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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 ___________________________________________________________
FORM 6-K
  ___________________________________________________________
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2021
Commission file number 1-33867
  ___________________________________________________________
TEEKAY TANKERS LTD.
(Exact name of Registrant as specified in its charter)
  ___________________________________________________________
4th Floor, Belvedere Building, 69 Pitts Bay Road, Hamilton, HM08, Bermuda
(Address of principal executive office)
  ___________________________________________________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F  ý            Form 40-F  ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1).
Yes  ¨            No   ý
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7).
Yes  ¨            No   ý










Table of Contents
TEEKAY TANKERS LTD.
REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021
INDEX
 
PAGE
Item 1.
Item 2.



Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
TEEKAY TANKERS LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF (LOSS) INCOME (note 1)
(in thousands of U.S. Dollars, except share and per share amounts)
 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
$$$$
Voyage charter revenues (note 3)
113,998207,926226,199525,404
Time-charter revenues (note 3)
7,06534,98635,35050,553
Other revenues (notes 3 and 4)
2,3573,5804,62012,435
Total revenues123,420246,492266,169588,392
Voyage expenses(71,773)(61,558)(140,818)(180,799)
Vessel operating expenses (note 13b)
(43,129)(46,218)(86,177)(96,867)
Time-charter hire expenses(2,138)(9,296)(5,768)(19,175)
Depreciation and amortization(26,895)(29,546)(53,579)(59,178)
General and administrative expenses (note 13b)
(12,233)(9,784)(23,703)(19,070)
(Write-down) and gain (loss) on sale of assets (note 15)
(86,686)2,896(87,401)(191)
(Loss) income from operations(119,434)92,986(131,277)213,112
Interest expense(9,299)(13,492)(19,367)(28,627)
Interest income2956759823
Realized and unrealized (loss) gain on derivative
    instruments (note 8)
(512)(589)191(1,416)
Equity (loss) income(829)3,188(1,188)5,128
Other (expense) income (note 9)
(1,218)940(475)2,083
Net (loss) income before income tax(131,263)83,600(152,057)191,103
Income tax recovery (note 10)
2,11914,5981,54813,934
Net (loss) income(129,144)98,198(150,509)205,037
Per common share amounts (note 14)
 - Basic (loss) earnings per share$(3.83)$2.91$(4.46)$6.08
 - Diluted (loss) earnings per share$(3.83)$2.89$(4.46)$6.04
Weighted-average number of Class A and Class B common stock outstanding (note 14)
 - Basic 33,763,36733,727,97833,753,59933,698,972
 - Diluted33,763,36733,978,73033,753,59933,962,511
Related party transactions (note 13)

The accompanying notes are an integral part of the unaudited consolidated financial statements.
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS (notes 1 and 2)
(in thousands of U.S. Dollars)
As atAs at
June 30, 2021December 31, 2020
$
$
ASSETS
Current
Cash and cash equivalents60,49897,232
Restricted cash – current (note 16)
2,7642,779
Accounts receivable35,05636,202
Assets held for sale (note 15)
11,92532,974
Due from affiliates (note 13c)
6815,236
Bunker and lube oil inventory 49,60934,606
Prepaid expenses12,5289,739
Accrued revenue20,67326,640
Total current assets193,734245,408
Restricted cash – long-term (note 16)
3,1353,135
Vessels and equipment
At cost, less accumulated depreciation of $282.7 million (2020 - $417.4 million) (note 6)
1,056,6571,104,742
Vessels related to finance leases, at cost, less accumulated depreciation of $89.5 million
   (2020 - $124.4 million) (note 7)
368,118450,558
Operating lease right-of-use assets (notes 7 and 15)
5482,529
Total vessels and equipment1,425,3231,557,829
Investment in and advances to equity-accounted joint venture25,87328,561
Derivative assets (note 8)
101
Other non-current assets1,887897
Intangible assets at cost, less accumulated amortization of $4.0 million (2020 - $3.7 million)
1,7341,989
Goodwill2,4262,426
Total assets1,654,2131,840,245
LIABILITIES AND EQUITY
Current
Accounts payable31,11531,059
Accrued liabilities (note 13c)
36,92355,055
Short-term debt (note 5)
10,00010,000
Due to affiliates (note 13c)
10,1623,123
Current portion of long-term debt (note 6)10,86410,858
Current portion of derivative liabilities (note 8)
632289
Current obligations related to finance leases (note 7)
139,96578,476
Current portion of operating lease liabilities (note 7)
8373,685
Other current liabilities (note 3)
8224,574
Total current liabilities241,320197,119
Long-term debt (note 6)
282,735232,103
Long-term obligations related to finance leases (note 7)
152,792281,567
Long-term operating lease liabilities (note 7)
105315
Derivative liabilities (note 8)
597
Other long-term liabilities (note 10)
47,82849,642
Total liabilities724,780761,343
Commitments and contingencies (notes 5, 6, 7, and 8)
Equity
Common stock and additional paid-in capital (585.0 million shares authorized, 29.2 million Class A and 4.6 million Class B shares issued and outstanding as of June 30, 2021, and 585.0 million shares authorized, 29.1 million Class A and 4.6 million Class B shares issued and outstanding as at December 31, 2020) (note 12)
1,300,2601,299,220
Accumulated deficit(370,827)(220,318)
Total equity929,4331,078,902
Total liabilities and equity1,654,2131,840,245
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (note 1)
(in thousands of U.S. Dollars)
 
