Teekay Corp – ‘424A’ on 5/18/98

As of:  Monday, 5/18/98   ·   Accession #:  950123-98-5229   ·   File #:  333-52513

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Prospectus   —   Rule 424(a)
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 1: 424A        Prospectus                                            86    447K 

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                                       Filed pursuant to Rule 424(a)
                                    Registration No. 333-52513
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A           
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE     
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY    
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES  
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE         
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES 
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR  
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.   

SUBJECT TO COMPLETION, DATED MAY 15, 1998 
7,000,000 SHARES

TEEKAY SHIPPING CORPORATION 
COMMON STOCK
(NO PAR VALUE)
--------------------- 

     Of the 7,000,000 shares of Common Stock offered, 5,600,000 shares are being
offered hereby in the United States and 1,400,000 shares are being offered in a 
concurrent international offering outside the United States. The initial public 
offering price and the aggregate underwriting discount per share are identical  
for both Offerings. See "Underwriting".                                         

     Of the 7,000,000 shares of Common Stock offered, 2,800,000 shares are being
sold by the Company and 4,200,000 shares are being sold by Cirrus Trust (the    
"Selling Stockholder"). See "Principal and Selling Stockholders". The Company   
will not receive any proceeds from the sale of shares by the Selling            
Stockholder.                                                                    

     Upon completion of the Offerings, the Selling Stockholder and an affiliated
trust will, in the aggregate, own approximately 54.7% (approximately 51.4% if   
the Underwriters exercise their over-allotment option in full) of the           
outstanding Common Stock of the Company and will retain the power to elect a    
majority of the Company's directors and thereby to determine the Company's      
corporate policies.                                                             

   The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "TK". On May 15, 1998, the last reported sale price of the Common    
Stock on the New York Stock Exchange was $27.75. See "Price Range of Common     
Stock".                                                                         

SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.                   
--------------------- 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. 
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 
------------------------

                                                        [Enlarge/Download Table]

                              INITIAL PUBLIC  UNDERWRITING  PROCEEDS TO  PROCEEDS TO SELLING
                              OFFERING PRICE  DISCOUNT(1)    COMPANY(2)      STOCKHOLDER    
                              --------------  ------------  -----------  -------------------
                                                                                            
Per Share....................       $              $             $                $         
Total(3).....................       $              $             $                $         

---------------                                                                 

(1) The Company and the Selling Stockholder have agreed to indemnify the        
 Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".                             

(2) Before deducting estimated expenses of $500,000 payable by the Company.     

(3) The Selling Stockholder has granted the U.S. Underwriters an option for 30  
days after the date of this Prospectus to purchase up to an additional  
840,000 shares of Common Stock at the initial public offering price per 
share, less the underwriting discount, solely to cover over-allotments. 
Additionally, the Selling Stockholder has granted the International     
  Underwriters a similar option with respect to an additional 210,000 shares
 of Common Stock as part of the concurrent international offering. If such
options are exercised in full, the total initial public offering price, 
underwriting discount and proceeds to the Selling Stockholder will be   
  $          , $          and $          , respectively. See "Underwriting".
------------------------

   The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to   
their right to reject any order in whole or in part. It is expected that the    
shares will be ready for delivery in New York, New York, on or about           ,
1998, against payment therefore in immediately available funds.                 

GOLDMAN, SACHS & CO.                                                            

                                    DONALDSON, LUFKIN & JENRETTE
                  SECURITIES CORPORATION

                                                                     FURMAN SELZ
------------------------

The date of this Prospectus is           , 1998.

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AVAILABLE INFORMATION 

  Teekay Shipping Corporation ("Teekay") has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form F-3 (the
"Registration Statement", which term shall encompass all amendments thereto)    
under the Securities Act of 1933, as amended (the "Securities Act"), with       
respect to the shares of its common stock, no par value (the "Common Stock"),   
offered hereby. This Prospectus, which constitutes a part of the Registration   
Statement, does not contain all the information set forth in the Registration   
Statement, certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the         
Commission. Statements made in this Prospectus as to the contents of any        
contract, agreement or other document referred to are not necessarily complete; 
with respect to each such contract, agreement or other document filed as an     
exhibit to the Registration Statement, reference is made to the exhibit for a   
more complete description of the matter involved, and each such statement shall 
be deemed qualified in its entirety by such reference. Items of information     
omitted from this Prospectus but contained in the Registration Statement may be 
inspected and copied at the public reference facilities maintained by the       
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549   
and at the following regional offices of the Commission: 14th Floor, 500 West   
Madison Street, Chicago, Illinois 60661; and 13th Floor, 7 World Trade Center,  
New York, New York 10048. Copies of such material can be obtained by mail from  
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,       
Judiciary Plaza, Washington, D.C. 20549 at prescribed rates. In addition, the   
Registration Statement may be accessed electronically at the Commission's web   
site on the internet at www.sec.gov.                                            

Teekay is subject to the informational requirements of the Securities 
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance       
therewith, files reports and other information with the Commission. All such    
information may be inspected and copied at the public reference facilities      
maintained by the Commission at the locations, and may be accessed              
electronically at the web site, referred to above. Teekay's Common Stock is     
listed on The New York Stock Exchange (the "NYSE") and such reports and other   
information may also be inspected at the offices of the NYSE, 20 Broad Street,  
New York, New York 10005.                                                       

 Teekay intends to furnish to its stockholders annual reports containing
audited financial statements and a report thereon expressed by independent      
chartered accountants and quarterly reports for the first three quarters of each
fiscal year containing unaudited interim financial information. Teekay also     
intends to furnish proxy statements prepared in accordance with Liberian law. As
a "foreign private issuer" under the Exchange Act, Teekay is exempt from        
provisions of the Exchange Act which prescribe the furnishing and content of    
proxy statements to stockholders and which relate to short-swing profit         
reporting and liability.                                                        
------------------------

FOR UNITED KINGDOM PURCHASERS: THE SHARES OF COMMON STOCK MAY NOT BE  
OFFERED OR SOLD IN THE UNITED KINGDOM OTHER THAN TO PERSONS WHOSE ORDINARY      
ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF         
INVESTMENTS, WHETHER AS PRINCIPAL OR AGENT (EXCEPT IN CIRCUMSTANCES THAT DO NOT 
CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE PUBLIC OFFERS OF    
SECURITIES REGULATIONS 1995 OR THE FINANCIAL SERVICES ACT 1986), AND THIS       
PROSPECTUS MAY ONLY BE ISSUED OR PASSED ON TO ANY PERSON IN THE UNITED KINGDOM  
IF THAT PERSON IS OF A KIND DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES
ACT 1986 (INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995.                   
------------------------

  CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,     
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE    
COMMON STOCK, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE       
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."            

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ENFORCEABILITY OF CIVIL LIABILITIES UNDER THE FEDERAL SECURITIES LAWS 

Teekay and most of its subsidiaries are incorporated in Liberia, and  
certain other of its subsidiaries are incorporated in The Bahamas, Canada,      
Japan, Singapore, Australia, Scotland and Panama. Most of the directors and     
executive officers of Teekay and its subsidiaries are residents of countries    
other than the United States. Substantially all of the assets of Teekay and its 
subsidiaries and a substantial portion of the assets of such directors and      
officers are located outside the United States. As a result, it may be difficult
or impossible for United States investors to effect service of process within   
the United States upon Teekay, its subsidiaries or such directors and officers  
or to realize against them in the United States upon judgments of courts of the 
United States predicated upon civil liabilities of Teekay, its subsidiaries or  
such directors and officers under the federal securities laws of the United     
States or the securities or blue sky laws of any state within the United States.
In addition, because of a lack of precedent, investors should not assume that   
courts in the countries in which Teekay or its subsidiaries are incorporated,   
where directors or officers reside or in which the assets of Teekay, its        
subsidiaries or such directors and officers are located (i) would enforce       
judgments of United States courts obtained in actions against Teekay, its       
subsidiaries or such persons predicated upon the civil liability provisions of  
the United States federal securities laws or the securities or blue sky laws of 
any state within the United States or (ii) would enforce, in original actions,  
liabilities against Teekay, its subsidiaries or such persons predicated upon the
United States federal securities laws or any such state securities or blue sky  
laws.                                                                           

FORWARD-LOOKING STATEMENTS

   This Prospectus contains certain forward-looking statements (as such term
is defined in Section 27A of the Securities Act and Section 21E of the Exchange 
Act) concerning the Company's operations, performance and financial condition,  
including, in particular, statements regarding: tanker supply and demand; the   
Company's market share in the Indo-Pacific Basin; future capital expenditures;  
the Company's growth strategy and measures to implement such strategy; the      
Company's competitive strengths; and future success of the Company. These       
statements involve known and unknown risks and are based upon a number of       
assumptions and estimates which are inherently subject to significant           
uncertainties and contingencies, many of which are beyond the control of the    
Company. Actual results may differ materially from those expressed or implied by
such forward-looking statements. Factors that could cause actual results to     
differ materially include, but are not limited to: the cyclical nature of the   
tanker industry and its dependence on oil markets; the supply of tankers        
available to meet the demand for transportation of petroleum products; the      
Company's dependence on spot oil voyages; environmental and other regulation;   
the Company's potential inability to achieve and manage growth; and the other   
factors set forth in "Risk Factors." The Company expressly disclaims any        
obligation or undertaking to release publicly any updates or revisions to any   
forward-looking statements contained herein to reflect any change in the        
Company's expectations with respect thereto or any change in events, conditions 
or circumstances on which any such statement is based.                          
------------------------------------

   Unless the context otherwise requires, "Teekay" refers to Teekay Shipping
Corporation, a Liberian corporation, and "Company" refers to Teekay and its     
consolidated subsidiaries. References to "Common Stock" mean the common stock of
Teekay, no par value per share, and references to "Offering" mean the offering  
of shares of Common Stock offered hereby. Unless otherwise indicated, all       
information in this Prospectus assumes that the over-allotment option granted to
the Underwriters by the Selling Stockholder has not been exercised. Certain     
shipping industry terms used in this Prospectus are defined in Exhibit A to this
Prospectus, "Definitions of Shipping Terms." Unless otherwise specifically noted
or the context otherwise requires, the term "tankers" refers to tankers and     
oil/bulk/ore carriers. All Dollar references in this Prospectus are to U.S.     
Dollars, unless otherwise specifically indicated.                               

    Certain statistical and graphical information contained in this Prospectus
is derived from data published by the Drewry Shipping Consultants Ltd., the     
International Energy Agency and other sources. While the Company has no reason  
to believe that such information is inaccurate in any material respect, readers 
of this Prospectus are advised that some information in such databases is based 
on estimates or subjective judgments.                                           

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PROSPECTUS SUMMARY

 The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.    

The Teekay logo and the name Teekay Shipping Corporation are among the
Company's trademarks. All other trademarks and trade names referred to in this  
Prospectus are the property of their respective owners.                         

THE COMPANY 
OVERVIEW                                                                        

    The Company is a leading provider of international crude oil and petroleum
product transportation services through the world's largest fleet of medium size
oil tankers. The Company's modern fleet of tankers provides transportation      
services to major oil companies, major oil traders and government agencies,     
principally in the region spanning from the Red Sea to the U.S. West Coast (the 
"Indo-Pacific Basin"). The Company believes that in each of the last six years  
it has transported more crude oil and petroleum products via Aframax tankers in 
the Indo-Pacific Basin than any other shipping company and estimates it has     
approximately a one quarter share of the Indo-Pacific Basin Aframax market.     

     The Company's fleet consists of 46 vessels: 42 Aframax (75,000-115,000 dwt)
oil tankers (including three vessels time-chartered-in) and oil/bulk/ore        
carriers ("O/B/Os"), three smaller oil tankers, and one Very Large Crude Carrier
("VLCC"). The Company's vessels are all of Liberian, Singaporean, Australian or 
Bahamian registry. The Company's fleet has a total cargo capacity of            
approximately 4.6 million tonnes and its Aframax vessels represent approximately
7.8% of the total tonnage of the world Aframax fleet. The Company intends to    
continue to supplement its fleet by selective orders of newbuilding vessels and 
selective purchases of modern, second-hand, high-quality tankers.               

    The Company's fleet is one of the most modern fleets in the world, with an
average age of approximately 7.8 years, compared to an average age for the world
oil tanker fleet of approximately 13.7 years and for the world Aframax tanker   
fleet of approximately 12.2 years. The Company has been recognized by customers 
and rating services for safety, quality and service. For example, in each of the
last eight years, Tanker Advisory Center, Inc. (New York) has rated the         
Company's fleet a "meritorious tanker fleet," a designation which, in the latest
publication (January 1998), placed it in the top 5% of all fleets containing    
five or more tankers. Given the age profile of the world tanker fleet,          
increasing emphasis by customers on quality as a result of stringent            
environmental regulations, and heightened concerns about liability for oil      
pollution, the Company believes that its modern fleet and its emphasis on       
quality and safety provide it with a favorable competitive profile. See         
"Business--The International Tanker Market--Industry Fundamentals."             

COMPETITIVE STRENGTHS                                                           

The Company pursues an intensively customer- and operations-focused   
business strategy to achieve superior operating results. The Company's business 
strategy is based on the following five key competitive strengths:              

-  MARKET CONCENTRATION: Scale and scope within a given market of the 
    shipping industry are critical for efficient operation. By focusing on
  the Indo-Pacific Basin, the Company has been able, with a relatively
 small share of the world Aframax fleet (approximately 7.8% of total
tonnage), to develop a significant presence in this region with   
       charterers of medium-size tankers, facilitating comprehensive coverage of
       charterers' requirements and providing a base for efficient operation and
      a high degree of capacity utilization. The Company estimates that it has
    a market share of approximately 25% in this region, with its principal
trading routes involving Australia, Japan and the United States.  

 -  OPERATIONAL CONTROL AND EXPERIENCED MANAGEMENT: The Company services
substantially all of its needs in-house, without having to rely on
    outside ship managers or crewing agencies. The Company has experienced
     management in all functions critical to its operations, which affords a

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 focused marketing effort, tight quality and cost controls, improved
  capacity utilization and effective operations and safety monitoring.

   -  MODERN, HIGH-QUALITY TONNAGE: The Company's modern, high-quality fleet
  operates with high fuel efficiency and low maintenance and operating
       costs compared to the world fleet of Aframax tankers, 23% of which are 20
      years of age or older. Only three of the Company's vessels are more than
   15 years old and none is more than 18 years old. In an environment of
    increasingly stringent operating and safety standards, the age profile
    and quality of the Company's fleet has translated into a high level of
acceptance by charterers.                                         

-  LARGE FLEET OF UNIFORM-SIZED VESSELS: The Company's large fleet of 
       Aframax tankers, many of which are in sister vessel series (substantially
  identical vessels), facilitates scheduling flexibility due to vessel
       substitution opportunities, permitting greater responsiveness to customer
   demands and enhanced capacity utilization. The scale of the Company's
     operations and resultant purchasing power, combined with the uniformity
of its vessels, results in lower operating expenses than those    
experienced by smaller operators.                                 

-  STRONG NETWORK OF CUSTOMER RELATIONSHIPS: The Company's intensively
     customer-oriented focus, combined with its other competitive strengths,
     have enabled it to establish a strong network of customer relationships
    and a reputation for transportation excellence among quality-sensitive
customers.                                                        

The Company's competitive strengths have resulted in "time charter    
equivalent" (or "TCE") rates and operating costs that are superior to averages  
indicated by industry data. As a result, the Company has achieved consistently  
higher operating cash flow per vessel as compared to an average of certain other
publicly traded bulk shipping companies, which is illustrated in the graph      
below.                                                                          

OPERATING CASH FLOW PER SHIP PER DAY
(Calendar Year Basis) 

FIGURE        

                                                                [Download Table]

                                        DOLLARS PER DAY                        
                        -------------------------------------------------------
                                                           *AVERAGE OF OTHER   
YEARS                   TEEKAY FLEET AVERAGE            BULK SHIPPING COMPANIES
-----------             --------------------            -----------------------
                                                                               
1990                            11,014                          8,190          
1991                            11,048                          9,389          
1992                             7,393                          4,947          
1993                             8,426                          5,034          
1994                             9,033                          4,020          
1995                            10,183                          4,478          
1996                            11,432                          6,409          
1997                            12,565                          7,874          

------------                                                                    

Information based upon respective company financial data.                       

* Vessel weighted average of the following companies: Bergesen d.y. A/S, Bona   
Shipholding Ltd., London & Overseas Freighters Limited, OMI Corp., and      
Overseas Shipholding Group.                                                 

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GROWTH STRATEGY                                                                 

The Company's growth strategy is to leverage its existing competitive 
strengths to continue to expand its business and increase shareholder value.    

-  MAINTAIN AND EXPAND AFRAMAX FRANCHISE IN INDO-PACIFIC BASIN.  The  
 Company anticipates that the continued upgrade and expansion of its
     Aframax tanker business in the Indo-Pacific Basin will continue to be a
  key component of its strategy. Over the past three fiscal years, the
  Company has increased its Aframax fleet by acquiring twelve vessels,
while disposing of seven older Aframax tankers. With the largest  
    concentration of Aframax tankers in the Indo-Pacific Basin, management
       believes the Company is able to provide the most comprehensive service to
       its customers thereby generating superior operating results. For example,
   the Company's size and scope of services has enabled it to enter into
    contracts of affreightment to provide large oil-company customers with
      ongoing services and which also grant the Company preferential rights on
      certain voyages, resulting in significant fleet utilization benefits and
increased market share on strategically important routes.         

   -  LEVERAGE THE FRANCHISE TO PROVIDE VALUE-ADDED SERVICES.  The Company's
    full-service marine operations capabilities, reputation for safety and
      quality, and strong customer orientation provide it with the opportunity
       to expand its business by providing additional value-added and innovative
      services, in many cases to existing customers. Examples of such services
    include the Company's recently-executed eight-year contract to provide
 Apache Energy Ltd. with an Aframax floating storage and off-loading
vessel, and its outsourcing arrangement with Caltex Petroleum's   
    Australian affiliate under which Teekay has acquired the entire tanker
 operation of the Australian affiliate and will service Caltex's oil
 transportation requirements formerly provided by that affiliate. By
 providing its customers with these value-added services, management
    believes that it will strengthen its franchise and further improve its
  financial performance. The Company expects that its participation in
    these types of activities will increase during the next several years.

-  SELECTIVELY EXPAND INTO RELATED MARKETS AND SERVICES.  Management  
intends to identify expansion opportunities in new tanker market  
segments, geographic areas and services to which the Company's    
       competitive strengths are well suited and which would enhance shareholder
value. The Company may choose to pursue such opportunities through
internal growth, joint ventures or business acquisitions.         

PRINCIPAL STOCKHOLDERS                                                          

   Prior to the Offering, approximately 74.6% of the capital stock of Teekay
has, in the aggregate, been owned by the Selling Stockholder and an affiliated  
trust which are under the common supervision of a group of individuals, the     
majority of whom are members of Teekay's board of directors. The beneficiaries  
of these trusts include charitable institutions and affiliated trusts. After    
completion of the Offering, the Selling Stockholder and the affiliated trust    
will own approximately 54.7% of the Common Stock (approximately 51.4% if the    
Underwriters' over-allotment option is exercised in full). See "Risk Factors--  
Concentration of Voting Power" and "Principal and Selling Stockholders."        

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THE OFFERING

                                                                [Download Table]
                                                                            
Common Stock offered:(1)                                                    
       U.S. Offering.................................    5,600,000    shares
       International Offering........................    1,400,000    shares
                                                         ----------         
       Total.........................................    7,000,000    shares
                                                         ==========         
Common Stock offered by:(1)                                                 
       The Company...................................    2,800,000    shares
       The Selling Stockholder.......................    4,200,000    shares
                                                         ----------         
       Total.........................................    7,000,000    shares
                                                         ==========         
Total Common Stock to be outstanding after the                              
  Offering(2)........................................    31,633,765   shares

New York Stock Exchange Symbol......     "TK"                                   

Use of proceeds.....................     The net proceeds to the Company from   
                                      the sale of the Common Stock offered
                                      hereby, after deducting underwriting
                                  discounts and estimated offering
                                      expenses payable by the Company, are
                                     estimated to be approximately $73.7
                                       million. The Company will not receive
                                         any proceeds from the sale of shares by
                                      the Selling Stockholder. The Company
                                  expects to use the net proceeds,
                                      together with other funds, to redeem
                                 its 9 5/8% First Preferred Ship
                                      Mortgage Notes due 2003. See "Use of
            Proceeds."
------------                                                                    

(1) Assumes the Underwriters' over-allotment option is not exercised. If such   
   over-allotment is exercised, up to an additional 1,050,000 shares will be
sold by the Selling Stockholder. See "Underwriting."                  

(2) Based on the number of shares outstanding as of April 30, 1998. Excludes    
 1,843,135 shares of Common Stock reserved for issuance upon exercise of
 options under the Company's 1995 Stock Option Plan, of which options to
purchase up to 1,160,251 shares of Common Stock at a weighted average 
   exercise price of $26.67 per share were outstanding as of April 30, 1998.
See "Management -- Executive Compensation."                           

RISK FACTORS

Prospective purchasers of the Common Stock should consider all of the 
information contained in this Prospectus before making an investment in the     
Common Stock. The Company's financial performance is subject to various risks,  
including risks related to the cyclical nature of the tanker industry and its   
dependence on oil markets; the Company's dependence on spot oil voyages;        
environmental and other regulation; and the Company's potential inability to    
achieve and manage growth. Prospective purchasers should consider these and     
other factors set forth herein under "Risk Factors."                            

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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA 

    The following summary consolidated financial and other data of the Company
were derived from more detailed information and financial statements appearing  
elsewhere in this Prospectus and should be read in conjunction therewith. For a 
discussion of the Company's recent operating results, see "Management's         
Discussion and Analysis of Results of Operations and Financial Condition." The  
Company changed its fiscal year end from April 30 to March 31, effective March  
31, 1994, in order to facilitate comparison of the Company's operating results  
to those of other companies within the transportation industry on a calendar    
quarter basis.                                                                  

                                                        [Enlarge/Download Table]

                                                                                                      11 MONTH  
                                                                                                       PERIOD   
                                                            YEAR ENDED MARCH 31,                       ENDED    
                                            -----------------------------------------------------    MARCH 31,  
                                               1998           1997          1996          1995        1994(1)   
                                            -----------    ----------    ----------    ----------    ---------- 
                                                     (IN THOUSANDS, EXCEPT PER SHARE AND PER DAY DATA)          
                                                                                                                
INCOME STATEMENT DATA:                                                                                          
Voyage revenues............................ $  406,036     $  382,249    $  336,320    $  319,966    $  317,742 
Voyage expenses............................    100,776        102,037        90,575        84,957        81,052 
Net voyage revenues........................    305,260        280,212       245,745       235,009       236,690 
Income from vessel operations..............    107,640         94,258        76,279        52,816        60,777 
Interest expense(2)........................    (56,269)       (60,810)      (62,910)      (66,304)      (49,713)
Interest income............................      7,897          6,358         6,471         5,904         2,904 
Other income...............................     11,236          2,824         9,230        12,839        10,245 
Net income from continuing operations......     70,504         42,630        29,070         5,255        24,213 
Net income from discontinued operations....         --             --            --            --         5,945 
Cumulative effect of change in accounting                                                                       
  for marketable securities................         --             --            --         1,113            -- 
Net income(2)..............................     70,504         42,630        29,070         6,368        30,158 
PER SHARE DATA:                                                                                                 
Net income from continuing operations...... $     2.46     $     1.52    $     1.17    $     0.29    $     1.35 
Cumulative effect of change in accounting                                                                       
  for marketable securities................         --             --            --          0.06            -- 
Net income                                                                                                      
  -- basic.................................       2.46           1.52          1.17          0.35          1.68 
  -- diluted...............................       2.44           1.50          1.17          0.35          1.68 
Pro forma net income(2)                                                                                         
  -- basic.................................       2.47             --            --            --            -- 
  -- diluted...............................       2.45             --            --            --            -- 
Cash earnings -- basic(3)..................       5.78           4.75          4.51          5.48          6.33 
Cash dividends declared....................       0.86           0.86          0.48            --            -- 
BALANCE SHEET DATA (AT END OF PERIOD):                                                                          
Cash and marketable securities............. $  115,254     $  117,523    $  101,780    $   85,739    $  107,246 
Total assets...............................  1,460,183      1,372,838     1,355,301     1,306,474     1,405,147 
Total debt.................................    725,369        699,726       725,842       842,874       945,611 
Total stockholders' equity.................    689,455        629,815       599,395       439,066       433,180 
OTHER FINANCIAL DATA:                                                                                           
EBITDA(4).................................. $  209,582     $  191,632    $  166,233    $  146,756    $  151,364 
Cash earnings(2)(3)........................    165,575        133,554       112,107        98,716       113,998 
Capital expenditures:                                                                                           
  Vessel purchases, gross..................    197,199         65,227       123,843         7,465       163,509 
  Drydocking (accrual basis)...............     12,409         23,124        11,641        11,917        13,296 
FLEET DATA:                                                                                                     
Average number of ships(5).................         43             41            39            42            45 
Average age of Company's Aframax fleet (in                                                                      
  years)(6)................................        7.6            7.9           6.8           7.3           7.5 
TCE per ship per day(5)(7)(8).............. $   21,373     $   20,356    $   18,438    $   16,552    $   17,431 
Vessel operating expenses per ship per                                                                          
  day(8)(9)................................      4,554          4,922         4,787         4,748         4,879 
Operating cash flow per ship per                                                                                
  day(8)(10)...............................     12,664         11,819        10,613         8,944         9,133 

(Footnotes on following page)                                                   
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(Footnotes for previous page)                                                   

(1)  For the 12 months ended March 31, 1994, voyage revenues were $345.0        
  million; income from vessel operations was $64.4 million; net income was
 $32.0 million; cash earnings were $121.6 million; and EBITDA was $162.3
million.                                                              

(2)  Pro forma net income per share gives effect to the application of the      
   estimated net proceeds to the Company of the Offering at the beginning of
 fiscal 1998 to redeem a portion of the Company's 9 5/8% First Preferred
Ship Mortgage Notes due 2003, excluding the effect of a non-recurring 
charge of $4.8 million related to the redemption of such notes. Giving
   effect to the same pro forma adjustment, interest expense, net income and
    cash earnings for fiscal 1998 would have been $49.2 million, $77.6 million
and $172.6 million, respectively.                                     

(3)  Cash earnings represents income from continuing operations before foreign  
   exchange gains (losses) and before depreciation and amortization expense.
Cash earnings is included because it is used by certain investors to  
     measure a company's financial performance as compared to other companies in
    the shipping industry. Cash earnings is not required by generally accepted
     accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.                             

(4)  EBITDA represents net income from continuing operations before interest    
expense, income tax expense, depreciation and amortization expense,   
 minority interest, and gains or losses arising from prepayment of debt,
 foreign exchange translation and disposal of assets. EBITDA is included
because such data is used by certain investors to measure a company's 
financial performance. EBITDA is not required by generally accepted   
     accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.                             

(5)  Includes vessels time-chartered-in, but excludes vessels of discontinued   
operations and a former joint venture.                                

(6)  Average age of Company's Aframax fleet is the average age, at the end of   
    the relevant period, of all the vessels owned, leased or time-chartered-in
   by the Company, excluding vessels of discontinued operations and a former
joint venture.                                                        

(7)  TCE (or "time charter equivalent") is a measure of the revenue performance 
of a vessel, which, on a per voyage basis, is generally determined by 
Clarkson Research Studies Inc.'s ("Clarkson") industry data sources by
subtracting voyage expenses (except commissions) which are incurred in
     transporting cargo from gross revenue per voyage and dividing the remaining
 revenue by the total number of days required for the round-trip voyage.
Voyage expenses comprise all expenses relating to particular voyages, 
   including bunker fuel expense, port fees and canal tolls. For purposes of
     calculating the Company's average TCE for the year, TCE has been calculated
consistent with Clarkson's method, by deducting total voyage expenses 
    (except commissions) from total voyage revenues and dividing the remaining
sum by the Company's total voyage days in the year. See "Exhibit      
A--Definitions of Shipping Terms."                                    

(8)  To facilitate comparison to prior years' results, excludes the results from
the Company's Australian-crewed vessels, which comprised four of the  
Company's vessels during the fourth quarter of fiscal 1998. Vessel    
operating expenses for the Australian-crewed vessels are substantially
    higher than those for the rest of the Company's fleet on a per ship basis,
 primarily as a result of higher crew costs, with correspondingly higher
   charter rates associated with the charter arrangements for those vessels.
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition--General" and "Business--Crewing and Staff."      

(9)  Vessel operating expenses consist of all expenses relating to the operation
 of vessels (other than voyage expenses), including crewing, repairs and
maintenance, insurance, stores and lubes, and miscellaneous expenses  
including communications. Ship days are calculated on the basis of a  
   365-day year multiplied by the average number of vessels in the Company's
  fleet for the respective year. Vessel operating expenses exclude vessels
time-chartered-in.                                                    

(10) Operating cash flow represents income from vessel operations plus          
depreciation and amortization expense (other than drydock amortization
  expense). Ship days are calculated on the basis of a 365-day fiscal year
    multiplied by the average number of vessels in the Company's fleet for the
    respective year. Operating cash flow is not required by generally accepted
     accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.                             

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RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in 
the Common Stock.                                                               

CYCLICAL NATURE OF THE TANKER INDUSTRY; DEPENDENCE ON OIL MARKETS               

Historically, the tanker industry has been cyclical, experiencing     
volatility in profitability and asset values resulting from changes in the      
supply of, and demand for, tanker capacity. The supply of tanker capacity is a  
function of the number of new vessels built and older vessels scrapped,         
converted and lost. At March 31, 1998, the Aframax newbuilding orderbook        
contained orders for 94 vessels, or approximately 16% of the existing fleet.    
This substantial newbuilding activity, combined with declining scrapping rates  
since 1994 due to stronger charter rates, may result in a significant increase  
in tanker capacity supply in the near term. The demand for tanker capacity is   
influenced by, among other factors, global and regional economic conditions,    
increases and decreases in industrial production and demand for crude oil and   
petroleum products, developments in international trade and changes in seaborne 
and other transportation patterns. Demand for the Company's vessels and its     
services in transporting crude oil and petroleum products has been dependent    
upon world and regional oil markets. Any decrease in shipments of crude oil in  
those markets could have a material adverse effect on the Company. Historically,
those markets have been volatile as a result of the many conditions and events  
that affect the price, production and transport of oil, as well as competition  
from alternative energy sources. Because many of the factors influencing the    
supply of and demand for vessel capacity are unpredictable, the nature, timing  
and degree of changes in tanker industry conditions are also unpredictable.     

