Teekay LNG Partners announces acquisition and charter back for up to two LNG carrier newbuildings
Teekay LNG Partners L.P. today announced that it has agreed to acquire a 155,900 cubic meter (cbm) liquefied natural gas (LNG) carrier newbuilding from Awilco LNG ASA (Awilco), a Norwegian-based owner and operator of LNG carriers, said in the company's press release. The vessel, which is currently under construction by Daewoo Shipbuilding & Marine Engineering Co., Ltd., (DSME) of South Korea, is expected to deliver in the third quarter of 2013, and subsequent to delivery from DSME to Awilco, Teekay LNG will purchase the vessel and bareboat charter the vessel back to Awilco at a fixed rate for a firm period of five years, plus a one-year extension option. Teekay LNG will purchase the vessel for a price of $205 million less a $50 million upfront prepayment of charter hire by Awilco which is in addition to the daily bareboat charter rate. Awilco has fixed-price purchase obligations at the end of both the firm charter period and option period.
As part of the transaction, Awilco has an option to sell to and bareboat charter back from Teekay LNG a second 155,900 cbm LNG carrier newbuilding currently under construction by DSME, under similar terms. The second LNG carrier newbuilding is expected to deliver in the fourth quarter of 2013.
The Partnership intends to finance the transaction with a portion of its existing liquidity and expects to secure long-term debt financing prior to delivery.
"We are pleased to announce this mutually beneficial acquisition-leaseback arrangement with Awilco which will provide Teekay LNG with immediate accretive cash flow," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. "Together with our four LNG carrier newbuildings delivering in 2016 and the ten LPG newbuildings in our joint venture with Exmar, delivering between 2014 and 2017, this transaction with Awilco provides a near-term compliment to the Partnership's strong portfolio of long-term visible growth projects."
The transaction, which is expected to close during the third quarter of 2013, has been approved by Board of Directors of both Teekay LNG and Awilco, and remains subject to customary closing conditions, including satisfactory documentation.
About Teekay LNG Partners L.P.
Teekay LNG Partners L.P. is the world's third largest independent owner and operator of LNG vessels, providing LNG, liquefied petroleum gas (LPG) and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its interests in 31 LNG carriers (including one LNG regasification unit and four newbuildings), 31 LPG/Multigas carriers (including five chartered-in LPG carriers and ten newbuildings) and 11 conventional tankers. The Partnership's interests in these vessels ranges from 33 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
