SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of October 2012
Commission File Number 001-32640
DHT HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
26 New Street
St. Helier, Jersey JE2 3RA
Channel Islands
(Address of principal executive offices)
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 þ Form 40-F o
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):
Yes o No þ
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):
Yes o No þ
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 o No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b).
The press release issued by DHT Holdings, Inc. on October 23, 2012 related to its results for the third quarter of 2012 and its declaration of a quarterly dividend is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
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Exhibit
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Description
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99.1
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Press Release dated October 23, 2012
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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.
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DHT Holdings, Inc.
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| (Registrant) | |||
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Date: October 23, 2012
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By:
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/s/ Eirik Ubøe | |
| Eirik Ubøe | |||
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Chief Financial Officer
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Exhibit 99.1
DHT Holdings, Inc. reports third quarter results
ST. HELIER, CHANNEL ISLANDS, October 23, 2012 – DHT Holdings, Inc. (NYSE:DHT) (“DHT” or the “Company”) today announced:
Financial and operational highlights:
USD mill. (except per share)
| Q3 2012 | Q2 2012 | Q1 2012 | 2011 | 2010 | ||||||||||||||||
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Net Revenue
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18.0 | 23.7 | 28.3 | 100.1 | 89.7 | |||||||||||||||
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EBITDA*
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7.3 | 11.0 | 15.0 | 52.7 | 51.6 | |||||||||||||||
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Adjusted Net Income**
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(4.9 | ) | 3.5 | 6.9 | 14.8 | 6.1 | ||||||||||||||
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Adjusted EPS**
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(0.32 | ) | 0.30 | 1.29 | 2.83 | 1.50 | ||||||||||||||
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Interest bearing debt
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216.7 | 219.8 | 267.4 | 280.6 | 265.2 | |||||||||||||||
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Cash
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72.2 | 70.9 | 29.6 | 42.6 | 58.6 | |||||||||||||||
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Dividend***
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0.02 | 0.24 | 0.24 | 3.12 | 4.80 | |||||||||||||||
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Fleet (dwt)
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2,086,315 | 2,384,602 | 2,574,304 | 2,574,304 | 1,659,802 | |||||||||||||||
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Spot days****
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41 | % | 27 | % | 17 | % | 13 | % | 0 | |||||||||||
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Unscheduled off hire****
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0.32 | % | 0.05 | % | 0.30 | % | 0.27 | % | 1.69 | % | ||||||||||
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Scheduled off hire****
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0 | 2.63 | % | 0.64 | % | 1.90 | % | 0 |
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*
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adjusted for impairment charges of $56 million in 2011 and $92.5 million in Q3 2012.
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**
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adjusted for loss on sale of vessels in Q1 and Q2 2012, non-cash impairment charge in 2011 and Q3 2012 and non-cash swap related items. EPS is calculated assuming all preferred shares issued on May 3, 2012 have been exchanged for common stock and applying the 12:1 reverse stock split which was effective on July 17, 2012 retrospectively.
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***
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per common share. Historical dividend per share adjusted for 12:1 reverse split.
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****
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as % of total operating days in period.
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Highlights of the quarter:
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●
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EBITDA for the quarter of $7.3 million and net loss for the quarter of $4.2 million ($0.27 per share) after adjusting for a non-cash impairment charge of $92.5 million. Net cash provided by operating activities for the quarter was $8.5 million.
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●
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The Company will pay a dividend of $0.02 per common share and $0.28 per preferred share for the quarter payable on November 12, 2012 for shareholders of record as of November 6, 2012. When determining the dividend our Board has taken into account general business conditions, the continued weak tanker market and the recent 8-K filing by OSG.
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●
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Following the recent announcement by OSG regarding its solvency and due to the continued weak tanker markets, the Company adjusted the carrying value of its fleet through a non-cash impairment charge of $92.5 million.
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The decline in revenues during 2012 is primarily due two vessels being sold during the second quarter and increased spot exposure as vessels have come off charters.
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The Company is in compliance with its loan facilities and had an unencumbered cash balance of $72.2 million as of September 30, 2012. The Company has no scheduled principal installments under its three credit facilities in 2013 and 2014. Scheduled principal installments total $12.0 million in 2015. However, further decline in vessel values may result in additional prepayments in order to remain in compliance with minimum value covenants.
