Teekay Corporation and Teekay LNG Partners L.P. Announce Elimination of Incentive Distribution Rights
11 May 2020 - 11:00PM
Teekay Corporation (Teekay) (NYSE:TK) and Teekay LNG Partners L.P.
(Teekay LNG or the Partnership) (NYSE:TGP) today announced the
execution of a definitive agreement to eliminate all of the
Partnership’s incentive distribution rights (IDRs) in exchange for
10.75 million newly-issued Teekay LNG common units (Transaction).
The Transaction concurrently closed on May 11, 2020.
“This important transaction creates greater
alignment between our sponsor, Teekay, and the rest of our common
unitholders, and we believe that it removes one of the primary
uncertainties for investors in Teekay LNG,” commented Mark Kremin,
President and CEO of Teekay Gas Group Ltd. “With approximately 98
percent and 94 percent of our LNG fleet operating on fixed-rate
charters for 2020 and 2021, respectively, and having increased our
quarterly common unit distributions by over 30 percent for two
consecutive years, we are well-positioned to continue executing on
our balanced capital allocation plan of near-term balance sheet
delevering, while continuing to return capital to unitholders.”
Kenneth Hvid, Teekay’s President and CEO,
commented: “This transaction simplifies Teekay LNG’s capital
structure and is beneficial to both parties. With a
market-leading position, strong contracted cash flows and an
improving balance sheet, we believe that Teekay LNG is and will
remain a true market leader in the LNG transportation industry for
the long-term.”
Following the completion of this Transaction,
Teekay now beneficially owns approximately 36 million Teekay LNG
common units and remains the sole owner of Teekay GP L.L.C. (Teekay
GP), the general partner of Teekay LNG, which together represents
an economic interest of approximately 42 percent in the
Partnership.
The Boards of Directors of Teekay and Teekay GP,
as well as the Teekay GP Conflicts Committee, which consists
entirely of independent directors, unanimously approved the IDR
elimination transaction.
Houlihan Lokey Capital, Inc. acted as financial
advisor and Potter Anderson & Corroon LLP acted as legal
advisor to the Teekay GP Conflicts Committee. Jefferies LLC acted
as financial advisor and Baker Botts LLP and Perkins Coie LLP acted
as legal advisors to Teekay.
About Teekay
Teekay is a leading provider of international
crude oil and gas marine transportation services and also provides
offshore production. Teekay provides these services primarily
through its directly-owned fleet and its controlling ownership
interests in Teekay LNG Partners L.P. (NYSE:TGP), one of the
world’s largest independent owners and operators of LNG carriers,
and Teekay Tankers Ltd. (NYSE:TNK), one of the world’s largest
owners and operators of mid-sized crude tankers. The consolidated
Teekay entities manage and operate total assets under management of
approximately $11 billion, comprised of approximately 140 liquefied
gas, conventional tanker, and offshore assets. With offices in 10
countries and approximately 5,500 seagoing and shore-based
employees, Teekay provides a comprehensive set of marine services
to the world’s leading oil and gas companies.
Teekay’s common stock is listed on the New York
Stock Exchange where it trades under the symbol “TK”.
About Teekay LNG
Teekay LNG is one of the world’s largest
independent owners and operators of LNG carriers, providing LNG and
LPG services primarily under long-term, fee-based charter contracts
through its interests in 47 LNG carriers, 23 mid-size LPG carriers,
and seven multi-gas carriers. Teekay LNG’s ownership interests in
these vessels range from 20 to 100 percent. In addition, Teekay LNG
owns a 30 percent interest in a regasification terminal. Teekay LNG
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’s 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 expected impact and benefits of
the IDR elimination transaction, including the potential impact on
Teekay LNG’s unit price; the Partnership’s market position and
financial strength relative to its peers; the Partnership’s
percentage of fixed charter coverage for its LNG fleet in 2020 and
2021; the Partnership’s ability to benefit from its fixed
contracts; and the Partnership’s expectations on future allocation
of capital towards balance sheet deleveraging and returning capital
to unitholders. 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: 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; 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;
general market conditions and trends, including spot, multi-month
and multi-year charter rates; inability of customers of the
Partnership or any of its joint ventures to make future payments
under contracts; the inability of the Partnership to renew or
replace long-term contracts on existing vessels; potential lack of
cash flow to reduce balance sheet leverage or of excess capital
available to allocate towards returning capital to unitholders; the
duration and extent of the COVID-19 coronavirus pandemic; and
other factors discussed in Teekay and Teekay LNG’s filings from
time to time with the SEC, including its Reports on Form 20-F for
the fiscal year ended December 31, 2019. The Company and 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 Company and 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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