Teekay LNG Partners to Acquire Three Ships for $160 Million and Recommend Distribution Increase

Teekay LNG Partners L.P., yesterday announced that it has agreed to acquire two 2009-built Suezmax tankers, the Bermuda Spirit and the Hamilton Spirit, and one 2007-built Handymax product tanker, the Alexander Spirit, from Teekay Corporation for a total purchase price of $160 million. Teekay LNG will finance the purchase by assuming $126 million of existing debt related to two of the ships, and cash-on-hand for the remaining $34 million. The Partnership does not anticipate raising further equity to complete this acquisition. The transaction, which is subject to standard closing conditions, is expected to be completed by mid-March 2010.

The Bermuda Spirit and the Hamilton Spirit are currently serving under 11-year fixed-rate contracts to Centrofin, an international owner of 28 vessels, and the Alexander Spirit is currently employed on a 10-year fixed-rate contract to Caltex Australia. These ships will join the Partnership's Conventional Tanker Segment which currently includes eight Suezmaxes, all on long-term fixed-rate charter. During the contract periods, the newly acquired vessels are expected to generate distributable cash flow of approximately $8 million per annum. As a result, management of the Partnership's General Partner intends to recommend that its Board of Directors increase the Partnership's current quarterly cash distribution of $0.57 per unit by $0.03 per unit, or 5.3 percent, commencing with the first quarter distribution to be paid in May 2010. The Board of Directors of the Partnership's General Partner and its Conflicts Committee have both approved the
transaction. To assist in its evaluation of the transaction, the Conflicts Committee retained independent legal advisors and obtained independent vessel valuations.