SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
($ in thousands except shares)
| | | | | | | | | Paid-in | | | | | | | | | | | | | | | |
| | | | | | | | | Additional | | | Treasury | | | Retained | | | Translation | | | Other | | | Total |
| | Note | Shares | | | Stock | | | Capital | | | Shares | | | Earnings | | | Differences | | | Reserves | | | Equity |
| Balance at January 1, 2017 | | 93,433,804 | | $ | 934 | | $ | 881,097 | | $ | – | | $ | (205,195) | | $ | (108) | | $ | 8,283 | | $ | 685,011 |
| Net income/(loss) after tax | | | | | | | | | | | | | | 6,602 | | | | | | | | | 6,602 |
| Other comprehensive income | | | | | | | | | | | | | | (166) | | | 193 | | | | | | 27 |
| Total comprehensive income | | | | | | | | | | | – | | | 6,435 | | | 193 | | | | | | 6,628 |
| Cash dividends declared and paid | | | | | | | | | | | | | | (23,328) | | | | | | | | | (23,328) |
| Issuance of stock | | 47,724,395 | | | 477 | | | 254,367 | | | | | | | | | | | | | | | 254,845 |
| Purchase of convertible bonds | | | | | | | | (2,213) | | | | | | | | | | | | | | | (2,213) |
| Compensation related to options and restricted stock | | 1,259,208 | | | 13 | | | 7,543 | | | | | | | | | | | | (2,607) | | | 4,948 |
| Balance at December 31, 2017 | | 142,417,407 | | $ | 1,424 | | $ | 1,140,794 | | $ | – | | $ | (222,087) | | $ | 85 | | $ | 5,676 | | $ | 925,892 |
| | Note | Shares | | | Stock | | | Capital | | | | | | Earnings | | | Differences | | | Reserves | | | Equity |
| Balance at January 1, 2018, as previously reported | | 142,417,407 | | $ | 1,424 | | $ | 1,140,794 | | $ | – | | $ | (222,087) | | $ | 85 | | $ | 5,676 | | $ | 925,892 |
| Impact of change in accounting policy | 2 | | | | | | | | | | | | | (4,734) | | | | | | | | | (4,734) |
| Adjusted balance at January 1, 2018 | | 142,417,407 | | | 1,424 | | | 1,140,794 | | | – | | | (226,821) | | | 85 | | | 5,676 | | | 921,158 |
| Net income/(loss) after tax | | | | | | | | | | | | | | (46,927) | | | (53) | | | | | | (46,927) |
| Other comprehensive income | | | | | | | | | | | | | | (148) | | | (53) | | | | | | (201) |
| Total comprehensive income | | | | | | | | | | | | | | (47,075) | | | | | | | | | (47,128) |
| Cash dividends declared and paid | | | | | | | | | | | | | | (11,487) | | | | | | | | | (11,487) |
| Purchase of treasury shares | | | | | | | | | | | (5,026) | | | | | | | | | | | | (5,026) |
| Retirement of treasury shares | | (892,497) | | | (9) | | | (3,654) | | | 3,662 | | | | | | | | | | | | (0) |
| Issuance of convertible bonds | | | | | | | | 3,165 | | | | | | | | | | | | | | | 3,165 |
| Purchase of convertible bonds | | | | | | | | (1,613) | | | | | | | | | | | | | | | (1,613) |
| Compensation related to options and restricted stock | | 1,175,136 | | | 12 | | | 6,414 | | | | | | | | | | | | (3,827) | | | 2,599 |
| Balance at December 31, 2018 | | 142,700,046 | | $ | 1,427 | | $ | 1,145,107 | | $ | (1,364) | | $ | (285,383) | | $ | 32 | | $ | 1,848 | | $ | 861,668 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 2018
Note 1 – General information
DHT Holdings, Inc. (“DHT” or the “Company”) is a company incorporated under the laws of the Marshall Islands whose shares are listed on the New York Stock Exchange. The Company’s principal executive office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The Company is engaged in the ownership and operation of a fleet of crude oil carriers.
