September 24, 2013
HAMILTON, BERMUDA–(Marketwired – Sept. 24, 2013) – Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today announced that it has agreed to acquire a second 155,900 cubic meter liquefied natural gas (LNG) carrier newbuilding from Awilco LNG ASA (Awilco) (ALNG:NO), a Norway-based owner and operator of LNG carriers. The vessel, the second of two vessels to be acquired by the Partnership from Awilco, is currently under construction by Daewoo Shipbuilding & Marine Engineering Co., Ltd. (DSME) of South Korea and is expected to deliver in the fourth quarter of 2013. Subsequent to delivery from DSME to Awilco, Teekay LNG will purchase the vessel and bareboat charter it back to Awilco at a fixed-rate for a firm period of four years, plus a one-year extension option. As with the first vessel, Teekay LNG will purchase the second 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 for both vessels at the end of both the firm charter period and option period. The Awilco vessels, the first of which was delivered on September 16, 2013, are each expected to generate annual Distributable Cash Flow(1) of approximately $7.5 million. The Partnership intends to initially finance the second vessel with a portion of its existing liquidity and expects to secure long-term debt financing prior to delivery. “Further to our August 2013 announcement on the first Awilco LNG carrier newbuilding, the acquisition-leaseback of a second vessel from Awilco will provide Teekay LNG with additional near-term accretive cash flows,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “These vessels will complement the Partnership’s strong portfolio of longer-term visible growth projects, including, the four LNG carrier newbuildings delivering in 2016 and the ten LPG newbuildings in our joint venture with Exmar, delivering between 2014 and 2017.” The acquisition of the second Awilco vessel, which is expected to close during the fourth 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.
- Distributable cash flow represents net income adjusted for depreciation and amortization expense, non-controlling interest, non-cash items, distributions relating to equity financing of newbuilding installments, vessel acquisition costs, estimated maintenance capital expenditures, unrealized gains and losses from derivatives, non-cash income taxes and unrealized foreign exchange related items. Maintenance capital expenditures represent those capital expenditures required to maintain over the long-term the operating capacity of, or the revenue generated by, the Partnership’s capital assets. Distributable cash flow is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership’s ability to make quarterly cash distributions. Distributable cash flow is not defined by United States generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income or any other indicator of the Partnership’s performance required by GAAP.