Bermuda-based shipping group Teekay Corporation has decided to reduce its note offering by USD 50 million.
The company would offer USD 250 million of 9.25% senior secured notes due November 2022, instead of the earlier announced USD 300 million due 2024.
The reduction comes as a result of Teekay Corp’s deal to sell its remaining interests in Teekay Offshore Partners to Brookfield Business Partners, together with its institutional partners, for USD 100 million in cash.
Teekay expects to use the net proceeds from the offering to partially fund its tender offer to purchase any and all of its outstanding 8.5% Senior Notes due 2020 and any fees and expenses thereof.
The remainder of the tender offer is expected to be funded with the USD 100 million of proceeds from the sale of interest to Brookfield, up to USD 160 million of existing cash and, if necessary, borrowings under Teekay’s equity margin loan facility, the company explained.
The offering is conditioned upon the receipt of consents of at least a majority of the aggregate principal amount of the outstanding 2020 notes and the effectiveness of certain proposed amendments to the indenture governing the 2020 notes.
The notes will initially be guaranteed on a senior secured basis by certain of Teekay’s subsidiaries and will be secured by first-priority liens on two of Teekay’s FPSO units, a pledge of the equity interests of the Teekay subsidiary that owns all of Teekay’s common units of Teekay LNG Partners and all of Teekay’s Class A common shares of Teekay Tankers and a pledge of the equity interests in the Teekay subsidiaries that own its three FPSO units.
The offering of the notes is expected to close on May 13, 2019, subject to customary closing conditions.