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●
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One vessel was redelivered from time charter with OSG during the quarter and two more vessels are expected to be redelivered from OSG during the next six months. Following these redeliveries, the remaining charters to OSG will be two Suezmax vessels which are on long-term bareboat charters to December 2014 and January 2018, respectively.
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●
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Following the fleet appraisal for the third quarter, DHT repaid $3.1 million under the RBS credit facility. Following the fleet appraisal for the fourth quarter conducted in early October, DHT repaid $4.0 million in October. The next scheduled principal installment under the RBS facility is in Q4 2015.
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●
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The VLCC Venture Spirit, which was chartered in, was redelivered to its owner in September. The vessel traded in the spot market during the quarter.
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●
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At the Company’s 2012 annual general meeting of shareholders, the shareholders voted to authorize a 12-for-1 reverse stock split of DHT’s common stock, par value $0.01 per share. The reverse stock split became effective after the close of business on July 16, 2012.
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Third Quarter 2012 Financials
The Company reported net revenues for the third quarter of 2012 of $18.0 million. The revenues reflect increased spot market exposure and the sale of two vessels in the second quarter.
Vessel operating expenses for the quarter were $6.3 million, and are in line with the Company’s plans as well as vessel operating expenses during the preceding quarters. Charter hire expense for the quarter was $2.2 million related to the charter in of the Venture Spirit which was redelivered to its owner in September.
Depreciation and amortization, including depreciation of capitalized survey expenses, was $10.6 million for the quarter. The increase in depreciation in the third quarter is a result of a change in estimated useful life for the calculation of depreciation from 25 years to 20 years.
Following the recent announcement by OSG regarding its solvency and due to the continued weak tanker markets, the Company adjusted the carrying value of its fleet through a non-cash impairment charge of $92.5 million. The impairment charge is a non-cash item.
G&A for the quarter was $2.2 million and includes non-cash charges related to restricted share agreements for the Company’s management and board of directors.
Net financial expenses were $0.9 million for the quarter including a net non-cash gain on interest rate swaps of $0.6 million.
Following the non-cash impairment charge of $92.5 million, the Company had a net loss for the quarter of $96.7 million. Net cash provided by operating activities for the quarter was $8.5 million.
The increase in accounts receivables during 2012 is primarily due to more vessels operating in the spot market. A significant part of the accounts receivable as of September 30, 2012 and December 31, 2011 relates to working capital for vessels operating in commercial pools. With regards to vessels on charter to subsidiaries of OSG and Frontline, the charter hire is paid monthly in advance. Subsequent to an amendment to the time charter with Frontline whereas the charter hire shall be paid at $26,000 per day monthly in advance for the remaining period of the charter commencing January 1, 2012, the difference between the original charter hire and the amendment, being $6,500 per day, shall be paid in arrears with one lump sum payment in December 2012 and a second lump sum payment at the end of the charter period. As a result we had an accounts receivable from Frontline of $1.7 million as of September 30, 2012.
At the end of the quarter, our cash balance was $72.2 million.
As a result of a fleet appraisal related to the RBS credit facility conducted in early October 2012, $4.0 million was classified as a current portion of long-term debt as of September 30, 2012.
As of September 30, 2012, we had 8,599,680 shares of common stock and 400,967 shares of preferred stock issued and outstanding, respectively. A total of 41,699 shares of preferred stock were exchanged for common stock during the quarter. The Company has a total of 15,414,438 outstanding shares on a fully exchanged and diluted basis.
The Company declared a cash dividend of $0.02 per common share and $0.28 per preferred share for the third quarter payable on November 12, 2012 for shareholders of record as of November 6, 2012. When determining the dividend our Board has taken into account such matters as general business conditions, the continued weak tanker market and the recent 8-K filing by OSG.
EARNINGS CONFERENCE CALL INFORMATION
DHT will host a conference call at 8:00 a.m. EDT on Wednesday October 24, 2012, to discuss the results for the quarter. All shareholders and other interested parties are invited to join the conference call, which may be accessed by calling 1 646 254 3369 within the United States, 23500485 within Norway and +44 203 450 9571 for international callers. The passcode is “DHT”. A live webcast of the conference call will be available in the Investor Relations section on DHT’s website at http://www.dhtankers.com.
