UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the
month of August 2010
Commission
File Number: 001-162171
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NORDIC
AMERICAN TANKER SHIPPING LIMITED
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(Translation
of registrant's name into English)
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LOM
Building, 27 Reid Street, Hamilton, HM 11, Bermuda
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(Address
of principal executive office)
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Indicate
by check mark whether the registrant files or will file annual reports under
cover of Form 20-F or Form 40-F.
Form 20-F
[x] Form 40-F
[ ]
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): [ ].
Note: Regulation S-T Rule
101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely
to provide an attached annual report to security holders.
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): [ ].
Note: Regulation S-T Rule
101(b)(7) only permits the submission in paper of a Form 6-K if submitted to
furnish a report or other document that the registrant foreign private issuer
must furnish and make public under the laws of the jurisdiction in which the
registrant is incorporated, domiciled or legally organized (the registrant's
"home country"), or under the rules of the home country exchange on which the
registrant's securities are traded, as long as the report or other document is
not a press release, is not required to be and has not been distributed to the
registrant's security holders, and, if discussing a material event, has already
been the subject of a Form 6-K submission or other Commission filing on
EDGAR.
INFORMATION
CONTAINED IN THIS FORM 6-K REPORT
Attached
as Exhibit 1 is a press release of Nordic American Tanker Shipping Limited (the
"Company"), dated August 6, 2010, containing the Company's report for
the second quarter of 2010.
This
Report on Form 6-K is hereby incorporated by reference into the Company's
Registration Statement on Form F-3 ASR (Registration No. 333-162171) filed on
September 28, 2009 and Form F-3ASR (Registration No. 333-158212) filed on March
26, 2009.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NORDIC
AMERICAN TANKER SHIPPING LIMITED
(registrant)
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Dated: August
6, 2010
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By:
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/s/
Herbjørn Hansson
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Herbjørn
Hansson
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Chairman,
Chief Executive Officer and
President
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Exhibit
1
Nordic American Tanker Shipping's
Report for the 2nd Quarter 2010. Company Announces Dividend for the 52nd
Consecutive Quarter. Plans Further Vessel Acquisitions. No Equity Issues
Contemplated.
Link to
the complete 2Q10 dividend report: http://hugin.info/201/R/1436346/381463.pdf
Hamilton,
Bermuda, August 6, 2010
Nordic
American Tanker Shipping Ltd. ("NAT" or "the Company") today announced that the
dividend for 2Q10 was $0.60 per share which is the same as for 1Q10. At a time
when several shipping companies produce negative results, the Board of Directors
is pleased to announce that NAT turned in a solid net income in 2Q10. We expect
that the fleet of NAT will reach a minimum of 20 vessels by the end of 2011. We
have no plans to tap the equity markets to fund this expansion, since the
Company currently has ample financial resources to reach a fleet of 24
vessels.
The
Company will pay the dividend on or about September 2, 2010, to shareholders of
record as of August 20, 2010. Since the autumn of 1997, when the company's first
three vessels were delivered, NAT has always paid a quarterly dividend; the
total dividends paid through the second quarter of 2010 amount to $41.34 per
share.
The Key
points:
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·
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A
dividend of $0.60 per share has been declared for 2Q10 - the same as for
1Q10. Earnings per share in 2Q10 were $0.17 as compared to
$0.21 in 1Q10.
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·
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In
April, 2010, NAT entered into an agreement with Samsung Heavy Industries
Co., Ltd, to build two suezmax tankers of 158,000 dwt each to be delivered
in the third and fourth quarters of 2011. The purchase price for the two
vessels is in aggregate $129.5m. Generally, the values of newbuildings
have risen somewhat since we signed our agreement with Samsung Heavy
Industries Co., Ltd.
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·
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The
Company consolidated its commercial operations during the second quarter.
Our vessels that are traded in the spot market are now in the Gemini
suezmax cooperative arrangement. Of the 16 vessels that our company
currently operates, 15 are in the spot market.
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·
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The
Company has no net debt and does not engage in any type of
derivatives.
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·
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So
far in 3Q10, the spot tanker market is lower than in
2Q10.
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Fleet Expansion and
Accretion
During
2Q10, we have seen some appreciation of asset values in the secondhand market
for vessels. Initial Public Offerings (IPOs) have contributed to this
development, which is now abating. Investors have become more discerning about
the quality of shipping companies in which they invest.
We are in
a good position to take advantage of strong shipping markets, which will mean
increased dividend payouts. If markets are weak, we will be ideally positioned
to grow our fleet accretively.
During
2009, NAT agreed to acquire four vessels which have been delivered to the
Company. As indicated above, the fleet is expected to stand at a minimum of 20
vessels late in 2011.
The
expansion of the Company has improved our position relative to that of some of
our competitors who have had a difficult time coping with the consequences of
the international financial crisis.
Dividend
Capacity
At
present ship values, the Company has ample financial capacity to increase its
fleet to 24 vessels without tapping the equity market.
The
Company will continue to keep a strong balance sheet with no or little net debt.
