Teekay Offshore Partners LP Cuts Dividend – Preferreds Tank

In an interesting move Teekay Offshore Partners LP (NYSE:TOO) cut their dividend – from 1 penny to 0 and the preferred shares are paying the price.

The 8.875% issue (TOO-E) is off $2.31 to $19.10, the 8.50% issue (TOO-B) is off $2 to $19 and the 7.25% issue (TOO-A) is off $2.05 to $16.77.  The current yields are 11.62%, 11.18% and 10.81% respectively.

We are always hesitant to call these types of issues ‘bargains’ but we think they are ‘bargains’.

Teekay Offshore units are trading around $1.44/unit.  This of course is a warning sign to stay away, BUT there may be some special circumstances here that may make the preferred shares a bargain.

Huge Canadian Asset manager Brookfield Asset Management (NASDAQ:BAM) has taken a controlling position in both Teekay Offshore LP and the general partner of TOO.  They now own 64% of TOO and 51% of the general partner while Teekay Corp  now owns just 14% of TOO and 49% of the general partner.

BAM has put $800 million into TOO in the last year.  We think BAM is a safety net.


6 thoughts on “Teekay Offshore Partners LP Cuts Dividend – Preferreds Tank”

    1. This is Brookfield’s baby now. No reason to be afraid of the Teekay name though, TGP has tons of potential going forward.

  1. I just checked the TOO partnership website and they report on a 1099 not a K-1. Now to go and take another look at their financials. I really do prefer a company with some E in their P/E but I did note the losses are getting smaller each quarter lately.

  2. I don’t know if this particular situation is the typical excuse to take profits in the sector but in general prices are a bit weak today.
    My favorite GLOPs are still a couple of bucks away from levels seen before the dramatic collapse that started at the end of November. Since it seemed all the fuss due to the weak price of oil, I expected another push after another jump in oil we are are seeing.

    1. Greg–my due diligence says sitting tight is probably correct. Actually I just jumped in and took a position in TOO-B–I will flip out probably if I get a quick gain.

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