K-Sea Transportation Partners L.P. to Acquire Marine Transportation Operations in Hawaii and Seattle for Approximately $205 Mill
June 26 2007 - 2:42PM
Business Wire
K-Sea Transportation Partners L.P. (NYSE: KSP) announced today that
it has agreed to acquire Smith Maritime, Ltd. of Honolulu, Hawaii
(�Smith�) and Sirius Maritime LLC of Seattle, Washington
(�Sirius�). Smith is controlled by Gordon Smith, who is also one of
the three owners of Sirius and who will join the management of
K-Sea. The total purchase price will be approximately $205 million.
The transactions are expected to be completed in July or early
August, subject to customary closing conditions, and are expected
to be immediately accretive to K-Sea�s distributable cash flow. On
a combined basis, these operations include eleven petroleum tank
barges and ten tugboats, aggregating 777,000 barrels of capacity,
of which 670,000 barrels, or 86%, are double-hulled. The addition
of these tank barges will represent a 22% increase in the
barrel-carrying capacity of the K-Sea fleet to about 4.3 million
barrels. The total purchase price will consist of approximately
$195 million in cash and assumed debt, plus K-Sea common units
valued at approximately $10 million. K-Sea expects to initially
finance the cash portion of the purchase price through additional
borrowings, which it expects to refinance in due course. K-Sea also
announced that its management will recommend an increase of $0.02
per unit, or 2.9%, in the distribution to unitholders for the
fourth quarter ending June 30, 2007, to $0.70 per unit, or $2.80
per unit annualized. This will be the ninth consecutive quarter of
increased distributions, and the eleventh such increase since the
Company�s IPO in January 2004. K-Sea also took delivery last week
of another new, 28,000 barrel double hulled tank barge, which is
part of its fleet expansion and upgrade program. Including the
recently announced extension of this program, ten more double
hulled tank barges, totaling 524,000 barrels of additional
capacity, are scheduled to be delivered before the end of calendar
2010, at which time K-Sea�s total barrel-carrying capacity of over
4.8 million barrels will have more than doubled from its capacity
at the time of the Company�s initial public offering in January
2004. By the end of calendar 2010, the Company�s fleet should be
more than 80% double hulled, depending on the rate of retirement of
the remaining single hulled vessels. Timothy J. Casey, President
and CEO of K-Sea, said, �We look forward to welcoming Gordon Smith,
Bob Dorn and Wayne Sundberg, along with the other employees of
Smith and Sirius, to our Company. Together, we look forward to
continuing to build a high quality marine transportation operation.
The management of Smith and Sirius have built impressive operating
teams which will significantly increase our growth potential. �This
expansion further increases our barrel-carrying capacity which, we
believe, strengthens our position as a provider of refined
petroleum products transportation services in the U.S. and enhances
our ability to provide safe, reliable, and efficient service to our
customers. In addition to expanding service to existing customers,
the acquisition of Smith and Sirius also brings new customers into
K-Sea�s coverage. In light of our growth and expectations for
continued development, our management, as indicated above, will
recommend that our Board of Directors approve a two cent per unit
increase in our quarterly distribution in respect of the quarter
ending June 30. We look forward to integrating the Smith and Sirius
operations into K-Sea and are optimistic about continuing our
growth into the future.� Gordon Smith, President of Smith Maritime,
stated, �We are excited to become part of the K-Sea Transportation
Partners L.P. group of companies. Throughout the years Smith
Maritime has endeavored to become the leading tank barge operator
in the Hawaiian Islands, greatly enhancing our fleet with new
double hull barges, as well as working to become one of the safest
and most reliable transporters of petroleum products in the U.S. We
believe that merging with K-Sea will bring greater opportunities
for both our loyal employees as well as our customers in our
continued growth and expansion.� Robert Dorn and Wayne Sundberg of
Sirius Maritime jointly stated, �We are very pleased to become part
of K-Sea Transportation Partners L.P., a company whose business and
culture closely resembles our own. We are excited about the
opportunities that this transaction provides to our employees and
to our customers, and look forward to continuing to strive for safe
and efficient marine transportation of petroleum products while
working in the K-Sea family of companies.� About K-Sea
Transportation Partners K-Sea Transportation Partners provides
refined petroleum products marine transportation, distribution and
logistics services in the U.S. domestic marine transportation
business, and its Master Limited Partnership Units trade on the New
York Stock Exchange under the symbol KSP. For additional
information about K-Sea Transportation Partners L.P., please visit
K-Sea�s website, including the Investor Relations section, at
www.k-sea.com. Cautionary Statements This press release contains
forward looking statements, which include any statements that are
not historical facts, such as the Company�s expectations regarding
the closing of the Smith and Sirius transaction and the benefits to
be derived therefrom, the timing of placing the acquired vessels in
service, expected accretion, the timing of delivery of tank barges
currently under construction, and the percentage of the Company�s
fleet which will be double-hulled by the end of calendar 2010.
These statements involve risks and uncertainties, including, but
not limited to, satisfaction of conditions to the closing of the
acquisitions, insufficient cash from operations, a decline in
demand for refined petroleum products, a decline in demand for tank
vessel capacity, intense competition in the domestic tank barge
industry, the occurrence of marine accidents or other hazards, the
loss of any of the Company�s largest customers, fluctuations in
charter rates, delays or cost overruns in the construction of new
vessels, failure to comply with the Jones Act, modification or
elimination of the Jones Act and adverse developments in the marine
transportation business and other factors detailed in the Company�s
filings with the Securities and Exchange Commission. If one or more
of these risks or uncertainties materialize (or the consequences of
such a development change), or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those
forecasted or expected. The Company disclaims any intention or
obligation to update publicly or revise such statements, whether as
a result of new information, future events or otherwise.
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