Nordic American Tanker Shipping Ltd: New contract with BP
27 7월 2004 - 1:00AM
PR Newswire (US)
Nordic American Tanker Shipping Ltd: New contract with BP *
Contracts with BP * NAT to become an operating company * Market
Strategy * Dividend policy * New corporate web-site
http://www.nat.bm * More management resources SANDEFJORD, Norway,
July 26 /PRNewswire-FirstCall/ -- Dear Shareholder: During the
period from early September to late October 2004, BP will return
the three ships that it has chartered from us for the past seven
years. As we have disclosed in a previous announcement, one of the
three ships has been chartered to Gulf Navigation at a fixed rate
for a term of five years. Contracts with BP Today we are very
pleased to announce that the two other ships have been chartered to
BP on time charters for three years at market related rates -- in
direct continuation with the present BP contracts. According to the
terms of the contracts, NAT will receive the spot market rate minus
5 percent according to an agreed formula in which there is neither
a "floor" nor a "ceiling." The two charters we are announcing today
complete the strategic foundation we set out to build with our
current fleet for the future growth of the company. We are
particularly pleased to be able to continue our relationship with
BP. With the market-based income from these two ships, plus the
fixed income from our third ship, we believe that our fleet has the
optimal mix of exposure to the spot market, together with a base
level of income as a cushion against adverse markets. The market
related charters for our two ships to BP eliminate the risk of not
finding immediate employment in the spot market and are a very
attractive alternative to the costs of rapidly building a spot
chartering operation in-house. NAT to become an operating company
Under the new charters with BP, NAT will have the responsibility of
providing the crew and of operating the ships technically. These
functions will be outsourced to a first class technical manager of
high reputation. As we assume responsibility for the operation of
the two ships, quality and cost effective operations will be our
prime focus. Under the shortly expiring arrangement, BP has the
full technical responsibility for the vessels (a bare-boat lease)
based on notional operating costs of USD 8,500 per day per vessel.
Going forward, we will endeavor to keep the operating costs of the
ships at this level or lower -- which essentially should leave us
in the same cost position as in the past when it comes to running
the ships. NAT will also, as per industry practices, assume the
risks of off-hire due to technical problems and of increases in
operating costs. Management intends to charter our ships in a
manner that will allow us to cease being classified as a "Passive
Foreign Investment Company" for US tax purposes. This means that
qualifying dividends, which will be available to our non-corporate
US shareholders in 2006 and later years, are expected to be taxed
at a maximum United States income rate of 15%, rather than the
current maximum rate of 35%. While you should always consult your
own tax advisors for advice, there is a very helpful discussion of
the tax issues in the proxy statement for our Special Shareholders'
Meeting held earlier this year on March 15, 2004, at which the
shareholders decided to keep our company in business. Market
Strategy We believe Nordic American Tanker Shipping Limited will
continue to be a dynamic and exciting company that will be gaining
its new powers to operate as an active business during a remarkable
time in the tanker industry. For three decades voyage charter rates
(also known as "spot" rates) have not been as high as they
currently are for such an extended period of time. Voyage charter
rates may rise from here, they may remain at the same level, or
they may drop. Shipping income has shown great volatility in the
past and is notoriously difficult to predict. A strong tanker
company management does not so much try to predict rates, as it
must plan to be successful in the midst of uncertainty. A policy of
expansion represents a potential that we did not have in the past
when the operation of our company was limited to the three ships,
which were delivered to the company from Samsung Shipyard in 1997.
We believe that our policies are appreciated by the capital markets
and may result in our having a lower cost of capital than some of
our competitors. Under these circumstances, we believe that
expansion of our fleet can benefit our shareholders, and we intend
to expand when the timing is right. However, growth should not take
place at the expense of profitability and the ability of NAT to
continue to pay dividends. NAT has now entered into charter
agreements for its entire fleet to replace the charters that are
expiring in the period September/October. Upon return of the three
ships from the BP bareboat charters, the present bye-law
restrictions, which have prevented us from engaging in other
business activities, will lapse. Dividend policy For the
foreseeable future, our Board will continue our successful policy
of maintaining a low average debt level and of prioritizing a
positive dividend policy essentially as in the past. This policy
allows our shareholders to participate directly in the good times,
and gives our company a strong balance sheet, giving it the ability
to outperform competitors during the bad times. Information
services - new web-site To provide our shareholders with easy
access to relevant information, we have launched a new web site:
http://www.nat.bm/. Here you can find up-to-date information on the
Company, press releases, a reports archive, and the like. You will
also have the possibility to subscribe to an e-mail service where
you can receive all press releases and reports directly to your own
e-mail account. More management resources Because of the simplicity
of our business while all of our ships were on bareboat charters to
BP, the job of Chief Executive Officer of Nordic American Tanker
Shipping Limited has been part-time only, with all other functions
outsourced. Starting October 1, I will devote my full time and
attention to Nordic American Tanker Shipping as Chairman and Chief
Executive Officer. In preparation for the changeover, we are
building a strong and slim executive team. We have already filled
the position of Chief Financial Officer and Treasurer as well as
functions covering administrative aspects of our business such as
IT and accounting. Based upon our policies, the future performance
of Nordic American Tanker Shipping Limited, as in the past, will
rise and fall with the strength of the tanker market. Management
will endeavor to maintain policies and strategies that will result
in the greatest value to shareholders -- a priority which we will
always have in focus. Sincerely, Herbjorn Hansson, Chairman &
Chief Executive Officer Enquiries from the US, please contact: Rolf
Amundsen 1-800-601-9079 or 1-866-805-9504 Enquiries from other
countries, please contact : + 47 908 26 906 or + 47 901 462 91 Web
site: http://www.nat.bm/ Scandic American Shipping Ltd., Postbox
56, 3201 Sandefjord, Norway Tel: + 47 33 44 61 40 DATASOURCE:
Nordic American Tanker Shipping Ltd. CONTACT: US - Rolf Amundsen,
1-800-601-9079, or 1-866-805-9504, or other countries - +
47-908-26-906, or + 47-901-462-91, all for Nordic American Tanker
Shipping Ltd, or Scandic American Shipping Ltd., +47-33-44-61-40
Web site: http://www.nat.bm/
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