Nordic American Tankers Limited (NYSE:NAT) - A different company with a strong balance sheet and a unique operating model.
(Thomson Reuters ONE) -
Link to complete release as PDF:
http://hugin.info/201/R/1552325/478249.pdf
Hamilton, Bermuda, October 5, 2011
Dear Shareholder,
I'd like to share with you some of my thoughts about the current capital market
and its impact on stock prices. You may recall I wrote you a letter on August
30(th)that carried the headline, "NAT is different".
I believe that NAT is fundamentally different from other stock listed tanker
companies, and thus should not be lumped with them. Let me be more specific in
outlining the main points that differentiate NAT.
First, NAT has only one type of vessels - the suezmax vessel. This type of
vessel (150,000 deadweight tonnes) can carry 1 million barrels of oil and is
highly versatile, able to be utilized on most long haul trade routes.The vessel
can load/discharge in many ports.
The VLCCs (very large crude carriers, with a dwt of 300,000 tonnes) can carry 2
million barrels of oil, and normally load only in a few places in the world due
to their large size and draft.
The advantages of trading a suezmax fleet are particularly reflected in today's
rate environment. As we speak, some VLCCs have negative earnings in the spot
market, i.e. they do not at all cover the operating cash costs. That means that
the voyage revenue generated by a VLCC, minus the fuel needed and other cost
items to complete the trip, have recently been negative on occasions. This also
means that the operating costs, such as crewing, spare parts etc., and
administration costs are not covered.
By contrast, at the time of this message, suezmaxes are earning about $7,000 to
$14,000 per day depending on the route. The average figure in early October is
somewhere near our cash break-even level of about $11,000 per day per vessel,
and that includes all operating and administrative cash costs.It is important to
keep in mind that the tanker market may change quickly and unexpectedly.
A homogenous fleet also helps keep down operating and administration costs,
which contribute in keeping our cash-breakeven level low.
Second, NAT has a unique balance sheet with little net debt and a credit
facility available. Upon delivery of the last newbuilding from Samsung (the
Nordic Zenith) later this month, we expect to have drawn about $200 million for
working capital and investments. The net debt is then approximately $7 million
per vessel, a very comfortable level.The credit facility is not subject to
reduction by the lenders and there is no obligation to repay principal during
the term of the facility. The Company pays interest only on drawn amounts and a
small commitment fee for undrawn amounts. This means that our cash breakeven
rate of about $11,000 per day per vessel is significantly lower than that of
companies witha high leverage. Many companies would typically have a cash break-
even rate between $15,000-$25,000 per day per vessel.
Third, NAT has a full dividend payout policy that we will continue to follow.
The actual dividend to be paid is always decided by the Board of Directors. We
believe that the present dividend rate reflects a support to the shareholders
from a unique and financially strong company. For 2Q2011 we paid a dividend of
$0.30 per share and as indicated in my letter of August 30(th), 2011 we expect
to keep that dividend for the third quarter in spite of the weak tanker market
during the period.
Dear friends, when investing in shipping, it is important to realize
that companies differ. Shipping companies are not all over-encumbered with debt,
they are not all exposed to the most volatile revenue streams, and they are not
all seeing their equity wiped out. I have said many times that NAT is in
excellent shape and we remain firmly committed to protecting the underlying
earnings and dividend potential through a disciplined and conservative policy. I
am more convinced now than ever that this is the case for Nordic American.
Significant opportunities lie ahead!
Sincerely,
Nordic American Tankers Limited
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
Press Release (PDF):
http://hugin.info/201/R/1552325/478249.pdf
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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#1552325]
Unternehmensinformation / Kurzprofil:
Datum: 05.10.2011 - 12:22 Uhr
Sprache: Deutsch
News-ID 73027
Anzahl Zeichen: 9491
contact information:
Town:
Hamilton HM 12
Kategorie:
Business News
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"Nordic American Tankers Limited (NYSE:NAT) - A different company with a strong balance sheet and a unique operating model."
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