Author Topic: TOO - Teekay Offshore Partners L.P.  (Read 18922 times)

heth247

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #100 on: January 08, 2019, 07:12:27 PM »
That is a good question and I have no answer.

The market didn't give a hoot about the stock with the dividend. I am guessing whatever they do with the money will be more beneficial.

Here is another theory - BBU probably wanted to cut to zero from the very beginning. But in before, TK the parent company needed the distribution from TOO, but now since the other daughter company TGP is going to raise the distribution (from 14c to 19c), which more than offset TK's loss of distribution from TOO, they agreed to cut for now.  TK really need the distribution from its daughters to pay for SGA and interest on its debt because its 3 FPSOs cannot cover it.



RadMan24

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #101 on: January 08, 2019, 09:08:49 PM »
Well, the way this has played out, it looks like 2019 will have to include some resignings and contract wins, and stable cash flows (although the word "largely" in the press release was odd).

Just some recent articles if any interested in reading:

http://www.defesanet.com.br/naval/noticia/31680/Odebrecht-agora-Ocyan-avalia-fornecer-plataformas-a-Petrobras/  (use google and translate)

https://brazilenergyinsight.com/2018/11/17/compliance-issues-may-take-exmar-from-buzios-v/

https://www.oedigital.com/news/443910-mero-field-ultra-deepwater-challenges

https://www.oedigital.com/news/460637-chevron-gets-green-light-for-captain-eor


walkie518

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #102 on: January 10, 2019, 04:11:08 PM »
That is a good question and I have no answer.

The market didn't give a hoot about the stock with the dividend. I am guessing whatever they do with the money will be more beneficial.

Here is another theory - BBU probably wanted to cut to zero from the very beginning. But in before, TK the parent company needed the distribution from TOO, but now since the other daughter company TGP is going to raise the distribution (from 14c to 19c), which more than offset TK's loss of distribution from TOO, they agreed to cut for now.  TK really need the distribution from its daughters to pay for SGA and interest on its debt because its 3 FPSOs cannot cover it.

I wonder if they halt payments on pref shs too?

BG2008

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #103 on: January 10, 2019, 04:32:19 PM »
That is a good question and I have no answer.

The market didn't give a hoot about the stock with the dividend. I am guessing whatever they do with the money will be more beneficial.

Here is another theory - BBU probably wanted to cut to zero from the very beginning. But in before, TK the parent company needed the distribution from TOO, but now since the other daughter company TGP is going to raise the distribution (from 14c to 19c), which more than offset TK's loss of distribution from TOO, they agreed to cut for now.  TK really need the distribution from its daughters to pay for SGA and interest on its debt because its 3 FPSOs cannot cover it.

I wonder if they halt payments on pref shs too?

HAMILTON, Bermuda, Jan. 08, 2019 (GLOBE NEWSWIRE) -- Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO), today announced that the Partnership is reducing its quarterly common unit cash distributions to zero, down from $0.01 per common unit in previous quarters, in order to reinvest additional cash in the business and further strengthen its balance sheet. There are no changes to the quarterly cash distributions relating to any of the Partnership’s outstanding preferred units, which were declared today and announced under a separate news release.

walkie518

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #104 on: January 10, 2019, 04:58:05 PM »
That is a good question and I have no answer.

The market didn't give a hoot about the stock with the dividend. I am guessing whatever they do with the money will be more beneficial.

Here is another theory - BBU probably wanted to cut to zero from the very beginning. But in before, TK the parent company needed the distribution from TOO, but now since the other daughter company TGP is going to raise the distribution (from 14c to 19c), which more than offset TK's loss of distribution from TOO, they agreed to cut for now.  TK really need the distribution from its daughters to pay for SGA and interest on its debt because its 3 FPSOs cannot cover it.

I wonder if they halt payments on pref shs too?

HAMILTON, Bermuda, Jan. 08, 2019 (GLOBE NEWSWIRE) -- Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO), today announced that the Partnership is reducing its quarterly common unit cash distributions to zero, down from $0.01 per common unit in previous quarters, in order to reinvest additional cash in the business and further strengthen its balance sheet. There are no changes to the quarterly cash distributions relating to any of the Partnership’s outstanding preferred units, which were declared today and announced under a separate news release.
interesting...wonder if it stays that way

heth247

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #105 on: January 10, 2019, 06:25:55 PM »
I wonder if they halt payments on pref shs too?
interesting...wonder if it stays that way

Unless they run into a liquidity issue, why would they suspend preferred dividend since it is accumulative? That will probably push the common below $1 instantly.

