TOO - Teekay Offshore Partners L.P.

[Read the Footnotes]

http://www.globenewswire.com/news-release/2019/10/01/1923146/0/en/Teekay-Offshore-Partners-Announces-Agreement-for-the-Acquisition-of-Its-Publicly-Held-Common-Units-by-Brookfield.html

 

Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO) today announced that it has entered into an agreement and plan of merger (the Merger Agreement) with Brookfield Business Partners L.P., and certain of its affiliates and institutional partners (collectively, the Brookfield Consortium). Pursuant to the Merger Agreement, the Brookfield Consortium will acquire by merger all of the outstanding publicly held common units representing limited partner interests of the Partnership (common units) not already held by the Brookfield Consortium (unaffiliated unitholders) in exchange for $1.55 in cash per common unit (the cash consideration). The cash consideration represents an increase of $0.34 (28.1 percent) per common unit when compared to the closing price per common unit on May 16, 2019, immediately prior to Brookfield’s initial offer and a premium of $0.39 (33.6 percent) to the $1.16 closing price per common unit on September 30, 2019. As an alternative to receiving the cash consideration, each unaffiliated unitholder will have the option (the unit option) to elect to receive one newly designated unlisted Class A Common Unit of the Partnership (the equity consideration) per common unit. The Class A Common Units will be economically equivalent to the common units to be held by the Brookfield Consortium following the closing of the merger, but will have limited voting rights and limited transferability.

 

This is pretty incredible outcome measured from when Brookfield lowballed the offer.  I don't think I have seen a group of LP being able to force someone like Brookfield's hand like this.  Brookfield still sucks and is the vapid vampire squid.

 

I agree that it is an unusual path that it has taken, but it really depends on which price you anchor on. If you think of it from the original offer, it looks like a big increase. On the other hand there's an argument that the units we trading well in to the two dollar per unit range when brookfield started tanking the price for their purposes. Anchoring on that price make it look like they are still getting a 30-40% discount off previous market. If you go buy their own internal documents then they are still paying 30 cents on the dollar based on their estimates.

 

In the end the press release makes it look like they were magnamous and were really doing the right thing.

 

No one ever said these guys aren't smart. I have heard some other things said.

[given2invest]

agree, really surprised they got that much more

[John Hjorth]

This is pretty incredible outcome measured from when Brookfield lowballed the offer. ... 

 

I'm surprised, too.

 

The globalnewswire link provided by Capensis is a replica of the full TOO News Release on the TOO website, available already yesterday my  local time [i haven't checked out the BBU website today, nothing available there yesterday].

 

The most interesting part of it - not quoted by Capensis is this, here with my emphasis :

 

... The conflicts committee, composed of non-executive, independent directors (the Conflicts Committee), of the board of directors of the Partnership’s general partner (the Board), after consultation with its independent legal and financial advisors, unanimously approved the Merger Agreement and determined that the transaction contemplated thereby was advisable and in the best interests of the Partnership and the unaffiliated unitholders. Subsequently, on the recommendation of the Conflicts Committee, the members of the Board unanimously approved the Merger Agreement and the transactions contemplated thereby.

 

- - - o 0 o - - -

 

Welcome til CoBF, Capensis!

[BG2008]

http://www.globenewswire.com/news-release/2019/10/01/1923146/0/en/Teekay-Offshore-Partners-Announces-Agreement-for-the-Acquisition-of-Its-Publicly-Held-Common-Units-by-Brookfield.html

 

Teekay Offshore Partners L.P. (Teekay Offshore or the Partnership) (NYSE:TOO) today announced that it has entered into an agreement and plan of merger (the Merger Agreement) with Brookfield Business Partners L.P., and certain of its affiliates and institutional partners (collectively, the Brookfield Consortium). Pursuant to the Merger Agreement, the Brookfield Consortium will acquire by merger all of the outstanding publicly held common units representing limited partner interests of the Partnership (common units) not already held by the Brookfield Consortium (unaffiliated unitholders) in exchange for $1.55 in cash per common unit (the cash consideration). The cash consideration represents an increase of $0.34 (28.1 percent) per common unit when compared to the closing price per common unit on May 16, 2019, immediately prior to Brookfield’s initial offer and a premium of $0.39 (33.6 percent) to the $1.16 closing price per common unit on September 30, 2019. As an alternative to receiving the cash consideration, each unaffiliated unitholder will have the option (the unit option) to elect to receive one newly designated unlisted Class A Common Unit of the Partnership (the equity consideration) per common unit. The Class A Common Units will be economically equivalent to the common units to be held by the Brookfield Consortium following the closing of the merger, but will have limited voting rights and limited transferability.

