One Teekay Raising Cash For The Other Teekay (TNK, TK)

Teekay Tankers Ltd. (NYSE: TNK) now plans to sell 7,000,000 shares of common stock in a public secondary offering.  This is a bit of an unusual offering as the company expects to use the funds to acquire a 2003-built Suezmax tanker (the Ashkini Spirit) from Teekay Corporation (NYSE: TK) for $57 million and it plans to repay a portion of its outstanding debt under its revolving credit facility.

After buying the Ashkini Spirit, the undrawn availability under the revolving credit facility will immediately increase by a further $58 million and any amounts drawn under this facility are not subject to any scheduled principal repayments until at least November 2012.

Teekay Tankers currently owns a fleet of nine double-hull Aframax tankers and two double-hull Suezmax tankers,  Teekay Corporation also agreed to offer the company an option to purchase from it an additional Suezmax tanker prior to June 18, 2010.

Teekay Tankers intends to continue to distribute on a quarterly basis all of its cash available for distribution, subject to any reserves established by its board of directors.

The joint book running managers for the offering are Morgan Stanley and Citi.  Teekay Tankers expects to grant the underwriters a 30-day option to purchase an additional 1,050,000 shares.

This would represent over $70 million in funds at the $10.61 closing bell price, and the market cap before any effects is listed as $265 million.  But that is before the drop, and shares are down 10% at $9.50.

JON C. OGG
JUNE 18, 2009