Teekay Tankers Ltd. (Teekay Tankers or the Company) announced the following updates since its Investor Day in November 2019:
Sale of Non-U.S. Ship-to-Ship Transfer Business
The Company has reached an agreement with Hili Ventures to sell a portion of its oil and gas ship-to-ship transfer support services business, which also provides gas terminal management and gas consulting services, for approximately $26 million. The sale is expected to close late in the first quarter of 2020 or early in the second quarter of 2020.
Teekay Tankers will retain its entire Full-Service Lightering business that operates in the U.S. Gulf, which provides ship-to-ship oil transfers for both U.S. crude imports and exports. In addition, the Company will continue to operate oil ship-to-ship transfer support services in North America and the Caribbean, a business that has synergies with its core Full-Service Lightering business.
The Company has agreed to sell three 2003-built Suezmax tankers in separate transactions for combined sale proceeds of approximately $57 million. The first vessel was delivered to the buyer in December 2019 and the remaining two vessels are expected to be delivered during February 2020. The proceeds from the vessel sales are expected to be used to reduce debt, including approximately $30 million of debt directly secured by these three vessels.
New Debt Facility
The Company has closed a new five-year, $533 million revolving credit facility to refinance 31 vessels. The size of the new debt facility was reduced since announcing the term sheet signing in November 2019 as a result of excluding five vessels from the new facility, including the three-vessel sales noted above and potential for further opportunistic vessel sales. The proceeds from the new debt facility will be used to repay approximately $455 million of the Company’s existing debt. The new debt facility has substantially similar terms and extends balloon maturities from 2020/2021 until the end of 2024.
Including the agreed asset sales and the new debt facility, the Company’s liquidity is expected to increase by approximately $73 million.
“We are excited to announce these opportunistic asset sales for combined proceeds of approximately $83 million, which is consistent with our strategy presented at our November 2019 Investor Day and accelerates our planned balance sheet delevering efforts,” commented Kevin Mackay, Teekay Tankers’ President and CEO. “The sale of a portion of our ship-to-ship transfer business also allows us to focus and simplify our core business of crude oil and clean product shipping. Importantly, by retaining our core Full-Service Lightering business in the U.S. Gulf, we will continue to benefit from U.S. import and growing export volumes, which provides synergies with our existing Aframax tanker fleet.”
“We are also grateful for the continued strong support we receive from our bank group, as represented by our new $533 million debt facility, which was approximately two times oversubscribed, and provides the Company with increased financial flexibility.”