 

This is pretty incredible outcome measured from when Brookfield lowballed the offer.  I don't think I have seen a group of LP being able to force someone like Brookfield's hand like this.  Brookfield still sucks and is the vapid vampire squid.

 

I agree that it is an unusual path that it has taken, but it really depends on which price you anchor on. If you think of it from the original offer, it looks like a big increase. On the other hand there's an argument that the units we trading well in to the two dollar per unit range when brookfield started tanking the price for their purposes. Anchoring on that price make it look like they are still getting a 30-40% discount off previous market. If you go buy their own internal documents then they are still paying 30 cents on the dollar based on their estimates.

 

No one ever said these guys aren't smart. I have heard some other things said.

 

It goes without saying that I still hate Brookfield with all my gut and will deem 99% of Brookfield related investments (non-BAM) as uninvestable.  This is still a crap offer from the original $2.50 price, but a gain from $1.05 to $1.10 that I added in late 2018.  We should start the #ME_TOO movement.  Where is that little girl standing in front of the charging bull? We can use her help. 

[Packer16]

What find as unique is the option to maintain a stake in TOO via the Class A units.  It will be interesting to read what these units represent.  From a fundamental perspective, it looks like there is a large auction of offshore leases in Brazil which should provide increased demand for TOO's shuttle tankers.

 

Packer

[Read the Footnotes]

What find as unique is the option to maintain a stake in TOO via the Class A units.  It will be interesting to read what these units represent.  From a fundamental perspective, it looks like there is a large auction of offshore leases in Brazil which should provide increased demand for TOO's shuttle tankers.

 

Packer

 

Good point. The unit option is definitely NOT a sleezeball move, if you believe they can be trusted, but that's a big if. It is very creative and solves several issues very efficiently. They score points for a creative option.

[BG2008]

What find as unique is the option to maintain a stake in TOO via the Class A units.  It will be interesting to read what these units represent.  From a fundamental perspective, it looks like there is a large auction of offshore leases in Brazil which should provide increased demand for TOO's shuttle tankers.

 

Packer

 

Good point. The unit option is definitely NOT a sleezeball move, if you believe they can be trusted, but that's a big if. It is very creative and solves several issues very efficiently. They score points for a creative option.

 

I think this is potentially a good solution if you own units in your PA that is not an IRA.  If you run a fund and have to talk to your auditor about the "mark" of this non-traded security every year, it can get exhausting.  This is a situation where an individual investor maybe able to get better returns/outcomes than a fund manager.  Anyone who owns it in their PA should consider this. 

 

What's everyone's thought on what JDP and Guy will do?  There seems to be elements of this counter offer that try to addresses JDP and Guy Spiers' fight. 

[Seth Lowry]

Hardest I've worked for a -40% return, LOL.  They really only bumped the offer by 25c given that they paid TK full $16M value for the warrants that were actually worthless, but just glad to actually get something back.  JDP is done with Brookfield and its affiliates forever - as is several hundred other investors I've spoken with on this shit show.  The craziest thing that I don't think will get talked about is how Teekay Tankers actually kicked off the destruction of all this - TK had to guarantee term loans at TNK, then TK couldn't get refi partially bc of subordination (and they're terrible managers), BBU took advantage of TK forced sale so on and so forth.  Anyways, on to the next one :/

[peterHK]

As a BBU unitholder, I'd like to scream and squawk about how you lot forced me to pay more for these assets. I hate you with all my guts. It's unfair, it's stupid, it's criminal, you're taking advantage of me, and I'm gonna write so many letters about it.

