-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GYTZat+0/SM0DYg5TjDIPCkS1xZxBiZYgNKjzvDgmHY7ejd7TCu5Zsn5ucdSJwya Q3173+EJEz0ej0Aylx3Elw== 0000919574-98-000726.txt : 19980727 0000919574-98-000726.hdr.sgml : 19980727 ACCESSION NUMBER: 0000919574-98-000726 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980724 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KNIGHTSBRIDGE TANKERS LTD CENTRAL INDEX KEY: 0001029145 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 00000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: SEC FILE NUMBER: 000-29106 FILM NUMBER: 98671343 BUSINESS ADDRESS: STREET 1: 41 CEDAR HOUSE STREET 2: HAMILTON HM 12 CITY: HAMILTON HM 12 BERMU STATE: D0 BUSINESS PHONE: 4412952244 MAIL ADDRESS: STREET 1: 41 CEDAR HOUSE STREET 2: HAMILTON HM 12 STATE: D0 6-K 1 Commission File No. 0-29106 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of July, 1998 KNIGHTSBRIDGE TANKERS LIMITED (Translation of registrant's name into English) Cedar House 41 Cedar Avenue Hamilton HM 12 Bermuda (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X Form 40-F 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 No X Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT Attached hereto is a copy of the quarterly report of Knightsbridge Tankers Limited (the "Company") for the period ended June 30, 1998. Item 2. ADDITIONAL INFORMATION Royal Dutch Petroleum Company and The Shell Transport and Trading Company, Public Limited Company file annual reports on Form 20-F (File Nos. 1-3788 and 1-4039) and periodic reports on Form 6-K with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. Such annual reports contain the financial statements of the Royal Dutch/Shell Group of Companies. 2 Stockholm, July 24, 1998 To the Shareholders of Knightsbridge Tankers Limited: Enclosed is our report for the first half of 1998. The report contains selected unaudited financial information accompanied by a Management's Discussion and Analysis of Financial Condition and Results of Operations for the period ended June 30, 1998. On February 27, 1997, the Company's ship owning subsidiaries purchased five very large crude carriers ("VLCC's") from their previous owners and delivered them to Shell International Petroleum Company Limited ("Shell International"), as charterer, under separate "hell and high water" bareboat charters. Under those charters, the Company's ship owning subsidiaries receive the greater of a Base Rate of hire in the amount of $ 22,069 per day per VLCC or a spot market related rate. After inclusion of a component for operating expenses of $ 10,500 per day, the spot market related rate must exceed $ 32,569 per day for the Company's subsidiaries to receive any additional charter hire over the Base Rate. Based upon the determination by the London Tanker Brokers Panel the spot market related rate, after inclusion of the component for operating expenses, totaled $ 39,989 per day for the period April 1 through June 30, 1998. (The corresponding spot market related rate for the period April 1 through June 30, 1997, was determined to be $27,972). Accordingly, on July 15, 1998, Shell International paid to the Companys vessel owning subsidiaries charter hire at the base rate in the aggregate amount of $ 10,041,395 and additional hire in the aggregate amount of $ 3,376,100 for the period April 1 through June 30, 1998. On July 15, 1998, the Board of Directors of the Company declared a distribution to share-holders of record as of July 27, 1998, payable on or about August 11, 1998, in the amount of $ 0.63 per share for the period April 1 through June 30, 1998. (For the period April 1 through June 30, 1997, the distribution was $ 0.45 per share.) The Company has agreed to provide information to shareholders that are United States income tax payers by February 15, 1999, so that they may make the appropriate tax reporting and elections with the United States tax authorities with respect to the Company's status as a "Passive Foreign Investment Company". Under present United States tax rules, the amount of income reported by a shareholder is based on the Company's income on an annual basis. Therefore, the Company will provide information enabling 3 shareholders to determine the tax consequences of their investment in the Company, including the treatment of distributions received from the Company, for the entire year ending December 31, 1998. We are pleased to answer any inquiries that shareholders may have. Our investor relations contact is: Karl Molander, the Company's Chief Financial Officer, Tel: Int + 46-8-613 30 30, fax: Int + 46-8-613 99 09. The Nasdaq National Market symbol for the Company's Common Shares is "VLCCF". Very truly yours, Ola Lorentzon Vice Chairman and Chief Executive Officer 4 Management's Discussion and Analysis of FINANCIAL CONDITION AND RESULTS OF OPERATIONS