Upcoming AWS Coverage on Teekay LNG Partners Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 24, 2017 / Active Wall St. blog coverage looks at the headline from DHT Holdings, Inc. (NYSE: DHT) as the Company announced on March 23, 2017, the acquisition of BW Group's very large crude carriers (VLCC) fleet, including the two newbuildings due for delivery in 2018. The transaction is valued at $538 million for the 11 VLCCs DHT plans to acquire from BW Group. Register with us now for your free membership and blog access at:

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One of DHT Holdings' competitors within the Shipping space, Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (NYSE: TGP) reported the Partnership's results for the quarter and year ended December 31, 2016.. AWS will be initiating a research report on Teekay LNG Partners in the coming days.

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Breaking down the Agreement

BW Group's VLCC fleet is currently valued at about $538 million at prevailing broker valuations. DHT plans to finance the acquisition by issuing approximately $256 million of DHT's capital stock, consisting of $32 million shares of DHT's common stock and 15,700 shares of preferred stock that are mandatorily convertible into 15.7 million shares of DHT's common stock subject to DHT's shareholders' approval. The implied value of DHT's common stock issued to BW Group is valued at $5.37 per share. Additionally, DHT will pay BW Group $177.36 million in cash and assume approximately $104.16 million in remaining obligations (the two newbuildings).

Sale of Old VLCCs

On March 17, 2017, DHT announced that it has entered into an agreement to sell the DHT Ann, 2001 built by VLCC for about $24.8 million. This step was viewed as a step to renew the existing fleet and replace it with the new ones at the end of the transaction. The Company will deliver the vessel to its new owners by Q2 FY17. This agreement with BW Group is viewed as the next step of the definitive fleet renewal strategy. DHT Holdings has been a recent acquisition target, when Frontline Ltd (NYSE: FRO) made two proposals, both of which were rejected, to acquire the Company at an exchange ratio of 0.8 Frontline's shares for each DHT's share on February 28, 2017.

The VLCC Newbuildings case

DHT announced on March 15, 2016, that it took delivery of a VLCC newbuilding from Hyundai Heavy Industries. Named as DHT Lion, this new building entered the spot market and was the third in a series of six VLCC newbuildings to be delivered from November 2015 to October 2016. The next newbuilding was delivered in July 2016, as per schedule. Post this announcement, DHT Holdings announced on March 01, 2017 that it has secured bank financing for the two 318,000 dwt VLCC newbuildings with scheduled delivery in July and September 2018 from Hyundai Heavy Industries. DHT reportedly financed 50% of the contract price where the remainder was financed by cash at hand. DHT will pay $177.36 million in cash and take over $104.6 million in debt on these two newbuildings.

DHT's Growth Portfolio

DHT in the recent years has aimed at renewing its fleet of VLCCs in an attempt to generate greater value for the shareholders. Being a leading crude oil tanker Company, DHT is set to become one of the world's largest independent VLCC owners. Following BW Group's delivery of all the vessels and novation of newbuilding contracts to DHT, BW Group and its affiliates will own nearly 33.5% of DHT's outstanding share capital and will be granted customary rights. Additionally, at the end of this transaction, DHT will have a fleet of 30 VLCCs, including four newbuildings with scheduled delivery in 2018.

Stock Performance

At the close of trading session on Thursday, March 23, 2017, DHT Holdings' share price finished yesterday's trading session at $4.49, tumbling 7.61%. A total volume of 3.90 million shares exchanged hands, which was higher than the 3 months average volume of 1.88 million shares. The stock has rallied 15.27% and 10.86% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have surged 10.25%. The stock currently has a market cap of $419.50 million and has a dividend yield of 7.13%.

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SOURCE: Active Wall Street