Independent Tankers - First Quarter 2009 ResultsIndependent Tankers - First Quarter 2009 Results

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 May 2009

Independent Tankers reports net income of $3.9 million, equivalent to earnings per share of $0.05 for the first quarter of 2009. In March 2009, Front Voyager Inc. declared a one year extension of the charter for the Suezmax tanker Front Voyager. 
In April 2009, Chevron Transport Corporation chose not to declare the termination option for the Suezmax tanker Altair Voyager and the bareboat charter will continue until 2015.
Introduction
Independent Tankers Corporation Limited (the "Company" or "Independent Tankers") was incorporated in Bermuda on January 18, 2008 and the shares have traded on the Norwegian over-the-counter market since March 7, 2008. Independent Tankers' business is mainly concentrated on the ownership and operation of crude oil tankers on long term bareboat contracts, which include certain cancellation options to major oil companies. Independent Tankers owns or leases in six VLCCs and four Suezmax tankers. All vessels are financed through bonds in the US market and some of the vessels are also subject to financial lease arrangements. The main shareholder is Frontline Ltd. ("Frontline") with an ownership of approximately 83 percent. 
First Quarter 2009 Results
The Board of Independent Tankers Corporation Limited (the "Company" or "Independent Tankers") announces net income of $3.9 million, equivalent to earnings per share of $0.05 for the first quarter of 2009. This compares with a net income of $5.3 million, equivalent to earnings per share of $0.07 for the fourth quarter of 2008. The decrease in net income is primarily due to foreign exchange movements offset by a net reduction in interest expense following the termination of the British Pioneer lease on January 2, 2009.
The average daily bareboat rates earned in the first quarter by the Company's VLCCs and the Suezmax tanker Front Voyager were approximately $25,700 and $8,000, respectively, compared with approximately $26,100 and $7,800, respectively, in the preceding quarter.
Net interest expense was $5.2 million (fourth quarter 2008: $6.3 million). At March 31, 2009, all of the Company's bond debt of $335.7 million is fixed with interest rates ranging from 6.63% to 8.52%. In addition, the Company has previously established short term bank facilities of $40.6 million in order to repurchase part of its own Windsor term notes. These facilities mature in June and August 2009.
The Company has reclassified some of its restricted cash balances to long-term. These balances relate to the restricted cash that are segregated for the settlement of long-term lease obligations. The amount reclassified as of December 31, 2008 and March 31, 2008 to conform to the current year presentation was $184.7 million and $246.6 million respectively.
In May 2009, the Company has an average cash breakeven rate for its VLCCs and Suezmax tanker of approximately $19,100 and $4,200 per vessel, respectively.
Chartering Summary
On November 13, 1997, the Company's subsidiary Buckingham Shipping Plc entered into a 20 year bareboat charter with BP Shipping Limited ("BP") for the VLCC British Pioneer. The fixed charter period with a bareboat rate of $24,895 ended on January 2, 2009 and is followed by four one year extensions at market related charter rates. During the market related period, the Company's ship owning subsidiary will receive the greater of a base daily rate of $20,000 per day or a spot market rate. After inclusion of daily operating expenses of $12,900 for 2009, the spot market rate must be greater than $32,900 per day, in order for the Company's subsidiary to receive any additional hire. The additional hire calculation, while calculated quarterly, is cumulative on a four year basis or shorter if BP terminates the charter earlier. Although the spot market rate was $41,400 per day for the first quarter of 2009 as quoted by the London Tanker Broker Panel, the Company has not recorded any additional hire in the first quarter of 2009. BP has extended the vessel until January 2011, and has two annual options to extend this market related charter.
On February 2, 2009, BP extended the charter for the double hull VLCC British Progress for one year after the fixed period ends in February 2010. The vessel will continue on a bareboat rate of $24,895 per day until the fixed period is finished in February 2010, followed by the same rate structure as for British Pioneer until February 2011.
The two double hull VLCCs, British Purpose and British Pride, are on bareboat contracts to BP at a fixed rate of $24,895 per day until the fixed periods end in July 2010 and July 2011, respectively. BP is required to notify the Company 12 months in advance of the fixed period ending if they intend to terminate the charter. As a consequence of the charter extensions, the charter coverage with BP is 100 percent in 2009 and 88 percent in 2010 for the four VLCCs.
 In March 2009, Front Voyager, Inc., a subsidiary of Frontline, extended the charter party with CalPetro Tankers (Bahamas III) Ltd. for the single hull Suezmax tanker, Front Voyager, for one year from April 1, 2009 at an average daily bareboat rate of $4,988.
In April 2009, Chevron Transport Corporation ("Chevron") chose not to declare the termination option for the double hull Suezmax tanker Altair Voyager, and the bareboat charter will continue until 2015. The bareboat rate averages approximately $13,900 per day in 2009, reducing to approximately $9,500 per day in 2015. As a consequence of the charter extension with Chevron, the charter coverage for the two double hull Suezmax tankers, Altair Voyager and Cygnus Voyager, is 100 percent until 2015. The third double hull Suezmax, Sirius Voyager, is 100 percent fixed until April 2011 with Chevron. These three vessels are owned by subsidiaries, which the Company accounts for under the equity method.

Source: International Tankers Corp.