6-K 1 d6084857_6-k.htm

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 August 2014

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 hereto as Exhibit 1 is a copy of the press release of Knightsbridge Tankers Limited (the "Company"), dated August 13, 2014, announcing the Company's second quarter results for 2014.




 
 

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
 
 
 
 
 
 
 
 
 
By:  /s/ Inger M. Klemp
Date: August 14, 2014
Name:  Inger M. Klemp
 
Title:    Chief Financial Officer


 
 



EXHIBIT 1 


Knightsbridge Tankers Limited


HIGHLIGHTS

· Knightsbridge reports net income of $6.3 million and earnings per share of $0.14 for the second quarter of 2014.
· Knightsbridge reports EBITDA of $10.5 million and EBITDA per share of $0.24 for the second quarter of 2014.
· Knightsbridge receives $3.2 million as partial settlement for a claim for damages and unpaid charter hire.
· Knightsbridge announces a cash distribution of $0.20 per share for the second quarter of 2014.
· Knightsbridge completes the purchase of five Capesize newbuilding contracts and one 2013-built Capesize dry bulk carrier from Frontline 2012 Ltd and Hemen Holdings Ltd, respectively.
· Knightsbridge announces the combination of Frontline 2012's remaining fleet of 25 fuel efficient Capesize newbuildings with Knightsbridge's fleet.
· Knightsbridge entered into a $420.0 million term loan facility in June 2014 to part finance the Company's newbuilding program.

SECOND QUARTER 2014 AND SIX MONTHS RESULTS 

The Company reports net income of $6.3 million and earnings per share of $0.14 for the second quarter compared with net income of $10.7 million and earnings per share of $0.35 for the preceding quarter. Net income in the second quarter and first quarter includes receipts of $3.2 million and $9.7 million, respectively, as partial settlements for a claim for damages and unpaid charter hire. Net income in the second quarter also includes a receipt of $2.6 million upon the early termination of the time charter of the Belgravia. The average daily time charter equivalent ("TCE") earned by the Capesize vessels in the second quarter was $15,000 compared with $25,200 in the preceding quarter. In August 2014, the Company estimates an average cash cost breakeven rate for the remainder of 2014 on a TCE basis for its Capesize vessels of $13,000 per vessel per day.

Cash and cash equivalents decreased by $89.3 million in the second quarter. The Company generated cash from operating activities of $1.0 million, paid $24.1 million for the purchase of the Bulk China (including bunkers and Lubes), paid $129.7 million in respect of its newbuilding program, received $43.4 million in connection with the purchase of five SPCs from Frontline 2012 Ltd, paid $9.8 million to shareholders and borrowed $29.9 million from the banks (net of fees paid). The Company expects to draw down $90.0 million from the $420.0 million term loan facility in the third quarter of 2014 in connection with the three newbuildings delivered in the second quarter.

For the six months ended June 30, 2014, the Company reports net income of $17.0 million and earnings per share of $0.45 compared with a net loss of $7.9 million and a loss per share of $0.32 in the six months ended June 30, 2013. The net loss in the six months ended June 30, 2013 includes a net loss from discontinued operations of $6.9 million. The average daily TCE earned by the Capesize vessels in the six months ended June 30, 2014 is $20,400 compared with $17,400 in the six months ended June 30, 2013.




FLEET DEVELOPMENT

On April 23, 2014, the Company acquired five special purpose companies ("SPCs") from Frontline 2012 Ltd, each owning a fuel efficient 180,000 dwt Capesize bulk carrier newbuilding, and one 2013-built Capesize bulk carrier from Hemen Holdings Ltd for a total consideration of $360.0 million of which $186.0 million was paid in shares based on a price of $10.00 per share, $150.0 million in absorption of remaining newbuilding instalments and $24.0 million in cash. The Company issued 15.5 million shares to Frontline 2012 and 3.1 million shares to Hemen on April 23 at $12.54 per share, being the closing price per share on that date.

The Company took delivery of the 2013-built Capesize bulk carrier on April 23. Four of the Capesize newbuildings have been delivered to date - KSL Seattle on May 14, KSL Singapore on May 19, KSL Sapporo on June 20, and KSL Sydney on July 30. The final newbuilding is expected to be delivered in September 2014.