However, in a weaker market environment the Company is prepared to add some debt
to the balance sheet, assuming a slightly higher financial risk. This
does not imply any change in the strategy of the Company and non-retiring debt
continues to be an integral part of the business model of Nordic
American.
With all
but one vessel (the Gulf Scandic which will be redelivered to us in November
2010) operating in the spot market, the Company is in a position to reap the
benefits of a potential upswing in the tanker market.
Below is
a chart indicating the annual dividend capacity based on a fleet of 20 vessels
and 24 vessels at different spot market rates.
Link to
the complete 2Q10 dividend report: http://hugin.info/201/R/1436346/381463.pdf
The above
is based on 355 income days per vessel per year. The net debt is about $7m per
vessel with a cash break-even level of $11,300 per day per vessel for a 20
vessel fleet. The same numbers for a 24 vessel fleet are $16m per vessel and
$12,300 per day per vessel. The numbers show the substantial dividend
capacity of NAT.
When the
freight market is above the cash break-even level, the Company can be expected
to pay a dividend. The breakeven rate is the amount of average daily revenues
our vessels would need to earn in the spot market in order to cover our vessel
operating expenses, voyage expenses, if any, cash general and administrative
expenses, interest expense and other financial charges.
2
The
annual spot rates as reported by R.S. Platou Economic Research a.s. show that
during the last 10 years up to the end of 2009, 7 years have produced about
$40,000 on average per day per ship or better. This is reflected in the graph
later in this report.
Typically,
our dividend correlates with the suezmax spot freight rates. Going forward, we
can expect that spot suezmax freight rates may fluctuate in an unpredictable
manner.
The lack
of commercial bank financing and higher margins on shipping loans are
challenging for debt-laden shipping companies. By having no or little net debt,
NAT is better positioned to navigate the financial seas, as we believe that is
in the best interests of our shareholders.
Our
primary objective is to maximize total return[1] to our shareholders, including
maximizing our quarterly cash dividend.
The
Company has further acquisitions under evaluation and will work to continue to
strengthen its position compared with that of its competitors.
Financial
Information
The Board
has declared a dividend of $0.60 per share in respect of 2Q10 to shareholders of
record as of August 20, 2010. Because of the strong financial
position of the Company, it is appropriate that shareholders at this time
receive an extra $0.10 above the dividend of $0.50 per share warranted by the
operating cash flow. Therefore, a dividend of $0.60 per share has been declared
for 2Q10 - the same as for 1Q10. The average number of shares
outstanding for the second quarter of 2010 was 46,898,782. The market
capitalization of the Company stood at $1.37 billion as of August 5,
2010.
Net
income from continuing operations was $0.22 per share in 2Q10. Reported net
income for 2Q10 came to $7.9m, or $0.17 per share (EPS), compared to reported
net income of $9.5 million or $0.21 per share for 1Q10. Total one-time charges
during 2Q10 constitute $0.05 per share including loss of hire related to the
Nordic Hunter and a one-time bonus of $0.9m spread across all employees of NAT
and the manager, including a total of $60,000 to non-executive members of the
Board. At this time there is no incentive scheme in place for employees or for
the Board.
The
Company's operating cash flow[2] was $24.0m for 2Q10, compared to $28.4m for
1Q10.
We
consider our general and administrative costs per day per ship to be at a low
level. We also continue to concentrate on keeping our vessel operating costs
low, while always maintaining our commitment to safe vessel operations. We have
focus on the cost advantages of operating a homogenous fleet.
3
At the
time of this report, the Company has no net debt and has a revolving credit
facility of $500 million. The credit facility, which matures in September 2013,
is not subject to reduction by the lenders and there is no obligation to repay
principal during the term of the facility. The Company pays interest only on
drawn amounts and a commitment fee for undrawn amounts. In June 2010, as a
cautionary measure, the Company drew $200m (of the $500m available) on the
credit facility as is reflected in the balance sheet as per end June. At the
time of this report we have repaid $150m of the amount drawn.
For
further details on our financial position for the periods of 2Q10, 1Q10, 4Q09,
and for the six months ended June 30, 2010 and 2009, please see later in this
release.
The
Fleet
The
Company has 16 trading vessels.
By way of
comparison, in the autumn of 2004, the Company had three vessels; at the end of
2005 the Company had eight vessels; and at the end of 2006 the Company had 12
vessels. At the end of 2009 we had 15 vessels in operation. At the end of June
30, 2010 we have 16 vessels in operation. The Company is expected to have a
fleet of minimum 20 vessels by the end of 2011. Please see the fleet list below.
We expect that the expansion process will continue and that further vessels will
be added to our fleet.
