A report out this week from Morgan Stanley suggests Teekay Corporation might have to reevaluate its ownership structure with a possible reverse merger of the parent company with its three subsidiaries to absorb its assets and liabilities in exchange of shares to stem erosion of its equity value.
The analysis showed that the value of Teekay parent company’s assets is close to $300m below its net debt, excluding the shares in its three subsidiaries.
“We value Teekay Group $3-4/share below its respective stakes in Teekay LNG Partners, Teekay Offshore Partners and Teekay Tankers,” the report said.
The falling price of oil has forced Teekay to slash its dividend and that of Teekay LNG Partners and Teekay Offshore Partners by 80%. This has knocked off at least $20-30 per share of value of the group company, Morgan Stanley said.
The bank questioned whether Teekay would be able to finance its huge $4.6bn newbuild program as well as its $1bn of maturing debt.
