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¨
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of each class
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Name of each exchange on which registered
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Class A common stock, par value of $0.01 per share
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New York Stock Exchange
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U.S. GAAP
ý
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International Financial Reporting Standards as issued by the International Accounting Standards Board
¨
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Other
¨
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PAGE
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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Item 5.
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Item 6.
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Item 7.
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Item 8.
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Item 9.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16A.
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Item 16B.
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Item 16C.
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Item 16D.
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Item 16E.
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Item 16F.
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Item 16G.
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Item 16H.
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81
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•
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our future financial condition, results of operations and future revenues, expenses and capital expenditures, and our expected financial flexibility and ability to fund capital expenditures and pursue acquisitions and other expansion opportunities;
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•
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our dividend policy and ability to pay dividends on shares of our common stock;
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•
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the crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, changes in the world tanker fleet, changes in global oil demand and crude oil tanker demand, the rate of global oil production, and changes in long-haul crude tanker movements, tanker fleet utilization and spot tanker rates;
|
•
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changes in the production of or demand for oil or refined products;
|
•
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changes in trading patterns significantly affecting overall vessel tonnage requirements; greater or less than anticipated levels of tanker newbuilding orders and deliveries and greater or less than anticipated rates of tanker scrapping or use of tankers for floating storage;
|
•
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our compliance with, and the effect on our business and operating results of, covenants under our term loans and credit facilities;
|
•
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future oil prices, production and refinery capacity;
|
•
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the effect of lower global oil prices, including the potential impact on oil stockpiling, refinery throughput, bunker fuel prices, and oil futures markets;
|
•
|
our expectations about the availability of vessels to purchase, the expected costs and time it may take to acquire vessels or construct and deliver newbuildings, or the useful lives of our vessels;
|
•
|
planned capital expenditures and the ability to fund capital expenditures;
|
•
|
the ability to leverage Teekay Corporation’s relationships and reputation in the shipping industry;
|
•
|
the expected benefits of participation in vessel pooling arrangements, RSAs (as defined below) and purchasing alliances;
|
•
|
the effectiveness of our chartering strategy in capturing upside opportunities and reducing downside risks, including our ability to take advantage of any tanker market recovery;
|
•
|
the expected benefits of our acquisition in 2015 of the ship-to-ship transfer business, including the ability of the acquired business to provide stable cash flow to help us partially manage the cyclicality of the tanker market, and our ability to leverage this acquisition to grow our presence in, and take advantage of the expected increased volumes moving in and out of, the U.S. Gulf, and to increase our market share in the ship-to-ship global supports business;
|
•
|
the expected benefits of our acquisitions of vessels or businesses, including the 2017 acquisitions of Teekay Tanker Operations Ltd. (or
TTOL
) and Tanker Investments Ltd. (or
TIL
);
|
•
|
our expectation regarding the U.S. Gulf lightering trade and the impact on this trade from the lifted ban on U.S. crude oil exports;
|
•
|
our expectation that our U.S. Gulf lightering business will complement our spot trading strategy in the Caribbean to the U.S. Gulf market, allowing us to better optimize the deployment of the fleet that we trade in this region through better scheduling flexibility and utilization;
|
•
|
our ability to execute our ship-to-ship support services strategy by accessing opportunities created by oil market arbitrages and oil traders optimizing their USD ton/mile on cargoes;
|
•
|
our ability to execute our lightering strategy by leveraging our existing fleet and acumen to provide a full service lightering business model to customers;
|
•
|
the impact of alternative methods of delivering crude oil on our lightering business;
|
•
|
the ability to maximize the use of vessels, including the redeployment of vessels no longer under time charters;
|
•
|
our expectation regarding our vessels’ ability to perform to specifications and maintain their hire rates;
|
•
|
operating expenses, availability of crew, number of off-hire days, dry-docking requirements and insurance costs;
|
•
|
the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards applicable to our business and to obtain any necessary permits, certificates, licenses or qualifications necessary to operate our business;
|
•
|
the anticipated timing and impact on us and the shipping industry of regulatory changes or environmental liabilities;
|
•
|
expenses under service agreements with other affiliates of Teekay Corporation;
|
•
|
the anticipated taxation of our company and of dividends to our shareholders;
|
•
|
our expectations as to the lifespan and any impairment of our vessels;
|
•
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construction and delivery delays in the tanker industry generally;
|
•
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customers’ increasing emphasis on environmental and safety concerns;
|
•
|
meeting our going concern requirements and our liquidity needs, including anticipated funds and sources of financing for liquidity and capital expenditure needs and the sufficiency of cash flows, and our estimation that we will have sufficient liquidity for at least a one-year period;
|
•
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our ability to refinance existing debt obligations, to raise additional debt and capital to fund capital expenditures and negotiate extensions or redeployments of existing assets;
|
•
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the future valuation or impairment of goodwill;
|
•
|
our use of interest rate swaps to reduce interest rate exposure;
|
•
|
our expectations and hedging activities relating to foreign exchange, interest rate and spot market risks;
|
•
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the ability of counterparties to our derivative contracts to fulfill their contractual obligations;
|
•
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the delivery timing of new charter-in vessels;
|
•
|
our expectations regarding payments made on behalf of our co-obligors in connection with the loan arrangements in which certain other subsidiaries of Teekay Corporation are also borrowers;
|
•
|
our position that we are not a passive foreign investment company;
|
•
|
our business strategy and other plans and objectives for future operations; and
|
•
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continued material variations in the period-to-period fair value of our derivative instruments.
|
Item 1.
|
Identity of Directors, Senior Management and Advisors
|
Item 2.
|
Offer Statistics and Expected Timetable
|
Item 3.
|
Key Information
|
|
Years Ended December 31,
|
||||||||||||||||||
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2017
|
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2016
|
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2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands, except share, per share, and fleet data)
|
||||||||||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
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|
||||||||||
Revenues
|
|
$431,178
|
|
|
|
$550,543
|
|
|
|
$534,681
|
|
|
|
$276,193
|
|
|
|
$217,809
|
|
Voyage expenses
(1)
|
(77,368
|
)
|
|
(53,604
|
)
|
|
(18,727
|
)
|
|
(9,968
|
)
|
|
(7,735
|
)
|
|||||
Vessel operating expenses
(2)
|
(175,389
|
)
|
|
(182,598
|
)
|
|
(137,164
|
)
|
|
(98,403
|
)
|
|
(91,667
|
)
|
|||||
Time-charter hire expense
(3)
|
(30,661
|
)
|
|
(59,647
|
)
|
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(74,898
|
)
|
|
(32,706
|
)
|
|
(54,457
|
)
|
|||||
Depreciation and amortization
|
(100,481
|
)
|
|
(104,149
|
)
|
|
(73,760
|
)
|
|
(53,292
|
)
|
|
(50,973
|
)
|
|||||
General and administrative expenses
|
(32,879
|
)
|
|
(33,199
|
)
|
|
(30,403
|
)
|
|
(25,130
|
)
|
|
(29,560
|
)
|
|||||
(Loss) gain on sale of vessels
|
(12,984
|
)
|
|
(20,594
|
)
|
|
771
|
|
|
9,955
|
|
|
(71
|
)
|
|||||
Restructuring charges
|
—
|
|
|
—
|
|
|
(6,795
|
)
|
|
(812
|
)
|
|
—
|
|
|||||
Income (loss) from operations
|
1,416
|
|
|
96,752
|
|
|
193,705
|
|
|
65,837
|
|
|
(16,654
|
)
|
|||||
Interest expense
|
(31,294
|
)
|
|
(29,784
|
)
|
|
(17,389
|
)
|
|
(8,874
|
)
|
|
(9,815
|
)
|
|||||
Interest income
|
907
|
|
|
117
|
|
|
122
|
|
|
445
|
|
|
1,001
|
|
|||||
Realized and unrealized gain (loss) on derivative instruments
|
1,319
|
|
|
(964
|
)
|
|
(1,597
|
)
|
|
5,229
|
|
|
(6,588
|
)
|
|||||
Equity (loss) income
|
(25,370
|
)
|
|
7,680
|
|
|
11,528
|
|
|
4,951
|
|
|
2,340
|
|
|||||
Other (expense) income
|
(5,001
|
)
|
|
(5,978
|
)
|
|
(2,743
|
)
|
|
1,318
|
|
|
4,681
|
|
|||||
Net (loss) income
|
|
($58,023
|
)
|
|
|
$67,823
|
|
|
|
$183,626
|
|
|
|
$68,906
|
|
|
|
($25,035
|
)
|
(Loss) earnings per share
(4)
|
|
|
|
|
|
|
|
|
|
||||||||||
- Basic
|
|
($0.31
|
)
|
|
|
$0.40
|
|
|
|
$1.26
|
|
|
|
$0.66
|
|
|
|
($0.31
|
)
|
- Diluted
|
|
($0.31
|
)
|
|
|
$0.40
|
|
|
|
$1.25
|
|
|
|
$0.65
|
|
|
|
($0.31
|
)
|
Cash dividends declared
|
|
$0.12
|
|
|
|
$0.18
|
|
|
|
$0.24
|
|
|
|
$0.12
|
|
|
|
$0.12
|
|
Balance Sheet Data (at end of year):
|
|
|
|
|
|
|
|
|
|||||||||||
Cash and cash equivalents
|
71,439
|
|
|
94,157
|
|
|
156,520
|
|
|
187,757
|
|
|
48,870
|
|
|||||
Investment in term loans and interest receivable on term loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
136,061
|
|
|||||
Vessels and equipment
(5)
|
1,737,792
|
|
|
1,605,372
|
|
|
1,767,925
|
|
|
897,237
|
|
|
931,374
|
|
|||||
Vessels related to capital leases
(5)
|
227,722
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total assets
|
2,197,348
|
|
|
1,964,370
|
|
|
2,214,803
|
|
|
1,288,844
|
|
|
1,523,510
|
|
|||||
Total debt
(6)
|
1,120,927
|
|
|
969,315
|
|
|
1,204,485
|
|
|
732,764
|
|
|
870,525
|
|
|||||
Common stock and additional paid in capital
|
1,294,998
|
|
|
1,103,304
|
|
|
1,094,874
|
|
|
802,650
|
|
|
673,217
|
|
|||||
Total equity
|
1,006,601
|
|
|
932,740
|
|
|
899,479
|
|
|
496,684
|
|
|
524,725
|
|
|||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating cash flows
|
79,640
|
|
|
206,666
|
|
|
201,966
|
|
|
16,437
|
|
|
22,500
|
|
|||||
Financing cash flows
|
(181,138
|
)
|
|
(290,853
|
)
|
|
647,678
|
|
|
6,150
|
|
|
(9,648
|
)
|
|||||
Investing cash flows
|
78,780
|
|
|
21,824
|
|
|
(880,881
|
)
|
|
116,300
|
|
|
(5,800
|
)
|
Number of outstanding shares of common stock at the end of the year
|
268,201,638
|
|
|
159,304,136
|
|
|
156,030,618
|
|
|
112,064,036
|
|
|
83,591,030
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
(7)
|
353,810
|
|
|
496,939
|
|
|
515,954
|
|
|
266,225
|
|
|
210,074
|
|
|||||
EBITDA
(8)
|
72,845
|
|
|
201,639
|
|
|
274,653
|
|
|
130,627
|
|
|
34,752
|
|
|||||
Adjusted EBITDA
(8)
|
120,413
|
|
|
234,100
|
|
|
283,711
|
|
|
119,567
|
|
|
41,866
|
|
|||||
Capital expenditures
|
|
|
|
|
|
|
|
|
|||||||||||
Expenditures for vessels and equipment
(9)
|
(4,732
|
)
|
|
(9,226
|
)
|
|
(848,229
|
)
|
|
(2,084
|
)
|
|
(1,904
|
)
|
|||||
Expenditures for dry docking
|
(16,239
|
)
|
|
(9,340
|
)
|
|
(39,617
|
)
|
|
(17,072
|
)
|
|
(19,245
|
)
|
|||||
Fleet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Average number of tankers
(10)
|
|
|
|
|
|
|
|
|
|
||||||||||
Suezmax
|
21.1
|
|
|
22.0
|
|
|
13.4
|
|
|
10.0
|
|
|
10.0
|
|
|||||
Aframax
|
17.3
|
|
|
21.8
|
|
|
22.0
|
|
|
15.4
|
|
|
14.6
|
|
|||||
Product
|
7.5
|
|
|
9.2
|
|
|
12.2
|
|
|
7.6
|
|
|
6.0
|
|
|||||
VLCC
|
0.5
|
|
|
0.5
|
|
|
0.5
|
|
|
0.8
|
|
|
0.5
|
|
(1)
|
Voyage expenses are all expenses unique to a particular voyage, including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions. Voyage expenses also include certain costs associated with full service lightering activities, which include: short-term in-charter expenses, bunker fuel expenses and other port expenses.
|
(2)
|
Vessel operating expenses include crewing, repairs and maintenance, insurance, stores, lube oils, and communication expenses among others.
|
(3)
|
Time-charter hire expense includes vessel operating lease expense incurred to charter-in vessels.
|
(4)
|
(Loss) earnings per share is determined by dividing (a) net (loss) income after (deducting) adding the amount of net income (loss) attributable to the Entities under Common Control which were purchased solely with cash by (b) the weighted-average number of shares outstanding during the applicable period and the equivalent shares outstanding that are attributable to the Entities under Common Control. The calculation of weighted-average number of shares includes the total Class A and total Class B shares outstanding during the applicable period. The computation of diluted earnings per share assumes the exercise of all dilutive stock options and restricted stock units using the treasury stock method. The computation of diluted loss per share does not assume such exercises.
|
(5)
|
Vessels and equipment and vessels related to capital leases consists of vessels, at cost less accumulated depreciation.
|
(6)
|
Total debt includes the current and long-term portion of debt, current and long-term portion of obligations related to capital leases and amounts due to affiliates.
|
(7)
|
Net revenues is a non-GAAP financial measure. Consistent with general practice in the shipping industry, we use “net revenues” (defined as revenues less voyage expenses) as a measure of equating revenues generated from voyage charters to revenues generated from time charters, which assists us in making operating decisions about the deployment of our vessels and their performance. Under time charters, the charterer pays the voyage expenses, whereas under voyage charters, the ship-owner pays these expenses. Some voyage expenses are fixed, and the remainder can be estimated. If we, as the ship owner, pay the voyage expenses, we typically pass the approximate amount of these expenses on to our customers by charging higher rates under the contract to them. As a result, although revenues from different types of contracts may vary, the net revenues are comparable across the different types of contracts. We principally use net revenues because it provides more meaningful information to us than revenues, the most directly comparable GAAP financial measure. Net revenues are also widely used by investors and analysts in the shipping industry for comparing financial performance between companies and to industry averages. The following table reconciles net revenues with revenues:
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Revenues
|
$
|
431,178
|
|
|
$
|
550,543
|
|
|
$
|
534,681
|
|
|
$
|
267,075
|
|
|
$
|
210,132
|
|
Interest income from investment in term loans
|
—
|
|
|
—
|
|
|
—
|
|
|
9,118
|
|
|
7,677
|
|
|||||
Voyage expenses
|
(77,368
|
)
|
|
(53,604
|
)
|
|
(18,727
|
)
|
|
(9,968
|
)
|
|
(7,735
|
)
|
|||||
Net revenues
|
$
|
353,810
|
|
|
$
|
496,939
|
|
|
$
|
515,954
|
|
|
$
|
266,225
|
|
|
$
|
210,074
|
|
(8)
|
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA represents earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA before (loss) gain on sale of vessels, realized losses on interest rate swaps, unrealized gains on derivative instruments, dilution gain on share issuance by the equity accounted investment, fair value adjustment of the equity accounted investment and share of the above items in non-consolidated equity accounted investments. Both measures are used as supplemental financial measures by management and by external users of our financial statements, such as investors, as discussed below:
|
•
|
Financial and operating performance
. EBITDA and Adjusted EBITDA assist our management and investors by increasing the comparability of our fundamental performance from period to period and against the fundamental performance of other companies in our industry that provide EBITDA or Adjusted EBITDA-based information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest expense, taxes, depreciation or amortization (or other items in determining Adjusted EBITDA), which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including EBITDA and Adjusted EBITDA as financial and operating measures benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength and health in assessing whether to continue to hold shares of our Class A common stock.
|
•
|
Liquidity.
EBITDA and Adjusted EBITDA allow us to assess the ability of assets to generate cash sufficient to service debt, pay dividends and undertake capital expenditures. By eliminating the cash flow effect resulting from our existing capitalization and other items such as dry-docking expenditures, working capital changes and foreign currency exchange gains and losses, EBITDA and Adjusted EBITDA provide consistent measures of our ability to generate cash over the long term. Management uses this information as a significant factor in determining (a) our proper capitalization (including assessing how much debt to incur and whether changes to the capitalization should be made) and (b) whether to undertake material capital expenditures and how to finance them, all in light of our dividend policy. Use of EBITDA and Adjusted EBITDA as liquidity measures also permits investors to assess the fundamental ability of our business to generate cash sufficient to meet cash needs, including dividends on shares of our Class A and Class B common stock.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Reconciliation of “Adjusted EBITDA” to “Net (loss) income”
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
$
|
(58,023
|
)
|
|
$
|
67,823
|
|
|
$
|
183,626
|
|
|
$
|
68,906
|
|
|
$
|
(25,035
|
)
|
Depreciation and amortization
|
100,481
|
|
|
104,149
|
|
|
73,760
|
|
|
53,292
|
|
|
50,973
|
|
|||||
Interest expense, net of interest income
|
30,387
|
|
|
29,667
|
|
|
17,267
|
|
|
8,429
|
|
|
8,814
|
|
|||||
EBITDA
|
$
|
72,845
|
|
|
$
|
201,639
|
|
|
$
|
274,653
|
|
|
$
|
130,627
|
|
|
$
|
34,752
|
|
Loss (gain) on sale of vessels
|
12,984
|
|
|
20,594
|
|
|
(771
|
)
|
|
(9,955
|
)
|
|
71
|
|
|||||
Realized loss on interest rate swaps
|
994
|
|
|
12,797
|
|
|
9,790
|
|
|
9,993
|
|
|
9,887
|
|
|||||
Unrealized gain on derivative instruments
|
(937
|
)
|
|
(9,679
|
)
|
|
(8,193
|
)
|
|
(11,676
|
)
|
|
(4,774
|
)
|
|||||
Fair value on initial recognition of stock purchase warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,420
|
)
|
|
—
|
|
|||||
Dilution gain on equity accounted investment
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,054
|
)
|
|
—
|
|
|||||
Fair value adjustment of TIL
|
26,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjustments related to equity accounted investments
(i)
|
7,794
|
|
|
8,749
|
|
|
8,232
|
|
|
6,052
|
|
|
1,930
|
|
|||||
Adjusted EBITDA
|
$
|
120,413
|
|
|
$
|
234,100
|
|
|
$
|
283,711
|
|
|
$
|
119,567
|
|
|
$
|
41,866
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Reconciliation of “Adjusted EBITDA” to “Net operating cash flow”
|
|
|
|
|
|
|
|
|
|
||||||||||
Net operating cash flow
|
$
|
79,640
|
|
|
$
|
206,666
|
|
|
$
|
201,966
|
|
|
$
|
16,437
|
|
|
$
|
22,500
|
|
Interest expense, net of interest income
|
30,387
|
|
|
29,667
|
|
|
17,267
|
|
|
8,429
|
|
|
8,814
|
|
|||||
Expenditures for dry docking
|
14,069
|
|
|
8,608
|
|
|
39,617
|
|
|
17,072
|
|
|
19,245
|
|
|||||
Realized loss on interest rate swaps
|
994
|
|
|
12,797
|
|
|
9,790
|
|
|
9,993
|
|
|
9,887
|
|
|||||
Change in working capital
|
(5,741
|
)
|
|
(30,004
|
)
|
|
(1,655
|
)
|
|
60,847
|
|
|
(26,635
|
)
|
|||||
Equity (loss) income
|
(25,370
|
)
|
|
7,680
|
|
|
11,528
|
|
|
4,951
|
|
|
2,340
|
|
|||||
Other cash flows, net
|
(8,093
|
)
|
|
(10,063
|
)
|
|
(3,034
|
)
|
|
1,260
|
|
|
3,785
|
|
|||||
Fair value on initial recognition of stock purchase warrant
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,420
|
)
|
|
—
|
|
|||||
Dilution gain on equity accounted investment
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,054
|
)
|
|
—
|
|
|||||
Fair value adjustment in TIL
|
26,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjustments related to equity accounted investments
(i)
|
7,794
|
|
|
8,749
|
|
|
8,232
|
|
|
6,052
|
|
|
1,930
|
|
|||||
Adjusted EBITDA
|
$
|
120,413
|
|
|
$
|
234,100
|
|
|
$
|
283,711
|
|
|
$
|
119,567
|
|
|
$
|
41,866
|
|
(i)
|
The following table reflects certain non-GAAP adjustments to the results of our equity accounted investments. The adjusted results should not be considered as an alternative to any measure of financial performance or liquidity presented in accordance with GAAP. Adjustments to equity investments include some, but not all, items that affect equity income and these measures and adjustments may vary among other companies, and may not be comparable to adjustments to similarly titled measures of other companies. When using Adjusted EBITDA as a measure of liquidity it should be noted that this measure includes the Adjusted EBITDA from our equity accounted for investments. We do not have control over the operations, nor do we have any legal claim to the revenue and expenses of our equity accounted for investments. Consequently, the cash flow generated by our equity accounted for investments may not be available for use by us in the period generated.