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Vessel
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Dwt
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Employment
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Gulf
Scandic
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151,475
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Fixed
charter until November 2010
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Nordic
Hawk
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151,475
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Spot
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Nordic
Hunter
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151,400
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Spot
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Nordic
Voyager
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149,591
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Spot
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Nordic
Fighter
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153,328
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Spot
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Nordic
Freedom
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163,455
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Spot
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Nordic
Discovery
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153,328
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Spot
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Nordic
Saturn
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157,332
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Spot
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Nordic
Jupiter
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157,411
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Spot
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Nordic
Cosmos
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159,998
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Spot
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Nordic
Moon
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159,999
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Spot
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Nordic
Apollo
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159,999
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Spot
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Nordic
Sprite
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147,188
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Spot
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Nordic
Grace
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149,921
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Spot
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Nordic
Mistral
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164,236
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Spot
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Nordic
Passat
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164,274
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Spot
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Newbuilding
1
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163,000
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*)
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Newbuilding
2
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163,000
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Delivery
expected by end October, early November 2010
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Newbuilding
3
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158,000
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Delivery
expected in 3Q11
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Newbuilding
4
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158,000
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Delivery
expected in 4Q11
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Total
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3,136,410
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*) We have not accepted delivery of this newbuilding because the vessel has not been demonstrated to comply with the specifications and the contract. Accordingly, NAT has not taken delivery because the vessel is affected by major deficiencies and is not in a deliverable condition under the contract. The seller has declined several requests from us to rectify the deficiencies, and have instead elected to cancel the contract. NAT will seek to recover in full all payments made to the seller under the contract and any losses which NAT incurs as a consequence of the seller's failure to deliver the vessel according to the contract.
4
Total
offhire for 2Q10 was 48 days, of which 47 days are associated with the Nordic
Hunter which was at yard in Quingdao in China. The planned yard stay was part of
our long term strategy concerning maintenance of the Company's assets. Nordic
Hunter is now back in service, having fully upgraded the vessel's ballast tanks
and heating coils. The vessel is now in excellent condition.
There are
no drydockings scheduled for the 3rd
quarter 2010.
World Economy and the Tanker
Market
In our
quarterly reports to shareholders we have often stressed the significance of the
development of the world economy for the tanker industry. The outlook for the
world economy is presently uncertain.
We have
seen an increase in both westbound and eastbound sailings from the Middle East
during 2Q10, relative to 1Q10, which is a positive development.
For NAT,
an improved freight market can be expected to result in a higher dividend,
whilst a declining freight market could represent attractive fleet growth
opportunities. As a matter of policy the Company does not attempt to predict
future spot rates.
The
average daily rate for our spot vessels was $28,800 per day net to us during
2Q10 compared with $32,400 per day for 1Q10.
Link to
the complete 2Q10 dividend report: http://hugin.info/201/R/1436346/381463.pdf
The graph
above shows the average yearly spot rates since 2000 and the rates for 1Q10 and
2Q10 as reported by R.S. Platou Economic Research a.s. The rates as
reported by shipbrokers and by Imarex may vary from the actual rates we achieve
in the market, but these rates are in general a good indication of the Company's
earnings.
Strategy going
forward
We
believe that the operating model of the Company is working to the benefit of our
shareholders.
Financial
turmoil and depressed shipping markets may represent attractive opportunities
for expansion.
5
Our
objective is to have a sustainable strategy that is flexible for both a strong
market and a weak market. Thus, the Company essentially has the following
strategic position going forward:
If the
market is strong, good results and dividends can be expected. If the
market is weaker, dividends will be lower. However, if rates remain down for a
while, the Company is in a position to buy ships inexpensively by historical
standards, paving the way for even higher dividends when the market strengthens
again. Several publicly traded tanker companies have significant net
debt which could make it difficult for them to buy vessels in a weak market. In
this way, the Company has covered both scenarios.
Our
policy is to grow when it is profitable and accretive to do so; that is, after
an acquisition of vessels or other forms of expansion, the Company should be
able pay a higher dividend per share and produce higher earnings per share than
had such an acquisition not taken place.
We
believe that our full dividend payout policy will continue to enable us to
achieve a competitive cash yield compared with that of other tanker
companies.
We
encourage investors wishing to receive dividends and to have exposure to the
tanker sector to assess our model and invest in our Company.
Our
Company is well positioned. To the best of our ability we shall endeavor to
safeguard and further strengthen this position for our shareholders in a
deliberate and transparent way.
[1] Total
Return is defined as stock price plus dividends, assuming dividends
are reinvested in the stock
[2] Operating
cash flow is a non-GAAP number. Please see later in this announcement
for a reconciliation of operating cash flow to income from vessel
operations.
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,"
"may," "should," "expect," "pending" and similar expressions identify
forward-looking statements.
6
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,
vessels breakdowns and instances of off-hire, failure on the part of a seller to
complete a sale to us 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.
Contacts:
Scandic
American Shipping Ltd
Manager
for:
Nordic
American Tanker Shipping Limited
P.O Box
56, 3201 Sandefjord, Norway
Tel: + 47
33 42 73 00 E-mail: nat@scandicamerican.com
Rolf
Amundsen, Investor Relations
Nordic
American Tanker Shipping Limited
Tel: +1
800 601 9079 or + 47 908 26 906
Gary J.
Wolfe
Seward
& Kissel LLP, New York, USA
Tel: +1
212 574 1223
Turid M.
Sørensen, CFO
Nordic
American Tanker Shipping Limited
Tel: +
47 33 42 73 00 or + 47 905 72 927
Herbjørn
Hansson, Chairman and Chief Executive Officer
Nordic
American Tanker Shipping Limited
Tel: +1
866 805 9504 or + 47 901 46 291
7