An audio replay of the conference call will be available through October 31, 2012. To access the replay, dial 1 347 366 9565 within the United States or +44 203 427 0598 for international callers and enter 8144064# as the pass code.
About DHT Holdings, Inc.
DHT is an independent crude oil tanker company. Our fleet trades internationally and consists of crude oil tankers in the VLCC, Aframax and Suezmax segments. We operate out of Oslo, Norway, through our wholly owned management company. You shall recognize us by our business approach with an experienced organization with focus on first rate operations and customer service, quality ships built at quality shipyards, prudent capital structure with robust cash break even levels to accommodate staying power through the business cycles, a combination of market exposure and fixed income contracts for our fleet and a clean corporate structure maintaining a high level of integrity and good governance. For further information: www.dhtankers.com.
Forward Looking Statements
This press release contains assumptions, expectations, projections, intentions and beliefs about future events, in particular regarding daily charter rates, vessel utilization, the future number of newbuilding deliveries, oil prices and seasonal fluctuations in vessel supply and demand. When used in this document, words such as “believe,” “intend,” “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “will,” “may,” “should” and “expect” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent the Company’s estimates and assumptions only as of the date of this press release and are not intended to give any assurance as to future results. For a detailed discussion of the risk factors that might cause future results to differ, please refer to the Company’s Annual Report on Form 20-F, filed with the Securities and Exchange Commission on March 19, 2012.
The Company undertakes no obligation to publicly update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and the Company’s actual results could differ materially from those anticipated in these forward-looking statements.
CONTACT:
Eirik Ubøe, CFO
Phone: +44 1534 639 759 and +47 412 92 712
E-mail: eu@dhtankers.com
DHT HOLDINGS, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2012
DHT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
($ in thousands except per share amounts)
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ASSETS
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Note
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Sep. 30 2012
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Dec. 31 2011
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Current assets
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Unaudited
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|||||||||||
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Cash and cash equivalents
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72,242 | 42,624 | ||||||||||
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Accounts receivable
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8 | 14,552 | 5,021 | |||||||||
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Prepaid expenses
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517 | 1,783 | ||||||||||
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Bunkers
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2,879 | – | ||||||||||
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Total current assets
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90,190 | 49,428 | ||||||||||
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Vessels
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5 | 325,519 | 454,542 | |||||||||
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Other property, plant and equipment
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469 | 533 | ||||||||||
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Other long term receivables
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54 | |||||||||||
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Total non-current assets
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325,987 | 455,129 | ||||||||||
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Total assets
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416,178 | 504,557 | ||||||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Accounts payable and accrued expenses
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9,118 | 5,243 | ||||||||||
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Derivative financial instruments
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4 | 1,518 | 3,422 | |||||||||
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Current portion long term debt
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4 | 4,000 | 16,938 | |||||||||
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Prepaid charter hire
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2,624 | 8,357 | ||||||||||
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Total current liabilities
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17,261 | 33,959 | ||||||||||
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Non-current liabilities
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Long term debt
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4 | 211,562 | 263,632 | |||||||||
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Derivative financial instruments
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4 | 178 | ||||||||||
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Other long term liabilities
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191 | 340 | ||||||||||
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Total non-current liabilities
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211,752 | 264,150 | ||||||||||
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Total liabilities
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229,013 | 298,109 | ||||||||||
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Stockholders' equity
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Stock
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6,7 | 90 | 54 | |||||||||
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Paid-in additional capital
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6,7 | 385,985 | 309,314 | |||||||||
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Retained earnings/(deficit)
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(198,704 | ) | (102,164 | ) | ||||||||
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Other components of equity
