UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13A-16 OR 15D-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
For the month of November 2009
Commission File Number: 000-29106
KNIGHTSBRIDGE TANKERS LIMITED
(Translation of registrant's name into English)
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ X ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ________.
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ________.
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 1 are management's discussion and analysis of financial condition and results of operations and the unaudited consolidated financial statements of Knightsbridge Tankers Limited (the "Company"), as of and for the three and nine months ended September 30, 2009.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
Knightsbridge Tankers Limited and its subsidiaries, or the Company, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This report and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. When used in this report, the words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect" and similar expressions identify forward-looking statements.
The forward-looking statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors and matters discussed elsewhere herein and in the documents incorporated by reference herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charterhire rates and vessel values, changes in demand in the tanker market, changes in world wide oil production and 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, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission or Commission.
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: November 20, 2009 | | By: | /s/ Ola Lorentzon |
| | | | Name: Ola Lorentzon |
| | | | Title: Chairman and Chief Executive Officer |
| | | |
| | | |
EXHIBIT 1
KNIGHTSBRIDGE TANKERS LIMITED
As used herein, "we," "us," "our" and "the Company" all refer to Knightsbridge Tankers Limited. This management's discussion and analysis of financial condition and results of operations should be read together with the discussion included in the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission on June 30, 2009.
Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2009
General
The Company was incorporated in Bermuda in September, 1996. The Company was originally founded for the purpose of the acquisition, disposition, ownership, leasing and chartering of five very large crude oil carriers, or VLCCs and certain related activities. The Company has subsequently expanded its scope of activities and has taken delivery of two Capesize newbuilding dry bulk carriers of approximately 170,000 dwt in August 2009 and October 2009, respectively. The Company's shares are listed on the Nasdaq Global Select Market under the symbol VLCCF.
The business of the Company is managed by ICB Shipping (Bermuda) Limited (the "Manager"), a wholly-owned subsidiary of Frontline Ltd.
In December 2007, one vessel was sold with delivery taking place during February 2008. Two VLCCs are on time charters that commenced in 2007 with initial terms of four and five years respectively, each earning a rate of $37,750 per day plus a market-based profit sharing payment computed as 50% of the difference between the related spot market index rate and the base rate. One VLCC is on a three year time charter earning a rate of $45,000 per day that is due to expire in 2010. The remaining VLCC has been operating in the spot market following the expiry of its time charter in March 2009. The Company's two Capesize newbuilding dry bulk carriers commenced five year time charters upon their deliveries in August 2009 and October 2009, respectively.
Results of Operations
Amounts included in the following discussion are derived from our unaudited consolidated financial statements for the three and nine months ended September 30, 2009 and 2008.
Operating revenues
| | | Three months ended
September 30, | | | Nine months ended
September 30, | |
| (in thousands of $) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Time charter revenues | | 12,238 | | | 19,813 | | | 36,832 | | | 60,660 | |
| Voyage charter revenues | | | 1,975 | | | | - | | | | 7,089 | | | | 6,145 | |
| Total operating revenues | | | 14,213 | | | | 19,813 | | | | 43,921 | | | | 66,805 | |
Time charter revenues decreased in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 primarily due to a decrease in profit share payments of $16.5 million received from the time charters for the Hampstead and Kensington due to the weaker spot market and a decrease in time charter earnings from the Camden of $6.8 million, which was operated in the spot market after its five year time charter ended March 2009, offset by time charter earnings from the Battersea of $1.4 million, which commenced a five year time charter upon its delivery to the Company in August 2009.
Time charter revenues decreased in the three months ended September 30, 2009 compared to the three months ended September 30, 2008 primarily due to a decrease in profit share payments of $5.2 million received from the time charters for the Hampstead and Kensington due to the weaker spot market and no time charter revenue from the Camden, which earned $2.9 million in the three months ended September 30, 2008 offset by time charter earnings from the Battersea of $1.4 million.
Voyage charter revenues in the three and nine months ended September 30, 2009 relate to the Camden, which operated in the spot market from March 2009 whereas voyage charter revenues in the nine months ended September 30, 2008 relate to the Chelsea, which was sold in December 2007 and delivered in February 2008.