The Company's sailing fleet currently consists of nine Capesize bulk carriers employed in the spot market or on index related time charter contracts.

The Company's newbuilding program will consist of 30 Capesize bulk carriers with estimated delivery in 2014-2016, of which 25 will be purchased from Frontline 2012 (see below).

CORPORATE

On April 24, 2014 Knightsbridge announced it had agreed to combine Frontline 2012's remaining fleet of 25 fuel efficient vessels with Knightsbridge. Under the agreement in principle, the exchange ratio for the acquisition and share issuance will be based on NAV using March 31, 2014 broker values. The Knightsbridge/Frontline 2012 exchange ratio will be 44%/56%. Accordingly, Knightsbridge has agreed to issue 62.0 million shares to Frontline 2012 and absorb $894 million in net remaining estimated Capex. The closing will be executed in two stages, with 31.0 million shares expected to be issued around September 15, 2014 and 31.0 million shares around March 15, 2015. The transaction is subject to definitive documentation, normal closing conditions and regulatory approvals.

In June 2014, the Company entered into a $420.0 million term loan facility with a number of banks to part finance 14 of the Company's current and future newbuildings divided into 14 tranches of $30.0 million each based on a 20 year loan profile. The second hand vessel bought from Hemen is financed by an existing facility and will enjoy an installment holiday until May 2015.

49,121,550 ordinary shares were outstanding as of June 30, 2014, and the weighted average number of shares outstanding for the quarter was 44,420,451. Following the expected issuance of shares in September 2014 and March 2015, the Company will have 111.2 million shares outstanding and a market capitalization of $1.3 billion based on the current share price.

In June 2014, the Company's authorized share capital was increased from $500,000.00 divided into 50,000,000 common shares of $0.01 par value each to $2,000,000.00 divided into 200,000,000 common shares of $0.01 par value each.

The company has called its Annual General Meeting (AGM) of Shareholders to be held on September 19, 2014. The AGM materials are in the process of being distributed to the shareholders.

The Board has decided to declare a cash distribution of $0.20 per share. The record date is August 28, 2014, the ex dividend date is August 26, 2014 and the cash distribution will be paid on or around September 10, 2014.




THE DRY BULK MARKET

The second quarter took the dry bulk industry by surprise. It did not live up to expectations forecast by most analysts following the sector. Capesize vessels earned on average $11,900 per day compared to $16.300 per day the previous quarter, but still almost twice as much as the same quarter in 2013. Positive expectations were also reflected in the forward freight market (FFA) which priced the second quarter at $20,000 per day the last trading days of the previous quarter. Chinese steel production has grown by approximately six percent in the first half of 2014 from the previous six month period, which was in line or even above the consensus forecast. Analysts have also been right in their fleet growth assumptions, so the relatively disappointing fleet utilization has to be explained by other reasons.

Continued weak Chinese coal and bauxite import has meant a plentiful supply of Panamaxes to put pressure on Capesize through ratios in the coal trade. Coal demand from China has been considerably lower than anticipated due to more available hydro power and increased use of natural gas. Chinese imports and production of thermal coal each declined by one percent in the first half of 2014 compared to the first half of 2013. In addition, the ban on exports put in place by the Indonesian Government for nickel ore and bauxite, and a relatively moderate South American grain season did not support the smaller segments which again have a negative impact on Capesizes. China has been drawing down on bauxite and nickel ore inventories for the last six months and unless the ban is lifted sourcing has to take place from longer distances.

Iron ore which is the main demand driver for the Capesize segment has lived up to its expectations. China alone imported 457 million mt in the first half of the year, representing an increase of 19 percent year on year. The three major suppliers in Australia (Rio Tinto, BHP and FMG) have pushed forward their expansion plans and are expected to add another 130 million mt of extra commodity this year. Brazil is also adding capacity and if the country is going reach its target of 350 million mt for 2014 a ramp up has to take place in the second half of 2014. This should support the freight market given the longer sailing distances to Far East. Prices of international ore have been under pressure and should support imports versus domestic Chinese production going forward.