Six Months Ended June 30,
20212020
$$
Cash, cash equivalents and restricted cash provided by (used for)
OPERATING ACTIVITIES
Net (loss) income(150,509)205,037
Non-cash items:
Depreciation and amortization53,57959,178
Write-down and loss on sale of assets (note 15)
87,401191
Unrealized (gain) loss on derivative instruments (note 8)
(388)1,776
Equity loss (income)1,188(5,128)
Income tax recovery (note 10)
(1,879)(12,873)
Other378(8)
Change in operating assets and liabilities(22,873)60,379
Expenditures for dry docking(12,602)(3,681)
Net operating cash flow(45,705)304,871
FINANCING ACTIVITIES
Proceeds from short-term debt (note 5)
25,000205,000
Prepayments of short-term debt (note 5)
(25,000)(245,000)
Proceeds from long-term debt, net of issuance costs (note 6)
70,000477,822
Scheduled repayments of long-term debt (note 6)
(5,615)(8,812)
Prepayments of long-term debt (note 6)
(15,000)(717,368)
Scheduled repayments of obligations related to finance leases (note 7)
(10,562)(12,269)
Prepayment of obligations related to finance leases (note 7)
(56,724)
Other(93)(562)
Net financing cash flow(17,994)(301,189)
INVESTING ACTIVITIES
Proceeds from sale of assets (2020 - net of cash sold of $2.1 million) (note 15)
32,68775,214
Expenditures for vessels and equipment(7,237)(3,076)
Loan repayments from equity-accounted joint venture1,5003,500
Net investing cash flow26,95075,638
(Decrease) increase in cash, cash equivalents and restricted cash(36,749)79,320
Cash, cash equivalents and restricted cash, beginning of the period103,14696,790
Cash, cash equivalents and restricted cash, end of the period66,397176,110
Supplemental cash flow information (note 16)
The accompanying notes are an integral part of the unaudited consolidated financial statements.

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TEEKAY TANKERS LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (note 1)
(in thousands of U.S. Dollars, except share amounts)
 
Common Stock and Additional
Paid-in Capital
  
 
Thousands
of Common
Shares
#
Class A Common Shares
$
Class B Common Shares
$
Accumulated
Deficit
$
Total
$
Balance as at December 31, 202033,7381,210,68888,532(220,318)1,078,902
Net loss(21,365)(21,365)
Equity-based compensation (note 12)
17341341
Balance as at March 31, 202133,7551,211,02988,532(241,683)1,057,878
Net loss(129,144)(129,144)
Equity-based compensation (note 12)
24699699
Balance as at June 30, 202133,7791,211,72888,532(370,827)929,433

 
Common Stock and Additional
Paid-in Capital
  
 
Thousands
of Common
Shares
#
Class A Common Shares
$
Class B Common Shares
$
Accumulated
Deficit
$
Total
$
Balance as at December 31, 201933,6551,209,02388,532(307,635)989,920
Net income106,839106,839
Equity-based compensation (note 12)
57468468
Balance as at March 31, 202033,7121,209,49188,532(200,796)1,097,227
Net income98,19898,198
Equity-based compensation (note 12)
26374374
Balance as at June 30, 202033,7381,209,86588,532(102,598)1,195,799
The accompanying notes are an integral part of the unaudited consolidated financial statements.

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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)

1.Basis of Presentation
The unaudited interim consolidated financial statements (or unaudited consolidated financial statements) have been prepared in accordance with United States generally accepted accounting principles (or GAAP). These unaudited consolidated financial statements include the accounts of Teekay Tankers Ltd., its wholly-owned subsidiaries, equity-accounted joint venture and any variable interest entities (or VIEs) of which it is the primary beneficiary (collectively, the Company). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020, filed on Form 20-F with the U.S. Securities and Exchange Commission (or the SEC) on April 1, 2021. In the opinion of management, these unaudited consolidated financial statements reflect all adjustments, consisting solely of a normal recurring nature, necessary to present fairly, in all material respects, the Company’s unaudited consolidated financial position, results of operations, cash flows and changes in total equity for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of those for a full fiscal year. Intercompany balances and transactions have been eliminated upon consolidation.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (or COVID-19) as a pandemic. Given the dynamic nature of these circumstances, the full extent to which the COVID-19 global pandemic may have direct or indirect impacts on the Company's business and the related financial reporting implications cannot be reasonably estimated at this time, although the pandemic could materially affect the Company's business, results of operations and financial condition in the future. COVID-19 has resulted and may continue to result in a significant decline in global demand for oil. As the Company's business includes the transportation of crude oil and refined petroleum products on behalf of customers, any significant decrease in demand for the cargo the Company transports could adversely affect demand for the Company's vessels and services. Spot tanker rates have come under pressure since mid-May 2020 as a result of significantly reduced oil demand due to COVID-19 and the subsequent decision by the OPEC+ group of oil producers to implement record oil supply cuts. Reduced oil production from other oil producing nations due to the impact of COVID-19, as well as the unwinding of floating storage and the delivery of newbuilding vessels to the world tanker fleet, has also contributed to the weakness in tanker rates. COVID-19 was also a contributing factor to the write-down of certain tankers during the three and six months ended June 30, 2021 as described in Note 15 - (Write-down) and Gain (Loss) on Sale of Assets, and the reduction in certain tax accruals during the three and six months ended June 30, 2020 as described in Note 10 - Income Tax Recovery.
2.    Recent Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (or ASU 2019-12), as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences, among other changes. The Company adopted this update on January 1, 2021. The adoption did not have an impact on the Company's unaudited consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (or ASU 2020-04). ASU 2020-04 provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate (or LIBOR). The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in this ASU are effective through December 31, 2022. The Company is currently evaluating the effect of adopting this new guidance.
3.    Revenue
The Company’s primary source of revenue is from chartering its vessels (Aframax tankers, Suezmax tankers and Long Range 2 (or LR2) tankers) to its customers. The Company utilizes two primary forms of contracts, consisting of voyage charters and time-charters.