The financial statements were approved by the Company’s Board of Directors (the “Board”) on February 4, 2019 and authorized for issue on February 6, 2019.
Note 2 – General accounting principles
The condensed consolidated interim financial statements do not include all information and disclosure required in the annual financial statements and should be read in conjunction with DHT’s audited consolidated financial statements included in its Annual Report on Form 20-F for 2017. Our interim results are not necessarily indicative of our results for the entire year or for any future periods.
The interim condensed financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”).
The interim condensed financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. The accounting policies that have been followed in these interim condensed financial statements are the same as presented in the 2017 audited consolidated financial statements.
These interim condensed consolidated financial statements have been prepared on a going concern basis.
Application of new and revised International Financial Reporting Standards (“IFRSs”)
New and revised IFRSs, and interpretations mandatory for the first time for the financial year beginning January 1, 2018 are listed below. With the exception of IFRS 15, the adoption did not have any effect on the financial statements:
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
Annual Improvements to IFRS Standards 2014-2016 Cycle
IFRIC 22 Foreign Currency Transactions and Advance Consideration
Adoption of IFRS 15 Revenue from Contracts with Customers
Effective from January 1, 2018, we adopted the new accounting standard IFRS 15 Revenue from Contracts with Customers using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
For vessels operating on spot charters, voyage revenues are, under the new revenue standard, recognized ratably over the estimated length of each voyage, calculated on a load-to-discharge basis. Voyage expenses are capitalized between the previous discharge port, or contract date if later, and the next load port if they qualify as fulfillment costs under IFRS 15. To recognize costs incurred to fulfil a contract as an asset, the following criteria shall be met: (i) the costs relate directly to the contract, (ii) the costs generate or enhance resources of the entity that will be used in satisfying performance obligations in the future and (iii) the costs are expected to be recovered. Reference is also made to note 2 in the Annual Report on Form 20-F for 2017.
Time charters continue to be accounted as operating leases in accordance with IAS 17 and related interpretations and the implementation of the new revenue standard therefore did not have an effect on income recognition from such contracts.
The cumulative effect of the adjustments made to our condensed consolidated statement of financial position at January 1, 2018 from the adoption of IFRS 15 Revenue from Contracts with Customers was as follows:
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| | Balance at | Adjustments | Balance att |
| $ in thousands | December 31, 2017 | due to IFRS 15 | January 1, 2018 |
| ASSETS | | | |
| Accounts receivable and accrued revenues | 42,212 | (7,437) | 34,775 |
| Capitalized voyage expenses | – | 1,888 | 1,888 |
| LIABILITIES | | | |
| Accounts payable and accrued expenses | 17,427 | (815) | 16,613 |
| EQUITY | | | |
| Accumulated deficit | (222,087) | (4,734) | (226,821) |
The impact of the adoption of IFRS 15 Revenues from Contracts with Customers on our condensed consolidated statement of financial position as of December 31, 2018, condensed consolidated income statement and condensed consolidated statement of cash flow for fourth quarter and twelve months of 2018 were as follows:
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| | Balance at December 31, 2018 |
| $ in thousands | | Adjustments due to IFRS 15 | Balance without adoption of IFRS 15 |
| ASSETS | | | |
| Accounts receivable and accrued revenues | 60,196 | 8,271 | 68,467 |
| Capitalized voyage expenses | 1,633 | (1,633) | 0 |
| LIABILITIES | | | |
| Accounts payable and accrued expenses | 28,634 | 602 | 29,236 |
| EQUITY | | | |
| Accumulated deficit | (285,383) | 6,036 | (279,347) |
CONDENSED CONSOLIDATED INCOME STATEMENT
| | 4Q 2018 Oct. 1 – Dec. 31, 2018 | 12 months 2018 Jan. 1 – Dec. 31, 2018 |
