K-Sea Transportation Partners
L.P. has agreed to acquire Sea Coast Towing, Inc. of Seattle, Wash. from Marine Resources Group
, Inc., also of Seattle, for approximately $81 million. Sea Coast operates 15 tank barges and 15 tugboats
, representing 694,000 barrels of capacity, of which 316,000 barrels are double-hulled. Of the remaining single hulled capacity, approximately 80 percent is eligible to operate in the Jones Act trades until January 2015, with the remaining capacity (one vessel) eligible until January 2008. The addition of these tank barges will represent a 27.1% increase in the barrel-carrying capacity of the K-Sea fleet
to over 3.2 million barrels, which the Company believes makes it the largest coastwise tank barge operator, measured by barrel-carrying capacity, in the United States. The purchase price will consist of $77 million in cash and 125,000 of K-Sea's common units. K-Sea expects to finance the cash portion of the purchase price through additional borrowings. The transaction is expected to close in late October, subject to customary closing conditions, and should be immediately accretive to K-Sea's distributable cash flow.
Timothy J. Casey, President and CEO of K-Sea, said "We look forward to welcoming Sea Coast's employees to our company. This transaction will expand our geographical presence to the West Coast which provides another platform for future growth. It also significantly increases our barrel-carrying capacity which, we believe, strengthens K-Sea's position as a leading provider of refined petroleum products transportation services in the U.S. and expands our ability to provide safe, reliable, and efficient service to our customers." By early 2006, after delivery of three previously announced double-hulled tank barges currently
under construction, totaling an additional 160,000 barrels, K-Sea's total barrel-carrying capacity of over 3.4 million barrels will have increased by over 1.1 million barrels, or 48 percent, from capacity at the time of the Company's initial public offering in January 2004, despite the phase-out of almost 328,000 barrels under OPA 90 requirements.