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Commission File No. 0-29106
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July, 1998
KNIGHTSBRIDGE TANKERS LIMITED
(Translation of registrant's name into English)
Cedar House
41 Cedar Avenue
Hamilton HM 12
Bermuda
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing
the information to the commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes No X
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Item 1. INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto is a copy of the quarterly report of
Knightsbridge Tankers Limited (the "Company") for the period
ended June 30, 1998.
Item 2. ADDITIONAL INFORMATION
Royal Dutch Petroleum Company and The Shell Transport
and Trading Company, Public Limited Company file annual reports
on Form 20-F (File Nos. 1-3788 and 1-4039) and periodic reports
on Form 6-K with the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended. Such annual
reports contain the financial statements of the Royal Dutch/Shell
Group of Companies.
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Stockholm, July 24, 1998
To the Shareholders of Knightsbridge Tankers Limited:
Enclosed is our report for the first half of 1998. The report
contains selected unaudited financial information accompanied by
a Management's Discussion and Analysis of Financial Condition and
Results of Operations for the period ended June 30, 1998.
On February 27, 1997, the Company's ship owning subsidiaries
purchased five very large crude carriers ("VLCC's") from their
previous owners and delivered them to Shell International
Petroleum Company Limited ("Shell International"), as charterer,
under separate "hell and high water" bareboat charters. Under
those charters, the Company's ship owning subsidiaries receive
the greater of a Base Rate of hire in the amount of $ 22,069 per
day per VLCC or a spot market related rate. After inclusion of a
component for operating expenses of $ 10,500 per day, the spot
market related rate must exceed $ 32,569 per day for the
Company's subsidiaries to receive any additional charter hire
over the Base Rate.
Based upon the determination by the London Tanker Brokers Panel
the spot market related rate, after inclusion of the component
for operating expenses, totaled $ 39,989 per day for the period
April 1 through June 30, 1998. (The corresponding spot market
related rate for the period April 1 through June 30, 1997, was
determined to be $27,972).
Accordingly, on July 15, 1998, Shell International paid to the
Companys vessel owning subsidiaries charter hire at the base rate
in the aggregate amount of $ 10,041,395 and additional hire in
the aggregate amount of $ 3,376,100 for the period April 1
through June 30, 1998.
On July 15, 1998, the Board of Directors of the Company declared
a distribution to share-holders of record as of July 27, 1998,
payable on or about August 11, 1998, in the amount of
$ 0.63 per share for the period April 1 through June 30, 1998.
(For the period April 1 through June 30, 1997, the distribution
was $ 0.45 per share.)
The Company has agreed to provide information to shareholders
that are United States income tax payers by February 15, 1999, so
that they may make the appropriate tax reporting and elections
with the United States tax authorities with respect to the
Company's status as a "Passive Foreign Investment Company". Under
present United States tax rules, the amount of income reported by
a shareholder is based on the Company's income on an annual
basis. Therefore, the Company will provide information enabling
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shareholders to determine the tax consequences of their
investment in the Company, including the treatment of
distributions received from the Company, for the entire year
ending December 31, 1998.
We are pleased to answer any inquiries that shareholders may
have. Our investor relations contact is: Karl Molander, the
Company's Chief Financial Officer, Tel: Int + 46-8-613 30 30,
fax: Int + 46-8-613 99 09. The Nasdaq National Market symbol for
the Company's Common Shares is "VLCCF".
Very truly yours,
Ola Lorentzon
Vice Chairman and
Chief Executive Officer
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Management's Discussion and Analysis of
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Knightsbridge Tankers Limited (the "Company") was incorporated in
Bermuda on September 18, 1996. In February, 1997, the Company
offered and sold to the public 16,100,000 common shares at an
initial offering price of $ 20 per share. Simultaneously, the
Company sold 1,000,000 common shares at a price of $ 20 per share
to ICB International Limited, an indirect wholly-owned subsidiary
of ICB Shipping Aktiebolag (publ) ("ICB"), a Swedish publicly
traded ship owning and operating company. The Company used the
proceeds of these offerings, together with advances under a $
145.6 million credit facility from an international syndicate of
lenders, primarily to fund the purchase by the Company's
subsidiaries of five recently constructed very large crude
carrier oil tankers ("VLCC's"). Upon their purchase from their
previous owners, the VLCC's were delivered on February 27, 1997,
to Shell International Petroleum Company Limited ("Shell
International"), a company of the Royal Dutch/Shell Group of
Companies, under separate "Hell and high water" bareboat
charters. The term of these charters is a minimum of seven years,
with an option for Shell International to extend the period for
each VLCC for an additional seven-year term, to a maximum of 14
years per VLCC. Under the charters, Shell pays the greater of a
Base Rate of hire of $ 22,069 per day or a spot market related
rate, determined quarterly by the London Tankers Brokers Panel.
