- Smith Maritime and Sirius Maritime to Expand K-Sea's Capacity by
- Company Expects to Increase Quarterly Distribution by $0.02 to
$0.70 Per Unit
NEW YORK--(BUSINESS WIRE)--June 26, 2007--K-Sea Transportation
Partners L.P. (NYSE: KSP) announced today that it has agreed to
acquire Smith Maritime, Ltd. of Honolulu, Hawaii ("Smith") and Sirius
Maritime LLC of Seattle, Washington ("Sirius"). Smith is controlled by
Gordon Smith, who is also one of the three owners of Sirius and who
will join the management of K-Sea. The total purchase price will be
approximately $205 million. The transactions are expected to be
completed in July or early August, subject to customary closing
conditions, and are expected to be immediately accretive to K-Sea's
distributable cash flow.
On a combined basis, these operations include eleven petroleum
tank barges and ten tugboats, aggregating 777,000 barrels of capacity,
of which 670,000 barrels, or 86%, are double-hulled. The addition of
these tank barges will represent a 22% increase in the barrel-carrying
capacity of the K-Sea fleet to about 4.3 million barrels.
The total purchase price will consist of approximately $195
million in cash and assumed debt, plus K-Sea common units valued at
approximately $10 million. K-Sea expects to initially finance the cash
portion of the purchase price through additional borrowings, which it
expects to refinance in due course.
K-Sea also announced that its management will recommend an
increase of $0.02 per unit, or 2.9%, in the distribution to
unitholders for the fourth quarter ending June 30, 2007, to $0.70 per
unit, or $2.80 per unit annualized. This will be the ninth consecutive
quarter of increased distributions, and the eleventh such increase
since the Company's IPO in January 2004.
K-Sea also took delivery last week of another new, 28,000 barrel
double hulled tank barge, which is part of its fleet expansion and
upgrade program. Including the recently announced extension of this
program, ten more double hulled tank barges, totaling 524,000 barrels
of additional capacity, are scheduled to be delivered before the end
of calendar 2010, at which time K-Sea's total barrel-carrying capacity
of over 4.8 million barrels will have more than doubled from its
capacity at the time of the Company's initial public offering in
January 2004. By the end of calendar 2010, the Company's fleet should
be more than 80% double hulled, depending on the rate of retirement of
the remaining single hulled vessels.
Timothy J. Casey, President and CEO of K-Sea, said, "We look
forward to welcoming Gordon Smith, Bob Dorn and Wayne Sundberg, along
with the other employees of Smith and Sirius, to our Company.
Together, we look forward to continuing to build a high quality marine
transportation operation. The management of Smith and Sirius have
built impressive operating teams which will significantly increase our
"This expansion further increases our barrel-carrying capacity
which, we believe, strengthens our position as a provider of refined
petroleum products transportation services in the U.S. and enhances
our ability to provide safe, reliable, and efficient service to our
customers. In addition to expanding service to existing customers, the
acquisition of Smith and Sirius also brings new customers into K-Sea's
coverage. In light of our growth and expectations for continued
development, our management, as indicated above, will recommend that
our Board of Directors approve a two cent per unit increase in our
quarterly distribution in respect of the quarter ending June 30. We
look forward to integrating the Smith and Sirius operations into K-Sea
and are optimistic about continuing our growth into the future."
Gordon Smith, President of Smith Maritime, stated, "We are excited
to become part of the K-Sea Transportation Partners L.P. group of
companies. Throughout the years Smith Maritime has endeavored to
become the leading tank barge operator in the Hawaiian Islands,
greatly enhancing our fleet with new double hull barges, as well as
working to become one of the safest and most reliable transporters of
petroleum products in the U.S. We believe that merging with K-Sea will
bring greater opportunities for both our loyal employees as well as
our customers in our continued growth and expansion."
Robert Dorn and Wayne Sundberg of Sirius Maritime jointly stated,
"We are very pleased to become part of K-Sea Transportation Partners
L.P., a company whose business and culture closely resembles our own.
We are excited about the opportunities that this transaction provides
to our employees and to our customers, and look forward to continuing
to strive for safe and efficient marine transportation of petroleum
products while working in the K-Sea family of companies."
About K-Sea Transportation Partners
K-Sea Transportation Partners provides refined petroleum products
marine transportation, distribution and logistics services in the U.S.
domestic marine transportation business, and its Master Limited
Partnership Units trade on the New York Stock Exchange under the
symbol KSP. For additional information about K-Sea Transportation
Partners L.P., please visit K-Sea's website, including the Investor
Relations section, at www.k-sea.com.
This press release contains forward looking statements, which
include any statements that are not historical facts, such as the
Company's expectations regarding the closing of the Smith and Sirius
transaction and the benefits to be derived therefrom, the timing of
placing the acquired vessels in service, expected accretion, the
timing of delivery of tank barges currently under construction, and
the percentage of the Company's fleet which will be double-hulled by
the end of calendar 2010. These statements involve risks and
uncertainties, including, but not limited to, satisfaction of
conditions to the closing of the acquisitions, insufficient cash from
operations, a decline in demand for refined petroleum products, a
decline in demand for tank vessel capacity, intense competition in the
domestic tank barge industry, the occurrence of marine accidents or
other hazards, the loss of any of the Company's largest customers,
fluctuations in charter rates, delays or cost overruns in the
construction of new vessels, failure to comply with the Jones Act,
modification or elimination of the Jones Act and adverse developments
in the marine transportation business and other factors detailed in
the Company's filings with the Securities and Exchange Commission. If
one or more of these risks or uncertainties materialize (or the
consequences of such a development change), or should underlying
assumptions prove incorrect, actual outcomes may vary materially from
those forecasted or expected. The Company disclaims any intention or
obligation to update publicly or revise such statements, whether as a
result of new information, future events or otherwise.
CONTACT: K-Sea Transportation Partners L.P.
John J. Nicola, Chief Financial Officer, 732-565-3818
SOURCE: K-Sea Transportation Partners L.P.