Nordic American Tankers Limited - (NYSE:NAT) Letter to Shareholders from the Chairman and CEO. NAT is in a strong position.
(Thomson Reuters ONE) -
Hamilton, Bermuda, August 28, 2013
Dear Shareholder,
In my letter to you this past June, I discussed how an excess supply of tonnage
hurt the tanker market during the second quarter of 2013. The daily IMAREX
index, which is a good measure of the level of the market, was on average
$11,500 during the second quarter. June, in particular, was weak, with a time
charter equivalent for suezmaxes of $7,500 per day.
The company is in a solid financial condition. This is demonstrated by the fact
that as of June 30, 2013 our net debt is about $4.4 million per ship. In
comparison, at the end of June 2004, at the time when the company turned into
and operating unit, the net debt was about $8 million per ship. Cash on hand,
net working capital and undrawn portion of our credit facility is $330 million,
representing our financial liquidity reserves June 30, 2013. This allows us to
plan for further growth.
In July and August the situation has improved, signaling that results for the
third quarter should be better than those for the second quarter. Since July
1(st), the IMAREX rates have been above the second quarter level. Towards the
end of August weakness is again seen. The actual results for a fleet may differ
from the quotations of IMAREX. In an improving market there is a time-lag of
two to three weeks before we can benefit from the higher rates.
Crude shipments to the Far East are a driving force in the tanker market. Stable
suezmax shipments have been undertaken from the Middle East region and West
Africa. Recently, the differential between the Brent oil price and the WTI
(West Texas Intermediate) oil price has narrowed, which impacts seaborne imports
of crude oil into the US positively from our perspective. This is because
transportation costs on our tankers are significantly lower than shipments by
rail or pipeline, so a tight spread in prices makes the delivered price of an
imported barrel of oil cheaper for the refineries. Typically, geopolitical
tensions, as for instance in Syria, Egypt and Libya, tend to create uncertainty
which may cause unpredictable volatility including spikes in the tanker market.
The order book for new crude oil vessels is decreasing sharply and starting in
2014 we expect only a handful of newbuildings to enter the suezmax market. In
the near future it is a question whether we shall see an improved market this
autumn and the traditionally stronger winter market.
We have had several vessels in drydock this year because it is mandatory to go
through the special surveys when ships are ten years old and again when they
turn fifteen. For a 10-year special survey the costs are about $2.5 million per
ship; a 15-year special survey could cost between $2.5 million and $3.0 million.
In the short term, drydockings hurt us since those ships are temporarily out of
service, but in the long term keeping our ships in top technical condition pays
off. We do a lot of work for major oil companies, and they are among the most
demanding players in the tanker industry. Our work to improve technical
standards and enhance safety never stops.
In addition, our ships are becoming greener and greener. We have installed
devices on our ships that are aimed at reducing the consumption of costly bunker
oil for the main engines. Our program to reduce emissions and save costs
continues unabated.
NAT is now assessing various investments that would allow us to expand
profitably. As always, our primary objective is to maximize total return to our
shareholders. Over time we have produced a competitive total return for our
shareholders and we believe that we are in an excellent position to achieve such
results in the future.
When the tanker market has softened in recent quarters, NAT has paid modest
quarterly dividends. When the markets tighten again, funds for payment of
dividends can be expected to increase sharply. As our cash breakeven is among
the lowest in the industry, we will be able to capitalize on an improving market
and return to profitability sooner than others.
From time to time it has been suggested that Nordic American should repurchase
shares. This is an option that we always have under review and which can be
implemented quickly. So far we have prioritized direct dividend to shareholders.
My family and I have continued to increase our ownership of shares in NAT this
year, evidencing our bedrock confidence in the future of Nordic American. In the
offering of April we bought $1.5 million worth of shares for cash and have made
additional cash purchases since then. We now have about 5.5% of the shares in
NAT and are proud to be the company's largest shareholder.
Based on our business model, growth, strong balance sheet and available
financial resources, we believe that Nordic American has a significant upside
potential and a limited downside. If you have any questions, please do not
hesitate to contact me.
All the best!
Sincerely,
Herbjorn Hansson
Chairman & CEO
Nordic American Tankers Limited
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements in order to encourage
companies to provide prospective information about their business. Forward-
looking statements include statements concerning plans, objectives, goals,
strategies, future events or performance, and underlying assumptions and other
statements, which are other than statements of historical facts.
The Company desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and is including this
cautionary statement in connection with this safe harbor legislation. The words
"believe," "anticipate," "intend," "estimate," "forecast," "project," "plan,"
"potential," "will," "may," "should," "expect," "pending" and similar
expressions identify forward-looking statements. Declaration of dividends is
solely in the discretion of the Board of Directors and may change from time to
time."
The forward-looking statements in this press release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, our management's examination of historical
operating trends, data contained in our records and other data available from
third parties. Although we believe that these assumptions were reasonable when
made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, we cannot assure you that we will achieve or accomplish
these expectations, beliefs or projections. We undertake no obligation to
update any forward-looking statement, whether as a result of new information,
future events or otherwise.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, general market conditions, including
fluctuations in charter rates and vessel values, changes in demand in the tanker
market, as a result of changes in OPEC's petroleum production levels and world
wide oil consumption and storage, changes in our operating expenses, including
bunker prices, drydocking and insurance costs, the market for our vessels,
availability of financing and refinancing, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential liability from
pending or future litigation, factors impacting the declaration of dividends,
general domestic and international political conditions, potential disruption of
shipping routes due to accidents or political events, vessels breakdowns and
instances of off-hires and other important factors described from time to time
in the reports filed by the Company with the Securities and Exchange Commission,
including our Annual Report on Form 20-F, and our reports on Form 6-K.
Contacts:
Scandic American Shipping Ltd
Manager for:
Nordic American Tankers Limited
P.O Box 56, 3201 Sandefjord, Norway
Tel: + 47 33 42 73 00 E-mail: nat(at)scandicamerican.com
Jacob Ellefsen, Manager, Investor Relations & Research, Monaco
Nordic American Tankers Limited
Tel: + 377 93 25 89 07 or + 33 678 631 959
Rolf Amundsen, Advisor, Norway
Nordic American Tankers Limited
Tel: +1 800 601 9079 or + 47 908 26 906
Turid M. Sørensen, EVP & CFO, Norway
Nordic American Tankers Limited
Tel: +47 33 42 73 00 or + 47 905 72 927
Gary J. Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223
Press release PDF:
http://hugin.info/201/R/1725302/575302.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Nordic American Tankers Limited via Thomson Reuters ONE
[HUG#1725302]
Unternehmensinformation / Kurzprofil:
Datum: 28.08.2013 - 12:02 Uhr
Sprache: Deutsch
News-ID 291714
Anzahl Zeichen: 10484
contact information:
Town:
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Kategorie:
Business News
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