DEPENDENCE ON SPOT OIL VOYAGES                                                  

 In fiscal 1998, the Company derived approximately 66% of its net voyage
revenue from spot voyages. An additional 18% of net voyage revenues during      
fiscal 1998 was generated by time charters and contracts of affreightment priced
on a spot market basis. The spot charter market is highly competitive and spot  
charter rates are subject to significant fluctuations based on tanker and oil   
supply and demand. There can be no assurance that future spot charters will be  
available at rates that will be sufficient to enable the Company's vessels to be
operated profitably. See "Management's Discussion and Analysis of Results of    
Operations and Financial Condition--General" and "Business--The International   
Tanker Market."                                                                 

COMPETITION                                                                     

The Company obtains employment for its vessels in a highly competitive
market. Competition arises primarily from other Aframax tanker owners (including
major oil companies as well as independent companies) and, to a lesser extent,  
owners of other size tankers. The Company's market share is insufficient to     
enforce any degree of pricing discipline in the markets in which the Company    
operates. There can be no assurance that the Company's competitive position will
not erode in the future. Further, to the extent the Company enters new          
geographic areas or tanker market segments, or provides new services, there can 
be no assurance that the Company will be able to compete successfully in        
entering such markets or market segments or in providing such services. New     
markets may involve competitive factors which differ from those of the Aframax  
market segment in the Indo-Pacific Basin and may include participants which have
greater financial strength and capital resources than the Company. See          
"Business--Competition" and "--Growth Strategy."                                

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ENVIRONMENTAL AND OTHER REGULATION                                              

The operations of the Company are affected by extensive and changing  
environmental protection laws and other regulations, compliance with which has  
entailed significant expenses, including expenses for ship modifications and    
changes in operating procedures. In particular, the United States Oil Pollution 
Act of 1990, as amended ("OPA 90"), provides for the phase-in of the exclusive  
use of double-hull tankers at United States ports, as well as potentially       
unlimited liability for owners, operators and demise or bareboat charterers for 
oil pollution in U.S. waters. In complying with OPA 90, tanker owners generally 
will incur additional costs in meeting additional maintenance and inspection    
requirements, in developing contingency arrangements for potential spills and in
obtaining insurance coverage as required by OPA 90. OPA 90 contains financial   
responsibility requirements for vessels operating in United States waters and   
requires owners and operators of vessels to establish and maintain with the     
United States Coast Guard evidence of insurance or of qualification as a        
self-insurer or other evidence of financial responsibility sufficient to meet   
their potential liabilities under OPA 90.                                       

  Following the example of OPA 90, the International Maritime Organization
(the United Nations' agency for maritime safety, referred to herein as the      
"IMO") adopted regulations for tanker design and inspection which are designed  
to reduce oil pollution in international waters and which will be phased in on a
schedule depending upon vessel age. In addition, certain U.S. states, the       
European Community and other countries are considering stricter technical and   
operational requirements for tankers and legislation that will affect the       
liability of tanker owners and operators for oil pollution. Additional laws and 
regulations may be adopted which could limit the ability of the Company to do   
business or increase the cost of its doing business and which may have a        
material adverse effect on the operations of the Company. See                   
"Business--Regulation." The Company currently maintains $700 million in coverage
for liability for pollution, spillage or leakage of oil for each of its vessels.
A catastrophic spill could exceed the insurance coverage available, in which    
event there could be a material adverse effect on the Company. See              
"Business--Risk of Loss and Insurance."                                         

POTENTIAL INABILITY TO ACHIEVE AND MANAGE GROWTH                                

   A principal component of the Company's strategy is to continue to grow by
expanding its business both in the geographic areas and market segments where it
has historically focused and into new geographic areas, market segments and     
services. The Company's future growth will depend upon a number of factors, both
within and outside of the Company's control, including the Company's            
identification of new markets, the identification and entering into, or         
acquisition on favorable terms of, suitable joint venture opportunities or      
acquisition candidates, the ability to hire and train qualified personnel, the  
successful integration of any acquired businesses with the Company's existing   
operations, and the Company's ability to manage expansion and to obtain required
financing. There can be no assurance that the Company will successfully expand  
its operations or that any expansion will be profitable. The Company has grown  
primarily by means of internal growth and has limited experience with completing
acquisitions and integrating acquired businesses. The failure to identify,      
purchase, develop and integrate any acquired businesses effectively could       
adversely affect the Company's business, financial condition and results of     
operations. Further, the results achieved by the Company to date may not be     
indicative of its prospects or its ability to penetrate new markets, many of    
which may have different competitive conditions and characteristics than the    
Company's current markets. See "Business--Growth Strategy."                     

     To the extent it expands its operations, the Company will experience growth
in the number of its employees, the scope of its operating and financial systems
and the geographic area of its operations. This growth will increase the        
operating complexity of the Company and the level of responsibility of existing 
and new management personnel. There can be no assurance that the Company will be
able to attract and retain qualified management and employees, especially       
qualified officers and other seagoing personnel, of which there is a limited    
supply, that the Company's current operating and financial systems and controls 
will be adequate as the Company grows, or that any steps taken to attract and   
retain management and employees and to improve such systems and controls will be
sufficient.                                                                     
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RISK OF LOSS AND INSURANCE                                                      

The operation of any ocean-going vessel carries an inherent risk of   
catastrophic marine disasters and property losses caused by adverse weather     
conditions, mechanical failures, human error, war, terrorism, piracy and other  
circumstances or events. In addition, the transportation of crude oil is subject
to the risk of crude oil spills, and business interruptions due to political    
circumstances in foreign countries, hostilities, labor strikes and boycotts. Any
such event may result in loss of revenues or increased costs.                   

The Company carries insurance to protect against most of the          
accident-related risks involved in the conduct of its business and it maintains 
environmental damage and pollution insurance coverage. The Company does not     
carry insurance covering the loss of revenue resulting from vessel off-hire     
time. There can be no assurance that all risks are adequately insured against,  
that any particular claim will be paid or that the Company will be able to      
procure adequate insurance coverage at commercially reasonable rates in the     
future. More stringent environmental regulations at times in the past have      
resulted in increased costs for, and may result in the lack of availability of, 
insurance against the risks of environmental damage or pollution. See           
"Business--Risk of Loss and Insurance" and "--Regulation."                      

INDEBTEDNESS OF THE COMPANY AND RESTRICTIONS IN DEBT AGREEMENTS                 

  A substantial portion of the Company's cash flow from operations must be
dedicated to the payment of principal and interest on its indebtedness, thereby 
limiting the funds available for working capital, capital expenditures and other
purposes. The Company's existing financing agreements impose operating and      
financial restrictions on the Company which affect, and in many respects        
significantly limit or prohibit, the ability of the Company to, among other     
things, incur additional indebtedness, create liens, sell capital stock of      
subsidiaries or other assets, make certain investments, engage in mergers and   
acquisitions, make certain capital expenditures or pay dividends. Several of the
Company's existing financing agreements impose restrictions on changes of       
control of Teekay and/or its ship-owning subsidiaries, including a requirement  
for prior consent, and a requirement that the Company make an offer to redeem   
certain indebtedness. In addition, declining vessel values could result in a    
breach of certain loan covenants, which could give rise to events of default    
under the relevant financing agreements. See "Management's Discussion and       
Analysis of Results of Operations and Financial Condition--Liquidity and Capital
Resources" and "Description of Certain Indebtedness."                           

    After giving effect to the Offering and the anticipated application of the
Company's net proceeds therefrom to redeem a portion of the Company's 9 5/8%    
First Preferred Ship Mortgage Notes due 2003, the Company's pro forma ratio of  
debt to total capitalization at March 31, 1998 would have been 46.3% (the actual
ratio at March 31, 1998 was 51.3%). See "Capitalization."                       

SEASONAL VARIATIONS IN OPERATING RESULTS                                        

The Company operates its tankers in markets that have historically    
exhibited seasonal variations in demand and, therefore, charter rates. Tanker   
markets are typically stronger in the winter months as a result of increased oil
consumption in the northern hemisphere. In addition, unpredictable weather      
patterns in the winter months tend to disrupt vessel scheduling. The oil price  
volatility resulting from these factors has historically led to increased oil   
trading activities. As a result, the Company's revenues have historically been  
weaker during its first two fiscal quarters, and, conversely, revenues have been
strongest for the Company in its third and fourth fiscal quarters. See          
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition--General."                                                            

OPERATION OF AGING AND SECOND-HAND VESSELS                                      

The Company's growth strategy includes the acquisition of second-hand 
vessels through purchases and chartering-in of such vessels. As of March 31,    
1998, the Company's fleet included three tankers over 15 years of age, all of   
which were acquired second-hand. The average age of Aframax vessels scrapped    
during 1997 was approximately 23 years. In general, expenditures necessary for  
maintaining a vessel in good operating condition increase as the age of the     
vessel increases. Due to improvements in engine                                 
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technology, older vessels are typically less fuel efficient than more recently  
constructed vessels. In addition, changes in governmental regulations, safety or
other equipment standards may require expenditures for alterations, or the      
addition of new equipment, to the Company's vessels and may restrict the trades 
in which the vessels may engage. Cargo insurance rates increase with the age of 
a vessel, making older vessels less desirable to charterers. There is no        
assurance that market conditions will justify such expenditures or enable the   
Company to operate its vessels profitably during the remainder of their economic
lives. In addition, second-hand vessels typically carry very limited warranties 
with respect to the condition of the vessels in comparison to warranties        
available for a newbuilding.                                                    

NEWBUILDINGS                                                                    

 The Company currently has two newbuildings on order (subject to certain
conditions), with deliveries scheduled for July and September 1999. The         
estimated delivered price for each vessel, including related charges, is        
approximately $38.0 million. The Company also has options for further           
newbuildings under similar terms, and may order additional newbuildings. In the 
case of a newbuilding, the Company is typically required to expend substantial  
sums in the form of progress payments during the construction of the vessel, but
the Company does not derive any revenue from the vessel until after its         
delivery. Moreover, if the shipyard were unable to complete the contract or if  
the Company were unable to obtain financing required to complete payments on any
of its newbuilding orders, the Company could effectively forfeit all or a       
portion of the progress payments previously made with respect to such contract. 

EXPOSURE TO CURRENCY EXCHANGE RATE AND INTEREST RATE FLUCTUATIONS               

     While virtually all of the Company's revenues are earned in U.S. dollars, a
portion of the Company's operating costs are incurred in currencies other than  
U.S. dollars. This partial mismatch in operating revenues and expenses could    
lead to fluctuations in net income due to changes in the value of the U.S.      
dollar relative to other currencies, in particular the Japanese Yen, the        
Singapore Dollar and the Australian Dollar.                                     

     At March 31, 1998, approximately $376.7 million, or 51.9%, of the Company's
indebtedness bore interest at floating interest rates. Increases in interest    
rates would increase interest payments on such indebtedness, and could adversely
affect the Company. In order to partially mitigate this exposure, the Company   
has entered into $150.0 million of long-term interest rate swaps with an average
remaining term of 7.5 months and an average fixed rate of 5.86%. See            
"Management's Discussion and Analysis of Results of Operations and Financial    
Condition--Liquidity and Capital Resources" and Notes 5, 7 and 9 to the         
Consolidated Financial Statements.                                              

OPERATIONS OUTSIDE THE UNITED STATES                                            

     The operations of the Company are primarily conducted outside of the United
States and, therefore, may be affected by currency fluctuations and by changing 
economic, political and governmental conditions in the countries where the      
Company is engaged in business or where its vessels are registered. During the  
fiscal year ended March 31, 1998, the Company derived approximately 92% of its  
total revenues from its operations in the Indo-Pacific Basin. In the past,      
political conflicts in such regions, particularly in the Arabian Gulf, have     
included attacks on tankers, mining of waterways and other efforts to disrupt   
shipping in the area. Vessels trading in such regions have also been subject to,
in limited instances, acts of terrorism and piracy. Future hostilities or other 
political instability in the region could affect the Company's trade patterns   
and adversely affect the Company's operations and performance.                  

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CONCENTRATION OF VOTING POWER                                                   

     The Selling Stockholder and an affiliated trust will, in the aggregate, own
approximately 54.7% of the outstanding Common Stock of Teekay after the Offering
(approximately 51.4% assuming exercise of the Underwriters' over-allotment      
option in full). As a result, the Selling Stockholder and the affiliated trust  
will have the power to elect all of the directors of Teekay and to control the  
vote on substantially all other matters, including significant corporate        
actions, without the approval of other stockholders, including purchasers of the
Common Stock offered hereby. Such concentration of voting power may, among other
things, have the effect of delaying or preventing a change in control of Teekay.
See "Principal and Selling Stockholders" and "Description of Capital            
Stock--Other Matters."                                                          

CUSTOMER CONCENTRATION                                                          

  The Company has derived, and believes that it will continue to derive, a
significant portion of its voyage revenues from a limited number of customers.  
In fiscal 1998 and 1997, the Company's ten largest customers accounted for      
approximately 69% and 66%, respectively, of the Company's consolidated voyage   
revenues. A single customer, an international oil company, accounted for $56.5  
million, or approximately 14%, of the Company's consolidated voyage revenues for
fiscal 1998. Another customer, also an international oil company, accounted for 
$48.7 million, or approximately 13%, of the Company's consolidated voyage       
revenues for fiscal 1997. No more than one customer accounted for over 10% of   
the Company's consolidated voyage revenues in either fiscal 1998 or 1997.       

     The loss of any significant customer or a substantial decline in the amount
of services requested by a significant customer could have a material adverse   
effect on the Company's business, financial condition and results of operations.

POSSIBLE TAXATION OF THE COMPANY'S UNITED STATES SOURCE INCOME                  

     In the absence of exemption from tax under Section 883 of the United States
Internal Revenue Code of 1986, as amended (the "Code"), the shipping income     
derived from U.S. sources attributable to Teekay's subsidiaries' transportation 
of cargoes to or from the United States will be subject to U.S. federal income  
tax. The tax so imposed would be equal to 4% of 50% of such U.S. source income, 
or an effective rate of 2%. Due to the absence of interpretive regulations or   
other applicable authority under the relevant Code sections, it is impossible to
confirm with certainty that Teekay's subsidiaries qualify for exemption from    
such tax under Section 883 of the Code. However, Teekay's subsidiaries have     
filed and intend to continue to file U.S. tax returns claiming such exemption   
from tax for each year in which their vessels call at U.S. ports. In the event  
Teekay's subsidiaries were subject to such tax, the Company's net income and    
cash flow would be reduced by the amount of such tax. On average, in fiscal     
years 1998, 1997 and 1996, approximately 37% of the Company's gross revenues    
were derived from U.S. sources attributable to the transportation by Teekay's   
subsidiaries of cargoes to or from the United States. The average U.S. tax on   
such U.S. source income, in the absence of exemption under Section 883, would   
have been 2% thereof, or $2.8 million. See "Business--Taxation of the           
Company--United States Taxation."                                               

CERTAIN FOREIGN ISSUER CONSIDERATIONS                                           

  Teekay's corporate affairs are governed by its Articles of Incorporation
and Bylaws and by the Business Corporation Act of Liberia (the "Liberian        
Business Corporation Act"). The provisions of the Liberian Business Corporation 
Act resemble provisions of the corporation laws of a number of states in the    
U.S. However, while most states have a fairly well-developed body of case law   
interpreting their respective corporate statutes, there have been few judicial  
cases in Liberia interpreting the Liberian Business Corporation Act. For        
example, the rights and fiduciary responsibilities of directors under Liberian  
law are not as clearly established as the rights and fiduciary responsibilities 
of directors under statutes or judicial precedent in existence in certain U.S.  
jurisdictions. Thus, the public stockholders of Teekay may have more difficulty 
in protecting their interests in the face of actions by the management,         

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directors or controlling stockholders than would stockholders of a corporation  
incorporated in a U.S. jurisdiction.                                            

POSSIBLE VOLATILITY OF SHARE PRICE                                              

Following consummation of the Offering, the market price of the Common
Stock could be subject to significant variation due to fluctuations in the      
Company's operating results, changes in or actual results varying from earnings 
or other estimates made by securities analysts, changes in business or          
regulatory conditions affecting the Company, its customers or its competitors,  
and other factors both within and outside the Company's control. In addition,   
the stock market may experience volatility that affects the market price of     
companies in ways unrelated to the operating performance of such companies, and 
such volatility may adversely affect the market price of the Common Stock.      

SHARES ELIGIBLE FOR FUTURE SALE                                                 

  No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock or the availability of such shares will have on the      
market price of the Common Stock prevailing from time to time. Sales of         
substantial amounts of Common Stock (including shares issued upon the exercise  
of stock options), or the perception that such sales could occur, could         
adversely affect prevailing market prices for the Common Stock. As of April 30, 
1998, 28,833,765 shares of Common Stock were outstanding, approximately         
15,042,000 shares (16,092,000 shares if the Underwriters' overallotment option  
is exercised in full) of which have been, or in connection with the Offering    
will be, registered under the Securities Act of 1933, as amended (the           
"Securities Act"). All of these shares are, or after the Offering will be,      
freely transferable in the United States without restriction under the          
Securities Act, except for any such shares which may be held by an "affiliate"  
of the Company, as that term is defined under Rule 144 of the Securities Act.   
Substantially all of the remaining shares of Common Stock outstanding are       
eligible for sale in the United States pursuant to Rule 144 (subject generally  
to volume and other restrictions set forth therein) under the Securities Act or 
outside the United States under Regulation S under the Securities Act, subject  
to the agreement with representatives of the Underwriters described below with  
respect to shares held by the Selling Stockholder and an affiliated trust.      
Teekay has granted the Selling Stockholder and the affiliated trust certain     
registration rights under the Securities Act with respect to Common Stock owned 
by them.                                                                        

    All of the 1,844,135 shares reserved for issuance under the Company's 1995
Stock Option Plan have been registered under the Securities Act on a Form S-8   
Registration Statement. Accordingly, the shares issued upon exercise of options 
granted under the 1995 Stock Option Plan will be freely transferable unless held
by an affiliate of the Company. As of April 30, 1998, a total of 1,160,251      
shares were subject to outstanding options with a weighted average exercise     
price of $26.67 per share. An additional 2,000,000 shares have been reserved for
issuance under the Company's Dividend Reinvestment Plan, 837,634 shares of which
had been issued as of April 30, 1998.                                           

   Teekay, the Selling Stockholder and an affiliated trust have agreed that,
without the prior written consent of Goldman, Sachs & Co., such parties will not
offer, sell, contract to sell or otherwise dispose of any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for shares of 
Common Stock for a period of 180 days after the date hereof, other than (i) the 
shares of Common Stock offered hereby and (ii) issuances by Teekay of securities
exercisable for shares of Common Stock pursuant to any employee benefit plan    
that is in existence on the date hereof. See "Shares Eligible for Future Sale"  
and "Underwriting."                                                             

YEAR 2000 COMPLIANCE                                                            

The Company relies on computer systems and software to operate its    
business, including applications used in chartering, shipping, communications,  
finance and various administrative functions. To the extent that the Company's  
software applications contain source code that is unable to appropriately       
interpret the calendar year 2000 and subsequent years, some level of            
modification or                                                                 

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replacement of such applications will be necessary. The Company is reviewing all
of its systems in order to verify that they are "Year 2000 compliant" and       
believes, with limited exceptions, that they will require only minor            
modification. Accordingly, management does not expect Year 2000 compliance costs
to have a material adverse effect on the Company. No assurance can be given,    
however, that all of the Company's systems will be Year 2000 compliant or that  
compliance costs or the impact of the Company's failure to achieve full Year    
2000 compliance will not have a material adverse effect on the Company. In      
addition, the Company could be adversely affected by the failure of one or more 
of its customers, lenders, suppliers or other organizations with which it       
conducts business to become fully Year 2000 compliant.                          

POTENTIAL INABILITY TO ENFORCE CERTAIN CIVIL LIABILITIES                        

Teekay and most of its subsidiaries are incorporated in Liberia, and  
certain other of its subsidiaries are incorporated in the Bahamas, Canada,      
Japan, Singapore, Australia, Scotland and Panama. Most of the directors and     
executive officers of Teekay and its subsidiaries are residents of countries    
other than the United States. Substantially all of the assets of Teekay and its 
subsidiaries and a substantial portion of the assets of such directors and      
officers are located outside the United States. As a result, it may be difficult
or impossible for United States investors to effect service of process within   
the United States upon Teekay, its subsidiaries or such directors and officers  
or to realize against them in the United States upon judgments of courts of the 
United States predicated upon civil liabilities of Teekay, its subsidiaries or  
such directors and officers under applicable U.S. federal and state securities  
laws. In addition, because of a lack of precedent, investors should not assume  
that courts in the countries in which Teekay or its subsidiaries are            
incorporated, where directors or officers reside or in which the assets of      
Teekay, its subsidiaries or such directors and officers are located (i) would   
enforce judgments of United States courts obtained in actions against Teekay,   
its subsidiaries or such persons predicated upon the civil liability provisions 
of applicable U.S. federal and state securities laws or (ii) would enforce, in  
original actions, liabilities against Teekay, its subsidiaries or such persons  
predicated upon such laws.                                                      

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USE OF PROCEEDS 

The net proceeds to the Company from the sale of Common Stock offered 
hereby, after deducting underwriting discounts and estimated offering expenses  
payable by the Company, are estimated to be approximately $73.7 million. The    
Company will not receive any proceeds from the sale of shares by the Selling    
Stockholder. The Company expects to use the net proceeds, together with other   
funds, to redeem its 9 5/8% First Preferred Ship Mortgage Notes due 2003,       
thereby reducing financial leverage and providing liquidity for general         
corporate purposes. See "Management's Discussion and Analysis of Results of     
Operations and Financial Condition--Liquidity and Resources" and "Description of
Certain Indebtedness."                                                          

DIVIDEND POLICY 

 Commencing with the fiscal quarter ended September 30, 1995, Teekay has
declared and paid quarterly cash dividends in the amount of $0.215 per share on 
its Common Stock. Subject to financial results and declaration by the Board of  
Directors, Teekay currently intends to continue to declare and pay a regular    
quarterly dividend in such amount per share on its Common Stock. Pursuant to    
Teekay's dividend reinvestment program, holders of Common Stock are permitted to
choose, in lieu of receiving cash dividends, to reinvest any dividends in       
additional shares of Common Stock at then prevailing market prices, but without 
brokerage commissions or service charges.                                       

The timing and amount of dividends, if any, will depend, among other  
things, on the Company's results of operations, financial condition, cash       
requirements, restrictions in financing agreements and other factors deemed     
relevant by Teekay's board of directors. Because Teekay is a holding company    
with no material assets other than the stock of its subsidiaries, its ability to
pay dividends on the Common Stock is dependent on the earnings and cash flow of 
its subsidiaries. Financing agreements to which certain of Teekay's subsidiaries
are party restrict these subsidiaries from paying dividends to Teekay. In       
addition, the indentures relating to the Company's 9 5/8% First Preferred Ship  
Mortgage Notes due 2003 and 8.32% First Preferred Ship Mortgage Notes due 2008  
(the "Mortgage Note Indentures") and the credit agreement governing one of the  
Company's credit facilities provide that Teekay's ability to pay dividends is   
subject to limitations based upon the Company's cumulative net income plus      
certain additional amounts, including the proceeds received by Teekay from any  
issuance of its capital stock. After giving effect to the anticipated net       
proceeds to it of the Offering, Teekay does not believe that the restrictions   
contained in the Mortgage Note Indentures or in other financing agreements to   
which Teekay and its subsidiaries are party will restrict payment of cash       
dividends on the Common Stock for the foreseeable future.                       

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PRICE RANGE OF COMMON STOCK 

     Since July 1995, the Company's Common Stock has been traded on The New York
Stock Exchange under the symbol "TK". The following table sets forth the high   
and low closing sales prices for the Common Stock on The New York Stock Exchange
for each of the fiscal quarters indicated.                                      

                                                                [Download Table]

                                                    HIGH      LOW   
                                                    -----    -----  
                                                                    
FISCAL 1996                                                         
  Second quarter................................    $24 7/8  $23 3/8
  Third quarter.................................    24 7/8   23     
  Fourth quarter................................    27       23 1/4 
FISCAL 1997                                                         
  First quarter.................................    $28      $25    
  Second quarter................................    30 5/8   26 1/2 
  Third quarter.................................    33 1/8   28 7/8 
  Fourth quarter................................    34 1/4   26 1/2 
FISCAL 1998                                                         
  First quarter.................................    $34 5/8  $28    
  Second quarter................................    36      3015/16 
  Third quarter.................................    37 7/8   30 3/8 
  Fourth quarter................................    33 9/16  27 7/8 

    The closing sale price per share of the Common Stock on the New York Stock
Exchange on May 15, 1998, was $27.75. As of April 30, 1998, there were          
28,833,765 shares of Common Stock outstanding.                                  

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CAPITALIZATION

     The following table sets forth the actual capitalization of Teekay at March
31, 1998, and as adjusted to give effect to the Offering and the application of 
the Company's estimated net proceeds therefrom to redeem a portion of its 9 5/8%
First Preferred Ship Mortgage Notes due 2003. This table should be read in      
conjunction with the consolidated financial statements of the Company and the   
related notes thereto set forth elsewhere in this Prospectus. See "Use of       
Proceeds" and "Management's Discussion and Analysis of Results of Operations and
Financial Condition."                                                           

                                                                [Download Table]

                                                             MARCH 31, 1998      
                                                        -------------------------
                                                          ACTUAL      AS ADJUSTED
                                                        ----------    -----------
                                                             (IN THOUSANDS)      
                                                                                 
Cash and marketable securities......................... $  115,254    $  115,254 
                                                        ==========    ========== 
Current portion of long-term debt...................... $   52,932    $   52,932 
Long-term debt obligations.............................    672,437       602,118 
                                                        ----------    ---------- 
       Total debt......................................    725,369       655,050 
                                                        ==========    ========== 
Stockholderss' equity:                                                           
  Preferred stockholders' equity:                                                
     Undesignated preferred stock, 25,000,000 shares                             
     authorized, none issued and outstanding, actual                             
     and as adjusted...................................         --            -- 
  Common stockholders' equity:                                                   
     Common stock, with no par value, 125,000,000                                
     shares authorized, 28,832,765 shares issued and                             
     outstanding; 31,632,765 shares issued and                                   
     outstanding, as adjusted(1).......................    261,353       335,057 
  Retained earnings(2).................................    428,102       423,264 
                                                        ----------    ---------- 
       Total stockholders' equity......................    689,455       758,321 
                                                        ----------    ---------- 
       Total capitalization............................ $1,414,824    $1,413,371 
                                                        ==========    ========== 

------------                                                                    

(1) Excludes 1,843,135 shares of Common Stock reserved for issuance upon        
exercise of options under the Company's 1995 Stock Option Plan, of which
options to purchase up to 1,160,251 shares of Common Stock at a weighted
   average exercise price of $26.67 per share were outstanding as of April 30,
1998. See "Management -- Executive Compensation."                       

(2) Reflects, on an as adjusted basis, a non-recurring charge of $4.8 million   
    which arises in connection with the redemption of the 9 5/8% First Preferred
Ship Mortgage Notes due 2003.                                           

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

   Set forth below are selected consolidated financial and other data of the
Company for the five fiscal periods ended March 31, 1998. The selected financial
and other data set forth below with respect to the Company's statements of      
income for each of three fiscal years ended March 31, 1998 and the Company's    
balance sheets as of March 31, 1998 and 1997 are derived from consolidated      
financial statements of the Company and the related notes thereto (the          
"Consolidated Financial Statements"), which are included elsewhere in this      
Prospectus, that have been audited by Ernst & Young, independent chartered      
accountants. The statement of income data for each of the two fiscal periods    
ended March 31, 1995 and 1994, and the balance sheet data as of March 31, 1996, 
1995 and 1994 are derived from consolidated financial statements audited by     
Ernst & Young but not included in this Prospectus.                              

The data below should be read in conjunction with the Consolidated    
Financial Statements, the other financial information and "Management's         
Discussion and Analysis of Results of Operations and Financial Condition" that  
appear elsewhere in this Prospectus. The Company changed its fiscal year end    
from April 30 to March 31, effective March 31, 1994, in order to facilitate     
comparison of the Company's operating results to those of other companies within
the transportation industry on a calendar quarter basis.                        

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                                                        [Enlarge/Download Table]

                                                                                                      11 MONTH  
                                                                                                       PERIOD   
                                                            YEAR ENDED MARCH 31,                       ENDED    
                                            -----------------------------------------------------    MARCH 31,  
                                               1998           1997          1996          1995        1994(1)   
                                            -----------    ----------    ----------    ----------    ---------- 
                                                     (IN THOUSANDS, EXCEPT PER SHARE AND PER DAY DATA)          
                                                                                                                
INCOME STATEMENT DATA:                                                                                          
Voyage revenues............................ $  406,036     $  382,249    $  336,320    $  319,966    $  317,742 
Voyage expenses............................    100,776        102,037        90,575        84,957        81,052 
                                            ----------     ----------    ----------    ----------    ---------- 
Net voyage revenues........................    305,260        280,212       245,745       235,009       236,690 
Operating expenses:                                                                                             
  Vessel operating expense(2)..............     70,510         72,586        67,841        72,723        73,597 
  Time charter hire expense................     10,627          3,461         2,503            --            -- 
  Depreciation and amortization expense....     94,941         90,698        82,372        94,452        88,253 
  General and administrative expense.......     21,542         19,209        16,750        15,018        14,063 
                                            ----------     ----------    ----------    ----------    ---------- 
Total operating expenses...................    197,620        185,954       165,466       182,193       175,013 
                                            ----------     ----------    ----------    ----------    ---------- 
Income from vessel operations..............    107,640         94,258        76,279        52,816        60,777 
Interest expense(3)........................    (56,269)       (60,810)      (62,910)      (66,304)      (49,713)
Interest income............................      7,897          6,358         6,471         5,904         2,904 
Other income...............................     11,236          2,824         9,230        12,839        10,245 
                                            ----------     ----------    ----------    ----------    ---------- 
Net income from continuing operations......     70,504         42,630        29,070         5,255        24,213 
Net income from discontinued operations....         --             --            --            --         5,945 
Cumulative effect of change in accounting                                                                       
  for marketable securities................         --             --            --         1,113            -- 
                                            ----------     ----------    ----------    ----------    ---------- 
Net income(3).............................. $   70,504     $   42,630    $   29,070    $    6,368    $   30,158 
                                            ==========     ==========    ==========    ==========    ========== 
PER SHARE DATA:                                                                                                 
Net income from continuing operations...... $     2.46     $     1.52    $     1.17    $     0.29    $     1.35 
Cumulative effect of change in accounting                                                                       
  for marketable securities................         --             --            --          0.06            -- 
Net income                                                                                                      
  -- basic.................................       2.46           1.52          1.17          0.35          1.68 
  -- diluted...............................       2.44           1.50          1.17          0.35          1.68 
Pro forma net income(3)                                                                                         
  -- basic.................................       2.47             --            --            --            -- 
  -- diluted...............................       2.45             --            --            --            -- 
Cash earnings -- basic(4)..................       5.78           4.75          4.51          5.48          6.33 
Cash dividends declared....................       0.86           0.86          0.48            --            -- 
BALANCE SHEET DATA (AT END OF PERIOD):                                                                          
Cash and marketable securities............. $  115,254     $  117,523    $  101,780    $   85,739    $  107,246 
Total assets...............................  1,460,183      1,372,838     1,355,301     1,306,474     1,405,147 
Total debt.................................    725,369        699,726       725,842       842,874       945,611 
Total stockholders' equity.................    689,455        629,815       599,395       439,066       433,180 
OTHER FINANCIAL DATA:                                                                                           
EBITDA(5).................................. $  209,582     $  191,632    $  166,233    $  146,756    $  151,364 
Cash earnings(3)(4)........................    165,575        133,554       112,107        98,716       113,998 
Capital expenditures:                                                                                           
  Vessel purchases, gross..................    197,199         65,227       123,843         7,465       163,509 
  Drydocking (accrual basis)...............     12,409         23,124        11,641        11,917        13,296 
FLEET DATA:                                                                                                     
Average number of ships(6).................         43             41            39            42            45 
Average age of Company's Aframax fleet (in                                                                      
  years)(7)................................        7.6            7.9           6.8           7.3           7.5 
TCE per ship per day(6)(8)(9).............. $   21,373     $   20,356    $   18,438    $   16,552    $   17,431 
Vessel operating expenses per ship per                                                                          
  day(2)(9)................................      4,554          4,922         4,787         4,748         4,879 
Operating cash flow per ship per                                                                                
  day(9)(10)...............................     12,664         11,819        10,613         8,944         9,133 

(Footnotes on following page)                                                   
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(Footnotes for previous page)                                                   

(1)  For the 12 months ended March 31, 1994, voyage revenues were $345.0        
  million; income from vessel operations was $64.4 million; net income was
 $32.0 million; cash earnings were $121.6 million; and EBITDA was $162.3
million.                                                              

(2)  Vessel operating expenses consist of all expenses relating to the operation
 of vessels (other than voyage expenses), including crewing, repairs and
maintenance, insurance, stores and lubes, and miscellaneous expenses  
including communications. Ship days are calculated on the basis of a  
   365-day year multiplied by the average number of vessels in the Company's
   fleet for the respective year. Vessel operating expenses excludes vessels
time-chartered-in.                                                    

(3)  Pro forma net income per share gives effect to the application of the      
   estimated net proceeds to the Company of the Offering at the beginning of
 fiscal 1998 to redeem a portion of the Company's 9 5/8% First Preferred
Ship Mortgage Notes due 2003, excluding the effect of a non-recurring 
charge of $4.8 million related to the redemption of such notes. Giving
    effect to the same pro forma adjustment, interest expenses, net income and
    cash earnings for fiscal 1998 would have been $49.2 million, $77.6 million
and $172.6 million, respectively.                                     