The extent to which the Company employs its vessels on voyage charters versus time charters is dependent upon the Company’s chartering strategy and the availability of time charters. Spot market rates for voyage charters are volatile from period to period, whereas time charters provide a stable source of monthly revenue. The Company also provides ship-to-ship (or STS) support services, which include managing the process of transferring cargo between seagoing ships positioned alongside each other, either stationary or underway, as well as management services to third-party owners of vessels. Prior to April 30, 2020, the Company managed liquefied natural gas (or LNG) terminals and procured LNG-related goods for terminal owners and other customers. For descriptions of these types of contracts, see Item 18 - Financial Statements: Note 3 in the Company’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020. On April 30, 2020, the Company completed the sale of the non-US portion of its STS support services business, as well as its LNG terminal management business (see note 15).
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)

The following table contains a breakdown of the Company's revenue by contract type for the three and six months ended June 30, 2021 and June 30, 2020. All revenue is part of the Company's tanker segment, except for revenue for the non-US portion of the STS support services and LNG terminal management, consultancy, procurement, and other related services, which are part of the Company's previously existing STS transfer segment (see note 4). The Company’s lease income consists of the revenue from its voyage charters and time-charters.
Three Months Ended June 31,Six Months Ended June 30,
2021202020212020
$
$$$
Voyage charter revenues
     Suezmax61,79493,985117,737251,705
     Aframax 23,54459,36950,613131,833
     LR216,51827,87333,66776,659
     Full service lightering12,14226,69924,18265,207
     Total113,998207,926226,199525,404
Time-charter revenues
     Suezmax95531,00020,39046,567
     Aframax5,2922,15811,5322,158
     LR28181,8283,4281,828
     Total7,06534,98635,35050,553
Other revenues
     Ship-to-ship support services1,1311,1232,1017,842
     Vessel management1,2261,8482,5194,201
     LNG terminal management, consultancy, procurement and other609392
     Total2,3573,5804,62012,435
Total revenues123,420246,492266,169588,392

Charters-out
As at June 30, 2021, three (December 31, 2020 - nine) of the Company’s vessels operated under fixed-rate time charter contracts, one of which is scheduled to expire in 2021 and two of which are scheduled to expire in 2022. As at June 30, 2021, the minimum scheduled future revenues to be received by the Company under these time charters were approximately $10.7 million (remainder of 2021) and $5.2 million (2022) (December 31, 2020 - $45.3 million (2021) and $5.2 million (2022)). The hire payments should not be construed to reflect a forecast of total charter hire revenue for any of the periods. Future hire payments do not include hire payments generated from new contracts entered into after June 30, 2021, from unexercised option periods of contracts that existed on June 30, 2021 or from variable consideration, if any, under contracts. In addition, future hire payments presented above have been reduced by estimated off-hire time for required periodic maintenance and do not reflect the impact of revenue sharing arrangements whereby time-charter revenues are shared with other revenue sharing arrangement participants. Actual amounts may vary given future events such as unplanned vessel maintenance.

Contract Liabilities
As at June 30, 2021, the Company had nil (December 31, 2020 - $4.2 million) of advanced payments recognized as contract liabilities that are expected to be recognized as time-charter revenues in subsequent periods and which are included in other current liabilities on the Company's unaudited consolidated balance sheets.
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
4.    Segment Reporting
On April 30, 2020, the Company completed the sale of the non-US portion of its STS support services business, as well as its LNG terminal management business. Following the sale, the Company's remaining STS support operations were integrated into the Company's tanker business. As a result, effective April 30, 2020, the Company has one reportable segment. The Company’s segment information for all periods prior to the sale and reorganization has been retroactively adjusted whereby the remaining STS support operations have been reallocated from the STS transfer segment to the tanker segment. Consequently, the Company’s tanker segment now consists of the operation of all of its tankers, including the operations from those tankers employed on full service lightering contracts, and the US based STS support service operations that the Company retained, including its lightering support services provided as part of full service lightering operations. The Company’s STS transfer segment consisted of the Company’s non-US lightering support services, LNG terminal management, consultancy, procurement, and other related services which were sold as of April 30, 2020. Segment results are evaluated based on income from operations. The accounting policies applied to the reportable segments are the same as those used in the preparation of the Company’s unaudited consolidated financial statements.

