New York-listed TOO says intends to use funds from the sale of seven million units to partially finance the purchase of the Voyageur Spirit (ex-Sevan Voyageur, built 2008) in a transaction scheduled to close in November.
Based on a closing price of $28.76, which fell 4.73% to $27.40 in afterhours trading, the exercise has the potential to top $231m if underwriters indulge in over-allotments.
When the fundraiser is wrapped up the company says it expects to use a portion of the pot to repay a chunk of outstanding debt under its revolving credit facilities and then reborrow cash from the same facilities to seal the acquisition.
To fill in the gap, TOO is planning to tap a new debt facility and also issue $40m worth of units to Teekay Corp at the same rate of those sold through the public offering, which will probably price within the next 24 hours, according to a leading Wall Street equity analyst.
Citigroup, BofA Merrill Lynch and RBC Capital Markets were called in as joint book running managers while Barclays, Credit Suisse, Deutsche Bank Securities and Raymond James will serve as senior co-managers. ABN AMRO, ING and Natixis are acting as co-managers.
According to a prospectus filed with the US Securities and Exchange Commission, upgrades to the FPSO, which was purchased by Teekay Corp from Sevan Marine of Norway in November 2011, are due for completion in the fourth quarter.
If all goes according to plan the unit will commence operations in the North Sea under a five year contract with E. ON Ruhrgas UK E&P shortly after in a deal that includes up to ten, one-year extension options.
TOO says the transaction was approved by a conflicts committee and identified affiliates of ABN AMRO, Citgroup, Deutsche Bank, ING and Merrill Lynch as the lenders behind the revolving credit facilities that it intends to repay in the weeks to come.