| $ in thousands | As reported | Adjustments due to IFRS 15 | Balance without adoption of IFRS 15 | As reported | Adjustments due to IFRS 15 | Balance without adoption of IFRS 15 |
| Shipping revenues | 138,620 | 2,815 | 141,435 | 375,941 | 834 | 376,776 |
| Voyage expenses | (53,389) | (205) | (53,594) | (161,891) | 468 | (161,423) |
| Net income/(loss) after tax | 11,983 | 2,610 | 14,593 | (46,927) | 1,302 | (45,625) |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
| | 4Q 2018 Oct. 1 – Dec. 31, 2018 | 12 months 2018 Jan. 1 – Dec. 31, 2018 |
$ in thousands | As
reported | Adjustments due to IFRS 15 | Balance without adoption of IFRS 15 | As reported | Adjustments due to IFRS 15 | Balance without adoption of IFRS 15 |
| Net income / (loss) | 11,983 | 2,610 | 14,593 | (46,927) | 1,302 | (45,625) |
| Accounts receivable and accrued revenues | (19,199) | (2,815) | (22,014) | (25,421) | (834) | (26,255) |
| Capitalized voyage expenses | (219) | 219 | (0) | 255 | (255) | (0) |
| Accounts payable and accrued expenses | 216 | (13) | 202 | 8,267 | (213) | 8,055 |
| Net cash provided by operating activities | 28,319 | – | 28,319 | 53,985 | – | 53,985 |
Voyage expenses are capitalized between the previous discharge port, or contract date if later, and the next load port and amortized between load port and discharge port. The closing balance of assets recognized from the costs to obtain or fulfil a contract was $1.6 million as per December 31, 2018. During the twelve months of 2018, $1.5 million was amortized and no impairment losses were recognized in the period.
IFRS 15 requires disclosure on the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period and an explanation of when an entity expects to recognize these amounts as revenue. We have applied the practical expedient related to performance obligation with reference to IFRS 15:121 (a), as the original expected duration of the underlying contract is one year or less. Consequently, no disclosure is presented in the notes to the interim condensed consolidated financial statements.
According to IFRS 15:114 an entity shall disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. DHT’s business is to operate a fleet of crude oil tankers and management has organized the entity as one segment based upon on the service provided. Consequently, the Company does not disaggregate revenue recognized from contracts with customers.
Note 3 – Segment reporting
Since DHT’s business is limited to operating a fleet of crude oil tankers, management has organized the entity as one segment based upon the service provided. Consequently, the Company has one operating segment as defined in IFRS 8, Operating Segments.
As of December 31, 2018, the Company had 27 vessels in operation; 5 vessels were on time charters and 22 vessels operating in the spot market.
Information about major customers:
For the period from October 1, 2018 to December 31, 2018 five customers represented $33.9 million, $12.6 million, $10.6 million, $8.8 million and $8.6 million, respectively, of the Company’s revenues. The five customers in aggregate represented $74.5 million, equal to 54 percent of the total revenue of $138.6 million for the period from October 1, 2018 to December 31, 2018.
For 2018, five customers represented $76.0 million, $38.4 million, $19.3 million, $18.7 million and $18.7 million, respectively, of the Company’s revenues. The five customers in aggregate represented $171.1 million, equal to 46 percent of the total revenue of $375.9 million for the year ending December 31, 2018.
For the period from October 1, 2017 to December 31, 2017 five customers represented $16.9 million, $12.7 million, $11.1 million, $7.7 million and $5.7 million, respectively, of the Company’s revenues. The five customers in aggregate represented $54.1 million, equal to 59 percent of the total revenue of $92.2 million for the period from October 1, 2017 to December 31, 2017.
For 2017, five customers represented $48.2 million, $39.5 million, $36.1 million, $32.3 million and $18.9 million, respectively, of the Company’s revenues. The five customers in aggregate represented $175.0 million, equal to 49 percent of the total revenue of $355.1 million for the year ending December 31, 2017.
Note 4 – Interest bearing debt
As of December 31, 2018, DHT had interest bearing debt totaling $967.3 million (including the $157.9 million convertible senior notes).
