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Mar 22, 2011 1:49 PM

Kirby Corporation has entered into an agreement with K-Sea Transportation Partners LP, pursuant to which a subsidiary of Kirby will merge with K-Sea, with K-Sea surviving the merger as a wholly owned subsidiary of Kirby. Total value of the transaction is approximately $600 million (before post-closing adjustments and fees) and will consist of cash, Kirby common stock, and the refinancing of K-Sea debt.

The transaction will be financed through a combination of available cash, borrowing under Kirby’s revolving credit facility; a new bank term loan of up to $540 million; and the issuance of Kirby common stock. Closing of the transaction is expected to occur in June or July 2011 and is subject to certain conditions, including approval by K-Sea’s unitholders and expiration of the required waiting period under the Hart-Scott-Rodino Act. The holders of a majority of the outstanding K-Sea units, which is enough units to approve the merger, have entered into support agreements with Kirby pursuant to which they have agreed to vote in favor of the merger.

Under terms of the agreement, the total value of the transaction is about $600 million, consisting of $335 million for K-Sea’s equity and the refinancing of $265 million of K-Sea debt. K-Sea’s common and preferred unitholders will receive $8.15 per unit in consideration in the form of cash and Kirby common stock. K-Sea’s common unitholders will have the election to receive for each common unit either $8.15 in cash or $4.075 in cash and 0.0734 of a share of Kirby common stock. K-Sea’s preferred unitholders will receive for each preferred unit $4.075 in cash and 0.0734 of a share of Kirby common stock. K-Sea’s general partner will receive $8.15 in cash for each general partner unit and $18 million in cash for its incentive distribution rights.

K-Sea’s fleet, comprised of 58 tank barges with a capacity of 3.8 million barrels and 63 tugboats, operates along the US East Coast, West Coast, and Gulf Coast, as well as in Alaska and Hawaii. Its tank barge fleet, 54 of which are double-hulled, has an average age of about nine years. K-Sea’s customers include major oil companies and refiners, many of which are current Kirby customers for inland tank barge services. Headquartered in East Brunswick NJ, K-Sea has operating facilities in New York NY, Philadelphia PA, Norfolk VA, Seattle WA, and Honolulu HI.