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TECO shipping out its shipping

Private investors pony up $405-million that will trim debts.

By STEVE HUETTEL
Published October 30, 2007

TECO Energy will sell its shipping business to a private investment group for $405-million and use proceeds to pay down debt from failed investments in out-of-state power plants.

The parent of Tampa Electric Co. said Monday that the deal with a group headed by an affiliate of Greenstreet Equity Partners of Miami for TECO Transportation should close by year's end.

The sale price was below the $450-million to $550-million expected by analyst David Parker of Robert W. Baird & Co. He lowered his 2008 earnings per share estimate for the company Monday by 5 cents to $1.15. TECO shares closed up 1 cent at $16.75.

In light of speculation that TECO might not find a buyer because of a credit crunch sparked by the subprime mortgage collapse, the sale price wasn't "hugely disappointing,"Parker said. TECO president John Ramil said the amount was "within the range of what we expected." The company expects to net $370-million to $380-million after transaction costs and taxes.

TECO Transport employs 850 workers, about 130 in Tampa, and has a fleet of 12 ocean-going vessels -- ships and tug-barge combinations. The company also owns river towboats, 650 river barges and a transfer terminal at the mouth of the Mississippi River.

Its vessels carry dry bulk commodities, mostly coal and grain from the Appalachians and Midwest and phosphate mined in Hillsborough and Polk counties. Shipping companies that worked for Tampa Electric since the '50s and early '60s were purchased and incorporated into a new parent, TECO Energy, in 1981.

TECO notified employees of the sale agreement Monday. The investment group has expressed an interest in keeping the shipping company's nine top executives, Ramil said. Nearly all employees took bonuses to stay through the sale, but they have no assurance of jobs afterward, he said.

TECO Energy plans to pay down $500-million of its remaining $1.6-billion in debt in 2008, using mostly proceeds from the shipping company. By selling that business, TECO should get a premium for its shares as a "pure-play" energy company, said Parker of Baird. The firm has been paid by TECO for banking and securities work in the last year.

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

[Last modified October 29, 2007, 23:26:03]