Scheduled debt repayments (USD thousands) and margin above Libor
| $ in thousands | Margin above Libor | Q1 2019 | Q2-Q4 2019 | 2020 | 2021 | Thereafter | Total |
| ABN Amro Credit Facility | 2.40% | 8,344 | 25,033 | 33,378 | 33,378 | 369,505 | 469,639 |
| Credit Agricole Credit Facility | 2.19% | 1,649 | 4,948 | 6,597 | 6,597 | 42,925 | 62,717 |
| Danish Ship Finance Credit Facility | 2.25% | | 2,600 | 39,000 | | | 41,600 |
| Nordea Credit Facility * | 2.40% | 5,400 | 16,200 | 26,600 | 21,600 | 188,683 | 258,483 |
| ABN Amro Revolving Credit Facility ** | 2.50% | | | | | | |
| Convertible Senior Notes | | | 32,860 | | 125,000 | | 157,860 |
| Total | | 15,394 | 81,641 | 105,575 | 186,575 | 601,113 | 990,299 |
| Unamortized upfront fees bank loans | | | | | | | (9,140) |
| Difference amortized cost/notional amount convertible note | | | | | | | (13,883) |
| Total interest bearing debt | | | | | | | 967,275 |
*$45.0 mill. undrawn as of December 31, 2018.
**$53.7 mill. available as of December 31, 2018. Quarterly reduction of $1.8 million.
Refinancing
In April we entered into a $484 million secured credit facility agreement for the refinancing of 13 of the Company’s VLCCs. The following credit facilities were refinanced: Nordea Samco Credit Facility (DHT Sundarbans, DHT Taiga, DHT Redwood, DHT Hawk, DHT China, DHT Falcon and DHT Condor) $215.2 million, Nordea/DNB Credit Facility (DHT Leopard) $44.4 million, ABN Amro Credit Facility (DHT Lion, DHT Panther and DHT Puma) $118.4 million and the undrawn DNB/Nordea Credit Facility (DHT Bronco and DHT Mustang) $82.5 million. We also entered into an agreement with ABN Amro to increase the Company’s revolving credit facility to $57.3 million from the current availability of $43.4 million. Both credit facilities are described below.
ABN Amro Credit Facility
In April 2018 we entered into a credit facility with ABN Amro, Nordea, Credit Agricole, DNB, ING, Danish Ship Finance, SEB, DVB and Swedbank as lenders and DHT Holdings, Inc. as guarantor for the financing of eleven VLCCs and two newbuildings. Borrowings bear interest at a rate equal to Libor + 2.40% and the loan is repayable in quarterly installments of $8.3 million through Q2 2024 and a final payment of $286.1 with the last installment.
The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
| ● | Value adjusted* tangible net worth of $300 million |
| ● | Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets |
| ● | Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt |
* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
Credit Agricole Credit Facility
In June 2015 Samco Gamma Ltd and DHT Tiger Limited entered into a credit agreement with Credit Agricole for the financing of the Samco Scandinavia and the newbuilding DHT Tiger that was delivered in January 2017. In June 2016 we made a voluntary prepayment of $5.0 million and the financing of the Samco Scandinavia is repayable with 30 quarterly installments of $0.97 million each. The $48.7million financing of DHT Tiger was drawn in 2016 in advance of the delivery of the DHT Tiger which took place in January 2017 and is repayable in quarterly installments of $0.7 million with a final payment of $29.7 in December 2023. The loan bears interest at Libor plus a margin of 2.1875%. The credit agreement is guaranteed by DHT and contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
| ● | Value adjusted* tangible net worth of $200 million |
| ● | Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets |
| ● | Unencumbered consolidated cash of at least the higher of (i) $20 million and (ii) 6% of our gross interest bearing debt |
* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
Danish Ship Finance Credit Facility
In November 2014 we entered into a credit facility totaling $49.4 million with Danish Ship Finance (“DSF”) as lender and DHT Holdings, Inc. as guarantor for the financing of the VLCC newbuilding DHT Jaguar delivered in Q4 2015. The full amount of the credit facility was drawn in November 2015. Borrowings bear interest at a rate equal to Libor + 2.25% and are repayable in 10 semiannual installments of $1.3 million each from May 2016 to November 2020 and a final payment of $36.4 million in November 2020. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessel that secure the credit facility be no less than 130% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
| ● | Value adjusted* tangible net worth of $300 million |
| ● | Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets |
| ● | Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt |
* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
Nordea/DNB Credit Facility
The Nordea/DNB Credit Facility was repaid in full in connection with the sale of DHT Cathy and DHT Sophie in December 2018.