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(206 | ) | (756 | ) | ||||||||
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Total stockholders equity
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187,165 | 206,448 | ||||||||||
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Total liabilities and stockholders' equity
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416,178 | 504,557 | ||||||||||
DHT HOLDINGS, INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
($ in thousands except per share amounts)
| 3Q 2012 | 3Q 2011 |
9 months 2012
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9 months 2011
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Note
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Jul. 1-Sep. 30 2012
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Jul. 1-Sep. 30 2011
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Jan. 1-Sep. 30 2012
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Jan. 1-Sep. 30 2011
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Unaudited
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Unaudited
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Unaudited
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Unaudited
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Gross revenues
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$ | 24,616 | 26,639 | 76,614 | 74,811 | |||||||||||||||
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Voyage expenses
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(6,594 | ) | (7,139 | ) | (1,294 | ) | ||||||||||||||
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Net revenues
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$ | 18,022 | 26,639 | 69,475 | 73,517 | |||||||||||||||
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Vessel operating expenses
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(6,258 | ) | (8,197 | ) | (19,650 | ) | (23,187 | ) | ||||||||||||
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Charter hire expense
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(2,202 | ) | (2,484 | ) | (6,892 | ) | (3,687 | ) | ||||||||||||
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Depreciation and amortization
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5 | (10,574 | ) | (8,445 | ) | (24,530 | ) | (22,985 | ) | |||||||||||
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Impairment charge
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5 | (92,500 | ) | (56,000 | ) | (92,500 | ) | (56,000 | ) | |||||||||||
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General and administrative expense
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(2,251 | ) | (2,349 | ) | (7,401 | ) | (7,021 | ) | ||||||||||||
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Total operating expenses
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$ | (113,786 | ) | (77,476 | ) | (150,973 | ) | (112,880 | ) | |||||||||||
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Profit / loss, sale of vessel
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(2,231 | ) | ||||||||||||||||||
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Operating income
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$ | (95,764 | ) | (50,837 | ) | (83,729 | ) | (39,363 | ) | |||||||||||
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Interest income
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124 | 17 | 190 | 80 | ||||||||||||||||
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Interest expense
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(1,773 | ) | (1,979 | ) | (5,665 | ) | (5,352 | ) | ||||||||||||
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Fair value gain/(loss) on derivative financial instruments
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4 | 642 | 327 | 1,533 | 501 | |||||||||||||||
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Other Financial income/(expenses)
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98 | (260 | ) | 8 | (260 | ) | ||||||||||||||
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Profit/(loss) before tax
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$ | (96,674 | ) | (52,732 | ) | (87,663 | ) | (44,394 | ) | |||||||||||
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Income tax expense
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(49 | ) | (22 | ) | (123 | ) | (72 | ) | ||||||||||||
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Net income/(loss) after tax
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$ | (96,723 | ) | (52,754 | ) | (87,786 | ) | (44,465 | ) | |||||||||||
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Attributable to the owners of parent
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$ | (96,723 | ) | (52,754 | ) | (87,786 | ) | (44,465 | ) | |||||||||||
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Basic net income/(loss) per share
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(6.27 | ) | (9.82 | ) | (8.08 | ) | (8.58 | ) | ||||||||||||
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Diluted net income/(loss) per share
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(6.27 | ) | (9.82 | ) | (8.08 | ) | (8.58 | ) | ||||||||||||
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Weighted average number of shares (basic)
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15,414,438 | 5,370,897 | 10,867,842 | 5,181,032 | ||||||||||||||||
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Weighted average number of shares (diluted)
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15,414,438 | 5,370,897 | 10,867,842 | 5,182,549 | ||||||||||||||||
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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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Profit for the period
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$ | (96,723 | ) | (52,754 | ) | (87,786 | ) | (44,465 | ) | |||||||||||
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Other comprehensive income:
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Reclassification adjustment from previous cash flow hedges
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80 | 423 | 550 | 1,337 | ||||||||||||||||
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Total comprehensive income for the period
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$ | (96,643 | ) | (52,331 | ) | (87,236 | ) | (43,128 | ) | |||||||||||
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Attributable to the owners of parent
