K-Sea In Rough Water

For the first quarter, K-Sea Transportation Partners L.P. reported lower operating results across the board largely reflecting market conditions in the Jones Act trades as well as an impairment charge attributed to an earlier than planned phase out of its single hulls vessels. Based upon its performance, the company cut its dividend from $0.77 to $0.45, a reduction of approximately 58%, and has proactively begun discussions with its banks with respect to potential breaches of covenants in its loan agreements, which may occur by the end of the 2nd or 3rd quarter. The intention is to amend the affected covenants.

As is the case with dividend payers in general and full payout models in particular, the impact of the dividend reduction was substantial with the stock trading down on the day of the announcement to $14 from the prior day close of $22.45, a 37.6% fall. The shares continue to trend downward trading in the $11 to $12 range and are currently yielding 15.6%. The impact of the decline was in all likelihood magnified by the company’s stellar record of increasing distributions over the past 5+ years.

Written by: carisk | Categories: Freshly Minted, The Week in Review | November 5th, 2009 | Add a Comment

K-Sea Follows-On

K-Sea Transportation Partners L.P. (“K-Sea”) announced last week the pricing of its public offering of 2 million units representing limited partner interests. With Lehman Brothers acting as the sole book-running manager, and RBC Capital Markets, as co-lead manager, the units were priced at $25.80 with expected net proceeds after expenses of $49.8 million. Proceeds will be used to re-pay existing indebtedness and make construction progress payments on newbuildings. Details of the transaction are shown in the Guts of the Deal below.

Written by: carisk | Categories: Freshly Minted, Stock, The Week in Review | August 21st, 2008 | Add a Comment

K-Sea GP: Slice and Dice

How many ways can you take a company public? When it comes to an MLP, there are at least two, as evidenced last week by K-Sea GP Holdings LP’s (“GP Holdings”) announcement that it plans an initial public offering of common units.

Formed in December 2007, GP Holdings’ sole cash generating assets are partnership interests in K-Sea Transportation Partners L.P. (“KSP”). KSP is a publicly traded limited partnership that provides marine transportation, distribution and logistical services for refined petroleum products in the United States. KSP currently operates a fleet of 73 tank barges, one tanker, and 59 tugboats that serves major oil companies, oil traders and refiners.