 

 

[John Hjorth]

As a BBU unitholder, I'd like to scream and squawk about how you lot forced me to pay more for these assets. I hate you with all my guts. It's unfair, it's stupid, it's criminal, you're taking advantage of me, and I'm gonna write so many letters about it.

 

Peter,

 

This is just CoBF bad form - plain and simple. Do I need to explain it to you?

[Read the Footnotes]

As a BBU unitholder, I'd like to scream and squawk about how you lot forced me to pay more for these assets. I hate you with all my guts. It's unfair, it's stupid, it's criminal, you're taking advantage of me, and I'm gonna write so many letters about it.

 

Peter,

 

This is just CoBF bad form - plain and simple. Do I need to explain it to you?

 

I assumed that PeterHK was joking. As a TOO unit holder who did a good bit of complaining in the posts immediately preceding, I thought Peter did a good job of skewering me and the post was pretty funny. Of course I probably have more of a sense of humor about this because for me TOO was a very small position and I was concerned that Brookfield would conducting a take under from the day I bought a few units. I therefore have felt I only have myself to blame for putting to much weight on the assurances management made to me that they had no intention of doing what they ended up doing. I probably also should give them more credit for improving the offer and have creative option of available also, even though that will only appeal to a limited number of unit holders.

[peterHK]

As a BBU unitholder, I'd like to scream and squawk about how you lot forced me to pay more for these assets. I hate you with all my guts. It's unfair, it's stupid, it's criminal, you're taking advantage of me, and I'm gonna write so many letters about it.

 

Peter,

 

This is just CoBF bad form - plain and simple. Do I need to explain it to you?

 

Is whining about something you can't control any better? Do I need to explain that to you?

 

If you can't laugh about losses and realized that BAM outmatched you fair and square, you're in the wrong business.

[John Hjorth]

I'll let it go from here.

[Read the Footnotes]

As a BBU unitholder, I'd like to scream and squawk about how you lot forced me to pay more for these assets. I hate you with all my guts. It's unfair, it's stupid, it's criminal, you're taking advantage of me, and I'm gonna write so many letters about it.

 

Peter,

 

This is just CoBF bad form - plain and simple. Do I need to explain it to you?

 

Is whining about something you can't control any better? Do I need to explain that to you?

 

If you can't laugh about losses and realized that BAM outmatched you fair and square, you're in the wrong business.

 

Sounds like peterHK thinks that BAM has some history of "outmatching" minority investors. Seems like Peter agrees with the primary point previous investors were making which is that BAM may deserve a reputation for "outmatching" people.

[bjakes00]

Agreed. I would like to go into the illiquid units alongside them, but am worried about being ‘outmatched’ somewhere along the line. A reputation of fairplay with minorities would be a far better place to be.

Do we have any other precedents of Brookfield enticing minorities into the illiquid units and screwing them?

[lnofeisone]

This might be more of a tax question. This is scheduled to close in Q4. I am sitting on a loss (was in at $2). Any issues of selling this now, wait 30 days, buying back to avoid the wash rule. I understand that 30 days is a long time and BBU might just up their offer one more time  ::).

[Seth Lowry]

The private ridealong offer is like someone robbing you in broad daylight, then half-way apologizing and inviting you into a dark alley and promising tea.

 

Everyone's gotta laugh at somepoint in investing - but a multi-billion asset manager breaking promises and fiduciary duty to stiff minority investors for self enrichment isn't really my kind of humor.

[RadMan24]

The private ridealong offer is like someone robbing you in broad daylight, then half-way apologizing and inviting you into a dark alley and promising tea.

 

Everyone's gotta laugh at somepoint in investing - but a multi-billion asset manager breaking promises and fiduciary duty to stiff minority investors for self enrichment isn't really my kind of humor.

 

That's a little cynical. At the end of the day, you can either accept $1.55 and leave, or go private. Brookfield would need to realize returns eventually, so in 3-4 years you're likely to get some dividends. As Buffett says, if you're not prepared for the exchange to close for 5 years, you shouldn't make the investment.

