Business Context and Reporting Period
This Form 6-K filing by Nordic American Tankers Ltd (NAT) covers the period ending December 31, 2017. The report primarily disseminates a shareholder letter dated December 18, 2017, detailing a comprehensive recapitalization program designed to strengthen the company's balance sheet amidst a volatile crude oil shipping market. NAT operates a fleet of 33 vessels.
Key Financial Metrics and Capital Structure
The filing focuses on capital raising and debt restructuring rather than operational performance metrics for the period. Key financial actions and figures include:
- Equity Raised: $110 million (excluding Greenshoe) via an oversubscribed equity offering on December 12, 2017.
- Asset Financing: $130 million secured via a sale/lease-back agreement for three newbuilding Suezmax vessels (delivery expected in 2018).
- Back-Stop Facility: A $375 million facility secured from a relationship bank to support the equity offering, ensuring a financing ratio of at least $3.40 for every new dollar of equity.
- Recapitalization Scope: The total program is estimated at $600 million or more.
- Debt Restructuring Plan: Intent to replace the existing restrictive revolving credit facility (dating to 2004) with a new $250 million facility, combined with a potential $100 million to $150 million bond offering or asset transactions.
Note: The filing text does not provide specific values for revenue, net income, operating cash flow, or current debt levels for the period ended December 31, 2017.
Material Changes and Strategic Actions
The primary material change is the execution of a multi-faceted recapitalization strategy to optimize the balance sheet. The company moved away from an outdated credit facility that had become restrictive as the fleet grew from 4 to 33 vessels. The recent actions include:
- Securing $130 million in financing for future assets.
- Completing a $110 million equity raise.
- Establishing a robust back-stop financing arrangement to ensure liquidity and investor confidence.
Outlook, Management Commentary, and Risks
Management Commentary: Chairman and CEO Herbjørn Hansson stated that 2018 is expected to be more rewarding than 2017, though no guarantees are issued. Management aims to maintain the lowest net debt per vessel and cash break-even rates among Wall Street-listed tanker companies. Dividends remain a priority.
Risks and Contingencies: The filing includes a cautionary statement regarding forward-looking statements. Key risks identified include:
- Fluctuations in charter rates and vessel values.
- Changes in global oil consumption, OPEC production levels, and storage.
- Operating expense volatility (bunker prices, drydocking, insurance).
- Political conditions, regulatory changes, and potential shipping route disruptions.
- Vessel breakdowns and off-hires.
Investor Verification Checklist
- Verify the closing status and final terms of the $130 million sale/lease-back agreement for the three newbuilding Suezmaxes.
- Confirm the final net proceeds of the $110 million equity offering, including any Greenshoe exercise.
- Monitor the execution of the new $250 million revolving credit facility and the retirement of the 2004 facility.
- Track the status of the proposed $100 million to $150 million bond offering or asset transactions.
- Review subsequent filings for actual 2017 revenue, profit, and cash flow figures, as they are not detailed in this specific Form 6-K.