Teekay LNG, EXMAR Form LPG Carrier Joint Venture

  • Business & Finance

 

Teekay LNG Partners L.P. and EXMAR NV today announced an agreement in principle to create a new 50/50 joint venture which will operate in the LPG Carrier segment with a primary focus on Midsize Gas Carriers.

EXMAR and Teekay LNG seek to expand the joint venture by taking advantage of the current and future demand for liquefied petroleum gas (LPG) and ammonia (NH3).

Transaction Summary

– EXMAR will contribute 16 owned LPG carriers to the new joint venture company, to be named EXMAR LPG BVBA. The EXMAR LPG BVBA fleet will include 15 owned Midsize Gas Carriers (MGC), of which four are under construction at Hyundai Mipo, and one owned Very Large Gas Carrier (VLGC). EXMAR LPG BVBA will also time-charter in three MGCs and two VLGCs, and bareboat-charter in one MGC and one VLGC.

– Prior to this transaction, EXMAR LPG BVBA will acquire from Wah Kwong the remaining 50 percent interest in two MGCs, the Brugge Venture and the Touraine, which it does not already own.

– Teekay LNG will then acquire a 50 percent ownership in EXMAR LPG BVBA. In exchange for its 50 percent interest in EXMAR LPG BVBA, Teekay LNG will contribute approximately USD 140 million of equity and assume pro rata debt and lease obligations secured by certain vessels to be owned by EXMAR LPG BVBA.

– EXMAR LPG BVBA has received a commitment from certain commercial lenders to refinance the fleet in early-2013.

– EXMAR will continue to commercially and technically manage and operate the vessels.

– It is the intention of EXMAR LPG BVBA to renew and grow the fleet and discussions are already underway with various yards to secure additional orders.

“New gas export projects scheduled to come on-line, combined with a relatively modest LPG carrier orderbook, are expected to result in strong demand for the current global LPG carrier fleet,” commented Peter Evensen, Chief Executive Officer of Teekay GP LLC. “In addition to providing potential upside from the attractive fundamentals in the LPG shipping market, this accretive transaction further diversifies Teekay LNG’s fixed-rate contract portfolio while leveraging EXMAR’s deep expertise as a leading owner and operator of medium-sized gas carriers.”

Nicolas Saverys, Chief Executive Officer of EXMAR NV commented, “This transaction reflects a long-standing tradition of partnership with outstanding shipping peers. EXMAR is pleased to have Teekay LNG as a partner and rely on their extensive knowledge of the worldwide shipping markets to continue to grow the LPG and NH3 trade together. We share the same vision and strategy to grow the gas shipping trade and are excited about implementing our ideas as soon as possible.”

The proposed transaction, which is expected to close in late-2012 or early-2013, has been approved by the Teekay LNG and EXMAR boards of directors, and remains subject to customary closing conditions, including the completion of due diligence, vessel inspections and documentation.

The table below summarizes the vessels to be included in the EXMAR LPG BVBA fleet

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Teekay LNG, December 5, 2012

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