Nordea BW VLCC Acquisition Credit Facility
$204 million of the $300 million credit facility was borrowed during the second quarter of 2017 in connection with delivery of the nine VLCCs in water from BW. The final $96 million was borrowed in connection with the delivery of the two VLCC newbuildings from DSME in the second quarter of 2018. The credit facility is guaranteed by DHT Holdings, Inc., borrowings bear interest at a rate equal to Libor + 2.40%. Subsequent to the sale of the DHT Utah and DHT Utik and the delivery of DHT Stallion and DHT Colt, the current outstanding is repayable in quarterly installments of $5.4 million with a final payment of $156.3 million in the second quarter of 2023. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
| ● | Value adjusted* tangible net worth of $300 million |
| ● | Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets |
| ● | Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt |
* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
In September 2018 we secured commitment to a $50 million scrubber financing structured through an increase of the existing $300 million secured credit facility entered into in the second quarter of 2017. The increased facility bear the same interest rate equal to Libor + 2.40%. As per December 31, 2018, a total of $5.0 million was drawn and $45.0 million is available. The facility will have quarterly installments of $2.5 million commencing second quarter 2020. Other terms and conditions remain unchanged.
ABN Amro Revolving Credit Facility
In November 2016, we entered into a secured five year revolving credit facility with ABN Amro totaling $50.0 million to be used for general corporate purposes, including security repurchases and the acquisition of ships. The financing bears interest at a rate equal to Libor + 2.50%. In April 2018, we entered into an agreement with ABN Amro to increase the revolving credit facility to $57.3 million with a quarterly reduction of $1.8 million starting July 31, 2018. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
| ● | Value adjusted* tangible net worth of $300 million |
| ● | Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets |
| ● | Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt |
*Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
Convertible Senior Notes
During the second quarter of 2017 we repurchased $12.2 million of the convertible senior notes in the open market at a price of 98.4% of par. During the first quarter of 2017 we repurchased $5.0 million of the convertible senior notes in the open market at a price of 100.4% of par. During the fourth quarter of 2016 we repurchased $23.0 million of the convertible senior notes in the open market at an average price of 90.4% of par. In February 2016 we repurchased $3.0 million of the convertible senior notes in the open market at a price of 99% of par and in April 2016 we repurchased $1.0 million of the convertible senior notes in the open market at a price of 99% of par. In August 2018, approximately $73.0 million of the 2019 Notes were exchanged for approximately $80.3 million of the 2021 Notes. The repurchased convertible senior notes have been cancelled and the current outstanding of the 2019 Notes is $32.9 million and the current outstanding of the 2021 Notes is $125.0 million.
Interest rate swaps
As of December 31, 2018, the Company has nine amortizing interest rate swaps totaling $402.0 million with maturity ranging from the second quarter 2023 to the third quarter 2023. The average fixed interest rate is 2.96%. As of December 31, 2018, the fair value of the derivative financial liability related to the swaps amounted to $5.7 million.
Covenant compliance
As of the date of our most recent compliance certificates submitted to the banks, we are in compliance with our financial covenants.
Note 5 – Vessels
The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of constructing new vessels. Historically, both charter rates and vessel values have been cyclical. The carrying amounts of vessels held and used by us are reviewed for potential impairment or reversal of prior impairment charges whenever events or changes in circumstances indicate that the carrying amount of a particular vessel may not accurately reflect the recoverable amount of a particular vessel. The Company is of the view that there were no events or changes in circumstances indicating that the carrying amount of a particular vessel may not accurately reflect the recoverable amount of a particular vessel as of December 31, 2018.