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$ | (96,643 | ) | (52,331 | ) | (87,236 | ) | (43,128 | ) | |||||||||||
DHT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
($ in thousands)
| 3Q 2012 | 3Q 2011 |
9 months
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9 months
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Note
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Jul. 1-Sep. 30 2012
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Jul. 1-Sep. 30 2011
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Jan. 1-Sep. 30 2012
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Jan. 1-Sep. 30 2011
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||||||||||||||||
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Unaudited
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Unaudited
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Unaudited
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Unaudited
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Cash Flows from Operating Activities:
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Net income
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$ | (96,723 | ) | (52,754 | ) | (87,786 | ) | (44,465 | ) | |||||||||||
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Items included in net income not affecting cash flows:
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Depreciation and amortization
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5 | 10,818 | 8,490 | 24,774 | 23,077 | |||||||||||||||
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Impairment charge
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92,500 | 56,000 | 92,500 | 56,000 | ||||||||||||||||
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Profit / loss, sale of vessel
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5 | 2,231 | – | |||||||||||||||||
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Amortization related to interest and swap expense
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(642 | ) | (327 | ) | (1,533 | ) | (501 | ) | ||||||||||||
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Deferred compensation related to options and restricted stock
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182 | 272 | 727 | 648 | ||||||||||||||||
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Changes in operating assets and liabilities:
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Accounts receivable, prepaid expenses
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1,732 | 2,040 | (6,761 | ) | (2,798 | ) | ||||||||||||||
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Accounts payable and accrued expenses
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2,051 | (8,133 | ) | (3,457 | ) | (7,951 | ) | |||||||||||||
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Bunkers
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(1,469 | ) | (2,879 | ) | – | |||||||||||||||
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Net cash provided by operating activities
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$ | 8,450 | 5,589 | 17,816 | 24,010 | |||||||||||||||
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Cash Flows from Investing Activities:
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Decrease/(increase) in vessel acquisitions deposits
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5,500 | |||||||||||||||||||
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Investment in/upgrade of vessels
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(304 | ) | (1,755 | ) | (3,802 | ) | (126,158 | ) | ||||||||||||
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Sale of vessels
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13,662 | |||||||||||||||||||
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Investment in property, plant and eqipment
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(10 | ) | (67 | ) | (10 | ) | (625 | ) | ||||||||||||
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Net cash used in investing activities
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$ | (314 | ) | (1,823 | ) | 9,850 | (121,282 | ) | ||||||||||||
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Cash flows from Financing Activities
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||||||||||||||||||||
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Issuance of stock
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6,7 | (235 | ) | 75,944 | 67,540 | |||||||||||||||
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Cash dividends paid
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7 | (3,425 | ) | (6,445 | ) | (8,754 | ) | (17,772 | ) | |||||||||||
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Issuance of long term debt
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4 | 60,169 | ||||||||||||||||||
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Repayment of long-term debt
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4 | (3,100 | ) | (25,234 | ) | (65,237 | ) | (25,843 | ) | |||||||||||
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Net cash provided by/(used) in financing activities
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$ | (6,760 | ) | (31,679 | ) | 1,953 | 84,094 | |||||||||||||
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Net increase/(decrease) in cash and cash equivalents
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1,376 | (27,913 | ) | 29,618 | (13,179 | ) | ||||||||||||||
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Cash and cash equivalents at beginning of period
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70,866 | 73,305 | 42,624 | 58,569 | ||||||||||||||||
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Cash and cash equivalents at end of period
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$ | 72,242 | 45,392 | 72,242 | 45,390 | |||||||||||||||
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Specification of items included in operating activities:
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||||||||||||||||||||
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Interest paid
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1,561 | 1,915 | 5,242 | 5,087 | ||||||||||||||||
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Interest received
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122 | 17 | 190 | 80 | ||||||||||||||||
DHT HOLDINGS, INC.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS’ EQUITY
($ in thousands except shares)
Unaudited
|
Preferred Stock
|
||||||||||||||||||||||||||||||||||||||||
