Business Context and Reporting Period
This Form 6-K filing by Nordic American Tanker Shipping Limited (NAT) relates to the period ending May 31, 2008. The document serves as a Notice of Annual General Meeting and Proxy Statement for a meeting scheduled for June 23, 2008, in Hamilton, Bermuda. The Company is a Bermuda-domiciled tanker shipping firm listed on the NYSE under the symbol "NAT."
Key Financial Metrics and Capital Structure
The filing does not provide specific revenue, profit, cash flow, or debt figures for the current period. However, it details the Company's capital structure as of the record date (May 22, 2008):
- Outstanding Shares: 34,373,271 common shares.
- Par Value: $0.01 per share.
- Aggregate Share Capital (Par Value): $343,733.
- Share Premium: Approximately $1.01 billion (excess of price paid over par value).
- Dividend Policy: Quarterly dividends substantially equal to net operating cash flow (net income plus depreciation and non-cash charges) after reserves, subject to Bermuda solvency tests.
Material Changes and Proposals
The filing outlines three primary proposals for shareholder approval, representing material changes to governance and capital structure:
- Election of Directors: Election of seven directors, including Chairman and CEO Herbjørn Hansson.
- Auditor Appointment: Approval of Deloitte AS as independent auditors for the fiscal year ending December 31, 2008.
- Reduction of Share Premium: Ratification of a reduction in paid-up share capital by approximately $1.01 billion. This reduction targets the share premium account to increase the Company's flexibility to declare dividends under Bermuda law, which currently restricts dividends if asset realizable value falls below liabilities plus share capital and share premium.
Outlook, Risks, and Management Commentary
Management Commentary: Management emphasizes that the proposed reduction of share premium is not a distribution to shareholders but a reclassification of surplus to the contributed surplus account. The primary objective is to ensure the Company can continue paying dividends even if the saleable value of assets declines, provided the Company remains solvent and has available cash.
Risks and Contingencies: The filing highlights regulatory risks under Bermuda law regarding dividend declarations. Specifically, dividends cannot be paid if there are reasonable grounds to believe the Company cannot pay liabilities as they become due, or if the realizable value of assets would be less than the sum of liabilities, issued share capital, and share premium. The proposed capital reduction is a strategic move to mitigate this specific legal constraint.
Investor Verification Checklist
- Verify the outcome of the shareholder vote on the $1.01 billion share premium reduction at the June 23, 2008 meeting.
- Confirm the filing of the required memorandum and affidavit with the Bermuda Registrar of Companies following the capital reduction.
- Review the audited financial statements for the year ended December 31, 2007, referenced in the proxy statement but not included in this filing.
- Monitor the Company's ability to declare dividends in subsequent quarters under the new capital structure.