The following tables include results for the Company’s revenues and income from operations by segment for the three and six months ended June 30, 2020. No results are included for the three and six months ended June 30, 2021 as the Company only had one reportable segment during that period.

Three Months Ended June 30, 2020
Tanker SegmentSTS Transfer SegmentTotal
$$$
Revenues (1)
245,728764246,492
Voyage expenses(61,558)(61,558)
Vessel operating expenses(45,140)(1,078)(46,218)
Time-charter hire expenses(9,296)(9,296)
Depreciation and amortization(29,425)(121)(29,546)
General and administrative expenses (2)
(9,637)(147)(9,784)
(Loss) gain on sale of assets and write-down of assets(185)3,0812,896
Income from operations90,4872,49992,986
Equity income3,1883,188

(1)Revenues earned from the STS transfer segment are reflected in Other Revenues in the Company's unaudited consolidated statements of (loss) income.
(2)Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).
Six Months Ended June 30, 2020
Tanker SegmentSTS Transfer SegmentTotal
$$$
Revenues (1)
581,4006,992588,392
Voyage expenses(180,799)(180,799)
Vessel operating expenses(90,927)(5,940)(96,867)
Time-charter hire expenses(19,175)(19,175)
Depreciation and amortization(58,685)(493)(59,178)
General and administrative expenses (2)
(18,443)(627)(19,070)
(Loss) gain on sale of assets and write-down of assets(3,272)3,081(191)
Income from operations210,0993,013213,112
Equity income5,1285,128
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
(1)Revenues earned from the STS transfer segment are reflected in Other Revenues in the Company's unaudited consolidated statements of (loss) income.
(2)Includes direct general and administrative expenses and indirect general and administrative expenses (allocated to each segment based on estimated use of corporate resources).
5.    Short-Term Debt
In November 2018, Teekay Tankers Chartering Pte. Ltd. (or TTCL), a wholly-owned subsidiary of the Company, entered into a working capital revolving loan facility (or the Working Capital Loan), which initially provided available aggregate borrowings of up to $40.0 million for TTCL, and had an initial maturity date in May 2019, subject to extension as described below. The maximum available aggregate borrowings were subsequently increased to $80.0 million, effective December 2019. The amount available for drawdown is limited to a percentage of certain receivables and accrued revenue, which is assessed weekly. The next maturity date of the Working Capital Loan is in November 2021. The Working Capital Loan maturity date is continually extended for further periods of six months thereafter unless and until the lender gives notice in writing that no further extensions shall occur. Proceeds of the Working Capital Loan are used to provide working capital in relation to certain vessels subject to the revenue sharing agreements (or RSAs). Interest payments are based on LIBOR plus a margin of 3.5%. The Working Capital Loan is collateralized by the assets of TTCL. The Working Capital Loan requires the Company to maintain its paid-in capital contribution under the RSAs and the retained distributions of the RSA counterparties in an amount equal to the greater of (a) an amount equal to the minimum average capital contributed by the RSA counterparties per vessel in respect of the RSA (including cash, bunkers or other working capital contributions and amounts accrued to the RSA counterparties but unpaid) and (b) a minimum capital contribution ranging from $20.0 million to $30.0 million based on the amount borrowed. As at June 30, 2021, $10.0 million (December 31, 2020 - $10.0 million) was owing under this facility, the aggregate available borrowings were $29.8 million (December 31, 2020 - $32.0 million) and the interest rate on the facility was 3.6% (December 31, 2020 - 3.6%). As at June 30, 2021, the Company was in compliance with all covenants in respect of this facility.
6.    Long-Term Debt
As atAs at
June 30, 2021December 31, 2020
$$
Revolving credit facility due through 2024240,000185,000
Term loan due in 202358,95364,568
Total principal298,953249,568
Less: unamortized discount and debt issuance costs(5,354)(6,607)
Total debt293,599242,961
Less: current portion(10,864)(10,858)
Long-term portion282,735232,103

As at June 30, 2021, the Company had one revolving credit facility (or the 2020 Revolver), which, as at such date, provided for aggregate borrowings of up to $391.2 million (December 31, 2020 - $438.4 million), of which $151.2 million (December 31, 2020 - $253.4 million) was undrawn. Interest payments are based on LIBOR plus a margin, which was 2.40% as at June 30, 2021 (December 31, 2020 - 2.40%). The total amount available under the 2020 Revolver decreases by $44.2 million (remainder of 2021), $80.4 million (2022), $65.3 million (2023) and $201.3 million (2024). The 2020 Revolver is collateralized by 31 of the Company's vessels, together with other related security.

