Nordic American Tanker Shipping Limited announced that it has entered into a preliminary agreement with Samsung Heavy Industries Co., Ltd., a leading Korean shipyard, to build two suezmax tankers of 158,000 deadweight tons each to be delivered to the company in the third and fourth quarters of 2011. The purchase prices of the two newbuilding vessels are $64.5/$65m, with about half to be paid on the signature of the definitive contracts and the balance to be paid on delivery. The advance payments will be guaranteed by a first class financial institution. The acquisitions will be financed by resources of the company. There are no plans for a follow-on equity offering in connection with either these two 2011 newbuldings or the previously announced two newbuildings scheduled to be delivered to us later this year.
Assuming no other acquisitions or dispositions, the delivery of the newbuildings will increase the company's fleet to 20 modern double hull suezmax tankers by the end of 2011. In January 2009, the company had 12 trading suezmax tankers. At the end of 2011 the trading fleet of the company is expected to reach 20 suezmax tankers - or an increase of 67% over a period of 36 months. During the same period, the company's share count is expected to have increased by about 36% assuming that no further acquisitions or follow-on equity offerings are made in the meantime. The definitive contracts with Samsung are expected to be signed at the end of April or in early May 2010.
Herbjorn Hansson, the Chairman and CEO of the Company, stated: "This is an important step forward in the organic growth of our company. By adding two more ships to our fleet, we will increase our dividend capacity and bolster our earnings potential. Our strong balance sheet enables us to contract for these two newbuildings from Samsung. Our dividend policy remains the same as in the past - a full pay out model. We already have seven vessels built by Samsung in our fleet".
