Teekay LNG Partners and Marubeni Joint Venture to Acquire Ownership Interest in Eight LNG Carriers From A.P. Moller-Maersk A/S

abarrelfullabarrelfull wrote on 12 Oct 2011 12:03
Tags: lng maersk marubeni teekay

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Teekay LNG Partners L.P. (Teekay LNG or the Partnership) 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:

LNG Carrier Year Delivered Ownership

1.Maersk Meridian 2010 100%

2.Woodside Donaldson 2009 100%

3.Maersk Magellan 2009 100%

4.Maersk Arwa 2008 100%

5.Maersk Marib 2008 100%

6.Maersk Methane 2008 100%

7.Maersk Qatar 2006 26%

8.Maersk Ras Laffan 2004 26%

Five of the eight LNG carriers to be acquired are currently operating under long-term, fixed-rate time-charter contracts, with an average remaining firm contract period duration of approximately 17 years, plus extension options. The other three vessels are currently operating under short-term, fixed-rate time-charters; however, one of these charters includes an extension option which, if exercised, would increase the number of acquired vessels on long-term, fixed-rate charters to six. Based on the acquired vessels' current employment, the acquisition is expected to be accretive to Teekay LNG's distributable cash flow (1) per unit.

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.

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