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Common Stock
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Paid-in
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Paid-in
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Retained
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Cash Flow
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Total
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|||||||||||||||||||||||||||||||||||
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Note
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Shares
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Amount
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Additional Capital
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Shares
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Amount
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Additional Capital
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Earnings
|
Hedges
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Equity
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|||||||||||||||||||||||||||||||
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Balance at January 1, 2012
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5,370,897 | $ | 54 | $ | 309,314 | $ | (102,164 | ) | $ | (756 | ) | $ | 206,448 | |||||||||||||||||||||||||||
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Total comprehensive income
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(87,786 | ) | 550 | (87,236 | ) | |||||||||||||||||||||||||||||||||||
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Cash dividends declared and paid
|
7 | (8,754 | ) | (8,754 | ) | |||||||||||||||||||||||||||||||||||
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Issue of stock
|
3,212,083 | 32 | 17,173 | 400,967 | 4 | 58,769 | 75,979 | |||||||||||||||||||||||||||||||||
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Compensation related to options and restricted stock
|
16,700 | 728 | 728 | |||||||||||||||||||||||||||||||||||||
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Balance at Sep. 30, 2012
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8,599,680 | 86 | 327,216 | 400,967 | 4 | 58,769 | (198,704 | ) | (206 | ) | 187,165 | |||||||||||||||||||||||||||||
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2012
Note 1 – General information
DHT Holdings, Inc. (“DHT” or the “Company”) is a limited company incorporated under the laws of the Marshall Islands whose shares are listed on the New York Stock Exchange. The Company’s principal executive office is located at 26 New Street, St. Helier, Jersey, Channel Islands. The Company’s principal activity is the ownership and operation of a fleet of crude oil carriers. Part of our strategy is to employ our vessels with a combination of market exposure and fixed income contracts.
The financial statement were approved by the Company’s Board of Directors (the “Board”) on October 23, 2012 and authorized for issue on October 23, 2012.
Note 2 – General accounting principals
The condensed consolidated interim financial statements do not include all information and disclosure required in the annual financial statements and should be read in conjunction with DHT’s audited consolidated financial statements included in its Annual Report on Form 20-F for 2011.
The condensed financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IFRS”).
The condensed financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. The accounting policies that have been followed in these condensed financial statements are the same as presented in the 2011 audited consolidated financial statements.
These interim financial statements have been prepared on a going concern basis.
Changes in accounting policy and disclosure
New and amended standards, and interpretations mandatory for the first time for the financial year beginning January 1, 2012 but not currently relevant to the group (although they may affect the accounting for future transactions and events). The adoption did not have any effect on the financial statements:
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Revised IAS 24 (revised), ‘Related party disclosures’, issued in November 2009. Effective January 1, 2011.
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Classification of rights issues (amendment to IAS 32), issued in October 2009. The amendment applies to annual periods beginning on or after February 1, 2010.
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IFRIC 19, ‘Extinguishing financial liabilities with equity instruments’, effective July 1, 2010.
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Prepayments of a minimum funding requirement’ (amendments to IFRIC 14). The amendments correct an unintended consequence of IFRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’.
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Annual Improvements project, The improvement project is an annual project that provides a mechanism for making necessary but non urgent amendments in several standards.
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Note 3 – Segment reporting
Since DHT’s business is limited to operating a fleet of crude oil tankers, management has organized the entity as one segment based upon on the service provided. Consequently, the Company has one operating segment as defined in IFRS 8, Operating Segments. The Company’s vessels carry crude oil only. The Company’s management manages the Company’s operations as one business segment.
Entity-wide disclosures:
Information about major customers:
As of September 30, 2012, five of the Company’s nine vessels were on charter, pursuant to either time charters or long-term bareboat charters. The long-term bareboat charters are to Overseas Shipholding Group, Inc. (OSG) and are an important source of revenue for the Company.
Note 4 – Interest bearing debt
As of September 30, 2012, DHT had interest bearing debt totalling $216.7 million, of which $142.3 million is priced at Libor+0.70%, $31.3 million is priced at Libor+0.85%, $18.4 million is priced at Libor+3.00% and $24.8 million is priced at Libor+2.75%. Interest is payable quarterly in arrears. As of September 30, 2012, the Company had one interest rate swap in an amount of $65 million under which DHT pays a fixed rate of 5.95% including margin of 0.85%. The interest rate swap expires in January 2013. From January 1, 2009, the Company has discontinued hedge accounting on a prospective basis. Derivatives are re-measured to their fair value at each balance sheet date. The resulting gain and loss is recognized in profit or loss.
