Teekay Shipping Corp. TK.N , a U.S.-listed provider of petroleum product transport services, said on Monday quarterly profits rose about 6 percent from a year ago and it planned to raise $125 million from a sale of securities automatically convertible into common stock.
Teekay, based in Nassau, Bahamas, said preliminary fourth quarter income was $33.1 million, or 82 cents per share, up from $31.2 million, or 78 cents per share, a year ago. Revenue rose nearly 2 percent to $155.1 million from $152.2 million, it said.
For all of 2002, preliminary net income totaled $53.4 million, or $1.33 per share, down from $336.5 million, or $8.31 per share, a year earlier, it said. The company also said it plans on Feb. 19 to release audited results for the quarter and year ending Dec. 31, 2002.
Teekay said its “mandatory” convertible units will consist of 5 million so-called Premium Equity Participating Security units, or PEPS units, consisting of a 3.25-year subordinated note and a contract to buy Teekay shares in three years.
The company said it will use proceeds for general corporate purposes, including capital expenses, working capital and retiring debt. It said it may sell another $18.75 million of convertibles to meet demand. Last month it filed with the U.S. Securities and Exchange Commission to sell up to $500 million of securities.
The convertibles are expected to carry a 7.25 percent to 7.75 percent dividend and be convertible into Teekay shares at an 18 percent to 22 percent premium over the share price, convertible market sources said. The sale is expected on Tuesday after U.S. markets close, the sources said.
Convertibles are stock-bond hybrids that usually offer current income and can be converted into company stock. Shares often fall after a company announces a convertible sale because some investors sell the underlying stock short and the bonds may dilute the stock. Mandatory convertibles require long-term investors to be optimistic about the issuer’s shares because they will in time get them automatically.
Morgan Stanley and Salomon Smith Barney are arranging the convertible sale. Teekay shares closed Monday on the New York Stock Exchange at $38.52, down 17 cents. They have traded in a range of $26 to $44 over the last year.
(Reporting by Jonathan Stempel, edited by Gary Crosse, Reuters)
