Canadian investment firm Brookfield Business Partners announced plans to acquire 60% of Teekay Offshore Partners, a leading global provider of marine services and solutions focused on production and logistics to the offshore oil industry.
Teekay Offshore is a publicly traded subsidiary of Teekay Corporation (NYSE:TK), one of the world’s largest marine energy transportation, storage and production companies.
Brookfield is expected to invest approximately $750 million in acquiring the majority stake. As part of the transaction, Teekay Corporation will be co-investing alongside Brookfield and will retain a 14% ownership of Teekay Offshore. Brookfield will also acquire 49% of Teekay Offshore GP LLC, the general partner of Teekay Offshore, with Teekay Corporation continuing to hold 51%. Upon closing of the transaction, Brookfield will appoint four of nine directors to the Board of TOO GP.
Brookfield will invest $610 million for newly-issued common units of Teekay Offshore and will acquire a $200 million loan to Teekay Offshore from Teekay Corporation.
“Teekay Offshore has established itself as a global leader in the provision of marine services to the offshore oil production industry,” said Cyrus Madon, CEO of Brookfield Business Partners. “Our investment represents an opportunity to acquire a high quality, highly contracted business with presence in attractive markets, and we look forward to supporting Teekay Offshore with its continued growth”.
Teekay Offshore has consolidated assets of $5.6 billion and its fleet of 62 offshore vessels provides critical services to its customers, including oil production, storage, transport, long distance towing and anchor handling, and maintenance and safety.
“We are excited to have Brookfield join us as a strategic partner and co-sponsor of Teekay Offshore, which is a strong endorsement of Teekay Offshore’s leading market positions in the marine infrastructure space,” commented Kenneth Hvid, Teekay’s President and CEO. “The combination of Teekay’s operational platform and Brookfield’s global business platform and access to long-term capital is a complementary fit and creates one of the world’s strongest offshore marine infrastructure companies. Out of the range of alternatives evaluated, we believe this comprehensive solution represents the best possible outcome for all of our long-term stakeholders and positions Teekay Offshore to benefit from an energy market recovery. This transaction maintains the stability of Teekay Offshore’s significant forward cash flows and also improves Teekay Parent’s financial position by eliminating all of its financial guarantees to Teekay Offshore and increasing its own liquidity by approximately $140 million. This will enhance Teekay Parent’s ability to be a supportive sponsor to all of its Daughter companies going forward.”