Teekay LNG Partners and Marubeni Joint Venture to Acquire Ownership Interest in Eight LNG Carriers From A.P. Moller-Maersk A/S
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.
Hamilton, Bermuda, October 12, 2011 – Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) 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:
(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.
Teekay LNG Partners L.P. press release