ITCL - Preliminary Fourth Quarter and Financial Year 2009 Results
Press release from Independent Tankers Corporation Limited 26.02.2010
Highlights
· Independent Tankers reports net income of $4.4 million, equivalent to earnings per share of $0.06 for the fourth quarter of 2009.
· Independent Tankers reports net income of $15.8 million, equivalent to earnings per share of $0.21 for 2009.
· In January 2010, the UK tax leasing arrangement for the VLCC British Progress was terminated.
· In January 2010, the bareboat charter for the single hull Suezmax tanker, Front Voyager, was terminated.
· In February 2010, BP Shipping Limited extended the bareboat charter for the VLCC British Progress for one additional year.
Introduction
Independent Tankers Corporation Limited (the "Company" or "Independent Tankers") was incorporated in Bermuda on January 18, 2008 and the shares have traded on the Norwegian over-the-counter market, since March 7, 2008. Independent Tankers' business is mainly concentrated on the ownership and operation of crude oil tankers on long term bareboat contracts, which include certain cancellation options, to major oil companies. Independent Tankers owns or leases six VLCC's and four Suezmax tankers. All vessels are financed through bonds in the US market and some of the vessels are also subject to financial lease arrangements. The main shareholder is Frontline Ltd. ("Frontline") with an ownership of approximately 83 percent.
Preliminary Fourth Quarter and Financial Year 2009 Results
The Board of Independent Tankers announces net income of $4.4 million, equivalent to earnings per share of $0.06 for the fourth quarter of 2009. This compares with a net income of $4.3 million, equivalent to earnings per share of $0.06 for the preceding quarter. The main reason for this increase in revenue is an increase in interest received on higher cash balances.
The average daily bareboat rates earned in the fourth quarter by the Company's VLCCs and the Suezmax tanker Front Voyager were approximately $25,100 and $7,800, respectively, compared with approximately $25,100 and $7,800, respectively, in the preceding quarter.
Net interest expense was $5.1 million (third quarter 2009: $5.5 million). At December 31, 2009, all of the Company's bond debt of $325.8 million is at fixed interest rates ranging from 6.68% to 8.52%.
The Company has reclassified some of its restricted cash balances to long-term. These balances relate to the restricted cash that are segregated for the settlement of long-term lease obligations. The amount reclassified as of December 31, 2008 to conform to the current year presentation was $184.7 million.
For the year ended December 31, 2009 the Company announces net income of $15.8 million, equivalent to earnings per share of $0.21 compared with net income of $15.3 million and earnings per share of $0.21 for the year ended December 31, 2008. The main reasons for this increase are a reduction in depreciation expense following the upward revision of the estimated residual values of the six VLCCs and a reduction in interest expense partially offset by a fall in revenue due to the VLCC British Pioneer and favorable foreign exchange movements. Net interest expense for the year ended December 31, 2009 was $21.1 million (2008: $23.1 million).
In February 2010, the Company has average cash breakeven rates for its VLCCs and Suezmax tanker of approximately $18,500 and $4,800 per vessel, respectively.
Chartering Development
In December 2009, BP Shipping Limited ("BP") gave irrevocable notice of termination of the bareboat charter for the VLCC British Pioneer and the termination takes effect January 2, 2011. The vessel will continue on a market rate with a minimum of $20,000 per day until January 2, 2011 and management will, in line with the requirements of the bond indenture, seek alternative employment or try to sell the vessel when the charter ends in January 2011. The Company has not accrued any market related hire as of December 31, 2009.
On January 5, 2010, Front Voyager Inc., a subsidiary of Frontline, gave irrevocable notice to ITCL's subsidiary, CalPetro Tankers (Bahamas III) Limited ("Bahamas III"), of termination of the bareboat charter for the single hull vessel Front Voyager. The termination will take effect April 1, 2010. Front Voyager Inc. is required to pay a termination fee, which will enable Bahamas III to satisfy its estimated obligations. The vessel will continue on an average bareboat rate of $4,988 per day until April 1, 2010 and management will, in line with the requirements of the bond indenture, seek alternative employment or try to sell the vessel when the charter ends in April 2010.
In February 2010, BP extended the charter for the VLCC British Progress for one additional year. As a result the vessel will trade on a market rate with a minimum of $20,000 per day from February 2, 2010 until February 2, 2012.
Other Matters
On January 15, 2010, the UK tax lease arrangement between Caernarfon Shipping Plc and Dresdner Kleinwort Leasing relating to the VLCC British Progress was terminated and the outstanding lease obligation was settled in full using restricted cash. At December 31, 2009 the lease obligation was $70.0 million and the termination was cash neutral for the Company. The vessel was sold to Caernarfon Petro Limited, a previously dormant subsidiary of Independent Tankers, which simultaneously entered into a lease with Caernarfon Shipping Plc.
74,825,166 ordinary shares were outstanding as of December 31, 2009 and the weighted average number of shares outstanding for the fourth quarter was also 74,825,166.
Forward Looking Statements
This press release contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including the Company's management's examination of historical operating trends. Although the Company believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, the Company cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.
Important factors that, in the Company's view, could cause actual results to differ materially from those discussed in this press release include the strength of world economies and currencies, general market conditions including fluctuations in charter hire 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 the Company's operating expenses including bunker prices, drydocking and insurance costs, 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 the Company with the Norwegian over-the-counter market in Oslo.
The full report is available in the link enclosed.
The Board of Directors
Independent Tankers Corporation Limited
Hamilton, Bermuda
February 26, 2010
Questions should be directed to:
Bengt Neteland: Vice President Finance, Frontline Management AS
+47 23 11 40 37 or +47 924 99 386
4th quarter 2009 results