As at June 30, 2021, the Company also had one term loan (or the 2020 Term Loan) outstanding, which totaled $59.0 million (December 31, 2020 - $64.6 million). Interest payments are based on LIBOR plus a margin, which was 2.25% as at June 30, 2021 (December 31, 2020 - 2.25%). The term loan reduces in quarterly payments and has a balloon repayment due at maturity in 2023. The 2020 Term Loan is collateralized by four of the Company's vessels, together with other related security.

The 2020 Revolver and the 2020 Term Loan require the Company to maintain a minimum hull coverage ratio of 125% of the total outstanding drawn balance and 125% of the total outstanding principal balance, respectively, for the facility periods. Such requirements are assessed on a semi-annual basis with reference to vessel valuations compiled by two or more agreed upon third parties. Should the ratios drop below the required amounts, the lender may request that the Company either prepay a portion of the loan in the amount of the shortfall or provide additional collateral in the amount of the shortfall, at the Company's option. As at June 30, 2021, the hull coverage ratios were 289% and 170% for the 2020 Revolver and 2020 Term Loan, respectively. A decline in the tanker market could negatively affect these ratios. In addition, the Company is required to maintain a minimum liquidity (cash, cash equivalents and undrawn committed revolving credit lines with at least six months to maturity) of the greater of $35.0 million and at least 5% of the Company's total consolidated debt and obligations related to finance leases. As at June 30, 2021, the Company was in compliance with all covenants in respect of the 2020 Revolver and the 2020 Term Loan.
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)

The weighted-average interest rate on the Company’s long-term debt as at June 30, 2021 was 2.5% (December 31, 2020 - 2.6%). This rate does not reflect the effect of the Company’s interest rate swap agreement (see note 8).

The aggregate annual long-term debt principal repayments required to be made by the Company under the 2020 Revolver and the 2020 Term Loan subsequent to June 30, 2021 are $5.6 million (remainder of 2021), $11.2 million (2022), $80.9 million (2023) and $201.3 million (2024).
7.    Operating Leases and Obligations Related to Finance Leases
Operating Leases
The Company charters-in vessels from other vessel owners on time-charter contracts, whereby the vessel owner provides use and technical operation of the vessel for the Company. A time charter-in contract is typically for a fixed period of time, although in certain cases, the Company may have the option to extend the charter. The Company typically pays the owner a daily hire rate that is fixed over the duration of the charter. The Company is generally not required to pay the daily hire rate during periods the vessel is not able to operate.
As at June 30, 2021, minimum commitments to be incurred by the Company under time charter-in contracts were approximately $5.1 million (remainder of 2021), $11.7 million (2022), $9.6 million (2023), $6.8 million (2024), $6.8 million (2025) and $25.0 million (thereafter), including one LR2 tanker delivered to the Company in September 2021 to commence an 18-month time charter-in contract, one STS support vessel expected to be delivered to the Company in September 2021 to commence a 24-month time charter-in contract, and one Aframax tanker newbuilding expected to be delivered to the Company in the fourth quarter of 2022 to commence a seven-year time charter-in contract. The minimum commitments exclude two time charter-in contracts for two Aframax tankers that were entered into by the Company subsequent to June 30, 2021.
Obligations Related to Finance Leases
As atAs at
June 30, 2021December 31, 2020
$$
Total obligations related to finance leases292,757360,043
Less: current portion(139,965)(78,476)
Long-term obligations related to finance leases152,792281,567

