Nordic American Tankers Ltd. (NYSE:NAT) Letter to Shareholders from the Chairman and CEO - NAT is Different.
(Thomson Reuters ONE) -
Hamilton, Bermuda, August 30, 2011
Dear Shareholder,
It is time to update you on recent developments in the Company and our industry.
As we have stated before, it is at times of difficulty for the industry that NAT
in particular improves its position relative to its peers.
We believe that important factors differentiate NAT from other tanker companies.
A professional management and board with wide experiences and complementary
skill sets, a strong balance sheet, one type and size of ships, low general and
administrative costs and accretive growth are among the factors making NAT
different.
The Company declared a dividend of $0.30 per share for 2Q2011 which was the same
as for 1Q2011. We expect to keep this level of dividend per share for 3Q2011.
NAT is in a very strong financial position as opposed to shipping companies with
weak balance sheets. Furthermore, NAT has a large credit facility available. NAT
remains firmly committed to protecting its underlying earnings and dividend
potential through a disciplined and conservative policy.
Shipping rates are at a low level as a result of there being too many ships at
the present time. However, as I noted in my last communication to you, actual
deliveries from shipyards are significantly lower than what had been projected.
This is partly a reflection of owners cancelling or changing newbuilding orders,
or owners not being in a position to finance vessels contracted in the past.
Moving forward, we expect that the demand for crude oil transportation will
continue to grow while we may see that the demand could be reduced from time to
time. The tanker fleet growth is expected to slow down significantly as the
major shipbuilders have been turning their focus to other sectors. The ordering
of new vessels has decreased substantially and the orderbook for new suezmaxes
as a percentage of the existing fleet is now about 22%, which is equal to the
low level of 2002.
Spot shipping freight rates are a reflection of supply and demand for vessels.
Small changes in this balance normally have a volatile impact on spot freight
tanker rates. With this as a background, NAT may occasionally pay more dividend
than our operating cash flow. We believe this strategy favors all shareholders,
many of whom have been with NAT for a long time. Financially, paying more
dividend than operating cash flow is in a way comparable to buying back stock or
returning capital, but all shareholders are in the same boat, so to speak,
because all of them receive the dividend. This is in line with our policy of
not accumulating cash on the balance sheet. In fact, in a weak market
environment, we in particular see it as our obligation to actively support our
shareholders. It is worth noting that our recent dividend payments are
insignificant in relation to our liquidity position and our overall financial
position.
We will act decisively to expand the fleet when we believe it is optimal for the
Company to do so.
We recently visited Korea to attend the naming ceremony for our two Korean
newbuildings ordered in April 2010. These vessels will be economical to run and
enhance our dividend and earnings capacity. One of these two vessels was
delivered to us a few days ago. The second one is expected to be delivered to us
in October.
2011 has been a year of growth for NAT. During the fourth quarter of 2010 our
fleet consisted of 15 operating vessels on the water. When the last of the two
newbuildings is delivered in October, our fleet will then total 19 vessels.
This growth greatly enhances our dividend capacity for any market recovery when
compared to our position before the downturn in the market. Our expansion has
taken place with no increase in our overhead costs, because our organization is
capable of handling a growing fleet.
We remain firmly committed to our strategy, and believe that our model is
working to the benefit of our shareholders. As you know, we maintain our focus
on transparency and active communication with our shareholders. At NAT,
management's interests are aligned with yours - we make money when you make
money.
We focus on maintaining total return - the only measure of performance that
should matter to a shareholder and we have good total return statistics over the
years. When the market recovers, we will be in a position to grow those returns.
We believe our history reflects excellent commercial management coupled with a
prudent financial strategy. We always ensure that our growth is accretive to our
dividends per share. This guiding principle serves as the foundation for how and
when we choose to grow and how we finance this growth.
We continue to encourage any investor with an interest in the tanker industry
who seeks dividend paying stocks to consider Nordic American.
After delivery of the second ship from Samsung in October, NAT expects to have a
net debt of about $5 million per ship - a very comfortable level. With the
unique operating model, Nordic American has significant upside potential with
relatively limited downside. We believe this also differentiates NAT from many
other shipowning companies.
I am as optimistic about the future of Nordic American as ever. I am happy to
receive any questions or comments via email at
herbjorn.hansson(at)scandicamerican.com
With the rest of our team, I am here to serve you.
All the best!
Herbjorn Hansson
Chairman & CEO
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.
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, 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 the prospectus
and related prospectus supplement, our Annual Report on Form 20-F, and our
reports on Form 6-K.
Contacts:
Scandic American Shipping Ltd
Manager for:
Nordic American Tankers Ltd.
P.O Box 56, 3201 Sandefjord, Norway
Tel: + 47 33 42 73 00 E-mail: nat(at)scandicamerican.com
Rolf Amundsen, Head of Investor Relations, Norway
Nordic American Tankers Ltd.
Tel: +1 800 601 9079 or + 47 908 26 906
Jacob Ellefsen, Head of Research, United Kingdom
Nordic American Tankers Ltd.
Tel: + 44 20 31 78 58 20 or + 44 78 27 92 94 11
Gary J. Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223
Herbjørn Hansson, Chairman and Chief Executive Officer
Nordic American Tankers Ltd.
Tel: +1 866 805 9504 or + 47 901 46 291
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
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