Teekay Tankers’ plans to buy out Tanker Investments has drawn criticism from a key shareholder.
Huber Capital Management, a California-based fund manager, has revealed it has built up a 10.3% stake in Teekay Tankers and says it intends to vote against the pending acquisition of Tanker Investments.
“Our decision to vote against the transaction has been influenced by what we believe to be the continued sub-optimal capital deployment strategy of paying as much or more than any other potential buyer for assets controlled by or related to TNK’s parent company Teekay Corporation,” Huber wrote in a statement. It added, “The control nature of Teekay Tankers’ dual share class structure prevents Class A holders from fully exercising their pro rata share on proxy decisions, however, this is our last best chance to convince the board to act in our best interest and not in what we believe to be the best interest of other Teekay Corporation related parties. Poor share price performance has gone hand in hand with poor capital allocation at Teekay Tankers.”
Summing up its position, Huber claimed: “Huber Capital sees a significant gap between Teekay Tankers’ intrinsic value and its current share price.”
Teekay Corporation and Teekay Tankers set up Tanker Investments in 2014 to benefit from cyclical fluctuations in the tanker market. It now has a fleet of 10 suezmax tankers, six aframax tankers and two LR2 product tankers.
Teekay Tankers currently has an 11.3% stake in Tanker Investments, and moved at the start of this month to acquire all remaining issued and outstanding shares of Tanker Investments at an exchange ration of 3.30 Teekay Tankers Class A common shares for each Tanker Investments common share. It will also assume around $350m of TIL’s long-term debt, which includes two revolving credit facilities and a term loan.
The merger has been approved by both boards and is expected to close in the third quarter of 2017.