Operating expenses
| | | Three months ended
September 30, | | | Nine months ended
September 30, | |
| (in thousands of $) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Voyage expenses | | 2,174 | | | 654 | | | 5,577 | | | 3,773 | |
| Ship operating expenses | | 4,847 | | | 3,908 | | | 13,298 | | | 10,692 | |
| Administrative expenses | | 458 | | | 406 | | | 1,235 | | | 1,146 | |
| Depreciation | | 3,266 | | | 3,428 | | | 10,047 | | | 10,284 | |
| Total operating expenses | | | 10,745 | | | | 8,396 | | | | 30,157 | | | | 25,895 | |
The increase in voyage expenses in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 was primarily due to the Camden, which traded in the spot market from March 2009 compared to the Chelsea, which traded in the spot market for six weeks at the beginning of 2008 before delivery to its new owners.
The increase in voyage expenses in the three months ended September 30, 2009 compared to the three months ended September 30, 2008 was primarily due to the Camden, which operated in the spot market for the whole of this period while no vessels operated in the spot market in the three months ended September 30, 2008.
Ship operating expenses increased in the three and nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 primarily due to an increase in crew expenses, repairs and maintenance and spares on our VLCCs and operating costs for the Battersea, which was delivered to the company in August 2009.
Depreciation decreased in the three and nine months ended September 30, 2009 compared to the three and nine months ended September 30, 2008 primarily due to a change in estimated residual values of our four VLCCs, effective July 1, 2009, which reduced depreciation on those vessels by $503,000 in the third quarter of 2009.
Other Income (Expenses)
| | | Three months ended
September 30, | | | Nine months ended
September 30, | |
| (in thousands of $) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Interest income | | 57 | | | 591 | | | 119 | | | 1,921 | |
| Interest expense | | | (319) | | | | (663) | | | | (1,021) | | | | (2,408) | |
| Other financial items | | | (102) | | | | (47) | | | | (168) | | | | (133) | |
| Net other income (expenses) | | | (364) | | | | (119) | | | | (1,070) | | | | (620) | |
Interest income decreased in the three and nine months ended September 30, 2009 compared to the three and nine months ended September 30, 2008 primarily due to a decrease in interest rates and a decrease in cash due to the funding of our newbuilding program.
Interest expense decreased in the three and nine months ended September 30, 2009 compared to the three and nine months ended September 30, 2008 primarily due a decrease in interest rates.
The increase in other financial items in the three and nine months ended September 30, 2009 compared to the three months and nine months ended September 30, 2008 was primarily due to breakage fees paid in August 2009 relating to the repayment of the Predelivery Loan for the Battersea described in note 7 to our unaudited consolidated financial statements included herein.
Knightsbridge Tankers Limited
Consolidated Statements of Operations for the three and nine month periods ended September 30, 2009 and 2008
(Unaudited)
(in thousands of $, except per share data)
| | | Three month periods ended Sept 30, | | | Nine month periods ended Sept 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Operating revenues | | | | | | | | | | | | |
| Time charter revenues | | | 12,238 | | | | 19,813 | | | | 36,832 | | | | 60,660 | |
| Voyage charter revenues | | | 1,975 | | | | - | | | | 7,089 | | | | 6,145 | |
| Total operating revenues | | | 14,213 | | | | 19,813 | | | | 43,921 | | | | 66,805 | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Voyage expenses and commission | | | 2,174 | | | | 654 | | | | 5,577 | | | | 3,773 | |
| Ship operating expenses | | | 4,847 | | | | 3,908 | | | | 13,298 | | | | 10,692 | |
| Administrative expenses | | | 458 | | | | 406 | | | | 1,235 | | | | 1,146 | |
| Depreciation | | | 3,266 | | | | 3,428 | | | | 10,047 | | | | 10,284 | |
| Total operating expenses | | | 10,745 | | | | 8,396 | | | | 30,157 | | | | 25,895 | |
| Net operating income | | | 3,468 | | | | 11,417 | | | | 13,764 | | | | 40,910 | |
| Other income (expenses) | | | | | | | | | | | | | | | | |
| Interest income | | | 57 | | | | 591 | | | | 119 | | | | 1,921 | |
| Interest expense | | | (319 | ) | | | (663 | ) | | | (1,021 | ) | | | (2,408 | ) |
| Other financial items | | | (102 | ) | | | (47 | ) | | | (168 | ) | | | (133 | ) |
| Net other expenses | | | (364 | ) | | | (119 | ) | | | (1,070 | ) | | | (620 | ) |
| Net income | | | 3,104 | | | | 11,298 | | | | 12,694 | | | | 40,290 | |
