Wow–what a lousy day for these two companies.
TeeKay Offshore (NYSE:TOO) will potentially be bought by Brookfield Business Partners (NYSE:BPY) for $1.05/common unit for those they don’t already own. The fear is one of a potential delisting or suspension (or both) of the 3 high yield preferred units TOO has outstanding. The A, B and E issues are off between $1.69 and $2.75/share–and that is after falling $3 bucks further earlier in the day.
LNG shipper Dynagas Partners (NYSE:DLNG) is being sued by investors for telling ‘lies’ to stockholders–it looks serious. Both high yield preferred unit issues are off around 12% and trading in the $16-$18 range.
I think most all knew these were high risk issues–and personally we hold none of them, but certainly have off and on in the past.
This is a lesson for newer preferred investors – you can always count on the shipping related issues to be some of the diciest preferreds out there–this has been the case as long as I have watched these companies (15 years). There is a reason they have coupons of 8% to near 10%. We have all had to learn these lessons–and we all continue to learn. It is not just the business model of these shippers, but most are domiciled outside the U.S. and reporting requirements may not be as stiff as they should be–too much “just trust me” from management.