(4)  Cash earnings represents income from continuing operations before foreign  
   exchange gains (losses) and before depreciation and amortization expense.
Cash earnings is included because it is used by certain investors to  
     measure a company's financial performance as compared to other companies in
    the shipping industry. Cash earnings is not required by generally accepted
     accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.                             

(5)  EBITDA represents net income from continuing operations before interest    
expense, income tax expense, depreciation and amortization expense,   
 minority interest, and gains or losses arising from prepayment of debt,
 foreign exchange translation and disposal of assets. EBITDA is included
because such data is used by certain investors to measure a company's 
financial performance. EBITDA is not required by generally accepted   
     accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.                             

(6)  Includes vessels time-chartered-in, but excludes vessels of discontinued   
operations and a former joint venture.                                

(7)  Average age of Company's Aframax fleet is the average age, at the end of   
    the relevant period, of all the vessels owned, leased or time-chartered-in
   by the Company, excluding vessels of discontinued operations and a former
joint venture.                                                        

(8)  TCE (or "time charter equivalent") is a measure of the revenue performance 
of a vessel, which, on a per voyage basis, is generally determined by 
 Clarkson and other industry data sources by subtracting voyage expenses
  (except commissions) which are incurred in transporting cargo from gross
   revenue per voyage and dividing the remaining revenue by the total number
  of days required for the round-trip voyage. Voyage expenses comprise all
 expenses relating to particular voyages, including bunker fuel expense,
port fees and canal tolls. For purposes of calculating the Company's  
average TCE for the year, TCE has been calculated consistent with     
    Clarkson's method, by deducting total voyage expenses (except commissions)
    from total voyage revenues and dividing the remaining sum by the Company's
total voyage days in the year. See "Exhibit A--Definitions of Shipping
Terms."                                                               

(9)  To facilitate comparison to prior years' results, excludes the results from
the Company's Australian-crewed vessels, which comprised four of the  
Company's vessels during the fourth quarter of fiscal 1998. Vessel    
operating expenses for the Australian-crewed vessels are substantially
    higher than those for the rest of the Company's fleet on a per ship basis,
 primarily as a result of higher crew costs, with correspondingly higher
   charter rates associated with the charter arrangements for those vessels.
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition--General" and "Business--Crewing and Staff."      

(10) Operating cash flow represents income from vessel operations plus          
depreciation and amortization expense (other than drydock amortization
  expense). Ship days are calculated on the basis of a 365-day fiscal year
    multiplied by the average number of vessels in the Company's fleet for the
    respective year. Operating cash flow is not required by generally accepted
     accounting principles and should not be considered as an alternative to net
income or any other indicator of the Company's performance required by
generally accepted accounting principles.                             

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

GENERAL                                                                         

    The Company is a leading provider of international crude oil and petroleum
product transportation services through its fleet of predominantly Aframax      
tankers. The charter rates that the Company is able to obtain for these services
are determined in a highly competitive global tanker charter market.            
Historically, the tanker industry has been cyclical, experiencing volatility in 
profitability and asset values resulting from changes in the supply of, and     
demand for, vessel capacity. The Company's future operating results will be     
subject to a number of uncertainties, many of which reflect the cyclical nature 
of the tanker industry.                                                         

    The Company's current operating fleet consists of 46 vessels, including 42
Aframax oil tankers (including three vessels time-chartered-in) and O/B/O       
carriers, three smaller oil tankers, and one VLCC, for a total cargo-carrying   
capacity of approximately 4.6 million tonnes.                                   

   During fiscal 1998, approximately 66% of the Company's net voyage revenue
was derived from spot voyages. The balance of the Company's revenue is generated
primarily by two other modes of employment: time charters, whereby vessels are  
chartered to customers for a fixed period; and contracts of affreightment       
("COAs"), whereby the Company carries an agreed quantity of cargo for a customer
over a specified trade route over a given period of time. In fiscal 1998, 18% of
net voyage revenues was generated by time charters and COAs priced on a spot    
market basis. In the aggregate, approximately 84% of the Company's net voyage   
revenue during fiscal 1998 was derived from spot voyages or time charters and   
COAs priced on a spot market basis, with the remaining 16% being derived from   
fixed-rate time-charters and COAs. This dependence on the spot market, which is 
within industry norms, contributes to the volatility of the Company's revenues, 
cash flow from operations, and net income.                                      

  Tanker charter markets have been affected historically by changes in the
supply of, and demand for, tanker capacity. Following a strong charter market in
the early 1990s, the tanker charter market experienced a decline in early 1992  
as a result of the expansion in tanker supply during the previous four years, as
well as the impact of the global recession on demand and pricing. Tanker charter
rates increased gradually from 1995 to 1997 as tanker demand grew while tanker  
supply was relatively unchanged, as the scrapping of older tankers offset       
newbuilding deliveries. In the latter part of 1997 and into 1998, newbuilding   
ordering activity increased significantly as a result of stronger charter rates 
and in anticipation of the eventual scrapping of older tonnage. Stronger charter
rates have led to a decrease in scrapping levels in 1997 and into 1998 by making
the operation of older vessels more profitable.                                 

The Company operates its tankers in markets that have historically    
exhibited seasonal variations in demand and, therefore, charter rates. Tanker   
markets are typically stronger in the winter months as a result of increased oil
consumption in the northern hemisphere. In addition, unpredictable weather      
patterns in the winter months tend to disrupt vessel scheduling. The oil price  
volatility resulting from these factors has historically led to increased oil   
trading activities. As a result, revenues have historically been strongest for  
the Company in its third and fourth fiscal quarters.                            

   Over the past seven years, certain countries have developed environmental
protection laws and regulations affecting the tanker industry. These            
requirements, in particular OPA 90 in the United States and IMO regulations,    
have imposed higher operating standards, greater potential liability, and a     
variety of higher costs upon tanker owners and operators. One costly requirement
of OPA 90 is that all tankers ordered after June 1990 which call at U.S. ports  
must be constructed with double-hulls. The IMO regulations impose certain       
newbuilding requirements and restrictions on vessels trading beyond 25 years of 
age. See "Business--Regulation." As a result, the Company's new vessels are of  
double-hull construction and the Company plans to replace its older single-hull 
vessels with double-hull vessels.                                               

In December 1997, the Company acquired two vessels and related shore  
support services from an Australian affiliate of Caltex Petroleum. These two    
tankers, together with one of the Company's existing Aframax tankers, have been 
time chartered to the Caltex affiliate in connection with the Company's         
provision of Caltex's oil transportation requirements formerly provided by that 
affiliate. The Company has                                                      
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converted one of its existing vessels to a floating storage and off-loading     
vessel, which is sharing crews with the vessels employed in the Caltex          
arrangement (together with the other three vessels involved in this arrangement,
the "Australian Vessels"). Vessel operating expenses for the Australian Vessels 
are substantially higher than those for the rest of the Company's fleet,        
primarily as a result of higher costs associated with employing an Australian   
crew. The time-charter rates for the Australian Vessels are correspondingly     
higher to compensate for these increased costs. During fiscal 1998, the         
Australian Vessels earned net voyage revenues and an average TCE rate of $8.4   
million and $25,347, respectively, and incurred vessel operating expenses of    
$3.2 million, or $10,276 on a per ship per day basis. The results of the        
Australian Vessels are included in the Company's consolidated financial         
statements included herein.                                                     

RESULTS OF OPERATIONS                                                           

Bulk shipping industry freight rates are commonly measured at the net 
voyage revenue level in terms of "time charter equivalent" (or "TCE") rates,    
defined as voyage revenues less voyage expenses (excluding commissions), divided
by voyage ship-days for the round-trip voyage. Voyage revenues and voyage       
expenses are a function of the type of charter, either spot charter or time     
charter, and port, canal and fuel costs depending on the trade route upon which 
a vessel is sailing, in addition to being a function of the level of shipping   
freight rates. For this reason, shipowners base economic decisions regarding the
deployment of their vessels upon anticipated TCE rates, and industry analysts   
typically measure bulk shipping freight rates in terms of TCE rates. Therefore, 
the discussion of revenue below focuses on net voyage revenue and TCE rates.    

FISCAL 1998, FISCAL 1997, AND FISCAL 1996                             

Operating results for the past three years reflect the improvement in 
average TCE rates experienced by the Company's fleet during this period, as well
as the increase in the size of the Company fleet. The Company sold a total of   
seven of its older Aframax tankers during the three fiscal years ended March 31,
1998, and acquired a total of twelve newer Aframax tankers (including two       
time-chartered-in vessels) and two modern product tankers during the same       
period. As a result, the Company's average fleet size increased by two vessels, 
or 4.9%, in fiscal 1998 compared to fiscal 1997, following an earlier increase  
of two vessels, or 4.6%, in fiscal 1997 compared to fiscal 1996.                

  Net voyage revenues increased 8.9% to $305.3 million in fiscal 1998 from
$280.2 million in fiscal 1997, and increased 14.0% in fiscal 1997 from $245.7   
million in fiscal 1996, reflecting a combination of improvement in TCE rates and
an increase in the Company's fleet size. The Company's average TCE rate in      
fiscal 1998, excluding the Australian Vessels, was up 5.0% to $21,373 from      
$20,356 in fiscal 1997, and up 10.4% in fiscal 1997 from $18,438 in fiscal 1996,
in part due to lower bunker fuel prices.                                        

     In spite of the increase in fleet size, vessel operating expenses decreased
2.9% to $70.5 million in fiscal 1998 from $72.6 million in fiscal 1997,         
primarily as a result of a reduction in insurance premiums as well as more      
favorable foreign exchange rates between the U.S. Dollar and certain Asian      
currencies, particularly the Japanese Yen and the Korean Won, for spare parts   
and supplies purchased during the latter half of fiscal 1998. In fiscal 1997,   
vessel operating expenses increased 7.0%, from $67.8 million in fiscal 1996,    
primarily as a result of the increase in the size of the Company's owned fleet. 
As a result of a more competitive market for qualified sea-going personnel,     
adjustments were made to crew wage rates and salaries effective April 1, 1998,  
which will increase vessel operating expenses by approximately $300 per ship per
day, or $4.3 million per year in aggregate, commencing in fiscal 1999.          

  Time-charter hire expense was $10.6 million in fiscal 1998, up from $3.5
million in fiscal 1997 and $2.5 million in fiscal 1996, as a result of two      
vessels time-chartered-in by the Company during fiscal 1998 as compared to only 
one vessel time-chartered-in during the latter part of fiscal 1996 and part of  
fiscal 1997.                                                                    

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     Depreciation and amortization expense increased by 4.6% to $94.9 million in
fiscal 1998 from $90.7 million in fiscal 1997, and increased by 10.1% in fiscal 
1997 from $82.4 million in fiscal 1996, as a result of the increase in the      
average size of the Company's owned fleet, an increase in the average cost base 
of the fleet resulting from the replacement of some of the Company's older      
vessels with newer vessels, and a larger than usual number of scheduled         
drydockings during the past two fiscal years. Depreciation and amortization     
expense included amortization of drydocking costs of $11.7 million, $10.9       
million, and $8.6 million in fiscal years 1998, 1997, and 1996, respectively.   

   General and administrative expenses rose 12.1% to $21.5 million in fiscal
1998 from $19.2 million in fiscal 1997, and increased 14.7% in fiscal 1997 from 
$16.8 million in fiscal 1996, primarily as a result of the cost of compliance   
with increasingly stringent tanker industry regulations, increases in senior    
management compensation, and the start-up cost and additional ongoing personnel 
and facility costs associated with expanding the Company's Australian office in 
December 1997. Management anticipates hiring additional senior management and   
staff personnel in connection with the further expansion of the Company's       
operations.                                                                     

   Income from vessel operations increased 14.2% to $107.6 million in fiscal
1998 from $94.3 million in fiscal 1997, and increased 23.6% in fiscal 1997 from 
$76.3 million in fiscal 1996, due to improved TCE rates and relatively stable   
costs.                                                                          

 Interest expense decreased by 7.4% to $56.3 million in fiscal 1998 from
$60.8 million in fiscal 1997, following a 3.3% decrease in fiscal 1997 from     
$62.9 million in fiscal 1996, reflecting the reduction in the Company's average 
debt balance and a lower average interest rate on debt borrowings, in each case 
compared to the prior fiscal year. The Company anticipates using the net        
proceeds it receives from the Offering to redeem a portion of its 9 5/8% First  
Preferred Ship Mortgage Notes due 2003. See "Use of Proceeds." Interest income  
of $7.9 million in fiscal 1998, $6.4 million in fiscal 1997, and $6.5 million in
fiscal 1996, largely reflected increasing cash balances, offset in fiscal 1997  
by lower interest rates.                                                        

   Other income of $11.2 million in fiscal 1998 consisted primarily of $14.4
million in gains on the sale of three vessels, offset partially by $3.5 million 
in losses related to the prepayment of debt. Other income of $2.8 million in    
fiscal 1997 and $9.2 million in fiscal 1996 consisted primarily of gains on the 
sale of vessels.                                                                

  As a result of the foregoing factors, the Company's net income was $70.5
million in fiscal 1998, which included $14.4 million in gains on asset sales. In
comparison, the Company's net income was $42.6 million in fiscal 1997, which    
included $2.7 million in gains on assets sales, and $29.1 million in fiscal     
1996, which included $8.8 million in gains on asset sales.                      

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The following table illustrates the relationship between fleet size   
(measured in ship-days), TCE performance, and operating results per calendar    
ship-day. To facilitate comparison to the prior years' results, the figures in  
the table below exclude the results from the Company's Australian Vessels.      

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED MARCH 31,         
                                                    --------------------------------------
                                                       1998          1997          1996   
                                                    ----------    ----------    ----------
                                                                                          
Average number of ships............................        42            41            39 
Total calendar ship-days...........................    15,341        14,937        14,310 
                                                     --------      --------      -------- 
Voyage days (A)....................................    14,229        14,071        13,612 
                                                     --------      --------      -------- 
Net voyage revenue before commissions (B) (000s)...  $304,115      $286,429      $250,981 
                                                     --------      --------      -------- 
TCE (B/A)..........................................  $ 21,373      $ 20,356      $ 18,438 
                                                     --------      --------      -------- 
Operating results per calendar ship-day:                                                  
  Net voyage revenue...............................  $ 19,358      $ 18,760      $ 17,173 
  Vessel operating expense.........................     4,554         4,922         4,787 
  General and administrative expense...............     1,375         1,286         1,171 
  Drydocking expense...............................       765           733           602 
                                                     --------      --------      -------- 
Operating cash flow per calendar ship-day..........  $ 12,664      $ 11,819      $ 10,613 
                                                     ========      ========      ======== 

LIQUIDITY AND CAPITAL RESOURCES                                                 

     Liquidity requirements of the Company relate to servicing its debt, funding
capital expenditures and working capital and maintaining cash reserves against  
fluctuations in operating cash flow. Net cash flow generated by operations is   
the main source of liquidity for the Company. Additional sources of liquidity   
include proceeds from asset sales and refinancings.                             

  The Company operates in a capital-intensive industry requiring extensive
investment in revenue-producing assets. Funds invested are raised mainly from   
borrowings and the Company's internally generated liquidity. The Company is     
required to expend substantial sums in connection with the construction of a    
newbuilding, with 10% to 20% of the purchase price typically paid upon order of 
the vessel and the remainder paid as progress payments prior to delivery one to 
three years later. The purchase price of second-hand vessels is typically paid  
in two installments, with 10% paid upon signing of the acquisition agreement and
the remainder paid upon delivery of the vessel.                                 

    Net cash flow from operating activities was $161.1 million in fiscal 1998,
compared to $139.2 million and $98.4 million in fiscal years 1997 and 1996,     
respectively, reflecting an improvement in tanker charter market conditions     
accompanied by a relatively stable cost environment, the increase in the size of
the Company's fleet, and a reduction in interest expense.                       

In January 1998, the Company replaced its existing revolving credit   
facility with a new revolving credit facility (the "Revolver") providing for    
borrowing of up to $200.0 million. The amount available under the Revolver      
reduces by $10.0 million semi-annually commencing in July 1999, with a final    
balloon reduction in January 2006. Interest payments are based on LIBOR plus a  
margin depending on the financial leverage of the Company; at March 31, 1998 the
margin was +0.50%. During fiscal 1998, $129.0 million of the Revolver was drawn 
to refinance existing floating rate debt and for vessel purchases. In addition  
to borrowings under the Revolver, the Company incurred $79.6 million of         
long-term debt in connection with the purchase of three other vessels. Proceeds 
from long-term debt were $240.0 million in fiscal 1997, mainly as a result of   
the $210.0 million term loan refinancing completed in October 1996, and were    
$448.0 million in fiscal 1996 as a result of the issuance of $225.0 million of  
the Company's 8.32% First Preferred Ship Mortgage Notes due 2008 (the "8.32%    
Notes") and borrowings under a $223.0 million revolving credit facility.        

   Scheduled debt repayments were $33.9 million during fiscal 1998, compared
to $16.0 million in fiscal 1997 and $57.9 million in fiscal 1996. In addition to
scheduled debt repayments, the Company                                          

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prepaid long-term debt of $150.7 million in fiscal 1998, primarily representing 
prepayments out of the proceeds of the Revolver and repurchases of $26.3 million
of its 9 5/8% First Preferred Ship Mortgage Notes due 2003 (the "9 5/8% Notes").
Total prepayments of long-term debt were $250.1 million in fiscal 1997 and      
$506.0 million in fiscal 1996, primarily reflecting the refinancing of existing 
debt.                                                                           

    Capitalized loan costs were approximately $994,000 in fiscal 1998 and $1.1
million in fiscal 1997, compared to $6.0 million in fiscal 1996. The high level 
of capitalized loan costs in fiscal 1996 resulted primarily from capitalization 
of costs incurred on the issuance of the 8.32% Notes.                           

    Three vessels were sold in fiscal 1998, resulting in net proceeds of $33.9
million. Subsequent to March 31, 1998, the Company sold an additional vessel for
net proceeds of approximately $10.5 million. In fiscal 1997, the Company sold   
its remaining 50%-owned vessel, resulting in net proceeds of $6.4 million which 
the Company received in the early part of fiscal 1998. Proceeds from            
dispositions of vessels totalled $28.4 million in fiscal 1996 as a result of the
sale of four older vessels.                                                     

   During fiscal 1998, the Company incurred capital expenditures for vessels
and equipment of $197.2 million, primarily as a result of taking delivery of two
newbuilding double-hull Aframax tankers, two modern second-hand Aframax tankers,
and two modern second-hand product tankers. Capital expenditures for vessels and
equipment were $65.1 million in fiscal 1997, primarily as a result of the       
acquisition of two Aframax tankers, and $79.3 million in fiscal 1996, primarily 
as a result of the acquisition of three Aframax tankers and a 50% interest in a 
fourth Aframax tanker. Capital expenditures for drydocking were $18.4 million in
fiscal 1998, $16.6 million in fiscal 1997, and $7.4 million in fiscal 1996,     
reflecting a larger than usual number of scheduled drydockings during the last  
two fiscal years. Subsequent to March 31, 1998, the Company entered into an     
agreement for the construction of two newbuilding double-hull Aframax tankers,  
with deliveries scheduled for July and September 1999, with the option to       
purchase further newbuildings under similar terms. The agreement is subject to  
certain conditions that must be satisfied by the tankers' builder. The estimated
delivered price for each vessel, including all related charges, is approximately
$38.0 million. The Company intends to pay for these purchases by using existing 
cash balances, borrowings under the Revolver or other debt financing.           

As part of its growth strategy, the Company will continue to consider 
strategic opportunities, including the acquisition of additional vessels and the
expansion into new markets. The Company may choose to pursue such opportunities 
through internal growth or through joint ventures or business acquisitions.     
Actual acquisition of additional vessels will be subject to a number of factors,
including the Company's expectations for future market rates and the Company's  
ability to obtain financing upon favorable terms. The Company intends to finance
future acquisitions through various sources of capital, including internally    
generated cash flow, existing credit lines, additional debt borrowings, and the 
issuance of additional shares of capital stock.                                 

 Commencing with the fiscal quarter ended September 30, 1995, Teekay has
declared and paid quarterly cash dividends in the amount of $0.215 per share on 
its Common Stock. Subject to financial results and declaration by the Board of  
Directors, Teekay currently intends to continue to declare and pay a regular    
quarterly dividend in such amount per share on its Common Stock. Pursuant to    
Teekay's dividend reinvestment program, holders of Common Stock are permitted to
choose, in lieu of receiving cash dividends, to reinvest any dividends in       
additional shares of Common Stock at then prevailing market prices, but without 
brokerage commissions or service charges. Dividends declared during fiscal 1998 
were $24.6 million, or $0.86 per share, of which $16.0 million was paid in cash 
and $8.6 million was paid in the form of shares of Common Stock issued under the
Company's dividend reinvestment plan. Dividends declared in fiscal 1997 were    
$24.1 million ($13.5 million paid in cash) and were $11.9 million in fiscal 1996
($7.1 million paid in cash).                                                    

  The Company's total liquidity, including cash, marketable securities and
undrawn long-term lines of credit, was $186.3 million as at March 31, 1998, down
from $258.6 million as at March 31, 1997, and $197.3 million as at March 31,    
1996. The Company's total liquidity had been increasing as a result of          
internally generated cash and debt refinancings, but declined during the fourth 
quarter of fiscal 1998 due to the purchase of two vessels which were paid for   
using existing cash balances and the Revolver.                                  
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BUSINESS

    The Company is a leading provider of international crude oil and petroleum
product transportation services through the world's largest fleet of medium-size
oil tankers. The Company's modern fleet consists of 46 vessels: 42 Aframax oil  
tankers (including three vessels time-chartered-in) and oil/bulk/ore carriers,  
three smaller oil tankers, and one VLCC. The Company's fleet has a total cargo  
capacity of approximately 4.6 million tonnes and its Aframax vessels represent  
approximately 7.8% of the total tonnage of the world Aframax fleet. The Company 
owns a modern fleet, with an average age of approximately 7.8 years, compared to
an average age for the world oil tanker fleet, including Aframax tankers, of    
approximately 13.7 years and for the world Aframax tanker fleet of approximately
12.2 years.                                                                     

The Teekay organization was founded in 1973 to manage and operate oil 
tankers. Prior to 1985, the Company chartered-in most of the tonnage that it    
subsequently provided to its transportation customers. As the availability of   
acceptable chartered-in tonnage declined, management began an expansion of its  
owned fleet. Since 1985, the Company has significantly expanded and modernized  
its owned fleet by taking delivery of 40 new vessels and acquiring 31 vessels in
the second-hand market, as well as disposing of 12 older tankers over the past  
four years.                                                                     

Teekay is incorporated under the laws of the Republic of Liberia and  
maintains its principal executive headquarters at the 4th Floor, Euro Canadian  
Centre, Marlborough Street & Navy Lion Road, P.O. Box SS 6293, Nassau,          
Commonwealth of the Bahamas. Its telephone number at such address is (242) 322- 
8020. The Company's principal operating offices are located at Suite 1400, One  
Bentall Centre, 505 Burrard Street, Vancouver, British Columbia, Canada, V7X    
1M5. Its telephone number at such address is (604) 683-3529.                    

THE INTERNATIONAL TANKER MARKET                                                 

OVERVIEW                                                              

International seaborne crude oil and other petroleum products         
transportation services are provided by two main types of operators: captive    
fleets of major oil companies (both private and state-owned) and independent    
ship owner fleets. Both types of operators transport oil under short-term       
contracts (including single-voyage "spot charters") and long-term time charters 
with oil companies, oil traders, large oil consumers, petroleum product         
producers and government agencies. The oil companies own, or control through    
long-term time charters, less than one-fifth of the current world tanker        
capacity, while independent companies own or control the balance of the fleet.  
The oil companies' fleets transport their own oil, as well as oil for third     
party charterers in direct competition with independent owners and operators.   
Management believes that the seaborne oil transportation business is            
decentralized. According to industry data, as of March 1997 the largest owner by
tonnage, Bergesen d.y. A/S, controlled 3.3% of the total world tanker fleet and 
the top 10 participants controlled approximately 21% of the world tanker fleet, 
in each case as measured by deadweight tonnage.                                 

A significant and ongoing shift toward quality in vessels and tanker  
operations has been taking place in the tanker industry over the past several   
years as charterers and regulators increasingly focus on safety and protection  
of the environment. The oil transportation industry has historically been       
subject to regulation by national authorities and through international         
conventions. Since 1990, there has been an ever-increasing emphasis on          
environmental protection through legislation and regulations such as OPA 90, IMO
regulations, international conventions and protocols, and Classification Society
procedures, demanding higher quality tanker construction, maintenance, repair,  
management and operations. In addition, oil companies acting as charterers,     
terminal operators, shippers and receivers are becoming increasingly selective  
in their acceptance of tankers, inspecting and vetting both vessels and         
companies on a periodic basis, and often excluding tankers on the basis of age  
alone. In calendar 1997, the Company's vessels were inspected 420 times by oil  
companies and port states, as compared to 335 and 285 times in 1996 and 1995,   
respectively. Management believes that the increasingly stringent regulatory    
environment and emphasis on quality relating to environmental protection will   
accelerate the                                                                  

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obsolescence of older, poor-quality tankers, and provide a competitive advantage
to modern tankers with high quality management. See "--The Company's Fleet,"    
"--Crewing and Staff" and "--Regulation."                                       

   Pricing of oil transportation services occurs in a highly competitive and
efficient global tanker charter market. While some business is conducted        
directly between ship owners and charterers, typically between one and three    
brokers act as intermediaries in most transactions. Tanker chartering is        
executed around the clock in several shipping centers, including London, New    
York, Tokyo, Singapore and Oslo. Business is transacted regionally according to 
the location of the charterer or ship owner, rather than the cargo's origin or  
destination. Time charters, as well as vessel sale and purchase transactions,   
are negotiated through brokers in the same centers in a similar pattern.        

In order to benefit from economies of scale, tanker charterers will   
typically charter the largest possible vessel to transport oil or other         
petroleum products, consistent with port and canal dimensional restrictions and 
optimal cargo lot sizes. The oil tanker fleet is generally divided into the     
following six major types of vessels, based on vessel carrying capacity: (i)    
Ultra Large Crude Carriers ("ULCCs") of approximately 320,000 dwt or more; (ii) 
Very Large Crude Carriers ("VLCCs") of approximately 200,000 to 320,000 dwt;    
(iii) Suezmax size range of approximately 115,000 to 200,000 dwt; (iv) Aframax  
size range of approximately 75,000 to 115,000 dwt; (v) Panamax size range of    
approximately 50,000 to 75,000 dwt; and (vi) small tankers of less than         
approximately 50,000 dwt. ULCCs and VLCCs typically transport crude oil in      
long-haul trades, such as from the Arabian Gulf to Rotterdam via the Cape of    
Good Hope. Because of the size of VLCCs and ULCCs and their predominance in the 
long-haul trades, more than 42% of the world's seaborne oil transportation is   
conducted by these vessels. While the ULCC/VLCC market differs in several       
respects from smaller size tanker markets, VLCCs and ULCCs have a significant   
influence on the tanker charter market in general. Suezmax size tankers also    
engage in long-haul crude oil trades as well as in medium-haul crude oil trades,
such as from West Africa to the U.S. East Coast. Aframax size vessels generally 
engage in both medium- and short-haul trades of less than 1,500 miles and carry 
crude oil or petroleum products. Panamax size and smaller tankers mostly        
transport petroleum products in short- to medium-haul trades.                   

     In addition to the six foregoing types of tankers, oil/bulk/ore carriers or
"O/B/Os" are typically considered part of the world tanker fleet in industry    
statistics. O/B/Os represent approximately 5.3% of the world tanker fleet based 
on total cargo capacity. O/B/Os are of various sizes and are capable of carrying
oil or dry bulk cargoes. According to industry data, as of March 31, 1998, 57%  
of all O/B/Os were trading in oil.                                              

   According to industry data, at March 31, 1998, the world fleet of Aframax
tankers and O/B/Os (excluding an estimated 60 O/B/Os trading dry) consisted of  
527 vessels comprising 45.9 million dwt, constituting approximately 15% of the  
vessels in the world tanker and O/B/O fleet. By virtue of their size, Aframax   
vessels are large enough to benefit from economies of scale yet have access to a
wide range of ports, and are particularly well-suited for trading in regional   
markets, including the Mediterranean, the Caribbean, the Northwestern European  
area and the Indo-Pacific Basin.                                                

     Management estimates that in 1997, approximately 24% of the world's Aframax
tankers were trading in the Company's main trading region, the Indo-Pacific     
Basin. The Company estimates that it has approximately a one-quarter share of   
the Indo-Pacific Basin Aframax market based on voyages in the region. This area 
contains a large number of loading and discharging points capable of receiving  
Aframax size vessels. Aframax tankers in the Indo-Pacific Basin (i) transport   
crude oil from three primary production locations--the Arabian Gulf, Australia  
and Southeast Asia--to refineries and storage points located short to medium    
distances away, (ii) transport petroleum products in medium-and long-haul       
trades, and (iii) engage in some inter-regional trades.                         

