Teekay LNG Partners L.P. today announced that its joint venture with Marubeni Corporation 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.
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.
About Teekay LNG Partners L.P.
Teekay LNG Partners L.P. is a publicly-traded master limited partnership formed by Teekay Corporation as part of its strategy to expand its operations in the LNG and LPG shipping sectors. Teekay LNG Partners L.P. provides LNG, LPG and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its fleet of 21 LNG carriers (including one LNG regasification unit), five LPG/Multigas carriers and 11 conventional tankers. Teekay LNG Partners’ interests in these vessels ranges from 33 to 100 percent. Two of the LNG carriers are newbuildings scheduled for delivery in 2011 and 2012. One of the LPG/Multigas carriers is a newbuilding scheduled for delivery in 2011. In addition, Teekay LNG Partners, through its joint venture with Marubeni, has agreed to acquire ownership interests in eight LNG carriers and expects this transaction to close by early 2012.
Teekay LNG Partners’ common units trade on the New York Stock Exchange under the symbol “TGP”.
About Marubeni Corporation
Marubeni Corporation is involved in the handling of products and provision of services in a broad range of sectors. These areas encompass importing and exporting, as well as transactions in the Japanese market, related to food materials, food products, textiles, materials, pulp and paper, chemicals, energy, metals and mineral resources, transportation machinery, and include offshore trading. Marubeni’s activities also extend to power projects and infrastructure, plants and industrial machinery, finance, logistics and information industry, and real estate development and construction. Additionally, Marubeni conducts business investment, development and management on a global level.
Marubeni’s common stock traded on the Tokyo Stock Exchange.
About A.P. Moller-Maersk A/S
The A.P. Moller – Maersk Group is a worldwide conglomerate. The Group operates in some 130 countries and has a workforce of some 108,000 employees. In addition to owning one of world’s largest shipping companies, the Group is involved in a wide range of activities in the energy, logistics, retail and manufacturing industries.
Source: Teekay LNG, October 12, 2011; Image: Maersk LNG