|
|
Years Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
5,250
|
|
|
5,866
|
|
|
4,517
|
|
|
2,979
|
|
|
1,166
|
|
|||||
Interest expense, net of interest income
|
2,562
|
|
|
2,868
|
|
|
2,763
|
|
|
1,446
|
|
|
448
|
|
|||||
Income tax (recovery) expense
|
(1
|
)
|
|
(107
|
)
|
|
602
|
|
|
1,359
|
|
|
12
|
|
|||||
Realized and unrealized (gain) loss on derivative instruments
|
(14
|
)
|
|
115
|
|
|
344
|
|
|
416
|
|
|
341
|
|
|||||
Foreign exchange (gain) loss
|
(3
|
)
|
|
7
|
|
|
6
|
|
|
3
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|
(37
|
)
|
|||||
Adjustments related to equity accounted investments
|
$
|
7,794
|
|
|
$
|
8,749
|
|
|
$
|
8,232
|
|
|
$
|
6,052
|
|
|
$
|
1,930
|
|
(9)
|
Excludes vessels purchased in connection with our acquisition of Tanker Investments Ltd. (or
TIL
). Please read Item 18. Financial Statements
:
Note 22 - Acquisition of Tanker Investments Ltd.
|
(10)
|
Average number of tankers consists of the average number of vessels that were in our possession during a period, including time-chartered in vessels, the vessel owned by our High-Q Investment Ltd. (or
High-Q
) joint venture with Wah Kwong Maritime Transport Holdings Ltd. and vessels of the Entities under Common Control.
|
•
|
restructuring our debt;
|
•
|
seeking additional debt or equity capital;
|
•
|
selling additional assets or equity interest in certain assets or joint venture;
|
•
|
further reducing cash dividends;
|
•
|
reducing, delaying or cancelling business activities, acquisitions, investments or capital expenditures; or
|
•
|
seeking bankruptcy protection.
|
•
|
environmental concerns and regulations;
|
•
|
the number of newbuilding deliveries;
|
•
|
the scrapping rate of older vessels;
|
•
|
conversion of tankers to other uses; and
|
•
|
the number of vessels that are out of service.
|
•
|
supply of oil and oil products;
|
•
|
demand for oil and oil products;
|
•
|
regional availability of refining capacity;
|
•
|
global and regional economic and political conditions;
|
•
|
the distance oil and oil products are to be moved by sea; and
|
•
|
changes in seaborne and other transportation patterns.
|
•
|
a reduction in exploration for or development of new oil fields or energy projects, or the delay or cancellation of existing projects as energy companies lower their capital expenditures budgets, which may reduce our growth opportunities;
|
•
|
potential lower demand for tankers, which may reduce available charter rates and revenue to us upon chartering or rechartering of our vessels;
|
•
|
customers failing to extend or renew contracts upon expiration;
|
•
|
the inability or refusal of customers to make charter payments to us due to financial constraints or otherwise; or
|
•
|
declines in vessel values, which may result in losses to us upon vessel sales or impairment charges against our earnings.
|
•
|
identify suitable tankers or shipping companies for acquisitions or joint ventures;
|
•
|
integrate successfully any acquired tankers or businesses with our existing operations; and
|
•
|
obtain required financing for our existing and any new operations.
|
•
|
fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;
|
•
|
be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet;
|
•
|
decrease our liquidity by using a significant portion of available cash or borrowing capacity to finance acquisitions;
|
•
|
significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;
|
•
|
incur or assume unanticipated liabilities, losses or costs associated with any vessels or businesses acquired; or
|
•
|
incur other significant charges, such as impairment of intangible assets, asset devaluation or restructuring charges.
|
•
|
incur or guarantee indebtedness;
|
•
|
change ownership or structure, including mergers, consolidations, liquidations and dissolutions;
|
•
|
pay dividends;
|
•
|
grant liens on our assets;
|
•
|
sell, transfer, assign or convey assets;
|
•
|
make certain investments; and
|
•
|
enter into a new line of business.
|
•
|
our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
|
•
|
we will need a substantial portion of our cash flow to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, business opportunities and dividends to our shareholders;
|
•
|
our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our industry or the economy generally; and
|
•
|
our debt level may limit our flexibility in responding to changing business and economic conditions.
|
•
|
marine disasters;
|
•
|
bad weather or natural disasters;
|
•
|
mechanical or electrical failures;
|
•
|
grounding, capsizing, fire, explosions and collisions;
|
•
|
piracy;
|
•
|
cyber attack;
|
•
|
human error; and
|
•
|
war and terrorism.
|
•
|
death or injury to persons, loss of property or damage to the environment and natural resources;
|
•
|
delays in the delivery of cargo;
|
•
|
loss of revenues from charters;
|
•
|
liabilities or costs to recover any spilled oil or other petroleum products and to restore the eco-system affected by the spill;
|
•
|
governmental fines, penalties or restrictions on conducting business;
|
•
|
higher insurance rates; and
|
•
|
damage to our reputation and customer relationships generally.
|
•
|
maximize revenues of our tankers included in the pooling arrangements;
|
•
|
acquire new tankers or obtain new time charters;
|
•
|
renew existing time charters upon their expiration;
|
•
|
successfully interact with shipyards during periods of shipyard construction constraints;
|
•
|
obtain financing on commercially acceptable terms; or
|
•
|
maintain satisfactory relationships with suppliers and other third parties.
|
•
|
our Chief Executive Officer and Chief Financial Officer and three of our directors also serve as executive officers or directors of Teekay Corporation and/or our Manager, and we have limited their fiduciary duties regarding corporate opportunities that may be attractive to both Teekay Corporation and us;
|
•
|
our Manager advises our Board of Directors about the amount and timing of asset purchases and sales, capital expenditures, borrowings, issuances of additional common stock and cash reserves, each of which can affect our ability to pay dividends to our shareholders and the amount of the performance fee payable to our Manager under the Management Agreement;
|
•
|
our executive officers and those of our Manager do not spend all of their time on matters related to our business; and
|
•
|
our Manager will advise us of costs incurred by it and its affiliates that it believes are reimbursable by us.
|
Item 4.
|
Information on the Company
|
A.
|
History and Development of the Company
|
B.
|
Business Overview
|
|
Owned and Capital Lease Vessels
|
|
Chartered-in
Vessels
|
|
Total
|
|||
Fixed-rate:
|
|
|
|
|
|
|||
Suezmax Tankers
|
6
|
|
|
—
|
|
|
6
|
|
Aframax Tankers
|
8
|
|
|
—
|
|
|
8
|
|
Long Range 2 Product Tankers
|
2
|
|
|
—
|
|
|
2
|
|
VLCC Tankers
(1)
|
1
|
|
|
—
|
|
|
1
|
|
Total Fixed-Rate Fleet
(2)
|
17
|
|
|
—
|
|
|
17
|
|
Spot-rate:
|
|
|
|
|
|
|||
Suezmax Tankers
|
24
|
|
|
—
|
|
|
24
|
|
Aframax Tankers
|
9
|
|
|
1
|
|
|
10
|
|
Long Range 2 Product Tankers
|
7
|
|
|
—
|
|
|
7
|
|
Total Spot Fleet
(3)
|
40
|
|
|
1
|
|
|
41
|
|
Total Conventional Fleet
|
57
|
|
|
1
|
|
|
58
|
|
Ship-to-Ship Support Vessels
|
3
|
|
|
3
|
|
|
6
|
|
Total Teekay Tankers Fleet
|
60
|
|
|
4
|
|
|
64
|
|
(1)
|
We own one VLCC through a 50/50 joint venture with Wah Kwong Maritime Transport Holdings Limited (please refer to Note 6 - Investments in and advances to Equity Accounted Investments, included in Item 18 – Financial Statements in this Annual Report).
|
(2)
|
The number of time-charter out contracts scheduled to expire include 16 in 2018 (including one jointly owned VLCC time-charter out contract) and one in 2019.
|
(3)
|
A total of 40 of our owned and capital lease vessels operated in the spot market in RSAs, which are managed by subsidiaries of TTOL (collectively, the
Pool Managers
). As at December 31, 2017, the three vessel class RSAs in which we participate were comprised of a total of 27 Suezmax tankers, 31 Aframax tankers, and nine LR2 product tankers (of which eight LR2 tankers are cross-trading in the Aframax RSA), including vessels owned by other members of the RSA.
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Ashkini Spirit
|
165,200
|
|
|
2003
|
|
RSA
|
|
—
|
|
—
|
Aspen Spirit
|
156,800
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Athens Spirit
|
158,500
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Atlanta Spirit
|
158,700
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Baker Spirit
|
156,900
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Barcelona Spirit
|
158,500
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Beijing Spirit
|
156,500
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Cascade Spirit
|
156,900
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Copper Spirit
|
156,800
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Dilong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Godavari Spirit
|
159,100
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
Iskmati Spirit
|
165,300
|
|
|
2003
|
|
RSA
|
|
—
|
|
—
|
Jiaolong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Kaveri Spirit
|
159,100
|
|
|
2004
|
|
RSA
|
|
—
|
|
—
|
London Spirit
(1)
|
158,500
|
|
|
2011
|
|
Time charter
|
|
$21,000
|
|
Jan-18
|
Los Angeles Spirit
(1)
|
159,200
|
|
|
2007
|
|
Time charter
|
|
$22,500
|
|
Jan-18
|
Montreal Spirit
(2)
|
150,000
|
|
|
2006
|
|
Time charter
|
|
$22,000
|
|
Feb-18
|
Moscow Spirit
|
156,500
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Narmada Spirit
|
159,200
|
|
|
2003
|
|
RSA
|
|
—
|
|
—
|
Pinnacle Spirit
|
160,400
|
|
|
2008
|
|
RSA
|
|
—
|
|
—
|
Rio Spirit
(3)
|
158,400
|
|
|
2013
|
|
RSA
|
|
—
|
|
—
|
Seoul Spirit
|
160,000
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Shenlong Spirit
(2)
|
159,000
|
|
|
2009
|
|
Time charter
|
|
$19,750
|
|
Feb-18
|
Summit Spirit
|
160,500
|
|
|
2008
|
|
Time Charter
|
|
$26,200
|
|
Aug-18
|
Sydney Spirit
|
158,500
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Tahoe Spirit
(2)
|
156,900
|
|
|
2010
|
|
Time charter
|
|
$19,750
|
|
Feb-18
|
Tianlong Spirit
|
159,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Tokyo Spirit
|
150,000
|
|
|
2006
|
|
RSA
|
|
—
|
|
—
|
Vail Spirit
|
157,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Zenith Spirit
|
160,500
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Total Capacity
|
4,749,900
|
|
|
|
|
|
|
|
|
|
(1)
|
The Suezmax tankers
London Spirit
and
Los Angeles Spirit
completed their respective time-charter out contracts and joined the Teekay Suezmax RSA in January 2018.
|
(2)
|
The Suezmax tankers
Montreal Spirit
,
Shenlong Spirit
and
Tahoe Spirit
completed their respective time-charter out contracts and joined the Teekay Suezmax RSA in February 2018.
|
(3)
|
The Suezmax tanker
Rio Spirit
entered into a time-charter out contract, which commenced in January 2018.
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Americas Spirit
|
111,900
|
|
|
2003
|
|
Time charter
|
|
$15,000
|
|
Oct-18
|
Australian Spirit
|
111,900
|
|
|
2004
|
|
Time charter
|
|
$16,000
|
|
Nov-18
|
Axel Spirit
(1)
|
115,400
|
|
|
2004
|
|
Time charter
|
|
$18,000
|
|
Jan-18
|
Blackcomb Spirit
|
109,000
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Emerald Spirit
|
109,100
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Erik Spirit
|
115,500
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Esther Spirit
|
115,400
|
|
|
2004
|
|
Time charter
|
|
$25,000
|
|
Dec-18
|
Everest Spirit
|
115,000
|
|
|
2004
|
|
Time charter
|
|
$25,000
|
|
Apr-19
|
Explorer Spirit
|
105,800
|
|
|
2008
|
|
Spot
|
|
—
|
|
—
|
Garibaldi Spirit
|
109,000
|
|
|
2009
|
|
RSA
|
|
—
|
|
—
|
Helga Spirit
|
115,500
|
|
|
2005
|
|
Time charter
|
|
$24,900
|
|
Sep-18
|
Matterhorn Spirit
|
114,800
|
|
|
2005
|
|
RSA
|
|
—
|
|
—
|
Navigator Spirit
|
105,800
|
|
|
2008
|
|
Spot
|
|
—
|
|
—
|
Peak Spirit
|
104,600
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Tarbet Spirit
(1)
|
107,500
|
|
|
2009
|
|
Time charter
|
|
$17,000
|
|
Feb-18
|
Whistler Spirit
|
109,100
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Yamato Spirit
|
107,600
|
|
|
2008
|
|
Time charter
|
|
$23,000
|
|
Jun-18
|
Total Capacity
|
1,882,900
|
|
|
|
|
|
|
|
|
|
(1)
|
The Aframax tankers
Axel Spirit
and
Tarbet Spirit
completed their respective time-charter out contracts and joined the Teekay Aframax RSA in January 2018 and February 2018, respectively.
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Donegal Spirit
|
105,600
|
|
|
2006
|
|
Time charter
|
|
$17,750
|
|
Oct-18
|
Galway Spirit
(1)
|
105,600
|
|
|
2007
|
|
Time charter
|
|
$17,000
|
|
Mar-18
|
Hovden Spirit
|
105,300
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Leyte Spirit
|
109,700
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Limerick Spirit
|
105,600
|
|
|
2007
|
|
RSA
|
|
—
|
|
—
|
Luzon Spirit
|
109,600
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Sebarok Spirit
|
109,600
|
|
|
2011
|
|
RSA
|
|
—
|
|
—
|
Seletar Spirit
|
109,000
|
|
|
2010
|
|
RSA
|
|
—
|
|
—
|
Trysil Spirit
|
105,300
|
|
|
2012
|
|
RSA
|
|
—
|
|
—
|
Total Capacity
|
965,300
|
|
|
|
|
|
|
|
|
|
Vessel
|
Capacity
(dwt)
|
|
Built
|
|
Employment
|
|
Daily Rate
|
|
Expiration of
Charter
|
|
Hong Kong Spirit
(1)
|
319,000
|
|
|
2013
|
|
Time charter
|
|
$37,500
|
|
Jul-18
|
(1)
|
The VLCC vessel,
Hong Kong Spirit
, is owned through a 50/50 joint venture. The charter rate on this vessel is subject to a profit sharing amount that is calculated every six months.
|
•
|
Expand our fleet through accretive acquisitions.
Since our initial public offering, we have purchased 21 conventional tankers from Teekay Corporation, 18 conventional tankers resulting from the merger with TIL, 17 conventional tankers from third parties and two conventional tankers from TOO. In the future, we anticipate growing our fleet primarily through acquisitions of tankers from third parties, by securing additional in-chartered vessels and by ordering newbuildings.
|
•
|
Tactically manage our mix of spot, charter, lightering, and LNG terminal management and consultancy contracts.
We employ a chartering strategy that seeks to capture upside opportunities in the spot market while using fixed-rate contracts to reduce downside risks. We believe that our Manager’s experience operating through cycles in the tanker spot market will assist us in employing this strategy and seeking to maximize operating results. In addition, we expect that the July 2015 acquisition of SPT will provide stable cash flow, to partially offset volatility in the tanker market, through global ship-to-ship support services, full service lightering, and LNG terminal management and consultancy services.
|
•
|
Increase cash flow by participating in revenue sharing arrangements.
We believe that the cash flow we derive over time from operating a significant number of our vessels in the Teekay Suezmax RSA, the Teekay Aframax RSA and the Taurus Tankers LR2 RSA exceeds the amount we would otherwise derive by operating these vessels outside of the RSAs due to higher vessel utilization and daily revenues. We also derive RSA and vessel management income through the operations of TTOL, which owns conventional tanker commercial and technical management operations and directly administers four commercially managed RSAs. We seek to increase this fee income by increasing the number of vessels participating in the applicable RSAs.
|
•
|
Provide superior customer service by maintaining high reliability, safety, environmental and quality standards.
We believe that energy companies seek transportation partners that have a reputation for high reliability, safety, environmental and quality standards. We leverage our reputation and operational expertise to further expand these relationships with consistent delivery of superior customer service through our Manager.
|
•
|
vessel maintenance (including repairs and dry docking) and certification;
|
•
|
crewing by competent seafarers;
|
•
|
purchasing of stores, bunkers and spare parts;
|
•
|
shipyard supervision;
|
•
|
insurance; and
|
•
|
financial management services.
|
•
|
our vessels and operations adhere to our operating standards;
|
•
|
the structural integrity of the vessel is being maintained;
|
•
|
machinery and equipment is being maintained to give reliable service;
|
•
|
we are optimizing performance in terms of speed and fuel consumption; and
|
•
|
our vessels' appearance supports our brand and meets customer expectations.
|
•
|
natural resources damages and the related assessment costs;
|
•
|
real and personal property damages;
|
•
|
net loss of taxes, royalties, rents, fees and other lost revenues;
|
•
|
lost profits or impairment of earning capacity due to property or natural resources damage;
|
•
|
net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and
|
•
|
loss of subsistence use of natural resources.
|
•
|
address a “worst case” scenario and identify and ensure, through contract or other approved means, the availability of necessary private response resources to respond to a “worst case discharge”;
|
•
|
describe crew training and drills; and
|
•
|
identify a qualified individual with full authority to implement removal actions.
|
C.
|
Organizational Structure
|
D.
|
Property, Plant and Equipment
|
E.
|
Taxation of the Company
|
1.
|
United States Taxation
|
2.
|
Marshall Islands Taxation
|
3.
|
Other Taxation
|
Item 4A.
|
Unresolved Staff Comments
|
Item 5.
|
Operating and Financial Review and Prospects
|
•
|
Voyage charters are charters for shorter intervals that are priced on a current or “spot” market rate then adjusted for pool participation based on predetermined criteria; and
|
•
|
Time charters, whereby vessels are chartered to customers for a fixed period of time at rates that are generally fixed, but may contain a variable component based on inflation, interest rates or current market rates.
|
(1)
|
“Hire” rate refers to the basic payment from the charterer for the use of the vessel.
|
(2)
|
Voyage expenses are all expenses unique to a particular voyage, including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions.
|
(3)
|
Vessel operating expenses include crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses.
|
(4)
|
“Off-hire” refers to the time a vessel is not available for service.
|
•
|
Our financial results reflect the results of TTOL and interests in vessels acquired from Teekay for all periods TTOL and the vessels were under common control.
Each of the two
conventional oil tankers (the
Explorer Spirit
, formerly known as the
SPT Explorer,
and the
Navigator Spirit
) acquired from TOO and
the May 2017 acquisition of the remaining 50% interest in TTOL were deemed to be business acquisitions between entities under common control. Accordingly, we have accounted for these transactions in a manner similar to the pooling of interests method. Under this method of accounting our consolidated financial statements, for periods prior to the respective dates the interests in these vessels or the controlling interest in TTOL were actually acquired by us, are retroactively adjusted to include the results of these acquired vessels and TTOL. The periods retroactively adjusted include all periods that we and the acquired vessels or TTOL, as applicable, were both under common control of Teekay and had begun operations. All financial or operational information contained herein for the periods prior to the respective dates the interests in these vessels and TTOL were actually acquired by us, and during which we and the applicable vessels or TTOL were under common control of Teekay, are retroactively adjusted to include the results of these acquired vessels and TTOL and are also collectively referred to as the “
Entities under Common Control”
.
|
•
|
Our voyage revenues are affected by cyclicality in the tanker markets.
