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 May 2010
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 and its subsidiaries (the "Company"), as of and for the three months ended March 31, 2010.
This Report on Form 6-K is hereby incorporated by reference into the Company's registration statement on Form F-3 (Registration No. 333-164007) declared effective on March 15, 2010.
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 politica l 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: May 19, 2010 | | 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, 2009 filed with the Securities and Exchange Commission on March 17, 2010.
Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three Months Ended March 31, 2010
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 was on a three year time charter earning a rate of $45,000 per day, which expired in April, 2010 and is now operating in the spot market. The remaining VLCC has recently commenced a 30 month bareboat charter at a rate, which is deemed by the Company to be equivalent to approximately $32,000 per day on a time charter basis. Daily time charter equivalent rate is calculated by adding estimated drydocking costs and operating expenses to the bareboat ch arter rate. The Company's two Capesize newbuilding dry bulk carriers commenced five year time charters upon their deliveries in August 2009 and October 2009, respectively, at a net average daily rate of $46,000.
Results of Operations
Amounts included in the following discussion are derived from our unaudited consolidated financial statements for the three months ended March 31, 2010 and 2009.
Operating revenues
| | | Three months ended March 31, | |
| (in thousands of $) | | 2010 | | | 2009 | |
| Time charter revenues | | 20,309 | | | 13,726 | |
| Voyage charter revenues | | | 3,877 | | | | 2,010 | |
| Total operating revenues | | | 24,186 | | | | 15,736 | |
Time charter revenues increased in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 primarily due to $8.4 million earned by the two Capesize newbuildings that were delivered in August and October 2009 offset by a $1.8 million decrease in revenues due to the expiry of the VLCC time charter in March 2009.
Voyage charter revenues increased in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 due to one VLCC, which operated in the spot market for all of the first quarter in 2010 compared with approximately three weeks in the first quarter of 2009.
Operating expenses
| | | Three months ended March 31, | |
| (in thousands of $) | | 2010 | | | 2009 | |
| Voyage expenses | | 3,399 | | | 1,134 | |
| Ship operating expenses | | 4,786 | | | 3,992 | |
| Administrative expenses | | 501 | | | 374 | |
| Depreciation | | 4,429 | | | 3,372 | |
| Total operating expenses | | | 13,115 | | | | 8,872 | |
The increase in voyage expenses in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 is primarily due to one VLCC, which operated in the spot market for all of the first quarter in 2010 compared with approximately three weeks in the first quarter of 2009.
Ship operating expenses and depreciation increased in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 primarily due to the two Capesize vessels, which were delivered in August and October 2009.
Other Income (Expenses)
| | | Three months ended March 31, | |
| (in thousands of $) | | 2010 | | | 2009 | |
| Interest income | | 3 | | | 33 | |
| Interest expense | | | (735 | ) | | | (375 | ) |
| Other financial items | | | (95 | ) | | | (28 | ) |
| Net other expenses | | | (827 | ) | | | (370 | ) |
Interest expense increased in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 primarily due to the higher debt level resulting from the two Capesize newbuildings that were delivered in August and October 2009.
The increase in other financial items in the three months ended March 31, 2010 compared to the three months ended March 31, 2009 is primarily due to an increase in the amortization of deferred charges due to an increase in deferred charges related to the $60 million bank loan for the purchase of the two Capesize newbuildings.
