December 7, 2004
K-Sea acquires Bay Gulf vessels
K-Sea Transportation Partners L.P. (NYSE: KSP) announced today that it has agreed to acquire ten tank barges and seven tugboats that were being operated by Bay Gulf Trading of Norfolk, Virginia.
These tank barges represent approximately 255,000 barrels of capacity, of which 127,000 barrels are already double-hulled, with the balance being eligible to operate in the Jones Act trades until January 1, 2015.
The addition of this capacity gives a 10.6 percent increase in the current barrel-carrying capacity of the K-Sea fleet.
The purchase price of $21 million, which includes a water treatment facility and leased office and terminal facilities in Norfolk, will be financed using K-Sea's available credit lines.
After what are described as "certain required modifications," the vessels will begin working in K-Sea's clean oil transportation and bunkering businesses on the east coast of the United States.
The acquisition is expected to be accretive to K-Sea's distributable cash flow.
In an unrelated transaction, K-Sea has agreed to bareboat charter in a 78,000 barrel double-hulled tank barge for use in its northeast market.
After the phase-out on December 31, 2004 of two single-hulled vessels as required by OPA 90, and reflecting today's announcements and other previously announced projects, the carrying capacity of K-Sea's fleet will be over 73 percent double-hulled, with all single-hulled vessels eligible to continue to operate until January 1, 2015.
Timothy J. Casey, President and CEO of K-Sea, said, "We believe these transactions will strengthen K-Sea's position as a key provider of petroleum products transportation services in the U.S. We are excited about expanding our capacity and geographical presence, as well as improving our ability to provide safe, reliable, and efficient service to our customers. By the fall of 2005, upon delivery of our previously announced 100,000 barrel newbuild barge, our total carrying capacity of approximately 2.7 million barrels will have increased by over 15 percent from the capacity existing at the time of our initial public offering in January 2004, despite the phase-out of over 325,000 barrels under OPA 90 requirements."