August 5, 2013
HAMILTON, BERMUDA–(Marketwired – Aug. 5, 2013) – Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today announced that it has agreed to acquire a 155,900 cubic meter (cbm) liquefied natural gas (LNG) carrier newbuilding from Awilco LNG ASA (Awilco) (ALNG:NO), a Norwegian-based owner and operator of LNG carriers. The vessel, which is currently under construction by Daewoo Shipbuilding & Marine Engineering Co., Ltd., (DSME) of South Korea, is expected to deliver in the third quarter of 2013, and subsequent to delivery from DSME to Awilco, Teekay LNG will purchase the vessel and bareboat charter the vessel back to Awilco at a fixed rate for a firm period of five years, plus a one-year extension option. Teekay LNG will purchase the vessel for a price of $205 million less a $50 million upfront prepayment of charter hire by Awilco which is in addition to the daily bareboat charter rate. Awilco has fixed-price purchase obligations at the end of both the firm charter period and option period.
As part of the transaction, Awilco has an option to sell to and bareboat charter back from Teekay LNG a second 155,900 cbm LNG carrier newbuilding currently under construction by DSME, under similar terms. The second LNG carrier newbuilding is expected to deliver in the fourth quarter of 2013.
The Partnership intends to finance the transaction with a portion of its existing liquidity and expects to secure long-term debt financing prior to delivery.
“We are pleased to announce this mutually beneficial acquisition-leaseback arrangement with Awilco which will provide Teekay LNG with immediate accretive cash flow,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “Together with our four LNG carrier newbuildings delivering in 2016 and the ten LPG newbuildings in our joint venture with Exmar, delivering between 2014 and 2017, this transaction with Awilco provides a near-term compliment to the Partnership’s strong portfolio of long-term visible growth projects.”
The transaction, which is expected to close during the third quarter of 2013, has been approved by Board of Directors of both Teekay LNG and Awilco, and remains subject to customary closing conditions, including satisfactory documentation.
About Teekay LNG Partners L.P.
Teekay LNG Partners L.P. is the world’s third largest independent owner and operator of LNG vessels, providing LNG, liquefied petroleum gas (LPG) and crude oil marine transportation services primarily under long-term, fixed-rate charter contracts with major energy and utility companies through its interests in 31 LNG carriers (including one LNG regasification unit and four newbuildings), 31 LPG/Multigas carriers (including five chartered-in LPG carriers and ten newbuildings) and 11 conventional tankers. The Partnership’s interests in these vessels ranges from 33 to 100 percent. Teekay LNG Partners L.P. is a publicly-traded master limited partnership (MLP) formed by Teekay Corporation (NYSE:TK) as part of its strategy to expand its operations in the LNG and LPG shipping sectors.
Teekay LNG Partners’ common units trade on the New York Stock Exchange under the symbol “TGP”.
This release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements regarding: the timing and certainty of completion of acquisition of a newbuilding LNG carrier from Awilco, including the completion of customary closing conditions; the timing and certainty of Teekay LNG acquiring a second LNG carrier newbuilding under similar terms to the first vessel; the timing and certainty of Teekay LNG securing long-term financing for the acquired vessel, or vessels; and the timing and effect of the transaction with Awilco, as well as other committed LNG and LPG newbuildings, will have on the Partnership’s cash flows. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: shipyard construction delays; failure by the Partnership to secure long-term financing; the potential early termination of the bareboat charter contracts with Awilco; failure to secure long-term charters for the acquired vessels; failure to satisfy closing conditions of the transaction; changes in production of LNG, either generally or in particular regions that would impact the expected future growth in the global LNG transportation and regasification markets, and spot LNG shipping rates; changes in trading patterns or timing of the start-up of new LNG liquefaction projects significantly impacting overall LNG shipping requirements; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; and other factors discussed in Teekay LNG Partners’ filings from time to time with the SEC, including its Report on Form 20-F for the fiscal year ended December 31, 2012. The Partnership expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.