JDP Capital Management responds to Teekay Offshore Partner's (NYSE: TOO) appointment of advisors to manage Brookfield's take-under offer
NEW YORK, June 19, 2019 /PRNewswire/ -- JDP has released a presentation on its website titled "The Numbers Don't Lie: Interpreting the Brookfield Offer for Teekay Offshore."
JDP Managing Partner Jeremy Deal commented: "Our presentation makes a compelling case that even a conservative valuation of Teekay Offshore would put the value well above $4 per share based on contracted cash flows with oil majors, a strong balance sheet, and a sector in the early stages of a major rebound."
Based on Teekay Offshore's Conflicts Committee Charter, JDP does not believe the Committee is structurally incentivized to protect minority investors from Brookfield Business Partner's (NYSE: BBU) tender offer of $1.05 per unit for the remaining 27% of the company.
Due to the abusive and self-dealing nature of the offer, we are asking that The Committee elect a Minority Unit Holder Representative to provide input and review to the fairness opinion process in order to ensure independence of the outcome.
JDP asks: "Who on the Conflicts Committee remains aligned with minority TOO investors?"
The members of the Conflicts Committee, Ian Craig (since 2006) and David Lemmon (since June 2017) are both legacy Teekay Offshore LLC GP directors hired by prior TOO owner Teekay Corporation, and were responsible for approving the distressed sale of Teekay Corp's remaining 14% sake in TOO to Brookfield in April 2019 which included warrants and a $25 million loan.
BBU's offer contradicts the positive statements and presentations that TOO's CEO Ingvild Sæther and CFO Jan Rune Steinsland have delivered each quarter both publicly and in private meetings with JDP since the merger.
Just 20 months ago BBU enthusiastically pitched they had created one of the world's strongest offshore infrastructure companies1 with a capital injection of $2.50 per unit that right-sized TOO's balance sheet.
Since then, TOO has received more than $1.2 billion in new investment plus low-cost loans guaranteed by the Canadian and Norwegian export credit agencies that enabled delivery of more than $1.5 billion in newbuild assets—set to generate an additional $200 million per year in cash flow.
Now, mysteriously, BBU wants the market to believe that TOO is worth less than half of what they paid to fix the company in 2017.
In closing Jeremy Deal said: "Self-funded fairness opinions like the one the board is pursuing is like paying a doctor to tell you it is healthy to smoke cigarettes.
"Furthermore, if Brookfield can get away with this transaction, what is stopping Brookfield from also oppressing minority investors of their other controlled entities – including: Terraform Power, Graftech Holdings, North American Palladium, TransAlta Corporation, Norbord, CWC Energy Services, Vodafone NZ, etc."
Bruce Flatt, Chairman of Brookfield Asset Management and Cyrus Madon, CEO of Brookfield Business Partners still have an opportunity to offer a fair deal to minority investors that trusted Brookfield as a controlling shareholder.
Responses and inquiries:
[email protected]
(347) 640-0318
1 Presentation: Strategic Partnership With Brookfield, July 27, 2017, Page 3
SOURCE JDP Capital Management
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