From 2017 to 2019, the Company completed sale-leaseback financing transactions with financial institutions relating to 16 of the Company's vessels. Under these arrangements, the Company transferred the vessels to subsidiaries of the financial institutions (collectively, the Lessors) and leased the vessels back from the Lessors on bareboat charters ranging from 9 to 12-year terms. In October 2020, the Company completed the purchases of two of these vessels for a total cost of $29.6 million, and in May 2021, the Company completed the purchases of two more of these vessels for a total cost of $56.7 million. In March 2021, the Company also declared purchase options to acquire six of these vessels for a total cost of $128.8 million with an expected completion date in September 2021. The Company has the option to purchase each of the remaining six vessels, four of which can be purchased between now and the end of their respective lease terms, while the remaining two can be purchased starting in November 2021 until the end of their respective lease terms.
The bareboat charters related to these vessels require that the Company maintain a minimum liquidity (cash, cash equivalents and undrawn committed revolving credit lines with at least six months to maturity) of the greater of $35.0 million and at least 5.0% of the Company's consolidated debt and obligations related to finance leases.
Six of the bareboat charters were entered into with subsidiaries of a financial institution in July 2017 and November 2018. Four of these bareboat charters, entered into in July 2017, require the Company to maintain, for each vessel, a minimum hull coverage ratio of 90% of the total outstanding principal balance during the first three years of the lease period and 100% of the total outstanding principal balance thereafter. As at June 30, 2021, these ratios were 102% (December 31, 2020 - ranged from 121% to 143%). The remaining two of these bareboat charters, entered into in November 2018, require the Company to maintain, for each vessel, a minimum hull coverage ratio of 100% of the total outstanding principal balance. As at June 30, 2021, these ratios ranged from 122% to 127% (December 31, 2020 - ranged from 145% to 156%). Should any of these ratios drop below the required amount, the lessor may request that the Company prepay additional charter hire.
Six bareboat charters were entered into with subsidiaries of a financial institution in September 2018, and require the Company to maintain, for each vessel, a minimum hull coverage ratio of 75% of the total outstanding principal balance during the first year of the lease period, 78% for the second year, 80% for the following two years and 90% of the total outstanding principal balance thereafter. As at June 30, 2021, these ratios ranged from 98% to 104% (December 31, 2020 - ranged from 80% to 88%). Should any of these ratios drop below the required amount, and we are unable to cure any such breach within the prescribed cure period, our obligations may become immediately due and payable at the election of the relevant lessor. In certain circumstances, this could lead to cross-defaults
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
under our other financing agreements which in turn could result in obligations becoming due and commitments being terminated under such agreements. In March 2021, the Company declared purchase options to acquire these six vessels for a total cost of $128.8 million with an expected completion date in September 2021. In April 2021, the Company was served with a claim from the counterparty of the bareboat charters relating to these six vessels and the two vessels purchased in May 2021 for reimbursement of breakage costs in respect of interest rate swaps that were entered into by the counterparty in connection with the counterparty's underlying financing. The Company filed a defense to this claim in June 2021, rejecting the claim that the Company is responsible for paying these breakage cost reimbursements. As of June 30, 2021, the breakage costs are estimated to range from $8.0 million to $9.0 million; however, depending on the timing of terminating the swaps and changes in underlying interest rates, the amount of the claim may change. No loss provision in respect of this claim has been made by the Company based on its assessment of the merits of the claim.
The requirements of the bareboat charters are assessed annually or quarterly with reference to vessel valuations compiled by one or more agreed upon third parties. As at June 30, 2021, the Company was in compliance with all covenants in respect of its obligations related to finance leases.
The weighted-average interest rate on the Company’s obligations related to finance leases as at June 30, 2021 was 7.5% (December 31, 2020 - 7.8%).
As at June 30, 2021, the Company's total remaining commitments (including the vessel purchase options declared) related to the financial liabilities of these vessels were approximately $352.1 million (December 31, 2020 - $480.9 million), including imputed interest of $59.3 million (December 31, 2020 - $120.9 million), repayable from 2021 through 2030, as indicated below:
Commitments
June 30, 2021
Year$
Remainder of 2021142,913
202221,848
202321,846
202421,903
202521,841
Thereafter121,782

8.    Derivative Instruments
Interest rate swap agreement
The Company uses derivative instruments in accordance with its overall risk management policies. The Company enters into interest rate swap agreements which exchange a receipt of floating interest for a payment of fixed interest to reduce the Company’s exposure to interest rate variability on its outstanding floating-rate debt. The Company has not designated, for accounting purposes, its interest rate swap as a cash flow hedge of its U.S. Dollar LIBOR-denominated borrowings.

In March 2020, the Company entered into an interest rate swap agreement which is scheduled to mature in December 2024. The following summarizes the Company's interest rate swap agreement as at June 30, 2021:
Interest RateNotional AmountFair Value /Carrying Amount of LiabilityRemaining TermFixed Swap Rate
 Index$$(years)
(%) (1)
LIBOR-Based Debt:
U.S. Dollar-denominated interest rate swap agreementLIBOR50,000(195)3.50.76
 
(1)Excludes the margin the Company pays on its variable-rate long-term debt, which, as of June 30, 2021, ranged from 2.25% to 2.40%.
The Company is potentially exposed to credit loss in the event of non-performance by the counterparty to the interest rate swap agreements in the event that the fair value results in an asset being recorded. In order to minimize counterparty risk, the Company only enters into interest rate swap agreements with counterparties that are rated A– or better by Standard & Poor’s or A3 or better by Moody’s at the time transactions are entered into.
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
Forward freight agreements
The Company uses forward freight agreements (or FFAs) in non-hedge-related transactions to increase or decrease its exposure to spot market rates, within defined limits. Net gains and losses from FFAs are recorded within realized and unrealized (loss) gain on derivative instruments in the Company's unaudited consolidated statements of (loss) income.
Tabular Disclosure
The following table presents the location and fair value amounts of derivative instruments, segregated by type of contract, on the Company’s unaudited consolidated balance sheets.
Derivative AssetsCurrent Portion of Derivative LiabilitiesDerivative Liabilities
$
$
$
As at June 30, 2021
     Interest rate swap agreement101(296)
     Forward freight agreements(336)
101(632)
As at December 31, 2020
     Interest rate swap agreement(289)(597)
(289)(597)

Realized and unrealized (losses) gains relating to the interest rate swaps and FFAs are recognized in earnings and reported in realized and unrealized (loss) gain on derivative instruments in the Company’s unaudited consolidated statements of (loss) income as follows:
Three Months EndedThree Months Ended
June 30, 2021June 30, 2020
Realized LossesUnrealized LossesTotalRealized Gains (Losses)Unrealized (Losses) GainsTotal
$$$$$$
Interest rate swap agreement(72)(82)(154)86(483)(397)
Forward freight agreements(88)(270)(358)(200)8(192)
(160)(352)(512)(114)(475)(589)

