-----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, QSzATKSdmdSDOgSLrGkRUzF6afrfxMjMHKEXeK6WGjpZ1OBA+RUjI1Z8USOHC25p R/gLaL1ef12HrDnWOg/y5Q== 0000919574-98-000952.txt : 19981027 0000919574-98-000952.hdr.sgml : 19981027 ACCESSION NUMBER: 0000919574-98-000952 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981026 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: 98730796 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 October, 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____X____ 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_____ Stockholm, October 22, 1998 To the Shareholders of Knightsbridge Tankers Limited: Enclosed is our third report for year 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 September 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 $ 35,585 per day for the period July 1 through September 30, 1998. (The corresponding spot market related rate for the period July 1 through September 30, 1997, was determined to be $39,374). Accordingly, on October 15, 1998, Shell International paid to the Companys vessel owning subsidiaries charter hire at the base rate in the aggregate amount of $ 10,151,740 and additional hire in the aggregate amount of $ 1,387,360 for the period July 1 through September 30, 1998. On October 15, 1998, the Board of Directors of the Company declared a distribution to share-holders of record as of October 26, 1998, payable on or about November 10, 1998, in the amount of $ 0.53 per share for the period July 1 through September 30, 1998. (For the period July 1 through September 30, 1997, the distribution was $ 0.64 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 2 annual basis. Therefore, the Company will provide information enabling 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 3 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 - 9 months 1998 Revenues The Company's revenues consist of charter hire of $ 34.9 million for the period commencing January 1, 1998 and ending September 30, 1998. The charter hire revenue for the period commencing February 27, 1997, when the vessels were delivered, and ending September 30, 1997, amounted to $ 26.9 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, 4 that the Company will not have other expenses or contingent liabilities for which reserves will be required. Interest income and expense Interest income of $ 124,456 was earned during the period. In addition the Company received interest income of $ 585,262 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 $ 7,306,533 for the period. Liquidity and Capital Resources Total shareholders equity of the Company at September 30, 1998, was $ 298.0 million compared to $ 315.2 million at December 31, 1997. The decrease was due to net income for the period January 1 through September 30, 1998, in the amount of $ 14,149,208 less distributions to shareholders for the fourth quarter of 1997 and for the first half 1998 in the aggregate amount of $ 31,293,000. 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 September 30, 1998, consists of the principal amounts borrowed under its credit facility in the aggregate amount of $ 135.5 million. Of this amount, $ 10.1 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 5 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 Sep 30, 1998 Dec 31, 1997 Cash 249,318 217,374 Current installments of note receivable 6,726,152 6,726,151 Charter hire receivable 11,679,578 15,449,599 Prepaid expenses 49,000 14,000 Total current assets 18,704,048 22,407,124 Notes receivable 3,363,076 8,407,690 Vessels under capital lease 411,770,707 424,965,352 Capitalized financing fees and expenses 2,008,399 2,287,056 TOTAL ASSETS 435,846,230 458,067,222 =========== =========== LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities Accrued expenses and other current liabilities 2,345,149 2,377,736 Current instalments of credit facility 6,726,152 6,726,151 Total current liabilities 9,071,301 9,103,887 Credit facility 128,760,475 133,805,088 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 297,843,454 - Total shareholders equity 298,014,454 315,158,247 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 435,846,230 458,067,222 =========== =========== 7 CONSOLIDATED INCOME STATEMENTS (UNAUDITED) (in U.S. Dollars) Jan 1, 1998 Sept 18, 1996 -Sep 30, 1998 -Sep 30, 1997 Charter hire revenue 34,887,645 26,899,301 Operating expenses: Depreciation of vessels under capital leases -13,194,645 -10,533,311 Management fee -562,500 -442,808 Administration expenses -68,320 -55,061 Operating income 21,062,180 15,868,121 Interest income 709,718 1,433,942 Interest expense and other financial costs -7,622,690 -6,227,985 Net income 14,149,208 11,074,078 ========== ========== 8 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in U.S. Dollars) Jan 1, 1998 Sep 18, 1996 Operating activities -Sep 30, 1998 -Sep 30, 1997 Net income 14,149,208 11,074,078 Depreciation 13,194,645 10,533,311 Amortization of capitalized fees and expenses 278,658 220,864 Changes in operating assets and liabilities: Receivables 8,779,634 -20,278,823 Accrued expenses and other current liabilities -32,587 9,251,389 Net cash provided by operating activities 36,369,558 10,800,819 Investing activities Notes receivable from Shell International - -16,815,377 Purchase of vessels under capital lease - -439,821,548 Net cash used in investing activities - -456,636,925 Financing activities Loan proceeds - 142,975,049 Repayments of loan -5,044,614 -3,363,076 Net proceeds from share offerings - 317,224,950 Redemption of original share capital - -12,000 Distribution to shareholders -31,293,000 -10,602,000 Net cash provided by financing activities -36,337,614 446,222,923 Net increase/decrease in cash and cash equivalents 31,944 386,817 Cash and cash equivalents at beginning of period 217,374 12,000 Cash and cash equivalents at end of period 249,318 398,817 ======= ======= 9 CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED) (in U.S. Dollars)
Contributed Additional capital Share paid-in surplus Retained Capital capital account earning 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 - - - 14,149,208 14,149,208 Distribution to the shareholders - - -17,143,793 -14,149,208 -31,293,001 _________________________________________________________________________________________________ Balance at Sep 30, 1998 171,000 - 297,843,454 - 298,014,454 =================================================================================================
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. 10 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: October 20, 1998 By: /s/ Ola Lorentzon ___________________________ Ola Lorentzon Director, Deputy Chairman and Treasurer 11 01655002.AE9 -----END PRIVACY-ENHANCED MESSAGE-----