Re: Cobas AM: Nueva Gestora de Francisco García Paramés
Bonhoeffer Capital Q3- 2018:
"It would be great if you could provide an example of a 'Public LBO' style investment you've reviewed in the past, or currently own.
A public LBO we own is Teekay Offshore (NYSE: TOO) (Teekay). It is also a mischaracterized firm as the firm is being valued as though it is a Floating Production Storage and Offloading (FPSO) tanker leasing company versus a shuttle tanker/FPSO company. FPSO tanker leasing firms are being priced by the market today at 6x EBITDA, while shuttle tanker firms are being valued at 10x EBITDA. Currently, the EBITDA ratio is 40% shuttle, 60% FPSO/Floating Storage and Offloading (FSO). As a result of the Brookfield transaction, all new investment will be into the shuttle tanker segment versus the FPSO/FSO segment. This will increase the value of Teekay as the new dollars invested from the lower-returning FPSO/FSO segment will be reinvested into the high-returning shuttle tanker segment.
For 2017, the shuttle tanker EBITDA/assets were 13.9%, while it was 11.1% for FPSO and 7.5% for FSO. The shuttle tanker segment also has more stable cash flows than the FPSO/FSO segment, has less competition (one major competitor in the shuttle tankers versus three independent providers along with the oil companies themselves for FPSO/FSO tankers) and is not as integrated with the offshore well equipment, as FPSO/FSOs are typically owned by the oil company.
Teekay was re-capitalized by Brookfield in 2017 via an LP/GP unit sale (in which Brookfield purchased 60% of the LP units) and a debt offering reducing debt from 7x EBITDA to a more manageable level of 4.5x EBITDA. Recently, Brookfield has taken control of the GP. Teekay has an aspect of good business/not so good business between its shuttle tanker and FPSO/FSO business. The 2018 data on cash flows is a little messy because there are temporary reductions in day rates for some of the FPSOs and there are assets that are not being used. Teekay currently sells for 6x EBITDA based upon EBITDA generated from less-than-fully-utilized ships and temporarily discounted lease rates. Other FPSO/FSO leasers sell at multiples of 6x EBITDA while shuttle tankers sell at 10x EBITDA. At the current cash flow mix, the blended ratio is about 8x EBITDA. Given Teekay's leverage, if Teekay was valued at 8x EBITDA, the share price would increase by about 140%. Moving forward, Teekay should become more of a shuttle tanker company with its multiple increasing to the shuttle tanker multiple from the FPSO/FSO tanker leasing multiple."