Six Months EndedSix Months Ended
June 30, 2021June 30, 2020
Realized LossesUnrealized Gains (Losses)TotalRealized Gains (Losses)Unrealized LossesTotal
$$$$$$
Interest rate swap agreement(137)691554609(1,697)(1,088)
Forward freight agreements(60)(303)(363)(249)(79)(328)
(197)388191360(1,776)(1,416)

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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
9.    Other (Expense) Income
The components of other (expense) income are as follows:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
$$$$
Foreign exchange (loss) gain(625)(87)(13)1,048
Other (expense) income(593)1,027(462)1,035
Total(1,218)940(475)2,083
10.    Income Tax Recovery
The following table reflects changes in uncertain tax positions relating to freight tax liabilities, which are recorded in other long-term liabilities on the Company's unaudited consolidated balance sheets:
 
Six Months Ended June 30,
2021
$
2020
$
Balance of unrecognized tax benefits as at January 149,12449,579
     Increases for positions related to the current year2,0751,489
Increases for positions related to prior years3,0861,863
     Decreases for positions taken in prior years(15,164)
     Decreases related to statute of limitations(7,336)(812)
Foreign exchange gain(110)(1,206)
Balance of unrecognized tax benefits as at June 3046,83935,749
Included in the Company's current income tax expense are provisions for uncertain tax positions relating to freight taxes. Positions relating to freight taxes can vary each year depending on the trading patterns of the Company's vessels.
During the six months ended June 30, 2020, the Company secured an agreement with a tax authority, which was based in part on an initiative of the tax authority in response to the COVID-19 global pandemic and included the waiver of interest and penalties on unpaid taxes. As a result, the Company reduced its freight tax liabilities for this jurisdiction by $15.2 million to $8.6 million, of which $7.7 million was paid in August 2020 and $0.9 million was paid in June 2021, with respect to open tax years up to and including 2020.

The Company does not presently anticipate that its provisions for these uncertain tax positions will significantly increase in the next 12 months; however, this is dependent on the jurisdictions in which vessel trading activity occurs. The Company reviews its freight tax obligations on a regular basis and may update its assessment of its tax positions based on available information at that time. Such information may include legal advice as to applicability of freight taxes in relevant jurisdictions. Freight tax regulations are subject to change and interpretation; therefore, the amounts recorded by the Company may change accordingly.
11.    Financial Instruments
Fair Value Measurements
For a description of how the Company estimates fair value and for a description of the fair value hierarchy levels, see Item 18 - Financial Statements: Note 12 to the Company’s audited consolidated financial statements filed with its Annual Report on Form 20-F for the year ended December 31, 2020.
The following table includes the estimated fair value, carrying value and categorization using the fair value hierarchy of those assets and liabilities that are measured at their estimated fair value on a recurring and non-recurring basis, as well as certain financial instruments that are not measured at fair value on a recurring basis. 
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
  June 30, 2021December 31, 2020
 
Fair
Value
Hierarchy
Level
Carrying
Amount
Asset /
(Liability)
$
Fair
Value
Asset /
(Liability)
$
Carrying
Amount
Asset /
(Liability)
$
Fair
Value
Asset /
(Liability)
$
Recurring:
Cash, cash equivalents and restricted cash (note 16)
Level 166,39766,397103,146103,146
Derivative instruments (note 8)
     Interest rate swap agreement
Level 2(195)(195)(886)(886)
     Freight forward agreements Level 2(336)(336)
Non-recurring:
Operating lease right-of-use assetsLevel 21,7991,799
Vessels and equipment (note 15)
Level 2125,125125,12559,25059,250
Vessels related to finance leases (note 15)
Level 226,25026,250  
Assets held for sale (note 15)
Level 211,27011,27031,68031,680
Other:
Short-term debt (note 5)
Level 2(10,000)(10,000)(10,000)(10,000)
Advances to equity-accounted joint ventureNote (1)3,780Note (1)5,280Note (1)
Long-term debt, including current portion (note 6)
Level 2(293,599)(298,704)(242,961)(248,738)
Obligations related to finance leases, including current
    portion (note 7)
Level 2(292,757)(309,164)(360,043)(411,740)
 
