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Teekay LNG Partners to Acquire Three Ships for $160 Million and Recommend Distribution Increase |
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Friday, 05 March 2010 |
 Teekay LNG Partners L.P., yesterday announced that it has agreed to acquire two 2009-built Suezmax tankers, the Bermuda Spirit and the Hamilton Spirit, and one 2007-built Handymax product tanker,
the Alexander Spirit, from Teekay Corporation for a total purchase price
of $160 million. Teekay LNG will finance the purchase by assuming $126
million of existing debt related to two of the ships, and cash-on-hand
for the remaining $34 million. The Partnership does not anticipate
raising further equity to complete this acquisition. The transaction,
which is subject to standard closing conditions, is expected to be
completed by mid-March 2010.
The Bermuda Spirit and the Hamilton Spirit are currently serving under
11-year fixed-rate contracts to Centrofin, an international owner of 28
vessels, and the Alexander Spirit is currently employed on a 10-year
fixed-rate contract to Caltex Australia. These ships will join the
Partnership's Conventional Tanker Segment which currently includes eight
Suezmaxes, all on long-term fixed-rate charter. During the contract
periods, the newly acquired vessels are expected to generate
distributable cash flow of approximately $8 million per annum. As a
result, management of the Partnership's General Partner intends to
recommend that its Board of Directors increase the Partnership's current
quarterly cash distribution of $0.57 per unit by $0.03 per unit, or 5.3
percent, commencing with the first quarter distribution to be paid in
May 2010.
The Board of Directors of the Partnership's General Partner and its
Conflicts Committee have both approved the transaction. To assist in its
evaluation of the transaction, the Conflicts Committee retained
independent legal advisors and obtained independent vessel valuations.
Source: Teekay LNG Partners L.P.
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