Placement with KA First completed with $15 million second tranche
By Devika Patel
Knoxville, Tenn., Sept. 16 - K-Sea Transportation Partners LP said it settled a $15 million second and final tranche of a $100 million private placement of preferred units. The deal, which was conducted with KA First Reserve, LLC, priced Sept. 2. The company raised $85 million on Sept. 10.
The company sold 18.5 million convertible preferred units at $5.43 apiece to KA First. It sold 15.7 million units in the initial tranche and 2.8 million units in the second.
The price per unit reflects a 10% premium to the five-day volume-weighted average price of K-Sea's common units on Aug. 26.
The 13.5% preferred units are each convertible into one common unit. The company may force conversion after three years if the price of K-Sea's common units is 150% of the conversion price on average for 20 consecutive days on a volume-weighted basis.
In connection with the investment, KA First will appoint three directors to the board of K-Sea's general partner and will be granted the right to acquire a 35% interest in the entity that owns the company's incentive distribution rights. The partnership's board will be expanded from six members to nine members; KA First's designees to join the board are Gary Reaves of First Reserve and Kevin McCarthy and Jim Baker of Kayne Anderson.
Proceeds are being used to reduce debt.
"With our balance sheet recapitalization behind us, we will be able to focus on operations, results and new opportunities," president and chief executive officer Timothy J. Casey said in a news release at pricing. "We remain convinced the domestic market for marine transportation of refined petroleum products will rebound significantly when demand recovers and single hull vessels leave the market permanently."
Based in East Brunswick, N.J., K-Sea provides marine transportation, services and logistics for petroleum products.
| Issuer: | K-Sea Transportation Partners LP
|
| Issue: | Preferred units convertible into common units
|
| Amount: | $100 million
|
| Units: | 18.5 million
|
| Price: | $5.43
|
| Dividends: | 13.5%
|
| Conversion ratio: | One for one
|
| Call option: | After three years
|
| Warrants: | No
|
| Investor: | KA First Reserve, LLC
|
| Pricing date: | Sept. 2
|
| Settlement dates: | Sept. 10 (for $85 million), Sept. 16 (for $15 million)
|
| Stock symbol: | NYSE: KSP
|
| Stock price: | $4.15 at close Sept. 1
|
| Market capitalization: | $81.37 million
|
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