Teekay LNG Partners L.P. (NYSE:TGP) reports that its joint venture with Marubeni Corporation is to acquire ownership interests in eight liquefied natural gas (LNG) carriers from A.P. Møller - Mærsk A/S, for an aggregate purchase price of approximately $1.402 billion.
The transaction includes the acquisition by the Joint Venture of 100 percent ownership interests in six LNG carriers and 26 percent ownership interests in two additional LNG carriers:
LNG Carrier Delivered Ownership
Maersk Meridian 2010 100%
Woodside Donaldson 2009 100%
Maersk Magellan 2009 100%
Maersk Arwa 2008 100%
Maersk Marib 2008 100%
Maersk Methane 2008 100%
Maersk Qatar 2006 26%
Maersk Ras Laffan 2004 26%
Five of the eight LNG carriers to be acquired are currently operating under long term, fixed rate time charter contracts, with an average remaining firm contract period duration of approximately 17 years, plus extension options. The other three vessels are currently operating under short term, fixed rate time charters; however, one of these charters includes an extension option which, if exercised, would increase the number of acquired vessels on long term, fixed rate charters to six.
To finance this transaction, the Joint Venture has secured loan facilities, which on a combined basis total approximately $1.12 billion. The remaining $280 million of the purchase price is expected to be financed with equity contributions from Teekay LNG and Marubeni, commensurate with the respective Joint Venture ownership interests of 52 percent and 48 percent. As a result, Teekay LNG's pro rata portion of the equity contribution is expected to be approximately $146 million, which will be funded from Teekay LNG's existing liquidity which totaled approximately $480 million as at September 30, 2011.
In addition, the owners of the remaining interests in the two LNG carriers in which the Joint Venture is acquiring 26 percent interests will have the right to require the Joint Venture to acquire up to all of such remaining interests.
"Working with our joint venture partner Marubeni, we are pleased to announce Teekay LNG's largest acquisition of on-the-water vessels to date," commented Peter Evensen, Chief Executive Officer of Teekay GP LLC, the partnership's general partner. "The eight acquired vessel interests will increase the total number of vessels in which we have ownership interests, including committed newbuildings, to 45 vessels, and the time charter contracts acquired with these vessels will broaden our customer base and add further stable cash flows to our existing large portfolio of long term, fixedrate contracts. With three of the vessels currently employed on short term time charters, the partnership should benefit from the strong near term demand for LNG carriers. With an average age of only four years, we are acquiring a modern, wel maintained fleet that has been operated by one of the leaders in global shipping."
October 12, 2011