe is at least $4 per unit based
on a reasonable multiple of cash flow.
Please see the following links for more information:
The Numbers Don't Lie: Interpreting Brookfield Business
Partner's Offer For Teekay Offshore, June
19, 2019
JDP Letter to Teekay Offshore Conflicts Committee, May 21, 2019
Merger Presentation: Strategic Partnership with Brookfield, July 27,
2017
Responses and inquiries:
info@jdpcap.com
(347) 640-0318
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SOURCE JDP Capital Management