Teekay LNG Partners Intends to Acquire 50 Percent Interest in Two LNG Carriers
Highlights
• Acquiring 50 percent interest in two LNG carriers on long-term, fixed-rate charters for an equity purchase price of approximately $70 million (including approximately $7 million of contributed working capital and other cash assets) and the assumption of approximately $100 million in pro rata debt relating to the vessels
• Expected to provide the Partnership $10 million of incremental distributable cash flow per annum over the firm period of the charters, which have 12 and 15 years remaining, respectively
• Equity purchase price to be financed with issuance by the Partnership of approximately 1,050,000 common units and cash of approximately $35 million from the Partnership's existing revolving credit facilities
The two vessels to be acquired are the 2002-built Excalibur, a conventional LNG carrier, and the 2005-built Excelsior, a specialized gas carrier which can both transport and regasify LNG onboard. Both vessels are on long-term, fixed-rate charter contracts to Excelerate Energy LP, a leading provider of LNG offshore solutions, for firm periods until 2022 and 2025, respectively.
The vessels are expected to generate distributable cash flow (1) of approximately $10 million per annum for the Partnership over the firm period of the charter contracts. The equity portion of the purchase price is to be financed through the issuance of approximately 1,050,000 common units by the Partnership to Exmar and the remaining $35 million is to be financed by drawing on one of the Partnership's existing revolving credit facilities. The Partnership is not required and does not intend to raise any additional equity capital to finance this transaction.
(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. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership's capital assets. 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.
"This transaction provides the Partnership with an opportunity to accretively grow its portfolio of stable fixed-rate cash flows while also benefiting from Exmar's extensive experience in the specialized floating LNG regasification sector," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC, the Partnership's general partner. "We look forward to expanding our relationship with Exmar."
The proposed transaction with Exmar remains subject to the negotiation and execution of definitive documentation. There is no assurance that the proposed transaction will be completed on the terms described above or at all.
About Teekay LNG
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 under long-term, fixed-rate time-charter contracts with major energy and utility companies through its fleet of 15 LNG carriers, six LPG/Multigas carriers and 11 conventional tankers. Three of the six LPG/Multigas carriers are newbuildings scheduled for delivery in 2010 and 2011. In addition, Teekay LNG Partners has agreed to acquire an indirect ownership interest in one LNG carrier and one LNG regasification unit.
Teekay LNG Partners' common units trade on the New York Stock Exchange under the symbol "TGP".
About Exmar
Exmar NV, headquartered in Antwerp, Belgium, is a diversified and independent shipping group serving the international gas and oil industry. Apart from providing the ships for the transportation of these products, it also performs studies and undertakes the management of commercial, technical and administrative activities for the oil and gas industry. Exmar strives to create shareholder value over the long term by balancing long- and short-term agreements to counteract volatility in the freight market, combined with providing services that are tailored to the needs of the customer. Exmar is quoted on Euronext Brussels (EXM).
Teekay LNG Partners L.P.