Teekay Tankers in Share Buyback Move

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  • As Alliance plans to Set Up USD 50 Mn Safety Net

Bermuda-based shipping company Teekay Tankers has announced a share repurchase program for the buyback of up to USD 45 million of the company’s shares.

“During this period of weaker tanker rates, one of our key priorities remains strengthening our balance sheet by further reducing financial leverage and increasing liquidity,” Kevin Mackay, Teekay Tankers’ President and CEO, explained.

“This program is being put in place as another lever to create shareholder value, allowing us to opportunistically take advantage of dislocations in the capital markets when we have excess capital,” Mackay added.

As explained, shares may be repurchased in the open market at times and prices considered appropriate by the company. The timing of any purchases and the exact number of shares to be purchased under the program will be dependent on market conditions and other factors.

What is more, Teekay Tankers has entered into a voting and support agreement with the company’s second largest shareholder after Teekay Corporation, Huber Capital Management.

Under the deal, Huber Capital will vote its shares in favor of increasing the authorized number of Teekay Tankers’ Class A common shares at an upcoming special meeting of shareholders. This will permit the issuance of Class A common shares as consideration to complete the company’s proposed merger with Tanker Investments Ltd.

Teekay Tankers currently owns a fleet of 39 double-hull tankers, including 20 Suezmax tankers, 12 Aframax tankers, and seven Long Range 2 (LR2) product tankers, and has three contracted time charter-in vessels. The company also owns a Very Large Crude Carrier (VLCC) through a 50 percent-owned joint venture.

In addition, Teekay Tankers owns a ship-to-ship transfer business and a minority interest of over 11 percent in Tanker Investments, which currently owns a fleet of 18 modern tankers and in which Teekay Tankers has agreed to acquire the remaining ownership interest.

Meanwhile, the Alliance is establishing a USD 50 million insolvency contingency fund to ensure smooth cargo flow in the event of another ocean carrier bankruptcy or catastrophic failure.

The parties to THE Alliance agreement submitted an amendment for the creation of the fund with the US Federal Maritime Commission (FMC) on September 14 and the Commission granted the request of petitioning parties for an expedited review. The amendment is effective immediately, the FMC said.

Each of the members of the alliance, including Hapag-Lloyd AG and Hapag-Lloyd USA LLC (acting as one party), Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming Marine Transport, would initially contribute USD 1 million into the contingency trust fund and a further USD 9 million in additional funds or through a letter of credit.

The agreement also establishes procedures for the orderly removal and/or replacement of vessels in case of a bankruptcy and the rights of the remaining parties to negotiate directly with agents and subcontractors of the affected party. The contingency fund would be administered by a trustee, the FMC informed.

“Last year’s collapse of Hanjin Shipping was a wake-up call for the entire ocean transportation and logistics chain. Over USD 14 billion worth of cargo was stranded at sea on 100 ships scattered around the globe. It is so important that another Hanjin debacle does not happen again,” William P. Doyle, FMC Commissioner, said.

“I applaud the innovative actions taken by carriers of THE Alliance. It is a responsible commercial reaction to the events of last year and it serves to assure the shipping public that its cargo will be delivered in a reliable and timely manner,” Doyle added.

World Maritime News

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