September 20, 2007
K-Sea inks LOI for 185,000 bbl ATB
Yesterday, K-Sea Transportation Partners L.P. (NYSE: KSP) announced it had inked a letter of intent with the Manitowoc Marine Group to construct a 185,000 barrel articulated tug-barge unit.
The expected cost is between $68 million to $70 million with delivery projected for the fourth quarter of calendar 2009. K-Sea says it also has an agreement in principle for a long-term charter for the unit with a major customer that is expected to commence upon delivery.
The letter of intent, which includes an option to build a second unit of similar design and cost, is subject to various conditions, including the execution and delivery of definitive agreements with respect to the construction of the unit.
President and CEO Timothy J. Casey said, "This is yet another example of organic growth opportunities we have as a result of our wide geographic reach. This new project is a direct result of our recent West Coast acquisition. The anticipated long-term charter adds to our earnings visibility and we expect the contribution to be accretive to our distributable cash flow in fiscal 2010 and beyond."
Today, K-Sea announced it intends to commence a public offering of 3.0 million common units representing limited partner interests. K-Sea intends to grant the underwriters a 30-day option to purchase a maximum of 450,000 additional common units to cover over-allotments. It expects to use the proceeds of the offering to repay indebtedness.
Lehman Brothers Inc., Citigroup Global Markets Inc. and UBS Securities LLC are serving as joint book-running managers for the offering.