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: May 2008
Commission
File Number: 001-13944
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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.
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes
[_] No [X]
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82-______________.
INFORMATION
CONTAINED IN THIS FORM 6-K REPORT
Attached
to this report on Form 6-K as Exhibit 1 is a press release of Nordic American
Tanker Shipping Limited, dated May 5, 2008, announcing its financial results for
the first quarter of 2008.
Exhibit
1
Nordic
American Tanker Shipping Ltd. (NYSE:NAT) – Announces Dividend and Earnings in
respect of the 1st Quarter of 2008
Hamilton,
Bermuda, May 5th,
2008
Nordic
American Tanker Shipping Ltd. (“Nordic American” or “the Company”) today
announced its results for the 1st quarter
of 2008. The Company’s results improved substantially in 1Q08 compared with the
two proceeding quarters. Dividend for 1Q08 of $1.18 was 136% per share up on
4Q07 when the dividend was $0.50 per share. The strong spot market during 1Q08
produced time charter earnings equivalent to $46,600 per day for our vessels in
the spot market – compared with an average of about $27,000 per day during 4Q07.
The strong market has continued in the second quarter. So far in 2Q08 the spot
freight rate level for our vessels is significantly higher than what we achieved
for 1Q08. The Company has now declared a dividend for 43 consecutive quarters
since the autumn of 1997 when our first three vessels were
delivered.
Highlights:
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·
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The
Board of Directors has declared a dividend of $1.18 per share for the
1st
quarter of 2008. The dividend is expected to be paid on June 3rd,
2008, to shareholders of record as of May 23rd,
2008.
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·
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Net
income for 1Q08 was $0.78 per share based on the average number of shares
outstanding during the quarter – 29,975,312 – the same number of shares
issued and outstanding as of December
31st,
2007.
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·
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In
1Q08 total offhire was 28 days related to planned
drydockings.
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·
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Our
fleet now consists of 14 double hull suezmax tankers including the two
newbuildings to be delivered in 4Q09 and in April 2010. In the
autumn of 2004 the Company had three suezmax
tankers.
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·
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We
are now starting to see the income and cost benefits from consolidation of
the commercial and technical functions; a development that can be expected
to continue.
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·
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The
conversion of oil tankers into dry cargo vessels and into vessels for the
offshore oil industry has continued, thereby moderating the growth in the
world tanker fleet. Our two newbuildings are on schedule with planned
deliveries in 4Q09 and April 2010. However, a general tendency of delays
at some yards can now be expected, dampening the supply growth of tanker
tonnage.
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·
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In
April the Company extended its $500 million Credit Facility by three years
– from September 2010 up to September 2013 - on the same terms as agreed
when the Credit Facility was established in September
2005.
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Dividends per Share,
Earnings per Share and Financial Information:
The
operating cash flow(1) was
$36.9m for 1Q08, compared to $17.2m for 4Q07 and $36.1m for 1Q07.
The Board
has declared a dividend of $1.18 per share in respect of 1Q08. A dividend of
$0.50 per share was declared for 4Q07. The dividend for 1Q07 was
$1.24 per share. The development of the dividend is above all a direct
reflection of the level of the spot tanker market.
Net
income for 1Q08 was $23.4m, or $0.78 per share (EPS). This compares
to a net income of $1.7m or $0.06 per share for 4Q07. In 1Q07, net income was
$22.8m, or $0.85 per share. In 1Q08 the Company incurred one time
costs equivalent to $0.04 per share due to loss of income following drydockings
- 18 days for one vessel and 10 days for another vessel which was in
drydock at the turn of the year 2007/2008. Two vessels have already finished
their planned drydockings in 2Q08 and another will be in planned drydock before
the end of 2Q08. The estimated total offhire between the three vessels is about
50 days. The drydockings this year have been carried through efficiently on or
below budget – costwise and timingwise.
In 3Q08
two vessels are
planned for drydocking with an estimated offhire of about 35 days between them.
Thereafter, there is no planned drydocking until 2010 for our current
fleet.
The
Company does not engage in freight or interest derivatives.
We
consider our general and administrative costs per day per ship to be at a low
level. We also continue to have a strong focus on keeping the operating costs of
our vessels low. However, we note the continuing upward pressure across the
shipping industry on vessel operating costs – above all related to crewing
costs, lubricating oil costs and repair and maintenance costs. We now
see synergies coming from the consolidation of our commercial and technical
operations.
We
estimate that our average cash breakeven for our trading fleet of 12 vessels is
approximately $9,500 per day per vessel. The cash breakeven level has
been reduced following reduced interest costs on our debt. When the freight
market is above this level, the Company can be expected to pay dividend based on
its strategy. The breakeven rate is the amount of average daily revenues for our
vessels which would cover our vessel operating expenses, voyage expenses, if
any, cash general and administrative expenses, interest expense and other
financial charges.
The debt
financing of the two newbuildings, is not expected to impact dividend payments
to shareholders nor earnings in the period up to delivery of the
vessels.
At the end of 1Q08, our
net debt was approximately $8.1m per vessel or $97.3m in total. At the
same time we have approximately $384m undrawn under our $500m revolving
credit facility with maturity in September 2013. There is no
repayment obligation during the term of the facility, and the Company pays
interest only on drawn amounts, and a commitment fee for undrawn amounts.
