Nordic American Tanker Shipping Ltd. (NYSE:NAT) - Announces Dividend
for the 48th Consecutive Quarte
(Thomson Reuters ONE) - Hamilton, Bermuda, August 7, 2009Nordic American Tanker Shipping Ltd. ("NAT" or "the Company") todayannounced its dividend and results for the 2nd quarter of 2009.The Company is committed to continuing its simple, transparent andpredictable strategy. Over time the fleet must grow faster than theshare count in order to provide for accretion. A full dividend payoutpolicy and a strong balance sheet are central components of thisstrategy. Typically, as in the past, the amount of the quarterlydividend is related to the level of the spot freight market forsuezmax tankers. Generally, when rates in the suezmax market areincreasing, the dividend can be expected to increase and converselyquarterly dividend can be expected to decline in a weaker market.Suezmax spot freight rates were lower in the 2nd quarter than in the1st quarter of 2009. Going forward, we expect that spot suezmaxfreight rates may go up and down in an unpredictable manner.The Company will pay a dividend of $0.50 per share on or aboutSeptember 4, 2009, to shareholders of record as of August 21, 2009.Following this dividend payment, the Company will have paid adividend for 48 consecutive quarters since the autumn of 1997 whenthe first three vessels in the Company's fleet were delivered andcommenced operations. Earnings per share (EPS) from continuingoperations for 2Q09 came to $0.09. Non-cash G&A items for thequarter, including one-time costs in connection with the follow-onoffering in May 2009, constitute $0.09 per share, resulting in netincome of $0.00 per share.The present instability in the international financial markets isserious for debt laden shipping companies and some of them are forcedto suspend dividends or change their dividend policy. NAT is stayingits course in this environment - having no net debt. Because of thisexceptionally strong financial situation of the Company - both inabsolute and relative terms - and its sound strategic position goingforward, it has been decided to round upwards the dividend for thisquarter to $0.50 per share which is somewhat more than the operatingcash flow[1].Our primary objective is to maximize total return[2] to ourshareholders including maximizing the quarterly cash dividend.The Company does not believe it is in the interest of shareholders toengage in any type of derivatives.Highlights: * The Board of Directors has declared a dividend of $0.50 per share in respect of 2Q09. For the last four quarters, including the dividend to be paid for 2Q09, a total of $3.86 has been declared in dividends, which represents 12.1% of the average daily share price over the same period. * Net income for 2Q09 was $0.00 per share based on the weighted average number of shares outstanding during the quarter, 39,978,227, compared to $0.46 per share for 1Q09. To put this into perspective, net income was also about zero during the last two quarters of 2007. * In 2Q09 total off hire for the Company's fleet was 22 days. There are no planned dry-dockings for any of the Company's vessels until 2010 when one vessel is scheduled for dry-docking. * On May 18, 2009, the Company completed an underwritten public offering of 4,225,000 common shares which strengthened its equity by approximately $130 million. This offering increased the capacity of the Company to make further accretive acquisitions. * In early May the Company announced that it had agreed to acquire a 2002 built double hull suezmax tanker. On July 7, 2009, the Company took delivery of this vessel, named the Nordic Grace, thereby increasing the fleet by two vessels - to 16 vessels (including two newbuildings to be delivered) - during the two first quarters of 2009.Financial Information:The Board has declared a dividend of $0.50 per share in respect of2Q09. In 1Q09 $0.88 per share was declared. The amount of dividendsper share is above all a reflection of the level of the spot tankermarket during the relevant quarter and the number of sharesoutstanding. The weighted average number of shares outstanding forthe second quarter 2009 was 39,978,227. The total number of sharesoutstanding as of the date of this report is 42,204,904.With the payment of the dividend in respect of 2Q09, the Company hasfor the last four quarters paid dividends in the aggregate of $3.86per share, representing a yield of 12.1% per annum based on theaverage daily share price during the 12 months ended June 30, 2009.Net income for 2Q09 was -$0.1m, or $0.00 per share (EPS) compared tonet income of $17.2m, or $0.46 per share for 1Q09. Non-cash G&Aitems, including one time non-cash costs in connection with thefollow-on offering constitute $0.09 per share. In contrast to otherissue related costs, this non-cash item is booked against the profitand loss account in the Company's statement of operations. TheCompany's operating cash flow was $17.0m for 2Q09, compared to $33.3mfor 1Q09.We consider our general and administrative costs per day per ship tobe at a low level. We also continue to have a strong focus on keepingour vessel operating costs low, while always maintaining ourcommitment to safe vessel operations.We estimate that our average cash breakeven level for our 14 existingvessels is below $10,000 per day per vessel. When the freight marketis above this level, the Company can be expected to pay a dividend.The breakeven rate is the amount of average daily revenues ourvessels would need to earn in the spot market in order to cover ourvessel operating expenses, voyage expenses, if any, cash general andadministrative expenses, interest expense and other financialcharges.The Company has no net debt and has an undrawn revolving creditfacility of $500 million. The credit facility, which matures inSeptember 2013, is not subject to reduction by the lenders and thereis no obligation to repay principal during the term of