The Company’s credit agreements contain a financial covenant related to the charter-free market value of the Company’s vessels that secure the obligations under the credit facilities. With regards to the credit agreement with the Royal Bank of Scotland the charter free value (broker valuations) of the vessels that secure the obligations under this credit facility shall at all times be above 120% of the outstanding debt under the facility plus the actual or notional cost of terminating the interest rates swap. In order to stay in compliance with this covenant, the Company made a prepayment of $3.1 million in the third quarter 2012. As a result of a fleet appraisal related to the RBS credit facility conducted in early October 2012, the Company repaid $4.0 million in October in order to stay in compliance with this covenant. This amount has been classified as current portion of long-term interest bearing debt as of September 30, 2012.
In March 2012 we entered into agreements to amend the credit agreements related to DHT Phoenix and DHT Eagle. The agreements were amended whereby, upon satisfaction of certain conditions, including the prepayment of $6.7 million and $6.9 million (equal to all scheduled installments through 2014), respectively, until and including December 31, 2014: (i) the “Value-to-Loan Ratio will be lowered from 130% to 120%; and (ii) the margin on the loans will be increased by 0.25% to 3.00% and 2.75%, respectively. These two amendments became effective upon the completion of the equity offering in early May at which time the above prepayments were made. These two credit facilities also contain financial covenants related to each of the borrowers as well as DHT on a consolidated basis. DHT covenants that, throughout the term of the credit agreements, DHT on a consolidated basis shall maintain unencumbered cash of at least $20 million, value adjusted tangible net worth of at least $100 million and value adjusted tangible net worth of no less than 25% of the value adjusted total assets.
Scheduled debt repayments (USD million)
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Oct. 1 to
Dec. 31, 2012
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2013
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2014
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2015
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2016
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Thereafter
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Total
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RBS
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4.0 | - | - | 7.1 | 36.3 | 126.2 | 173.6 | |||||||||||||||||||||
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DVB
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- | - | - | 2.4 | 15.9 | - | 18.4 | |||||||||||||||||||||
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DNB
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- | - | - | 2.5 | 22.3 | - | 24.8 | |||||||||||||||||||||
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Total
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4.0 | - | - | 12.0 | 74.5 | 126.2 | 216.7 | |||||||||||||||||||||
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Unamortized upfront fees
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(1.1 | ) | ||||||||||||||||||||||||||
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Total long term debt including current portion
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215.6 | ||||||||||||||||||||||||||
Note 5 – Vessels
The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of constructing new vessels. Historically, both charter rates and vessel values have been cyclical. The carrying amounts of vessels held and used by us are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular vessel may not be fully recoverable. The Company has performed an impairment test using the “value in use” method as of September 30, 2012.
In assessing “value in use”, the estimated future cash flows are discounted to their present value. In developing estimates of future cash flows, we make assumptions about future charter rates, ship operating expenses, the estimated remaining useful lives of the vessels and the discount rate. These assumptions are based on current market conditions, historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are subjective. The impairment test resulted in an impairment charge in the third quarter of $92.5 million. The impairment test has been performed using an estimated weighted average cost of capital of 8.39%. The main changes from previous impairment tests is that we have assumed an estimated useful life of 20 years, down from 25 years and a reassessment of the long-term bare boat charters with OSG due to the announcement by OSG regarding its solvency. Commencing with the third quarter 2012 we apply the estimated useful life of 20 years when calculating depreciation.
The Aframaxes Overseas Rebecca and Overseas Ania were sold during the second quarter of 2012. DHT incurred a loss of $1.4 million on the sale of the two vessels in the second quarter. A loss of $0.9 million related to the Overseas Rebecca was recorded in the first quarter 2012.
Note 6 – Equity Offering
A backstopped equity offering and a concurrent private placement of common stock and preferred stock by the Company closed on May 2, 2012. DHT issued a total of 30,038,400 shares of common stock with par value of $0.01 per share and 442,666 shares of preferred stock with par value of $0.01 per share for total net proceeds of $76.0 million after expenses amounting to $4.0 million. Upon effectiveness of the reverse stock split on July 17, 2012, the preferred shares became exchangeable into 7,525,322 shares of common stock on a split-adjusted basis and assuming no further adjustments. Unless voluntarily exchanged by each shareholder prior to June 30, 2013, the preferred shares will automatically be exchanged for shares of common stock in July 2013. Assuming the full exchange of all shares of preferred stock into shares of common stock a total of approximately 15.4 million shares of common stock would have been issued and outstanding.
