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Teekay and Brookfield Announce Strategic Partnership and Investment in Teekay Offshore

HAMILTON, BERMUDA--(Marketwired - Jul 26, 2017) - Teekay Corporation (Teekay or Teekay Parent) (TK) and Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (TOO) today announced that they have agreed to enter into a strategic partnership with Brookfield Business Partners L.P. (BBU)(BBU-UN.TO), together with its institutional partners (collectively Brookfield). This transaction is part of a comprehensive solution for Teekay Offshore, which includes a $640 million equity investment and other financing initiatives detailed below.


  • Brookfield is attracted to Teekay Offshore's high-quality contracted cash flows and market leading positions in the offshore production and logistics space
  • Comprehensive solution significantly strengthens Teekay Offshore's balance sheet
  • Fully finances Teekay Offshore's existing growth projects, which are expected to provide significant near-term cash flow growth
  • Positions Teekay Offshore to better service its customers and take advantage of future growth opportunities
  • Teekay Offshore has ordered two shuttle tanker newbuildings, which will serve under the Master Agreement with Statoil, with the option to order two additional vessels under similar terms

"We are excited to have Brookfield join us as a strategic partner and co-sponsor of Teekay Offshore, which is a strong endorsement of Teekay Offshore's leading market positions in the marine infrastructure space," commented Kenneth Hvid, Teekay's President and CEO. "The combination of Teekay's operational platform and Brookfield's global business platform and access to long-term capital is a complementary fit and creates one of the world's strongest offshore marine infrastructure companies. Out of the range of alternatives evaluated, we believe this comprehensive solution represents the best possible outcome for all of our long-term stakeholders and positions Teekay Offshore to benefit from an energy market recovery. This transaction maintains the stability of Teekay Offshore's significant forward cash flows and also improves Teekay Parent's financial position by eliminating all of its financial guarantees to Teekay Offshore and increasing its own liquidity by approximately $140 million. This will enhance Teekay Parent's ability to be a supportive sponsor to all of its Daughter companies going forward."

"Brookfield's co-sponsorship in Teekay Offshore provides both immediate and long-term benefits," commented Ingvild Sæther, President and CEO of Teekay Offshore Group Ltd. "This transaction fully finances Teekay Offshore's existing growth projects which, when delivered over the next few quarters, are expected to contribute an incremental $200 million of run-rate annual cash flow from vessel operations. Longer-term, the co-sponsorship of Brookfield and Teekay will provide greater access to capital, which will enable Teekay Offshore to better service its customers and take advantage of future growth opportunities as the global energy markets recover. Our recent order of shuttle tanker newbuildings to service Teekay Offshore's North Sea Master Agreement with Statoil is just one example of the customer demand we are already seeing for our offshore production and logistics services."

"Teekay Offshore has established itself as a global leader in the provision of marine services to the offshore oil production industry," said Cyrus Madon, CEO of Brookfield Business Partners. "Our investment represents an opportunity to acquire a high quality, highly contracted business with presence in attractive markets, and we look forward to supporting Teekay Offshore with its continued growth."

Summary of the Comprehensive Solution

  • Brookfield and Teekay will invest $610 million and $30 million, respectively, in Teekay Offshore at a price of $2.50 per common unit and receive 65.5 million Teekay Offshore warrants (Warrants) on a pro rata basis. Following the investment, Brookfield will own approximately 60 percent and Teekay will own approximately 14 percent of the common units of Teekay Offshore;

  • Brookfield will acquire from Teekay Parent both a 49 percent interest in Teekay Offshore GP LLC (TOO GP), the general partner of Teekay Offshore, and an option to acquire an additional 2 percent of TOO GP. On closing, Brookfield will have the right to elect four members to the nine-member Board of Directors of TOO GP;

  • Teekay Offshore will repurchase and cancel all $304 million of the outstanding Series C-1 and Series D preferred units from the existing unitholders for an aggregate amount of approximately $250 million in cash, which will save approximately $28 million in annual distributions;

  • Teekay Offshore has reached agreement in principle with the lenders of the Arendal Spirit UMS debt facility to extend the mandatory...