Knightsbridge Tankers Limited (the "Company") was incorporated in Bermuda on September 18, 1996. In February, 1997, the Company offered and sold to the public 16,100,000 common shares at an initial offering price of $ 20 per share. Simultaneously, the Company sold 1,000,000 common shares at a price of $ 20 per share to ICB International Limited, an indirect wholly-owned subsidiary of ICB Shipping Aktiebolag (publ) ("ICB"), a Swedish publicly traded ship owning and operating company. The Company used the proceeds of these offerings, together with advances under a $ 145.6 million credit facility from an international syndicate of lenders, primarily to fund the purchase by the Company's subsidiaries of five recently constructed very large crude carrier oil tankers ("VLCC's"). Upon their purchase from their previous owners, the VLCC's were delivered on February 27, 1997, to Shell International Petroleum Company Limited ("Shell International"), a company of the Royal Dutch/Shell Group of Companies, under separate "Hell and high water" bareboat charters. The term of these charters is a minimum of seven years, with an option for Shell International to extend the period for each VLCC for an additional seven-year term, to a maximum of 14 years per VLCC. Under the charters, Shell pays the greater of a Base Rate of hire of $ 22,069 per day or a spot market related rate, determined quarterly by the London Tankers Brokers Panel. After taking into account a component for operating costs of $ 10,500 per day, Shell International pays the higher rate if the award exceeds $ 32,569 per day. In addition, for the first three years of the charters, Shell International pays "Supplemental Hire" as described below. Results of Operations - First Half 1998 Revenues The Company's revenues consist of charter hire of $ 23.3 million for the period commencing January 1, 1998 and ending June 30, 1998. The charter hire revenue for the period commencing February 27, 1997, when the vessels were delivered, and ending June 30, 1997, amounted to $ 13.6 million. Operating Expenses The Company's operating expenses consist of (i) fees due to the Company's manager, ICB Shipping (Bermuda) Ltd, an indirect wholly-owned subsidiary of ICB (the "Manager"), (ii) depreciation of the vessels and (iii) administration expenses consisting of payments of insurance premiums for directors and officers liability insurance. There can be no assurance, however, that the Company will not have other expenses or contingent liabilities for which reserves will be required. 5 Interest income and expense Interest income of $ 79,940 was earned during the period. In addition the Company received interest income of $ 415,733 on the principal balance of the receivable note from Shell International. The Company's borrowings under its credit facility have been effectively converted to a fixed rate pursuant to a swap arrangement to which the Company is a party. Interest on the credit facility has effectively been fixed at 7.05 %, which resulted in interest expenses of $ 4,881,972 for the period. Liquidity and Capital Resources Total shareholders equity of the Company at June 30, 1998, was $304.2 million compared to $315.2 million at December 31, 1997. The decrease was due to net income for the period January 1 through June 30, 1998, in the amount of $ 9,559,495 less distributions to shareholders for the fourth quarter of 1997 and for the first quarter 1998 in the aggregate amount of $20,520,000. On March 27, 1998, the Company's shareholders voted to reallocate from share premium to contributed capital surplus account the amount of $315.0 million. This reallocation according to which additional paid in capital has been reduced to zero and contributed capital surplus increased to $ 305.2 million has been reflected in the Company's balance sheet since March 31, 1998. The reallocation has no effect on the Company's liquidity. The Company believes that its present liquidity is adequate to its needs. The Company's long-term debt as of June 30, 1998, consists of the principal amounts borrowed under its credit facility in the aggregate amount of $137.2 million. Of this amount, $11.8 million represents the "Amortizing Loan" which is payable in eight equal quarterly installments ending on January 15, 2000. Supplemental Hire payable by Shell International is equal to amounts payable by the Company on account of the Amortizing Loan. The balance of the credit facility matures seven years and six months from February 27, 1997. Interest on this balance is payable quarterly in arrears. Currency Exchange Rates The international shipping industry's functional currency is the United States Dollar and virtually all of the Company's operating revenues and expenses are expected to be denominated in United States Dollar. Accordingly, the company's operating results, following expiration or termination of the charters with Shell International, are not expected to be significantly affected by movements in currency exchange rates. 