Teekay LNG: drydock schedule hits quarterly performance again

Teekay LNG Partners said its quarterly performance was impacted again by a “heavy drydock schedule”, while the firm continues to work on the $6.2 billion merger deal with private equity firm Stonepeak Infrastructure Partners.

The Bermuda-based LNG carrier operator said in the prior quarter that its results had been impacted by the drydock schedule. It also said that this would continue into the third quarter.

Teekay LNG said on Thursday its GAAP net income reached $67 million in the third quarter. This compares to $87.5 million in the previous quarter and $53.2 million in the July-September period last year.

Adjusted net income reached $54.7 million, compared to $58.9 million last year and $57 million in the prior quarter.

In addtion, Teekay LNG reported an adjusted Ebitda of $178 million. This compares to $183.5 million in the prior quarter and $186.9 million in the third quarter of last year.

The firm has earlier this year secured employment for 98 percent of its LNG fleet for 2021, and 89 percent for 2022.

Drydock schedule and Stonepeak transaction

“While we were once again well-served by our strong contract coverage, Teekay LNG’s third-quarter results were, as expected, negatively impacted by a heavier-than-normal drydock schedule, partially offset by lower operating expenses and stronger results in our multi-gas carrier fleet,” Mark Kremin, chief executive of Teekay Gas, said.

In early October, Teekay LNG had entered into a merger agreement with an affiliate of Stonepeak. Under the deal, the affiliate has agreed to acquire 100 percent of Teekay LNG’s common units.

Teekay LNG has interests in 47 LNG carriers and is one of the world’s largest operators of such vessels. It also operates 21 mid-size LPG carriers and seven multi-gas carriers.

“We believe that the transaction will enable common unitholders to realize an attractive valuation and immediate liquidity on closing of the transaction,” Kremin said.

“In addition, under Stonepeak’s ownership, we expect Teekay LNG will have greater access to competitively priced capital for both fleet renewal and potential future growth, which has not been available to Teekay LNG through the public capital markets for many years,” he said.

The transaction remains subject to approval by the holders of a majority of Teekay LNG’s outstanding common units. This also includes the satisfaction or waiver of other customary closing conditions.

Teekay LNG expects the deal to close on or soon after December 31, 2021.

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