The cyclical nature of the tanker industry causes significant increases or decreases in the revenue we earn from our vessels, particularly those we trade in the spot market.
|
•
|
Tanker rates also fluctuate based on seasonal variations in demand
. Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and increased refinery maintenance. In addition, unpredictable weather patterns during the winter months tend to disrupt vessel scheduling, which historically has increased oil price volatility and oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger in the quarters ended December 31 and March 31.
|
•
|
Our U.S. Gulf lightering business competes with alternative methods of delivering crude oil to ports, which may limit our earnings in this area of our operations.
Our U.S. Gulf lightering business faces competition from alternative methods of delivering crude oil shipments to port, including offshore offloading facilities. While we believe that lightering offers advantages over alternative methods of delivering crude oil to U.S. Gulf ports, our lightering revenues may be limited due to the availability of alternative methods.
|
•
|
Vessel operating and other costs are facing industry-wide cost pressures
.
The shipping industry continues to forecast a shortfall in qualified personnel, although weak tanker markets may ease officer shortages. We will continue to focus on our manning and training
|
•
|
The amount and timing of dry dockings of our vessels can significantly affect our revenues between periods
. Our vessels are normally off hire when they are being dry docked. We had seven vessels drydock in
2017
, compared to two vessels which dry docked in
2016
and 18 vessels which dry docked in
2015
. The total number of off-hire days relating to dry dockings during the years ended December 31,
2017
,
2016
and
2015
were 221, 82, and 603, respectively. For our current fleet, there are nine vessels scheduled to dry dock in 2018.
|
•
|
a net decrease of $66.5 million primarily due to lower average realized spot TCE rates earned by our Suezmax, Aframax and LR2 product tankers;
|
•
|
a net decrease of $27.9 million primarily due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates; and
|
•
|
a net decrease of $9.5 million primarily due to the sale of two Suezmax tankers and three Aframax tankers in 2017, compared to the losses on sale of two MR tankers in 2016, and the redeliveries of our in-chartered vessels to their respective owners;
|
•
|
a net increase of $3.0 million primarily due to the scope of repairs and planned maintenance activities in 2017 as compared to 2016; and
|
•
|
a net increase of $1.7 million primarily resulting from the income from vessel operations of TIL subsequent to our merger with TIL on November 27, 2017.
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
|
% Change
|
|||
Revenues
|
391,267
|
|
|
512,608
|
|
|
(24
|
)%
|
Less: voyage expenses
(1)
|
(87,879
|
)
|
|
(56,805
|
)
|
|
55
|
%
|
Net revenues
|
303,388
|
|
|
455,803
|
|
|
(33
|
)%
|
Vessel operating expenses
|
(135,740
|
)
|
|
(150,100
|
)
|
|
(10
|
)%
|
Time-charter hire expense
|
(25,666
|
)
|
|
(57,368
|
)
|
|
(55
|
)%
|
Depreciation and amortization
|
(95,433
|
)
|
|
(99,024
|
)
|
|
(4
|
)%
|
General and administrative expenses
|
(29,539
|
)
|
|
(29,432
|
)
|
|
—
|
%
|
Loss on sale of vessels
|
(13,034
|
)
|
|
(20,926
|
)
|
|
(38
|
)%
|
Income from vessel operations
|
3,976
|
|
|
98,953
|
|
|
(96
|
)%
|
Equity (loss) income
|
(25,370
|
)
|
|
7,680
|
|
|
(430
|
)%
|
(1)
|
Includes
$10.5 million
and
$3.2 million
of voyage expenses for the years ended
December 31, 2017
and 2016, respectively, relating to lightering support services which the ship-to-ship transfer segment provided to the conventional tanker segment for full service lightering operations.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2017
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
(2)
|
Adjustments
(3)
|
Net Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(3)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$98,550
|
|
|
($5,618
|
)
|
|
$525
|
|
|
$93,457
|
|
5,621
|
|
|
$16,627
|
|
Voyage-charter contracts - Aframax
(4)
|
|
$141,763
|
|
|
($80,220
|
)
|
|
$727
|
|
|
$62,270
|
|
3,956
|
|
|
$15,739
|
|
Voyage-charter contracts - LR2
|
|
$25,353
|
|
|
($141
|
)
|
|
$306
|
|
|
$25,518
|
|
1,771
|
|
|
$14,407
|
|
Voyage-charter contracts - MR
|
|
$11
|
|
—
|
|
|
($10
|
)
|
|
$1
|
|
—
|
|
—
|
|
||
Time-charter out contracts - Suezmax
|
|
$45,745
|
|
|
($932
|
)
|
|
$18
|
|
|
$44,831
|
|
1,853
|
|
|
$24,198
|
|
Time-charter out contracts - Aframax
|
|
$50,964
|
|
|
($686
|
)
|
|
$151
|
|
|
$50,429
|
|
2,283
|
|
|
$22,085
|
|
Time-charter out contracts - LR2
|
|
$15,391
|
|
|
($265
|
)
|
|
($13
|
)
|
|
$15,113
|
|
837
|
|
|
$18,063
|
|
Total
|
|
$377,777
|
|
|
($87,862
|
)
|
|
$1,704
|
|
|
$291,619
|
|
16,321
|
|
|
$17,867
|
|
(1)
|
Excludes $10.4 million of commissions and management fees earned by TTOL from the management of external vessels trading in the RSAs, $2.6 million of bunker rebates and $0.6 million of revenue earned from a profit-sharing agreement.
|
(2)
|
Includes $10.5 million of inter-segment voyage expenses relating to lightering support services provided by the ship-to-ship transfer segment to the full service lightering business.
|
(3)
|
Average TCE per Revenue Day excludes off-hire bunker and other expenses included as part of the adjustments.
|
(4)
|
Includes $92.8 million of revenues and $72.4 million of voyage expenses related to the full service lightering business, which include $10.5 million of inter-segment voyage expenses referenced in note 2, above.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2016
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
(2)
|
Adjustments
(3)
|
Net Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(3)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$184,965
|
|
|
($5,068
|
)
|
|
($59
|
)
|
|
$179,838
|
|
6,705
|
|
|
$26,820
|
|
Voyage-charter contracts - Aframax
(4)
|
|
$158,272
|
|
|
($50,185
|
)
|
|
$392
|
|
|
$108,479
|
|
5,145
|
|
|
$21,086
|
|
Voyage-charter contracts - LR2
|
|
$48,599
|
|
|
$53
|
|
|
($36
|
)
|
|
$48,616
|
|
2,572
|
|
|
$18,903
|
|
Voyage-charter contracts - MR
|
|
$8,305
|
|
|
($30
|
)
|
|
$302
|
|
|
$8,577
|
|
535
|
|
|
$16,035
|
|
Time-charter out contracts - Suezmax
|
|
$30,597
|
|
|
($731
|
)
|
|
$99
|
|
|
$29,965
|
|
1,029
|
|
|
$29,124
|
|
Time-charter out contracts - Aframax
|
|
$54,593
|
|
|
($338
|
)
|
|
$40
|
|
|
$54,295
|
|
2,327
|
|
|
$23,332
|
|
Time-charter out contracts - LR2
|
|
$12,201
|
|
|
($273
|
)
|
|
($30
|
)
|
|
$11,898
|
|
526
|
|
|
$22,629
|
|
Total
|
|
$497,532
|
|
|
($56,572
|
)
|
|
$708
|
|
|
$441,668
|
|
18,839
|
|
|
$23,445
|
|
(1)
|
Excludes $11.2 million of commissions and management fees earned by TTOL from the management of external vessels trading in the RSAs, $2.6 million of bunker rebates and $1.2 million of in-process revenue contract revenue.
|
(2)
|
Includes $3.2 million of inter-segment voyage expenses relating to lightering support services provided by the ship-to-ship transfer segment to the full service lightering business and excludes $0.3 million of voyage expenses incurred by TTOL.
|
(3)
|
Average TCE per Revenue Day excludes $0.7 million in pool management fees and commissions payable for commercial management for our vessels, off-hire bunker and other expenses, all of which are included as part of the adjustments.
|
(4)
|
Includes $48.2 million of revenues and $34.8 million of voyage expenses related to the full service lightering business, which includes $3.2 million inter-segment voyage expenses referenced in note 2, above.
|
•
|
a decrease of $66.5 million due to lower average realized spot tanker rates earned by our Suezmax, Aframax and LR2 tankers in 2017 compared to 2016;
|
•
|
net decreases of $59.3 million primarily due to the redeliveries of various in-charters to their owners at various times during 2016 and 2017 and the sale of two Suezmax product tankers, three Aframax tankers and two MR product tankers in 2016 and 2017, partially offset by the addition of 18 vessels that we acquired as part of the TIL merger on November 27, 2017 and three Aframax in-charters that were delivered to us during 2016 and 2017;
|
•
|
a net decrease of $29.3 million due to the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates and more vessels that transitioned from voyage charter to full service lightering employment in 2017 compared to 2016;
|
•
|
a decrease of $1.2 million due to in-process revenue contract amortization that we recognized in revenue in the first quarter of 2016;
|
•
|
a net decrease of $1.4 million due to more off-hire days, higher off-hire bunker and other expenses in 2017 compared to 2016;
|
•
|
a decrease of $0.9 million for 2017 due to one additional calendar day in 2016 as it was a leap year; and
|
•
|
a decrease of $0.9 million due to lower commissions and management fees earned from TTOL from the management of external vessels trading in the RSAs and bunker rebates received in 2017 compared to 2016;
|
•
|
an increase of $7.0 million due to an increase in the number of voyages related to our full service lightering operations in 2017 compared to 2016.
|
•
|
a net decrease of $13.5 million primarily resulting from the sales of two MR tankers in the second half of 2016, of two Suezmax tankers in the first quarter of 2017, of one Aframax tanker in second quarter of 2017 and of two Aframax tankers in the second half of 2017;
|
•
|
a decrease of $3.0 million due to the scope of repairs and planned maintenance activities in 2017 as compared to 2016;
|
•
|
a decrease of $2.9 million due to higher transition costs incurred in 2016 compared to 2017 directly relating to 12 Suezmax tankers, which were acquired in the latter part of 2015; and
|
•
|
a decrease of $0.8 million primarily due to costs related to the change from external to in-house ship management and lower insurance premiums paid during the year;
|
•
|
an increase of $5.4 million primarily resulting from the acquisition of 10 Suezmax tankers, six Aframax tankers and two LR2 product tankers which were acquired as a result of the merger with TIL in November 2017; and
|
•
|
an increase of $0.3 million due to higher fleet overhead costs, primarily resulting from the timing of seafarer training, crew agency fees and other initiatives.
|
•
|
an increase of $2.3 million due to higher administrative, strategic management, and other fees incurred due primarily to differences in annual bonuses and financial system changes;
|
•
|
a decrease of $1.3 million due to higher corporate expenses incurred during 2016 primarily as a result of legal expenses related to our vessel construction and option agreements with STX Offshore & Shipbuilding Co. Ltd (or
STX
) of South Korea; and
|
•
|
a decrease of $0.6 million primarily due to decreased stock-based compensation granted to our Board of Directors, one of our officers and certain employees of Teekay subsidiaries that provided services to us.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
||
High-Q Joint Venture
|
3,071
|
|
|
4,359
|
|
Tanker Investments Ltd.
|
(28,443
|
)
|
|
3,515
|
|
Gemini Tankers L.L.C.
|
2
|
|
|
(194
|
)
|
Total equity (loss) income
|
(25,370
|
)
|
|
7,680
|
|
•
|
a decrease of $31.9 million primarily due to a $26.7 million net write-down of our investment in TIL to its fair market value in June 2017 and prior to the TIL merger completion and lower equity earnings from TIL resulting from overall lower realized average spot rates earned in 2017 compared to 2016; and
|
•
|
a decrease of $1.3 million due to lower equity earnings from our High-Q Investment Ltd (or
High-Q
) joint venture primarily resulting from profit share recognized in the second quarter of 2016 as VLCC rates averaged above certain thresholds, triggering a profit sharing with the customer.
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
|
% Change
|
|||
Revenues
(1)
|
50,422
|
|
|
41,136
|
|
|
23
|
%
|
Less: voyage expenses
|
—
|
|
|
—
|
|
|
—
|
%
|
Net revenues
|
50,422
|
|
|
41,136
|
|
|
23
|
%
|
Vessel operating expenses
|
(39,649
|
)
|
|
(32,498
|
)
|
|
22
|
%
|
Time-charter hire expense
|
(4,995
|
)
|
|
(2,279
|
)
|
|
119
|
%
|
Depreciation and amortization
|
(5,048
|
)
|
|
(5,125
|
)
|
|
(2
|
)%
|
General and administrative expenses
|
(3,340
|
)
|
|
(3,767
|
)
|
|
(11
|
)%
|
Gain on sale of vessels
|
50
|
|
|
332
|
|
|
(85
|
)%
|
Loss from vessel operations
|
(2,560
|
)
|
|
(2,201
|
)
|
|
16
|
%
|
(1)
|
Includes
$10.5 million
of revenues for the year ended
December 31, 2017
(2016 -
$3.2 million
) relating to lightering support services which the ship-to-ship transfer segment provided to the conventional tanker segment for full service lightering operations.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
||
Interest expense
|
(31,294
|
)
|
|
(29,784
|
)
|
Interest income
|
907
|
|
|
117
|
|
Realized and unrealized gain (loss) on derivative instruments
|
1,319
|
|
|
(964
|
)
|
Other expense
|
(5,001
|
)
|
|
(5,978
|
)
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars)
|
2016
|
|
2015
|
|
% Change
|
|||
Revenues
|
512,608
|
|
|
516,943
|
|
|
(1
|
)%
|
Less: voyage expenses
(1)
|
(56,805
|
)
|
|
(18,379
|
)
|
|
209
|
%
|
Net revenues
|
455,803
|
|
|
498,564
|
|
|
(9
|
)%
|
Vessel operating expenses
(2)
|
(150,100
|
)
|
|
(123,572
|
)
|
|
21
|
%
|
Time-charter hire expense
|
(57,368
|
)
|
|
(74,860
|
)
|
|
(23
|
)%
|
Depreciation and amortization
|
(99,024
|
)
|
|
(72,118
|
)
|
|
37
|
%
|
General and administrative expenses
|
(29,432
|
)
|
|
(28,418
|
)
|
|
4
|
%
|
(Loss) gain on sale of vessels
|
(20,926
|
)
|
|
771
|
|
|
(2,814
|
)%
|
Restructuring charges
|
—
|
|
|
(6,468
|
)
|
|
(100
|
)%
|
Income from vessel operations
|
98,953
|
|
|
193,899
|
|
|
(49
|
)%
|
Equity income
|
7,680
|
|
|
11,528
|
|
|
(33
|
)%
|
(1)
|
Includes $3.2 million of voyage expenses for the year ended December 31, 2016 relating to lightering support services which the ship-to-ship transfer segment provided to the conventional tanker segment for full service lightering operations.
|
(2)
|
Includes $0.8 million of vessel operating expenses for the year ended December 31, 2015 relating to lightering support services which the ship-to-ship transfer segment provided to the conventional tanker segment for full service lightering operations.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2016
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
(2)
|
Adjustments
(3)
|
Net Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(3)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$184,965
|
|
|
($5,068
|
)
|
|
($59
|
)
|
|
$179,838
|
|
6,705
|
|
|
$26,820
|
|
Voyage-charter contracts - Aframax
(4)
|
|
$158,272
|
|
|
($50,185
|
)
|
|
$392
|
|
|
$108,479
|
|
5,145
|
|
|
$21,086
|
|
Voyage-charter contracts - LR2
|
|
$48,599
|
|
|
$53
|
|
|
($36
|
)
|
|
$48,616
|
|
2,572
|
|
|
$18,903
|
|
Voyage-charter contracts - MR
|
|
$8,305
|
|
|
($30
|
)
|
|
$302
|
|
|
$8,577
|
|
535
|
|
|
$16,035
|
|
Time-charter out contracts - Suezmax
|
|
$30,597
|
|
|
($731
|
)
|
|
$99
|
|
|
$29,965
|
|
1,029
|
|
|
$29,124
|
|
Time-charter out contracts - Aframax
|
|
$54,593
|
|
|
($338
|
)
|
|
$40
|
|
|
$54,295
|
|
2,327
|
|
|
$23,332
|
|
Time-charter out contracts - LR2
|
|
$12,201
|
|
|
($273
|
)
|
|
($30
|
)
|
|
$11,898
|
|
526
|
|
|
$22,629
|
|
Total
|
|
$497,532
|
|
|
($56,572
|
)
|
|
$708
|
|
|
$441,668
|
|
18,839
|
|
|
$23,445
|
|
(1)
|
Excludes $11.2 million of commissions and management fees earned from TTOL from the management of external vessels trading in the RSAs, $2.6 million of bunker rebates and $1.2 million of in-process revenue contract revenue.
|
(2)
|
Includes $3.2 million of inter-segment voyage expenses relating to lightering support services provided by the ship-to-ship transfer segment and excludes $0.3 million of voyage expenses incurred by TTOL.
|
(3)
|
Average TCE per Revenue Day excludes $0.7 million in pool management fees and commissions payable for commercial management for our vessels, off-hire bunker and other expenses, all of which are included as part of the adjustments.
|
(4)
|
Includes $48.2 million of revenues and $34.8 million of voyage expenses related to the full service lightering business, which includes $3.2 million inter-segment voyage expenses referenced in note 2 relating to lightering support services provided to the full service lightering business by the ship-to-ship transfer segment.
|
|
Conventional Tanker Segment
|
||||||||||||||||
|
Year Ended December 31, 2015
|
||||||||||||||||
|
Revenues
(1)
|
Voyage Expenses
|
Adjustments
(2)
|
Net Revenues
|
Revenue Days
|
Average TCE per Revenue Day
(2)
|
|||||||||||
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
(in thousands)
|
|
|
|||||||||||
|
|
|
|
|
|
|
|||||||||||
Voyage-charter contracts - Suezmax
|
|
$158,639
|
|
|
($2,568
|
)
|
|
$1,642
|
|
|
$157,713
|
|
4,021
|
|
|
$39,217
|
|
Voyage-charter contracts - Aframax
(3)
|
|
$162,654
|
|
|
($13,683
|
)
|
|
$343
|
|
|
$149,314
|
|
4,800
|
|
|
$31,109
|
|
Voyage-charter contracts - LR2
|
|
$81,672
|
|
|
($342
|
)
|
|
$528
|
|
|
$81,858
|
|
2,845
|
|
|
$28,777
|
|
Voyage-charter contracts - MR
|
|
$19,346
|
|
|
($61
|
)
|
|
$1,088
|
|
|
$20,373
|
|
960
|
|
|
$21,205
|
|
Time-charter out contracts - Suezmax
|
|
$14,235
|
|
|
($109
|
)
|
|
$148
|
|
|
$14,274
|
|
483
|
|
|
$29,577
|
|
Time-charter out contracts - Aframax
|
|
$54,550
|
|
|
($1,398
|
)
|
|
$857
|
|
|
$54,009
|
|
2,864
|
|
|
$18,835
|
|
Time-charter out contracts - LR2
|
|
$4,607
|
|
|
($132
|
)
|
|
$5
|
|
|
$4,480
|
|
175
|
|
|
$25,623
|
|
Time-charter out contracts - MR
|
|
$6,427
|
|
|
($39
|
)
|
|
($4,418
|
)
|
|
$1,970
|
|
50
|
|
|
$39,036
|
|
Total
|
|
$502,130
|
|
|
($18,332
|
)
|
|
$193
|
|
|
$483,991
|
|
16,198
|
|
|
$29,875
|
|
(1)
|
Excludes $8.1 million of commissions and management fees earned from TTOL from the management of external vessels trading in the RSAs, $4.8 million of in-process revenue contract revenue, $1.3 million of bunker rebates and $0.6 million of results incurred by TTOL.
|
(2)
|
Average TCE per Revenue Day excludes $4.4 million of crew redundancy costs recovered from one of our customers and $4.6 million in pool management fees and commissions payable for commercial management for our vessels, off-hire bunker and other expenses, all of which are included as part of the adjustments.
|
(3)
|
Includes $15.0 million of revenues and $5.8 million of voyage expenses related to the full service lightering business.