Knightsbridge Tankers Limited
Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009
(Unaudited)
(in thousands of $, except per share data)
| | | Three months ended March 31, | |
| | | 2010 | | | 2009 | |
| Operating revenues | | | | | | |
| Time charter revenues | | | 20,309 | | | | 13,726 | |
| Voyage charter revenues | | | 3,877 | | | | 2,010 | |
| Total operating revenues | | | 24,186 | | | | 15,736 | |
| Operating expenses | | | | | | | | |
| Voyage expenses and commission | | | 3,399 | | | | 1,134 | |
| Ship operating expenses | | | 4,786 | | | | 3,992 | |
| Administrative expenses | | | 501 | | | | 374 | |
| Depreciation | | | 4,429 | | | | 3,372 | |
| Total operating expenses | | | 13,115 | | | | 8,872 | |
| Net operating income | | | 11,071 | | | | 6,864 | |
| Other income (expenses) | | | | | | | | |
| Interest income | | | 3 | | | | 33 | |
| Interest expense | | | (735 | ) | | | (375 | ) |
| Other financial items | | | (95 | ) | | | (28 | ) |
| Net other expenses | | | (827 | ) | | | (370 | ) |
| Net income | | | 10,244 | | | | 6,494 | |
| Per share information: | | | | | | | | |
| Earnings per share: basic and diluted | | $ | 0.60 | | | $ | 0.38 | |
| Cash dividends per share declared | | $ | 0.40 | | | $ | - | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Knightsbridge Tankers Limited
Balance Sheets as of March 31, 2010 and December 31, 2009
(in thousands of $)
| | | Mar 31, 2010 | | | Dec 31, 2009 | |
| | | (unaudited) | | | (audited) | |
| ASSETS | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | | 8,594 | | | | 7,964 | |
| Restricted cash | | | 10,000 | | | | 10,000 | |
| Trade accounts receivable, net | | | 8,014 | | | | 4,437 | |
| Other receivables | | | 660 | | | | 662 | |
| Inventories | | | 2,734 | | | | 3,167 | |
| Voyage in progress | | | - | | | | 2,679 | |
| Prepaid expenses and accrued income | | | 852 | | | | 418 | |
| Total current assets | | | 30,854 | | | | 29,327 | |
| Vessels, net | | | 339,969 | | | | 344,399 | |
| Deferred charges | | | 1,128 | | | | 1,220 | |
| Total assets | | | 371,951 | | | | 374,946 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Current portion of long-term debt | | | 13,960 | | | | 13,960 | |
| Trade accounts payable | | | 4,550 | | | | 3,664 | |
| Accrued expenses | | | 5,318 | | | | 6,841 | |
| Other current liabilities | | | 269 | | | | 4,251 | |
| Total current liabilities | | | 24,097 | | | | 28,716 | |
| Long-term liabilities | | | | | | | | |
| Long-term debt | | | 103,030 | | | | 106,520 | |
| Total liabilities | | | 127,127 | | | | 135,236 | |
| | | | | | | | | |
| Stockholders' equity | | | | | | | | |
| Share capital | | | 171 | | | | 171 | |
| Contributed capital surplus | | | 179,019 | | | | 179,019 | |
| Retained earnings | | | 65,634 | | | | 60,520 | |
| Total stockholders' equity | | | 244,824 | | | | 239,710 | |
| Total liabilities and stockholders' equity | | | 371,951 | | | | 374,946 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Knightsbridge Tankers Limited
Consolidated Statements of Cash Flows for the three month periods ended March 31, 2010 and 2009
(Unaudited)
(in thousands of $)
| | | Three months | |
| | | ended March 31, | |
| | | 2010 | | | 2009 | |
| | | | | | | |
| Net income | | | 10,244 | | | | 6,494 | |
| Adjustments to reconcile net income to net cash | | | | | | | | |
| provided by operating activities: | | | | | | | | |
| Depreciation | | | 4,429 | | | | 3,372 | |
| Amortization of deferred charges | | | 92 | | | | 27 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Trade accounts receivable, net | | | (3,576 | ) | | | 1,323 | |
| Other receivables | | | 2 | | | | (19 | ) |
| Inventories | | | 433 | | | | (1,027 | ) |
| Voyage in progress | | | 2,679 | | | | (1,861) | |
| Prepaid expenses and accrued income | | | (434 | ) | | | 67 | |
| Trade accounts payable | | | 885 | | | | 694 | |
| Accrued expenses | | | (716 | ) | | | 898 | |
| Other current liabilities | | | (1,188 | ) | | | (952 | ) |
| Net cash provided by operating activities | | | 12,850 | | | | 9,016 | |
| Investing activities | | | | | | | | |
| Additions to newbuildings | | | (3,600 | ) | | | (328 | ) |
| Net cash used in investing activities | | | (3,600 | ) | | | (328 | ) |
| Financing activities | | | | | | | | |
| Repayment of long-term debt | | | (3,490 | ) | | | (2,240 | ) |
| Dividends paid | | | (5,130 | ) | | | (4,275 | ) |
| Net cash used in financing activities | | | (8,620 | ) | | | (6,515 | ) |
| Net increase in cash and cash equivalents | | | 630 | | | | 2,173 | |
| Cash and cash equivalents at beginning of period | | | 7,964 | | | | 77,998 | |
| Cash and cash equivalents at end of period | | | 8,594 | | | | 80,171 | |
| | | | | | | | | |
| Supplemental disclosure of cash flow information: | | | | | | | | |
| Interest paid, net of capitalized interest | | | 663 | | | | 376 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Knightsbridge Tankers LimitedNotes to the Unaudited Consolidated Financial Statements
1. Basis of Preparation
The unaudited consolidated financial statements for Knightsbridge Tankers Limited and its subsidiaries (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, 2009 filed with the Securities and Exchange Commission on March 17, 2010.
