Teekay LNG and EXMAR Form LPG Joint Venture

Teekay LNG (NYSE:TGP) and Antwerp-based EXMAR (EXM:BB) announced Wednesday plans to create a new 50/50 joint venture that will operate in the midsized LPG Carrier segment in a bid to take advantage of the current and future demand for liquefied petroleum gas (LPG) and ammonia (NH3).

Under the deal, EXMAR will contribute 16 owned LPG carriers to the new joint venture company, which is to be named EXMAR LPG BVBA. The new fleet will include 15 owned Midsize Gas Carriers (MGC), of which four are under construction at Hyundai Mipo, and one owned Very Large Gas Carrier (VLGC). EXMAR LPG BVBA will also time-charter in three MGCs and two VLGCs, and bareboat-charter in one MGC and one VLGC. EXMAR LPG BVBA will acquire from Wah Kwong the remaining 50 percent interest in two MGCs, the Brugge Venture and the Touraine, which it does not already own.

Teekay LNG will then acquire a 50 percent ownership in EXMAR LPG BVBA for approximately $140 million.

“New gas export projects scheduled to come on-line, combined with a relatively modest LPG carrier orderbook, are expected to result in strong demand for the current global LPG carrier fleet,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “In addition to providing potential upside from the attractive fundamentals in the LPG shipping market, this accretive transaction further diversifies Teekay LNG”s fixed-rate contract portfolio while leveraging EXMAR”s deep expertise as a leading owner and operator of medium-sized gas carriers.”

Nicolas Saverys, Chief Executive Officer of EXMAR N.V commented, “This transaction reflects a long-standing tradition of partnership with outstanding shipping peers. EXMAR is pleased to have Teekay LNG as a partner and rely on their extensive knowledge of the worldwide shipping markets to continue to grow the LPG and NH3 trade together. We share the same vision and strategy to grow the gas shipping trade and are excited about implementing our ideas as soon as possible.”

The proposed transaction is expected to close in late-2012 or early-2013 and has been approved by the Teekay LNG and EXMAR boards of directors.

Additional details concerning the transaction can be found HERE.

(c) 2012 Thomson Reuters

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