Teekay Cuts Quarterly Dividend

Teekay NYSE-listed Teekay Corporation is lowering its quarterly dividend to USD 0.055 per share, down from USD 0.55 per share in the third quarter of 2015, commencing with the fourth quarter of 2015 dividend payable in February 2016. The reduction in the dividend amount comes in response to announcements by the general partners of Teekay Offshore Partners L.P. and Teekay LNG Partners L.P. that they plan to reduce their quarterly cash distribution amounts. Teekay Offshore and Teekay LNG now expect to use a significant portion of their internally generated cash flow to fund the equity capital requirements of their future profitable growth projects and reduce debt levels, eliminating their need to access the equity capital markets for the foreseeable future, the company said. The underlying businesses of our two master limited partnerships remain strong, in stark contrast to the current weakness in the oil price and energy capital markets. Cash flows generated by both Teekay Offshore and Teekay LNG, which largely underpin Teekay Corporations dividend payment, remain stable and growing, supported by large and well-diversified portfolios of fee-based contracts with blue-chip counterparties, said Peter Evensen, Teekays President and Chief Executive Officer. However, Teekay Offshore and Teekay LNG require capital to fund their growth and there is currently a dislocation in the capital markets relative to the underlying stability of our MLPs businesses. As a result, their cost of equity has increased to the point where it is currently not an economically attractive source of growth capital, Evensen said.