HAMILTON, Bermuda, Dec. 10, 2013 (GLOBE NEWSWIRE) --
Dear Shareholder,
As we approach the end of the year, I would like to share with you some thoughts on recent events. The best suezmax tanker rates for a year or two are with us now. For each day passing by, we come closer to stable improved conditions. These last few months have been a busy and exciting time for us. We have established a new company, Nordic American Offshore Ltd. (NAO), where NAT is the largest shareholder. The fourth quarter started quite slowly, while the tanker market for crude oil has strengthened considerably during the last few weeks. The stronger market manifested itself first in the super tanker sector (VLCC), and is now having a positive impact on the Suezmax sector. As I write this, broker reports are quoting Suezmax spot market rates of about $35,000 per day. The longer it lasts, the better. The fourth quarter can still be expected to remain weak as a certain time is needed to improve the rates across our fleet.
We obviously see the recent development as a positive sign. As we enter 2014, the fundamentals of our business can accommodate these spikes occurring more frequently, in turn raising the average rates achieved by our fleet.
Bright spots on the horizon are the strong tendencies we see in global ton-mile demand (transportation work) coupled with, most likely, negative tanker industry fleet growth in 2014. Recently, there have been many reports in the media about US energy independence. The US accounts for only about 15% of our business; the focus in the crude shipping sector is tilting eastward. Global oil consumption is still growing, and the distances for transporting the oil are increasing.
In November, we announced the creation of Nordic American Offshore - an offshore supply vessel company employing a similar strategy to NAT. NAO, which at this time owns six supply vessels, is a separate company from NAT. The company was primarily financed through a private placement, which was well received and oversubscribed. NAT also has made an investment in NAO of $65 million, which is slightly in excess of the cost of one Suezmax newbuilding. The plan is to have NAO listed on the NYSE during the first quarter of 2014.
The reasoning behind the investment in NAO is twofold. Accounting for the related equity issue, the transaction is demonstrably accretive, at today's rates. NAO has substantial contracted revenue and a potential for strong dividends, which will flow through to NAT shareholders. We are hopeful that the value of NAT's investment would increase. We have seen NAO shares trading over the counter (OTC) in Oslo at levels above the issue price. Secondly, many of the same management resources will serve both companies. This will decrease NAT's general and administrative costs and give NAO a cost advantage too.
The shipping downturn has lasted for a long time. However, the signs of a recovery are becoming clearer and clearer. NAT will benefit from the turning tide. We have made significant investments in our ships during the weak market – an investment that will bear fruit as conditions improve.
We already see the benefits of fuel-saving technologies that we have applied to our existing vessels. Thanks to our investment in maintenance, the technical condition of our fleet is excellent.
We believe our shareholders are not served by endlessly ordering new ships when the existing tonnage is perfectly capable of the job. Some companies spend plenty of time talking about the benefits of new ships, but those new ships only exacerbate the oversupply problem we have and drive down rates for the entire sector. We are in the business of generating returns – not acting like the neighbour who every year has to buy the flashiest new car.
We would also point out that our fleet gets high marks in vetting, with a proven record in adhering to strict industry standards of quality and safety. That means safety for the crew, safety for the environment and safety for assets.
We focus on risk management. Many companies failed to manage their balance sheets and to protect their equity position. The investors in several of those companies ended up with holdings worth zero. We have always stated we are shareholder friendly and protecting our position and strength during the downturn is part of that strategy.
With the establishment of NAO, NAT is in an even stronger position than before and we are constantly evaluating the best way to safeguard shareholders and capture the tanker market recovery. The management of NAT has no incentive to indiscriminately grow the fleet or assume large risks. We will stay the course, acting responsibly and conservatively.
I wish you all and your families all the best for the holidays and look forward to a prosperous and exciting 2014.
Regards,
Herbjørn 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, vessel 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.
Press release (PDF): http://hugin.info/201/R/1748872/589119.pdf
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: Jacob Ellefsen, Manager, Investor Relations and 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. Sorensen, CFO & EVP, Norway Nordic American Tankers Limited Tel: +47 33 42 73 00 or +47 90 57 29 27 Gary J. Wolfe Seward & Kissel LLP, New York, USA Tel: +1 212 574 1223