the facility.The Company pays interest only on drawn amounts and a commitment feefor undrawn amounts. The Company raised net proceeds of approximately$130 million on May 18, 2009, from a follow-on offering of commonshares. Together with the follow-on offering in January, the netequity infusion into NAT amounts to $236.7 million this yearproviding the Company with financial flexibility to make furtheracquisitions beyond the 16 vessel fleet of the Company when the twonewbuildings have been delivered. Assuming that no more acquisitionswill be made until the last of the two newbuildings is delivered in2010, the Company can be expected to be debt free at that time inaddition to having the unused credit facility of $500 million. We arecontinuously assessing further acquisitions, but intend to beselective and the Company is under no pressure to rush in thisregard.The double hull Suezmax tanker which was delivered to the Company onJuly 7, 2009, the Nordic Grace, was financed from cash on hand. Thisvessel and the two newbuildings are expected to increase the earningsand dividend capacity of the Company by approximately 23% comparedwith the 13 vessel fleet as at the end of 1Q09.On May 18, 2009, the Company completed the offering of 4,225,000common shares, including the exercise by the underwriters of anover-allotment option of 225,000 shares. The follow-on offeringresulted in aggregate net proceeds to the Company, before expensesrelating to the offering, of approximately $130 million. Followingthe offering, the Company has 42,204,904 common shares outstanding.Because of the volatility in the spot tanker market in this messagewe compare the 2nd quarter 2009 with the 1st quarter of 2009. Forfurther details on our financial position and for other periods suchas 2Q08 and for the six months ended June 30 2009 and June 30 2008,please see later in this release.The Fleet:With the delivery of the Nordic Grace, 13 of the Company's 14existing vessels have employment in two cooperative arrangements. Onevessel remains employed on a long-term fixed rate charter.By way of comparison, in the autumn of 2004 the Company had threevessels; at the end of 2005 the Company had eight vessels; and at theend of 2006 the Company had 12 vessels. During 2Q09, we had 13vessels in operation. With the two newbuildings announced in November2007 and the most recent acquisition, the Company is expected to havea fleet of 16 vessels operating from August 2010, assuming no furtheracquisitions or dispositions in the meantime.Vessel Dwt EmploymentGulf Scandic 151,475 Long term fixed charterNordic Hawk 151,475 SpotNordic Hunter 151,400 SpotNordic Voyager 149,591 SpotNordic Fighter 153,328 SpotNordic Freedom 163,455 SpotNordic Discovery 153,328 SpotNordic Saturn 157,332 SpotNordic Jupiter 157,411 SpotNordic Cosmos 159,998 SpotNordic Moon 159,999 SpotNordic Apollo 159,999 SpotNordic Sprite 147,188 SpotNordic Grace 149,921 SpotNordic Galaxy 163,000 Delivery expected by end May 2010Nordic Vega 163,000 Delivery expected by end August 2010Total 2,491,900No scheduled dry-dockings were undertaken during 2Q09. There are nofurther planned dry-dockings for our vessels until 2010 when onedry-docking is expected to take place. During 2Q09, we had in total22 days of unscheduled off hire for our fleet.We have been advised that the delivery of the two newbuildings can beexpected to be delayed by six and four months, respectively.Financial Instability and the Tanker Market:In our quarterly reports to shareholders we have often stressed thesignificance of the development of the world economy for the tankerindustry. Presently, the world economy shows a significantcontraction of demand. This downturn influenced the suezmax tankermarket during the 2nd quarter of 2009.Suezmax tanker rates are currently under pressure. For NAT, a lowerfreight tanker market can be expected to result in a lower dividend.If a lower freight market results in lower vessel prices - such adevelopment would be an advantage for the Company because we would bein a position to acquire further vessels inexpensively compared tohistorical levels. The two acquisitions during the first six monthsof 2009 are indicative of the ability of the Company to growaccretively. The Company can be expected to pay a higher dividendafter these two acquisitions compared with a situation had theacquisitions not taken place. This is so irrespective of the level ofthe suezmax spot tanker market, as long as the freight level is abovethe Company's cash break-even for its fleet as a whole, currentlybelow $10,000 per day.While the recession internationally is reducing the demand fortransportation capacity, the demand side for tankers to some extentcontinues to be impacted positively by the use of tankers forstorage.On the supply side, we now see clearly that the current financialupheaval may delay deliveries of newbuildings and may also lead tothe cancellation of newbuilding orders.The average daily rate for our spot vessels was $26,300 per day netto us during 2Q09 compared with $41,600 per day for 1Q09.The spot market rates for suezmax tankers are very volatile.According to the Imarex Tanker Index ("Imarex") the highest ratereported during 2Q09 was $38,813 June 22 and the lowest rate was$9,482 June 1, 2009. The average spot market rate for modern suezmaxtankers as reported by Imarex was $20,569 per day in 2Q09 compared to$38,871 per day during 1Q09.The graph shows the average yearly spot rates since 2000 as reportedby R.S. Platou Economic Research a.s. The rates as reported byshipbrokers and by Imarex may vary from the actual rates we achievein the market.We believe it is an advantage for the Company to have its spotvessels in two cooperative arrangements which in total have more than50 suezmax vessels under commercial management. Strategy going forward:We believe that the operating model of the Company works to thebenefit of our shareholders.The serious