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INDUSTRY FUNDAMENTALS                                                 

    Tanker charter rates are strongly influenced by the demand for, and supply
of, tanker capacity because of the highly competitive nature of the tanker      
charter market. Small changes in tanker utilization have historically led to    
relatively large changes in tanker charter rates.                               

   TANKER DEMAND.  Tanker demand is expressed in "ton-miles" and is measured
as the product of (a) the amount of oil transported in tankers, multiplied by   
(b) the distance over which this oil is transported. Tonnage of oil shipped is  
primarily a function of global oil consumption, which is driven by economic     
activity as well as the long-term impact of oil prices on the location and      
related volume of oil production. Tonnage of oil shipped is also influenced by  
transportation alternatives such as pipelines.                                  

    The distance over which oil is transported is the more variable element of
the ton-mile demand equation. It is determined by seaborne trading and          
distribution patterns, which are principally influenced by the locations of     
production and the optimal economic distribution of such production to          
destinations for refining and consumption. Seaborne trading patterns are also   
periodically influenced by geo-political events which divert tankers from normal
trading patterns, as well as by inter-regional oil trading activity created by  
oil supply/demand imbalances. Tankers, particularly older tonnage, are also     
increasingly used as "floating storage" by oil companies and oil traders,       
particularly during times of supply uncertainty.                                

     Two trends in the oil market over the last few years have strongly affected
the development of the tanker market. The first important trend has been the    
overall increase in world oil demand over the past five years. According to the 
International Energy Agency ("IEA"), between 1993 and 1997, world oil           
consumption increased at a compounded annual growth rate of 2.2%. The IEA       
reported a 2.9% increase in world oil consumption in 1997 and forecasts that    
world oil consumption will grow by 2.0% in 1998.                                

   The table set forth below indicates the geographic breakdown of world oil
demand.                                                                         

WORLD OIL DEMAND (MILLIONS OF BARRELS PER DAY)(1)                               

                                                        [Enlarge/Download Table]

                                                    1993  1994  1995  1996  1997  CAGR(3)
                                                    ----  ----  ----  ----  ----  -------
                                                                                         
North America...................................... 19.2  19.8  19.8  20.3  20.7    1.9% 
Pacific(2).........................................  6.3   6.6   6.7   6.7   6.7    1.6  
Asia...............................................  9.9  10.4  11.2  12.1  12.9    6.8  
Other World........................................ 32.2  31.7  32.3  32.6  33.5    1.0  
                                                    ----  ----  ----  ----  ----   ----  
  Total Demand..................................... 67.6  68.5  70.0  71.7  73.8    2.2% 
                                                    ====  ====  ====  ====  ====   ====  

---------------                                                                 

(1) Information based on International Energy Agency -- Monthly Oil Report.     
(2) Includes Australia, New Zealand and Japan.                                  
(3) Compounded annual growth rate.                                              

     The second trend affecting the tanker market relates to the location of oil
supply relative to major discharge points, which affects average voyage length. 
While much of the world's increased supply during 1993 through 1996 came from   
the North Sea and Caribbean regions, most of the 3.6% increase in world oil     
supply in 1997 was provided by Arabian Gulf OPEC supply. Arabian Gulf OPEC      
supply increased by 6.6% in 1997 as compared to virtually no change in the North
Sea during 1997.                                                                

Incremental supply from the Arabian Gulf results in a more significant
increase in demand for tanker services than incremental supply from the North   
Sea and the Caribbean, because of the greater distance from the Arabian Gulf to 
discharge points and the associated longer average length of voyage for oil     
tankers. For example, the tanker tonnage required to ship the incremental supply
of one million barrels per day from the Arabian Gulf to the United States is    
approximately 13 million dwt as compared to approximately 5 million dwt of      
tanker tonnage required to ship the incremental supply of one million barrels   
per day from the North Sea to the United States. Management believes that the   
recent trend toward an increased share of world oil supply originating from     
Arabian Gulf OPEC producers has positively affected tanker demand.              

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   The table set forth below indicates the geographic breakdown of world oil
supply.                                                                         

WORLD OIL SUPPLY (MILLIONS OF BARRELS PER DAY)(1)                               

                                                        [Enlarge/Download Table]

                                                    1993  1994  1995  1996  1997  CAGR(4)
                                                    ----  ----  ----  ----  ----  -------
                                                                                         
North Sea(2).......................................  4.7   5.6   5.9   6.2   6.3    7.6% 
Other non-OPEC..................................... 36.1  35.8  36.5  37.4  38.1    1.4  
                                                    ----  ----  ----  ----  ----   ----  
  Total non-OPEC................................... 40.8  41.4  42.4  43.6  44.4    2.1  
Arabian Gulf OPEC(3)............................... 18.9  19.0  19.1  19.6  20.9    2.5  
Other OPEC.........................................  7.7   7.8   8.1   8.6   9.1    4.3  
                                                    ----  ----  ----  ----  ----   ----  
  Total OPEC....................................... 26.6  26.8  27.2  28.2  30.0    3.1  
                                                    ----  ----  ----  ----  ----   ----  
  Total Supply..................................... 67.4  68.2  69.6  71.8  74.4    2.5% 
                                                    ====  ====  ====  ====  ====   ====  

---------------                                                                 

(1) Information based on International Energy Agency -- Monthly Oil Report and  
Middle East Economic Survey.                                            
(2) Includes Norway, United Kingdom and Denmark.                                
(3) Includes Iran, Iraq, Kuwait, Qatar, Saudi Arabia, UAE and total OPEC natural
gas liquids supply.                                                     
(4) Compounded annual growth rate.                                              

TANKER SUPPLY.  The supply of tankers is a function of new vessel     
deliveries and the scrapping, conversion and loss of tonnage. Since 1993, the   
world Aframax fleet has been relatively stable at approximately 53.3 million    
dwt.                                                                            

Scrapping generally involves older tankers; the average age of Aframax
vessels scrapped in 1997 was approximately 23 years. Aging vessels typically    
require substantial repairs and maintenance to conform to industry standards,   
including repairs made in connection with Special Surveys which involve periodic
thorough inspections. Insurance companies and customers rely to some degree on  
the survey and classification regime to provide reasonable assurance of a       
vessel's seaworthiness and vessels must be certified as "in-class" in order to  
continue to trade. In addition, the IMO regulations impose certain restrictions 
on vessels trading beyond 25 years of age. See "-- Regulation." Because the     
costs of maintaining a vessel in-class rise substantially as the age of the     
vessel increases, vessel owners often conclude that it is more economical to    
scrap a vessel that has exhausted its anticipated useful life than to upgrade it
to maintain it in class. In addition, the economics of operating older vessels  
are adversely affected by customer demand for the safety and reliability        
associated with more modern vessels, coupled with the higher rates and operating
cost efficiencies available to newer vessels. Approximately 23% of the vessels  
in the current world Aframax fleet are 20 years of age or older.                

At any point in time, the level of scrapping activity is a function   
primarily of current and prospective charter market conditions, as well as      
factors which are heavily influenced by the age of the relevant vessel, such as 
second-hand vessel values in relation to scrap prices, current and anticipated  
operating costs, and expected repair and survey costs. According to industry    
data, scrapping of Aframax tankers and O/B/Os occurred at an average of         
approximately 28 vessels per year for the period 1992 to 1995; 23 scrappings    
occurred in 1996, 14 in 1997, and four in the first three months of 1998.       
Management believes that, while scrapping activity has recently declined due to 
a favorable charter rate environment, the age profile of the worldwide Aframax  
fleet will eventually cause increased scrapping activity.                       

  Newbuilding deliveries of Aframax tankers and O/B/Os, which were limited
during the depressed market conditions of the early to mid-1980s, increased     
after 1987 with improved market conditions and in anticipation of the           
replacement of an aging fleet. Newbuilding deliveries of Aframax tankers        
occurred at an annual average rate of 22 vessels for the period 1988 through    
1991 and 30 vessels per year for the period 1992 through 1995, 19 deliveries    
occurred in 1996, 21 deliveries took place during 1997, and five during the     
first three months of 1998.                                                     

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   At March 31, 1998, the Aframax newbuilding orderbook contained orders for
94 vessels, equivalent to 16.0% of the existing fleet (including O/B/Os). Orders
for 61 vessels were placed in 1997, and orders for 12 vessels were placed in the
first three months of 1998. Typically, delivery of a vessel occurs within 18 to 
36 months after ordering. The correlation between the Aframax newbuilding       
orderbook and deliveries, and additional supply of tonnage competing in the     
world tanker market is not precise, since some of the newbuild vessels are      
expected to be employed in the offshore oil production industry or as coated    
product tankers, that do not compete directly for crude oil shipping business.  

 While the newbuilding orderbook has recently risen due to the favorable
charter rate environment, it represents a meaningfully smaller percentage of the
worldwide Aframax tanker fleet than do the vessels 20 years and older which are 
destined to be scrapped within the next several years.                          

    As an illustration of the aging Aframax fleet and the number of vessels on
order that are available to replace the aging tankers, the following chart      
shows, on a calendar year-end basis, the historical development of the          
proportion of the Aframax tanker fleet that is 20 years or older, and the       
Aframax tanker orderbook:                                                       

HISTORICAL DEVELOPMENT OF AFRAMAX FLEET 

  FIGURE

                                                                [Download Table]

                                                        VESSELS 18 YEARS 
                                                            AND OLDER    
  YEAR                  AFRAMAX ORDERBOOK                (PERCENTAGE OF  
(AS OF DECEMBER 31)       (# OF SHIPS)                    AFRAMAX FLEET) 
-------------------     -----------------               -----------------
                                                                         
1986                            33                              1%       
1987                            40                              4%       
1988                            45                              6%       
1989                            81                              8%       
1990                            83                             10%       
1991                            99                             12%       
1992                            73                             11%       
1993                            47                             10%       
1994                            42                             11%       
1995                            44                             13%       
1996                            52                             18%       
1997                            89                             22%       
1998                            93                             23%       

------------                                                                    

Information based on industry data.                                             

COMPETITIVE STRENGTHS                                                           

The Company pursues an intensively customer- and operations-focused   
business strategy to achieve superior operating results. The Company's business 
strategy is based on the following five key competitive strengths:              

-  MARKET CONCENTRATION: Scale and scope within a given market of the 
    shipping industry are critical for efficient operation. By focusing on
  the Indo-Pacific Basin, the Company has been able, with a relatively
 small share of the world Aframax fleet (approximately 7.8% of total
tonnage), to develop a significant presence in this region with   
       charterers of medium-size tankers, facilitating comprehensive coverage of
       charterers' requirements and providing a base for efficient operation and
      a high degree of capacity utilization. The Company estimates that it has
    a market share of approximately 25% in this region, with its principal
trading routes involving Australia, Japan and the United States.  

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 -  OPERATIONAL CONTROL AND EXPERIENCED MANAGEMENT: The Company services
substantially all of its needs in-house, without having to rely on
    outside ship managers or crewing agencies. The Company has experienced
     management in all functions critical to its operations, which affords a
 focused marketing effort, tight quality and cost controls, improved
  capacity utilization and effective operations and safety monitoring.

   -  MODERN, HIGH-QUALITY TONNAGE: The Company's modern, high-quality fleet
  operates with high fuel efficiency and low maintenance and operating
       costs compared to the world fleet of Aframax tankers, 23% of which are 20
      years of age or older. Only three of the Company's vessels are more than
   15 years old and none is more than 18 years old. In an environment of
    increasingly stringent operating and safety standards, the age profile
    and quality of the Company's fleet has translated into a high level of
acceptance by charterers.                                         

-  LARGE FLEET OF UNIFORM-SIZED VESSELS: The Company's large fleet of 
       Aframax tankers, many of which are in sister vessel series (substantially
  identical vessels), facilitates scheduling flexibility due to vessel
       substitution opportunities, permitting greater responsiveness to customer
   demands and enhanced capacity utilization. The scale of the Company's
     operations and resultant purchasing power, combined with the uniformity
of its vessels, results in lower operating expenses than those    
experienced by smaller operators.                                 

-  STRONG NETWORK OF CUSTOMER RELATIONSHIPS: The Company's intensively
     customer-oriented focus, combined with its other competitive strengths,
     have enabled it to establish a strong network of customer relationships
    and a reputation for transportation excellence among quality-sensitive
customers.                                                        

The Company's competitive strengths have resulted in TCE rates and    
operating costs that are superior to averages indicated by industry data. As a  
result, the Company has achieved consistently higher operating cash flow per    
vessel as compared to an average of certain other publicly traded bulk shipping 
companies, which is illustrated in the graph below.                             

OPERATING CASH FLOW PER SHIP PER DAY
(Calendar Year Basis) 

  FIGURE

                                                                [Download Table]

                                            DOLLARS PER DAY                    
                        -------------------------------------------------------
                                                           *AVERAGE OF OTHER   
  YEARS                 TEEKAY SHIPPING AVERAGE         BULK SHIPPING COMPANIES
---------               -----------------------         -----------------------
                                                                               
1990                            11,014                          8,190          
1991                            11,048                          9,389          
1992                             7,393                          4,947          
1993                             8,426                          5,034          
1994                             9,033                          4,020          
1995                            10,183                          4,478          
1996                            11,432                          6,409          
1997                            12,565                          7,874          

------------                                                                    

Information based upon respective company financial data.                       

* Vessel weighted average of the following companies: Bergesen d.y. A/S, Bona   
Shipholding Ltd., London & Overseas Freighters Limited, OMI Corp., and      
Overseas Shipholding Group.                                                 

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GROWTH STRATEGY                                                                 

The Company's growth strategy is to leverage its existing competitive 
strengths to continue to expand its business and increase shareholder value.    

-  MAINTAIN AND EXPAND AFRAMAX FRANCHISE IN INDO-PACIFIC BASIN.  The  
 Company anticipates that the continued upgrade and expansion of its
     Aframax tanker business in the Indo-Pacific Basin will continue to be a
  key component of its strategy. Over the past three fiscal years, the
  Company has increased its Aframax fleet by acquiring twelve vessels,
while disposing of seven older Aframax tankers. With the largest  
    concentration of Aframax tankers in the Indo-Pacific Basin, management
       believes the Company is able to provide the most comprehensive service to
       its customers thereby generating superior operating results. For example,
   the Company's size and scope of services has enabled it to enter into
    contracts of affreightment to provide large oil-company customers with
      ongoing services and which also grant the Company preferential rights on
      certain voyages, resulting in significant fleet utilization benefits and
increased market share on strategically important routes.         

   -  LEVERAGE THE FRANCHISE TO PROVIDE VALUE-ADDED SERVICES.  The Company's
    full-service marine operations capabilities, reputation for safety and
      quality, and strong customer orientation provide it with the opportunity
       to expand its business by providing additional value-added and innovative
      services, in many cases to existing customers. Examples of such services
    include the Company's recently-executed eight-year contract to provide
 Apache Energy Ltd. with an Aframax floating storage and off-loading
vessel, and its outsourcing arrangement with Caltex Petroleum's   
    Australian affiliate under which Teekay has acquired the entire tanker
 operation of the Australian affiliate and will service Caltex's oil
 transportation requirements formerly provided by that affiliate. By
 providing its customers with these value-added services, management
    believes that it will strengthen its franchise and further improve its
  financial performance. The Company expects that its participation in
    these types of activities will increase during the next several years.

-  SELECTIVELY EXPAND INTO RELATED MARKETS AND SERVICES.  Management  
intends to identify expansion opportunities in new tanker market  
segments, geographic areas and services to which the Company's    
       competitive strengths are well suited and which would enhance shareholder
value. The Company may choose to pursue such opportunities through
internal growth, joint ventures or business acquisitions.         

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THE COMPANY'S FLEET                                                             

The following list provides information with respect to the Company's 
vessels.                                                                        

                                                        [Enlarge/Download Table]

                                                         YEAR                               
                                            SERIES/YARD  BUILT  TYPE   DWT-MT       FLAG    
                                            -----------  -----  ----   ------       ----    
                                                                                            
AFRAMAX TANKERS (42)                                                                        
HAMANE SPIRIT.............................. Onomichi     1997   DH      105,300  Bahamian   
POUL SPIRIT................................ Onomichi     1995   DH      105,300  Liberian   
TORBEN SPIRIT.............................. Onomichi     1994   DH       98,600  Bahamian   
SAMAR SPIRIT............................... Onomichi     1992   DH       98,600  Bahamian   
LEYTE SPIRIT............................... Onomichi     1992   DH       98,600  Bahamian   
LUZON SPIRIT............................... Onomichi     1992   DH       98,600  Bahamian   
MAYON SPIRIT............................... Onomichi     1992   DH       98,600  Bahamian   
TEEKAY SPIRIT.............................. Onomichi     1991   SH      100,200  Bahamian   
PALMSTAR LOTUS............................. Onomichi     1991   SH      100,200  Bahamian   
PALMSTAR THISTLE........................... Onomichi     1991   SH      100,200  Bahamian   
PALMSTAR ROSE.............................. Onomichi     1990   SH      100,200  Bahamian   
PALMSTAR POPPY............................. Onomichi     1990   SH      100,200  Bahamian   
ONOZO SPIRIT............................... Onomichi     1990   SH      100,200  Bahamian   
PALMSTAR CHERRY............................ Onomichi     1990   SH      100,200  Bahamian   
PALMSTAR ORCHID............................ Onomichi     1989   SH      100,200  Bahamian   
VICTORIA SPIRIT (OBO)...................... Hyundai      1993   DH      103,200  Bahamian   
VANCOUVER SPIRIT (OBO)..................... Hyundai      1992   DH      103,200  Bahamian   
SHILLA SPIRIT.............................. Hyundai      1990   SH      106,700  Liberian   
ULSAN SPIRIT............................... Hyundai      1990   SH      106,700  Liberian   
NAMSAN SPIRIT.............................. Hyundai      1988   SH      106,700  Liberian   
PACIFIC SPIRIT............................. Hyundai      1988   SH      106,700  Liberian   
PIONEER SPIRIT............................. Hyundai      1988   SH      106,700  Liberian   
DAMPIER SPIRIT (FSO)....................... Hyundai      1988   SH      106,700  Liberian   
NASSAU SPIRIT.............................. Imabari      1998   DH      107,000  Bahamian   
SENANG SPIRIT.............................. Imabari      1994   DH       95,700  Bahamian   
SEBAROK SPIRIT............................. Imabari      1993   DH       95,700  Liberian   
SELETAR SPIRIT............................. Imabari      1988   DS       97,300  Bahamian   
SERAYA SPIRIT.............................. Imabari      1992   DS       97,300  Bahamian   
SENTOSA SPIRIT............................. Imabari      1989   DS       97,300  Liberian   
ALLIANCE SPIRIT............................ Imabari      1989   DS       97,300  Bahamian   
SEMAKAU SPIRIT............................. Imabari      1988   DS       97,300  Liberian   
SINGAPORE SPIRIT........................... Imabari      1988   DS       97,300  Liberian   
SUDONG SPIRIT.............................. Imabari      1987   DS       97,300  Liberian   
KYUSHU SPIRIT.............................. Mitsubishi   1991   DS       95,600  Bahamian   
KOYAGI SPIRIT.............................. Mitsubishi   1989   SH       96,000  Liberian   
SEABRIDGE*................................. Namura       1996   DH      105,200  Liberian   
SEAMASTER*................................. Namura       1990   SH      101,000  Liberian   
TORRES SPIRIT.............................. Namura       1990   SH       96,000  Bahamian   
HAKUYOU MARU*.............................. Namura       1987   SH       93,000  Singaporean
MENDANA SPIRIT............................. Namura       1980   SH       81,700  Bahamian   
MAGELLAN SPIRIT............................ Hitachi      1985   DS       95,000  Liberian   
PALM MONARCH............................... Mitsui       1981   SH       89,900  Liberian   
OTHER TANKERS (4)                                                                           
MUSASHI SPIRIT (VLCC)...................... Sasebo       1993   SH      280,700  Bahamian   
SCOTLAND................................... Mitsubishi   1982   DS       40,800  Bahamian   
BARRINGTON................................. Samsung      1989   DH       33,300  Australian 
PALMERSTON................................. Halla        1990   DB       36,700  Australian 
                                                                      ---------             
                                                                      4,576,200             
                                                                      =========             

------------                                                                    

DH   Double-hull tanker                                                         
DS   Double-sided tanker                                                        
DB   Double-bottom tanker                                                       
FSO  Floating storage and off-loading vessel                                    
OBO Oil/Bulk/Ore carrier                                                        
SH   Single-hull tanker                                                         
VLCC Very Large Crude Carrier                                                   
* Time-chartered-in                                                             

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Many of the Company's vessels have been designed and constructed as   
substantially identical sister ships. Such vessels can, in many situations, be  
interchanged, providing scheduling flexibility and greater capacity utilization.
In addition, spare parts and technical knowledge can be applied to all the      
vessels in the particular series, thereby generating operating efficiencies.    

  The Company has disposed of several vessels as part of its ongoing fleet
modernization program. The Company sold a total of seven of its older Aframax   
tankers during the three fiscal years ended March 31, 1998, and acquired a total
of twelve newer Aframax tankers (including two time-chartered-in vessels) and   
two modern product tankers during the same period. As a result, the Company's   
average fleet size increased by two vessels, or 4.9%, in fiscal 1998 compared to
fiscal 1997, following an earlier increase of two vessels, or 4.6%, in fiscal   
1997 compared to fiscal 1996. The Company currently has two double-hull         
newbuildings on order (subject to certain conditions to be satisfied by the     
builder), with deliveries scheduled for July and September 1999. The estimated  
delivered price for each vessel, including all related charges, is approximately
$38.0 million. The Company has the option to purchase further newbuildings under
similar terms.                                                                  

   The Company's fleet is one of the most modern fleets in the world, having
an average age of approximately 7.8 years, compared to an average age for the   
world oil tanker fleet of approximately 13.7 years and for the world Aframax    
tanker fleet of approximately 12.2 years. The following chart compares the age  
profiles of the Company's Aframax Fleet, the world Aframax tanker fleet         
(excluding the Company's vessels) and the world tanker fleet, as of March 31,   
1998.                                                                           

COMPARISON OF FLEET AGE PROFILES

  FIGURE

                                                                [Download Table]

                                             Percentage of Fleet              
                      --------------------------------------------------------
                      0-9 Years   10-14 Years   15-19 Years   20 Years & Older
                      ---------   -----------   -----------   ----------------
                                                                              
Teekay Aframax                                                                
   Tanker Fleet          72%          24%           4%              0%        
World Aframax                                                                 
   Tanker Fleet          41%          16%          20%             23%        
World Tanker                                                                  
   Fleet                 37%          11%          13%             39%        

---------------                                                                 

Information based on industry data                                              

CLASSIFICATION AND INSPECTION                                                   

 All of the Company's vessels have been certified as being "in class" by
their respective classification societies: Nippon Kaiji Kyokai, Lloyds Register,
Det Norske Veritas or American Bureau of Shipping. Every commercial vessel's    
hull and machinery is "classed" by a classification society authorized by its   
country of registry. The classification society certifies that the vessel has   
been built and maintained in accordance with the rules of such classification   
society and complies with applicable rules and regulations of the country of    
registry of the vessel and the international conventions of which that country  
is a member. Each vessel is inspected by a surveyor of the classification       
society every year ("Annual Survey"), every two to three years ("Intermediate   
Survey") and every four to five years                                           

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("Special Survey"). Vessels also may be required, as part of the Intermediate   
Survey process, to be dry-docked every 24 to 30 months for inspection of the    
underwater parts of the vessel and for necessary repair related to such         
inspection. Many of the Company's vessels have qualified with their respective  
classification societies for drydocking every five years in connection with the 
Special Survey and are no longer subject to the Intermediate Survey drydocking  
process. To so qualify, the Company was required to enhance the resiliency of   
the underwater coatings of each such vessel as well as to install apparatus on  
each vessel to accommodate thorough underwater inspection by divers.            

In addition to the classification inspections, many of the Company's  
customers, including the major oil companies, regularly inspect the Company's   
vessels as a precondition to chartering voyages on such vessels. In each of the 
last eight years, Tanker Advisory Center, Inc. (New York) has rated the         
Company's fleet a "meritorious tanker fleet," a designation which, in the latest
publication (January 1998), placed it in the top 5% of all fleets containing    
five or more tankers. Management believes that the Company's well-maintained,   
high quality tonnage should provide it with a competitive advantage in the      
current environment of increasing regulation and customer emphasis on quality of
service.                                                                        

The Company has obtained through Det Norske Veritas, the Norwegian    
classification society, a document of compliance with the ISO 9000 standards of 
total quality management. ISO 9000 is a series of international standards for   
quality systems which includes ISO 9002, the standard most commonly used in the 
shipping industry. The Company has also completed the implementation of the     
International Safety Management (ISM) code. The Company has obtained Documents  
of Compliance (DOC) for its offices and Safety Management Certificates (SMC) for
its applicable vessels, as required by the IMO prior to July 1, 1998.           

OPERATIONS AND SHIP MANAGEMENT                                                  

 The Company has experienced management in all functions critical to its
operations, which affords a focused marketing effort, tight quality and cost    
controls, improved capacity utilization and effective operations and safety     
monitoring. Through wholly owned subsidiaries located worldwide, the Company    
provides substantially all of the operations, ship maintenance, crewing,        
technical support, shipyard supervision, insurance and financial management     
services necessary to support its fleet.                                        

   The Company has a worldwide chartering staff located in Vancouver, Tokyo,
London and Singapore. Each office serves the Company's clients headquartered in 
such office's region. Fleet operations, vessel positions and charter market     
rates are monitored around the clock. Management believes that monitoring such  
information is critical to making informed bids on competitive brokered         
business. During fiscal 1998, approximately 84% of the Company's net voyage     
revenues were derived from spot voyages or time charters and COAs priced on a   
spot market basis.                                                              

     Company employees perform much of the necessary ordinary course maintenance
and regularly inspect all of the Company's vessels, both at sea and while the   
vessels are in port. The Company inspects its vessels two to four times per year
using predetermined and rigorous criteria. Each vessel is examined and specific 
notations are made, and recommendations are given for improvements to the       
overall condition of the vessel, maintenance, safety and crew welfare. While    
certain ship management and commercial operations services are contracted out,  
the Company believes that it could obtain a replacement provider of these       
services, or could provide these services internally, without any negative      
impact on its operations.                                                       

CREWING AND STAFF                                                               

The Company employs approximately 300 captains, chief engineers, chief
officers and first engineers, approximately 1,450 additional personnel at sea   
and approximately 200 personnel ashore. Management anticipates hiring senior    
management and staff personnel in connection with the further expansion of its  
operations.                                                                     

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 The Company places great emphasis on attracting, through its recruiting
offices in Manila, Glasgow, Sydney and Mumbai, qualified crew members for       
employment on the Company's tankers. Recruiting has become an increasingly      
difficult task for operators in the tanker industry. The Company pays           
competitive salaries and provides competitive benefits to its personnel and     
tries to promote, when possible, from within their ranks. Management believes   
that the well maintained quarters and equipment on the Company's vessels help to
attract and retain motivated and qualified seamen and officers. During fiscal   
1996, the Company entered into a Collective Bargaining Agreement with the       
Philippine Seafarers' Union (PSU), an affiliate of the International Transport  
Workers' Federation (ITF), and a Special Agreement with ITF London, which covers
substantially all of the Company's junior officers and seamen. The Collective   
Bargaining Agreement and the Special Agreement did not result in any significant
increase in the levels of wages paid or benefits provided to members of the     
vessel crews. The Company is also a party to Enterprise Bargaining Agreements   
with three Australian maritime unions, covering officers and seamen. The time   
charters covering the Australian vessels provide that increases in wages or     
benefits for the Company's Australian-crewed vessels will be passed on to the   
customer. See "Risk Factors--Competition."                                      

The Company has a cadet training program, the purpose of which is to  
develop a cadre of future senior officers for the Company, with one specially   
equipped vessel staffed with an instructor and trainees. In addition to the     
basic training that all seamen are required to undergo to achieve certification,
the Company provides additional training of as much as one month for all newly  
hired seamen and junior officers at training facilities in the Philippines.     
Safety procedures are a critical element of this training and continue to be    
emphasized through the Company's onboard training program. Management believes  
that high quality manning and training policies will play an increasingly       
important role in distinguishing larger independent tanker companies which have 
in-house (or affiliate) capabilities, from smaller companies that must rely on  
outside ship managers and crewing agents.                                       

CUSTOMERS                                                                       

  Customers of the Company include major oil companies, major oil traders,
large oil consumers and petroleum product producers, government agencies, and   
various other entities dependent upon the tanker transportation trade. During   
fiscal 1998, one customer (an international oil company) accounted for $56.5    
million, or approximately 14%, of the Company's consolidated voyage revenues for
such period. Another customer, also an international oil company, accounted for 
$48.7 million, or approximately 13%, of the Company's fiscal 1997 voyage        
revenues. No more than one customer has accounted for more than 10% of the      
Company's consolidated voyage revenues in any of the three fiscal years ended   
March 31, 1998.                                                                 

COMPETITION                                                                     

International seaborne oil and other petroleum products transportation
services are provided by two main types of operators: captive fleets of major   
oil companies (both private and state-owned) and independent ship owner fleets. 
Many major oil companies and other oil trading companies, the primary charterers
of the vessels owned or controlled by the Company, also operate their own       
vessels and transport their own oil as well as oil for third party charterers in
direct competition with independent owners and operators. Competition for       
charters is intense and is based upon price, location, the size, age, condition 
and acceptability of the vessel, and the vessel's manager. Competition in the   
Aframax segment is also affected by the availability of other size vessels that 
compete in the Company's markets. Suezmax size vessels and Panamax size vessels 
can compete for many of the same charters for which the Company competes.       
Because of their large size, ULCCs and VLCCs rarely compete directly with       
Aframax tankers for specific charters; however, because ULCCs and VLCCs comprise
a substantial portion of the total capacity of the market, movements by such    
vessels into Suezmax trades and of Suezmax vessels into Aframax trades would    
heighten the already intense competition. See "--The International Tanker       
Market--Industry Fundamentals--Demand" and "Risk Factors--Competition."         

