Deal with KA First consisted of 13.5% convertible preferred units
By Devika Patel
Knoxville, Tenn., Sept. 22 - K-Sea Transportation Partners LP gave further details on a $100 million private placement of preferred units in an 8-K filed Wednesday with the Securities and Exchange Commission. The deal, which was conducted with KA First Reserve, LLC, priced Sept. 2; the company raised $85 million on Sept. 10 and $15 million in the second and final tranche on Sept. 16.
The company sold 18,416,206 convertible preferred units at $5.43 apiece to KA First. It sold 15,653,775 units in the initial tranche and 2,762,431 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 unit. The company may force conversion after three years.
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 will be used to reduce debt.
"We are very pleased with our new association with First Reserve. Their decision to invest in us is a testimony to K-Sea's leading industry position and the strength of our company," president and chief executive officer Timothy J. Casey stated at pricing.
"With our balance sheet recapitalization behind us, we will be able to focus on operations, results and new opportunities. 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 New York, K-Sea provides marine transportation, services and logistics for petroleum products.
| Issuer: | K-Sea Transportation Partners LP
|
| Issue: | Convertible preferred units
|
| Amount: | $100 million
|
| Units: | 18,416,206
|
| Price: | $5.43
|
| Coupon: | 13.5%
|
| Conversion ratio: | One for one
|
| Call: | After three years
|
| Warrants: | No
|
| Investor: | KA First Reserve, LLC
|
| Pricing date: | Sept. 2
|
| Settlement date: | Sept. 10 (for $85 million), Sept. 16 (for $15 million)
|
| Stock symbol: | NYSE: KSP
|
| Stock price: | $4.15 at close Sept. 1
|
| Market capitalization: | $80.72 million
|
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