financial turmoil may represent attractive opportunitiesfor our Company. We are continually assessing further acquisitions,but we have the flexibility to be selective.The Company essentially has the following strategic position goingforward: If the market is firm, very good results and dividend can beexpected.In a weaker market, dividend will be lower which is a minus. However,if rates are down for a while, the Company is in a position to buyships inexpensively and accretively - a plus. This plus can beexpected to be much larger than the minus. Almost all of our listedcompetitors have significant net debt which could make it difficultfor them to buy vessels in a weak market. In this way, the Companyhas covered both scenarios. Typically, the level of the spot marketrates may change very fast.Our policy is to grow when it is profitable and accretive to do so;that is, after an acquisition of vessels or other forms of expansion,the Company should be able pay a higher dividend per share andproduce higher earnings per share than before such an event beforetaking into account any change in the spot rates. We believe that therecent acquisitions in January and May this year are examples of suchaccretive transactions.We believe that our full dividend payout policy will continue toenable us to achieve a competitive cash yield compared with that ofother shipping companies.We encourage investors wishing to have exposure to the tanker sectorto assess our model and invest in our Company.In the midst of the international financial instability which isserious for many of our competitors, our Company is well positioned.To the best of our ability we shall endeavor to safeguard and furtherstrengthen this position. * * * * *[1] Operating cash flow is a non-GAAP financial term often used byinvestors to measure financial performance of shipping companies.Operating cash flow represents income from vessel operations beforedepreciation and non-cash administrative charges. Please see page 7for a reconciliation of this non-GAAP measure as used in this releaseto the most directly comparable GAAP financial measure.[2] Total Return is defined as stock price plus dividends, assumingdividends are reinvested in the stock CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSMatters discussed in this press release may constituteforward-looking statements. The Private Securities Litigation ReformAct of 1995 provides safe harbor protections for forward-lookingstatements in order to encourage companies to provide prospectiveinformation about their business. Forward-looking statements includestatements concerning plans, objectives, goals, strategies, futureevents or performance, and underlying assumptions and otherstatements, which are other than statements of historical facts.The Company desires to take advantage of the safe harbor provisionsof the Private Securities Litigation Reform Act of 1995 and isincluding this cautionary statement in connection with this safeharbor legislation. The words "believe," "anticipate," "intend,""estimate," "forecast," "project," "plan," "potential," "may,""should," "expect," "pending" and similar expressions identifyforward-looking statements.The forward-looking statements in this press release are based uponvarious assumptions, many of which are based, in turn, upon furtherassumptions, including without limitation, our management'sexamination of historical operating trends, data contained in ourrecords and other data available from third parties. Although webelieve that these assumptions were reasonable when made, becausethese assumptions are inherently subject to significant uncertaintiesand contingencies which are difficult or impossible to predict andare beyond our control, we cannot assure you that we will achieve oraccomplish these expectations, beliefs or projections. We undertakeno obligation to update any forward-looking statement, whether as aresult of new information, future events or otherwise.Important factors that, in our view, could cause actual results todiffer materially from those discussed in the forward-lookingstatements include the strength of world economies and currencies,general market conditions, including fluctuations in charter ratesand vessel values, changes in demand in the tanker market, as aresult of changes in OPEC's petroleum production levels and worldwide oil consumption and storage, changes in our operating expenses,including bunker prices, drydocking and insurance costs, the marketfor our vessels, availability of financing and refinancing, changesin governmental rules and regulations or actions taken by regulatoryauthorities, potential liability from pending or future litigation,general domestic and international political conditions, potentialdisruption of shipping routes due to accidents or political events,vessels breakdowns and instances of off-hire, failure on the part ofa seller to complete a sale to us and other important factorsdescribed from time to time in the reports filed by the Company withthe Securities and Exchange Commission, including the prospectus andrelated prospectus supplement, our Annual Report on Form 20-F, andour Reports on Form 6-K.Contacts:Scandic American Shipping LtdManager for:Nordic American Tanker Shipping LimitedP.O Box 56, 3201 Sandefjord, NorwayTel: + 47 33 42 73 00 E-mail: nat(at)scandicamerican.comRolf Amundsen, Investor RelationsNordic American Tanker Shipping LimitedTel: +1 800 601 9079 or + 47 908 26 906Gary J. WolfeSeward & Kissel LLP, New York, USATel: +1 212 574 1223Turid M. Sørensen, CFONordic American Tanker Shipping LimitedTel: + 47 33 42 73 00 or + 47 905 72 927Herbjørn Hansson, Chairman and Chief Executive OfficerNordic American Tanker Shipping LimitedTel: +1 866 805 9504 or + 47 901 46 291http://hugin.info/201/R/1333341/316047.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 07.08.2009 - 10:00 Uhr
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