2. Leases
The minimum contracted future revenues due under time charters, which are accounted for as operating leases as of March 31, 2010 are as follows:
Year ending March 31, (in thousands of $) | | | |
| 2011 | | | 68,079 | |
| 2012 | | | 46,653 | |
| 2013 | | | 37,358 | |
| 2014 | | | 33,825 | |
| 2015 | | | 17,086 | |
| Thereafter | | | - | |
| Total minimum contracted future lease revenues | | | 203,001 | |
The cost and accumulated depreciation of vessels leased to third parties at March 31, 2010 was $523.7 million and $183.7 million, respectively and at December 31, 2009 was $523.7 million and $179.3 million, respectively.
3. Trade Accounts Receivable, Net
Trade accounts receivable are presented net of allowance for doubtful accounts amounting to $0.2 million (2009: $0.2 million).
4. Vessels
| (in thousands of $) | | Mar 31, 2010 | | | Dec 31, 2009 | |
| Cost | | | 523,689 | | | | 523,689 | |
| Accumulated depreciation | | | (183,720 | ) | | | (179,291 | ) |
| | | | 339,969 | | | | 344,398 | |
Knightsbridge Tankers Limited
Notes to the Unaudited Consolidated Financial Statements (continued)
5. Debt
| (in thousands of $) | | Mar 31, 2010 | | | Dec 31, 2009 | |
| U.S. dollar denominated floating rate debt; | | | | | | |
| - $140 Million Loan | | | 58,240 | | | | 60,480 | |
| - $60 Million Loan | | | 58,750 | | | | 60,000 | |
| Total debt | | | 116,990 | | | | 120,480 | |
| Less: Current Portion | | | (13,960 | ) | | | (13,960 | ) |
| | | | 103,030 | | | | 106,520 | |
The average interest rate for the floating rate debt was 3.0% for the three months ended March 31, 2010 (2009: 2.4%).
$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 June 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 the Company to maintain a certain minimum level of cash. The Company is in compliance with all covenants related to the $140 Million Loan as of March 31, 2010.
$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 a loan used to part finance the predelivery installments on the first Capesize newbuilding. 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 a loan used to part finance the predelivery installments on the second Capesize newbuilding. 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 the Company to maintain a certain minimum level of cash and value adjusted equity and positive working capital. The Company is in compliance with all covenants related to the $60 Million Loan as of March 31, 2010.
6. Share Capital
| (in thousands of $) | | Mar 31, 2010 | | | Dec 31, 2009 | |
| 17,100,000 common shares of $0.01 each | | | 171 | | | | 171 | |
Knightsbridge Tankers Limited
Notes to the Unaudited Consolidated Financial Statements (continued)
7. 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 March 31, 2010, 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:
| | | Mar 31, 2010 | | | Mar 31, 2010 | | | Dec 31, 2009 | | | Dec 31, 2009 | |
(in thousands of $) | | Fair Value | | | Carrying Value | | | Fair Value | | | Carrying Value | |
| Cash and cash equivalents | | | 8,594 | | | | 8,594 | | | | 7,964 | | | | 7,964 | |
| Restricted cash | | | 10,000 | | | | 10,000 | | | | 10,000 | | | | 10,000 | |
| Floating rate debt | | | 116,990 | | | | 116,990 | | | | 120,480 | | | | 120,480 | |
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.
