Teekay Tankers has emerged as the winning bidder for Principal Maritime’s Suezmax fleet, ending months of speculation.
NYSE-listed Teekay Tankers will pay USD662 million in cash and shares for 12 Suezmaxes built in 2005-13: the Princimar Courage, Princimar Pride, Princimar Integrity, Princimar Grace, Princimar Hope, Princimar Promise, Princimar Joy, Princimar Strength, Princimar Truth, Princimar Confidence, Princimar Loyalty, and Princimar Faith.
The vessels will be delivered to Teekay Tankers by the end of October and placed in the spot market, complementing its existing fleet of 10 Suezmaxes.
“The acquisition is strategically important,” said Teekay Tankers CEO Kevin Mackay.
“Teekay Tankers will become one of the largest owners of modern Suezmax tankers at the right point in the tanker market cycle, when positive market fundamentals support continued strength in spot rates.”
JP Morgan analyst Noah Parquette said, “There’s a lot to like about this transaction, as the purchase price is attractive, an en bloc purchase of a fleet like this is rare, and the deal is immediately accretive.”
Teekay Tankers will finance the purchase with a new USD400 million debt facility plus USD122 million in cash from its existing liquidity.
The remaining USD140 million of the purchase price will be paid for with stock priced at a weighted average of USD6.76/share. Principal Maritime will receive USD50 million of Teekay Tankers stock, Teekay Corp USD30 million, and a group of institutional investors the remaining USD60 million.
Principal Maritime was founded in 2010 by private-equity group Apollo and is led by Art Regan. Apollo originally sought to monetise its tanker investments by taking Principal public but eventually opted for a private sale.
Following the sale of its Suezmaxes, Principal’s remaining fleet consists of four chemical tankers.