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The Company competes principally with other Aframax owners through the
global tanker charter market, comprised of tanker broker companies which        
represent both charterers and ship owners in chartering transactions. Within    
this market, some transactions, referred to as "market cargoes," are offered by 
charterers through two or more brokers simultaneously and shown to the widest   
possible range of owners; other transactions, referred to as "private cargoes," 
are given by the charterer to only one broker and shown selectively to a limited
number of owners whose tankers are most likely to be acceptable to the charterer
and are in position to undertake the voyage. Management estimates that the      
Company transacts approximately one-third of its spot voyages from market       
cargoes, the remainder being either private cargoes or direct cargoes transacted
directly with charterers outside this market.                                   

Other large operators of Aframax tonnage include Shell International  
Marine, a subsidiary of Royal Dutch/Shell Petroleum Corporation, with           
approximately 21 vessels trading globally (11 of which are on charter), Neptune 
Orient Lines Ltd. (owned partially by the Singapore government), with           
approximately 16 vessels, and Bona Shipholding Limited, which controls 15       
vessels; each of the latter two fleets trade exclusively in the Atlantic Basin. 
Management believes that it has significant competitive advantages in the       
Aframax tanker market as a result of the age, quality, type and dimensions of   
its vessels and its large market share in the Indo-Pacific Basin. See "--Growth 
Strategy."                                                                      

As part of its growth strategy, the Company will continue to consider 
strategic opportunities, including business acquisitions. To the extent the     
Company enters new geographic areas or tanker market segments, there can be no  
assurance that the Company will be able to compete successfully therein. New    
markets may involve competitive factors which differ from those of the Aframax  
market segment in the Indo-Pacific Basin and may include participants which have
greater financial strength and capital resources than the Company.              

RISK OF LOSS AND INSURANCE                                                      

The operation of any ocean-going vessel carries an inherent risk of   
catastrophic marine disasters and property losses caused by adverse weather     
conditions, mechanical failures, human error, war, terrorism, piracy and other  
circumstances or events. In addition, the transportation of crude oil is subject
to the risk of crude oil spills, and business interruptions due to political    
circumstances in foreign countries, hostilities, labor strikes, and boycotts.   

The Company carries insurance to protect against most of the          
accident-related risks involved in the conduct of its business and it maintains 
environmental damage and pollution insurance coverage. The Company does not     
carry insurance covering the loss of revenue resulting from vessel off-hire     
time. The Company believes that its current insurance coverage is adequate to   
protect against most of the accident-related risks involved in the conduct of   
its business and that it maintains appropriate levels of environmental damage   
and pollution insurance coverage. Currently, the available amount of coverage   
for pollution is $700 million per vessel per incident. However, there can be no 
assurance that all covered risks are adequately insured against, that any       
particular claim will be paid or that the Company will be able to procure       
adequate insurance coverage at commercially reasonable rates in the future. See 
"Risk Factors--Risk of Loss and Insurance."                                     

LEGAL PROCEEDINGS                                                               

From time to time the Company has been, and expects to continue to be,
subject to legal proceedings and claims in the ordinary course of its business, 
principally personal injury and property casualty claims. Such claims, even if  
lacking merit, could result in the expenditure of significant financial and     
managerial resources. The Company is not aware of any legal proceedings or      
claims that it believes will have, individually or in the aggregate, a material 
adverse effect on the Company or on its financial condition or results of       
operations.                                                                     

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REGULATION                                                                      

     The business of the Company and the operation of its vessels are materially
affected by government regulation in the form of international conventions,     
national, state and local laws and regulations in force in the jurisdictions in 
which the vessels operate, as well as in the country or countries of their      
registration. Because such conventions, laws, and regulations are often revised,
the Company cannot predict the ultimate cost of complying with such conventions,
laws and regulations or the impact thereof on the resale price or useful life of
its vessels. Additional conventions, laws and regulations may be adopted which  
could limit the ability of the Company to do business or increase the cost of   
its doing business and which may have a material adverse effect on the Company's
operations. The Company is required by various governmental and                 
quasi-governmental agencies to obtain certain permits, licenses and certificates
with respect to its operations. Subject to the discussion below and to the fact 
that the kinds of permits, licenses and certificates required for the operations
of the vessels owned by the Company will depend upon a number of factors, the   
Company believes that it has been and will be able to obtain all permits,       
licenses and certificates material to the conduct of its operations.            

     The Company believes that the heightened environmental and quality concerns
of insurance underwriters, regulators and charterers will impose greater        
inspection and safety requirements on all vessels in the tanker market and will 
accelerate the scrapping of older vessels throughout the industry.              

ENVIRONMENTAL REGULATION--IMO.  On March 6, 1992, the IMO adopted     
regulations which set forth new and upgraded requirements for pollution         
prevention for tankers. These regulations, which went into effect on July 6,    
1995 in many jurisdictions in which the Company's tanker fleet operates, provide
that (i) tankers between 25 and 30 years old must be of double-hull construction
or of a mid-deck design with double side construction, unless they have wing    
tanks or double-bottom spaces, not used for the carriage of oil, which cover at 
least 30% of the length of the cargo tank section of the hull or are capable of 
hydrostatically balanced loading which ensures at least the same level of       
protection against oil spills in the event of collision or stranding, (ii)      
tankers 30 years old or older must be of double-hull construction or mid-deck   
design with double-side construction, and (iii) all tankers will be subject to  
enhanced inspections. Also, under IMO regulations, a tanker must be of          
double-hull construction or a mid-deck design with double side construction or  
be of another approved design ensuring the same level of protection against oil 
pollution in the event that such tanker (i) is the subject of a contract for a  
major conversion or original construction on or after July 6, 1993, (ii)        
commences a major conversion or has its keel laid on or after January 6, 1994,  
or (iii) completes a major conversion or is a newbuilding delivered on or after 
July 6, 1996.                                                                   

    Under the current regulations, the vessels of the Company's existing fleet
will be able to operate for substantially all of their respective economic lives
before being required to have double-hulls. Although three of the Company's     
vessels are 15 years or older, the oldest of such vessels is only 18 years old  
and, therefore, the IMO requirements currently in effect regarding 25 and 30    
year-old tankers will not affect the Company's fleet in the near future.        
However, compliance with the new regulations regarding inspections of all       
vessels may adversely affect the Company's operations. The Company cannot at the
present time evaluate the likelihood or magnitude of any such adverse effect on 
the Company's operations due to uncertainty of interpretation of the IMO        
regulations.                                                                    

 The operation of the Company's vessels is also affected by the recently
adopted requirements set forth in the IMO's International Management Code for   
the Safe Operation of Ships and Pollution Prevention (the "ISM Code"). The ISM  
Code requires shipowners and bareboat charterers to develop and maintain an     
extensive "Safety Management System" that includes the adoption of a safety and 
environmental protection policy setting forth instructions and procedures for   
safe operation and describing procedures for dealing with emergencies. The      
failure of a shipowner or bareboat charterer to comply with the ISM Code may    
subject such party to increased liability, may decrease available insurance     
coverage for the affected vessels, and may result in a denial of access to, or  
detention in, certain ports. Currently, each of the Company's applicable vessels
is ISM code-certified. However, there can be no assurance that such             
certification will be maintained indefinitely.                                  

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ENVIRONMENTAL REGULATIONS--OPA 90.  OPA 90 established an extensive   
regulatory and liability regime for the protection and cleanup of the           
environment from oil spills. OPA 90 affects all owners and operators whose      
vessels trade to the United States or its territories or possessions or whose   
vessels operate in United States waters, which include the United States'       
territorial sea and its two hundred nautical mile exclusive economic zone.      

Under OPA 90, vessel owners, operators and bareboat (or "demise")     
charterers are "responsible parties" and are jointly, severally and strictly    
liable (unless the spill results solely from the act or omission of a third     
party, an act of God or an act of war) for all containment and clean-up costs   
and other damages arising from discharges or threatened discharges of oil from  
their vessels. These other damages are defined broadly to include (i) natural   
resources damages and the costs of assessment thereof, (ii) real and personal   
property damages, (iii) net loss of taxes, royalties, rents, fees and other lost
revenues, (iv) lost profits or impairment of earning capacity due to property or
natural resources damage, (v) net cost of public services necessitated by a     
spill response, such as protection from fire, safety or health hazards, and (vi)
loss of subsistence use of natural resources. OPA 90 limits the liability of    
responsible parties to the greater of $1,200 per gross ton or $10 million per   
tanker that is over 3,000 gross tons (subject to possible adjustment for        
inflation). These limits of liability would not apply if the incident was       
proximately caused by violation of applicable United States federal safety,     
construction or operating regulations or by the responsible party's gross       
negligence or willful misconduct, or if the responsible party fails or refuses  
to report the incident or to cooperate and assist in connection with the oil    
removal activities. The Company currently plans to continue to maintain for each
of its vessels pollution liability coverage in the amount of $700 million per   
incident. A catastrophic spill could exceed the insurance coverage available, in
which event there could be a material adverse effect on the Company.            

     Under OPA 90, with certain limited exceptions, all newly built or converted
tankers operating in United States waters must be built with double-hulls, and  
existing vessels which do not comply with the double-hull requirement must be   
phased out over a 25-year period (1990-2015) based on size, age and hull        
construction. Only three of the Company's vessels are over 15 years old, and the
oldest of such vessels, the single-hulled Mendana Spirit, would not be          
phased-out under the double-hull regulations until 2003. Notwithstanding the    
phase-out period, OPA 90 currently permits existing single-hull tankers to      
operate until the year 2015 if their operations within United States waters are 
limited to discharging at the Louisiana Off-Shore Oil Platform, or off-loading  
by means of lightering activities within authorized lightering zones more than  
60 miles off-shore.                                                             

   OPA 90 requires owners and operators of vessels to establish and maintain
with the United States Coast Guard (the "Coast Guard") evidence of financial    
responsibility sufficient to meet their potential liabilities under OPA 90. In  
December 1994, the Coast Guard implemented regulations requiring evidence of    
financial responsibility in the amount of $1,500 per gross ton for tankers,     
coupling the OPA limitation on liability of $1,200 per gross ton with the       
Comprehensive Environmental Response, Compensation, and Liability Act liability 
limit of $300 per gross ton. Under the regulations, such evidence of financial  
responsibility may be demonstrated by insurance, surety bond, self-insurance, or
guaranty. Under OPA 90, an owner or operator of a fleet of tankers is required  
only to demonstrate evidence of financial responsibility in an amount sufficient
to cover the tanker in the fleet having the greatest maximum liability under OPA
90.                                                                             

The Coast Guard's regulations concerning certificates of financial    
responsibility provide, in accordance with OPA 90, that claimants may bring suit
directly against an insurer or guarantor that furnishes certificates of         
financial responsibility; and, in the event that such insurer or guarantor is   
sued directly, it is prohibited from asserting any contractual defense that it  
may have had against the responsible party and is limited to asserting those    
defenses available to the responsible party and the defense that the incident   
was caused by the willful misconduct of the responsible party. Certain          
organizations, which had typically provided certificates of financial           
responsibility under pre-OPA 90 laws, including the major protection and        
indemnity organizations, declined to furnish evidence of insurance for vessel   
owners and operators if they are subject to direct actions or required to waive 
insurance policy defenses.                                                      
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The Coast Guard's financial responsibility regulations may also be    
satisfied by evidence of surety bond, guaranty or by self-insurance. Under the  
self-insurance provisions, the ship owner or operator must have a net worth and 
working capital, measured in assets located in the United States against        
liabilities located anywhere in the world, that exceeds the applicable amount of
financial responsibility. The Company has complied with the Coast Guard         
regulations by providing a financial guaranty from a related company evidencing 
sufficient self-insurance.                                                      

     OPA 90 specifically permits individual states to impose their own liability
regimes with regard to oil pollution incidents occurring within their           
boundaries, and some states have enacted legislation providing for unlimited    
liability for oil spills. In some cases, states which have enacted such         
legislation have not yet issued implementing regulations defining tanker owners'
responsibilities under these laws. The Company intends to comply with all       
applicable state regulations in the ports where the Company's vessels call.     

Owners or operators of tankers operating in United States waters are  
required to file vessel response plans with the Coast Guard, and their tankers  
are required to operate in compliance with their Coast Guard approved plans.    
Such response plans must, among other things, (i) address a "worst case"        
scenario and identify and ensure, through contract or other approved means, the 
availability of necessary private response resources to respond to a "worst case
discharge," (ii) describe crew training and drills, and (iii) identify a        
qualified individual with full authority to implement removal actions. The      
Company has filed vessel response plans with the Coast Guard for the tankers    
owned by the Company and has received approval of such plans for all vessels in 
its fleet to operate in United States waters.                                   

  ENVIRONMENTAL REGULATION--OTHER ENVIRONMENTAL INITIATIVES.  The European
Union is considering legislation that will affect the operation of tankers and  
the liability of owners for oil pollution. It is impossible to predict what     
legislation, if any, may be promulgated by the European Union or any other      
country or authority.                                                           

Although the United States is not a party thereto, many countries have
ratified and follow the liability scheme adopted by the IMO and set out in the  
International Convention on Civil Liability for Oil Pollution Damage, 1969, as  
amended (the "CLC"), and the Convention for the Establishment of an             
International Fund for Oil Pollution of 1971, as amended. Under these           
conventions, a vessel's registered owner is strictly liable for pollution damage
caused on the territorial waters of a contracting state by discharge of         
persistent oil, subject to certain complete defenses. Approximately one-quarter 
of the countries that have ratified the CLC have increased the liability limits 
through a 1992 Protocol to the CLC which has recently become effective. The     
liability limits in the countries that have ratified this Protocol are currently
approximately $4.0 million plus approximately $566.0 per gross registered tonne 
above 5,000 gross tonnes with an approximate maximum of $80.5 million, with the 
exact amount tied to a unit of account which varies according to a basket of    
currencies. The right to limit liability is forfeited under the CLC where the   
spill is caused by the owner's actual fault or privity and, under the 1992      
Protocol, where the spill is caused by the owner's intentional or reckless      
conduct. Vessels trading to contracting states must provide evidence of         
insurance covering the limited liability of the owner. In jurisdictions where   
the CLC has not been adopted, various legislative schemes or common law govern, 
and liability is imposed either on the basis of fault or in a manner similar to 
the CLC.                                                                        

TAXATION OF THE COMPANY                                                         

   The following discussion is a summary of the principal Liberian tax laws,
Bahamian tax laws and U.S. federal income tax laws applicable to the Company.   
The following discussion of tax matters, as well as the conclusions regarding   
certain issues of tax law that are reflected in such discussion are based on    
current law and upon the advice received by the Company from its counsel. Such  
advice is based, in part, on representations made by officers of the Company,   
some of which relate to anticipated future factual matters and circumstances. No
assurance can be given that changes in or interpretation of existing laws will  
not occur or will not be retroactive or that anticipated future factual matters 
and circumstances will in fact occur. The views of the Company and its counsels 
have no binding effect or official status of any                                

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kind, and no assurance can be given that the conclusions discussed below would  
be sustained if challenged by taxing authorities.                               

UNITED STATES TAXATION                                                

The following discussion is based on the advice of Watson, Farley &   
Williams, special United States tax counsel to the Company. The following       
discussion is based upon the provisions of the U.S. Internal Revenue Code of    
1986, as amended (the "Code"), existing and proposed U.S. Treasury Department   
regulations, administrative rulings and court decisions, all as of the date     
hereof.                                                                         

     It is anticipated that substantially all of the gross income of the Company
will be derived from and attributable to the ownership, use and operation of    
vessels in international commerce by Teekay's wholly-owned subsidiaries         
(collectively, the "Subsidiaries" and individually, a "Subsidiary") and that    
such income will principally consist of freights from the transportation of     
cargoes and hire or lease from time or voyage charters and from the performance 
of services directly related to the ownership, use and operation of such vessels
("Shipping Income"). Unless exempt from U.S. taxation under Section 883 of the  
Code, the Subsidiaries' Shipping Income will be subject to U.S. federal income  
taxation (in the manner discussed below) to the extent that such Shipping Income
is derived from sources within the United States.                               

    Shipping Income that is attributable to transportation that begins or ends
(but that does not both begin and end) in the United States will be considered  
to be 50% derived from sources within the United States. Shipping Income        
attributable to transportation that both begins and ends in the United States   
("coastwise trade") will be considered to be 100% derived from sources within   
the United States. The Subsidiaries will not generate 100% U.S. source Shipping 
Income since their vessels are prohibited by law from engaging in coastwise     
trade. All Shipping Income attributable to transportation exclusively between   
non-U.S. ports will be considered to be 100% derived from sources outside the   
United States. Shipping Income derived by the Subsidiaries from sources outside 
the United States will not be subject to U.S. federal income tax.               

   Based upon the anticipated shipping operations of the Subsidiaries, their
vessels will be operated in various parts of the world, including to or from    
U.S. ports. On average, in fiscal years 1998, 1997 and 1996, approximately 37%  
of the Subsidiaries' gross revenues was attributable to the transportation of   
cargoes to or from U.S. ports. Therefore, only 19%, on average, of the          
Subsidiaries' Shipping Income would have been treated as derived from U.S.      
sources for such periods.                                                       

Management estimates that, should the Subsidiaries not qualify for the
Section 883 exemption described below, the Company's tax liability for fiscal   
year 1998 would not be material.                                                

THE CODE SECTION 883 EXEMPTION                              

  The Company believes that both before as well as after the Offering, the
U.S. source Shipping Income derived by the Subsidiaries qualifies for exemption 
from U.S. federal income tax under Section 883 of the Code.                     

   A Subsidiary will qualify for the exemption under Code Section 883 if, in
relevant part, (i) it is organized in a foreign country that grants an          
equivalent exemption from tax to corporations organized in the United States    
("the country of organization requirement"), and (ii) more than 50% of the value
of its shares is treated as owned, directly or indirectly, by individuals who   
are "residents" of such country or of another foreign country that grants an    
equivalent exemption to corporations organized in the United States (the        
"ownership requirement").                                                       

  The U.S. Treasury Department has recognized Liberia, The Bahamas, Panama
and Australia as foreign countries that grant an equivalent exemption to U.S.   
corporations. Since each of the Subsidiaries is organized in Liberia, The       
Bahamas, Panama or Australia, each of the Subsidiaries satisfies the country of 
organization requirement. Therefore, each Subsidiary's qualification for        
exemption under Section 883 will depend solely upon whether the ownership       
requirement is met.                                                             

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 The Company believes that the Subsidiaries can claim the benefit of the
special publicly traded rule of Section 883(c) to satisfy the ownership         
requirement both before and after the Offering.                                 

    Under this rule, the capital stock of each Subsidiary will be deemed to be
owned by individual residents of Liberia (a qualifying foreign country as       
described above) if Teekay's Common Stock is considered to be "primarily and    
regularly traded on an established securities market" in the United States      
("publicly traded test").                                                       

 At present, there are no regulations promulgated under Section 883 that
define the term "primarily and regularly traded on an established securities    
market." The U.S. Internal Revenue Service (the "IRS") has taken the position in
a technical advice memorandum that regulations issued under Code Section 884,   
which contains a publicly-traded exception similar to that contained in Code    
Section 883, should apply for purposes of determining whether the stock of a    
corporation is "primarily and regularly traded on an established securities     
market" under Code Section 883. The IRS, however, is not bound by, and taxpayers
cannot rely on, conclusions reached in a technical advice memorandum, although a
technical advice memorandum can indicate the current position of the IRS on the 
legal issues addressed therein. For purposes of the discussion below, it is     
assumed that principles similar to those contained in Section 884 regulations   
(modified to take into account the legislative purposes and objectives of       
Section 883) will be applied under Section 883.                                 

The Section 884 regulations provide in pertinent part, that stock of a
foreign corporation will be considered to be "primarily traded" on an           
established securities market if the number of shares that are traded during any
taxable year on that market exceeds the number of shares traded during that year
on any other established securities market. Stock will be considered to be      
"regularly traded" on such market if (i) stock representing 80% or more of the  
issuer's outstanding shares (by voting power and value) is listed on such market
(the "80%" test); (ii) stock is traded on such market, other than in de minimus 
quantities, on at least 60 days during the taxable year (the "trading frequency 
threshold"); and (iii) the aggregate number of shares of stock traded is at     
least 10% of the average number of shares outstanding during such year (the     
"trading volume threshold"). The trading frequency threshold and the trading    
volume threshold will be deemed satisfied if, as is the case here, stock is     
traded on an established securities market in the United States and such stock  
is regularly quoted by brokers and dealers making a market in the stock ("U.S.  
securities market exception").                                                  

     At present, the sole class of Teekay's stock that is issued and outstanding
is the Common Stock and the Common Stock is listed on the New York Stock        
Exchange, which is an established securities market in the United States. Since 
the Common Stock is not listed or quoted on any other securities market, the    
Common Stock must be considered to be "primarily" traded on such market. The    
Common Stock should also be considered to be "regularly traded" on the New York 
Stock Exchange since the 80% test is satisfied by virtue of 100% of the Common  
Stock being listed on such Exchange and the trading frequency threshold and     
trading volume threshold tests will be deemed satisfied as a result of the      
applicability of the U.S. securities market exception.                          

Notwithstanding the foregoing, the Section 884 regulations provide, in
pertinent part, that stock will not be considered to be regularly traded on an  
established securities market for any taxable year in which 50% or more of the  
outstanding shares of such stock are owned (within the meaning of the           
regulations) for more than 30 days during such taxable year by persons who each 
own 5% or more of the value of the outstanding shares of such stock and who are 
not "qualifying shareholders" for purposes of Section 884 (the "5% Override     
Rule").                                                                         

   The Company believes, however, that the Subsidiaries' satisfaction of the
foregoing publicly traded test is not vitiated by the 5% Override Rule. This is 
because (i) Cirrus Trust and JTK Trust will, in the aggregate, own approximately
74.6% of the Common Stock prior to the Offering and approximately 54.7% of the  
Common Stock upon completion of the Offering (approximately 51.4% if the        
Underwriters' over-allotment option is exercised in full), (ii) the trust       
documents of each of Cirrus Trust and JTK Trust contain provisions that         
currently require that no less than 75% of the capital and income of the trust  
be distributed to persons who would be "qualifying shareholders" for purposes of
the Section 884                                                                 
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regulations and (iii) the Company expects (assuming a wide distribution and     
disbursement of the Common Stock offered hereby), that upon completion of the   
Offering only one shareholder other than the trusts will own 5% or more of the  
Common Stock, and that such shareholder will own less than 10% of the Common    
Stock. These factors should preclude non-qualifying shareholders from owning 50%
or more of the Common Stock either before or upon completion of the Offering and
thereby triggering the 5% Override Rule.                                        

   Future regulations promulgated under Section 883, however, might adopt an
interpretation of the term "primarily and regularly traded on an established    
securities market" that is inconsistent with the approach adopted by the        
regulations under Section 884 or an interpretation of the term "qualifying      
shareholder" for purposes of Section 883 that differs from the interpretation   
set out immediately above. In either case, the Subsidiaries could thereby fail  
to satisfy the ownership requirement.                                           

     Furthermore, while the Company is not aware of any plan by the Cirrus Trust
(other than this Offering) or the JTK Trust to dispose of any Common Stock, it  
can give no assurance that the Cirrus Trust or JTK Trust may not do so in the   
future and thereby make it possible for one or more persons that are not        
qualifying shareholders for purposes of Section 884 to acquire sufficient       
beneficial ownership of the outstanding shares of Common Stock to trigger the 5%
Override Rule and thereby preclude the Subsidiaries from satisfying the         
ownership requirement of Section 883. The Subsidiaries' eligibility to satisfy  
the ownership requirement could also be adversely affected by Teekay's issuance 
of additional shares of Common Stock or other changes in its capitalization.    

     To the extent the Subsidiaries are unable to qualify for exemption from tax
under Section 883, their U.S. source Shipping Income will become subject to the 
4% gross basis tax regime or, alternatively, to the net basis and branch tax    
regime described below.                                                         

TAXATION IN ABSENCE OF CODE SECTION 883 EXEMPTION                     

   4% GROSS BASIS TAX REGIME.  To the extent the benefits of Section 883 are
unavailable, the U.S. source Shipping Income of the Subsidiaries, which is not  
considered to be "effectively connected" with the conduct of a U.S. trade or    
business (as discussed below), would be subject to a 4% tax imposed by Section  
887 of the Code on a gross basis (without benefit of deductions). As discussed  
above, the Company expects that substantially less than half of the             
subsidiaries' gross Shipping Income will be considered U.S. source Shipping     
Income. Therefore, the Company believes that the maximum effective rate of U.S. 
federal income tax on the subsidiaries' gross Shipping Income would not exceed  
2%. The Company does not expect that any potential liability it may have with   
respect to its U.S. source Shipping Income for prior years would be material in 
amount.                                                                         

     NET BASIS AND BRANCH TAX REGIME.  To the extent the benefits of the Section
883 exemption are unavailable and the U.S. source Shipping Income of the        
Subsidiaries is considered to be "effectively connected" with the conduct of a  
U.S. trade or business (as described below), any such "effectively connected"   
U.S. source Shipping Income, net of applicable deductions would be subject to   
the U.S. federal corporate income tax currently imposed at rates of up to 35%.  
The U.S. source Shipping Income of the Subsidiaries would be considered         
"effectively connected" with the conduct of a U.S. trade or business only if:   
(i) the Subsidiaries have (or are considered to have) a fixed place of business 
in the United States involved in the earning of Shipping Income and (ii)        
substantially all of the U.S. source Shipping Income of the Subsidiaries is     
attributable to regularly scheduled transportation, such as the operation of a  
vessel that follows a published schedule with repeated sailings at regular      
intervals between the same points for voyages that begin or end in the United   
States. In addition to the general corporate tax, the Subsidiaries may be       
subject to the 30% "branch-level" taxes on earnings effectively connected with  
the conduct of such trade or business, as determined after allowance for certain
adjustments, and on certain interest paid or deemed paid attributable to the    
conduct of their U.S. trade or business.                                        

  The Company does not intend to have (or permit circumstances which would
result in it having) any of the Subsidiaries' vessels operating to the United   
States on a regularly scheduled basis or having (or being considered to have) an
office or other fixed place of business in the United States involved in the    
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earning of Shipping Income. Based on the foregoing and on the expected mode of  
the Company's shipping operations and other activities as described in this     
Prospectus, it is the opinion of special United States tax counsel that none of 
the U.S. source Shipping Income of the Company will be "effectively connected"  
with the conduct of a U.S. trade or business.                                   

    GAIN ON SALE OF VESSELS.  To the extent the vessel of any Subsidiary makes
more than an occasional voyage to U.S. ports, that Subsidiary may be considered 
to be engaged in the conduct of a U.S. trade or business. As a result, except to
the extent such gain falls within the scope of the Section 883 exemption, any   
U.S. source gain on the sale of a Subsidiary's vessel may be partly or wholly   
subject to U.S. federal income tax as "effectively connected" income (determined
under rules different from those discussed above) under the above described net 
basis and branch tax regime. However, the Company intends to structure sales of 
Subsidiary vessels in such a manner, including but limited to effecting the sale
and delivery of vessels outside of the United States, as to not give rise to    
U.S. source gain.                                                               

LIBERIAN TAXATION                                                     

   Based on the advice of Watson, Farley & Williams, Liberian tax counsel to
the Company, because Teekay does not expect that it and its subsidiaries will   
conduct business or operations in the Republic of Liberia, Teekay and its       
subsidiaries will not be subject to taxation under the laws of the Republic of  
Liberia, and distributions by its subsidiaries to Teekay will not be subject to 
Liberian tax.                                                                   

BAHAMIAN TAXATION                                                     

Based on the advice of Graham, Thompson & Co., Bahamian counsel to the
Company, Teekay and its subsidiaries will not be subject to taxation under the  
laws of The Bahamas, and distributions by its subsidiaries to Teekay also will  
not be subject to any Bahamian tax.                                             

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MANAGEMENT

    The directors, executive officers and senior management of the Company are
listed below:                                                                   

                                                                [Download Table]

             NAME        AGE                          POSITION                     
             ----        ---                          --------                     
                                                                                   
Karlshoej, Axel          57   Director and Chairman of the Board                   
Moller, Bjorn            40   Director, President and Chief Executive Officer      
Coady, Arthur F.         64   Director, EVP and General Counsel                    
Dingman, Michael D.      66   Director                                             
Feder, Morris L.         81   Director                                             
Hsu, Steve G. K.         64   Director                                             
Hsu, Thomas Kuo-Yuen     51   Director                                             
Adams, John              42   Managing Director (Glasgow)                          
Alsleben, Veronica A. E. 47   Managing Director (London)                           
Antturi, Peter S.        39   VP, Treasurer and Chief Financial Officer (Vancouver)
Bendy, Paul              44   Managing Director (Australia)                        
Blair, Esther E.         43   Secretary (Nassau)                                   
Chad, Greg               46   VP, Corporate Services (Vancouver)                   
Glendinning, David       44   VP, Marine and Commercial Operations (Vancouver)     
Lok, Vincent C.          30   Controller (Vancouver)                               
Meldgaard, Mads T.       33   VP, Chartering (Vancouver)*                          
Murphy, Justin           37   Managing Director (Singapore)**                      
Nagao, Yoshio            51   Managing Director (Tokyo)                            
Patwardhan, Vinay S.     56   President, Marine Operations (Vancouver)             

------------                                                                    

*   Promotion to indicated position to become effective July 1998.              

**  Promotion to indicated position to become effective August 1998.            

 Certain biographical information about each of these individuals is set
forth below:                                                                    

 JOHN ADAMS joined the Company in April 1998 as Managing Director of the
newly established Glasgow Office, where Mr. Adams heads the Company's crewing   
and crew training activities. Prior to joining Teekay, Mr. Adams served for nine
years as Managing Director of Teekay Norbulk, a joint venture between the       
Company and Norbulk Agencies. Mr. Adams has over 22 years' experience in the    
crewing and ship management business.                                           

  VERONICA A. E. ALSLEBEN has been employed in ship chartering since 1973.
She joined the Company in 1989 as chartering manager and was subsequently       
promoted to her current position as Managing Director (London). Prior to joining
the Company, Ms. Alsleben served as Vice President of a chartering office of an 
international tanker company in New York City for five years.                   

PETER S. ANTTURI joined the Company in September 1991 as Manager,     
Accounting and was promoted to the position of Controller in March 1992, and to 
his current position of Vice President, Treasurer and Chief Financial Officer in
October 1997. Prior to joining the Company, Mr. Antturi held various accounting 
and finance roles in the shipping industry since 1985.                          

    PAUL BENDY joined the Company in December 1997 as Managing Director of the
Australia office in connection with the acquisition by the Company of an        
Australian affiliate of Caltex Petroleum. From 1993 to December 1997, Mr. Bendy 
held a variety of senior management positions within the Caltex Petroleum       
organization, including in shipping operations management. Prior to 1993, Mr.   
Bendy served for 13 years as a Marine Engineer for Caltex.                      