I am actually surprised how well common hold up yesterday after the announcement. Today is actually not bad either, considering the downgrade from Wells Fargo analyst Michael Webber.

BG2008

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #106 on: January 10, 2019, 07:51:37 PM »
I wonder if they halt payments on pref shs too?
interesting...wonder if it stays that way

Unless they run into a liquidity issue, why would they suspend preferred dividend since it is accumulative? That will probably push the common below $1 instantly.

I am actually surprised how well common hold up yesterday after the announcement. Today is actually not bad either, considering the downgrade from Wells Fargo analyst Michael Webber.

I can see them turn off the prefer to horde cash and pay for new shuttle tankers. 

heth247

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #107 on: January 10, 2019, 09:33:58 PM »
I can see them turn off the prefer to horde cash and pay for new shuttle tankers.

Can you explain why and in which situation, BG?

Here is a list of their 2019 obligations from latest 6K and how I think they can be handled:
1. Bond repayments $74.9MM (this can be simply paid off from CFVO)
2. secured debt      $366MM  (this can be refinanced against the ships)
3. secured debt        $85MM  (this can be refinanced against the ships)
4. unsecured revolver $125MM (this is sponsored by TK + BBU, so I assume it can be extended??)
5. Norwegian bond     $10.5MM (this can be simply paid off from CFVO)
6. new building         $377MM (assume 60% will be funded by new secured debt, 40%x377=150MM needs fund by CFVO)

So if I add (1), (5), (6) together, that is 74.9+10.5+150=235MM that need to be funded by CFVO. With 640MM CFVO, after interest expense and other, they probably have $350-$400MM left to work with. In addition, they should also have received $50MM in 4Q from the Petrobra settlement. So I don't see any difficulty there to cover the 235MM. They probably can even pay off the revolver (4), at least partially. 25MM of the 125MM revolver was sponsored by TK, who definitely need cash to handle their own debt maturity.

Turning off preferred only saves like $28MM/year, and they will need to pay it back in the future because it is accumulative. So I don't see it is necessary.

« Last Edit: January 10, 2019, 09:54:08 PM by heth247 »

BG2008

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #108 on: January 10, 2019, 09:56:15 PM »
I can see them turn off the prefer to horde cash and pay for new shuttle tankers.

Can you explain why and in which situation, BG?

Here is a list of their 2019 obligations from latest 6K and how I think they can be handled:
1. Bond repayments $74.9MM (this can be simply paid off from CFVO)
2. secured debt      $366MM  (this can be refinanced against the ships)
3. secured debt        $85MM  (this can be refinanced against the ships)
4. unsecured revolver $125MM (this is sponsored by TK + BBU, so I assume it can be extended??)
5. Norwegian bond     $10.5MM (this can be simply paid off from CFVO)
6. new building         $377MM (assume 60% will be funded by new secured debt, 40%x377=150MM needs fund by CFVO)

So if I add (1), (5), (6) together, that is 74.9+10.5+150=235MM that need to be funded by CFVO. With 640MM CFVO, after interest expense and other, they probably have $350-$400MM left to work with. In addition, they should also have received $50MM in 4Q from the Petrobra settlement. So I don't see any difficulty there to cover the 235MM. They probably can even pay off the revolver (4), at least partially. 25MM of the 125MM revolver was sponsored by TK, who definitely need cash to handle their own debt maturity.

Turning off preferred only saves like $28MM/year, and they will need to pay it back in the future because it is accumulative. So I don't see it is necessary.

We need to check if it is merely cumulative or if it compounds as well.  Cumulative just means that it acrrues.  But compounding makes a big difference.  They say prefer is the hybrid of debt and equity and that's exactly what it is.  You can turn off the dividends without a lot of penalty unlike interest payment where people will seize your asset. 

heth247

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Re: TOO - Teekay Offshore Partners L.P.
« Reply #109 on: January 10, 2019, 10:12:57 PM »
We need to check if it is merely cumulative or if it compounds as well.  Cumulative just means that it acrrues.  But compounding makes a big difference.  They say prefer is the hybrid of debt and equity and that's exactly what it is.  You can turn off the dividends without a lot of penalty unlike interest payment where people will seize your asset.

Most preferred just accrues. But I think suspending the preferred is definitely a distressed move that is unnecessary at this point. Not sure if it will affect their credit ratings.
« Last Edit: January 10, 2019, 10:30:04 PM by heth247 »