| Per share information: | | | | | | | | | | | | | | | | |
| Earnings per share: basic and diluted | | $ | 0.18 | | | $ | 0.66 | | | $ | 0.74 | | | $ | 2.36 | |
| Cash dividends per share declared | | | - | | | $ | 0.75 | | | | - | | | $ | 2.25 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Knightsbridge Tankers Limited
Balance Sheets as of September 30, 2009 and December 31, 2008
(in thousands of $)
| | | Sept 30, 2009 | | | Dec 31, 2008 | |
| | | (unaudited) | | | (audited) | |
| ASSETS | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | | 1,607 | | | | 77,998 | |
| Restricted cash | | | 10,000 | | | | 10,000 | |
| Trade accounts receivable, net | | | 3,714 | | | | 2,745 | |
| Other receivables | | | 267 | | | | 446 | |
| Inventories | | | 2,056 | | | | 1,222 | |
| Prepaid expenses and accrued income | | | 404 | | | | 475 | |
| Total current assets | | | 18,048 | | | | 92,886 | |
| Vessels, net | | | 266,185 | | | | 187,360 | |
| Newbuildings | | | 66,884 | | | | 51,305 | |
| Deferred charges | | | 1,322 | | | | 134 | |
| Total assets | | | 352,439 | | | | 331,685 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Current portion of long-term debt | | | 28,260 | | | | 42,560 | |
| Trade accounts payable | | | 3,062 | | | | 1,820 | |
| Accrued expenses | | | 7,676 | | | | 2,111 | |
| Other current liabilities | | | 1,457 | | | | 2,409 | |
| Total current liabilities | | | 40,455 | | | | 48,900 | |
| Long-term liabilities | | | | | | | | |
| Long-term debt | | | 81,260 | | | | 60,480 | |
| Total liabilities | | | 121,715 | | | | 109,380 | |
| | | | | | | | | |
| Stockholders' equity | | | | | | | | |
| Share capital | | | 171 | | | | 171 | |
| Contributed capital surplus | | | 179,019 | | | | 179,019 | |
| Retained earnings | | | 51,534 | | | | 43,115 | |
| Total stockholders' equity | | | 230,724 | | | | 222,305 | |
| Total liabilities and stockholders' equity | | | 352,439 | | | | 331,685 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Knightsbridge Tankers Limited
Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2009
and 2008
(Unaudited)
(in thousands of $)
| | | Nine month period | |
| | | ended Sept 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net income | | | 12,694 | | | | 40,290 | |
| Adjustments to reconcile net income to net cash | | | | | | | | |
| provided by operating activities: | | | | | | | | |
| Depreciation | | | 10,047 | | | | 10,284 | |
| Amortization of deferred charges | | | 98 | | | | 106 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Trade accounts receivable, net | | | (968 | ) | | | (2,033 | ) |
| Other receivables | | | 180 | | | | 5,487 | |
| Inventories | | | (833 | ) | | | 2,921 | |
| Prepaid expenses and accrued income | | | 71 | | | | 52 | |
| Trade accounts payable | | | (3,319 | ) | | | 1,617 | |
| Accrued expenses | | | 5,564 | | | | (3,745 | ) |
| Other current liabilities | | | (952 | ) | | | - | |
| Net cash provided by operating activities | | | 22,582 | | | | 54,979 | |
| Investing activities | | | | | | | | |
| Additions to newbuildings | | | (99,892 | ) | | | (17,267 | ) |
| Net cash used in investing activities | | | (99,892 | ) | | | (17,267 | ) |
| Financing activities | | | | | | | | |
| Proceeds from long-term debt | | | 30,000 | | | | - | |
| Repayments of long-term debt | | | (23,520 | ) | | | (6,720 | ) |
| Debt fees paid | | | (1,286 | ) | | | - | |
| Dividends paid | | | (4,275 | ) | | | (38,475 | ) |
| Net cash provided by (used in) financing activities | | | 919 | | | | (45,195 | ) |
| Net decrease in cash and cash equivalents | | | (76,391 | ) | | | (7,483 | ) |
| Cash and cash equivalents at beginning of period | | | 77,998 | | | | 82,143 | |
| Cash and cash equivalents at end of period | | | 1,607 | | | | 74,660 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | |
| Interest paid, net of capitalized interest | | | 923 | | | | 2,411 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Knightsbridge Tankers Limited
Notes to the Unaudited Consolidated Financial Statements
1. Basis of Preparation
The unaudited consolidated financial statements for Knightsbridge Tankers Limited (the "Company") have been prepared on the same basis as the Company's audited consolidated financial statements and, in the opinion of management, include all material adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The accompanying unaudited consolidated financial statements should be read in conjunction with the annual consolidated financial statements and notes included in the Annual Report on Form 20-F for the year ended December 31, 2008 filed with the Securities and Exchange Commission on June 30, 2009.