In February 2011, DHT issued a total of 15,425,300 shares of common stock with par value of $0.01 per share for total net proceeds of $67.5 million after underwriting discount and expenses amounting to $4.2 million.
Note 7 – Stockholders equity and dividend payment
At the Company’s 2012 annual general meeting of shareholders, the shareholders voted to authorize the Board to effect a reverse stock split of DHT’s common stock, par value of $0.01 per share, at a reverse stock split ratio of 12-for-1 and to amend the articles of incorporation to effect the reverse stock split and adjust the total number of authorized shares of common stock to 30,000,000. The reverse stock split became effective after the close of business on July 16, 2012.
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Common stock
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Preferred stock
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Issued at September 30, 2012
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8,599,680 | 400,967 | ||||||
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Par value
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$ | 0.01 | $ | 0.01 | ||||
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Numbers of shares authorized for issue at September 30, 2012
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30,000,000 | 1,000,000 | ||||||
Common stock:
Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. The common shares outstanding reflect the 12-for-1 reverse split effective on July 17, 2012.
Preferred stock:
Terms and rights of Preferred stock will be established by the board when or if such shares are issued. For the terms and rights of the preferred shares issued on May 2, 2012, please refer to the prospectus supplement filed with the Securities and Exchange Commission on March 19, 2012.
Dividend payment:
Dividend payment as of September 30, 2012:
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Payment date:
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Total payment
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Per common share
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|||
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August 16, 2012
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$ 3.4 million*
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$ | 0.24 | ||
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May 23, 2012
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$ 3.4 million*
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$ | 0.24 | ** | |
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February 7, 2012
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$ 1.9 million
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$ | 0.36 | ** | |
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Total payment as of September 30, 2012:
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$ 8.7 million
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$ | 0.84 | ||
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*
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total payment on August 16 and May 23, 2012 include $3.40 per preferred share.
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**
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adjusted for the 12-for-1 reverse stock split effective on July 17, 2012.
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Dividend payment 2011:
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Payment date:
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Total payment
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Per share*
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|||
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February 11, 2011
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$4.9 million
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$ | 1.20 | ||
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May 10, 2011
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$6.4 million
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$ | 1.20 | ||
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August 4, 2011
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$6.4 million
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$ | 1.20 | ||
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November 15, 2011
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$1.9 million
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$ | 0.36 | ||
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Total payment as of December 31, 2011:
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$19.7 million
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$ | 3.96 | ||
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*
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adjusted for the 12-for-1 reverse stock split effective on July 17, 2012.
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Note 8 – Accounts receivable
The increase in accounts receivables during 2012 is primarily due to more vessels operating in the spot market. A significant part of the accounts receivable as of September 30, 2012 and December 31, 2011 relates to working capital for vessels operating in commercial pools. With regards to vessels on charter to subsidiaries of OSG and Frontline, the charter hire is paid monthly in advance. Subsequent to an amendment to the time charter with Frontline whereas the charter hire shall be paid at $26,000 per day monthly in advance for the remaining period of the charter commencing January 1, 2012, the difference between the original charter hire and the amendment, being $6,500 per day, shall be paid in arrears with one lump sum payment in December 2012 and a second lump sum payment at the end of the charter period. As a result we had an accounts receivable from Frontline of $1.7 million as of September 30, 2012.
Note 9 - Financial risk management, objectives and policies
Note 9 in the 2011 annual report on Form 20F provides for details of financial risk management objectives and policies.
The Company’s principal financial liability consists of long-term debt with the main purpose being to finance the Company’s assets and operations. The Company’s financial assets mainly comprise cash. The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks.
Note 10 – Subsequent Events
On October 23, 2012 the Board approved a dividend of $0.02 per common share and $0.28 per preferred share related to the third quarter 2012 to be paid on November 12, 2012 for shareholders of record as of November 6, 2012.