Cost of Vessels $ in thousands | |
| At January 1, 2018 | 1,810,158 |
| Additions | 15,373 |
| Transferred from vessels under construction | 336,890 |
| Retirement ** | (90,965) |
| At December 31, 2018 | 2,071,456 |
Depreciation, impairment and amortization* $ in thousands | |
| At January 1, 2018 | 366,012 |
| Depreciation and amortization | 103,259 |
| Impairment charges | 3,500 |
| Retirement ** | (67,125) |
| At December 31, 2018 | 405,646 |
Carrying Amount $ in thousands | |
| At January 1, 2018 | 1,444,146 |
| At December 31, 2018 | 1,665,810 |
*Accumulated numbers
**Relates to completed depreciation of drydocking for DHT Sophie, DHT Lake and DHT Raven and sale of DHT Cathy and DHT Sophie.
Vessels under construction
On October 8, 2018, the Company took delivery of DHT Mustang, the last of its two VLCC newbuildings from HHI. A total of $51.4 million of debt was drawn in connection with the delivery and remaining commitment was financed with cash at hand. The Company has no further vessels under constructions and the cost of vessels under construction has been transferred to vessels and relates to the four newbuildings delivered during 2018.
Cost of vessels under construction $ in thousands | |
| At January 1, 2018 | 114,759 |
| Additions | 222,131 |
| Transferred to vessels | (336,890) |
| At December 31, 2018 | – |
| | |
Carrying Amount $ in thousands | |
| At January 1, 2018 | 114,759 |
| At December 31, 2018 | – |
Note 6 – Equity and Convertible Bond Offerings
Convertible Senior Note Offering
On September 16, 2014 we completed a private placement of $150 million aggregate principal amount of convertible senior notes due 2019 (the “2019 Notes”). DHT will pay interest at a fixed rate of 4.5% per annum, payable semiannually in arrears. Net proceeds to DHT were approximately $145.9 million after the payment of placement agent fees. The value of the conversion right has been estimated to $21.8 million; hence $21.8 million of the aggregate principal amount of $150.0 million was classified as equity. The Notes will be convertible into common stock of DHT at any time after placement until one business day prior to their maturity. The initial conversion price was $8.125 per share of common stock (equivalent to 18,461,538 shares of common stock), and is subject to customary anti-dilution adjustments. As a result of the cumulative effect of previously announced cash dividends, the conversion price was adjusted to $6.2599 effective May 18, 2018. Based on the adjusted conversion price and after adjusting for the repurchase of $44.2 million of the convertible senior notes in the open market at an average price of 94.5% of par, and the private exchange August 2018, the total number of shares to be issued would be 5,249,285.
In August 2018 we completed a privately negotiated exchange agreement with certain holders of the outstanding 4.5% Convertible Senior Notes due 2019 to exchange approximately $73.0 million aggregate principal amount of the existing notes for approximately $80.3 million aggregate principal amount of the Company’s new 4.5% Convertible Senior Notes due 2021. In addition, a private placement of approximately $44.7 million aggregate principal amount of the Company’s new 4.5% Convertible Senior Notes due 2021 for gross proceeds of approximately $41.6 million. Net proceeds to DHT were approximately $38.9 million after the payment of placement agent fees.
Following closing of the private exchange and the private placement, there are $125 million aggregate principal amount of convertible senior notes due 2021 (the “2021 Notes”) and approximately $32.9 million aggregate principal amount of the 2019 Notes outstanding. The 2021 Notes will bear interest at a rate of 4.5% per annum on the principal amount accruing from August 21, 2018. Interest will be payable semiannually in arrears on February 15 and August 15 each year, beginning on February 2019. Interest is computed on the basis of 360-day year comprised of twelve 30-days months. The initial conversion price was $6.2599 per share of common stock (equivalent to an initial conversion rate of 159.7470 shares of common stock per $1,000 aggregate principal amount of 2021 Notes) and is subject to customary anti-dilution adjustments. Based on the conversion price, the total number of shares to be issued would be 19,968,370. The 2021 Notes will mature on August 15, 2021, unless earlier converted, redeemed or repurchased in accordance with their terms.