Effective July 1, 2009, the Company effected a change in estimate related to the estimated scrap rate for its VLCC vessels from $149 per lightweight ton to $281 per lightweight ton. The resulting increase in salvage value has been applied prospectively and reduced depreciation by $503,000 for the three and nine months ended September 30, 2009. This change also resulted in an increase in net income of $503,000 and an increase of $0.03 in earnings per share for the three and nine months ended September 30, 2009.
2. Recently Issued Accounting Standards
In May 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") 855-10. ASC 855-10 provides guidance on management's assessment of subsequent events and incorporates this guidance into accounting literature. ASC 855-10 is effective prospectively for interim and annual periods ending after June 15, 2009. The Company has evaluated subsequent events through November 20, 2009, the date of issuance of our financial position and results of operation. The adoption of this standard did not have a material impact on our financial statements.
In June 2009, the FASB issued ASC 105-10. ASC 105-10 stipulates the FASB Accounting Standards Codification is the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. ASC 105-10 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The implementation of this standard did not have a material impact on our financial statements.
The minimum contracted future revenues to be received on time charters, which are accounted for as operating leases as of September 30, 2009 are as follows:
Year ending September 30, (in thousands of $) | | | |
| 2010 | | | 69,348 | |
| 2011 | | | 57,948 | |
| 2012 | | | 43,187 | |
| 2013 | | | 33,825 | |
| 2014 | | | 32,385 | |
| Thereafter | | | 1,475 | |
| Total minimum contracted future lease revenues | | | 238,168 | |
The cost and accumulated depreciation of vessels leased to third parties at September 30, 2009 was $354.5 million and $131.6 million, respectively and at December 31, 2008 was $352.3 million and $164.9 million, respectively.
4. Trade Accounts Receivable, Net
Trade accounts receivable are presented net of allowance for doubtful accounts amounting to $0.2 million (2008 $0.2 million).
| (in thousands of $) | | September 30, 2009 | | | December 31, 2008 | |
| Newbuildings | | | 66,884 | | | | 51,305 | |
The carrying value of newbuildings represents accumulated costs paid in purchase installments, other capital expenditures and capitalized loan interest. Interest capitalized in the cost of newbuildings during the three and nine months ended September 30, 2009 totaled $0.1 million and $0.4 million, respectively (2008: $0.3 million and $1.1 million, respectively).
6. Vessels
| (in thousands of $) | | September 30, 2009 | | | December 31, 2008 | |
| Cost | | | 441,180 | | | | 352,308 | |
| Accumulated depreciation | | | (174,995 | ) | | | (164,948 | ) |
| | | | 266,185 | | | | 187,360 | |
In August 2009, an amount of $88.9 million was removed from Newbuildings and added to the cost of Vessels upon the delivery of the first Capesize newbuilding. $17.3 million of this amount was recorded in Newbuildings at December 31, 2008.
7. Debt
| (in thousands of $) | | September 30, 2009 | | | December 31, 2008 | |
| U.S. dollar denominated floating rate debt; | | | | | | |
| - $140 Million Loan | | | 62,720 | | | | 69,440 | |
| - Predelivery Loan | | | 16,800 | | | | 33,600 | |
| - $60 Million Loan | | | 30,000 | | | | - | |
| Total debt | | | 109,520 | | | | 103,040 | |
| Less: Current portion | | | (28,260 | ) | | | (42,560 | ) |
| | | | 81,260 | | | | 60,480 | |
The average interest rate for the floating rate debt was 2.0% for the nine months ended September 30, 2009 (2008: 4.3%).
