Why Nordic American Tankers Is Down 27 Percent


 
 
10:40 12/13/2017

After announcing the full financing of 3 new buildings earlier this month, Nordic American Tankers Limited NAT  today announced the launch of a recapitalization program with NAT Equity Offering as one component. With the pricing of the equity offering itself taking place today according to the Company`s effective shelf registration statement. Following demand for shares the transaction has been upsized to $110 million.

The Company agreed to sell 40 million common shares at a public offering price of $2.75 per share. At the Company`s request, the underwriters have reserved for sale an aggregate of approximately 450,000 common shares for certain members of the Company`s board of directors, management and advisors.

NAT `s Chairman and Chief Executive Officer and his immediate family have purchased $1 million worth of shares all at the public offering price. The Company has granted the underwriters a 30-day option to purchase up to an additional 6.0 million common shares. The Company intends to close the sale of the common shares on December 15, 2017, subject to customary closing conditions.

NAT  intends to use the net proceeds of this offering to be part of the recapitalization program primarily to repay outstanding amounts under its current credit facility originally of 2004, finance the growth of NAT and for general corporate purposes. On December1, 2017, NAT initiated a sale/leaseback arrangement for three new buildings to be delivered in 2018. This is a part of the recapitalization program.

In its announcement for the 3 new buildings the company was pleased to announce that NAT had entered into final agreements with a subsidiary of Ocean Yield ASA for the financing of the outstanding commitments of $39 million per ship, due on delivery.

30% of the contract price for each vessel ($55.7 m) was paid cash by NAT to the yard when the vessels were ordered in October 2016. The three Suezmax new buildings are expected to be delivered during the latter part of 2018. The financed amount by Ocean Yield is about $43 million per vessel.

The agreements are based on a 10-year bareboat charter for each vessel. NAT will buy back the vessel at the end of the charter, but also has the flexibility to buy-back the vessels from Ocean Yield after year five and seven.


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