|
•
|
a decrease of $99.8 million due to lower average realized spot tanker rates earned by our Suezmax, Aframax, LR2 and MR tankers in 2016 compared to 2015;
|
•
|
a net decrease of $16.2 million due to various vessels changing employment between fixed-rate charters and spot voyage charters;
|
•
|
a decrease of $4.4 million due to redundancy cost for the Australian seafarers that we recovered from the customer upon expiration of a time-charter out contract of a MR product tanker in the first quarter of 2015;
|
•
|
a decrease of $3.5 million of in-process revenue contract amortization we recognized in revenue in 2016 compared to 2015; and
|
•
|
a net decrease of $0.8 million of lower revenue generated by TTOL in 2016 compared to 2015;
|
•
|
a net increase of $43.9 million, primarily due to the addition of 12 Suezmax tankers, two LR2 product tankers and one Aframax tanker that we acquired during 2015 and the change in the average size of the in-charter fleet, partially offset by the sale of two MR product tankers in 2015 and 2016;
|
•
|
a net increase of $13.9 million due to fewer off-hire days in 2016 compared to 2015;
|
•
|
an increase of $10.5 million due to higher average rates earned on our out-chartered Aframax tankers in 2016 compared to 2015;
|
•
|
an increase of $4.4 million due to higher commissions and management fees earned by TTOL from the management of external vessels trading in the RSAs and bunker rebates;
|
•
|
an increase of $4.2 million due to the acquisition of the full service lightering business that was part of the STS transfer business (or
SPT
) acquisition during the third quarter of 2015;
|
•
|
a net increase of $3.9 million due to lower pool management fees and commissions paid to external pool managers, off-hire bunker and other expenses in 2016 compared to 2015; and
|
•
|
an increase of $1.1 million for 2016 due to one additional calendar day as 2016 was a leap year.
|
•
|
an increase of $27.0 million primarily resulting from the addition of 12 modern Suezmax tankers, one Aframax tanker and four LR2 product tankers, acquired in 2015, including two LR2 product tankers that were previously in-chartered. This was partially offset by the sales of two MR tankers in the second half of 2016 and one MR tanker sold in the fourth quarter of 2015;
|
•
|
an increase of $1.7 million due to higher ship management fees resulting from the 17 vessels acquired in 2015; and
|
•
|
an increase of $0.6 million due to inflationary increases and higher crew and manning expenses related to performance-based compensation paid to seafarers which were recognized in 2016;
|
•
|
a decrease of $0.9 million due to lower fleet overhead costs primarily resulting from the timing of seafarer training, crew agency fees and other initiatives; and
|
•
|
a decrease of $0.9 million due to lower insurance premiums paid and insurance credits received during the year.
|
•
|
an increase of $1.5 million due to higher administrative, strategic management, and other fees incurred under our management agreement with Teekay primarily resulting from higher allocations due to supporting activities provided to bring commercial management of Suezmax vessels in-house;
|
•
|
a decrease of $0.5 million due to higher corporate expenses incurred during 2015 primarily as a result of lower legal expenses related to our vessel construction and option agreements with STX Offshore & Shipbuilding Co. Ltd. (or
STX
) of South Korea and legal expenses incurred related to the acquisitions of vessels and the ship-to-ship business in 2015.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2016
|
|
2015
|
||
High-Q Joint Venture
|
4,359
|
|
|
3,218
|
|
Tanker Investments Ltd.
|
3,515
|
|
|
7,280
|
|
Gemini Tankers L.L.C.
|
(194
|
)
|
|
1,030
|
|
Total equity income
|
7,680
|
|
|
11,528
|
|
•
|
a decrease of $3.8 million due to lower equity earnings from TIL resulting from overall lower realized average spot rates earned in 2016 compared to 2015, partially offset by an increase resulting from our increased ownership interest in TIL to 11.3% in 2016 as compared to 10.2% in 2015; and
|
•
|
a decrease of $1.2 million due to the winding down of operations of the Gemini Tankers L.L.C. joint venture in 2015;
|
•
|
an increase of $1.1 million due to higher equity earnings from our High-Q Investment Ltd (or
High-Q
) joint venture primarily resulting from profit share recognized in the second quarter of 2016 as VLCC rates averaged above certain thresholds, triggering a profit sharing with the customer.
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars)
|
2016
|
|
2015
|
|
% Change
|
|||
Revenues
(1)
|
41,136
|
|
|
18,587
|
|
|
121
|
%
|
Less: voyage expenses
|
—
|
|
|
(348
|
)
|
|
(100
|
)%
|
Net revenues
|
41,136
|
|
|
18,239
|
|
|
126
|
%
|
Vessel operating expenses
|
(32,498
|
)
|
|
(14,441
|
)
|
|
125
|
%
|
Time-charter hire expense
|
(2,279
|
)
|
|
(38
|
)
|
|
5,897
|
%
|
Depreciation and amortization
|
(5,125
|
)
|
|
(1,642
|
)
|
|
212
|
%
|
General and administrative expenses
|
(3,767
|
)
|
|
(1,985
|
)
|
|
90
|
%
|
Gain on sale of vessels
|
332
|
|
|
—
|
|
|
100
|
%
|
Restructuring charge
|
—
|
|
|
(327
|
)
|
|
(100
|
)%
|
Loss from vessel operations
|
(2,201
|
)
|
|
(194
|
)
|
|
1,035
|
%
|
(1)
|
Includes
$3.2 million
of revenues for the year ended
December 31, 2016
(
2015
-
$0.8 million
) relating to lightering support services which the ship-to-ship transfer segment provided to the conventional tanker segment for full service lightering operations.
|
|
Year Ended December 31,
|
||||
(in thousands of U.S. dollars)
|
2016
|
|
2015
|
||
Interest expense
|
(29,784
|
)
|
|
(17,389
|
)
|
Interest income
|
117
|
|
|
122
|
|
Realized and unrealized loss on derivative instruments
|
(964
|
)
|
|
(1,597
|
)
|
Other (expenses) income
|
(5,978
|
)
|
|
(2,743
|
)
|
|
Year Ended December 31,
|
|||||||
(in thousands of U.S. dollars)
|
2017
|
|
2016
|
|
2015
|
|||
Net cash flow from operating activities
|
79,640
|
|
|
206,666
|
|
|
201,966
|
|
Net cash flow (used for) provided by financing activities
|
(181,138
|
)
|
|
(290,853
|
)
|
|
647,678
|
|
Net cash flow provided by (used for) investing activities
|
78,780
|
|
|
21,824
|
|
|
(880,881
|
)
|
•
|
a net decrease of $97.3 million in operating earnings in 2017 primarily as a result of lower average realized TCE rates, the expiry of time-charter out contracts for various vessels which subsequently traded on spot voyages at lower average realized rates and more vessels which transitioned from voyage charter to full service lightering employment in 2017 compared to 2016;
|
•
|
a net decrease of $24.3 million in operating cash flows in 2017 due to the timing of the settlement of operating assets and liabilities, primarily resulting from lower settlements of our pool receivables due to changes in the average realized TCE rates in 2017 compared to the prior year and higher settlements of our due to affiliates accounts, partially offset by the timing of our 2016 first quarter dividends which were declared at the end of 2015; and
|
•
|
a decrease of $5.5 million in operating cash flows in 2017 relating to higher expenditures for dry-docking activities. In 2017, we dry docked three Suezmax tankers and four Aframax tankers, whereas in 2016 we dry docked two Suezmax tankers.
|
•
|
an increase of $31.0 million in operating cash flows in 2016 relating to lower expenditures on dry-docking activities. In 2016, we dry docked two Suezmax tankers, whereas in 2015, we dry docked seven Suezmax tankers, seven LR2 product tankers, two Aframax tankers and two MR tankers; and
|
•
|
a net increase of $28.3 million in operating cash flows in 2016 due to the timing of the settlement of operating assets and liabilities primarily as a result of the decrease in pool receivables due to lower TCE rates in 2016 compared to the prior year;
|
•
|
a net decrease of $54.7 million in operating earnings primarily as a result of lower average realized TCE rates, partially offset by the increase in fleet size in 2016 as compared to the prior year.
|
•
|
a net decrease of $68.8 million in cash outflows due to a decrease in repayments and prepayments on our term loans and revolving credit facilities, partially offset by the 2016 refinancing of our long-term debt facilities and the 2017 sale-leaseback financing transaction;
|
•
|
a decrease of $26.2 million in cash outflows related to lower cash dividends paid during 2017, resulting from lower earnings as our dividend policy is based on adjusted net (loss) income, partially offset by the increase in the number of our shares of outstanding Class A and B common stock from issuances of our shares in 2016 and 2017;
|
•
|
a decrease of $15.0 million in cash outflows, related to the return of capital in 2016 by the Entities under Common Control to Teekay; and
|
•
|
an increase of $6.0 million in cash inflows from proceeds received from equity offerings, including our COP which we relaunched in November 2016 and proceeds from an issuance of 2.2 million shares of Class A common stock to Teekay;
|
•
|
an increase of $4.1 million in cash outflows due to the scheduled payments on our capital lease obligations which we entered into in July 2017; and
|
•
|
an increase of $2.7 million in cash outflows due to an increase in restricted cash held for the purposes of the margin requirements of our obligations related to capital leases.
|
•
|
an increase of $692.9 million in cash outflows primarily due to an increase in repayments and prepayments on our term loans and revolving credit facilities in 2016 compared to 2015;
|
•
|
a net decrease of $202.8 million in cash inflows due to lower proceeds from equity offerings in 2016 compared with 2015, including the effect of the 2015 issuances of shares under private placements to partially fund the acquisition of the 12 vessels from Principal Maritime Tankers (or
Principal Maritime
) and the ship-to-ship transfer business in 2015, substantially lower sales of Class A common stock during 2016 under our COP, and proceeds from the underwriters' exercise of their over-allotment option in January 2015 for an additional 3.0 million shares of Class A common stock;
|
•
|
an increase of $31.7 million in cash outflows related to additional cash dividends paid during 2016 due to the change in our dividend policy and the increase in the number of shares of Class A and B common stock from our 2015 issuances; and
|
•
|
an increase of $15.0 million in cash outflows primarily related to the return of capital issued from Entities under Common Control to Teekay in 2016;
|
•
|
a decrease of $3.5 million in cash used for financing activities from the Entities under Common Control.
|
•
|
a net increase of $30.8 million in cash acquired, net of transaction costs, in the TIL merger;
|
•
|
an increase of $24.6 million in cash inflows related to the sales of two Suezmax tankers, three Aframax tankers and one lightering support vessel during the year ended December 31, 2017, compared to the sale of two MR tankers and two lightering support vessels for the same period in the prior year; and
|
•
|
an decrease of $4.5 million in cash outflows due to fewer capital expenditures for the fleet for the year ended December 31, 2017 as compared to the prior year;
|
•
|
an decrease of $3.0 million in cash inflows related to loan repayments to us from our High-Q joint venture.
|
•
|
a decrease of cash outflows of $612.0 million related to the cash consideration paid in 2015 to acquire the 12 modern Suezmax vessels from Principal Maritime Tankers;
|
•
|
a decrease of cash outflows of $227.0 million related to the 2015 acquisition of four LR2 product tankers and one Aframax tanker as well as other capital expenditures made during the year;
|
•
|
a decrease of cash outflows of $45.6 million, net of working capital adjustments, related to the 2015 acquisition of SPT;
|
•
|
an increase of cash inflows of $16.5 million related to gross proceeds received in the second half of 2016 from the sales of two MR tankers and two lightering support vessels; and
|
•
|
an increase of cash inflows of $2.5 million related to the 2016 repayment of a loan to us from our High-Q joint venture;
|
•
|
a decrease of cash inflows of $1.1 million related to the 2015 return of capital received from our equity accounted investments.
|
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Beyond
2022
|
|||||||
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. Dollar-Denominated Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Scheduled repayments of revolving facilities, term loans and other debt
(1)
|
435.7
|
|
|
103.4
|
|
|
105.7
|
|
|
131.9
|
|
|
72.1
|
|
|
22.6
|
|
|
—
|
|
Repayments at maturity of revolving facilities, term loans and other debt
(1)
|
527.5
|
|
|
63.8
|
|
|
—
|
|
|
—
|
|
|
330.8
|
|
|
132.9
|
|
|
—
|
|
Scheduled repayments of obligations related to capital leases
(2)
|
148.9
|
|
|
7.2
|
|
|
7.7
|
|
|
8.2
|
|
|
8.7
|
|
|
9.3
|
|
|
107.8
|
|
Chartered-in vessels (operating leases)
|
29.7
|
|
|
11.7
|
|
|
8.3
|
|
|
8.3
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
Total
|
1,141.8
|
|
|
186.1
|
|
|
121.7
|
|
|
148.4
|
|
|
413.0
|
|
|
164.8
|
|
|
107.8
|
|
(1)
|
Excludes all expected interest payments of $31.7 million (2018), $27.5 million (2019), $23.3 million (2020), $13.9 million (2021) and $3.4 million (2022). Expected interest payments are based on the existing interest rates for fixed-rate loans of 5.4% and existing interest rates for variable-rate loans at LIBOR
|
(2)
|
Excludes imputed interest payments of $9.0 million (2018), $8.5 million (2019), $8.1 million (2020), $7.5 million (2021), $7.0 million (2022) and $29.1 million (thereafter).
|
Aframax, Suezmax and Product Tankers
(in thousands of U.S. dollars, except number of vessels) |
# Vessels
|
|
Market
Values (1) |
|
Carrying
Values |
|||
Conventional Tankers
(2)
|
11
|
|
|
153,500
|
|
|
293,088
|
|
Conventional Tankers
(3)
|
27
|
|
|
706,300
|
|
|
1,195,837
|
|
Total
|
38
|
|
|
859,800
|
|
|
1,488,925
|
|
(1)
|
Market values are determined using reference to second-hand market comparables. Since vessel values can be volatile, our estimates of market value may not be indicative of either the current or future prices we could obtain if we sold any of the vessels.
|
(2)
|
Undiscounted cash flows are marginally greater than the carrying values.
|
(3)
|
Undiscounted cash flows are significantly greater than the carrying values.
|
Item 6.
|
Directors, Senior Management and Employees
|
Name
|
|
Age
|
|
Position
|
Stewart Andrade
|
|
45
|
|
Chief Financial Officer
(1)
|
Arthur Bensler
|
|
60
|
|
Chairman of the Board of Directors
|
Richard J.F. Bronks
|
|
52
|
|
Director
(2)
|
Richard T. du Moulin
|
|
71
|
|
Director
(2)
|
Kenneth Hvid
|
|
49
|
|
Director
(3)
|
William Lawes
|
|
74
|
|
Director
(2)
|
Kevin Mackay
|
|
49
|
|
President and Chief Executive Officer
|
Bjorn Moller
|
|
60
|
|
Director
|
Richard Paterson
|
|
66
|
|
Director
(2)(4)
|
(1)
|
Appointed December 7, 2017.
|
(2)
|
Member of Audit Committee, Conflicts Committee, and Nominating and Governance Committee.
|
(3)
|
Appointed February 22, 2017.
|
(4)
|
Appointed August 1, 2017.
|
•
|
the integrity of our consolidated financial statements;
|
•
|
our compliance with legal and regulatory requirements;
|
•
|
the independent auditors’ qualifications and independence; and
|
•
|
the performance of our internal audit function and independent auditors.
|
•
|
identifies individuals qualified to become Board members;
|
•
|
selects and recommends director and committee member candidates to the Board;
|
•
|
maintain oversight of the operation and effectiveness of the Board of Directors and the corporate governance of the Company;
|
•
|
develops, updates and recommends to the Board corporate governance principles and policies applicable to us, monitors compliance with these principles and policies and recommends to the Board appropriate changes;
|
•
|
monitors compliance with such principles and policies;
|
•
|
discharges responsibilities of the Board relating to the Board’s compensation; and
|
•
|
oversees the evaluation of the Board and its committees.
|
Identity of Person or Group
|
Class A
Common
Stock
|
|
Percent of Class A
Common Stock
Owned
|
|
Percent of Total
Class A and Class B
Common Stock
Owned
|
|||
All directors and executive officers as a group (9 persons)
(1)
|
1,792,970
|
|
|
0.8
|
%
|
|
0.7
|
%
|
(1)
|
Excludes shares of Class A and Class B common stock beneficially owned by Teekay Corporation. Please read Item 7 - Major Shareholders and Related Party Transactions for more detail. Also excludes shares beneficially owned by our former Chief Financial Officer, Vincent Lok, who retired from the position in December 2017.
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
A.
|
Major Shareholders
|
Identity of Person or Group
|
Class A
Common
Stock
|
|
Percent of Class A
Common Stock
Owned
|
|
Class B
Common
Stock
|
|
Percent of Class B
Common Stock
Owned
|
|
Percent of
Total Class A
and Class B
Common
Stock Owned
|
|||||
Teekay Corporation
(1)
|
40,290,460
|
|
|
17.4
|
%
|
|
37,007,981
|
|
|
100.0
|
%
|
|
28.8
|
%
|
BlueMountain Capital Management, LLC
(2)
|
17,485,057
|
|
|
7.6
|
%
|
|
—
|
|
|
—
|
|
|
6.5
|
%
|
Huber Capital Management, LLC
(3)
|
16,259,924
|
|
|
7.0
|
%
|
|
—
|
|
|
—
|
|
|
6.1
|
%
|
Azvalor Asset Management, SGIIC, SA
(4)
|
12,150,631
|
|
|
5.3
|
%
|
|
—
|
|
|
—
|
|
|
4.5
|
%
|
(1)
|
The voting power represented by shares beneficially owned by Teekay Corporation is 9.7% for its Class A common stock, 44.5% for its Class B common stock and 54.1% for its total Class A and Class B common stock.
|
(2)
|
According to the Schedule 13G filed with the SEC on February 14, 2018, BlueMountain Capital Management, LLC has shared voting power and shared dispositive power as to 17,485,057 shares. The voting power represented by shares beneficially owned by BlueMountain Capital Management, LLC is 4.2% for its Class A common stock.
|
(3)
|
According to the Schedule 13G/A filed with the SEC on February 13, 2018, Huber Capital Management, LLC has sole voting power and sole dispositive power as to 9,446,248 and 16,259,924 of the shares, respectively. The voting power represented by shares beneficially owned by Huber Capital Management, LLC is 3.9% for its Class A common stock.
|
(4)
|
According to the Schedule 13G filed with the SEC on January 22, 2018, Azvalor Asset Management, SGIIC, SA has sole and shared voting power as to 12,150,631 shares. The voting power represented by shares beneficially owned by Azvalor Asset Management, SGIIC, SA is 2.9% for its Class A common stock.
|
B.
|
Related Party Transactions
|
•
|
Teekay Corporation and its other affiliates may engage (and will have no duty to refrain from engaging) in the same or similar activities or lines of business as us, and that we will not be deemed to have an interest or expectancy in any business opportunity, transaction or other matter (each a
Business Opportunity
) in which Teekay Corporation or any of its other affiliates engages or seeks to engage merely because we engage in the same or similar activities or lines of business as that related to such Business Opportunity;
|
•
|
if Teekay Corporation or any of its other affiliates (whether through our Manager, any of Teekay Corporation’s or any of its other affiliates' officers or directors who are also officers or directors of us, or otherwise) acquires knowledge of a potential Business Opportunity that may be deemed to constitute a corporate opportunity of both Teekay Corporation and us, then (i) neither Teekay Corporation, our Manager nor any of such officers or directors will have any duty to communicate or offer such Business Opportunity to us and (ii) Teekay Corporation may pursue or acquire such Business Opportunity for itself or direct such Business Opportunity to another person or entity; and
|
•
|
any Business Opportunity of which our Manager or any person who is an officer or director of Teekay Corporation (or any of its other affiliates) and of us becomes aware shall be a Business Opportunity of Teekay Corporation.
|
•
|
Commercial services fee. We pay a fee to our Manager for commercial services it provides to us currently equal to 1.25% of the gross revenue attributable to the vessels, on time charter and spot-traded vessels, our Manager commercially manages for us (excluding vessels participating in the Teekay Suezmax RSA, Teekay Aframax RSA or the Taurus Tankers LR2 RSA). We paid commercial service fees of $1.2 million for 2017, $1.9 million for 2016, and $1.2 million for 2015. Subsequent to our acquisition of the remaining 50% interest in TTOL in May 2017, our share of the Manager's commercial management fees has been eliminated.
|
•
|
Technical services fee
. We pay a fee, equal to the average rate Teekay Corporation charges third parties to technically manage their Tankers of a similar size, as determined on a quarterly basis, to our Manager for technical services it provides to us. For 2017, the technical services fee we paid was $8.8 million, $9.2 million for 2016 and $7.0 million for 2015. Subsequent to our acquisition of the remaining 50% interest in TTOL, our share of the Manager's technical services fees has been eliminated. TTOL also received reimbursements for technical services from our Manager. These reimbursements are further described in the Commercial and Technical Management Services Agreements described below.
