HAMILTON, BERMUDA–(Marketwired – Dec. 16, 2015) – Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO), has approved a plan to reduce its quarterly cash distributions to $0.11 per common unit, down from $0.56 per common unit in the third quarter of 2015, commencing with the fourth quarter of 2015 distribution payable in February 2016. The Partnership expects to use a significant portion of its internally generated cash flow to fund equity capital requirements on its future profitable growth projects and reduce debt levels, eliminating the need to access the equity capital markets for the foreseeable future. “Despite significant weakness in the global energy and capital markets, Teekay Offshore’s businesses remain strong,” commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC. “The Partnership’s cash flows remain stable and growing, supported by a large and well-diversified portfolio of fee-based contracts with high quality counterparties,” Mr. Evensen continued. “However, as a growing MLP, Teekay Offshore does require capital and there is currently a dislocation in the capital markets relative to the stability of our businesses such that the Partnership’s cost of equity has increased to the point where it is currently not an economically attractive source of capital. Based on the upcoming capital requirements for our committed growth projects and bond maturities, coupled with the uncertainty regarding how long it will take for the energy and capital markets to normalize, management and the Partnership’s Board of Directors believe that it is in the best interest of the Partnership’s unitholders to conserve our internally generated cash flows to fund future growth projects and reduce our debt levels.” Mr. Evensen added “This decision by management and the Partnership’s Board of Directors was not taken lightly. Numerous options were considered, including selling existing assets and future growth projects, and evaluating potential alternative sources of capital, which could have resulted in permanent dilution to existing unitholders. Rather than take this course, we determined that temporarily reducing our cash distributions is the most reliable way to fund our future profitable growth projects with the lowest cost of capital. We believe this prudent approach will strengthen the Partnership’s financial position, preserve our long-term growth potential, and will result in higher distributable cash flow per unit.” The Partnership’s Series A, B and C preferred unitholders are not directly affected by this change and we expect to continue paying regular quarterly cash distributions to the preferred unitholders. Teekay Corporation and the Partnership plan to host a joint conference call on Thursday, December 17, 2015 at 8:45 a.m. (ET) to discuss this announcement. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:
- By dialing 1-800-524-8950 or 1-416-260-0113, if outside North America, and quoting conference ID code 4020024.
- By accessing the webcast: https://streaming.webcasts.com/starthere.jsp?ei=1087990
For Investor Relations enquiries contact: Teekay Offshore GP LLC Ryan Hamilton +1 (604) 609-6442 www.teekayoffshore.com