In spite of the recent spot soft market, most forecasters have a positive market outlook. This is in particular valid for the fourth quarter this year and onwards. The same is reflected in the forward freight market (FFA) which at the moment of writing is trading at prices twice the present spot market on average from October 2014 and through 2015. Owners of Capesize vessels are reluctant to commit their vessels on long period time charters unless they obtain rates that are even higher than the present FFA market.

Approximately 11 million dwt of new dry bulk capacity was delivered during the second quarter of 2014, compared to 16 million dwt the previous quarter. Scrapping has been fairly stable and four million dwt was removed from the tonnage list last quarter. As a consequence of a softer freight market, ordering of new vessels came down compared to the previous quarter. Available data is showing that orders for 14 million dwt of new capacity were signed during the second quarter of 2014, half of what was reported during the first quarter of 2014. The present order book represents approximately 19 percent of the existing fleet.

After several quarters of steady rise in asset values, prices corrected down. The Capsizes however were holding better up than the smaller segments and according to sale and purchase brokers modern vessels (maximum 5 years old) were priced three percent lower by the end of June compared to end of March 2014.

OUTLOOK

The weak drybulk market in the second quarter has continued into the third quarter. This is obviously disappointing, as the Board had expected a recovery by now. The Board, however, is still confident that we will see a recovery in the market later this year.

The Frontline 2012 transaction is a transformative step for Knightsbridge. With a unique fleet of 39 modern Capesize vessels, of which 34 are fuel efficient newbuildings expected to achieve higher time charter equivalent earnings than existing vessels in any market situation, and a targeted cash breakeven rate below $15,000 per day, Knightsbridge is in a strong position to benefit from an expected recovery in the dry bulk market.




The Board will seek to grow the Company's dividend per share as the dry bulk market recovers and newbuildings commence operation. Further growth and consolidation opportunities are currently being evaluated.

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, which 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. The words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "will," "may," "should," "expect" and similar expressions identify forward-looking statements.
 
The forward-looking statements in this report are based upon various assumptions, including, without limitation, management's examination of historical operating trends, data contained in our records and 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. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
 
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 charter hire rates and vessel values, changes in demand in the dry bulk market, changes in the Company's operating expenses, including bunker prices, drydocking and insurance costs, the market for the Company's vessels, availability of financing and refinancing, 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 the Commission.

The Board of Directors
Knightsbridge Tankers Limited
Hamilton, Bermuda
August 12, 2014

Questions should be directed to:

Contact:
 
Ola Lorentzon: Chairman, Knightsbridge Tankers Limited
 
 
+ 46 703 998886
 
 
 
 
 
Inger M. Klemp: Chief Financial Officer, Knightsbridge Tankers Limited
 
 
+47 23 11 40 76





KNIGHTSBRIDGE TANKERS LIMITED
SECOND QUARTER REPORT (UNAUDITED)
 
2013
Apr-Jun
    
 
2014
Apr-Jun
 
INCOME STATEMENT
(in thousands of $)
  
 
2014
Jan-Jun
    
 
2013
Jan-Jun
    
 
2013
Jan-Dec
  
 
 
7,660
      
20,593
  
Operating revenues
    
40,698
      
14,129
      
37,546
  
             
 
                        
             
Operating expenses
                        
 
1,519
      
5,643
  
Voyage expenses
    
7,242
      
1,652
      
6,809
  
 
1,859
      
3,315
  
Ship operating expenses
    
6,357
      
3,832
      
7,897
  
 
1,345
      
1,095
  
Administrative expenses
    
2,479
      
2,415
      
4,937
  
 
2,750
      
3,745
  
Depreciation
    
6,392
      
5,494
      
11,079
  
 
7,473
      
13,798
  
Total operating expenses
    
22,470
      
13,393
      
30,722
  
 
187
      
6,795
  
Net operating income
    
18,228
      
736
      
6,824
  
             
Other income (expenses)
                        
 
9
      
5
  
Interest income
    
10
      
29
      
41
  
 
(708
)
    