|
•
|
Administrative and strategic services fees
. We pay fees to our Manager for administrative and strategic services that reimburse our Manager for its related direct and indirect expenses in providing such services and which includes a profit margin. The amount of the profit margin is based on the most recent transfer pricing study performed by an independent, nationally recognized accounting firm with respect to similar administrative and strategic services. The transfer pricing study is updated at least annually. We paid administrative and strategic services fees of $21.2 million for 2017, $10.1 million for 2016 and $8.4 million for 2015 excluding administrative and strategic services fees of $7.0 million for 2017, $15.5 million for 2016 and $14.7 million for 2015 attributable to the Entities under Common Control.
|
•
|
For additional information about these services and fee, please see Item 18 – Financial Statements: Note 3 – Acquisition of Entities under Common Control and Item 18 – Financial Statements: Note 14e – Related Party Transactions – Management fee – Related and Other, in our consolidated financial statements included in this Annual Report.
|
•
|
our Manager materially breaches the Management Agreement (and the matter is unresolved after a 90-day dispute resolution period) or experiences certain bankruptcy events or experiences a change of control to which we do no consent; or
|
•
|
we provide notice in the fourth quarter of 2021 after two-thirds of our Board of Directors elects to terminate the Management Agreement, which termination would be effective on December 31, 2022. If the Management Agreement extends pursuant to its terms as described above, we can elect to exercise this optional termination right in the fourth quarter of the year immediately preceding the end of the respective term.
|
•
|
after December 18, 2012 with 12 months’ notice. At our option, our Manager will continue to provide technical services to us for up to an additional two-year period from termination, provided that our Manager or its affiliates continue in the business of providing such services to third parties for similar types of vessels; or
|
•
|
if we materially breach the agreement and the matter is unresolved after a 90-day dispute resolution period.
|
•
|
if the Management Agreement is terminated;
|
•
|
at the option of the party not in breach of the Commercial Agreement (and the matter is unresolved after a 30-day dispute resolution period);
|
•
|
at the option of the other party, if a party experiences certain bankruptcy events (and the matter is unresolved after a 60-day dispute resolution period); or
|
•
|
if a final judgment, order or decree which materially and adversely affects the ability of either party to perform its obligations.
|
•
|
if the Management Agreement is terminated;
|
•
|
at the option of the party not in breach of the Technical Agreement (and the matter is unresolved after a 30-day dispute resolution period);
|
•
|
at the option of the other party, if a party experiences certain bankruptcy events (and the matter is unresolved after a 60-day dispute resolution period); or
|
•
|
if a final judgment, order or decree which materially and adversely affects the ability of either party to perform its obligations.
|
•
|
any license or permit required to enable any party to perform any of its obligations is wholly or partially revoked, withdrawn, sustained or terminated or expires and is not renewed or otherwise fails to remain in full force; or
|
•
|
either party ceases to carry on business, or a substantial part of the business properties or assets of either party are seized or appropriated.
|
•
|
Teekay Chartering Limited or Teekay Corporation materially breaches the Teekay RSA Agreements (and the matter is unresolved after a 90-day dispute resolution period) or experiences certain bankruptcy events or if Teekay Chartering Limited experiences a change of control to which we do no consent; or
|
•
|
the Management Agreement terminates for any reason.
|
•
|
after December 18, 2012 with 12 months’ notice;
|
•
|
if we materially breach the Teekay RSA Agreements and the matter is unresolved after a 90-day dispute resolution period; or
|
•
|
if the Management Agreement terminates for any reason.
|
Item 8.
|
Financial Information
|
Item 9.
|
The Offer and Listing
|
Years Ended
|
Dec 31,
2017
|
|
Dec 31, 2016
|
|
Dec 31, 2015
|
|
Dec 31, 2014
|
|
Dec 31, 2013
|
|
|
|
|
|
|
|
|
||||||||||||||||||
High
|
$
|
2.70
|
|
|
$
|
6.89
|
|
|
$
|
8.53
|
|
|
$
|
5.95
|
|
|
$
|
4.02
|
|
|
|
|
|
|
|
|
|
||||||||
Low
|
$
|
1.30
|
|
|
$
|
1.90
|
|
|
$
|
4.82
|
|
|
$
|
3.18
|
|
|
$
|
2.38
|
|
|
|
|
|
|
|
|
|
||||||||
|
|||||||||||||||||||||||||||||||||||
Quarters Ended
|
Mar 31,
2018
|
|
Dec 31,
2017
|
|
Sept 30,
2017
|
|
Jun 30,
2017
|
|
Mar 31,
2017
|
|
Dec 31, 2016
|
|
Sept 30,
2016 |
|
Jun 30, 2016
|
|
Mar 31, 2016
|
||||||||||||||||||
High
|
$
|
1.43
|
|
|
$
|
1.95
|
|
|
$
|
1.91
|
|
|
$
|
2.20
|
|
|
$
|
2.70
|
|
|
$
|
2.85
|
|
|
$
|
3.28
|
|
|
$
|
4.16
|
|
|
$
|
6.89
|
|
Low
|
$
|
1.08
|
|
|
$
|
1.30
|
|
|
$
|
1.37
|
|
|
$
|
1.65
|
|
|
$
|
1.96
|
|
|
$
|
1.90
|
|
|
$
|
2.42
|
|
|
$
|
2.87
|
|
|
$
|
3.26
|
|
|
|||||||||||||||||||||||||||||||||||
Months Ended
|
Mar 31, 2018
|
|
Feb 28,
2018
|
|
Jan 31,
2018
|
|
Dec 31,
2017
|
|
Nov 30,
2017
|
|
Oct 31,
2017
|
|
|
|
|
|
|
||||||||||||||||||
High
|
$
|
1.27
|
|
|
$
|
1.29
|
|
|
$
|
1.43
|
|
|
$
|
1.63
|
|
|
$
|
1.95
|
|
|
$
|
1.72
|
|
|
|
|
|
|
|
||||||
Low
|
$
|
1.11
|
|
|
$
|
1.08
|
|
|
$
|
1.24
|
|
|
$
|
1.30
|
|
|
$
|
1.40
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
Item 10.
|
Additional Information
|
a)
|
Management Agreement dated December 18, 2007 between Teekay Tankers Ltd. and Teekay Tankers Management Services Ltd., as amended by Amendment No. 1 dated as of May 7, 2009, Amendment No. 2 dated as of September 21, 2010 and Amendment No. 3 dated as of January 1, 2011. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Management Agreement.
|
b)
|
Addendum to Management Agreement dated March 23, 2016 between Teekay Tankers Ltd. and Teekay Tankers Management Services Ltd. This Addendum allows Teekay Tankers Management Services Ltd. to sub-contract commercial management of vessels to certain parties, subject to certain terms.
|
c)
|
Technical Services Agreement dated December 18, 2007 between Teekay Tankers Management Services Ltd. and Teekay Shipping Limited. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Technical Services Agreement.
|
d)
|
Commercial Management Services Agreement dated February 29, 2008 between Teekay Tankers Management Services Ltd. and Teekay Chartering Limited. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Commercial Management Agreement.
|
e)
|
Teekay Tankers Ltd. 2007 Long-Term Incentive Plan.
|
f)
|
Registration Rights Agreement between Teekay Tankers Ltd. and Teekay Corporation.
|
g)
|
Shareholders Agreement dated September 30, 2010 for a U.S. $98,000,000 shipbuilding contract among Teekay Tankers Holding Ltd., Kriss Investment Company and High-Q Investment Ltd.
|
h)
|
Master Ship Management Agreement dated August 31, 2012 between Teekay Shipping Limited and Teekay Marine Ltd. Please read Item 4. – Information on the Company – B. Business Overview for a description of this Master Ship Management Agreement.
|
i)
|
Secured Term Loan and Revolving Credit Facility Agreement dated January 8, 2016 between Teekay Tankers Ltd., Nordea Bank Finland PLC and various other banks, for a $894.4 million long-term debt facility, consisting of both a term loan and a revolving credit facility, which is scheduled to mature in January 2021.
|
j)
|
Secured Term Loan Facility Agreement dated August 28, 2015 between Teekay Tankers Ltd., ABN AMRO Capital USA LLC and various other banks for the principal amount of $397.2 million, which matured on January 29, 2016. The loan facility is secured by the 12 modern Suezmax tankers we acquired from Principal Maritime and has a variable interest rate of LIBOR plus a margin of 2.25%. Repayments are to be made in two equal quarterly installments of $10.0 million with a balloon repayment due at maturity. This loan facility was refinanced through the new loan agreement in January 2016, referred to above.
|
k)
|
Secured Term Loan Facility Agreement dated January 30, 2015 between Teekay Tankers Ltd., ABN AMRO Capital USA LLC, DNB Capital LLC and DNB Markets, Inc., for the principal amount of approximately $126.6 million, which matured on January 29, 2016. The loan facility is secured by the four LR2 product tankers and one Aframax tanker we acquired during the quarter ended March 31, 2015, and has a variable interest rate of LIBOR plus a margin of 2.50% to 2.80%. Repayments are to be made in four equal quarterly installments of $3.0 million with a balloon repayment due at maturity. This loan facility was refinanced through the new loan agreement in January 2016, referred to above.
|
l)
|
Equity Distribution Agreement, dated November 18, 2015, between Teekay Tankers Ltd. and Evercore Group L.L.C. Under this Agreement, we implemented a continuous offering program through which we may, from time to time, issue Class A common stock with an aggregate offering price of up to $80.0 million, through Evercore, as sale agent.
|
m)
|
Equity Distribution Agreement, dated June 4, 2015, between Teekay Tankers Ltd. and Evercore Group L.L.C. Under this Agreement, we implemented a continuous offering program through which we may, from time to time, issue Class A common stock with an aggregate
|
n)
|
Registration Rights Agreement, dated August 4, 2015, by and among Teekay Tankers Ltd. and Veritable Maritime Holdings, LLC. Under this Agreement, we agreed to prepare and file a shelf registration statement to register offers and sales of certain shares of our Class A Common Stock that we issued to Veritable Maritime Holdings, LLC and certain of its affiliates as partial consideration for our purchase of certain vessels from certain wholly-owned indirect subsidiaries of Veritable Maritime Holdings, LLC.
|
o)
|
Common Stock Purchase Agreement, dated August 4, 2015, by and among Teekay Tankers Ltd. and the purchasers named therein. Under this Agreement, we issued 9,118,797 shares of our Class A Common Stock to a group of institutional investors for $6.65 per share.
|
p)
|
Secured Revolving Credit Facility Agreement dated December 18, 2017 between Teekay Tankers Ltd., Nordea Bank AB and various other banks, for a $270.0 million long-term debt facility which is scheduled to mature in December 2022.
|
q)
|
Agreement and Plan of Merger, dated as of May 31, 2017, by and among Teekay Tankers Ltd., Royal 2017 Ltd. and Tanker Investments Ltd. (or
TIL
) under which we completed a merger with TIL by acquiring all of the remaining 27.0 million issued and outstanding common shares of TIL, by way of a share-for-share exchange of 3.3 shares of our Class A common stock for each share of TIL common stock, and as a result, TIL became a wholly-owned subsidiary.
|
r)
|
Voting and Support Agreement, dated as of May 31, 2017, between Teekay Corporation, Teekay Holdings Limited, Teekay Finance Limited, Tanker Investments Ltd. and Teekay Tankers Ltd., providing, among other things, that Teekay Corporation will support the Merger with TIL.
|
s)
|
Purchase Agreement, dated as of May 31, 2017, between Teekay Tankers Ltd. and Teekay Holdings Limited (or
THL
), under which we purchased the remaining 50% of the issued and outstanding shares of Teekay Tanker Operations Ltd. from THL.
|
t)
|
Voting and Support Agreement, dated as of September 14, 2017, by and among Teekay Tankers Ltd., Huber Capital Management, LLC and Joseph R. Huber, providing, among other things, that Huber Capital Management, LLC and Joseph R. Huber would vote certain shares of the Company's Class A Common Stock in favor of a charter amendment in connection with our merger with TIL.
|
u)
|
Share Subscription Agreement, dated January 13, 2017, between Teekay Tankers Ltd. and THL, under which we agreed to issue a total of 2,155,172 shares of our Class A common stock for an aggregate purchase price of $5,000,000.
|
•
|
dealers in securities or currencies,
|
•
|
traders in securities that have elected the mark-to-market method of accounting for their securities,
|
•
|
persons whose functional currency is not the U.S. dollar,
|
•
|
persons holding our common stock as part of a hedge, straddle, conversion or other “synthetic security” or integrated transaction,
|
•
|
certain U.S. expatriates,
|
•
|
financial institutions,
|
•
|
insurance companies,
|
•
|
persons subject to the alternative minimum tax,
|
•
|
persons that actually or under applicable constructive ownership rules own 10% or more of our stock (by vote or value), and
|
•
|
entities that are tax-exempt for U.S. federal income tax purposes.
|
•
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for our common stock;
|
•
|
the amount allocated to the current taxable year and any taxable year prior to the taxable year we were first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income in the current taxable year;
|
•
|
the amount allocated to each of the other taxable years would be subject to U.S. federal income tax at the highest rate of tax in effect for the applicable class of taxpayer for that year; and
|
•
|
an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
•
|
fails to timely provide an accurate taxpayer identification number;
|
•
|
is notified by the IRS that it has failed to report all interest or distributions required to be shown on its U.S. federal income tax returns; or
|
•
|
in certain circumstances, fails to comply with applicable certification requirements.
|
Item 11.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
|
Fair Value
Asset /
(Liability)
|
|
Rate
(1)
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
(in millions of U.S. dollars, except percentages)
|
|||||||||||||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Variable rate
|
(157.2
|
)
|
|
(95.7
|
)
|
|
(121.9
|
)
|
|
(365.7
|
)
|
|
(155.5
|
)
|
|
—
|
|
|
(896.0
|
)
|
|
(879.9
|
)
|
|
3.40
|
%
|
Fixed-rate
|
(10.0
|
)
|
|
(10.0
|
)
|
|
(10.0
|
)
|
|
(37.2
|
)
|
|
—
|
|
|
—
|
|
|
(67.2
|
)
|
|
(66.2
|
)
|
|
5.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Obligation related to capital leases
|
(7.2
|
)
|
|
(7.7
|
)
|
|
(8.2
|
)
|
|
(8.7
|
)
|
|
(9.3
|
)
|
|
(107.8
|
)
|
|
(148.9)
|
|
(147.4)
|
|
6.20%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest Rate Swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Dollar-denominated interest rate swap
(2)
|
46.3
|
|
|
46.3
|
|
|
46.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138.8
|
|
|
1.3
|
|
|
1.46
|
%
|
U.S. Dollar-denominated interest rate swap
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
150.0
|
|
|
|
|
—
|
|
|
150.0
|
|
|
2.5
|
|
|
1.55
|
%
|
|
U.S. Dollar-denominated interest rate swap
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
50.0
|
|
|
|
|
—
|
|
|
50.0
|
|
|
1.4
|
|
|
1.16
|
%
|
(1)
|
Rate refers to the weighted-average interest rate for our long-term debt as at December 31, 2017, including the margin we pay on our variable-rate and fixed-rate debt.
|
(2)
|
Interest payments on U.S. Dollar-denominated debt and interest rate swaps are based on LIBOR. The average variable rate paid to us under our interest rate swaps is set quarterly at the three-month LIBOR.
|
Item 12.
|
Description of Securities Other than Equity Securities
|
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Item 15.
|
Controls and Procedures
|
Item 16A.
|
Audit Committee Financial Expert
|
Item 16B.
|
Code of Ethics
|
Item 16C.
|
Principal Accountant Fees and Services
|
(1)
|
Audit fees represent fees for professional services provided in connection with the audit of our consolidated financial statements, review of our quarterly consolidated financial statements, as well as other professional services in connection with the review of our regulatory filings.
|
(2)
|
For 2017 and 2016, tax fees principally included corporate tax compliance fees.
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Item 16F.
|
Change in Registrant’s Certifying Accountant
|
Item 16G.
|
Corporate Governance
|
•
|
Our Board of Directors is not comprised of a majority of independent directors, as required for domestic companies under the New York Stock Exchange listing requirements.
|
•
|
As a foreign private issuer, we are not required to obtain shareholder approval prior to the adoption of equity compensation plans or certain equity issuances, including, among others, issuing 20% or more of our outstanding common shares or voting power in a transaction.
|
Item 16H.
|
Mine Safety Disclosure
|
Item 17.
|
Financial Statements
|
Item 18.
|
Financial Statements
|
|
|
Page
|
|
||
|
|
|
|
||
|
||
|
||
|
||
|
Item 19.
|
Exhibits
|
(1)
|
Previously filed as Exhibits 3.1, 3.2, 10.1, 10.3, 10.5 and 4.1 to the Company’s Amendment No. 1 to the Registration Statement on Form F-1 (Registration No. 33-147798), filed with the SEC on December 11, 2007, and hereby incorporated by reference to such Amendment No. 1 to Registration Statement.
|
(2)
|
Previously filed as Exhibits 4.1 and 4.2 to the Company’s Report on Form 6-K furnished to the SEC on May 28, 2008, and hereby incorporated by reference to such Report.
|
(3)
|
Previously filed as an exhibit to the Company’s Report on Form 6-K furnished to the SEC on September 30, 2009, and hereby incorporated by reference to such Report.
|
(4)
|
Previously filed as an exhibit to the Company’s Report on Form 6-K furnished to the SEC on June 1, 2010 and hereby incorporated by reference to such Report.
|
(5)
|
Previously filed as an exhibit to the Company’s Report on Form 6-K furnished to the SEC on September 10, 2010 and hereby incorporated by reference to such Report.
|
(6)
|
Previously filed as Exhibit 4.11 to the Company’s Report on Form 6-K furnished to the SEC on November 30, 2010 and hereby incorporated by reference to such Report.
|
(7)
|
Previously filed as Exhibit 4.12 to the Company’s Report on Form 6-K furnished to the SEC on November 30, 2010 and hereby incorporated by reference to such Report.
|
(8)
|
Previously filed as Exhibit 4.19, 4.20, 4.21 and 10.4 to the Company’s Report on Form 20-F filed with the SEC on April 27, 2016 and hereby incorporated by reference to such Report.
|
(9)
|
Previously filed as Exhibit 4.17 to the Company’s Report on Form 6-K furnished to the SEC on September 17, 2012 and hereby incorporated by reference to such Report.
|
(10)
|
Previously filed as Exhibit 99.1 to the Company’s Registration Statement on Form, S-8 filed with the SEC on March 7, 2014 and hereby incorporated by reference to such Registration Statement.
|
(11)
|
Previously filed as Exhibit 10.2 to the Company’s Report on Form 6-K filed with the SEC on November 18, 2015 and hereby incorporated by reference to such Report.
|
(12)
|
Previously filed as Exhibit 10.1 to the Company’s Report on Form 6-K furnished to the SEC on August 7, 2015 and hereby incorporated by reference to such Report.
|
(13)
|
Previously filed as Exhibits 1.1, 1.2, and 1.3 to the Company’s Report on Form 6-K filed with the SEC on June 1, 2017 and hereby incorporated by reference to such Report.
|
(14)
|
Previously filed as Exhibits 1.1, 10.3 and 10.4 to the Company’s Report on Form 6-K filed with the SEC on November 18, 2015 and hereby incorporated by reference to such Report.
|
(15)
|
Previously filed as Exhibit 1.1 to the Company’s Report on Form 6-K filed with the SEC on June 4, 2015 and hereby incorporated by reference to such Report.
|
(16)
|
Previously filed as Exhibits 99.1 to the Company's Report on Form 6-K filed with the SEC on October 25, 2017 and hereby incorporated by reference to such Report.
|
|
|
|
|
TEEKAY TANKERS LTD.