The
credit crunch is impacting the shipping sector as banks have increased their
margins and they have introduced stricter credit policies. This tendency has not
impacted the Company. Reflecting the banks confidence in the Company, in April
this year the Company entered into an agreement with leading shipping banks to
extend the tenure of the Company’s Credit Line of $500 million by three years -
from September 2010 up to September 2013 - on the same terms as agreed when the
Credit Facility was established in September 2005. The extension of three years
gives the Company a high degree of flexibility for future
expansion.
The
Company has one of the strongest balance sheets in the tanker industry,
providing flexibility for the Company if a weaker freight environment should
occur. It is apparent that some shipping companies are now facing challenges
when it comes to financing their large newbuilding programs as shipping banks
are more restrictive than before in granting credit. In such an environment the
relative competitive position of the Company is improved.
For
further details on our financial results, please see later in this
release.
The
Fleet:
Eleven of
the Company’s 12 trading vessels are employed in the spot market, while one
vessel remains employed on a long-term fixed rate charter.
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. During 1Q08, we also had 12 vessels in operation. With the two
newbuildings announced in November 2007, the Company will have a fleet of 14
vessels.
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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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Long
term fixed charter
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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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Newbuilding
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163,000
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Delivery
in 4Q09
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Newbuilding
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163,000
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Delivery
by end April 2010
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Total 2,194,791
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The
Market:
The
average spot market rate for modern suezmax tankers, according to the Imarex
Tanker Index, was $43,635 per day for 1Q08 compared to $43,511 per day during
4Q07.
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The
average daily rate for our spot vessels was about $46,600 per day net to
us during 1Q08 compared with $27,000 for 4Q07. At the time of this writing
– so far into 2Q08 - the average rate for our 11 spot vessels is
significantly higher than for 1Q08. We expect that freight
rates may continue to fluctuate significantly.
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The
graph shows the average yearly spot rates as from
2000 as reported by R.S. Platou Economic Research a.s. The rates as
reported by shipbrokers may vary from the actual rates we achieve in the
market.
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Recent statistics
indicate that the world suezmax fleet shrank marginally during 1Q08 (2
vessels) – now standing at 360 vessels. There are uncertainties associated
with this number as we see that deliveries from some yards are being
delayed. As at the end of 1Q08, there are 46 single hull vessels still in
service but they are expected to be phased out from the tanker trade by
2010. A recent high profile pollution incident in Korean waters has
further damaged the weak position of single hull tankers.
We
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believe
that this development is advantageous for our Company, which owns only
double hull tankers. Following the strength of the offshore oil industry
and the dry cargo market, both suezmax tankers and very large crude
carriers are being withdrawn from the tanker market as they are converted
to other purposes – such as offshore vessels and dry bulk carriers. From
January 2006 through the end of 2007 about 10 million dwt of tanker
tonnage has been scheduled for conversion to nontanker purposes. This
development has also the effect of dampening tanker supply
growth.
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In
summary, the supply side dynamics contribute to dampening the tanker supply
growth, compared with earlier expectations.
The level
of the tanker market is essentially a function of supply and demand for tanker
tonnage. In addition to the supply of new vessels from the ship yards, adjusted
for phasing out single hull tonnage and for other vessel deletions, the level of
the tanker market in the foreseeable future is above all dependent on the
development of the world economy. So far we have not seen that the
instability of the financial markets has impacted trade flows in the crude oil
business. Far Eastern countries and other emerging areas including
South America, are showing strong economic growth, which to some extent is
balancing out the economic challenges in the United States and the Western
world. The importance of China is reflected by recent statistics from China’s
Customs to the effect that the country’s crude oil imports increased by 25% in
March this year on a year on year basis to reach a new record high of 4.1 mill
barrels a day, having risen 13% from February this year.
Strategy going
forward
The
operations of the Company are based on its unique and transparent operating
model. Some other listed companies have on occasions changed policies and
invested in sectors outside of their core business. In the foreseeable future we
intend to stick to our operating model and to our core business. Going forward,
our policy is that growth should be accretive; that is, after an acquisition of
vessels or other forms of expansion, the Company should be able to pay higher
dividend than before such an event. We are actively assessing expansion
alternatives for the Company. A full dividend payout policy with high spot
market exposure and a strong balance sheet should continue to provide for a
competitive yield compared with other shipping companies.
We focus
on a cost efficient management of the Company, both in regard to the operating
expenses of the vessels and general and administrative expenses (G&A). The
Company’s G&A costs continue to be among the lowest in the
industry.
We regard
it as extremely important that the interests of management are aligned with
those of shareholders.
The
Company's exposure to the spot market is based on our analysis showing that the
spot market over time can be expected to produce higher revenues on average than
the time charter market. A certain amount of term charter coverage is also
being contemplated from time to time.
The main
objective of the Company is to maximize its risk adjusted total return(2) for
shareholders via a transparent, predictable and simple strategic
platform.
* * * *
*
________________________
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(1)
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Operating
cash flow is a non-GAAP financial term often used by investors to measure
financial performance of shipping companies. Operating cash
flow represents income from vessel operations before depreciation and
non-cash administrative charges. Please see page 6 for a
reconciliation of this non-GAAP measure as used in this release to the
most directly comparable GAAP financial
measure.
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(2) The
total return is based on the price for our common shares plus dividends
reinvested in our common shares.
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.
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
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)
Dated: May
5,
2008 By: /s/ Herbjørn
Hansson
Herbjørn
Hansson
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Chairman,
Chief Executive Officer and
President
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SK 01318
0002 880540