Teekay Corporation and Teekay LNG Partners L.P. Announce Elimination of Incentive Distribution Rights

HAMILTON, Bermuda, May 11, 2020 (GLOBE NEWSWIRE) -- Teekay Corporation (Teekay) (NYSE:TK) and Teekay LNG Partners L.P. (Teekay LNG or the Partnership) (NYSE:TGP) today announced the execution of a definitive agreement to eliminate all of the Partnership’s incentive distribution rights (IDRs) in exchange for 10.75 million newly-issued Teekay LNG common units (Transaction). The Transaction concurrently closed on May 11, 2020.

“This important transaction creates greater alignment between our sponsor, Teekay, and the rest of our common unitholders, and we believe that it removes one of the primary uncertainties for investors in Teekay LNG,” commented Mark Kremin, President and CEO of Teekay Gas Group Ltd. “With approximately 98 percent and 94 percent of our LNG fleet operating on fixed-rate charters for 2020 and 2021, respectively, and having increased our quarterly common unit distributions by over 30 percent for two consecutive years, we are well-positioned to continue executing on our balanced capital allocation plan of near-term balance sheet delevering, while continuing to return capital to unitholders.”

Kenneth Hvid, Teekay’s President and CEO, commented: “This transaction simplifies Teekay LNG’s capital structure and is beneficial to both parties.  With a market-leading position, strong contracted cash flows and an improving balance sheet, we believe that Teekay LNG is and will remain a true market leader in the LNG transportation industry for the long-term.”

Following the completion of this Transaction, Teekay now beneficially owns approximately 36 million Teekay LNG common units and remains the sole owner of Teekay GP L.L.C. (Teekay GP), the general partner of Teekay LNG, which together represents an economic interest of approximately 42 percent in the Partnership.

The Boards of Directors of Teekay and Teekay GP, as well as the Teekay GP Conflicts Committee, which consists entirely of independent directors, unanimously approved the IDR elimination transaction.

Houlihan Lokey Capital, Inc. acted as financial advisor and Potter Anderson & Corroon LLP acted as legal advisor to the Teekay GP Conflicts Committee. Jefferies LLC acted as financial advisor and Baker Botts LLP and Perkins Coie LLP acted as legal advisors to Teekay.

About Teekay

Teekay is a leading provider of international crude oil and gas marine transportation services and also provides offshore production. Teekay provides these services primarily through its directly-owned fleet and its controlling ownership interests in Teekay LNG Partners L.P. (NYSE:TGP), one of the world’s largest independent owners and operators of LNG carriers, and Teekay Tankers Ltd. (NYSE:TNK), one of the world’s largest owners and operators of mid-sized crude tankers. The consolidated Teekay entities manage and operate total assets under management of approximately $11 billion, comprised of approximately 140 liquefied gas, conventional tanker, and offshore assets. With offices in 10 countries and approximately 5,500 seagoing and shore-based employees, Teekay provides a comprehensive set of marine services to the world’s leading oil and gas companies.