* Knightsbridge reports net income of $8.9 million and earnings per share of
$0.48 for the third quarter of 2010.
* Knightsbridge reports net income of $32.6 million and earnings per share of
$1.86 for the nine months ended September 30, 2010.
* Knightsbridge announces a cash dividend of $0.50 per share for the third
quarter of 2010.
* Knightsbridge completed the successful offering of 4,887,500 ordinary shares
in October at $19.00 per share raising net proceeds of approximately $88.2
* Knightsbridge purchased the Capesize vessel Golden Future from Golden Ocean
for a price of $72 million.
* In October, Knightsbridge purchased the Capesize vessel Golden Zhejiang from
Golden Ocean for a price of $65.5 million.
* The VLCC Mayfair commenced a five year bareboat charter in October 2010.
* In July, Knightsbridge entered into a new $58.24 million term loan facility
and has secured a $175 million credit facility, which is expected to close
in the fourth quarter.
THIRD QUARTER 2010 AND NINE MONTHS RESULTS
Knightsbridge Tankers Limited (the "Company" or "Knightsbridge") reports net
income of $8.9 million and earnings per share of $0.48 for the third quarter of
2010. The average daily time charter equivalents ("TCEs") earned by the
Company's VLCCs excluding bareboat charters and Capesize vessels were $30,800
and $40,700, respectively, compared with $49,800 and $45,500 in the preceding
quarter. VLCC revenues and TCEs decreased mainly due to weaker results from the
Mayfair, which operated in the spot market and the absence of profit share from
the Hampstead and Kensington in the third quarter. Although Capesize revenues
increased due to the delivery of Golden Future in July, average Â Capesize TCEs
decreased due to the lower rate earned by the Golden Future compared with the
other two vessels.
The net increase in cash and cash equivalents in the quarter was $11.1 million.
The Company generated cash from operating activities of $20.0 million, paid
$47.0 million in connection with the purchase of Golden Future and paid a
dividend of $9.3 million. The Company borrowed $104.6 million, net of fees paid,
and repaid debt of $57.3 million. In November 2010, the Company has average cash
breakeven rates for its VLCCs excluding bareboat charters and Capesize vessels
of approximately $19,200 and $8,800 per vessel per day, respectively.
For the nine months ended September 30, 2010 the Company reports net income of
$32.6 million and earnings per share of $1.86. The average daily TCEs for the
Company's VLCCs excluding bareboat charters and Capesize vessels for the nine
months ended September 30, 2010 were $38,500 and $43,500 respectively.
THE TANKER MARKET
The market rate for a VLCC trading on a standard 'TD3' voyage between The
Arabian Gulf and Japan in the third quarter of 2010 was WS 52; equivalent to
$17,000/day; representing a decrease of approximately WS 36 points or
$37,500/day between the second quarter of 2010 and an increase of WS 16.5 points
from the third quarter of 2009. Present market indications are approximately
Bunkers at Fujairah averaged approximately $444.5/mt in the third quarter of
2010 compared to $461/mt in the second quarter of 2010; a decrease of $16.5/mt.
Bunker prices varied from a low of $421.5/mt at the beginning of July and a high
of $468/mt at the beginning of August.
The International Energy Agency's ("IEA") October 2010 report stated an average
OPEC oil production, including Iraq, of 29.2 million barrels per day (mb/d)
during the third quarter of the year. This was an increase of 250,000 barrels
per day compared to the second quarter of 2010 and an increase of 420,000
barrels per day compared to the third quarter of 2009.
IEA further estimates that world oil demand averaged 87.6 mb/d in the third
quarter of 2010, representing an increase of 840,000 barrels per day compared to
the second quarter of 2010, and approximately 2.4 mb/d from the third quarter of
2009. Additionally, the IEA estimates that world oil demand will average
approximately 87 mb/d in 2010 representing an increase of 2.5 percent or
approximately 2.2 mb/d from 2009.
The VLCC fleet totalled 539 vessels at the end of the third quarter of 2010, up
from 530 vessels at the end of the previous quarter. 14 VLCCs were delivered
during the quarter versus an estimated 12 at the beginning of the year.
Throughout 2010 the current estimate is 63 deliveries. The orderbook counted
183 vessels at the end of the third quarter, up from 170 orders from the
previous quarter. 27 new orders were placed during the quarter and the current
orderbook represents about 34 percent of the VLCC fleet. During the quarter five
vessels were removed from the trading fleet for scrapping or conversion/storage
purposes. According to Fearnleys the single hull fleet now stands at 49 vessels.
THE DRY BULK MARKET
In spite of a net fleet growth of 11.8 percent (55.8 million dwt) the dry bulk
segment has again surprised on the upside. Iron ore transport to China, which
has been the fastest growing sea borne trade the last decade has even
experienced a small decline the three first quarters this year compared to
2009. The combination of these two factors should cater for a lower utilization
of the dry bulk fleet.
However, other areas have contributed positively and overall demand has been
able to absorb the vast number of newbuildings so far. We would like to
emphasize three reasons:
Â Â Â 1.Â Â Â Â Â Â Strong increase in coal imports to China and India
Â Â Â 2.Â Â Â Â Â Â Congestions
Â Â Â 3.Â Â Â Â Â Â Chinese coastal trade
The Capesize spot market has experienced a lot of volatility during third
quarter. Average earnings have been $26,233 per day, with a low of $12,000 per
day mid July and a high of $ 41,000 per day early September
Asset values have softened slightly during the quarter. By the end of September
2010 the value of a five year old Capesize was $55.4 million compared to $60.4
million by the end of the previous quarter.