We have concluded that the adjustment of the conversion rate upon the payment of cash dividends does not result in an accounting entry as the liability and equity components of the instrument are not re-measured as a result of the cash dividend. This is based on the fact that we have determined that the Notes are non-derivative financial instruments that contain both liability and equity components. The financial liability is the contractual obligation to make interest and principal payments and the equity component is the right of the holders of the Notes to convert the Notes into a fixed number of the Company’s common shares. In accordance with IAS 32, the liability component was measured first and is recorded at its amortized cost over the life of the instrument. The equity component was assigned the residual amount after deducting the amount separately determined for the liability component. The equity component was recorded as part of additional paid-in capital and is never re-measured.
The determination that the conversion feature is an equity instrument (rather than a derivative liability accounted for under IAS 39) was made on the basis that there is no variability in the number of equity instruments delivered upon conversion (i.e. the exchange meets the “fixed for fixed” requirements set forth under IAS 32). In making the determination, the Company considered that the Notes contain a mechanism whereby the conversion rate of the Notes is adjusted for cash dividends paid by the Company. Although this adjustment results in variability in the number of common shares delivered, the fact that this variability serves to maintain the relative economic rights of the holders of the Notes results in no violation of the “fixed for fixed” requirement.
Note 7 – Stockholders equity and dividend payment
| | | Common stock | | | Preferred stock |
| Issued at December 31, 2018 | | 142,700,046 | | | 0 |
| Shares to be issued assuming conversion of | | | | | |
| convertible notes due 2019* | | 6,562,001 | | | |
| Shares to be issued assuming conversion of | | | | | |
| convertible notes due 2021* | | 29,761,913 | | | |
| Numbers of shares authorized for issue | | | | | |
| at December 31, 2018 | | 250,000,000 | | | 1,000,000 |
| Par value | | $ 0.01 | | | $ 0.01 |
*assuming the maximum Fundamental Change conversion rate.
Common stock:
Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders.
Preferred stock:
In the first quarter 2017, the board established two series of preferred stock: Series C Preferred Stock and Series D Preferred Stock, the terms of which are detailed in Current Reports on Form 6-K dated January 30, 2017 and March 24, 2017, respectively. As of December 31, 2018, no shares of Series C Preferred Stock or Series D Preferred Stock were outstanding. Terms and rights of any other preferred shares will be established by the board when or if such shares would be issued.
Stock repurchase
In December 2018, the Company purchased 1,228,440 of its own shares in the open market for an aggregate consideration of $5.0 million, at an average price of $4.07 per share. As per December 31, 2018 a total of 892,497 shares were retired, while the remaining 335,943 shares were held as treasury shares and retired in January 2019.
Dividend payment
Dividend payment as of December 31, 2018:
| Payment date | Total Payment | Per common share |
| November 23, 2018 | $ | 2.9 million | $ | 0.02 |
| August 31, 2018 | $ | 2.9 million | $ | 0.02 |
| May 30, 2018 | $ | 2.9 million | $ | 0.02 |
| February 28, 2018 | $ | 2.9 million | $ | 0.02 |
| Total payment as per December 31, 2018 | $ | 11.5 million | $ | 0.08 |
Dividend payment as of December 31, 2017:
| Payment date | Total Payment | Per common share |
| December 6, 2017 | $ | 2.8 million | $ | 0.02 |
| August 31, 2017 | $ | 2.8 million | $ | 0.02 |
| May 31, 2017 | $ | 10.1 million | $ | 0.08 |
| February 22, 2017 | $ | 7.6 million | $ | 0.08 |
| Total payment as per December 31, 2017 | $ | 23.3 million | $ | 0.20 |
Note 8 – Accounts receivable and accrued revenues
Accounts receivable and accrued revenues totaling $60.2 million as of December 31, 2018 consists mainly of accounts receivable with no material amounts overdue.
Note 9 - Financial risk management, objectives and policies
Note 9 in the 2017 annual report on Form 20-F provides for details of financial risk management objectives and policies.
The Company’s principal financial liability consists of long-term debt with the main purpose being to partly finance the Company’s assets and operations. The Company’s financial assets mainly comprise cash. The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks.
Note 10 – Subsequent events
On February 4, 2018 the Board approved a dividend of $0.05 per common share related to the fourth quarter 2018 to be paid on February 26, 2019 for shareholders of record as of February 19, 2019.
