Business Context and Reporting Period
This Form 6-K filing by Nordic American Tanker Shipping Ltd. covers the month of July 2009, specifically referencing a press release dated July 7, 2009. The Company is a foreign private issuer incorporated in Bermuda, operating a fleet of Suezmax vessels. The primary event reported is the delivery of the Company's 16th vessel, the Nordic Grace, a double-hull Suezmax tanker.
Key Financial Metrics and Fleet Status
- Fleet Composition: The fleet now consists of 16 Suezmax vessels, including two newbuildings.
- Financing: The acquisition of the Nordic Grace was financed entirely with cash on hand.
- Liquidity and Balance Sheet: Management describes the Company as having one of the strongest balance sheets in the industry.
- Operating Breakeven: The average cash breakeven is stated to be less than $10,000 per day per ship.
- Revenue and Profit: The filing text does not provide specific revenue, profit, or cash flow figures for the period.
- Debt: No specific debt figures are provided, though the use of cash for acquisition implies low reliance on new debt for this transaction.
Material Changes
The material change reported is the expansion of the fleet from 15 to 16 vessels with the delivery of the Nordic Grace. The vessel is immediately employed in a cooperative arrangement with the Stena Group of Gothenburg, Sweden. This acquisition is characterized by management as accretive to the Company's dividend capacity.
Guidance, Outlook, and Risks
Management Commentary and Strategy: CEO Herbjorn Hansson reiterated the Company's policy of growing only when profitable and accretive. The goal is to ensure that after an acquisition, the dividend per share is higher than it would have been without the acquisition, provided the Company remains above its cash breakeven. The Company remains committed to its full dividend policy and transparent operating model.
Risks and Contingencies: The filing includes a cautionary statement regarding forward-looking statements. Key risk factors identified include:
- Fluctuations in charter rates and vessel values.
- Changes in global oil demand, OPEC production levels, and world economies.
- Operating expense volatility, specifically bunker prices, drydocking, and insurance costs.
- Availability of financing and refinancing.
- Regulatory changes, political conditions, and potential disruptions to shipping routes.
- Vessel breakdowns and off-hire instances.
Investor Verification Checklist
- Verify the specific purchase price of the Nordic Grace and the impact on cash reserves.
- Confirm the terms and duration of the cooperative arrangement with the Stena Group.
- Review the most recent Form 20-F or 10-Q for detailed financial statements, as this 6-K does not contain audited financial data.
- Monitor current spot market rates against the stated cash breakeven of less than $10,000 per day.
- Assess the status of the two remaining newbuildings mentioned in the fleet composition.