|
||
|
|
|
|
|||
Date: April 24, 2018
|
|
|
|
By:
|
|
/s/ Stewart Andrade
|
|
|
|
|
|
|
Stewart Andrade
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
|
Year Ended
December 31, 2015 $ |
||||||
REVENUES
|
|
|
|
|
|
||||||
Net pool revenues
(notes 14e and 14h)
|
139,936
|
|
|
310,108
|
|
|
381,028
|
|
|||
Time-charter revenues
(note 14e)
|
112,100
|
|
|
97,374
|
|
|
75,375
|
|
|||
Voyage charter revenues
|
125,774
|
|
|
90,032
|
|
|
41,874
|
|
|||
Other revenues
(note 20)
|
53,368
|
|
|
53,029
|
|
|
36,404
|
|
|||
Total revenues
|
431,178
|
|
|
550,543
|
|
|
534,681
|
|
|||
|
|
|
|
|
|
||||||
Voyage expenses
(note 14e)
|
(77,368
|
)
|
|
(53,604
|
)
|
|
(18,727
|
)
|
|||
Vessel operating expenses
(notes 14e and 14f)
|
(175,389
|
)
|
|
(182,598
|
)
|
|
(137,164
|
)
|
|||
Time-charter hire expense
(note 9)
|
(30,661
|
)
|
|
(59,647
|
)
|
|
(74,898
|
)
|
|||
Depreciation and amortization
|
(100,481
|
)
|
|
(104,149
|
)
|
|
(73,760
|
)
|
|||
General and administrative expenses
(note 14e)
|
(32,879
|
)
|
|
(33,199
|
)
|
|
(30,403
|
)
|
|||
(Loss) gain on sale of vessels
(note 19)
|
(12,984
|
)
|
|
(20,594
|
)
|
|
771
|
|
|||
Restructuring charges
(note 20)
|
—
|
|
|
—
|
|
|
(6,795
|
)
|
|||
Income from operations
|
1,416
|
|
|
96,752
|
|
|
193,705
|
|
|||
|
|
|
|
|
|
||||||
Interest expense
|
(31,294
|
)
|
|
(29,784
|
)
|
|
(17,389
|
)
|
|||
Interest income
|
907
|
|
|
117
|
|
|
122
|
|
|||
Realized and unrealized gain (loss) on derivative instruments
(note 10)
|
1,319
|
|
|
(964
|
)
|
|
(1,597
|
)
|
|||
Equity (loss)
income
(note 6)
|
(25,370
|
)
|
|
7,680
|
|
|
11,528
|
|
|||
Other expense
(note 15)
|
(5,001
|
)
|
|
(5,978
|
)
|
|
(2,743
|
)
|
|||
Net (loss) income
|
(58,023
|
)
|
|
67,823
|
|
|
183,626
|
|
|||
|
|
|
|
|
|
||||||
Per common share amounts
(note 18)
|
|
|
|
|
|
||||||
• Basic (loss) earnings per share
|
|
($0.31
|
)
|
|
|
$0.40
|
|
|
|
$1.26
|
|
• Diluted (loss) earnings per share
|
|
($0.31
|
)
|
|
|
$0.40
|
|
|
|
$1.25
|
|
• Cash dividends declared
|
|
$0.12
|
|
|
|
$0.18
|
|
|
|
$0.24
|
|
|
|
|
|
|
|
||||||
Weighted-average number of Class A and Class B common stock outstanding
(note 18)
|
|
|
|
|
|
||||||
• Basic
|
187,235,377
|
|
|
170,098,572
|
|
|
143,911,452
|
|
|||
• Diluted
|
187,235,377
|
|
|
170,340,639
|
|
|
144,492,933
|
|
|
As at
December 31, 2017 $ |
|
As at
December 31, 2016 $ |
||
ASSETS
|
|
|
|
||
Current
|
|
|
|
||
Cash and cash equivalents
|
71,439
|
|
|
94,157
|
|
Restricted cash
|
1,599
|
|
|
750
|
|
Pool receivables from affiliates, net
(note 14h)
|
15,550
|
|
|
24,598
|
|
Accounts receivable, including affiliate balances of $0.8 million (2016 - $0.8 million)
|
19,288
|
|
|
33,789
|
|
Vessels held for sale
(note 19)
|
—
|
|
|
33,802
|
|
Due from affiliates
(note 14f)
|
49,103
|
|
|
48,714
|
|
Current portion of derivative assets
(note 10)
|
1,016
|
|
|
875
|
|
Prepaid expenses
|
18,690
|
|
|
21,300
|
|
Total current assets
|
176,685
|
|
|
257,985
|
|
Restricted cash - long-term
|
2,672
|
|
|
—
|
|
Vessels and equipment
At cost, less accumulated depreciation of $512.0 million (2016 - $459.3 million) |
1,737,792
|
|
|
1,605,372
|
|
Vessels related to capital leases
At cost, less accumulated depreciation of $25.4 million (2016 - $nil) (note 9) |
227,722
|
|
|
—
|
|
Investment in and advances to equity accounted investments
(note 6)
|
25,460
|
|
|
70,651
|
|
Derivative assets (
note 10)
|
4,226
|
|
|
4,538
|
|
Intangible assets - net
(note 21 and 22)
|
14,605
|
|
|
17,658
|
|
Other non-current assets
|
127
|
|
|
107
|
|
Goodwill
(note 21)
|
8,059
|
|
|
8,059
|
|
Total assets
|
2,197,348
|
|
|
1,964,370
|
|
LIABILITIES AND EQUITY
|
|
|
|
||
Current
|
|
|
|
||
Accounts payable, including affiliate balances of $nil (2016 - $1.1 million)
|
7,860
|
|
|
14,406
|
|
Accrued liabilities
(notes 7, 10 and 14f)
|
34,608
|
|
|
28,663
|
|
Current portion of long-term debt
(note 8)
|
166,745
|
|
|
171,019
|
|
Current portion of derivative liabilities
(note 10)
|
—
|
|
|
1,108
|
|
Current obligation related to capital leases
(note 9)
|
7,227
|
|
|
—
|
|
Deferred revenue
|
557
|
|
|
4,455
|
|
Due to affiliates
(note 14f)
|
19,717
|
|
|
36,299
|
|
Total current liabilities
|
236,714
|
|
|
255,950
|
|
Long-term debt
(note 8)
|
785,557
|
|
|
761,997
|
|
Long-term obligation related to capital leases
(note 9)
|
141,681
|
|
|
—
|
|
Other long-term liabilities
(note 11)
|
26,795
|
|
|
13,683
|
|
Total liabilities
|
1,190,747
|
|
|
1,031,630
|
|
Commitments and contingencies
(notes 6, 9 and 10
)
|
|
|
|
||
Equity
|
|
|
|
||
Common stock and additional paid-in capital (385 million shares authorized, 231.2 million Class A and 37.0 million class B shares issued and outstanding as of December 31, 2017) (2016 - 300 million shares authorized, 136.1 million Class A and 23.2 million Class B shares issued and outstanding)
(notes 4 and 13)
|
1,294,998
|
|
|
1,103,304
|
|
Accumulated deficit
|
(288,397
|
)
|
|
(182,680
|
)
|
Entities under Common Control equity
|
—
|
|
|
12,116
|
|
Total equity
|
1,006,601
|
|
|
932,740
|
|
Total liabilities and equity
|
2,197,348
|
|
|
1,964,370
|
|
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
|
Year Ended
December 31, 2015 $ |
|||
Cash and cash equivalents provided by (used for)
|
|
|
|
|
|
|||
OPERATING ACTIVITIES
|
|
|
|
|
|
|||
Net (loss) income
|
(58,023
|
)
|
|
67,823
|
|
|
183,626
|
|
Non-cash items:
|
|
|
|
|
|
|||
Depreciation and amortization
|
100,481
|
|
|
104,149
|
|
|
73,760
|
|
Loss (gain) on sale of vessels
(note 19)
|
12,984
|
|
|
20,594
|
|
|
(771
|
)
|
Unrealized gain on derivative instruments
(note 10)
|
(937
|
)
|
|
(9,679
|
)
|
|
(8,193
|
)
|
Equity loss (income)
(note 6)
|
25,370
|
|
|
(7,680
|
)
|
|
(11,528
|
)
|
Other
|
8,093
|
|
|
10,063
|
|
|
3,034
|
|
Change in operating assets and liabilities
(note 16)
|
5,741
|
|
|
30,004
|
|
|
1,655
|
|
Expenditures for dry docking
|
(14,069
|
)
|
|
(8,608
|
)
|
|
(39,617
|
)
|
Net operating cash flow
|
79,640
|
|
|
206,666
|
|
|
201,966
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|||
Proceeds from long-term debt, net of issuance costs
|
232,825
|
|
|
906,149
|
|
|
688,695
|
|
Repayments of long-term debt
|
(109,006
|
)
|
|
(162,092
|
)
|
|
(40,029
|
)
|
Prepayment of long-term debt
|
(443,796
|
)
|
|
(979,877
|
)
|
|
(191,592
|
)
|
Repayment from long-term debt of Entities under Common Control
(note 3)
|
—
|
|
|
—
|
|
|
(4,632
|
)
|
Proceeds from financing related to sale and leaseback
(note 9)
|
153,000
|
|
|
—
|
|
|
—
|
|
Scheduled repayments of obligations related to capital leases
(note 9)
|
(4,090
|
)
|
|
—
|
|
|
—
|
|
Net advances from affiliates
(note 3)
|
—
|
|
|
—
|
|
|
(825
|
)
|
Equity contribution from Teekay Corporation to Entities under Common Control
(note 3)
|
—
|
|
|
—
|
|
|
1,928
|
|
Increase in restricted cash - long-term
|
(2,672
|
)
|
|
—
|
|
|
—
|
|
Return of capital to Teekay Corporation
(note 3)
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
Acquisition of the Explorer Spirit and Navigator Spirit from Teekay Offshore Partners L.P
. (note 3)
|
—
|
|
|
—
|
|
|
(31,870
|
)
|
Cash dividends paid
|
(20,679
|
)
|
|
(46,847
|
)
|
|
(15,139
|
)
|
Proceeds from equity offerings, net of offering costs
(note 4)
|
8,521
|
|
|
7,558
|
|
|
242,264
|
|
Proceeds from issuance of common stock, net of share issuance costs
(note 4)
|
5,000
|
|
|
—
|
|
|
—
|
|
Other
|
(241
|
)
|
|
(744
|
)
|
|
(1,122
|
)
|
Net financing cash flow
|
(181,138
|
)
|
|
(290,853
|
)
|
|
647,678
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|||
Proceeds from the sales of vessels and equipment
(note 19)
|
52,131
|
|
|
27,550
|
|
|
11,080
|
|
Expenditures for Principal Maritime Vessel acquisitions
(note 19)
|
—
|
|
|
—
|
|
|
(612,000
|
)
|
Expenditures for vessels and equipment
|
(4,732
|
)
|
|
(9,226
|
)
|
|
(236,229
|
)
|
Loan repayments from High-Q joint venture
(note 6)
|
550
|
|
|
3,500
|
|
|
1,000
|
|
Adjustment to investment in TTOL prior to 100% acquisition
|
—
|
|
|
—
|
|
|
(239
|
)
|
Return of capital from equity accounted investments
|
—
|
|
|
—
|
|
|
1,088
|
|
Acquisition of SPT
(note 21)
|
—
|
|
|
—
|
|
|
(45,581
|
)
|
Cash acquired in TIL acquisition, net of transaction fees
(note 22)
|
30,831
|
|
|
—
|
|
|
—
|
|
Net investing cash flow
|
78,780
|
|
|
21,824
|
|
|
(880,881
|
)
|
Decrease in cash and cash equivalents
|
(22,718
|
)
|
|
(62,363
|
)
|
|
(31,237
|
)
|
Cash and cash equivalents, beginning of the year
|
94,157
|
|
|
156,520
|
|
|
187,757
|
|
Cash and cash equivalents, end of the year
|
71,439
|
|
|
94,157
|
|
|
156,520
|
|
|
EQUITY
|
||||||||||||||||
|
Equity of Entities under Common Control
$ |
|
Common Stock and Paid-in Capital
|
|
|
|
|
||||||||||
|
Thousands of Common Stock
# |
|
Class A
$ |
|
Class B
$ |
|
Accumulated Deficit
$ |
|
Total
$ |
||||||||
Balance as at December 31, 2014
|
40,961
|
|
|
112,064
|
|
|
785,515
|
|
|
17,135
|
|
|
(346,927
|
)
|
|
496,684
|
|
Net income
|
6,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176,927
|
|
|
183,626
|
|
Proceeds from issuance of Class A common stock, net of offering costs (
note 4)
|
—
|
|
|
37,201
|
|
|
246,032
|
|
|
—
|
|
|
—
|
|
|
246,032
|
|
Proceeds from issuance of Class B common stock, net of offering costs (
note 4)
|
—
|
|
|
6,512
|
|
|
—
|
|
|
45,500
|
|
|
—
|
|
|
45,500
|
|
Value adjustment to share issuance to Teekay Corporation for purchase of the initial 50% of TTOL
(note 6)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(239
|
)
|
|
(239
|
)
|
Net change in parent's equity from Entities under Common Control
(note 3)
|
1,549
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,549
|
|
Acquisition of SPT Explorer and Navigator Spirit from Teekay Offshore Partners L.P.
(note 3)
|
(27,191
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,311
|
)
|
|
(40,502
|
)
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,863
|
)
|
|
(33,863
|
)
|
Equity-based compensation
(note 13)
|
—
|
|
|
254
|
|
|
692
|
|
|
—
|
|
|
|
|
|
692
|
|
Balance as at December 31, 2015
|
22,018
|
|
|
156,031
|
|
|
1,032,239
|
|
|
62,635
|
|
|
(217,413
|
)
|
|
899,479
|
|
Net income
|
4,968
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,855
|
|
|
67,823
|
|
Proceeds from issuance of Class A common stock, net of offering costs
(note 4)
|
—
|
|
|
3,020
|
|
|
7,558
|
|
|
—
|
|
|
—
|
|
|
7,558
|
|
Net change in parent's equity from Entities under Common Control
(note 3)
|
130
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130
|
|
Return of capital from Entities under Common Control
(note 3)
|
(15,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,000
|
)
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,122
|
)
|
|
(28,122
|
)
|
Equity-based compensation
(note 13)
|
—
|
|
|
253
|
|
|
872
|
|
|
—
|
|
|
—
|
|
|
872
|
|
Balance as at December 31, 2016
|
12,116
|
|
|
159,304
|
|
|
1,040,669
|
|
|
62,635
|
|
|
(182,680
|
)
|
|
932,740
|
|
Net income (loss)
|
1,304
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,327
|
)
|
|
(58,023
|
)
|
Proceeds from issuance of Class A common stock, net of offering costs
(note 4)
|
—
|
|
|
5,955
|
|
|
13,521
|
|
|
—
|
|
|
—
|
|
|
13,521
|
|
Acquisition of the remaining 50% of TTOL
(note 4)
|
(13,420
|
)
|
|
13,775
|
|
|
—
|
|
|
25,897
|
|
|
(25,711
|
)
|
|
(13,234
|
)
|
Acquisition of TIL
(note 4)
|
—
|
|
|
88,978
|
|
|
151,262
|
|
|
—
|
|
|
—
|
|
|
151,262
|
|
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,679
|
)
|
|
(20,679
|
)
|
Equity-based compensation
(note 13)
|
—
|
|
|
190
|
|
|
1,014
|
|
|
—
|
|
|
—
|
|
|
1,014
|
|
Balance as at December 31, 2017
|
—
|
|
|
268,202
|
|
|
1,206,466
|
|
|
88,532
|
|
|
(288,397
|
)
|
|
1,006,601
|
|
1.
|
Summary of Significant Accounting Policies
|
Class of Financing Receivable
|
|
Credit Quality Indicator
|
|
Grade
|
|
December 31, 2017
$ |
|
December 31, 2016
$ |
|
Advances to equity accounted investment
|
|
Other internal metrics
|
|
Performing
|
|
9,930
|
|
10,480
|
|
|
|
|
|
|
|
9,930
|
|
10,480
|
|
|
Year Ended December 31,
|
|||||||
|
2017
$ |
|
2016
$ |
|
2015
$ |
|||
Balance at the beginning of the year
|
49,298
|
|
|
62,146
|
|
|
35,509
|
|
Cost incurred for dry docking
|
16,239
|
|
|
9,340
|
|
|
39,617
|
|
Dry-dock amortization
|
(17,077
|
)
|
|
(18,736
|
)
|
|
(12,866
|
)
|
Vessel sales
(note 19)
|
—
|
|
|
(3,452
|
)
|
|
(114
|
)
|
Balance at the end of the year
|
48,460
|
|
|
49,298
|
|
|
62,146
|
|
2.
|
Recent Accounting Pronouncements
|
•
|
The Company currently presents the net allocation for its vessels participating in revenue sharing arrangements as revenues. The Company has determined that it is the principal in voyages its vessels perform that are included in the revenue sharing arrangements. As such, the revenue from those voyages will be presented in voyage revenues and the difference between this amount and the Company's net allocation from the revenue sharing arrangement will be presented as voyage expenses. There will be no cumulative imp
act to opening equity as at January 1, 2018.
|
3.
|
Acquisition of Entities under Common Control
|
4.
|
Public Offerings and Private Placements
|
Date
|
Number of Common Stock Issued
|
|
Offering Price
(Per Share) |
|
Gross Proceeds
|
|
Net Proceeds
|
|
Teekay's Ownership After the Offering
|
|
Use of Proceeds
|
||||||
January 2015
|
3,000,000
|
|
(1)
|
|
$4.57
|
|
|
13,716
|
|
|
13,685
|
|
|
25.5
|
%
|
|
Acquisition of conventional tankers
|
July 2015
|
6,511,812
|
|
(2)
|
|
$6.99
|
|
|
45,500
|
|
|
45,500
|
|
|
28.3
|
%
|
|
Acquisition of the ship-to-ship transfer business
|
August 2015
|
13,630,075
|
|
(3)
|
|
$6.65
|
|
|
90,640
|
|
|
90,640
|
|
|
28.8
|
%
|
|
Acquisition of conventional tankers
|
August - October 2015
|
7,180,083
|
|
(3)
|
$6.12 - $7.92
|
|
|
49,268
|
|
|
49,268
|
|
|
26.2
|
%
|
|
Acquisition of conventional tankers
|
|
Continuous offering program during 2015
|
13,391,100
|
|
(4)
|
$6.04 - $7.70
|
|
|
94,594
|
|
|
92,439
|
|
|
(4
|
)
|
|
General purposes including acquisitions of conventional tankers
|
|
Continuous offering program during 2016
|
3,020,000
|
|
(5)
|
$2.38 - $2.75
|
|
|
7,747
|
|
|
7,558
|
|
|
(5
|
)
|
|
General corporate purposes
|
|
January 2017
|
2,155,172
|
|
(6)
|
|
$2.32
|
|
|
5,000
|
|
|
5,000
|
|
|
25.7
|
%
|
|
General corporate purposes
|
May 2017
|
13,775,224
|
|
(7)
|
|
$1.88
|
|
|
25,897
|
|
|
25,897
|
|
|
31.4
|
%
|
|
Acquisition of controlling interest in TTOL
|
November 2017
|
88,977,544
|
|
(8)
|
|
$1.70
|
|
|
151,262
|
|
|
151,262
|
|
|
24.1
|
%
|
|
TIL Merger
|
Continuous offering program during 2017
|
3,800,000
|
|
(9)
|
$2.26 - $2.41
|
|
|
8,826
|
|
|
8,521
|
|
|
(9
|
)
|
|
General corporate purposes
|
(1)
|
In December 2014, the Company granted the underwriters a
30
-day option to purchase up to an additional
3.0 million
shares of the Company’s Class A common stock from a December 2014 offering. The underwriters exercised this option and on January 2, 2015, the Company issued
3.0 million
shares of Class A common stock for net proceeds of
$13.7 million
.
|
(2)
|
Represents Class B common shares issued to Teekay as consideration for the Company’s acquisition of the ship-to-ship transfer business. The shares had an approximate value of
$45.5 million
, or
$6.99
per share, when the purchase price was agreed between the parties.
|
(3)
|
Represents
9.1 million
shares of Class A common stock issued to the public and
4.5 million
shares of Class A common stock issued to Teekay in a concurrent private placement. The proceeds from the issuances were used to acquire
12
modern Suezmax tankers from Principal Maritime Tankers (or
Principal
Maritime
) (note 19). The Company also issued approximately
7.2 million
shares of Class A common stock to Principal Maritime as partial consideration for the vessels acquired. The shares had an approximate value of
$49.3 million
and were based on market prices of the shares at the time each vessel was delivered.
|
(4)
|
In June 2015, the Company implemented a continuous offering program (or
COP
) under which the Company may issue shares of its Class A common stock at market prices up to a maximum aggregate amount of
$80.0 million
. The initial
$80.0 million
program was concluded in September 2015. The Company re-launched another
$80.0 million
COP in November 2015. The portion of the Company’s voting power and ownership held by Teekay at December 31, 2015 was
53.6%
and
25.9%
, respectively.
|
(5)
|
In December 2016, the Company re-opened its
$80.0 million
COP. The portion of the Company's voting power and ownership held by Teekay at December 31, 2016 was
52.9%
and
25.4%
, respectively.
|
(6)
|
Represents Class A common shares issued in a private placement to Teekay. The gross proceeds were used for general corporate purposes, including to strengthen the Company's liquidity position and to delever its balance sheet.
|
(7)
|
Represents Class B common shares issued to Teekay as consideration for the Company's acquisition of the remaining
50%
interest in TTOL, which shares had an approximate value of
$25.9 million
, or
$1.88
per share, on the closing date of the transaction (note 6).