[BG2008]

The private ridealong offer is like someone robbing you in broad daylight, then half-way apologizing and inviting you into a dark alley and promising tea.

 

Everyone's gotta laugh at somepoint in investing - but a multi-billion asset manager breaking promises and fiduciary duty to stiff minority investors for self enrichment isn't really my kind of humor.

 

That's a little cynical. At the end of the day, you can either accept $1.55 and leave, or go private. Brookfield would need to realize returns eventually, so in 3-4 years you're likely to get some dividends. As Buffett says, if you're not prepared for the exchange to close for 5 years, you shouldn't make the investment.

 

Seth probably knows more about Brookfield in his 30 round Ali vs Frasier fight.  Deep knowledge not cynicism.  Thanks to JDP and Guy for fighting the good fight for all of us.  I blame myself for believing in Brookfield.  The guy in the mirror is ultimately responsible.  I misjudged the alignment of interest. 

[Read the Footnotes]

The private ridealong offer is like someone robbing you in broad daylight, then half-way apologizing and inviting you into a dark alley and promising tea.

 

Everyone's gotta laugh at somepoint in investing - but a multi-billion asset manager breaking promises and fiduciary duty to stiff minority investors for self enrichment isn't really my kind of humor.

 

That's a little cynical. At the end of the day, you can either accept $1.55 and leave, or go private. Brookfield would need to realize returns eventually, so in 3-4 years you're likely to get some dividends. As Buffett says, if you're not prepared for the exchange to close for 5 years, you shouldn't make the investment.

 

Seth probably knows more about Brookfield in his 30 round Ali vs Frasier fight.  Deep knowledge not cynicism.  Thanks to JDP and Guy for fighting the good fight for all of us.  I blame myself for believing in Brookfield.  The guy in the mirror is ultimately responsible.  I misjudged the alignment of interest.

Well said BG2008.

 

I believe someone asked recently about other examples of similar behavior by Brookfield. BG2008, I believe you're pretty qualified to respond to that question and have made informed comments to me in the past. Would you care to share some of your thoughts on the board?

[BG2008]

The private ridealong offer is like someone robbing you in broad daylight, then half-way apologizing and inviting you into a dark alley and promising tea.

 

Everyone's gotta laugh at somepoint in investing - but a multi-billion asset manager breaking promises and fiduciary duty to stiff minority investors for self enrichment isn't really my kind of humor.

 

That's a little cynical. At the end of the day, you can either accept $1.55 and leave, or go private. Brookfield would need to realize returns eventually, so in 3-4 years you're likely to get some dividends. As Buffett says, if you're not prepared for the exchange to close for 5 years, you shouldn't make the investment.

 

Seth probably knows more about Brookfield in his 30 round Ali vs Frasier fight.  Deep knowledge not cynicism.  Thanks to JDP and Guy for fighting the good fight for all of us.  I blame myself for believing in Brookfield.  The guy in the mirror is ultimately responsible.  I misjudged the alignment of interest.

Well said BG2008.

 

I believe someone asked recently about other examples of similar behavior by Brookfield. BG2008, I believe you're pretty qualified to respond to that question and have made informed comments to me in the past. Would you care to share some of your thoughts on the board?

 

Sure, but I have a deep gash on my hand and can only type with one hand.  Will have to do after it heals.  Electing to take the units is kind of like committing to marriage after finding out your fiance has been sleeping with others.  Buffet comment is relevant to mgt that you can trust.     

[BTShine]

Brookfield was less than friendly during the GGP rehabilitation process. 

[redhots]

Anyone thinking of keeping the units?

[lnofeisone]

Anyone thinking of keeping the units?

 

I am. Just need to go through the 300+ page thing they just sent out to figure out what the process is.

[Spekulatius]

Brookfield was less than friendly during the GGP rehabilitation process.

 

Yes, GGP was bought by BAM without any premium. A lot of investors were rightfully upset. BAM could do thwt be sure they owned a considerable amount of GGP (~35%?) to essentially discourage any other potential bidder.

 

Anyways, I think this deal might come back to bite BAM because they still overpaid as it turns out.