As a play on the cyclical, secondhand crude tanker market, Teekay Tankers Ltd. (NYSE:TNK) and Teekay Corporation (NYSE:TK) announced today the creation of a new company called Tanker Investments Ltd. (TIL). According to a statement on Teekay’s website, TIL “will seek to opportunistically acquire, operate and sell modern secondhand tankers to benefit from an expected recovery in the current cyclical low of the tanker market.”
With initial investments of $25 million each, TNK and TK will each own a 20 percent stake in the new company, while $250 million has been raised via a private equity offering to institutional investors in the United States, UK, and Norway.
“Our investment in TIL provides a new avenue for Teekay Tankers’ shareholders to benefit from a tanker market recovery,” commented Bruce Chan, Teekay Tankers’ Chief Executive Officer. “This transaction complements our existing strategy of owning and in-chartering conventional tankers. In addition, our planned acquisition of Teekay Operations represents the final step in Teekay Tankers’evolution into a full-service conventional tanker platform, which we believe will allow us to better serve our customers and generate greater value for Teekay Tankers.”
Peter Evensen, Teekay Corporation’s President and Chief Executive Officer commented, “With the sale of our last four owned conventional tankers to TIL, Teekay Corporation is one step closer to achieving its strategy of becoming an asset-light company primarily focused on increasing the value of its daughter entities.”
Funds from the private equity offering will be used in the following initial transactions:
- Acquisition of four 2009 and 2010-built Aframax crude oil tankers for an aggregate purchase price of approximately $116 million.
- Acquisition of four 2009-built Suezmax crude oil tankers from Teekay for an aggregate purchase price of approximately $163 million
- Additional future acquisitions and “for general corporate purposes”
In addition, Teekay and Teekay Tankers’ Boards of Directors have agreed in principle to the sale to Teekay Tankers of Teekay’s commercial and technical management operations involving their commercial tankers (Teekay Operations). This includes direct ownership in three commercially managed tanker pools, which currently generates fees from commercially managing a fleet of 82 vessels and technically managing a fleet of 49 vessels.
Teekay notes the TIL fleet will be managed by Teekay Operations and all corresponding fees associated with the management of TIL’s vessels will be earned by Teekay Tankers.
Teekay and Teekay Tankers together will receive warrants to acquire up to an additional 1.5 million shares of TIL’s common stock, linked to TIL’s future share price performance.
The TIL private equity offering is expected to close on Friday, January 24, 2014 and TIL’s acquisition of the initial eight tankers is expected to be completed in the first half of 2014. TIL intends to undertake a public listing of its common stock on the Oslo Stock Exchange in the first quarter of 2014.
DNB Markets acted as exclusive financial advisor to Teekay Tankers and Teekay on the formation of TIL. DNB Markets and Pareto Securities acted as joint bookrunners on the private equity offering for TIL.