Teekay Tankers And Teekay Form Tanker Investments - Quick Facts

(RTTNews) - Teekay Tankers Ltd. (TNK) and Teekay Corp. (TK) announced the creation of Tanker Investments Ltd. or TIL, which will seek to opportunistically acquire, operate and sell modern secondhand tankers to benefit from an expected recovery in the current cyclical low of the tanker market.

TIL has completed a $250 million private equity offering in which Teekay Tankers and Teekay have co-invested $25 million each for a combined 20 percent ownership interest in the new company. The balance of the privately placed TIL shares, which will trade on the Norwegian over-the-counter market, have been purchased by a group of institutional investors primarily based in the United States, Norway and United Kingdom.

The companies said that a portion of the net proceeds from the private equity offering will beused to acquire four 2009 and 2010-built Aframax crude oil tankers for an aggregate purchase price of approximately $116 million.

TIL will also acquire four 2009-built Suezmax crude oil tankers from Teekay for an aggregate purchase price of approximately $163 million, which TIL will pay for by assuming an equal amount of indebtedness already secured by those vessels.

The companies noted that TIL intends to use the remaining net proceeds from the private equity offering to acquire additional tankers in the near future and for general corporate purposes.

In addition to the private equity offering and related transactions, the Teekay and Teekay Tankers' Boards of Directors have agreed in principle to the sale to Teekay Tankers of Teekay's conventional tanker commercial and technical management operations, including direct ownership in three commercially managed tanker pools, which currently generates fees from commercially managing a fleet of 82 vessels and technically managing a fleet of 49 vessels.

The TIL fleet will be managed by Teekay Operations. Upon completion of the sale of Teekay Operations, the corresponding fees associated with the management of TIL's vessels will be earned by Teekay Tankers.

Teekay and Teekay Tankers together will receive warrants to acquire up to an additional 1.5 million shares of TIL's common stock, linked to TIL's future share price performance.

The TIL private equity offering is expected to close on Friday, January 24, 2014 and TIL's acquisition of the initial eight tankers is expected to be completed in the first half of 2014. TIL plans to undertake a public listing of its common stock on the Oslo Stock Exchange in the first quarter of 2014.