Two Teekay spinoffs face liquidity shortfalls that will likely lead them to refinance their debt, a Wells Fargo Securities analyst said.
Michael Webber said Teekay Offshore is facing a cash deficit of $45m in 2017 and $94m in 2018, primarily as it faces a $185m balloon payment later this year.
And he said that Teekay LNG faces a "meaningful shortfall" of $377m next year as a result of looming debt maturities, even though it should finish 2017 with a surplus of $322m.
More work ahead
His estimates show that the Kenneth Hvid-led Teekay group, the Vancouver-based tanker, gas carrier and offshore vessel owner with a stable three daughter companies listed in New York, has more financial moves to make after a series of steps that made significant progress in shrinking projected liquidity shortfalls.
Webber said Teekay Offshore will likely focus on refinancing intermediate-term debt maturities, extending floating, production and storage unit employment, and exploring partial asset sales or joint venture deals. The company owns FPSOs, shuttle tankers and offshore support vessels.
The company "still has an intermediate-term liquidity hurdle ... but its outlook is much healthier year over year, in our view," Webber said.
Teekay LNG, meanwhile, will likely need to refinance some of its debt maturities coming due in 2017 and 2018 before it increases its payout to shareholders, the analyst said.
The owner of LNG carriers, LPG carriers and conventional tankers "has already made significant progress in solidifying its liquidity, finalising more than $1.3bn of financing in January, making first-half 2017 a feasible completion time frame, in our view," Webber.
Parent Teekay Corp is expected to end 2017 with a $184m funding surplus, and the analyst estimates a $96m surplus in 2018.