(1)The advances to its equity-accounted joint venture, together with the Company’s investment in the equity-accounted joint venture, form the net aggregate carrying value of the Company’s interests in the equity-accounted joint venture in these unaudited consolidated financial statements. The fair values of the individual components of such aggregate interests as at June 30, 2021 and December 31, 2020 were not determinable.
12.    Capital Stock and Equity-Based Compensation
The authorized capital stock of the Company at June 30, 2021 was 100.0 million shares of Preferred Stock (December 31, 2020 - 100.0 million shares), with a par value of $0.01 per share (December 31, 2020 - $0.01 per share), 485.0 million shares of Class A common stock (December 31, 2020 - 485.0 million shares), with a par value of $0.01 per share (December 31, 2020 - $0.01 per share), and 100.0 million shares of Class B common stock (December 31, 2020 - 100.0 million shares), with a par value of $0.01 per share (December 31, 2020 - $0.01 per share). A share of Class A common stock entitles the holder to one vote per share while a share of Class B common stock entitles the holder to five votes per share, subject to a 49% aggregate Class B common stock voting power maximum. As of June 30, 2021, the Company had 29.2 million shares of Class A common stock (December 31, 2020 – 29.1 million), 4.6 million shares of Class B common stock (December 31, 2020 – 4.6 million) and no shares of preferred stock (December 31, 2020 – nil) issued and outstanding.
During the three and six months ended June 30, 2021 and 2020, the Company recognized $0.5 million and $0.9 million (2020 - $0.6 million and $0.9 million), respectively, of expenses related to restricted stock units and stock options in general and administrative expenses. During the six months ended June 30, 2021, a total of 56.0 thousand restricted stock units (2020 - 78.3 thousand) with a market value of $0.8 million (2020 - $1.3 million) vested and 35.8 thousand shares (2020 - 44.8 thousand shares) of Class A common stock, net of withholding taxes, were concurrently issued to the grantees.
13.    Related Party Transactions
Management Fee - Related and Other

a.The Company's operations are conducted in part by its subsidiaries, which receive services from Teekay Corporation''s (or Teekay's) wholly-owned subsidiary, Teekay Shipping Ltd. (or the Manager) and its affiliates. The Manager provides various services under a long-term management agreement (the Management Agreement), as disclosed below.
b.Amounts received (paid) by the Company for related party transactions for the periods indicated were as follows:
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TEEKAY TANKERS LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(all tabular amounts stated in thousands of U.S. Dollars, other than share or per share data)
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
$$$$
Vessel operating expenses - technical management fee (i)
(252)(248)(504)(496)
Strategic and administrative service fees (ii)
(9,198)(7,143)(18,240)(15,115)
Secondment fees (iii)
(68)(144)(155)(242)
Technical management fee and service revenues (iv)(v)
174169344347
(i)The cost of ship management services provided by a third party has been presented as vessel operating expenses on the Company's unaudited consolidated statements of (loss) income. The Company paid such third party technical management fees to the Manager in relation to certain former Tanker Investments Ltd. vessels.
(ii)The Manager’s strategic and administrative service fees have been presented in general and administrative expenses, except for fees related to technical management services, which have been presented in vessel operating expenses on the Company’s unaudited consolidated statements of (loss) income. The Company’s executive officers are employees of Teekay or subsidiaries thereof, and their compensation (other than any awards under the Company’s long-term incentive plan) is set and paid by Teekay or such other subsidiaries. The Company compensates Teekay for time spent by its executive officers on the Company’s management matters through the strategic portion of the management fee.
(iii)The Company pays secondment fees for services provided by some employees of Teekay. Secondment fees have been presented in general and administrative expenses, except for fees related to technical management services, which have been presented in vessel operating expenses on the Company's unaudited consolidated statements of (loss) income.
(iv)The Company receives reimbursements from Teekay for the provision of technical management services. These reimbursements have been presented in general and administrative expenses on the Company's unaudited consolidated statements of (loss) income.
(v)The Company recorded service revenues relating to Teekay Tanker Operations Limited's (or TTOL) provision of certain commercial services to the counterparties in the agreements.
c.The Manager and other subsidiaries of Teekay collect revenues and remit payments for expenses incurred by the Company’s vessels. Such amounts, which are presented on the Company’s unaudited consolidated balance sheets in "due from affiliates" or "due to affiliates," as applicable, are without interest or stated terms of repayment. In addition, $1.4 million and $9.0 million were payable as crewing and manning costs as at June 30, 2021 and December 31, 2020, respectively, and such amounts are included in accrued liabilities in the unaudited consolidated balance sheets. These crewing and manning costs will be payable as reimbursement to the Manager once they are paid by the Manager to the vessels' crew.
14.    (Loss) Earnings Per Share
The net (loss) earnings available for common shareholders and (loss) earnings per common share are presented in the table below:
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
$$$$
Net (loss) income(129,144)98,198 (150,509)205,037 
Weighted average number of common shares - basic33,763,367 33,727,978 33,753,599 33,698,972 
Dilutive effect of stock-based awards 250,752  263,539 
Weighted average number of common shares - diluted33,763,367 33,978,730 33,753,599 33,962,511 
(Loss) earnings per common share:
– Basic(3.83)2.91 (4.46)6.08 
– Diluted(3.83)2.89 (4.46)6.04 
Stock-based awards that have an anti-dilutive effect on the calculation of diluted earnings per common share are excluded from this calculation. In the periods where a loss attributable to shareholders has been incurred, all stock-based awards are anti-dilutive. For the three and six months ended June 30, 2021, 0.3 million and 0.3 million (June 30, 2020 - nil and nil) restricted stock units, respectively, had anti-dilutive effects on the calculation of diluted earnings per common share. For the three and six months ended June 30, 2021,
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