Teekay Tankers Announces Merger Agreement With Tanker Investments Ltd.

Teekay Tankers Ltd. (Teekay Tankers or the Company) announced on May 31st, that it has agreed to acquire all the remaining issued and outstanding shares of Tanker Investments Ltd. (TIL), in a share-for-share merger at an exchange ratio of 3.30 Teekay Tankers Class A common shares for each TIL common share (Teekay Tankers currently owns 3.4 million common shares, or 11.3 percent, of TIL). TIL’s fleet consists of 10 Suezmax tankers, 6 Aframax tankers and 2 LR2 Product tankers with an average age of 7.3 years. Following the merger, Teekay Tankers’ fleet will consist of 62 conventional tankers, including 3 in-chartered conventional tankers (30 Suezmax tankers, 22 Aframax tankers, 9 LR2 Product tankers and one 50 percent-owned VLCC).

As part of the transaction, Teekay Tankers will assume approximately $350 million of TIL’s long-term debt, which includes two revolving credit facilities and a term loan, and on a pro forma basis as of March 31, 2017, the transaction adds approximately $117 million(1) of liquidity to Teekay Tankers. The transaction is expected to be immediately accretive to Teekay Tankers’ earnings per share and, since Teekay Operations already provides the commercial and technical management of TIL’s vessels, the Company expects a seamless integration of these two homogenous fleets.

“We believe Teekay Tankers presents an even more compelling investment in the mid-size tanker space with a stronger financial foundation, a much larger, younger fleet with which to service our customers globally, and our now fully-integrated tanker operations, positioning our Company as the leading tanker brand in our segment,” commented Kevin Mackay, Teekay Tankers’ President and Chief Executive Officer.

Mr. Mackay continued, “The merger with Tanker Investments is expected to be immediately accretive to earnings per share, further strengthens the Company’s financial position, and better positions Teekay Tankers to take advantage of the next tanker market upturn. Once finalized, the acquisition will lower our average fleet age, reduce our financial leverage and increase our total liquidity position. In addition, with the acquisition of the remaining interest in Teekay Operations, Teekay Tankers has now completed its evolution into a fully-integrated conventional tanker platform with all management and operations now owned and operated solely by Teekay Tankers.”

The TIL merger has been approved by the Board of Directors of both Teekay Tankers and TIL, including approval from a Special Committee of the Board of Directors of TIL made up of independent TIL board members. The transaction is subject to customary closing conditions, approval by TIL shareholders of the merger, and approval by Teekay Tankers’ shareholders of an increase in the authorized number of Teekay Tankers’ Class A common shares, to permit the issuance of Class A common shares as merger consideration. The Company expects to close the merger in the third quarter of 2017.

The acquisition of the remaining 50 percent ownership in Teekay Operations, from Teekay Corporation, for approximately $27 million, has brought all commercial and technical management operations directly under Teekay Tankers. As compensation, Teekay Tankers has issued to Teekay Corporation approximately 13.8 million Class B common shares. Teekay Operations commercially manages an aggregate fleet of approximately 90 vessels and provides technical management for approximately 60 vessels. The Teekay Operations transaction was approved by the Board of Directors and Conflicts Committee of Teekay Tankers.

(1) Pro-forma balance sheet as of March 31, 2017
(2) TIL’s total liquidity as of March 31, 2017.

TIL Fleet Summary

Reference: teekay.com

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