$140 Million Loan
In March 2004, the Company refinanced a prior debt facility with a $140.0 million credit facility in the form of five tranches of $28.0 million, each of which relates to a vessel. The credit facility is secured by, among other things, a mortgage on each vessel and an assignment of any charter in respect to that vessel. The credit facility is for a term of seven years and matures in 2011.
The credit facility bears interest at LIBOR plus a margin and contains a minimum market value covenant on the vessels and a covenant requiring us to maintain a certain minimum level of cash.
Predelivery Loan
In May 2007, the Company entered into an amendment of the $140 million loan and drew two tranches of $16.8 million each to fund installment payments on two newbuilding contracts. The facility is secured on the same basis as the original loan and is subject to the same covenants as the original loan. The two tranches were repaid in August 2009 and October 2009 upon the delivery of the two newbuilding vessels.
$60 Million Loan
In August 2009, the Company entered into a four year term loan facility agreement consisting of two tranches of $30.0 million each. In August 2009, the Company drew down $30.0 million to fund the final installment due on delivery of the first Capesize newbuilding and the repayment of the first tranche of the Predelivery Loan. In October 2009, the Company drew down the second tranche of $30.0 million under the term loan to fund the final installment due on delivery of the second Capesize newbuilding and the repayment of the second tranche of the Predelivery Loan. The loans are secured by, among other things, a mortgage on the Capesize vessels and an assignment of any charters in respect to those vessels.
The $60 Million Loan bears interest at LIBOR plus a margin and contains a minimum market value covenant on the Capesize vessels and covenants requiring us to maintain a certain minimum level of cash and positive working capital.
8. Share Capital
The authorized share capital consists of 35,000,000 (2008: 20,000,000) ordinary shares of $0.01 each. The increase in the authorized share capital was approved at the Company's Annual General Meeting on September 25, 2009. The issued and fully paid share capital consists of:
| (in thousands of $) | | September 30, 2009 | | | December 31, 2008 | |
| 17,100,000 ordinary shares of $0.01 each | | | 171 | | | | 171 | |
9. Financial Instruments
Interest rate risk management
The Company may enter into financial instruments to reduce the risk associated with fluctuations in interest rates. The Company does not hold or issue instruments for speculative or trading purposes. As at September 30, 2009, the Company is not a party to any interest rate swaps to hedge interest rate exposure.
Foreign currency risk
The majority of the Company's transactions, assets and liabilities are denominated in United States dollars, which is the functional currency of the Company. There is no significant risk that currency fluctuations will have a negative effect of the value of the Company's cash flows.
Fair values
The carrying value and estimated fair value of the Company's financial instruments are as follows:
| | | Sept 30, 2009 | | | Sept 30, 2009 | | | Dec 31, 2008 | | | Dec 31, 2008 | |
(in thousands of $) | | Fair Value | | | Carrying Value | | | Fair Value | | | Carrying Value | |
| Cash and cash equivalents | | | 1,607 | | | | 1,607 | | | | 77,998 | | | | 77,998 | |
| Restricted cash | | | 10,000 | | | | 10,000 | | | | 10,000 | | | | 10,000 | |
| Floating rate debt | | | 109,520 | | | | 109,520 | | | | 103,040 | | | | 103,040 | |
The carrying value of cash and cash equivalents, and restricted cash, is a reasonable estimate of fair value.
The estimated fair value of floating rate debt is considered to be equal to the carrying value since it bears variable interest rates, which are reset on a quarterly basis.
Concentrations of risk
There is a concentration of credit risk with respect to cash and cash equivalents to the extent that substantially all of the amounts are carried with Skandinaviska Enskilda Banken, The Royal Bank of Scotland plc, DnB NOR and Nordea bank. The latter two banks deal with the money market transactions. The Company does not require collateral or other security to support financial instruments subject to credit risk.
10. Subsequent Event
The Company took delivery of its second Capesize newbuilding on October 29, 2009.
