Robbins Arroyo LLP announces that shareholders of Teekay Offshore Partners L.P. ("Teekay") have filed a class action complaint against Teekay (NYSE: TOO) and Brookfield Asset Management Inc. (NYSE: BAM), among others, in regard to the agreement by Teekay Corporation (NYSE: TK) to sell its remaining interests in Teekay to Brookfield. Under the terms of the agreement, Brookfield will purchase Teekay Corporation's remaining interests in Teekay, including the 49% general partner interest, common units, warrants, and an outstanding $25 million loan, for total proceeds of $100 million in cash
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Is the Proposed Acquisition Best for Teekay Offshore Partners L.P. and Its Unitholders?
According to the complaint, Teekay is a leading services provider in the offshore petroleum industry that saw its stock price decline 90% over three years due to declining oil prices, increased competition, and poor management. In response to Teekay's deteriorating financials, Brookfield made a white-knight offer that ultimately grew to an over $.15 billion investment and allowed Teekay to pay off debt, retire preferred units and save on dividend payments, and purchase assets that would promise to lead to growth. The result was to keep Teekay's debt level high and dividend payouts low.
In making a play for the remaining shares of Teekay, Brookfield revealed that it deliberately depressed Teekay's common unit trading price so it could buy the remaining units for less than Teekay's already depressed trading price and squeeze out non-affiliated common unitholders. Brookfield is likely to gain approval from Teekay's conflicted Conflicts Committee. Teekay has allowed Brookfield to intentionally depress Teekay's common unit price, and despite having been informed of the common unitholders' protests, has taken no action to protect the interests of the common unitholders.
Teekay Offshore Partners L.P. (TOO) Unitholders Have Legal Options
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