Nordic American Tankers Ltd. Reachs Out to Shareholders

Tuesday, August 30, 2011

Nordic American Tankers Ltd. Letter to Shareholders From the Chairman and CEO - NAT Is Different.

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@scandicamerican.com

With the rest of our team, I am here to serve you.

All the best!

Herbjorn Hansson
Chairman & CEO

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Location of New Port Expansion Projects: Analysis

When it comes to port development, many governments now favour letting the market decide where expansion should take place, whereas most other transport infrastructure,

Europe Sleep Walking into an Energy Crisis: Analyst

The downing of flight MA17 has prompted calls for further sanctions on Russia targeted at its energy sector. Douglas-Westwood in its 'DW Monday' analysis considers

GAC North America Passes the Helm to Schensema

GAC says it  has moved Claus Schensema to Houston, Texas, where he will take up the post of Managing Director of GAC North America Logistics. Schensema brings

Shipbuilding

New Australian Navy Submarines to be Japan Built?

Australia should discuss building its next-generation fleet of submarines overseas, the Department of Defence said on Monday, a shift that could open the door to

Russian Navy Expansion Gathers Momentum

The Russian Navy celebrates its professional holiday by putting two new submarines into service and expects a new warship in the fall and several additional ships

Horizon Delivers 4th 74’ Towboat for Canal Barge Co.

Horizon Shipbuilding, Inc., Bayou La Batre, AL, has delivered the fourth in a series of 74’ towboats to Canal Barge Company, Inc. of New Orleans, LA.    The Jane

Tanker Trends

Jones Act Tanker Chartered for Airline Refinery

Delta Air Lines Inc's refining unit has chartered a U.S.-flagged oil tanker for the first time, allowing it to tap directly into cheap Texas shale oil as the company overhauls its supply strategy.

Horizon Delivers 4th 74’ Towboat for Canal Barge Co.

Horizon Shipbuilding, Inc., Bayou La Batre, AL, has delivered the fourth in a series of 74’ towboats to Canal Barge Company, Inc. of New Orleans, LA.    The Jane

Asia VLCC Rates Could Nudge Higher on Activity

Rates for very large crude carriers (VLCCs) on key Asian freight routes could hold steady or gain next week as charterers seek to complete their vessel chartering

Finance

Leighton HY14 net margin Up to 2.7%

Leighton Holdings announced its results for the six months to 30 June 2014.   * Total revenue of $11.9 billion, up on HY13 * EBITDAiii of $843 million. Comparable EBITDAiv of $945 million,

LNG to Acquire Bear Head LNG Project in Canada for US$11 mi

Liquefied Natural Gas Limited today announced that it has significantly expanded its presence in the North American Liquefied NaturalGas (LNG) sector by signing

Three Share in Navy US$96.8-M Twin-Ship Modernization Contract

The U.S. Department of Defense informs that AMSEC LLC; CDI Marine Co. LLC; and Q.E.D. Systems Inc., (all located in Virginia Beach, Virginia) are each being awarded a cost-plus-fixed-fee/cost-only,

People in the News

GAC North America Passes the Helm to Schensema

GAC says it  has moved Claus Schensema to Houston, Texas, where he will take up the post of Managing Director of GAC North America Logistics. Schensema brings

Panama's Alfonso Castillero Moves to Liberian Registry

The Liberian Registry informs that Alfonso Castillero, former Director-General of the Panama Registry, has joined their organization as Vice-President. Castillero

Costa Concordia Arrives Genoa for Demolition

Crowley Maritime Corp. subsidiary TITAN Salvage and project partner Micoperi has confirmed that the Costa Concordia – the Concordia-class cruise ship that wrecked off Giglio Island,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Naval Architecture Navigation Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1838 sec (5 req/sec)