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Barge operator K-Sea Transportation Partners L.P. has announced that it intends to commence a public offering of 2.9 million common units to repay debt and to pay for its vessel newbuilding program.

"K-Sea Transportation Partners intends to grant the underwriters a 30-day option to purchase up to an additional 435,000 common units to cover over-allotments, if any," the company said.

"The net proceeds of the offering are expected to be used to repay indebtedness and make construction progress payments in connection with its vessel newbuilding program," K-Sea added.

BofA Merrill Lynch and Wells Fargo Securities will act as joint book-running managers for the offering.

RBC Capital Markets and UBS Investment Bank are acting as co-lead managers, and DnB NOR Markets, KeyBanc Capital Markets and Stifel Nicolaus are acting as co-managers for the offering.

When available, a copy of the preliminary prospectus supplement and the accompanying prospectus relating to the offering may be obtained from the following underwriters at the addresses below:

BofA Merrill Lynch
4 World Financial Center
New York, New York 10080
Attn: Prospectus Department

Wells Fargo Securities
Attn: Equity Syndicate Dept.
375 Park Avenue
New York, New York 10152
(800) 326-5897

equity.syndicate@wachovia.com

Earlier this week, K-Sea Transportation Partners L.P. reported a year-on-year decrease in net income of almost 60 percent during the last fiscal quarter.

Net income for the three months ended June 30, 2009 was $2.6 million, or $0.16 per share, a decrease of $3.8 million compared to net income of $6.4 million, or $0.45 per share, for the three months ended June 30, 2008.

K-Sea said the fiscal 2009 year was adversely impacted by the $9.1 million decrease in operating income and the $2.5 million negative swing in other expense (income), net.

President and CEO Timothy J. Casey said, “Fiscal 2009 was an extremely challenging year in our country’s economy and financial system, as well as for K-Sea. In addition to an unprecedented decline in U.S. petroleum product demand, which was pronounced in our fourth fiscal quarter, our full year results were negatively impacted by unusual items that total approximately $4.8 million."

Commenting on the company's vessel newbuilding program, Casey said "Recently, there has been a noticeable trend for customers to increasingly prefer double-hull vessels over single-hulls. If all barges currently contracted to be constructed are in fact built and placed into service, and if all existing single-hulls are removed from service, total capacity in this size range would decline by approximately 18%. As the largest operator of barges in this size range, our market position would be enhanced," the company added.