6 CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in U.S. Dollars) ASSETS Current assets June 30, 1998 Dec 31, 1997 Cash 521 217,374 Current instalments of note receivable 6,726,152 6,726,151 Charter hire receivable 13,579,285 15,449,599 Prepaid expenses 84,000 14,000 ____________ __________ TOTAL CURRENT ASSETS 20,389,958 22,407,124 Notes receivable 5,044,614 8,407,690 Vessels under capital lease 416,168,922 424,965,352 Capitalized financing fees and expenses 2,101,284 2,287,056 ___________ ___________ TOTAL ASSETS 443,704,778 458,067,222 =========== =========== LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities ___________________ Accrued expenses and other current liabilities 2,338,873 2,313,618 Current instalments of credit facility 6,726,152 6,726,151 __________ __________ TOTAL CURRENT LIABILITIES 9,065,025 9,103,887 Credit facility 130,442,012 133,805,088 7 Shareholders equity ___________________ Common shares, par value $0.01 per share: Authorized and outstanding 17,100,000 171,000 171,000 Additional paid-in capital - 314,987,247 Contributed capital surplus account 304,026,741 - ___________ ___________ Total shareholders equity 304,197,741 315,158,247 ___________ ___________ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 443,704,778 458,067,222 =========== =========== 8 CONSOLIDATED INCOME STATEMENTS (UNAUDITED) (in U.S. Dollars) Jan 1, 1998 Sept 18, 1996 -June 30, 1998 -June 30, 1997 CHARTER HIRE REVENUE 23,348,545 13,617,260 OPERATING EXPENSES: DEPRECIATION OF VESSELS UNDER CAPITAL LEASES -8,796,430 -6,097,428 Management fee -375,000 -255,308 Administration expenses -45,549 -32,192 __________ __________ Operating income 14,131,566 7,232,332 INTEREST INCOME 495,673 1,122,449 Interest expense and other financial costs -5,067,744 -3,596,243 __________ __________ Net income 9,559,495 4,758,538 ========= ========= 9 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in U.S. Dollars) Jan 1, 1998 Sept 18, 1996 Operating activities -June 30, 1998 -June 30, 1997 ___________________ ______________ ______________ Net income 9,559,495 4,758,538 Depreciation 8,796,430 6,097,428 Amortization of capitalized fees and expenses 185,771 127,981 Changes in operating assets and liabilities: Receivables 5,163,389 -17,080,790 Accrued expenses and other current liabilities -38,862 9,199,261 _________ ___________ Net cash provided by operating activities 23,666,223 3,102,418 Investing activities Notes receivable from Shell International - -18,496,916 Purchase of vessels under capital lease - -439,821,548 ____ ____________ Net cash used in investing activities - -458,318,464 Financing activities ____________________ Loan proceeds - 142,975,049 Repayments of loan -3,363,076 -1,681,538 Net proceeds from share offerings - 317,224,950 Redemption of original share capital - -12,000 Distribution to shareholders -20,520,000 -2,907,000 ___________ __________ Net cash provided by financing activities -23,883,076 455,599,461 10 Net increase/decrease in cash and cash equivalents -216,853 383,415 Cash and cash equivalents at beginning of period 217,374 12,000 ___________ _________ Cash and cash equivalents at end of period 521 395,415 =========== ========= 11 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED) (in U.S. Dollars) SHARE ADDITIONAL CONTRIBUTED CAPITAL PAID-IN CAPITAL SURPLUS RETAINED CAPITAL CAPITAL ACCOUNT EARNINGS TOTAL Original issue Sept 18, 1996 12,000 - - - 12,000 Net proceeds from share issuance 171,000 317,053,950 - - 317,224,950 Original share redemption -12,000 - - - -12,000 Net income - - - 19,479,297 19,479,297 Distribution to the shareholders - -2,066,703 - -19,479,297 -21,546,000 _____________________________________________________________________________ Balance at Dec 31, 1997 171,000 314,987,247 - - 315,158,247 Reallocation Share Premium - -314,987,247 314,987,247 - - Net income - - - 9,559,495 9,559,495 Distribution to the shareholders - - -10,960,505 -9,559,495 -20,520,000 _____________________________________________________________________________ Balance at June 30, 1998 171,000 - 304,026,741 - 304,197,741 ============================================================================= Contributed capital surplus account At the General Meeting March 27, 1998, a resolution was taken to reallocate Share Premium Additional paid-in capital to Contributed capital surplus account. 12 01655002.AE6 SIGNATURES 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. KNIGHTSBRIDGE TANKERS LIMITED (registrant) Dated: July 24, 1998 By: /s/ Ola Lorentzon ___________________________ Ola Lorentzon Director, Deputy Chairman and Treasurer 13 01655002.AE7 -----END PRIVACY-ENHANCED MESSAGE-----