(191
)
Interest expense
    
(755
)
    
(1,553
)
    
(2,827
)
 
(116
)
    
(141
)
Other financial items
    
(255
)
    
(266
)
    
(508
)
 
(815
)
    
(327
)
Total other expenses
    
(1,000
)
    
(1,790
)
    
(3,294
)
 
(628
)
    
6,468
  
Net income (loss) from continuing operations
    
17,228
      
(1,054
)
    
3,530
  
 
(356
)
    
(186
)
Net loss from discontinued operations
    
(228
)
    
(6,868
)
    
(7,433
)
 
(984
)
    
6,282
  
Net income (loss)
    
17,000
      
(7,922
)
    
(3,903
)
             
 
                        
 
(0.03
)
    
0.15
  
Basic earnings (loss) per share from continuing operations ($)
    
0.46
      
(0.04
)
    
0.14
  
 
(0.01
)
    
(0.01
)
Basic loss per share from discontinued operations ($)
    
(0.01
)
    
(0.28
)
    
(0.29
)
 
(0.04
)
    
0.14
  
Basic earnings (loss) per share ($)
    
0.45
      
(0.32
)
    
(0.15
)
             
 
                        
             
Income on time charter basis ($ per day per vessel)*
                        
$
16,900
    
$
15,000
  
Capesize
  
$
20,400
    
$
17,400
    
$
21,100
  
             
* Calender days less off-hire after deduction of broker commission
                        
             
 
                        

Note: EBITDA from continuing operations is defined as earnings from continuing operations before interest, taxes, depreciation and amortization of deferred charges. EBITDA from continuing operations in Q2 is calculated as $10,529,000 based on net income from continuing operations ($6,468,000), depreciation ($3,745,000), net interest expense ($186,000) and amortization of deferred charges ($130,000).



KNIGHTSBRIDGE TANKERS LIMITED
SECOND QUARTER REPORT (UNAUDITED)

 
BALANCE SHEET
(in thousands of $)
  
 
2014
Jun 30
    
 
2013
Jun 30
    
 
2013
Dec 31
  
 
   
   
 
ASSETS
  
   
   
 
Short term
  
   
   
 
Cash and cash equivalents
    
18,130
      
58,003
      
98,250
  
Other current assets
    
16,247
      
5,232
      
6,491
  
Long term
                        
Restricted cash
    
15,000
      
15,000
      
15,000
  
Vessels, net
    
527,898
      
268,332
      
262,747
  
Newbuildings
    
99,047
      
15,343
      
26,706
  
Deferred charges
    
3,946
      
900
      
664
  
Total assets
    
680,268
      
362,810
      
409,858
  
LIABILITIES AND EQUITY
                        
Short term
                        
Current portion of long-term debt
    
2,604
      
-
      
-
  
Other current liabilities
    
12,254
      
6,004
      
7,417
  
Long term
                        
Long-term debt
    
122,396
      
95,000
      
95,000
  
Other long term liabilities
    
-
      
250
      
-
  
Equity
    
543,014
      
261,556
      
307,441
  
Total liabilities and equity
    
680,268
      
362,810
      
409,858
  



KNIGHTSBRIDGE TANKERS LIMITED
SECOND QUARTER REPORT (UNAUDITED)

 
2013
Apr-Jun
    
 
2014
Apr-Jun
  
 
STATEMENT OF CASHFLOWS
(in thousands of $)
  
 
2014
Jan-Jun
    
 
2013
Jan-Jun
    
2013
Jan-Dec
 
  
         
   
   
 
     
OPERATING ACTIVITIES
  
   
   
 
 
(984
)
    
6,282
  
Net income (loss)
    
17,000
      
(7,922
)
    
(3,903
)
             
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities;
                        
 
2,947
      
3,874
  
  Depreciation and amortization
    
6,638
      
5,816
      
11,637
  
 
(31
)
    
-
  
  Net loss on sale of vessels
    
-
      
(31
)
    
(254
)
 
-
      
-
  
  Impairment loss on vessels
    
-
      
5,342
      
5,342
  
 
204
      
349
  
  Restricted stock unit expense
    
927
      
542
      
919
  
 
-
      
-
  
  Provision for doubtful accounts
    
-
      
-
      
226
  
 
(3,054
)
    