     ESTHER E. BLAIR joined the Company in June 1988. In 1991, she was appointed
to the position of Secretary.                                                   

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   GREG CHAD joined the Company in August 1991 as Manager, Personnel. He was
promoted in June 1993 to Director, Personnel and in March 1995 to his current   
position of Vice President, Corporate Services. Mr. Chad has held a number of   
senior human resources and administration roles in the transportation and       
communication industries since 1976.                                            

   ARTHUR F. COADY is an Executive Vice President and the General Counsel of
the Company. He has served as a Director of Teekay since 1989. He joined the    
Company after 30 years in private law practice in Canada, having specialized in 
corporate and commercial law. In July 1995, Mr. Coady was appointed as a        
Director of the Bahamas Maritime Authority.                                     

    MICHAEL D. DINGMAN is a private investor, industrial company executive and
corporate director. He has served as a Director of Teekay since May 1995. He is 
Chairman and Chief Executive Officer of The Shipston Group Limited, a           
diversified international holding company, and a Director of Fisher Scientific  
International Inc. and of Ford Motor Company. Mr. Dingman also serves as        
Director/Executive to a number of other industrial concerns.                    

MORRIS L. FEDER is President of Worldwide Cargo Inc., a New York based
chartering firm. Mr. Feder has been employed in the shipping industry in excess 
of 48 years, of which 43 were spent with Maritime Overseas Corporation, from    
which he retired as Executive Vice President and Director in December 1991. He  
has also served as Senior Vice President and Director of Overseas Shipholding   
Group Inc. and was a member of the Finance and Development Committee of the     
Board of Directors of such company. He has served as a Director of Teekay since 
June 1993. Mr. Feder is a member of the American Bureau of Shipping, the        
Connecticut Maritime Association and the Association of Shipbrokers and Agents  
USA Inc., as well as being a member of the Board of Directors of American Marine
Advisors, Inc.                                                                  

     CAPTAIN DAVID GLENDINNING joined the Chartering Department of the Company's
London office in January 1987. Since then, he has worked in a number of senior  
positions within the organization, including Vice President, Commercial         
Operations, a position he held for two years prior to his January 1995 promotion
to the position of Vice President, Marine and Commercial Operations. Captain    
Glendinning has 18 years' sea service on oil tankers of various types and sizes 
and is a Master Mariner with British Class 1 Foreign Going Certificate of       
Competency.                                                                     

  STEVE G. K. HSU is Chairman of Oak Maritime (H.K.) Inc., Limited, a ship
management company based in Hong Kong. Mr. Hsu is a Standing Supervisor of the  
National Association of Chinese Shipowners, Taiwan, a member of the American    
Bureau of Shipping, and a council member of the International General Committee 
of Bureau Veritas. He has served as a Director of Teekay since June 1993.       

  THOMAS KUO-YUEN HSU has served 26 years with, and is presently Executive
Director of, Expedo & Company (London) Ltd., which is part of the Expedo Group  
of Companies that manages a fleet of seven vessels, ranging in size from 30,000 
dwt to 280,000 dwt. He has been a Committee Director of the Britannia Steam Ship
Insurance Association Limited since 1988, and a Lloyd's Underwriting Member     
since 1983. He has served as a Director of Teekay since June 1993.              

AXEL KARLSHOEJ is President of Nordic Industries, a California general
construction firm with whom he has served for the past 25 years. He is the older
brother of the late J. Torben Karlshoej, the founder of the Company. He has     
served as a Director and Chairman of the Board of Teekay since June 1993.       

   VINCENT C. LOK joined the Company in June 1993 as a financial analyst and
was promoted to the position of Assistant Controller in July 1995, and to his   
current position of Controller in October 1997. Prior to joining the Company,   
Mr. Lok worked in the audit practice of Deloitte & Touche, Chartered            
Accountants, for four years.                                                    

 MADS T. MELDGAARD joined the Company's Chartering Department in January
1986 and served in the European and Singapore offices until December 1991, when 
he was appointed Chartering Manager in the Vancouver office. In January 1994, he
was promoted to the position of General Manager, Chartering, and                

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then to Managing Director (Singapore) in September 1995. Effective July 1998,   
Mr. Meldgaard will become Vice President, Chartering, based in Vancouver.       

    BJORN MOLLER succeeded Captain James Hood as President and Chief Executive
Officer in April 1998. Mr. Moller has over 20 years experience in shipping and  
has served in senior management positions with the Company for more than 10     
years. He has headed the Company's overall operations since January 1997,       
following his promotion to the position of Chief Operating Officer. Prior to    
this, Mr. Moller headed the Company's global chartering operations and business 
development activities.                                                         

JUSTIN MURPHY joined the Company in October 1990 and has held various 
positions in the Company's operations and chartering departments. Mr. Murphy is 
currently serving as General Manager of Business Development at the Company's   
Vancouver office and, in August 1998, he will assume the position of Managing   
Director of the Company's Singapore office. Mr. Murphy has been employed in the 
chartering business for the past 20 years and is a Member of the Institute of   
Chartered Shipbrokers (MICS).                                                   

 YOSHIO NAGAO has been employed in the shipping industry for the past 31
years and is qualified as a Chief Engineer. He joined the Company from Sanko    
Steamship Co. Ltd., a Japanese ship owning company, where he served as Manager  
of their Technical Department. Mr. Nagao has served as Managing Director (Tokyo)
since joining the Company in 1985.                                              

CAPTAIN VINAY S. PATWARDHAN has held senior positions with the Company
since joining the organization in 1981, including Vice President, Ship          
Management, a position he held from January 1986 through January 1995, when he  
was promoted to his current position of President, Marine Operations. Captain   
Patwardhan has been employed in the shipping industry for the past 37 years,    
having experience in crude tanker, product carrier, O/B/O, ore oiler, container,
general cargo and bulk carrier operations, with 11 years of command experience. 
Captain Patwardhan is a Master Mariner with Foreign Going Certificate of        
Competency.                                                                     

EXECUTIVE COMPENSATION                                                          

 The aggregate annual compensation paid to the 14 executive officers and
senior managers listed above was $2,428,797 for fiscal 1998, a portion of which 
was attributable to payments made pursuant to bonus plans of the Company, which 
consider both Company and individual performance for a given period. Currently, 
the non-employee directors of Teekay receive, in the aggregate, approximately   
$100,000 for their services and reimbursement of their out-of-pocket expenses in
each fiscal year during which they are directors of Teekay. In fiscal 1998, the 
Company contributed an aggregate amount of $155,130 to provide pension and      
similar benefits for the 14 executive officers and senior managers listed above.

Teekay's 1995 Stock Option Plan (the "Plan") entitles certain eligible
officers, key employees (including senior sea staff), and directors of the      
Company to receive options to acquire Common Stock of Teekay. As of April 30,   
1998, a total of 1,843,135 shares of Common Stock had been reserved for issuance
under the Plan. As of such date, options to purchase a total of 1,160,251 shares
of Common Stock were outstanding, with options to purchase a total of 564,267   
shares then exercisable and with the directors and the 14 executive officers and
senior managers listed above holding options to purchase a total of 554,375     
shares, of which 325,375 are exercisable. The outstanding options are           
exercisable at prices ranging from $21.50 to $33.50 per share, with a weighted  
average exercise price of $26.67 per share, and expire between July 19, 2005 and
June 13, 2007, ten years after the date of grant.                               

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PRINCIPAL AND SELLING STOCKHOLDERS

   The following table sets forth certain information regarding ownership of
Teekay's Common Stock as of May 11, 1998 and as adjusted to give effect to the  
Offering by (i) the Selling Stockholder, (ii) each owner of 10% or more of the  
Common Stock and (iii) all officers and directors of Teekay as a group:         

                                                        [Enlarge/Download Table]

                             COMMON STOCK OWNED PRIOR    NUMBER OF     COMMON STOCK OWNED AFTER 
                                  TO THE OFFERING       SHARES TO BE         THE OFFERING       
                             -------------------------    SOLD IN     --------------------------
IDENTITY OF PERSON OR GROUP    NUMBER      PERCENTAGE   THE OFFERING    NUMBER     PERCENTAGE(2)
---------------------------  -----------   -----------  ------------  ----------   -------------
                                                                                                
Cirrus Trust...............  18,627,397    64.6%         4,200,000    14,427,397     45.6%      
JTK Trust..................   2,888,293    10.0%            --         2,888,293      9.1%      
All officers and directors                                                                      
  as a group (19                                                                                
  persons)(1)..............      *            *             --            *             *       

------------                                                                    

(1) Excludes outstanding options to purchase up to 554,375 shares of Common     
Stock.                                                                  
(2) On a fully diluted basis after giving effect to the Offering, Cirrus Trust  
 and JTK Trust will own approximately 44.0% and 8.8%, respectively; Cirrus
    Trust will own approximately 40.8% if the Underwriters' overallotment option
is exercised in full.                                                   

*   Less than one percent of outstanding shares.                                

The activities of Cirrus Trust and JTK Trust are under the common     
supervision of Messrs. Coady, Karlsboej and Thomas Hsu, directors of Teekay, and
Mr. Shigeru Matsui, President of Matsui & Company, a Tokyo based ship brokerage 
firm. The beneficiaries of such trusts include charitable institutions and      
affiliated trusts.                                                              

DESCRIPTION OF CERTAIN INDEBTEDNESS 

 The following is a summary of certain indebtedness of the Company. Such
summary is qualified in its entirety by reference to the full text of the       
documents which govern the transactions so summarized.                          

As of March 31, 1998, the subsidiaries of Teekay had obligations for  
outstanding indebtedness for borrowed money under existing credit agreements in 
the aggregate principal amount of $376.7 million, all of which is guaranteed by 
Teekay. In addition, Teekay had indebtedness of $123.7 million of its 9 5/8%    
Notes and $225.0 million of its 8.32% Notes. After giving effect to the Offering
and the application of the estimated net proceeds to the Company therefrom, the 
Company's indebtedness, on a consolidated basis, would be approximately $655.1  
million. See "Use of Proceeds." The following chart indicates, on a consolidated
basis after giving effect to the Offering and the application of the proceeds to
the Company therefrom, the aggregate principal amount of indebtedness that will 
be due and payable in upcoming fiscal years of the Company.                     

                                                                [Download Table]

    FISCAL YEAR            AMOUNT           FISCAL YEAR           AMOUNT    
    -----------            ------           -----------           ------    
                                                                            
1999                    $52.9 million          2004           $135.6 million
2000                    $53.1 million          2005           $ 72.5 million
2001                    $31.6 million          2006           $121.5 million
2002                    $37.3 million          2007           $ 48.5 million
2003                    $48.5 million   2008 and thereafter   $ 53.6 million

Credit agreements, and guarantees executed by Teekay in connection    
therewith, contain various covenants which restrict the operations of the       
obligors and Teekay. Such credit agreements and guarantees contain covenants    
which require the obligors thereunder or Teekay, as the case may be, to conduct 
their operations, including, for such obligors, the operations of their         
respective vessels, in accordance with certain standards set forth in such      
credit agreements or guarantees, as the case may be. The Company's Revolver     
(discussed below) contains a "hull covenant" which requires the obligors to     
deliver additional collateral to the lenders under such credit agreement, or    
prepay a certain amount of                                                      

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the indebtedness under such credit agreement, in the event that the value of the
subject vessels falls below a fixed percentage of the amount of the indebtedness
under such credit agreement then outstanding. The percentage at which the       
combined value of the subject vessels must remain is 120% of the outstanding    
indebtedness under the Revolver, with the percentage increasing to 130% over the
term of the Revolver. The Company believes that as of March 31, 1998 it was in  
compliance with all of the covenants in effect at that time.                    

In addition to the hull covenants, certain of the credit agreements   
prohibit the payment of dividends by, or the making of distributions from, the  
respective obligors during the time in which any of the indebtedness thereunder 
remains outstanding.                                                            

     In July 1993, Teekay issued $175.0 million of its 9 5/8% Notes in a private
placement. In December 1993, the privately-placed Notes were exchanged for Notes
registered under the Securities Act. The 9 5/8% Notes are collateralized by     
first preferred mortgages granted on six of the Company's Aframax tankers,      
together with certain other related collateral, and are guaranteed by the Teekay
subsidiaries that own the mortgaged vessels. The 9 5/8% Notes are subject to a  
sinking fund, which since July 15, 1997 retires $25.0 million principal amount  
of the 9 5/8% Notes on each July 15. The 9 5/8% Notes are not listed for trading
on any foreign or United States exchange and there is currently no regular      
trading market for such Notes. The Company intends to use the net proceeds it   
receives from the Offering, together with cash on hand, to redeem all of the    
outstanding the 9 5/8% Notes pursuant to the terms thereof.                     

In January 1996, Teekay issued $225.0 million of its 8.32% Notes in a 
public offering registered under the Securities Act. The 8.32% Notes currently  
are collateralized by first preferred mortgages granted on seven of the         
Company's Aframax tankers, together with certain other related collateral, and  
are guaranteed by the Teekay subsidiaries that own the mortgaged vessels. The   
8.32% Notes are subject to a sinking fund, which will retire $45.0 million      
principal amount of the 8.32% Notes on each February 1, commencing February 1,  
2004. The 8.32% Notes are listed for trading on the New York Stock Exchange.    

In January 1998, the Company negotiated a reducing revolving credit   
facility (the "Revolver") with nine commercial banks providing for borrowings of
up to $200.0 million in order to refinance certain indebtedness of the Company  
and to provide working capital. The Revolver is secured by first priority       
mortgages granted on eight of the Company's Aframax tankers, together with      
certain other related collateral, and a guarantee from Teekay for all amounts   
outstanding under the Revolver. The original commitment amount will be reduced  
in 16 semi-annual instalments commencing July 1998. A final balloon payment is  
due coincident with the final semi-annual reduction. Interest payments are based
on LIBOR plus a specified margin which is dependent on the capital structure of 
the Company, as calculated on a quarterly basis.                                

CERTAIN TRANSACTIONS WITH RELATED PARTIES 

  Prior to the Offering, approximately 74.6% of the issued and outstanding
shares of Teekay voting common stock has been owned by the Selling Stockholder  
and an affiliated trust which are under the common supervision of Messrs. Coady,
Karlshoej, and Thomas Hsu, directors of Teekay, and Mr. Shigeru Matsui,         
President of Matsui & Company, a Tokyo based ship brokerage firm. Upon          
consummation of the Offering, the Selling Stockholder and the affiliated trust  
will own approximately 54.7% (approximately 51.4% if the Underwriters'          
over-allotment option is exercised in full) of the issued and outstanding shares
of Teekay voting common stock.                                                  

    In April 1993, Teekay acquired all of the issued and outstanding shares of
common stock of Palm Shipping Inc. from an affiliate of Teekay for a nominal    
purchase price, plus an amount to be paid at a later date (up to a maximum of   
$5.0 million plus accrued interest), contingent upon certain future events. The 
payment of such purchase price by Teekay shall not occur until after the 9 5/8% 
Notes have been paid in full.                                                   

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SHARES ELIGIBLE FOR FUTURE SALE 

   As of April 30, 1998, 28,833,765 shares of Common Stock were outstanding,
15,042,000 shares (16,092,000 shares if the Underwriters' over-allotment option 
is exercised in full) of which have been, or in connection with the Offering    
will be, registered under the Securities Act and are, or after the Offering will
be, freely transferable without restriction under the Securities Act, except for
any such shares which may be held by an "affiliate" of the Company, as that term
is defined under Rule 144 of the Securities Act. Substantially all of the       
remaining shares of Common Stock outstanding are eligible for sale in the United
States pursuant to Rule 144 (subject generally to volume and other restrictions 
set forth therein) under the Securities Act or outside the United States under  
Regulation S under the Securities Act, subject to the agreement with            
representatives of the Underwriters described below with respect to shares held 
by the Selling Stockholder or an affiliated trust.                              

 In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
"restricted securities" (i.e., shares issued in private transactions not        
involving a public offering) for at least one year will be entitled to sell,    
within any three-month period, a number of shares that does not exceed the      
greater of (i) 1% of the then outstanding shares of Teekay's Common Stock       
(approximately 316,338 immediately after the Offering) or (ii) an amount equal  
to the average weekly reported volume of trading in such shares on all national 
securities exchanges and/or reported through the automated quotation system of  
registered securities associations during the four calendar weeks preceding the 
date on which notice of the sale is filed with the Commission. Sales pursuant to
Rule 144 are also subject to certain other requirements regarding the manner of 
sale, notice and availability of current public information about Teekay. A     
person (or persons whose shares are aggregated) who is not deemed to have been  
an affiliate of Teekay at any time during the three months immediately preceding
the sale is entitled to sell restricted securities pursuant to Rule 144(k)      
without regard to the limitations described above, provided that two years have 
expired since the later of the date on which such restricted securities were    
acquired from Teekay or the date they were acquired from an affiliate of Teekay.
As defined in Rule 144, an "affiliate" of an issuer is a person that directly,  
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such issuer.                                   

    All of the 1,843,135 shares reserved for issuance under the Company's 1995
Stock Option Plan have been registered under the Securities Act on a Form S-8   
Registration Statement. Accordingly, the shares issued upon exercise of options 
granted under the 1995 Stock Option Plan will be freely transferable unless held
by an affiliate of the Company. As of April 30, 1998, a total of 1,160,251      
shares were subject to outstanding options with a weighted average exercise     
price of $26.67 per share. See "Management--Executive Compensation." An         
additional 2,000,000 shares have been reserved for issuance under the Company's 
Dividend Reinvestment Plan, 837,634 shares of which had been issued as of April 
30, 1998.                                                                       

Teekay has granted the Selling Stockholder and an affiliated trust    
(collectively, the "Trusts") certain registration rights with respect to the    
Common Stock owned by them. Pursuant to the registration rights agreement, the  
Trusts have the right, subject to certain terms and conditions, to require      
Teekay, on up to two separate occasions in addition to the Offering, to register
under the Securities Act shares of Common Stock held by them for offer and sale 
to the public (including by way of underwritten public offering) and to join in 
any registration of Common Stock of Teekay. Exercise by the Trusts of their     
rights under such agreement could result in the distribution of substantial     
amounts of Common Stock, including distributions in underwritten public         
offerings.                                                                      

     Teekay and the Trusts have agreed that during the period beginning from the
date of this Prospectus and continuing to and including the date 180 days after 
the date of the Prospectus, not to offer, sell, contract to sell or otherwise   
dispose of any securities of the Company (other than pursuant to employee stock 
option plans existing on the date of this Prospectus) which are substantially   
similar to the shares of the Common Stock or which are convertible or           
exchangeable into securities which are substantially similar to the shares of   
the Common Stock without the prior written consent of Goldman, Sachs & Co.,     

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except for the shares of Common Stock offered in connection with the concurrent 
U.S. and international offerings.                                               

  No prediction can be made as to the effect, if any, that future sales of
Common Stock or the availability of shares for sale will have on the market     
price of the Common Stock prevailing from time to time. Nevertheless, sales of  
substantial amounts of the Common Stock in the public market (including shares  
issued upon the exercise of stock options), or the perception that such sales   
may occur, could adversely affect prevailing market prices for the Common Stock.

DESCRIPTION OF CAPITAL STOCK

     Under the Articles of Incorporation of Teekay, as amended (the "Articles"),
the authorized capital stock of Teekay consists of 125 million shares of Common 
Stock, no par value per share, of which 28,833,765 shares were issued and       
outstanding as of April 30, 1998, and 25 million shares of undesignated         
preferred stock (the "Preferred Stock"), of which no shares are issued and      
outstanding. Assuming no stock options are exercised after April 30, 1998, upon 
consummation of the Offering, 31,633,765 shares of Common Stock will be issued  
and outstanding.                                                                

COMMON STOCK                                                                    

   Each outstanding share of Common Stock entitles the holder thereof to one
vote on all matters submitted to a vote of stockholders. Subject to preferences 
that may be applicable to any outstanding shares of Preferred Stock, holders of 
Common Stock are entitled to receive ratably such dividends, if any, as may be  
declared from time to time by the Board of Directors out of funds legally       
available therefor. See "Dividend Policy." Holders of Common Stock generally do 
not have conversion, redemption or preemptive rights to subscribe for any       
securities of Teekay. All outstanding shares of Common Stock are, and the shares
to be sold in this Offering when issued and paid for will be, fully paid and    
nonassessable. The rights, preferences and privileges of holders of Common Stock
are subject to the rights of the holders of any shares of Preferred Stock which 
Teekay may issue in the future.                                                 

OTHER MATTERS                                                                   

SALES OF ASSETS, MERGERS AND DISSOLUTION.  Under the Liberian Business
Corporation Act, the sale of all or substantially all of Teekay's assets not    
made in the usual or regular course of Teekay's business or the non-judicial    
dissolution and liquidation of Teekay are required to be approved by the holders
of 66 2/3% of the outstanding shares of Common Stock. Holders of one-half of the
outstanding shares of Common Stock may institute judicial dissolution           
proceedings in accordance with the Liberian Business Corporation Act. In the    
event of the dissolution of Teekay, the holders of the Common Stock will be     
entitled to share pro rata in the net assets of Teekay available for            
distribution to them, after payment to all creditors and the liquidation        
preferences of any outstanding preferred stock of Teekay. Under the Liberian    
Business Corporation Act, a merger or consolidation involving Teekay (other than
with subsidiaries at least 90% of whose shares are owned by Teekay) is required 
to be approved by the holders of a majority of the outstanding shares of Common 
Stock.                                                                          

    Under the Liberian Business Corporation Act, amendments to the articles of
incorporation of a Liberian company may be authorized by vote of the holders of 
a majority of all outstanding shares. However, in the case of provisions in     
articles of incorporation requiring the approval of a super-majority of the     
members of the board of directors or outstanding shares of Common Stock as a    
condition to the taking of specified corporate actions, the Liberian Business   
Corporation Act requires the approval of holders of 66 2/3% of the outstanding  
shares of Common Stock entitled to vote thereon, or of such greater proportion  
of shares, or class or series of shares, as may be provided specifically in the 
Articles of Incorporation for the addition, deletion or amendment of any of such
provisions.                                                                     

  DIRECTORS.  Pursuant to Teekay's Bylaws, directors of Teekay are elected
annually by a majority of the votes cast by stockholders entitled to vote, and  
cumulative voting is not permitted. Teekay has an                               

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audit committee composed of Messrs. Michael Dingman, Morris Feder, Steve Hsu and
Thomas Hsu, all of whom are non-employee directors of Teekay.                   

   DISSENTERS' RIGHTS OF APPRAISAL AND PAYMENT.  Under the Liberian Business
Corporation Act, stockholders of Teekay have the right to dissent from various  
corporate actions, including any merger or sale of all or substantially all of  
the assets of Teekay not made in the usual course of its business, and receive  
payment of the fair value of their shares. In the event of any further amendment
of the Articles, a stockholder also has the right to dissent and receive payment
for his or her shares if the amendment alters certain rights in respect of those
shares. A condition for such payment is that the dissenting shareholders follow 
the procedures set forth in the Liberian Business Corporation Act. In the event 
that Teekay and any dissenting stockholders fail to agree on a price for the    
shares, such procedures involve, among other things, the institution of         
proceedings in the circuit court in the judicial circuit in Liberia in which    
Teekay's Liberian office is situated. The value of the shares of the dissenting 
stockholder is fixed by the court after reference, if the court so elects, to   
the recommendations of a court-appointed appraiser.                             

    STOCKHOLDERS' DERIVATIVE ACTIONS.  Under the Liberian Business Corporation
Act, any stockholder of Teekay may bring action in the name of Teekay to procure
a judgment in its favor (a "derivative action"), provided that such stockholder 
is a holder of Common Stock both at the time the derivative action is commenced 
and at the time of the transaction to which the action relates.                 

REGISTRAR AND TRANSFER AGENT                                                    

  The Registrar and Transfer Agent for the Common Stock is The Bank of New
York.                                                                           

PREFERRED STOCK                                                                 

Teekay's Board of Directors may, without further action by Teekay's   
stockholders, from time to time, direct the issuance of shares of Preferred     
Stock in series and may, at the time of issuance, determine the rights,         
preference, and limitations of each such series. Satisfaction of any dividend   
preferences of outstanding shares of Preferred Stock would reduce the amount of 
funds available for the payment of dividends on shares of Common Stock. Holders 
of shares of Preferred Stock may be entitled to receive a preference payment in 
the event of any liquidation, dissolution or winding-up of Teekay before any    
payment is made to the holders of shares of Common Stock. Under certain         
circumstances, the issuance of shares of Preferred Stock may render more        
difficult or tend to discourage a merger, tender offer, proxy contest, the      
assumption of control by a holder of a large block of Teekay's securities or the
removal of incumbent management. The Board of Directors of Teekay, without      
stockholder approval, may issue shares of Preferred Stock with voting and       
conversion rights which could adversely affect the holders of shares of Common  
Stock. Upon completion of the Offering, there will be no shares of Preferred    
Stock outstanding, and Teekay has no current intention to issue any shares of   
Preferred Stock.                                                                

TAX CONSIDERATIONS

UNITED STATES TAX CONSIDERATIONS                                                

  In the opinion of Perkins Coie, special U.S. tax counsel to the Company,
the summary below of U.S. federal income tax considerations describes the       
material U.S. federal income tax matters expected to be relevant to U.S. Holders
(as defined below) who hold the Common Stock as a capital asset. The following  
discussion of U.S. federal income tax matters, and the conclusions regarding    
certain issues of U.S. federal income tax law that are reflected in that        
discussion, are based upon the United States Internal Revenue Code of 1986, as  
amended (the "Code"), existing and proposed regulations thereunder, and         
administrative and judicial interpretation thereof, all as at the date hereof,  
and upon certain representations made by officers of the Company, some of which 
relate to anticipated future factual matters and circumstances. No assurance can
be given that changes in existing laws or regulations or their interpretation   
will not occur, or that such changes will not be retroactive, or that           

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anticipated factual matters and circumstances will in fact occur. The Company's 
and special U.S. tax counsel's views have no binding effect or official status  
of any kind, and no assurance can be given that the conclusions discussed below 
would be sustained by a court if challenged by the Internal Revenue Service. In 
addition, as indicated below, special U.S. tax counsel is unable to opine as to 
certain issues due to substantial legal or factual uncertainties.               

   As used herein, the term "U.S. Holder" means a beneficial owner of Common
Stock who or that is for U.S. federal income tax purposes (i) a citizen or      
individual resident of the United States, (ii) a corporation or partnership     
created or organized in or under the laws of the United States or any political 
subdivision thereof, (iii) an estate, the income of which is subject to U.S.    
federal income taxation regardless of its source, or (iv) a trust, if both (A) a
U.S. court is able to exercise primary supervision over the administration of   
the trust, and (B) one or more of U.S. persons have the authority to control all
substantial decisions of the trust.                                             

    Purchasers of the Common Stock offered hereby may be required to pay stamp
taxes and other charges, if any, in accordance with the laws and practices of   
the locality of purchase in addition to the initial public offering price of the
Common Stock set forth on the cover page hereof.                                

     THE DISCUSSION BELOW IS A SUMMARY FOR GENERAL INFORMATION ONLY AND DOES NOT
ADDRESS POTENTIAL TAX EFFECTS RELEVANT TO THE COMPANY OR THOSE TAX              
CONSIDERATIONS THAT DEPEND UPON CIRCUMSTANCES SPECIFIC TO EACH INVESTOR. IN     
ADDITION, THIS DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES THAT MAY BE     
RELEVANT TO PARTICULAR INVESTORS SUBJECT TO SPECIAL TREATMENT UNDER CERTAIN U.S.
FEDERAL INCOME TAX LAWS, SUCH AS ANY U.S. HOLDER WHO OWNS, DIRECTLY OR          
INDIRECTLY, 10% OR MORE OF THE COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF 
THE COMPANY, CERTAIN U.S. EXPATRIATES, HOLDERS WHO DO NOT HOLD THE COMMON STOCK 
AS A CAPITAL ASSET, U.S. HOLDERS WHOSE FUNCTIONAL CURRENCY IS NOT THE U.S.      
DOLLAR, DEALERS IN SECURITIES, TAX-EXEMPT ENTITIES, BANKS, INSURANCE COMPANIES  
AND NON-U.S. HOLDERS. PURCHASERS OF THE COMMON STOCK SHOULD THEREFORE SATISFY   
THEMSELVES AS TO THE OVERALL TAX CONSEQUENCES OF THEIR OWNERSHIP OF THE COMMON  
STOCK, INCLUDING THE STATE, LOCAL AND FOREIGN TAX CONSEQUENCES THEREOF (WHICH   
ARE NOT REVIEWED HEREIN), AND SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THEIR PARTICULAR CIRCUMSTANCES.                                              

U.S. TAXATION OF U.S. HOLDERS OF COMMON STOCK                         

General                                                               

   Subject to the discussion under "Special Tax Provisions" below, dividends
paid by Teekay on the Common Stock will be taxable to U.S. Holders of Common    
Stock as ordinary income to the extent such dividends are paid out of the       
current or accumulated earnings and profits of Teekay (as determined for U.S.   
federal income tax purposes). Any distribution by Teekay in excess of the       
current and accumulated earnings and profits of Teekay will be treated first as 
a return of capital which will reduce the U.S. Holder's adjusted basis in the   
Common Stock (but not below zero). To the extent such a distribution exceeds the
U.S. Holder's adjusted basis in the Common Stock, the distribution will         
constitute capital gain from the sale or exchange of property. Dividends        
received on the Common Stock from Teekay by a corporate holder will generally   
not be eligible for the dividends received deduction.                           

    A U.S. Holder may be subject to backup withholding at the rate of 31% with
respect to certain payments to such holder, such as proceeds of a sale,         
redemption or other disposition of Common Stock (and in certain situations,     
dividends thereon), unless such holder (i) is a corporation or comes within     
certain other exempt categories and, when required, demonstrates that fact or   
(ii) provides a correct taxpayer identification number, certifies as to no loss 
of exemption from backup withholding and otherwise complies with applicable     
requirements of the rules. In addition, such payments, including dividends, may 
be subject to information reporting. A U.S. Holder who does not provide the     
Company with the holder's correct taxpayer identification number may be subject 
to penalties. Any amount of                                                     
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backup withholding may be credited against the holder's U.S. federal income tax 
liability and may entitle such holder to a refund, provided that the required   
information is furnished to the Internal Revenue Service.                       

Generally, subject to the discussion of "Special Tax Provisions"      
immediately below, any gain or loss on the sale or exchange of the Common Stock 
(which generally would include the receipt of property in a liquidating         
distribution) will be treated as capital gain or loss. Under recently enacted   
legislation, an individual U.S. Holder generally will be subject to tax on the  
net amount of his or her capital gain realized on the sale or exchange of the   
Common Stock at a maximum rate of (i) 28% for Common Stock held for more than   
one year but not more than eighteen months, (ii) 20% for Common Stock held for  
more than eighteen months, and (iii) provided that the holding period for such  
shares begins after December 31, 2000, 18% for Common Stock held for more than  
five years. Special rules (and generally lower maximum rates) apply for         
individuals whose taxable income is below certain levels. Gain realized by a    
U.S. Holder on the sale or other disposition of the Common Stock generally will 
be treated as income from sources within the United States for purposes of      
applicable foreign tax credit limitations, unless the gain is attributable to an
office or fixed place of business maintained by the holder outside the United   
States and certain other conditions are met.                                    