After taking into account a component for operating costs of $
10,500 per day, Shell International pays the higher rate if the
award exceeds $ 32,569 per day. In addition, for the first three
years of the charters, Shell International pays "Supplemental
Hire" as described below.
Results of Operations - First Half 1998
Revenues
The Company's revenues consist of charter hire of $ 23.3 million
for the period commencing January 1, 1998 and ending June 30,
1998. The charter hire revenue for the period commencing February
27, 1997, when the vessels were delivered, and ending June 30,
1997, amounted to
$ 13.6 million.
Operating Expenses
The Company's operating expenses consist of (i) fees due to the
Company's manager, ICB Shipping (Bermuda) Ltd, an indirect
wholly-owned subsidiary of ICB (the "Manager"), (ii)
depreciation of the vessels and (iii) administration expenses
consisting of payments of insurance premiums for directors and
officers liability insurance. There can be no assurance, however,
that the Company will not have other expenses or contingent
liabilities for which reserves will be required.
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Interest income and expense
Interest income of $ 79,940 was earned during the period. In
addition the Company received interest income of $ 415,733 on the
principal balance of the receivable note from Shell
International.
The Company's borrowings under its credit facility have been
effectively converted to a fixed rate pursuant to a swap
arrangement to which the Company is a party. Interest on the
credit facility has effectively been fixed at 7.05 %, which
resulted in interest expenses of $ 4,881,972 for the period.
Liquidity and Capital Resources
Total shareholders equity of the Company at June 30, 1998, was
$304.2 million compared to $315.2 million at December 31, 1997.
The decrease was due to net income for the period January 1
through June 30, 1998, in the amount of $ 9,559,495 less
distributions to shareholders for the fourth quarter of 1997 and
for the first quarter 1998 in the aggregate amount of
$20,520,000. On March 27, 1998, the Company's shareholders voted
to reallocate from share premium to contributed capital surplus
account the amount of $315.0 million. This reallocation according
to which additional paid in capital has been reduced to zero and
contributed capital surplus increased to $ 305.2 million has been
reflected in the Company's balance sheet since March 31, 1998.
The reallocation has no effect on the Company's liquidity. The
Company believes that its present liquidity is adequate to its
needs.
The Company's long-term debt as of June 30, 1998, consists of the
principal amounts borrowed under its credit facility in the
aggregate amount of $137.2 million. Of this amount, $11.8 million
represents the "Amortizing Loan" which is payable in eight equal
quarterly installments ending on January 15, 2000. Supplemental
Hire payable by Shell International is equal to amounts payable
by the Company on account of the Amortizing Loan. The balance of
the credit facility matures seven years and six months from
February 27, 1997. Interest on this balance is payable quarterly
in arrears.
Currency Exchange Rates
The international shipping industry's functional currency is the
United States Dollar and virtually all of the Company's operating
revenues and expenses are expected to be denominated in United
States Dollar. Accordingly, the company's operating results,
following expiration or termination of the charters with Shell
International, are not expected to be significantly affected by
movements in currency exchange rates.
