DHT Holdings Inc (DHT) 2012 Q4 法說會逐字稿

Thank you and good morning. I'm here joined by my colleagues, Svein Moxnes Harfjeld, our CEO, and Trygve Munthe, our President.

Before we get started with today's call, I'd like to make the following remarks. This conference call is also being broadcast on our website at DHTankers.com, and a replay of this conference call will be available on the website. In addition, our Form 6-K evidence in this news release will be filed with the SEC.

As a reminder, this conference call contains forward-looking statements that are governed by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include statements regarding the issues, prospects, the outlook for tanker markets in general, expectations regarding daily charter hire rates and vessel utilization, forecasts of world economic activity, oil price and oil trading patterns, expectations regarding seasonal fluctuations in tanker demand, anticipated levels of new building and scrapping, and projected drydock schedules involve risks and uncertainties that are more fully described in our filings made with the SEC. Actual results may differ materially from expectations reflected in these forward-looking statements.

And with that out of the way, I would like to turn the call over to Svein Harfjeld.

Thank you, Eirik. Welcome all.

I will now walk you through the highlights of the quarter. EBITDA for the quarter came in at $9.8 million with a net income for the quarter of $1.7 million, equal to $0.11 per share after adjusting for a non-cash impairment charge of $8 million.

Net cash provided by operating activities for the quarter was $3.4 million.

We will pay a dividend of $0.02 per common share and $0.28 per preferred share for the quarter, payable on February 19 for shareholders of record as of February 11.

When determining the dividend, our Board has taken into account the general business conditions, a continued weak tanker market, as well as the Chapter 11 filing by Overseas Shipholding Group and certain of its affiliates, collectively referred to as OSG, and the subsequent rejection of the two long-term bareboat charters for our two Suezmax vessels. The vessels were delivered -- redelivered to us in December and in January, and they are currently trading in the spot markets. We will have a claim against the OSG bankruptcy assets related to the rejection of these contracts, contracts which are guaranteed by Overseas Shipholding Group, Inc. We have not reflected such claim and the potential recovery in our financial statements as of December 31, 2012.

We have entered into time charter contracts for three of our vessels, the VLCCs DHT Ann and DHT Chris and the Aframax DHT Cathy. The time charters are entered into with end users of durations up to one year and have a mix of fixed rates and market-related earnings. The DHT Eagle is on a time charter until May 2013. The remaining vessels in our fleet are operating in the spot markets.

Following the fleet appraisal for the fourth quarter, we repaid $4 million under the RBS credit facility in October. Following the fleet appraisal conducted in early January 2013, we repaid $9 million in January. The next scheduled principal installment under the RBS facility is in the first quarter of 2016.

We are in compliance with our loan facilities and have an unencumbered cash balance of $71.3 million, equal to $4.63 per share as of December 31, 2012. We have no scheduled principal installments under our three credit facilities in 2013 and 2014.

For 2015, scheduled principal installments under the DVB and DNB credit facilities total $4.9 million. However, further decline in vessel values may result in additional prepayments in order to remain in compliance with minimum value covenants.

Due to the likelihood of a potential sale of one of our vessels, we adjusted the carrying value of our fleet through a non-cash impairment charge of $8 million in the quarter.

And with that, we open up for Q&A.

(Operator Instructions). Jon Chappell, Evercore Partners.

Just looking for a couple details from some of the new announcements, or relatively new, I guess, and the key points you just talked about, Svein. First of all, can you give any more detail regarding the exact duration and the rates on the three contracts, the Ann, the Chris, and the Cathy?

These contracts have confidentiality clauses, so we are not able to provide any more specific information on that.

But I think when discussing your analysis model in detail with our Financial Director, he will be able to provide some more guidance as to how you should build your model. But the duration of these charters are between six and 12 months, and as we say, there's a mix of market-related earnings and fixed earnings. So we are quite pleased with this, and this, of course, also provides some working capital also for the Company.

By the mix of fixed end market, does that mean that out of the three of them, some are completely fixed, some are completely market? Does it mean that all of them have a fixed component with a profit-sharing component that would give you the market exposure?

We can tell you that one is on a fixed rate, one is on a completely floating rate, and one is a mix of the two. Is that helpful?

Yes, and then, also, any commentary on the counterparties? Are these with oil majors, other owners, traders?

It's a combination of oil majors and oil traders. There's no other ship owners.

As we stated in the highlights, it's with end users, and this is in line with our Company's ambition and strategy is to conduct business with end users as opposed to leasing our vessels to other operators.

Okay. And then, you also mentioned the likelihood of a potential sale. Can you tell us which vessel that may be and the timing surrounding that?

We are testing the market, so to speak, on the VLCC DHT Regal, which was built in 1997.

And we are currently in the midst of doing that, so it remains to be seen whether we could find a buyer with an acceptable price level to us. Our thinking is that in line with our stated ambition of both expanding the Company and also then over time renewing the fleet, this is one piece to that puzzle. So it remains to be seen whether we will execute on this or not.

Okay. And then, just one last strategic question with two parts. First of all, how do you see DHT developing from here as part of what you just mentioned, your fleet modernization or expansion initiatives?

And then, as part of that, every quarter it seems there's a repayment to the facility because of the markdown in asset value. So out of the cash you have, the $71 million in cash, how much would you feel is really -- could be used as growth capital versus how much would you want to keep on the balance sheet just to kind of protect against further write-downs of asset values?

You know, we have stated all along that we have an ambition to expand through the downturn, and I guess we are quite far into the downturn, and as such one is potentially closer also to a turnaround. So we are certainly monitoring the market in general.

We feel that with the balance sheet and the cash at hand in the Company that at some point the Company will be in position to execute on expansion, but that is certainly -- and also envisaged with additional capital in the Company in some shape or form. So although we are not specifically stating how that will be, we also feel in this respect that we have great support from our lending banks in having access to debt capital in order to execute on future fleet expansions.

When it comes to the cash in the Company, we are operating -- running the Company currently with a larger amount of cash than one would naturally do with a fleet of nine vessels. And this is a reflection of the risk that you addressed that we are making prepayments in line with the minimum value covenants in the RBS facility, in particular.

Okay, thanks for your help, Svein.

Herman Hildan, RS Platou.

Good afternoon, gentlemen. A quick question on the Regal. Could you just let us know what the book value of the vessel is, after the write-down?

We are not communicating in our quarterly consolidated numbers specific book values on vessels, so there is typically in our 20-F some more deliberations on carrying values in general.

Okay, thank you. Also on the OSG claim, could you say something about the size of the claim?

We are yet to file the claim, and the size of the claim is a work in progress, so to speak, but that is just something we expect to be able to identify during this quarter. And once the claim has been filed, then, of course, it will be communicated, the size of that claim.

Okay, so it's not possible to give any kind of sort of range?

Well, as we said, we have not filed the claim yet, and this is a formal process and it's important that we get through that gate, so to speak, before communicating the claim to the market.

Okay, thank you. And in terms of priority, are you ranked equal to the unsecured bonds in that claim or is that too early to say in terms of priority for your claim?

I think the key point here is that these two bareboat charters were guaranteed by Overseas Shipholding Group, Inc., which is the same entity that has the bond obligation attached.

Okay, so I guess there's a good indication to use the bonds to price, call it, the market value of that claim.

That is correct.

Okay, that's all for me. Thank you.

(Operator Instructions). We have no further questions.

Okay, thank you all for attending the call and following DHT. We appreciate your continued support. Have a good day.