   Capital loss realized by a noncorporate U.S. Holder will be allowed as an
offset against capital gain and up to $3,000 of ordinary income. Capital loss   
realized by a corporate U.S. Holder is allowable as an offset only against      
capital gain. Capital loss not utilized in any taxable year by a noncorporate   
U.S. Holder may be carried forward indefinitely and used to offset capital gain 
and up to $3,000 of ordinary income in any future taxable year; capital loss not
utilized by a corporation must first be carried back and applied against gain in
the three years preceding the year of the sale giving rise to the loss, and then
may be carried forward to the five taxable years subsequent to the year of such 
sale. The amount that a corporation generally may carry back is limited,        
however, to an amount which does not increase or produce a net operating loss in
the carryback year.                                                             

Special Tax Provisions                                                

    Certain provisions of the Code deal specifically with the tax treatment of
investments by U.S. persons in non-U.S. corporations and may alter the tax      
treatment of income, gains, and losses described above or propose special rules 
for foreign tax credits.                                                        

PASSIVE FOREIGN INVESTMENT COMPANY.  U.S. persons owning shares of a  
"passive foreign investment company" ("PFIC") are subject to a special U.S.     
federal income tax regime with respect to certain distributions received from   
the PFIC and with respect to gain from the sale or disposition of PFIC stock. A 
PFIC is any non-U.S. corporation if (i) at least 75% of its gross income is     
"passive income" or (ii) at least 50% of the average value of its assets is     
attributable to assets that produce "passive income" or that are held for the   
production of "passive income." Passive income for this purpose generally       
includes dividends, interest, royalties, rents, and gains from commodities and  
securities transactions. If Teekay is treated as a PFIC, U.S. Holders may be    
subject to increased tax liability upon the disposition of Common Stock         
(including a pledge of Common Stock) or upon the receipt of certain             
distributions, unless such holder makes one of two elections. The elections     
generally have the effect of requiring the holder to currently include in income
either the holder's pro rata portion of Teekay's income, whether or not such    
income is distributed in the form of dividends or otherwise, or the value of    
Common Stock held in excess of the holder's basis in those shares, whether or   
not such excess has been realized.                                              

  The Company expects that neither Teekay nor any of its subsidiaries will
constitute a PFIC for any taxable year in which more than 25% of the gross      
income of Teekay (under applicable "look through" rules) and of each of the     
subsidiaries consists of income from time and voyage chartering, or from the    
sale or other disposition of vessels, and the average percentage of the assets  
that produce such income for such taxable year is not less than 50% of all      
assets of the Company and each of the respective subsidiaries. Although the     
Company expects that Teekay, together with its subsidiaries, will not be treated
as a PFIC for any year, the determination of whether a corporation is a PFIC is 
made on an annual                                                               

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basis and operations and business plans of the Company may change. Therefore, no
assurance can be given that they will not be treated as a PFIC. Due to the      
factual nature of the matter, special U.S. tax counsel to the Company is unable 
to render an opinion in this regard. If the Company determines that it has      
become a PFIC, within two months after the end of each of its taxable years it  
will supply all information and statements that a U.S. Holder making a qualified
electing fund election is required to obtain for U.S. federal income tax        
purposes and will take any other reasonable steps necessary to facilitate such  
election.                                                                       

    CONTROLLED FOREIGN CORPORATION AND FOREIGN PERSONAL HOLDING COMPANY.  U.S.
persons owning (directly or indirectly) on the last day of the corporation's tax
year shares representing 10% or more of the voting power of the shares of a     
"controlled foreign corporation" ("CFC") are required to include in gross income
their pro rata share of certain items of income (including certain Shipping     
Income) derived by the CFC (as well as certain income of its subsidiaries),     
whether or not such amounts actually are distributed, and are subject to special
rules in respect to gain realized upon a disposition of the shares of the CFC.  
U.S. shareholders of a CFC who are required to include in gross income their    
share of certain items of income in years in which such income is not           
distributed would not be subject to tax with regard to such income when such    
income is distributed. Special foreign tax credit limitation rules apply to such
U.S. shareholders. A foreign corporation is a CFC if more than 50% of its stock 
(by vote or value) is owned (directly, indirectly, or by attribution) by U.S.   
persons who each own (directly, indirectly, or by attribution) 10% or more of   
the total combined voting power of its shares. Based on the expected size and   
distribution of Common Stock in the Offering and among current holders, the     
Company does not expect to be a CFC immediately after the Offering, but future  
changes of ownership could cause the Company to become a CFC.                   

     Similarly, U.S. persons who own (directly or indirectly) on the last day of
the non-U.S. corporation's taxable year shares of a non-U.S. corporation that is
a "foreign personal holding company" ("FPHC") are required to include in their  
gross income a pro rata share of the FPHC's "foreign personal holding company   
income" that has not been distributed by the corporation to its shareholders    
during its taxable year. A foreign corporation will constitute a FPHC if more   
than 50% of its stock (by vote or value) is owned (directly or indirectly) by   
five or fewer individuals who are U.S. citizens or residents and at least 60%   
(50% in certain years following the year in which the corporation becomes a     
FPHC) of its gross income consists of "foreign personal holding company income."
"Foreign personal holding company income" includes interest, dividends,         
royalties, certain rents, and gain from the sale of stock or securities. Based  
upon the expected size and distribution of Common Stock in the Offering and     
among current holders, Teekay does not expect to meet the FPHC stock ownership  
test immediately after the Offering and, therefore, will not be an FPHC at such 
time. However, future changes of ownership could cause Teekay to become an FPHC.

     PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
FEDERAL, STATE AND OTHER TAX CONSEQUENCES OF INVESTING IN TEEKAY. THE STATEMENTS
OF UNITED STATES AND FOREIGN LAWS SET OUT ABOVE ARE BASED UPON THE LAWS IN FORCE
AS OF THE DATE OF THIS PROSPECTUS, AND ARE SUBJECT TO ANY CHANGES IN SUCH LAWS  
OCCURRING AFTER SUCH DATE.                                                      

LIBERIAN TAX CONSIDERATIONS                                                     

   Based on the advice of Watson, Farley & Williams, Liberian tax counsel to
the Company, since (i) the Company is and intends to maintain its status as a   
"nonresident Liberian entity" under the Liberian Internal Revenue Code, (ii) the
Company is not now carrying on, and in the future does not expect to carry on,  
any operations within the Republic of Liberia, and (iii) all documentation      
related to the Offering will be executed outside the Republic of Liberia, under 
current Liberian law no taxes or withholding will be imposed by the Republic of 
Liberia on distributions made in respect of the Common Stock to holders of the  
Common Stock who neither reside in, maintain offices in, nor engage in business 
in, the Republic of Liberia. Furthermore, no stamp, capital gains, or other     
taxes will be imposed by the Republic of Liberia on the ownership or disposition
of the Common Stock by such persons. In addition,                               
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such persons will not be required by the Republic of Liberia to file a tax      
return in connection with the ownership or disposition of the Common Stock, or  
the receipt of any distributions made in respect of the Common Stock.           

BAHAMIAN TAX CONSIDERATION                                                      

Based on the advice of Graham, Thompson & Co., Bahamian counsel to the
Company, under current Bahamian law no taxes or withholdings will be imposed by 
the Commonwealth of the Bahamas on distributions made in respect of the Common  
Stock, and no stamp, capital gains or other taxes will be imposed by the        
Commonwealth of the Bahamas on the ownership or disposition of the Common Stock,
as there are no personal income or corporation taxes, capital gains taxes or    
death duties in the Commonwealth of the Bahamas. In addition, holders of Common 
Stock will not be required by the Commonwealth of the Bahamas to file a tax     
return in connection with the ownership or disposition of the Common Stock, or  
the receipt of any distributions made in respect of the Common Stock.           

INCORPORATION OF DOCUMENTS BY REFERENCE 

The following documents filed by Teekay with the Commission are hereby
incorporated by reference in this Prospectus: (a) Annual Report of Teekay on    
Form 20-F for the fiscal year ended March 31, 1998 and (b) the description of   
Teekay's Common Stock contained in the Registration Statement on Form 20-F filed
with the Commission on July 10, 1995, including any amendments or reports filed 
for the purpose of updating such description.                                   

    In addition, all documents filed by Teekay with the Commission pursuant to
Sections 13(a), 13(c) or 15(d) of the Exchange Act, including any Report on Form
6-K which so provides, after the date hereof and prior to the termination of the
offering of the Common Stock, shall be deemed to be incorporated by reference   
into this Prospectus and to be a part hereof commencing on the respective dates 
on which such documents are filed with the Commission. Any statement contained  
in a document incorporated or deemed to be incorporated by reference herein     
shall be deemed to be modified or superseded for purposes of this Prospectus to 
the extent that a statement contained herein or in any other subsequently filed 
document which also is or is deemed to be incorporated by reference herein      
modifies or supersedes such statement. Any statement so modified or superseded  
shall not be deemed, except as so modified or superseded, to constitute a part  
of this Prospectus.                                                             

     Teekay will provide without charge to each person, including any beneficial
owner, to whom a copy of this Prospectus is delivered, upon the written or oral 
request of such person, a copy of any or all of the documents that have been    
incorporated by reference herein, other than exhibits to such documents (unless 
such exhibits are specifically incorporated by reference in such documents).    
Written requests for such copies may be directed to Teekay Shipping Corporation,
505 Burrard Street, Suite 1400, Vancouver, B.C., Canada V7X 1M5. Telephone      
requests may be directed to (604) 683-3529.                                     

LEGAL MATTERS 

The validity under Liberian law of the shares of Common Stock offered 
hereby and certain legal matters of United States law will be passed upon for   
Teekay by Watson, Farley & Williams, New York, New York, and certain other legal
matters will be passed upon for Teekay by Perkins Coie, Portland, Oregon, with  
respect to matters of United States law, and by Graham, Thompson & Co., Nassau, 
The Bahamas, with respect to matters of Bahamian law. Certain legal matters will
be passed upon for the Underwriters by Shearman & Sterling, Toronto, Ontario and
New York, New York, with respect to matters of United States law.               

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EXPERTS 

    The consolidated financial statements of Teekay and its subsidiaries as of
March 31, 1998 and 1997, and for the fiscal years ended March 31, 1998, 1997 and
1996, included herein have been audited by Ernst & Young, independent chartered 
accountants, as set forth in their report appearing elsewhere herein and are    
included in reliance upon such report given upon the authority of such firm as  
experts in accounting and auditing. The consolidated financial statements and   
schedule of Teekay and its subsidiaries incorporated in this Prospectus by      
reference to the Annual Report of Teekay on Form 20-F for the fiscal year ended 
March 31, 1998, have been audited by Ernst & Young, independent chartered       
accountants, as indicated on their report with respect thereto, and have been so
incorporated in reliance upon such report given upon the authority of such firm 
as experts in accounting and auditing.                                          

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TEEKAY SHIPPING CORPORATION 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]

                                                              PAGE  
                                                              ----  
                                                                    
Auditors' Report............................................     F-2
Consolidated Statements of Income and Retained Earnings for         
  the fiscal years ended March 31, 1998, 1997 and 1996......     F-3
Consolidated Balance Sheets at March 31, 1998 and 1997......     F-4
Consolidated Statements of Cash Flows for the fiscal years          
  ended March 31, 1998, 1997 and 1996.......................     F-5
Notes to the Consolidated Financial Statements..............     F-6

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AUDITORS' REPORT

To the Board of Directors                                                       
TEEKAY SHIPPING CORPORATION                                                     

We have audited the accompanying consolidated balance sheets of TEEKAY
SHIPPING CORPORATION and subsidiaries as of March 31, 1998 and 1997, and the    
related consolidated statements of income and retained earnings and cash flows  
for each of the three years in the period ended March 31, 1998. These financial 
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

 We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant    
estimates made by management, as well as evaluating the overall financial       
statement presentation. We believe that our audits provide a reasonable basis   
for our opinion.                                                                

 In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Teekay Shipping Corporation and subsidiaries as at March 31, 1998 and 1997, and 
the consolidated results of their operations and their cash flows for each of   
the three years in the period ended March 31, 1998 in conformity with accounting
principles generally accepted in the United States.                             

Nassau, Bahamas,                                                                
May 11, 1998                                                   /s/ ERNST & YOUNG
                                                           Chartered Accountants

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TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS 

(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                            YEAR ENDED MARCH 31,       
                                                      -------------------------------- 
                                                        1998        1997        1996   
                                                      --------    --------    -------- 
                                                                                       
NET VOYAGE REVENUES                                                                    
Voyage revenues...................................... $406,036    $382,249    $336,320 
Voyage expenses......................................  100,776     102,037      90,575 
                                                      --------    --------    -------- 
Net voyage revenues                                    305,260     280,212     245,745 
                                                      --------    --------    -------- 
OPERATING EXPENSES                                                                     
Vessel operating expenses............................   70,510      72,586      67,841 
Time charter hire expense............................   10,627       3,461       2,503 
Depreciation and amortization........................   94,941      90,698      82,372 
General and administrative...........................   21,542      19,209      16,750 
                                                      --------    --------    -------- 
                                                       197,620     185,954     169,466 
                                                      --------    --------    -------- 
Income from vessel operations........................  107,640      94,258      76,279 
                                                      --------    --------    -------- 
Other items                                                                            
Interest expense.....................................  (56,269)    (60,810)    (62,910)
Interest income......................................    7,897       6,358       6,471 
Other income (note 10)...............................   11,236       2,824       9,230 
                                                      --------    --------    -------- 
                                                       (37,136)    (51,628)    (47,209)
                                                      --------    --------    -------- 
Net income...........................................   70,504      42,630      29,070 
Retained earnings, beginning of the year.............  382,178     363,690     406,547 
                                                      --------    --------    -------- 
                                                       452,682     406,320     435,617 
Exchange of redeemable preferred stock (note 8)......                          (60,000)
Dividends declared and paid..........................  (24,580)    (24,142)    (11,927)
                                                      --------    --------    -------- 
Retained earnings, end of the year................... $428,102    $382,178    $363,690 
                                                      ========    ========    ======== 
Earnings per common share (notes 1 and 8)                                              
- basic.............................................. $   2.46    $   1.52    $   1.17 
- diluted............................................ $   2.44    $   1.50    $   1.17 

The accompanying notes are an integral part of the consolidated financial 
statements. 

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TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 

(IN THOUSANDS OF U.S. DOLLARS)

                                                        [Enlarge/Download Table]

                                                                 AS AT MARCH 31,     
                                                             ------------------------
                                                                1998          1997   
                                                             ----------    ----------
                                                                                     
ASSETS                                                                               
CURRENT                                                                              
Cash and cash equivalents................................... $   87,953    $  117,523
Marketable securities (notes 3).............................     13,448              
Accounts receivable                                                                  
-- trade....................................................     23,092        25,745
-- other....................................................      1,235         1,066
Prepaid expenses and other assets...........................     13,786        14,666
                                                             ----------    ----------
       Total current assets.................................    139,514       159,000
                                                             ----------    ----------
Marketable securities (note 3)..............................     13,853              
                                                             ----------              
Vessels and equipment (notes 1,5 and 9)                                              
At cost, less accumulated depreciation of $500,779 (1997 --                          
  $457,779).................................................  1,297,883     1,187,399
Advances on vessels.........................................                    8,938
                                                             ----------    ----------
       Total vessels and equipment..........................  1,297,883     1,196,337
                                                             ----------    ----------
Investment..................................................                    6,335
Other assets................................................      8,933        11,166
                                                             ----------    ----------
                                                             $1,460,183    $1,372,838
                                                             ==========    ==========
LIABILITIES AND STOCKHOLDERSS' EQUITY                                                
CURRENT                                                                              
Accounts payable............................................ $   16,164    $   16,315
Accrued liabilities (note 4)................................     29,195        26,982
Current portion of long-term debt (note 5)..................     52,932        36,283
                                                             ----------    ----------
       Total current liabilities............................     98,291        79,580
                                                             ----------    ----------
Long-term debt (note 5).....................................    672,437       663,443
                                                             ----------    ----------
       Total liabilities....................................    770,728       743,023
                                                             ----------    ----------
STOCKHOLDERSS' EQUITY                                                                
Capital stock (note 8)......................................    261,353       247,637
Retained earnings...........................................    428,102       382,178
                                                             ----------    ----------
       Total stockholders' equity...........................    689,455       629,815
                                                             ----------    ----------
                                                             $1,460,183    $1,372,838
                                                             ==========    ==========

Commitments and contingencies (notes 5, 6, and 9)                               

The accompanying notes are an integral part of the consolidated financial 
statements. 

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TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(IN THOUSANDS OF U.S. DOLLARS)

                                                        [Enlarge/Download Table]

                                                            YEAR ENDED          YEAR ENDED         YEAR ENDED     
                                                             MARCH 31,           MARCH 31,          MARCH 31,     
                                                               1998                1997               1996        
                                                         -----------------   -----------------  ----------------- 
                                                                                                                  
Cash and cash equivalents provided by (used for)                                                                  
OPERATING ACTIVITIES                                                                                              
Net income.............................................. $          70,504   $         42,630   $          29,070 
Add (deduct) charges to operations not requiring a                                                                
  payment of cash and cash equivalents:                                                                           
Depreciation and amortization...........................            94,941             90,698              82,372 
Gain on disposition of assets...........................           (14,392)                                (8,784)
Loss on repurchase of 9 5/8% Notes......................             2,175                                        
Equity income (net of dividend received: March 31,                                                                
  1997--$282)...........................................               (45)            (2,414)             (1,139)
Other--net..............................................             2,735              2,785               2,452 
Change in non-cash working capital items related to                                                               
  operating activities (note 11)........................             5,201              5,459              (5,556)
                                                         -----------------   -----------------  ----------------- 
Net cash flow from operating activities.................           161,119            139,158              98,415 
                                                         -----------------   -----------------  ----------------- 
FINANCING ACTIVITIES                                                                                              
Proceeds from long-term debt............................           208,600            240,000             448,000 
Scheduled repayments of long-term debt..................           (33,876)           (16,038)            (57,850)
Prepayments of long-term debt...........................          (150,655)          (250,078)           (505,962)
Scheduled payments on capital lease obligations.........                                                   (1,527)
Prepayments of capital lease obligations................                                                  (43,023)
Net proceeds from issuance of Common Stock..............             5,126              1,283             137,872 
Cash dividends paid.....................................           (15,990)           (13,493)             (7,094)
Capitalized loan costs..................................              (994)            (1,130)             (5,965)
                                                         -----------------   -----------------  ----------------- 
Net cash flow from financing activities.................            12,211            (39,456)            (35,549)
                                                         -----------------   -----------------  ----------------- 
INVESTING ACTIVITIES                                                                                              
Expenditures for vessels and equipment (net of                                                                    
  capital lease financing of: (1998--$NIL;                                                                        
  1997--$NIL; 1996--$44,550)............................          (197,199)           (65,104)            (79,293)
Expenditures for drydocking.............................           (18,376)           (16,559)             (7,405)
Proceeds from disposition of assets.....................            33,863                                 28,428 
Net cash flow from investment...........................             6,380             (2,296)              3,273 
Proceeds on sale of available-for-sale securities.......            14,854                                111,770 
Purchases of available-for-sale securities..............           (42,154)                               (41,993)
Other...................................................              (268)                                       
                                                         -----------------   -----------------  ----------------- 
Net cash flow from investing activities.................          (202,900)           (83,959)             14,780 
                                                         -----------------   -----------------  ----------------- 
(Decrease) increase in cash and cash equivalents........           (29,570)            15,743              77,646 
Cash and cash equivalents, beginning of the year........           117,523            101,780              24,134 
                                                         -----------------   -----------------  ----------------- 
Cash and cash equivalents, end of the year.............. $          87,953   $        117,523   $         101,780 
                                                         =================   =================  ================= 

The accompanying notes are an integral part of the consolidated financial 
statements. 
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                  

Basis of presentation                                                 

The consolidated financial statements are prepared in accordance with 
accounting principles generally accepted in the United States. They include the 
accounts of Teekay Shipping Corporation ("Teekay"), which is incorporated under 
the laws of Liberia, and its wholly owned or controlled subsidiaries (the       
"Company"). Significant intercompany items and transactions have been eliminated
upon consolidation.                                                             

The preparation of financial statements in conformity with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the amounts reported in the financial statements and    
accompanying notes. Actual results could differ from those estimates.           

   Certain of the comparative figures have been reclassified to conform with
the presentation adopted in the current period.                                 

Reporting currency                                                    

  The consolidated financial statements are stated in U.S. dollars because
the Company operates in international shipping markets which utilize the U.S.   
dollar as the functional currency.                                              

Investment                                                            

   The Company's 50% interest in Viking Consolidated Shipping Corp. ("VCSC")
is carried at the Company's original cost plus its proportionate share of the   
undistributed net income. On March 12, 1997, VCSC sold its one remaining vessel 
and it is not anticipated that the operating companies of VCSC will have active 
operations in the near future. The disposal of this vessel and the related gain 
on sale has been reflected in these consolidated financial statements (see Note 
10 -- Other Income).                                                            

Operating revenues and expenses                                       

     Voyage revenues and expenses are recognized on the percentage of completion
method of accounting. Estimated losses on voyages are provided for in full at   
the time such losses become evident. The consolidated balance sheets reflect the
deferred portion of revenues and expenses applicable to subsequent periods.     

Voyage expenses comprise all expenses relating to particular voyages, 
including bunker fuel expenses, port fees, canal tolls, and brokerage           
commissions. Vessel operating expenses comprise all expenses relating to the    
operation of vessels, including crewing, repairs and maintenance, insurance,    
stores and lubes, and miscellaneous expenses including communications.          

Marketable securities                                                 

The Company's investments in marketable securities are classified as  
available-for-sale securities and are carried at fair value. Net unrealized     
gains or losses on available-for-sale securities, if material, are reported as a
separate component of stockholders' equity.                                     

Vessels and equipment                                                 

  All pre-delivery costs incurred during the construction of newbuildings,
including interest costs, and supervision and technical costs are capitalized.  
The acquisition cost and all costs incurred to restore used                     

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

vessel purchases to the standard required to properly service the Company's     
customers are capitalized. Depreciation is calculated on a straight-line basis  
over a vessel's useful life, estimated by the Company to be twenty years from   
the date a vessel is initially placed in service.                               

 Interest costs capitalized to vessels and equipment for the years ended
March 31, 1998, 1997 and 1996 aggregated $283,000, $232,000, and $106,000,      
respectively.                                                                   

    Expenditures incurred during drydocking are capitalized and amortized on a
straight-line basis over the period until the next anticipated drydocking. When 
significant drydocking expenditures recur prior to the expiry of this period,   
the remaining balance of the original drydocking is expensed in the month of the
subsequent drydocking. Drydocking expenses amortized for the years ended March  
31, 1998, 1997 and 1996 aggregated $11,737,000, $10,941,000, and $8,617,000     
respectively.                                                                   

Vessels acquired pursuant to bareboat hire purchase agreements are    
capitalized as capital leases and are amortized over the estimated useful life  
of the acquired vessel.                                                         

Other assets                                                          

     Loan costs, including fees, commissions and legal expenses, are capitalized
and amortized over the term of the relevant loan. Amortization of loan costs is 
included in interest expense.                                                   

Interest rate swap agreements                                         

     The differential to be paid or received is accrued as interest rates change
and is recognized as an adjustment to interest expenses. Premiums and receipts, 
if any, are recognized as adjustments to interest expense over the lives of the 
individual contracts.                                                           

Forward contracts                                                     

 The Company enters into forward contracts as a hedge against changes in
foreign exchange rates. Market value gains and losses are deferred and          
recognized during the period in which the hedged transaction is recorded in the 
accounts.                                                                       

Cash flows                                                            

 Cash interest paid during the years ended March 31, 1998, 1997 and 1996
totaled $55,141,000, $57,400,000, and $59,021,000, respectively.                

   The Company classifies all highly liquid investments with a maturity date
of three months or less when purchased as cash and cash equivalents.            

Income taxes                                                          

The legal jurisdictions of the countries in which the Company and the 
majority of its subsidiaries are incorporated do not impose income taxes upon   
shipping-related activities.                                                    

Earnings per share                                                    

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per share".   
SFAS 128 requires dual presentation of basic earnings per share ("EPS") and     
diluted EPS on the face of all statements of                                    

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

earnings ending after December 15, 1997 for all entities with complex capital   
structures. The Company's EPS for all periods presented herein are in conformity
with SFAS 128 (see Note 8--Capital Stock).                                      

Accounting for Stock-Based Compensation                               

Effective April 1, 1996, the Company adopted Statement of Financial   
Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based          
Compensation." SFAS 123 requires expanded disclosures of stock-based            
compensation arrangements with employees and encourages (but does not require)  
companies to record compensation costs associated with employee stock option    
awards, based on estimated fair values at the grant dates. The Company has      
chosen to continue to account for stock-based compensation using the intrinsic  
value method prescribed in APB Opinion No. 25 (APB 25) "Accounting for Stock    
Issued to Employees" and has disclosed the required pro forma effect on net     
income and earning per share as if the fair value method of accounting as       
prescribed in SFAS 123 had been applied (see Note 8--Capital Stock).            

2.  BUSINESS OPERATIONS                                                         

 The Company is engaged in the ocean transportation of petroleum cargoes
worldwide through the ownership and operation of a fleet of tankers. All of the 
Company's revenues are earned in international markets.                         

A single customer, an international oil company, accounted for        
approximately 14% ($56,537,000) of the Company's consolidated voyage revenues   
for fiscal 1998. Another customer, also an international oil company, accounted 
for approximately 13% ($48,696,000), of consolidated voyage revenues for fiscal 
1997. No more than one customer accounted for over 10% of the Company's         
consolidated voyage revenues in any of the last three fiscal years.             

3.  INVESTMENTS IN MARKETABLE SECURITIES                                        

                                                        [Enlarge/Download Table]

                                                        GROSS       GROSS      APPROXIMATE  
                                                      UNREALIZED  UNREALIZED    MARKET AND  
                                              COST      GAINS       LOSSES    CARRYING VALUE
                                             -------  ----------  ----------  --------------
                                                                                            
March 31, 1998                                                                              
Available-for-sale securities............... $27,304     $13         $(16)       $27,301    

   The cost and approximate market value of available-for-sale securities by
contractual maturity, as at March 31, 1998, are shown as follows:               

                                                                [Download Table]

                                                                       APPROXIMATE  
                                                                        MARKET AND  
                                                              COST    CARRYING VALUE
                                                             -------  --------------
                                                                                    
Less than one year.......................................... $13,456     $13,448    
Due after one year through five years.......................  13,848      13,853    
                                                             -------     -------    
                                                             $27,304     $27,301    
                                                             =======     =======    

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

4.  ACCRUED LIABILITIES                                                         

                                                                [Download Table]

                                                                 MARCH 31,     
                                                             ------------------
                                                              1998       1997  
                                                             -------    -------
                                                                               
Voyage and vessel........................................... $15,845    $15,458
Interest....................................................   9,272      9,294
Payroll and benefits........................................   4,078      2,230
                                                             -------    -------
                                                             $29,195    $26,982
                                                             =======    =======

5.  LONG-TERM DEBT                                                              

                                                                [Download Table]

                                                                  MARCH 31,      
                                                             --------------------
                                                               1998        1997  
                                                             --------    --------
                                                                                 
Revolving Credit Facility................................... $129,000            
First Preferred Ship Mortgage Notes (8.32%)                                      
  U.S. dollar debt due through 2008.........................  225,000    $225,000
First Preferred Ship Mortgage Notes (9 5/8%)                                     
  U.S. dollar debt due through 2003.........................  123,718     151,200
Floating rate (1998: LIBOR + 0.55% to 1%; 1997:                                  
  LIBOR + 0.65% to 1 1/2%) U.S. dollar debt due through                          
  2009......................................................  247,651     323,526
                                                             --------    --------
                                                              725,369     699,726
Less current portion........................................   52,932      36,283
                                                             --------    --------
                                                             $672,437    $663,443
                                                             ========    ========

     In January 1998, the Company refinanced approximately $105.0 million of its
floating rate debt and replaced the previous corporate revolving credit facility
with a new $200 million corporate revolving credit facility (the "Revolver") at 
improved rates and credit terms. The amount available under the Revolver reduces
by $10.0 million semi-annually commencing in July 1999, with a final balloon    
reduction in January 2006. Interest payments are based on LIBOR plus a margin   
depending on the financial leverage of the Company; at March 31, 1998 the margin
was +0.50%. As at March 31, 1998, the undrawn amount available under the        
Revolver was $71.0 million. The Revolver is collateralized by first priority    
mortgages granted on eight of the Company's Aframax tankers, together with      
certain other related collateral, and a guarantee from the Company for all      
amounts outstanding under the Revolver.                                         

 The 8.32% First Preferred Ship Mortgage Notes due February 1, 2008 (the
"8.32% Notes") are collateralized by first preferred mortgages on seven of the  
Company's Aframax tankers, together with certain other related collateral, and  
are guaranteed by seven subsidiaries of Teekay that own the mortgaged vessels   
(the "8.32% Notes Guarantor Subsidiaries") to a maximum of 95% of the fair value
of their net assets. As at March 31, 1998, the fair value of these net assets   
approximated $252.0 million. The 8.32% Notes are also subject to a sinking fund,
which will retire $45.0 million principal amount of the 8.32% Notes on each     
February 1, commencing 2004.                                                    

Upon the 8.32% Notes achieving Investment Grade Status and subject to 
certain other conditions, the guarantees of the 8.32% Notes Guarantor           
Subsidiaries will terminate, all of the collateral securing the obligations of  
the Company and the 8.32% Notes Guarantor Subsidiaries under the Indenture and  
the Security Documents will be released (whereupon the Notes will become general
unsecured obligations of the Company) and certain covenants under the Indenture 
will no longer be applicable to the Company.                                    