|
(8)
|
Represents Class A common shares issued to the shareholders of Tanker Investment Ltd. (
TIL
) as consideration for the Company's acquisition of the remaining
88.7%
interest in TIL. The shares had an approximate value of
$151.3 million
, or
$1.70
per share, on the closing date of the transaction (notes 6 and 22).
|
(9)
|
In January 2017, the Company re-opened its
$80.0 million
COP. The portion of the Company's voting power and ownership held by Teekay at December 31, 2017 was
54.1%
and
28.8%
respectively.
|
5.
|
Segment Reporting
|
Year Ended December 31, 2017
|
Conventional
Tanker Segment $ |
|
Ship-to-Ship
Transfer Segment $ |
|
Inter-segment
Adjustment (1) $ |
|
Total
$ |
||||
Revenues
(2)
|
391,267
|
|
|
50,422
|
|
|
(10,511
|
)
|
|
431,178
|
|
Voyage expenses
|
(87,879
|
)
|
|
—
|
|
|
10,511
|
|
|
(77,368
|
)
|
Vessel operating expenses
|
(135,740
|
)
|
|
(39,649
|
)
|
|
—
|
|
|
(175,389
|
)
|
Time-charter hire expense
|
(25,666
|
)
|
|
(4,995
|
)
|
|
—
|
|
|
(30,661
|
)
|
Depreciation and amortization
|
(95,433
|
)
|
|
(5,048
|
)
|
|
—
|
|
|
(100,481
|
)
|
General and administrative expenses
(3)
|
(29,539
|
)
|
|
(3,340
|
)
|
|
—
|
|
|
(32,879
|
)
|
(Loss) gain on sale of vessels
|
(13,034
|
)
|
|
50
|
|
|
—
|
|
|
(12,984
|
)
|
Income (loss) from operations
|
3,976
|
|
|
(2,560
|
)
|
|
—
|
|
|
1,416
|
|
Equity loss
|
(25,370
|
)
|
|
—
|
|
|
—
|
|
|
(25,370
|
)
|
Year Ended December 31, 2016
|
Conventional
Tanker Segment $ |
|
Ship-to-Ship
Transfer Segment $ |
|
Inter-segment
Adjustment (1) $ |
|
Total
$ |
||||
Revenues
(2)
|
512,608
|
|
|
41,136
|
|
|
(3,201
|
)
|
|
550,543
|
|
Voyage expenses
|
(56,805
|
)
|
|
—
|
|
|
3,201
|
|
|
(53,604
|
)
|
Vessel operating expenses
|
(150,100
|
)
|
|
(32,498
|
)
|
|
—
|
|
|
(182,598
|
)
|
Time-charter hire expense
|
(57,368
|
)
|
|
(2,279
|
)
|
|
—
|
|
|
(59,647
|
)
|
Depreciation and amortization
|
(99,024
|
)
|
|
(5,125
|
)
|
|
—
|
|
|
(104,149
|
)
|
General and administrative expenses
(3)
|
(29,432
|
)
|
|
(3,767
|
)
|
|
—
|
|
|
(33,199
|
)
|
(Loss) gain on sale of vessel
|
(20,926
|
)
|
|
332
|
|
|
—
|
|
|
(20,594
|
)
|
Income (loss) from operations
|
98,953
|
|
|
(2,201
|
)
|
|
—
|
|
|
96,752
|
|
Equity income
|
7,680
|
|
|
—
|
|
|
—
|
|
|
7,680
|
|
Year Ended December 31, 2015
|
Conventional
Tanker Segment $ |
|
Ship-to-Ship
Transfer Segment $ |
|
Inter-segment
Adjustment (1) $ |
|
Total
$ |
||||
Revenues
(2)
|
516,943
|
|
|
18,587
|
|
|
(849
|
)
|
|
534,681
|
|
Voyage expenses
|
(18,379
|
)
|
|
(348
|
)
|
|
—
|
|
|
(18,727
|
)
|
Vessel operating expenses
|
(123,572
|
)
|
|
(14,441
|
)
|
|
849
|
|
|
(137,164
|
)
|
Time-charter hire expense
|
(74,860
|
)
|
|
(38
|
)
|
|
—
|
|
|
(74,898
|
)
|
Depreciation and amortization
|
(72,118
|
)
|
|
(1,642
|
)
|
|
—
|
|
|
(73,760
|
)
|
General and administrative expenses
(3)
|
(28,418
|
)
|
|
(1,985
|
)
|
|
—
|
|
|
(30,403
|
)
|
Gain on sale of vessel
|
771
|
|
|
—
|
|
|
—
|
|
|
771
|
|
Restructuring charge
|
(6,468
|
)
|
|
(327
|
)
|
|
—
|
|
|
(6,795
|
)
|
Income (loss) from operations
|
193,899
|
|
|
(194
|
)
|
|
—
|
|
|
193,705
|
|
Equity income
|
11,528
|
|
|
—
|
|
|
—
|
|
|
11,528
|
|
(1)
|
The ship-to-ship transfer segment provides lightering support services to the conventional tanker segment for full service lightering operations and the pricing for such services is based on actual costs incurred per voyage commencing January 1, 2017 (2016 - based on estimated costs of approximately
$25,000
per voyage).
|
(2)
|
Revenues, net of the inter-segment adjustment, earned from the ship-to-ship transfer segment are reflected in Other Revenues in the Company's consolidated statements of (loss) income.
|
(3)
|
Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).
|
|
As at
December 31, 2017 $ |
|
As at
December 31, 2016 $ |
||
Conventional Tanker
|
2,089,099
|
|
|
1,828,550
|
|
Ship-to-Ship Transfer
|
36,810
|
|
|
41,663
|
|
Cash and cash equivalents
|
71,439
|
|
|
94,157
|
|
Total assets
|
2,197,348
|
|
|
1,964,370
|
|
6.
|
Investments in and advances to Equity Accounted Investments
|
|
Year Ended December 31,
|
||||
|
2017
$ |
|
2016
$ |
||
High-Q Joint Venture
|
24,546
|
|
|
22,025
|
|
Tanker Investments Ltd.
|
—
|
|
|
47,710
|
|
Gemini Tankers L.L.C.
|
914
|
|
|
916
|
|
Total
|
25,460
|
|
|
70,651
|
|
a.
|
The Company has a joint venture arrangement with Wah Kwong Maritime Transport Holdings Limited (or
Wah Kwong
), whereby the Company has a
50%
economic interest in the High-Q joint venture, which is jointly controlled by the Company and Wah Kwong. The High-Q joint venture owns
one
VLCC, which is trading on a fixed time charter-out contract expiring in the second quarter of 2018. Under the contract, the vessel earns a fixed daily rate and an additional amount if the daily rate of any sub-charter earned exceeds a certain threshold.
|
b.
|
In January 2014, the Company and Teekay formed TIL, a company whose shares were publicly traded on the Oslo Stock Exchange. TIL's primary business was to own and operate modern second-hand tankers. The Company purchased
2.5 million
shares of common stock for
$25.0 million
and received a stock purchase warrant entitling it to purchase up to
750,000
additional shares of common stock of TIL (note 10 and 12c). The Company also received
one
preferred share, which entitled the Company to elect
one
Board member of TIL. The preferred share did not give the Company a right to any dividends or distributions of TIL.
|
c.
|
In August 2014, the Company purchased from Teekay a
50%
interest in TTOL, which owns conventional tanker commercial management and technical management operations and directly administers
four
commercially managed tanker revenue sharing arrangements. Teekay retained the remaining
50%
interest in TTOL.
|
|
As at December 31,
|
||||
|
2017
$ |
|
2016
$ |
||
Cash and cash equivalents
|
2,231
|
|
|
38,987
|
|
Other current assets
|
4,774
|
|
|
18,760
|
|
Vessels and equipment
|
83,417
|
|
|
815,961
|
|
Other non-current assets
|
—
|
|
|
20,558
|
|
|
|
|
|
||
Current portion of long-term debt
|
5,616
|
|
|
43,677
|
|
Other current liabilities
|
572
|
|
|
10,442
|
|
Long-term debt
|
36,645
|
|
|
367,201
|
|
Other non-current liabilities
|
19,207
|
|
|
25,540
|
|
|
Year Ended December 31,
|
|||||||
|
2017
$ |
|
2016
$ |
|
2015
$ |
|||
Revenues
|
107,691
|
|
|
169,631
|
|
|
234,398
|
|
Income from operations
|
11,640
|
|
|
62,998
|
|
|
112,542
|
|
Realized and unrealized gain (loss) on derivative instruments
|
26
|
|
|
(244
|
)
|
|
(689
|
)
|
Net (loss) income
|
(8,967
|
)
|
|
39,536
|
|
|
85,647
|
|
7.
|
Accrued Liabilities
|
|
Year Ended December 31,
|
||||
|
2017
$ |
|
2016
$ |
||
Voyage and vessel
|
19,404
|
|
|
16,341
|
|
Corporate accruals
|
1,244
|
|
|
1,233
|
|
Interest and dividends
|
3,984
|
|
|
2,527
|
|
Payroll and benefits (note 14h)
|
9,976
|
|
|
8,562
|
|
Total
|
34,608
|
|
|
28,663
|
|
8.
|
Long-Term Debt
|
|
Year Ended December 31,
|
||||
|
2017
$ |
|
2016
$ |
||
Revolving credit facilities due through 2022
|
539,735
|
|
|
466,195
|
|
Term loans due through 2021
|
423,512
|
|
|
475,466
|
|
Total principal
|
963,247
|
|
|
941,661
|
|
Less: unamortized discount and debt issuance costs
|
(10,945
|
)
|
|
(8,645
|
)
|
Total debt
|
952,302
|
|
|
933,016
|
|
Less: current portion
|
(166,745
|
)
|
|
(171,019
|
)
|
Non-current portion of long-term debt
|
785,557
|
|
|
761,997
|
|
9.
|
Leases and Restricted Cash
|
|
As at
|
|
|
December 31, 2017
|
|
|
$
|
|
Total obligations related to capital leases
|
148,908
|
|
Less: current portion
|
(7,227
|
)
|
Long-term obligations related to capital leases
|
141,681
|
|
Year
|
|
Commitment
|
||
2018
|
|
$
|
16,237
|
|
2019
|
|
$
|
16,236
|
|
2020
|
|
$
|
16,279
|
|
2021
|
|
$
|
16,233
|
|
2022
|
|
$
|
16,232
|
|
Thereafter
|
|
$
|
136,846
|
|
10.
|
Derivative Instruments
|
|
Interest Rate Index
|
|
Notional Amount
$ |
|
Fair Value /
Carrying Amount of Asset $ |
|
Remaining
Term (years) |
|
Fixed Interest
Rate (1) |
||
LIBOR-Based Debt:
|
|
|
|
|
|
|
|
|
|
||
U.S. Dollar-denominated interest rate swaps
(2)
|
LIBOR
|
|
138,844
|
|
|
1,258
|
|
|
3.0
|
|
1.46%
|
U.S. Dollar-denominated interest rate swaps
|
LIBOR
|
|
150,000
|
|
|
2,548
|
|
|
3.0
|
|
1.55%
|
U.S. Dollar-denominated interest rate swaps
|
LIBOR
|
|
50,000
|
|
|
1,436
|
|
|
3.0
|
|
1.16%
|
(1)
|
Excludes the margin the Company pays on its variable-rate debt, which, as of
December 31, 2017
ranged from
0.30%
to
2.75%
.
|
(2)
|
Notional amount reduces quarterly.
|
|
Current portion of derivative assets
$ |
|
Derivative assets
$ |
|
Accrued liabilities
$ |
|
Current portion of derivative liabilities
$ |
||||
As at December 31, 2017
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
|
1,016
|
|
|
4,226
|
|
|
(39
|
)
|
|
—
|
|
|
1,016
|
|
|
4,226
|
|
|
(39
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
As at December 31, 2016
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
|
—
|
|
|
4,251
|
|
|
(254
|
)
|
|
(1,108
|
)
|
Stock purchase warrant
|
—
|
|
|
287
|
|
|
—
|
|
|
—
|
|
Time-charter swap agreement
|
875
|
|
|
—
|
|
|
(667
|
)
|
|
—
|
|
|
875
|
|
|
4,538
|
|
|
(921
|
)
|
|
(1,108
|
)
|
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
|
Year Ended
December 31, 2015 $ |
|||
Realized gains (losses) relating to:
|
|
|
|
|
|
|||
Interest rate swaps agreements
|
(994
|
)
|
|
(12,797
|
)
|
|
(9,790
|
)
|
Stock purchase warrant
|
—
|
|
|
—
|
|
|
—
|
|
Time-charter swap agreement
|
1,106
|
|
|
2,154
|
|
|
—
|
|
Forward freight agreements
|
270
|
|
|
—
|
|
|
—
|
|
|
382
|
|
|
(10,643
|
)
|
|
(9,790
|
)
|
|
|
|
|
|
|
|||
Unrealized gains (losses) relating to:
|
|
|
|
|
|
|||
Interest rate swaps agreements
|
2,099
|
|
|
13,681
|
|
|
7,686
|
|
Stock purchase warrant
|
(287
|
)
|
|
(4,877
|
)
|
|
507
|
|
Time-charter swap agreement
|
(875
|
)
|
|
875
|
|
|
—
|
|
|
937
|
|
|
9,679
|
|
|
8,193
|
|
Total realized and unrealized gain (loss) on derivatives
|
1,319
|
|
|
(964
|
)
|
|
(1,597
|
)
|
11.
|
Other Long-Term Liabilities
|
|
Year Ended December 31,
|
||||
|
2017
$ |
|
2016
$ |
||
Balance of unrecognized tax benefits as at January 1
|
12,882
|
|
|
7,597
|
|
Increases related to the TIL merger
(note 22)
|
8,528
|
|
|
—
|
|
Increases for positions related to the current year
|
1,910
|
|
|
6,777
|
|
Changes for positions taken in prior years
|
3,641
|
|
|
(800
|
)
|
Decreases related to statute of limitations
|
(907
|
)
|
|
(692
|
)
|
Balance of unrecognized tax benefits as at December 31
|
26,054
|
|
|
12,882
|
|
12.
|
Fair Value Measurements
|
a.
|
The fair value of the Company’s interest rate swap agreements are the estimated amounts that the Company would receive or pay to terminate the agreements at the reporting date, taking into account current interest rates, and if the swap is not collateralized, the current credit worthiness of either the Company or the swap counterparties. The estimated amount is the present value of future cash flows. The inputs used to determine the future cash flows include the fixed interest rate of the swaps and market interest rates. Given the current volatility in the credit markets, it is reasonably possible that the amounts recorded as derivative assets and liabilities could vary by material amounts in the near term.
|
b.
|
The Company entered into a time-charter swap agreement for
55%
of
two
Aframax equivalent vessels (note 10). The fair value of this derivative agreement was the estimated amount that the Company would receive or pay to terminate the agreement at the reporting date, based on the present value of the Company's projection of future Aframax spot market tanker rates, which were derived from current Aframax spot market tanker rates and estimated future rates, as well as an estimated discount rate.
|
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
||
Fair value asset - beginning of the year
|
875
|
|
|
—
|
|
Settlements
|
(1,106
|
)
|
|
(2,154
|
)
|
Realized and unrealized gain
|
231
|
|
|
3,029
|
|
Fair value asset - at the end of the year
|
—
|
|
|
875
|
|
c.
|
During January 2014, the Company received a stock purchase warrant which entitled it to purchase up to
750,000
shares of the common stock of TIL (note 10). The estimated fair value of the stock purchase warrant was determined using a Monte-Carlo simulation and was based, in part, on the historical price of common shares of TIL, the risk-free interest rate, vesting conditions and the historical volatility of comparable companies. The estimated fair value of the stock purchase warrant as of December 31, 2016 was based on the historical volatility of comparable companies of
47.83%
. On November 27, 2017, the merger of TIL was completed, resulting in TIL becoming a wholly-owned subsidiary of the Company. Under the terms of the agreement, warrants to purchase or acquire shares of common stock of TIL that had not been exercised as of the effective time of the merger, were canceled. As a result,
no
value was recorded for this warrant in the Company's consolidated balance sheets at December 31, 2017 (notes 6b and 10).
|
|
Year Ended
December 31, 2017 $ |
|
Year Ended
December 31, 2016 $ |
||
Fair value at the beginning of the year
|
287
|
|
|
5,164
|
|
Unrealized loss included in earnings
|
(287
|
)
|
|
(4,877
|
)
|
Fair value at the end of the year
|
—
|
|
|
287
|
|
Level 1.
|
Observable inputs such as quoted prices in active markets;
|
Level 2.
|
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
Level 3.
|
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
|
Fair Value Hierarchy Level
|
|
Carrying Amount Asset/ (Liability)
$ |
|
Fair Value Asset/ (Liability)
$ |
|
Carrying Amount Asset/ (Liability)
$ |
|
Fair Value Asset/ (Liability)
$ |
||||
Recurring:
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents and restricted cash
|
Level 1
|
|
75,710
|
|
|
75,710
|
|
|
94,907
|
|
|
94,907
|
|
Derivative instruments (
note 10
)
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
(1)
|
Level 2
|
|
5,242
|
|
|
5,242
|
|
|
3,143
|
|
|
3,143
|
|
Time-charter swap agreement
(1)
|
Level 3
|
|
—
|
|
|
—
|
|
|
875
|
|
|
875
|
|
Stock purchase warrant
|
Level 3
|
|
—
|
|
|
—
|
|
|
287
|
|
|
287
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-recurring:
|
|
|
|
|
|
|
|
|
|
||||
Vessels held for sale
(note 19)
|
Level 2
|
|
—
|
|
|
—
|
|
|
33,802
|
|
|
33,802
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
|
||||
Advances to equity accounted investments
|
Note (2)
|
|
9,930
|
|
|
Note (2)
|
|
|
10,480
|
|
|
Note (2)
|
|
Long-term debt, including current portion
|
Level 2
|
|
(952,302
|
)
|
|
(946,105
|
)
|
|
(933,016
|
)
|
|
(923,306
|
)
|
Obligations related to capital leases, including current portion
|
Level 2
|
|
(148,908
|
)
|
|
(147,401
|
)
|
|
|
|
|
|
|
(1)
|
The fair value of the Company's interest rate swap agreements and time-charter swap agreement at
December 31, 2017
and 2016 exclude accrued interest expense which is recorded in accrued liabilities in these consolidated financial statements.
|
(2)
|
The advances to equity accounted investments together with the Company’s investments in the equity accounted investments form the net aggregate carrying value of the Company’s interests in the equity accounted investments in these consolidated financial statements. The fair values of the individual components of such aggregate interests are not determinable.
|
13.
|
Capital Stock
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Options (#)
|
|
Weighted-Average Exercise Price ($)
|
|
Options (#)
|
|
Weighted-Average Exercise Price ($)
|
|
Options (#)
|
|
Weighted-Average Exercise Price ($)
|
||||||
Outstanding - beginning of year
|
822,345
|
|
|
3.99
|
|
|
321,609
|
|
|
4.39
|
|
|
263,175
|
|
|
4.16
|
|
Granted
|
882,741
|
|
|
2.23
|
|
|
500,736
|
|
|
3.74
|
|
|
58,434
|
|
|
5.39
|
|
Forfeited / expired
|
(34,781
|
)
|
|
2.23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Outstanding - end of year
|
1,670,305
|
|
|
3.10
|
|
|
822,345
|
|
|
3.99
|
|
|
321,609
|
|
|
4.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Exercisable - end of year
|
1,055,250
|
|
|
3.34
|
|
|
530,034
|
|
|
3.97
|
|
|
188,920
|
|
|
4.13
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Options (#)
|
|
Weighted-Average Grant Date Fair Value ($)
|
|
Options (#)
|
|
Weighted-Average Grant Date Fair Value ($)
|
|
Options (#)
|
|
Weighted-Average Grant Date Fair Value ($)
|
||||||
Outstanding non-vested stock options - beginning of year
|
292,311
|
|
|
4.02
|
|
|
132,689
|
|
|
4.75
|
|
|
110,829
|
|
|
4.25
|
|
Granted
|
486,329
|
|
|
2.23
|
|
|
216,043
|
|
|
3.74
|
|
|
58,434
|
|
|
5.39
|
|
Vested
|
(128,804
|
)
|
|
4.14
|
|
|
(56,421
|
)
|
|
4.64
|
|
|
(36,574
|
)
|
|
4.25
|
|
Forfeited / expired
|
(34,781
|
)
|
|
2.23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Outstanding non-vested stock options - end of year
|
615,055
|
|
|
2.68
|
|
|
292,311
|
|
|
4.02
|
|
|
132,689
|
|
|
4.75
|
|
14.