Long term time charters are still holding up, one year time charter period is
estimated to generate $30.000 per day for modern tonnage while five year time
charter stands at approximately $27,500 per day.
CORPORATE AND OUTLOOK
Herman Billung, the Chief Executive Officer of Golden Ocean Management AS, was
elected a director of the Company at the Annual General Meeting on September
In July 2010, the Company entered into a new $58.24 million term loan facility
with DnB NOR Bank that matures in June 2015. This new term loan facility
consists of four equal tranches of $14.56 million. The Company drew down the
entire amount of this term loan facility partly to refinance the balance of
$56.0 million outstanding under the $140.0 million loan facility with the Royal
Bank of Scotland.
In July 2010, the Company took delivery of the Capesize vessel "Golden Future"
from Golden Ocean Group Limited ("Golden Ocean"). The Golden Future was built at
the Zhoushan Jinhaiwan Shipyard Co., Ltd. and completed in February 2010. The
vessel is employed on a time charter with a minimum term of 35 months from
February 2010 at a gross rate of $31,500 per day.
In September 2010, the Company agreed to acquire the Capesize vessel "Golden
Zhejiang" from Golden Ocean for a purchase price of $65.5 million and took
delivery of the vessel on October 27, 2010. The Golden Zhejiang was built at the
Zhoushan Jinhaiwan Shipyard Co., Ltd. and was completed in September 2010. The
vessel is employed on a time charter with a minimum term of 48 months from
September 2010 at a gross rate of $29,900 per day. The Company took delivery of
the vessel in October and settled $18.5 million of the purchase price by issuing
973,684 restricted common shares to Golden Ocean and used cash of $47 million to
finance the remaining portion of the purchase price. Knightsbridge expects to
draw down $25 million of debt against the Golden Zhejiang in the fourth quarter
of 2010. The Golden Zhejiang is the fourth Capesize vessel in the Knightsbridge
fleet. Golden Ocean is acting as the commercial manager for all of the Capesize
On September 27, 2010, the Company announced an underwritten public offering of
4,250,000Â common shares and a 30 day option granted to the underwriters to
purchase up to 637,500 additional shares to cover overallotments.Â The offering
was priced at $19.00 per share and the underwriters exercised the over-allotment
option in full.Â As a result, 4,887,500 common shares were issued in October and
net proceeds of approximately $88.2 million were received. The proceeds have
been used to fund a portion of the purchase price of the Golden Zhejiang and the
remainder is expected to be used to repay indebtedness, fund future vessel
acquisitions, for working capital and for general corporate purposes.
In October 2010, the VLCC Mayfair commenced a five year bareboat charter at a
rate which is determined by the Company to be equivalent to at least $32,000 per
day on a time charter basis. The charterers will pay for the vessel's drydocking
due in the fourth quarter 2010. With the commencement of this bareboat charter,
all of the Company's vessels are fixed on time and bareboat charters expiring
between 2011 and 2015.
In May 2010, the Company entered into a commitment letter with Nordea for a new
$175.0 million senior secured credit facility maturing in May 2015 consisting of
a term loan in the amount of $100.0 million and a revolving credit facility in
the amount of $75.0 million. This offer was confirmed in a term sheet in
September and the Company expects to enter into this new senior secured credit
facility in the fourth quarter. The Company intends to use $75.0 million in
borrowings available under the term loan to refinance $75.0 million of debt
under the amended Nordea credit facility and intends to use the remaining
$25.0Â million in borrowings under the term loan to partially finance the
acquisition costs of the Golden Zhejiang.
Based on the third quarter cash flow and its profitable forward contract
coverage, Knightsbridge is pleased to announce that the dividend level of the
previous quarter will be maintained in the third quarter and has decided to
declare a dividend of $0.50 per share. The record date for the dividend is
November 19, 2010, ex dividend date is November 17, 2010 and the dividend will
be paid on or around December 6, 2010.
Based on the recent completion of the public offering and the secured revolving
credit facility, Knightsbridge has the ability to further grow the Company by
purchasing an additional vessel without having to raise additional equity.
Henceforth the Board is actively looking for tonnage that can contribute to the
Company's dividend capacity.
18,564,515 ordinary shares were outstanding as of September 30, 2010. The
weighted average number of shares outstanding for the three months and nine
months ended September 30, 2010, was 18,325,735 and 17,513,068, respectively.
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.
Knightsbridge 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," "except," "anticipate," "intends," "estimate," "forecast," "project,"
"plan," "potential," "will," "may," "should," "expect" "pending" and similar
expressions identify forward-looking statements.
The forward-looking statements in this document 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.
In addition to these important factors, 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 charterhire
rates and vessel values, changes in demand in the dry bulk and tanker markets,
as a result of changes in OPEC's petroleum production levels and world wide oil
consumption and storage, changes in Knightsbridge's operating expenses,
including bunker prices, drydocking and insurance costs, the market for
Knightsbridge's 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, and other important factors described from
time to time in the reports filed by Knightsbridge with the Securities and
The full report is available in the link enclosed
The Board of Directors
Knightsbridge Tankers Limited
November 9, 2010
Questions should be directed to:
Ola LorentzonÂ : Chairman, Knightsbridge Tankers Limited
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â + 46 703 998886
Inger M. Klemp: Chief Financial Officer, Knightsbridge Tankers Limited
Â Â Â Â Â Â Â Â Â Â Â Â +47 23 11 40 76
3rd Quarter 2010 Results :
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Source: Knightsbridge Tankers Limited via Thomson Reuters ONE