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

The 9 5/8% First Preferred Ship Mortgage Notes due July 15, 2003 (the 
"9 5/8% Notes") are collateralized by first preferred mortgages on six of the   
Company's Aframax tankers, together with certain other related collateral, and  
are guaranteed by six subsidiaries of Teekay that own the mortgaged vessels (the
"9 5/8% Notes Guarantor Subsidiaries") to a maximum of 95% of the fair value of 
their net assets. As at March 31, 1998, the fair value of these net assets      
approximated $186.0 million. The 9 5/8% Notes are also subject to a sinking     
fund, which will retire $25.0 million principal amount of the 9 5/8% Notes on   
each July 15, which commenced on July 15, 1997. During fiscal 1998, the Company 
repurchased a principal amount of $26.3 million of the 9 5/8% Notes. During     
fiscal 1996, the Company repurchased $23.8 million of these notes, which was    
applied to reduce the July 15, 1997 sinking fund requirement. The 9 5/8% Notes  
are redeemable at the option of the Company, in whole or in part, on or after   
July 15, 1998 at the following redemption prices expressed as a percentage of   
principal:                                                                      

                                                                [Download Table]

                      JULY 15                         REDEMPTION PRICE
                      -------                         ----------------
                                                                      
1998................................................      104.813%    
1999................................................      102.406%    
2000................................................      100.000%    

     Upon a Change of Control, each 9 5/8% Note holder and 8.32% Note holder has
the right, unless the Company elects to redeem these Notes, to require the      
Company to purchase these Notes at 101% of their principal amount plus accrued  
interest.                                                                       

    All floating rate loans are collateralized by first preferred mortgages on
the vessels to which the loans relate, together with certain other collateral,  
and guarantees from Teekay.                                                     

  Among other matters, the long-term debt agreements generally provide for
such items as maintenance of certain vessel market value to loan ratios and     
minimum consolidated financial covenants, prepayment privileges (in some cases  
with penalties), and restrictions against the incurrence of additional debt and 
new investments by the individual subsidiaries without prior lender consent. The
amount of Restricted Payments, as defined, that the Company can make, including 
dividends and purchases of its own capital stock, is limited as of March 31,    
1998, to $74.0 million.                                                         

 As at March 31, 1998, the Company was committed to a series of interest
rate swap agreements whereby $150 million of the Company's floating rate debt   
was swapped with fixed rate obligations having an average remaining term of 7.5 
months. The swap agreements expire between October 1998 and December 1998. These
arrangements effectively change the Company's interest rate exposure on $150    
million of debt from a floating LIBOR rate to an average fixed rate 5.86%. The  
Company is exposed to credit loss in the event of non-performance by the counter
parties to the interest rate swap agreements; however, the Company does not     
anticipate non-performance by any of the counter parties.                       

 The aggregate annual long-term debt principal repayments required to be
made for the five fiscal years subsequent to March 31, 1998 are $52,932,000     
(fiscal 1999), $53,058,000 (fiscal 2000), $53,191,000 (fiscal 2001), $62,332,000
(fiscal 2002), and $72,199,000 (fiscal 2003).                                   

6.  LEASES                                                                      

Charters-out                                                          

   Time charters to third parties of the Company's vessels are accounted for
as operating leases. The minimum future revenues to be received on time charters
currently in place are $46,222,000 (fiscal                                      

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

1999), $39,631,000 (fiscal 2000), $39,602,000 (fiscal 2001), $39,562,000 (fiscal
2002), $39,562,000 (fiscal 2003), and $215,533,000 thereafter.                  

The minimum future revenues should not be construed to reflect total  
charter hire revenues for any of the years.                                     

Charters-in                                                           

   Minimum commitments under vessel operating leases are $19,681,000 (fiscal
1999), $9,445,000 (fiscal 2000), $6,844,000 (fiscal 2001), and $412,000 (fiscal 
2002).                                                                          

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS                                         

     Carrying amounts of all financial instruments approximate fair market value
except for the following:                                                       

 Long-term debt -- The fair values of the Company's fixed rate long-term
debt are based on either quoted market prices or estimated using discounted cash
flow analyses, based on rates currently available for debt with similar terms   
and remaining maturities.                                                       

 Interest rate swap agreements -- The fair value of interest rate swaps,
used for hedging purposes, is the estimated amount that the Company would       
receive or pay to terminate the agreements at the reporting date, taking into   
account current interest rates and the current credit worthiness of the swap    
counter parties.                                                                

The estimated fair value of the Company's financial instruments is as 
follows:                                                                        

                                                        [Enlarge/Download Table]

                                            MARCH 31, 1998         MARCH 31, 1997    
                                         --------------------   -------------------- 
                                         CARRYING      FAIR     CARRYING      FAIR   
                                          AMOUNT      VALUE      AMOUNT      VALUE   
                                         --------    --------   --------    -------- 
                                                                                     
Cash, cash equivalents and marketable                                                
  securities............................ $115,254    $115,254   $117,523    $117,523 
Long-term debt..........................  725,369     737,785    699,726     695,265 
Interest rate swap agreements -- net                                                 
  receivable (payable) position.........                 (176)                 1,154 
Foreign currency contracts..............                  339                   (181)

  The Company transacts with investment grade rated financial institutions
and requires no collateral from these institutions.                             

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

8.  CAPITAL STOCK                                                               

                                                                [Download Table]

                         AUTHORIZED                                
                         ----------                                
                                                                   
 25,000,000 Preferred Stock with a par value of $1 per share       
125,000,000 Common Stock with no par value                         

                                                                [Download Table]

                                            COMMON   THOUSANDS  PREFERRED  THOUSANDS
                                            STOCK    OF SHARES    STOCK    OF SHARES
                                           --------  ---------  ---------  ---------
                                                                                    
Issued and outstanding                                                              
Balance March 31, 1995.................... $ 33,000    36,000      $1         600   
May 15, 1995 1-for-2 Reverse Common Stock                                           
  Split...................................            (18,000)                      
July 19, 1995 Initial Public Offering                                               
  6,900,000 shares at $21.50 per share of                                           
  Common Stock (net of share issue                                                  
  costs)..................................  137,613     6,900                       
July 19, 1995 Exchange of Redeemable                                                
  Preferred Stock for 2,790,698 shares of                                           
  Common Stock............................   60,000     2,791      (1)       (600)  
Reinvested Dividends......................    4,833       201                       
Exercise of Stock Options.................      259        12                       
                                           --------   -------      --        ----   
Balance March 31, 1996....................  235,705    27,904       0           0   
Reinvested Dividends......................   10,649       364                       
Exercise of Stock Options.................    1,283        60                       
                                           --------   -------      --        ----   
Balance March 31, 1997....................  247,637    28,328       0           0   
Reinvested Dividends......................    8,590       273                       
Exercise of Stock Options.................    5,126       232                       
                                           --------   -------      --        ----   
Balance March 31, 1998.................... $261,353    28,833      $0           0   
                                           ========   =======      ==        ====   

     The Company has reserved 1,844,135 shares of Common Stock for issuance upon
exercise of options granted pursuant to the Company's 1995 Stock Option Plan    
(the "Plan").                                                                   

  During fiscal 1998, 1997 and 1996, the Company granted options under the
Plan to acquire up to 359,750, 343,250 and 796,750 shares of Common Stock (the  
"Grants"), respectively, to certain eligible officers, key employees (including 
senior sea staff), and directors of the Company. The options have a 10-year term
and follow a graded-vesting schedule. The options granted during fiscal 1998 and
1997 vest equally over four years from the date of grant. At March 31, 1998, all
options granted during fiscal 1996 have vested.                                 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

   A summary of the Company's stock option activity, and related information
for the years ended March 31, follows:                                          

                                                        [Enlarge/Download Table]

                                         1998                        1997                        1996           
                              --------------------------  --------------------------  --------------------------
                                        WEIGHTED-AVERAGE            WEIGHTED-AVERAGE            WEIGHTED-AVERAGE
                              OPTIONS    EXERCISE PRICE   OPTIONS    EXERCISE PRICE   OPTIONS    EXERCISE PRICE 
                              -------   ----------------  -------   ----------------  -------   ----------------
                              (000S)                      (000S)                      (000S)                    
                                                                                                                
Outstanding-beginning of                                                                                        
  year.......................  1,056         $23.40          779         $21.50           0          $21.50     
Granted......................    360          33.50          343          27.38         797           21.50     
Exercised....................   (232)         22.02          (60)         21.50         (12)          21.50     
Forfeited....................    (23)         30.39           (6)         24.00          (6)          21.50     
                               -----         ------        -----         ------         ---          ------     
Outstanding-end of year......  1,161         $26.66        1,056         $23.40         779          $21.50     
                               =====         ======        =====         ======         ===          ======     
Exercisable at end of year...    565         $22.14          519         $21.50         383          $21.50     
                               =====         ======        =====         ======         ===          ======     
Weighted-average fair value                                                                                     
  of options granted during                                                                                     
  the year (per option)......           $8.13                       $6.72                       $5.16           
                                        ======                      ======                      ======          

 Exercise prices for the options outstanding as of March 31, 1998 ranged
from $21.50 to $33.50 and have a weighted-average remaining contractual life of 
8.10 years.                                                                     

    The Company applies APB 25, "Accounting for Stock Issued to Employees" and
related Interpretations in accounting for its employee stock options (see Note  
1--Accounting for Stock-Based Compensation). Under APB 25, because the exercise 
price of the Company's employee stock options equals the market price of        
underlying stock on the date of grant, no compensation expense is recognized.   

 Had the Company recognized compensation costs for the Grants consistent
with the methods recommended by SFAS 123 (see Note 1--Accounting for Stock-Based
Compensation), the Company's net income and earnings per share for those fiscal 
years would have been stated at the pro forma amounts as follows:               

                                                        [Enlarge/Download Table]

                                                    YEAR ENDED  YEAR ENDED  YEAR ENDED
                                                    MARCH 31,   MARCH 31,   MARCH 31, 
                                                       1998        1997        1996   
                                                    ----------  ----------  ----------
                                                                                      
NET INCOME:                                                                           
As reported........................................  $70,504     $42,630     $29,070  
Pro forma..........................................   69,090      40,679      26,842  
BASIC EARNINGS PER COMMON SHARE:                                                      
As reported........................................     2.46        1.52        1.17  
Pro forma..........................................     2.41        1.45        1.08  
DILUTED EARNINGS PER COMMON SHARE:                                                    
As reported........................................     2.44        1.50        1.17  
Pro forma..........................................     2.39        1.44        1.08  

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

Basic earnings per share is based upon the following weighted average 
number of common shares outstanding: 28,655,000 shares at March 31, 1998;       
28,138,000 shares at March 31, 1997; and 24,837,000 shares at March 31, 1996.   
Diluted earnings per share, which gives effect to the aforementioned stock      
options, is based upon the following weighted average number of common shares   
outstanding: 28,870,000 shares at March 31, 1998; 28,339,000 shares at March 31,
1997; and 24,902,000 shares at March 31, 1996.                                  

  The fair values of the Grants were estimated on the dates of grant using
the Black-Scholes option-pricing model with the following assumptions: risk-free
average interest rates of 6.29%, 6.44%, and 6.14% for fiscal 1998, fiscal 1997  
and fiscal 1996, respectively; dividend yield of 3.0%; expected volatility of   
25%; and expected lives of 5 years.                                             

9.  COMMITMENTS AND CONTINGENCIES                                               

As at March 31, 1998, the Company was committed to foreign exchange   
contracts for the forward purchase of approximately Japanese Yen 100 million and
Singapore dollars 15.9 million for U.S. dollars, at an average rate of Japanese 
Yen 128.3 per U.S. dollar and Singapore dollar 1.68 per U.S. dollar,            
respectively, for the purpose of hedging accounts payable and accrued           
liabilities.                                                                    

10. OTHER INCOME                                                                

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED MARCH 31,         
                                                    --------------------------------------
                                                       1998          1997          1996   
                                                    ----------    ----------    ----------
                                                                                          
Gain on disposition of assets......................  $14,392                      $8,784  
Equity in results of 50% owned company.............       45         2,696         1,139  
Write off of loan costs due to refinancing.........   (1,308)                             
Loss on extinguishment of debt.....................   (2,175)                             
Miscellaneous -- net...............................      282           128          (693) 
                                                     -------        ------        ------  
                                                     $11,236        $2,824        $9,230  
                                                     =======        ======        ======  

For the year ended March 31, 1997, Equity in results of the 50% owned 
company included a $2,732,000 gain on a vessel sale. Gross realized gains and   
(losses) on sales of available-for-sale securities for the year ended March 31, 
1996 aggregated $1,787,000 and ($1,732,000), respectively.                      

11. CHANGE IN NON-CASH WORKING CAPITAL ITEMS RELATED TO OPERATING ACTIVITIES    

                                                        [Enlarge/Download Table]

                                                             YEAR ENDED MARCH 31,         
                                                    --------------------------------------
                                                       1998          1997          1996   
                                                    ----------    ----------    ----------
                                                                                          
Accounts receivable................................  $ 2,484       $(1,873)      $(4,792) 
Prepaid expenses and other assets..................      880           665        (2,058) 
Accounts payable...................................    5,814         4,554           281  
Accrued liabilities................................   (3,977)        2,113         1,013  
                                                     -------       -------       -------  
                                                     $ 5,201       $ 5,459       $(5,556) 
                                                     =======       =======       =======  

12. SUBSEQUENT EVENTS                                                           

     In May 1998, the Company commenced an offering of up to 8,050,000 shares of
Common Stock, of which 2,800,000 shares are being offered by the Company and up 
to 5,250,000 shares are being offered                                           

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TEEKAY SHIPPING CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONT'D)

(ALL TABULAR AMOUNTS STATED IN THOUSANDS OF U.S. DOLLARS, OTHER THAN SHARE OR 
PER SHARE DATA) 

by a selling shareholder. The net proceeds to the Company of the offering will  
be used to redeem a portion of the 9 5/8% Notes.                                

     Subsequent to March 31, 1998 the Company entered into an agreement (subject
to certain conditions) for the construction of two Aframax vessels for a cost of
$76.0 million, scheduled for delivery in July and September of 1999.            

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UNDERWRITING

 Subject to the terms and conditions of the U.S. Underwriting Agreement,
Teekay and the Selling Stockholder have agreed to sell to each of the U.S.      
Underwriters named below, and each of such U.S. Underwriters, for whom Goldman, 
Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation and Furman Selz
LLC are acting as representatives, has severally agreed to purchase from Teekay 
and the Selling Stockholder, the respective number of shares of Common Stock set
forth opposite its name below:                                                  

                                                                [Download Table]

                                                         NUMBER OF 
                                                         SHARES OF 
                                                           COMMON  
                   UNDERWRITER                             STOCK   
                   -----------                           --------- 
                                                                   
Goldman, Sachs & Co....................................            
Donaldson, Lufkin & Jenrette Securities Corporation....            
Furman Selz LLC........................................            

                                                         ----------
  Total................................................   5,600,000
                                                         ==========

     Under the terms and conditions of the U.S. Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.                                                               

   The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the    
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $          per share. The U.S. Underwriters may      
allow, and such dealers may reallow, a concession not in excess of $            
per share to certain brokers and dealers. After the shares of Common Stock are  
released for sale to the public, the offering price and other selling terms may 
from time to time be varied by the representatives.                             

Teekay and the Selling Stockholder have entered into an underwriting  
agreement (the "International Underwriting Agreement") with the underwriters of 
the international offering (the "International Underwriters") providing for the 
concurrent offer and sale of 1,400,000 shares of Common Stock in an             
international offering outside the United States. The offering price and        
aggregate underwriting discounts and commissions per share for the two offerings
are identical. The closing of the offering made hereby is a condition to the    
closing of the international offering, and vice versa. The representatives of   
the International Underwriters are Goldman Sachs International, Donaldson,      
Lufkin & Jenrette International and Furman Selz LLC.                            

  Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the 
U.S. Underwriters named herein has agreed that, as a part of the distribution of
the shares offered hereby and subject to certain exceptions, it will offer, sell
or deliver the shares offered hereby, directly or indirectly, only in the United
States of America (including the States and the District of Columbia), its      
territories, its possessions and other areas subject to its jurisdiction (the   
"United States") and to U.S. persons, which term shall mean, for purposes of    
this paragraph: (a) any individual who is a resident of the United States or (b)
any corporation, partnership or other entity organized in or under the laws of  
the United States or any political subdivision thereof and whose office most    
directly involved with the purchase is located in the United States. Each of the
International Underwriters has agreed or will agree pursuant to the Agreement   
Between that, as a part of the distribution of the shares offered as a part of  
the international offering, and subject to certain exceptions, it will (i) not, 
directly or indirectly, offer, sell or deliver shares of Common                 

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Stock (a) in the United States or to any U.S. persons or (b) to any person whom 
it believes intends to reoffer, resell or deliver the shares in the United      
States or to any U.S. persons, and (ii) cause any dealer to whom it may sell    
such shares at any concession to agree to observe a similar restriction.        

Pursuant to the Agreement Between, sales may be made between the U.S. 
Underwriters and the International Underwriters of such number of shares of     
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling  
concession.                                                                     

The Selling Stockholder has granted the U.S. Underwriters an option   
exercisable for 30 days after the date of this Prospectus to purchase up to an  
aggregate of 840,000 additional shares of Common Stock to cover over-allotments,
if any, at the initial public offering price, less the underwriting discount, as
set forth in this Prospectus. If the U.S. Underwriters exercise their           
over-allotment option, the U.S. Underwriters have severally agreed, subject to  
certain conditions, to purchase approximately the same percentage thereof that  
the number of shares to be purchased by each of them, as shown in the foregoing 
table, bears to the 5,600,000 shares of Common Stock offered. The Selling       
Stockholder has granted the International Underwriters a similar option to      
purchase up to an aggregate of 210,000 additional shares of Common Stock.       

    Teekay, the Selling Stockholder and JTK Trust have agreed that, during the
period beginning from the date of this Prospectus and continuing to and         
including the date 180 days after the date of the Prospectus, they will not     
offer, sell, contract to sell or otherwise dispose of any securities of the     
Company (other than pursuant to employee stock option plans existing on the date
of this Prospectus) which are substantially similar to the shares of the Common 
Stock or which are convertible into or exchangeable for securities which are    
substantially similar to the shares of the Common Stock without the prior       
written consent of Goldman, Sachs & Co., except for the shares of Common Stock  
offered in connection with the concurrent U.S. and international offerings.     

     In connection with the Offering, the Underwriters may purchase and sell the
Common Stock in the open market. These transactions may include over-allotment  
and stabilizing transactions and purchases to cover syndicate short positions   
created in connection with the Offering. Stabilizing transactions consist of    
certain bids or purchases for the purpose of preventing or retarding a decline  
in the market price of the Common Stock; and syndicate short positions involve  
the sale by the Underwriters of a greater number of shares of Common Stock than 
they are required to purchase from the Company in the Offering. The Underwriters
also may impose a penalty bid, whereby selling concessions allowed to syndicate 
members or other broker-dealers in respect of the securities sold in the        
Offering for their account may be reclaimed by the syndicate if such securities 
are repurchased by the syndicate in stabilizing or covering transactions. These 
activities may stabilize, maintain or otherwise affect the market price of the  
Common Stock, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at any 
time. These transactions may be effected on the NYSE in the over-the-counter    
market or otherwise.                                                            

 The Company's Common Stock is traded on the NYSE under the symbol "TK."

   The representatives of the Underwriters have in the past provided and may
continue to provide investment banking services to Teekay.                      

 Teekay and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the       
Securities Act of 1933.                                                         

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                                                                       EXHIBIT A

DEFINITIONS OF SHIPPING TERMS 

The following is a set of definitions for shipping terms that are used
throughout this Prospectus:                                                     

   "AFRAMAX TANKER"  An oil tanker of 75,000 - 115,000 dwt. Certain external
statistical compilations define an "Aframax Tanker" slightly differently, some  
going as high as 125,000 dwt and others as low as 70,000 dwt. External data used
in this prospectus has been adjusted so that the definition of "Aframax Tanker" 
is consistent throughout.                                                       

"ANNUAL SURVEY"  An annual inspection of a vessel by a classification 
society surveyor to ensure that the vessel meets the standards of that society. 

     "BALLAST"  A vessel is in ballast when it is steaming without cargo, and is
instead loaded down with sea water for stability. Given that oil production is  
concentrated in certain parts of the world, a vessel will generally spend a     
significant amount of time "ballasting" as it returns from discharge port to    
load port.                                                                      

    "BAREBOAT CHARTER"  The leasing of an empty ship for a specified period of
time for a specific fee. In this arrangement, the shipowner virtually           
relinquishes all rights and responsibilities in respect of the vessel and the   
charterer becomes the de facto ("disponent") owner for this period. The         
charterer is generally responsible for all operating expenses including crewing 
and insurance                                                                   

"BUNKER"  Fuel oil used to operate a vessel's engines and generators. 

    "CHARTER"  The hiring of a vessel for either 1) a specified period of time
or 2) a specific voyage or set of voyages.                                      

"CHARTERER"  The entity hiring the vessel from the shipowner.         

"CHARTER-PARTY"  The contract between the owner and the charterer,    
stipulating in detail each party's responsibilities in the transaction.         

"CLASSIFICATION"  In order for a vessel to obtain both insurance and  
employment with most oil majors, the vessel must belong to a classification     
society, an independent body run under the direction of various shipping        
professionals. In order to maintain classification, a vessel must meet the      
standards of that society and be inspected on a regular basis.                  

     "CRUDE CARRIER"  A tanker vessel designed to carry crude oil or other dirty
products.                                                                       

"DEMURRAGE"  Compensation paid by the charterer to the ship owner when
loading and discharging time exceed the stipulated time in the voyage           
charter-party. This rate of compensation is generally explicitly stated in the  
charter-party.                                                                  

     "DOUBLE BOTTOM OR DOUBLE HULL"  Hull construction technique by which a ship
has an inner and outer bottom or hull separated by void space, usually several  
feet in width.                                                                  

    "DWT"  Deadweight ton. A unit of a vessel's capacity, for cargo, fuel oil,
stores and crew, measured in metric tons of 1,000 kg. A vessel's dwt or total   
deadweight is the total weight the vessel can carry when loaded to a particular 
load line.                                                                      

  "HEAVY PETROLEUM PRODUCTS"  Certain products derived from crude oil that
crude carriers are capable of carrying.                                         

   "IDLE-TIME" or "WAITING DAYS"  Period during which a vessel is able to be
employed but is not earning revenue.                                            

  "IMO"  International Maritime Organization, a United Nations agency that
issues international trade standards for shipping.                              

"INTERMEDIATE SURVEY"  The inspection of a vessel by a classification 
society surveyor which takes place approximately two and a half years before and
after each Special Survey. This survey is more                                  
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rigorous than the "Annual Survey" and is meant to ensure that the vessel meets  
the standards of the classification society.                                    

"LADEN"  A vessel is laden when it is carrying cargo.                 

"LAY-UP"  Mooring a ship at a protected anchorage, shutting down      
substantially all of its operating systems and taking measures to protect       
against corrosion and other deterioration. Generally, a ship enters lay-up for a
period when its owner does not consider it profitable to continue trading that  
vessel for that period.                                                         

    "LIGHT PETROLEUM PRODUCTS"  Products of crude oil that have passed through
an extensive refining process. It is generally not possible for crude carriers  
to carry these products.                                                        

"M/T"  Motor Tanker. A tanker propelled by diesel engines.            

"NEWBUILDING"  A new vessel under construction.                       

"OFF-HIRE"  Period during which a vessel is temporarily incapable of  
trading due to drydocking, maintenance, repair or breakdown.                    

    "OIL/BULK/ORE CARRIER" OR "O/B/O"  An ocean-going vessel designed to carry
either oil or dry bulk cargoes.                                                 

"OPA 90"  The United States Oil Pollution Act of 1990.                

"PANAMAX TANKER"  A vessel of approximately 50,000 to 75,000 dwt, of  
maximum length and breadth and draught capable of passing through the Panama    
Canal.                                                                          

   "PROTECTION AND INDEMNITY INSURANCE"  Insurance obtained through a mutual
association formed by ship owners to provide protection from large financial    
loss to one member by contribution towards that loss by all members.            

"SCRAP"  At the end of its life, a vessel is sold to a shipbreaker who
strips the ship and sells the steel. When charter rates are low, the scrap value
of the vessel may exceed the present trading value of that vessel, especially if
the vessel must incur significant costs to pass special surveys.                

"SMALL TANKER"  A tanker generally of less than 50,000 dwt.           

  "SPECIAL SURVEY"  The inspection of a vessel by a classification society
surveyor which takes place every four to five years. A shipowner often must     
incur a great deal of repair expense in order to pass his fourth and fifth      
special survey and as a result may choose to simply scrap the vessel beforehand.

"SPOT MARKET"  The market for chartering a vessel for single voyages. 

"STORAGE"  The use of a vessel for the storage rather than the        
transportation of cargo. When spot market rates are low, a vessel can earn      
comparable net cash flow from storage.                                          

"SUEZMAX TANKER"  A vessel of approximately 115,000 to 200,000 dwt of 
maximum length and breadth and draught capable of passing through the Suez      
Canal.                                                                          

    "TCE" or "TIME CHARTER EQUIVALENT"  A measure of revenue performance based
on a spot market rate, measured in $/ton, adjusted to equate to a time charter  
rate, measured in dollars per ship per day. TCE is calculated as gross revenue  
less the voyage specific expenses that the owner would not have incurred had the
vessel been time-chartered, divided by the number of voyage days. Consistent    
with industry data, such as that produced by Clarkson, the TCE rates used in    
this Prospectus do not account for brokerage commissions or off-hire and idle   
time.                                                                           

 "TANKER"  Ship designed for the carriage of liquid cargoes in bulk, her
cargo space consisting of many tanks. Tankers carry a variety of products       
including crude oil, refined products, liquid chemicals, liquid gas and wine.   
Tankers load their cargo by gravity from the shore or by shore pumps and        
discharge using their own pumps.                                                

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"TIME CHARTER"  The hire of a ship for a specified period of time. The
owner provides the ship with crew, stores and provisions, ready in all aspects  
to load cargo and proceed on a voyage. The charterer pays for bunkering and all 
voyage related expenses including canal tolls and port charges.                 

"TON-MILES"  A measure of tanker demand. Tons carried by a vessel     
multiplied by the distance traveled.                                            

 "ULCC"  Ultra Large Crude Carrier. An ocean-going tanker vessel of more
than 320,000 dwt, designed to carry crude oil cargoes.                          

   "VLCC"  Very Large Crude Carrier. An ocean-going tanker vessel of between
200,000 and 320,000 dwt, designed to carry crude oil cargoes.                   

    "VOYAGE CHARTER"  Contract of carriage in which the charterer pays for the
use of a ship's cargo capacity for one, or sometimes more than one, voyage.     
Under this type of charter, the ship owner pays all the operating costs of the  
ship (including bunkers, canal and port charges, pilotage, towage and ship's    
agency) while payment for cargo handling charges are subject of agreement       
between the parties. Freight is generally paid per unit of cargo, such as a ton,
based on an agreed quantity, or as a lump sum irrespective of the quantity      
loaded.                                                                         

Shipping terms supplied by Dictionary of Shipping Terms, published by 
Lloyds of London Press Limited (1985), and other sources.                       

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[AFRAMAX FLEET] 

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[LEFT SIDE CAPACITY CHART]

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[RIGHT SIDE CAPACITY CHART] 

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---------------------------------------------------------             
--------------------------------------------------------- 
---------------------------------------------------------             
--------------------------------------------------------- 

---------------------------------------------------------             
--------------------------------------------------------- 
---------------------------------------------------------             

--------------------------------------------------------- 
NO PERSON HAS BEEN AUTHORIZED                                         
TO GIVE ANY INFORMATION OR TO MAKE                                              
ANY REPRESENTATION OTHER THAN THOSE                                             
CONTAINED IN THIS PROSPECTUS, AND,                                              
IF GIVEN OR MADE, SUCH INFORMATION                                              
OR REPRESENTATIONS MUST NOT BE                                                  
RELIED UPON AS HAVING BEEN                                                      
AUTHORIZED. THIS PROSPECTUS DOES NOT                                            
CONSTITUTE AN OFFER TO SELL OR THE                                              
SOLICITATION OF AN OFFER TO BUY ANY                                             
SECURITIES OTHER THAN THE SECURITIES                                            
TO WHICH IT RELATES OR AN OFFER TO                                              
SELL OR THE SOLICITATION OF AN OFFER                                            
TO BUY SUCH SECURITIES IN ANY                                                   
CIRCUMSTANCES IN WHICH SUCH OFFER OR                                            
SOLICITATION IS UNLAWFUL. NEITHER                                               
THE DELIVERY OF THIS PROSPECTUS NOR                                             
ANY SALE MADE HEREUNDER SHALL, UNDER                                            
ANY CIRCUMSTANCES, CREATE ANY                                                   
IMPLICATION THAT THERE HAS BEEN NO                                              
CHANGE IN THE AFFAIRS OF THE COMPANY                                            
SINCE THE DATE HEREOF OR THAT THE                                               
INFORMATION CONTAINED HEREIN IS                                                 
CORRECT AS OF ANY TIME SUBSEQUENT TO                                            
ITS DATE.                                                                       
--------------------------------------------------------------------            
TABLE OF CONTENTS                                             

                                                                [Download Table]

                                                  PAGE
                                                  ----
                                                      
Available Information.........................       2
Enforceability of Civil Liabilities Under the         
  Federal Securities Laws.....................       3
Forward-Looking Statements....................       3
Prospectus Summary............................       4
Summary Consolidated Financial and Other              
  Data........................................       8
Risk Factors..................................      10
Use of Proceeds...............................      17
Dividend Policy...............................      17
Price Range of Common Stock...................      18
Capitalization................................      19
Selected Consolidated Financial and Other             
  Data........................................      20
Management's Discussion and Analysis of               
  Results of Operations and Financial                 
  Condition...................................      23
Business......................................      28
Management....................................      47
Principal and Selling Stockholders............      50
Description of Certain Indebtedness...........      50
Certain Transactions With Related Parties.....      51
Shares Eligible For Future Sale...............      52
Description of Capital Stock..................      53
Tax Considerations............................      54
Incorporation of Documents by Reference.......      58
Legal Matters.................................      58
Experts.......................................      59
Index to Consolidated Financial Statements....     F-1
Underwriting..................................     U-1
Definitions of Shipping Terms.................     A-1

                                            7,000,000 SHARES
                                           TEEKAY SHIPPING
                                           CORPORATION
                                            COMMON STOCK
                                            (NO PAR VALUE)

            --------------------------------------------------------------------
                                            LOGO

            --------------------------------------------------------------------
                                            GOLDMAN, SACHS & CO.
                                            DONALDSON, LUFKIN & JENRETTE
                                            SECURITIES CORPORATION
                                           FURMAN SELZ
                                           REPRESENTATIVES OF THE UNDERWRITERS

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424A’ Filing		Date		First		Last			Other Filings
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		6/13/07		52
		7/19/05		52
		2/1/04		54
		7/15/03		72
		12/31/00		59					20-F
		7/15/98		72
		7/1/98		40
Filed on:		5/18/98
		5/15/98		1		21			SC 13G/A
		5/11/98		53		64
		4/30/98		10		56
		4/1/98		27
		3/31/98		13		77			20-F
		12/15/97		70
		7/15/97		54		72
		3/31/97		23		76			20-F
		3/12/97		68
		7/6/96		43
		4/1/96		70
		3/31/96		23		76			20-F
		9/30/95		20		30			6-K
		7/19/95		74
		7/10/95		61
		7/6/95		43
		3/31/95		23		74			20-F/A
		3/31/94		11		25
		1/6/94		43
		7/6/93		43
		3/6/92		43
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