(9,457
)
  Change in operating assets and liabilities
    
(8,771
)
    
(1,268
)
    
(1,654
)
 
(918
)
    
1,048
  
Net cash provided by (used in) operating activities
    
15,794
      
2,479
      
12,313
  
                                       
             
INVESTING ACTIVITIES
                        
 
31
      
(129,772
)
Additions to newbuildings
    
(129,966
)
    
(15,343
)
    
(26,706
)
 
12,465
      
-
  
Proceeds from the sale of assets
    
-
      
16,852
      
17,075
  
 
-
      
19,327
  
Cash assumed on purchase of SPCs, net of vessel purchase consideration
    
19,327
      
-
      
-
  
 
12,496
      
(110,445
)
Net cash (used in) provided by  investing activities
    
(110,639
)
    
1,509
      
(9,631
)
                                       
             
FINANCING ACTIVITIES
                        
 
(12,646
)
    
-
  
Repayment of long-term debt
    
-
      
(16,678
)
    
(16,678
)
 
-
      
30,000
  
Proceeds from long term debt
    
30,000
      
-
      
-
  
 
-
      
(118
)
Debt fees paid
    
(118
)
    
-
      
-
  
 
-
      
-
  
Net proceeds from share issuance
    
-
      
-
      
51,167
  
 
(4,283
)
    
(9,824
)
Distributions to shareholders
    
(15,157
)
    
(8,566
)
    
(18,180
)
 
(16,929
)
    
20,058
  
Net cash provided by (used in) financing activities
    
14,725
      
(25,244
)
    
16,309
  
             
 
                        
 
(5,351
)
    
(89,339
)
Net change in cash and cash equivalents
    
(80,120
)
    
(21,256
)
    
18,991
  
 
63,354
      
107,469
  
Cash and cash equivalents at start of period
    
98,250
      
79,259
      
79,259
  
 
58,003
      
18,130
  
Cash and cash equivalents at end of period
    
18,130
      
58,003
      
98,250
  



KNIGHTSBRIDGE TANKERS LIMITED
SECOND QUARTER REPORT (UNAUDITED)

 
STATEMENT OF CHANGES IN EQUITY
(in thousands of $)
  
 
2014
Jan-Jun
    
 
2013
Jan-Jun
    
 
2013
Jan-Dec
  
 
  
   
   
 
NUMBER OF SHARES OUTSTANDING
  
   
   
 
Balance at beginning of period
    
30,472,061
      
24,437,000
      
24,437,000
  
Shares issued
    
18,649,489
      
35,061
      
6,035,061
  
Balance at end of period
    
49,121,550
      
24,472,061
      
30,472,061
  
 
                        
SHARE CAPITAL
                        
Balance at beginning of period
    
305
      
244
      
244
  
Shares issued
    
186
      
1
      
61
  
Balance at end of period
    
491
      
245
      
305
  
 
                        
ADDITIONAL PAID IN CAPITAL
                        
Balance at beginning of period
    
183,535
      
131,766
      
131,766
  
Shares issued
    
233,058
      
-
      
51,106
  
Restricted stock unit expense
    
486
      
349
      
663
  
Balance at end of period
    
417,079
      
132,115
      
183,535
  
 
                        
CONTRIBUTED CAPITAL SURPLUS
                        
Balance at beginning of period
    
131,520
      
149,700
      
149,700
  
Distributions to shareholders
    
(6,076
)
    
(8,566
)
    
(18,180
)
Balance at end of period
    
125,444
      
141,134
      
131,520
  
 
                        
RETAINED DEFICIT
                        
Balance at beginning of period
    
(7,919
)
    
(4,016
)
    
(4,016
)
Distributions to shareholders
    
(9,081
)
    
-
      
-
  
Net income (loss)
    
17,000
      
(7,922
)
    
(3,903
)
Balance at end of period
    
-
      
(11,938
)
    
(7,919
)
Total Equity
    
543,014
      
261,556
      
307,441