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in U.S. Dollars)
ASSETS
Current assets June 30, 1998 Dec 31, 1997
Cash 521 217,374
Current instalments of
note receivable 6,726,152 6,726,151
Charter hire receivable 13,579,285 15,449,599
Prepaid expenses 84,000 14,000
____________ __________
TOTAL CURRENT ASSETS 20,389,958 22,407,124
Notes receivable 5,044,614 8,407,690
Vessels under capital lease 416,168,922 424,965,352
Capitalized financing fees
and expenses 2,101,284 2,287,056
___________ ___________
TOTAL ASSETS 443,704,778 458,067,222
=========== ===========
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities
___________________
Accrued expenses and other
current liabilities 2,338,873 2,313,618
Current instalments of
credit facility 6,726,152 6,726,151
__________ __________
TOTAL CURRENT LIABILITIES 9,065,025 9,103,887
Credit facility 130,442,012 133,805,088
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Shareholders equity
___________________
Common shares, par value
$0.01 per share:
Authorized and outstanding
17,100,000 171,000 171,000
Additional paid-in capital - 314,987,247
Contributed capital surplus
account 304,026,741 -
___________ ___________
Total shareholders equity 304,197,741 315,158,247
___________ ___________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 443,704,778 458,067,222
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CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 1998 Sept 18, 1996
-June 30, 1998 -June 30, 1997
CHARTER HIRE REVENUE 23,348,545 13,617,260
OPERATING EXPENSES:
DEPRECIATION OF VESSELS
UNDER CAPITAL LEASES -8,796,430 -6,097,428
Management fee -375,000 -255,308
Administration expenses -45,549 -32,192
__________ __________
Operating income 14,131,566 7,232,332
INTEREST INCOME 495,673 1,122,449
Interest expense and other
financial costs -5,067,744 -3,596,243
__________ __________
Net income 9,559,495 4,758,538
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in U.S. Dollars)
Jan 1, 1998 Sept 18, 1996
Operating activities -June 30, 1998 -June 30, 1997
___________________ ______________ ______________
Net income 9,559,495 4,758,538
Depreciation 8,796,430 6,097,428
Amortization of
capitalized fees and expenses 185,771 127,981
Changes in operating
assets and liabilities:
Receivables 5,163,389 -17,080,790
Accrued expenses and other
current liabilities -38,862 9,199,261
_________ ___________
Net cash provided by operating
activities 23,666,223 3,102,418
Investing activities
Notes receivable from Shell
International - -18,496,916
Purchase of vessels under
capital lease - -439,821,548
____ ____________
Net cash used in investing
activities - -458,318,464
Financing activities
____________________
Loan proceeds - 142,975,049
Repayments of loan -3,363,076 -1,681,538
Net proceeds from share
offerings - 317,224,950
Redemption of original
share capital - -12,000
Distribution to shareholders -20,520,000 -2,907,000
___________ __________
Net cash provided by financing
activities -23,883,076 455,599,461
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Net increase/decrease in
cash and cash equivalents -216,853 383,415
Cash and cash equivalents
at beginning of period 217,374 12,000
___________ _________
Cash and cash equivalents
at end of period 521 395,415
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CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED)
(in U.S. Dollars)
SHARE ADDITIONAL CONTRIBUTED
CAPITAL PAID-IN CAPITAL SURPLUS RETAINED
CAPITAL CAPITAL ACCOUNT EARNINGS TOTAL
Original issue
Sept 18, 1996 12,000 - - - 12,000
Net proceeds from
share issuance 171,000 317,053,950 - - 317,224,950
Original share
redemption -12,000 - - - -12,000
Net income - - - 19,479,297 19,479,297
Distribution to
the shareholders - -2,066,703 - -19,479,297 -21,546,000
_____________________________________________________________________________
Balance at
Dec 31, 1997 171,000 314,987,247 - - 315,158,247
Reallocation
Share Premium - -314,987,247 314,987,247 - -
Net income - - - 9,559,495 9,559,495
Distribution to
the shareholders - - -10,960,505 -9,559,495 -20,520,000
_____________________________________________________________________________
Balance at
June 30, 1998 171,000 - 304,026,741 - 304,197,741
=============================================================================
Contributed capital surplus account
At the General Meeting March 27, 1998, a resolution was taken to reallocate
Share Premium Additional paid-in capital to Contributed capital surplus
account.
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01655002.AE6
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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: July 24, 1998 By: /s/ Ola Lorentzon
___________________________
Ola Lorentzon
Director, Deputy Chairman
and Treasurer
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01655002.AE7