|
Related Party Transactions
|
a.
|
On November 27, 2017, the Company completed its merger with TIL. As consideration for the merger, the Company issued
88,977,544
Class A common shares to the TIL shareholders (other than the Company and its subsidiaries), including
8,250,000
shares to Teekay, for
$151.3 million
, or
$1.70
per share (notes 4 and 22).
|
b.
|
On May 31, 2017, the Company acquired from Teekay Holdings Ltd., a wholly-owned subsidiary of Teekay, the remaining
50%
of TTOL which owns conventional tanker commercial management and technical management operations and directly administers
four
commercially-managed tanker revenue sharing arrangements (notes 3 and 6c). In August 2014, the Company purchased from Teekay its initial
50%
ownership in TTOL.
|
c.
|
In January 2017, the Company issued
2,155,172
shares of Class A common stock in a private placement to Teekay at a price of
$2.32
per share for gross proceeds of
$5.0 million
(note 4). In August 2015, the Company also issued
4.5 million
shares of Class A common stock to Teekay in a private placement at a price of
$6.65
per share for gross proceeds of
$30.0 million
(note 4).
|
d.
|
On July 31, 2015, the Company acquired SPT from a company jointly-owned by Teekay and a Norway-based marine transportation company, I.M. Skaugen SE (note 21) and on December 18, 2015 the Company acquired the
Explorer Spirit
and
Navigator Spirit
from TOO (note 3).
|
e.
|
Teekay and its wholly-owned subsidiary and the Company’s manager, Teekay Tankers Management Services Ltd. (or
the Manager
), provide commercial, technical, strategic and administrative services to the Company pursuant to a long-term management agreement (the
Management Agreement
). In addition,
the Manager has subcontracted with TTOL and its affiliates to provide certain commercial and technical services to the Company, except for certain vessels acquired in the merger with TIL as they are technically managed by a third-party. C
ertain of the Company’s vessels participate in revenue sharing arrangements that, with the exception of a Medium Range revenue sharing arrangement, are managed by TTOL (or the
Pool Manager
). Amounts received and paid by the Company for such related party transactions for the periods indicated were as follows:
|
|
Year Ended December 31,
|
|||||||
|
2017
$ |
|
2016
$ |
|
2015
$ |
|||
Time-charter revenues
(i)
|
—
|
|
|
5,404
|
|
|
392
|
|
RSA pool management fees and commissions
(ii)
|
(2,799
|
)
|
|
(9,813
|
)
|
|
(10,445
|
)
|
Commercial management fees
(iii)
|
(1,187
|
)
|
|
(1,870
|
)
|
|
(1,236
|
)
|
Vessel operating expenses - technical management fee
(iv)
|
(8,775
|
)
|
|
(9,155
|
)
|
|
(7,039
|
)
|
Strategic and administrative service fees
(v
)
|
(21,185
|
)
|
|
(10,122
|
)
|
|
(8,356
|
)
|
Secondment fees
(vi)
|
(382
|
)
|
|
—
|
|
|
—
|
|
Lay-up services revenues
(vii)
|
33
|
|
|
302
|
|
|
—
|
|
LNG terminal services revenues
(viii)
|
388
|
|
|
70
|
|
|
—
|
|
Technical management fee revenue
(ix)
|
7,666
|
|
|
—
|
|
|
—
|
|
Service revenues
(x)
|
1,939
|
|
|
—
|
|
|
—
|
|
Entities under Common Control (note 3)
|
|
|
|
|
|
|||
Time-charter revenues
(xi)
|
—
|
|
|
—
|
|
|
4,558
|
|
RSA pool management fees and commissions
(ii)
|
2,799
|
|
|
9,813
|
|
|
10,445
|
|
Commercial management fees
(iii)
|
1,187
|
|
|
1,870
|
|
|
1,236
|
|
Vessel operating expenses - technical management fee
(iv)
|
—
|
|
|
—
|
|
|
(430
|
)
|
Strategic and administrative service
fees
(v)
|
(7,026
|
)
|
|
(15,508
|
)
|
|
(14,701
|
)
|
Secondment fees
(vi)
|
(248
|
)
|
|
(644
|
)
|
|
(675
|
)
|
Technical management fee revenues
(ix)
|
4,890
|
|
|
11,742
|
|
|
10,413
|
|
Service revenues
(x)
|
1,772
|
|
|
5,482
|
|
|
4,023
|
|
i
|
In December 2015, immediately after the completion of the 2015 Acquired Business, the Company chartered-out the
Navigator Spirit
to Teekay under a fixed-rate time-charter contract, which was due to expire in July 2016. On May 18, 2016, the contract was transferred to the
Americas Spirit
, which subsequently expired on July 15, 2016.
|
ii.
|
The Company’s share of TTOL’s fees for revenue sharing arrangements are reflected as a reduction to net pool revenues from affiliates on the Company’s consolidated statements of (loss) income. The Company acquired the remaining
50%
interest in TTOL on May 31, 2017 (notes 3 and note 6c). Subsequent to the acquisition, the Company's share of TTOL's fees has been eliminated.
|
iii.
|
The Manager’s commercial management fees for vessels on time-charter out contracts and spot-traded vessels are not included in the revenue sharing arrangement, which are reflected in voyage expenses on the Company’s consolidated statements of (loss) income. Subsequent to the Company's acquisition of the remaining
50%
interest in TTOL, the Company's share of the Manager's commercial management fees has been eliminated.
|
iv.
|
The cost of ship management services provided by the Manager has been presented as vessel operating expenses on the Company’s consolidated statements of (loss) income.
|
v.
|
The Manager’s strategic and administrative service fees have been presented in general and administrative fees on the Company’s consolidated statements of (loss) income. The Company’s executive officers are employees of Teekay or subsidiaries thereof, and their compensation (other than any awards under the Company’s long-term incentive plan described in note 13) is set and paid by Teekay or such other subsidiaries. The Company reimburses Teekay for time spent by its executive officers on the Company’s management matters through the strategic portion of the management fee.
|
vi.
|
The Company pays secondment fees for services provided by some employees of Teekay. Secondment fees have been presented in general and administrative expenses on the Company's consolidated statements of (loss) income.
|
vii.
|
The Company recorded revenue of
$0.3 million
for the year ended December 31, 2016 to provide lay-up services to Teekay for
two
of its in-chartered vessels.
|
viii.
|
In November 2016, the Company's ship-to-ship transfer business signed an operational and maintenance subcontract with Teekay LNG Bahrain Operations L.L.C., an entity wholly owned by Teekay LNG Partners L.P. (or
TGP
), for the Bahrain LNG Import Terminal. The terminal is owned by Bahrain LNG W.I.L., a joint venture for which Teekay LNG Operating L.L.C., an entity wholly owned by TGP, has a
30%
interest.
|
ix.
|
The Company receives reimbursements from Teekay who subcontracts technical management services from the Manager. These reimbursements have been presented in general and administrative expenses on the Company's consolidated statements of (loss) income.
|
x.
|
The Company recorded revenue of $
1.9 million
for the year ended December 31, 2017 relating to TTOL's administration of certain revenue sharing arrangements and provision of certain commercial services to participants in the arrangements. The Company also recorded revenue of
$1.8 million
,
$5.5 million
and
$4.0 million
for the years ended December 31, 2017, 2016, and 2015, respectively, associated with the Entities under Common Control.
|
xi.
|
The Company recorded
$4.6 million
related to a time-charter out contract for the
Explorer Spirit
for the years ended December 31,
2015
, associated with the Entities under Common Control. The vessel was under a fixed-rate time-charter contract with SPT which expired in September 2015.
|
f.
|
The Manager and other subsidiaries of Teekay collect revenues and remit payments for expenses incurred by the Company’s vessels. Such amounts, which are presented in the consolidated balance sheets in due from affiliates or due to affiliates, are without interest or stated terms of repayment. In addition,
$8.7 million
and
$8.6 million
were payable to the Manager as at
December 31, 2017
and
2016
, respectively, for reimbursement of the Manager’s crewing and manning costs to operate the Company’s vessels and such amounts are included in accrued liabilities in the consolidated balance sheets. The amounts owing from the revenue sharing arrangements (or
RSAs
), which are reflected in the consolidated balance sheets as pool receivables from affiliates, are without interest and are repayable upon the terms contained within the applicable revenue sharing agreement. In addition, the Company had advanced
$45.1 million
and
$35.7 million
as at
December 31, 2017
and
2016
, respectively, to the RSAs for working capital purposes. The Company may be required to advance additional working capital funds from time to time. Working capital advances will be returned to the Company when a vessel no longer participates in the applicable RSA, less any set-offs for outstanding liabilities or contingencies. These activities, which are reflected in the consolidated balance sheets as due from affiliates, are without interest or stated terms of repayment.
|
g.
|
The Management Agreement provides for payment to the Manager of a performance fee in certain circumstances. If
Gross Cash Available for Distribution
for a given fiscal year exceeds
$3.20
per share of the Company’s weighted average outstanding common stock (or the
Incentive Threshold
), the Company is generally required to pay a performance fee equal to
20%
of all
Gross Cash Available for Distribution
for such year in excess of the Incentive Threshold. The Company did
no
t incur any performance fees for the years ended
December 31, 2017
,
2016
and
2015
. Cash Available for Distribution represents net income plus depreciation and amortization, unrealized losses from derivatives, non-cash items and any write-offs or other non-recurring items, less unrealized gains from derivatives and net income attributable to the historical results of vessels acquired by the Company from Teekay, prior to their acquisition by us, for the period when these vessels were owned and operated by Teekay.
Gross Cash Available for Distribution
represents Cash Available for Distribution without giving effect to any deductions for performance fees and reduced by the amount of any reserves the Company’s Board of Directors may establish during the applicable fiscal period that have not already reduced the
Cash Available for Distribution
.
|
h.
|
Pursuant to certain RSAs, TTOL provides certain commercial services to the RSA participants and administers the RSAs in exchange for a fee currently equal to
1.25%
of the gross revenues attributable to each RSA participant’s vessels and a fixed amount per vessel per day which ranges from
$275
to
$350
. Voyage revenues and voyage expenses of the Company’s vessels operating in these RSAs are pooled with the voyage revenues and voyage expenses of other RSA participants. The resulting net pool revenues, calculated on a time-charter equivalent basis, are allocated to the RSA participants according to an agreed formula. The Company accounts for the net allocation from the pools as “net pool revenue” on the consolidated statements of (loss) income. The pool receivable from affiliates as at
December 31, 2017
and
2016
was
$15.6 million
and
$24.6 million
, respectively.
|
i.
|
During 2017, 2016 and 2015, the Company incurred expenses of
$14.1 million
,
$13.1 million
and
$2.1 million
, respectively, to hire vessels from the Teekay Aframax RSA to perform full service lightering operations.
|
15.
|
Other Expense
|
|
Year Ended December 31,
|
|||||||
|
2017
$ |
|
2016
$ |
|
2015
$ |
|||
Income tax expense
|
(5,330
|
)
|
|
(7,511
|
)
|
|
(3,406
|
)
|
Foreign exchange gain
|
79
|
|
|
1,413
|
|
|
613
|
|
Other income
|
250
|
|
|
120
|
|
|
50
|
|
Total
|
(5,001
|
)
|
|
(5,978
|
)
|
|
(2,743
|
)
|
16.
|
Supplemental Cash Flow Information
|
a.
|
The changes in non-cash working capital items related to operating activities for the years ended
December 31, 2017
,
2016
, and
2015
are as follows:
|
|
Year Ended December 31,
|
|||||||
|
2017
$ |
|
2016
$ |
|
2015
$ |
|||
Accounts receivable
|
14,353
|
|
|
(108
|
)
|
|
(5,765
|
)
|
Pool receivables from affiliates
|
16,193
|
|
|
38,137
|
|
|
(27,448
|
)
|
Due from affiliates
|
17,562
|
|
|
18,371
|
|
|
32,801
|
|
Prepaid expenses and other current assets
|
8,767
|
|
|
2,313
|
|
|
(6,267
|
)
|
Accounts payable and accrued liabilities
|
(13,996
|
)
|
|
(26,821
|
)
|
|
27,473
|
|
Due to affiliates
|
(32,641
|
)
|
|
(3,606
|
)
|
|
(12,735
|
)
|
Deferred revenue
|
(3,898
|
)
|
|
1,718
|
|
|
2,039
|
|
Other
|
(599
|
)
|
|
—
|
|
|
(8,443
|
)
|
Change in operating assets and liabilities
|
5,741
|
|
|
30,004
|
|
|
1,655
|
|
b.
|
Cash interest paid (including interest paid by the Entities under Common Control) during the years ended
December 31, 2017
,
2016
, and
2015
totaled
$26.4 million
,
$38.5 million
, and
$22.8 million
, respectively.
|
c.
|
In November 2017, the Company acquired the outstanding shares of TIL through issuing
89.0 million
Class A common shares, which was treated as a non-cash transaction in the Company's consolidated statement of cash flows. As a result of this transaction, the Company acquired
$37.6 million
in cash and paid
$6.8 million
in transaction costs
(note 22).
|
17.
|
Liquidity
|
18.
|
(Loss) Earnings Per Share
|
|
Year Ended December 31,
|
|||||||
|
2017
$ |
|
2016
$ |
|
2015
$ |
|||
Net (loss) income
|
(58,023
|
)
|
|
67,823
|
|
|
183,626
|
|
Less: Net income attributable to the Entities under Common Control
(1)
|
—
|
|
|
—
|
|
|
(2,708
|
)
|
Net (loss) income available for common shareholders
|
(58,023
|
)
|
|
67,823
|
|
|
180,918
|
|
Weighted-average number of common shares - basic
(2)
|
187,235,377
|
|
|
170,098,572
|
|
|
143,911,452
|
|
Dilutive effect of stock-based awards
|
—
|
|
|
242,067
|
|
|
581,481
|
|
Weighted average number of common shares - diluted
(2)
|
187,235,377
|
|
|
170,340,639
|
|
|
144,492,933
|
|
(Loss) earnings per common share:
|
|
|
|
|
|
|||
- Basic
|
(0.31
|
)
|
|
0.40
|
|
|
1.26
|
|
- Diluted
|
(0.31
|
)
|
|
0.40
|
|
|
1.25
|
|
(1)
|
Includes net income of the 2015 Acquired Business of
$2.7 million
for the year ended December 31, 2015.
|
(2)
|
The weighted-average number of common shares outstanding for periods prior to May 2017 has been retroactively adjusted to include the approximately
13.8 million
shares of the Company's Class B common stock issued to Teekay as consideration for the acquisition of
50%
of TTOL in May 2017.
|
19.
|
Vessel Sales and Vessel Acquisitions
|
20.
|
Other Revenues and Restructuring Charges
|
21.
|
Acquisition of SPT
|
(1)
|
The customer relationships and customer contracts are being amortized over a weighted average amortization period of
10 years
and
7.6 years
, respectively. As at
December 31, 2017
, the gross carrying amount, accumulated amortization and net carrying amount were
$22.5 million
,
$8.0 million
and
$14.5 million
(2016 -
$22.5 million
,
$4.8 million
and
$17.7 million
; 2015 -
$30.9 million
,
$1.3 million
and
$29.6 million
), respectively. Amortization of intangible assets for the five fiscal years subsequent to 2017 is expected to be
$2.9 million
(2018),
$2.2 million
(2019),
$2.0 million
(2020),
$1.8 million
(2021),
$1.6 million
(2022) and
$4.0 million
(thereafter).
|
(2)
|
Goodwill recognized from this acquisition attributed
$1.9 million
to the Company's conventional tanker segment and
$6.2 million
to the Company's ship-to-ship transfer segment.
|
(3)
|
Prior to the SPT acquisition date, SPT had in-chartered the
Explorer Spirit
(formerly known as the
SPT Explorer
) from Teekay, which was acquired by the Company in December 2015. Retroactively adjusting the Company’s consolidated financial statements for the acquisition of the
Explorer Spirit
has resulted in
$1.4 million
of the SPT acquisition purchase price being characterized as the settlement of a pre-existing relationship. Such amount was accounted for as a reduction to revenue on the SPT acquisition date.
|
|
Unaudited
Pro Forma
Year ended
December 31,
2015
$
|
|
Revenues
|
570,381
|
|
Net income
|
178,266
|
|
Earnings per common share:
|
|
|
Basic
|
1.33
|
|
Diluted
|
1.33
|
|
22.
|
Acquisition of Tanker Investments Ltd.
|
23.
|
Subsequent Events
|
Name of Subsidiary
|
State or Jurisdiction of Incorporation
|
Proportion of Ownership Interest
|
Americas Spirit L.L.C.
|
Marshall Islands
|
100%
|
Ashkini Spirit L.L.C.
|
Marshall Islands
|
100%
|
Athens Spirit L.L.C.
|
Marshall Islands
|
100%
|
Atlanta Spirit L.L.C.
|
Marshall Islands
|
100%
|
Australian Spirit L.L.C.
|
Marshall Islands
|
100%
|
Axel Spirit L.L.C.
|
Marshall Islands
|
100%
|
Barcelona Spirit L.L.C.
|
Marshall Islands
|
100%
|
Beijing Spirit L.L.C.
|
Marshall Islands
|
100%
|
Dilong Spirit L.L.C.
|
Marshall Islands
|
100%
|
Donegal Spirit L.L.C.
|
Marshall Islands
|
100%
|
Erik Spirit L.L.C.
|
Marshall Islands
|
100%
|
Esther Spirit L.L.C.
|
Marshall Islands
|
100%
|
Everest Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Explorer Spirit L.L.C.
|
Marshall Islands
|
100%
|
Freeport Landholdings LLC
|
USA
|
100%
|
Galway Spirit L.L.C.
|
Marshall Islands
|
100%
|
Ganges Spirit L.L.C.
|
Marshall Islands
|
100%
|
Godavari Spirit L.L.C.
|
Marshall Islands
|
100%
|
Halo Fenders L.L.C.
|
Marshall Islands
|
100%
|
Helga Spirit L.L.C.
|
Marshall Islands
|
100%
|
Hugli Spirit L.L.C.
|
Marshall Islands
|
100%
|
Iskmati Spirit L.L.C.
|
Marshall Islands
|
100%
|
Jiaolong Spirit L.L.C.
|
Marshall Islands
|
100%
|
Kanata Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Kareela Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Kaveri Spirit L.L.C.
|
Marshall Islands
|
100%
|
Kyeema Spirit Holding L.L.C.
|
Marshall Islands
|
100%
|
Limerick Spirit L.L.C.
|
Marshall Islands
|
100%
|
London Spirit L.L.C.
|
Marshall Islands
|
100%
|
Los Angeles Spirit L.L.C.
|
Marshall Islands
|
100%
|
Matterhorn Spirit L.L.C.
|
Marshall Islands
|
100%
|
Montreal Spirit L.L.C.
|
Marshall Islands
|
100%
|
Moscow Spirit L.L.C.
|
Marshall Islands
|
100%
|
Narmada Spirit L.L.C.
|
Marshall Islands
|
100%
|
Navigator Spirit L.L.C
|
Marshall Islands
|
100%
|
Pinnacle Spirit L.L.C.
|
Marshall Islands
|
100%
|
Rio Spirit L.L.C.
|
Marshall Islands
|
100%
|
Seoul Spirit L.L.C.
|
Marshall Islands
|
100%
|
Shenlong Spirit L.L.C.
|
Marshall Islands
|
100%
|
SPT Marine Transfer Services Ltd.
|
Bermuda
|
100%
|
STX Hull No. S1672 L.L.C.
|
Marshall Islands
|
100%
|
STX Hull No. S1673 L.L.C.
|
Marshall Islands
|
100%
|
STX Hull No. S1674 L.L.C.
|
Marshall Islands
|
100%
|
STX Hull No. S1675 L.L.C.
|
Marshall Islands
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100%
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1.
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I have reviewed this Annual Report on Form 20-F of Teekay Tankers Ltd.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
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4.
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The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
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5.
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The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing equivalent functions): and
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
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Date: April 24, 2018
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By:
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/s/ Kevin Mackay
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Kevin Mackay
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President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 20-F of Teekay Tankers Ltd.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
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4.
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The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
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5.
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The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
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Date: April 24, 2018
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By:
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/s/ Stewart Andrade
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Stewart Andrade
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Chief Financial Officer
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(1)
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The Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
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(2)
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The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Kevin Mackay
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Kevin Mackay
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President and Chief Executive Officer
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(1)
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The Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
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(2)
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The information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Stewart Andrade
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Stewart Andrade
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Chief Financial Officer
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