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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, 1999
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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INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein is a copy of the report to shareholders
for the quarter ended June 30, 1999 containing certain unaudited
financial information and a Management's Discussion and Analysis
of Financial Condition and Results.
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Stockholm, July 21, 1999
TO THE SHAREHOLDERS OF KNIGHTSBRIDGE TANKERS LIMITED:
Enclosed is our report for the first half of 1999. 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, 1999.
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 $ 18,330 per day for the period
April 1 through June 30, 1999. (The corresponding spot market
related rate for the period April 1 through June 30, 1998, was
determined to be $39,989.)
Accordingly, on July 15, 1998, Shell International paid to the
Company's vessel owning subsidiaries charter hire at the base
rate in the aggregate amount of $ 10,041,395 for the period April
1 through June 30, 1999. (For the period April 1 through June 30,
1998, Shell International paid 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.)
On July 15, 1999, the Board of Directors of the Company declared
a distribution to share-holders of record as of July 27, 1999,
payable on or about August 11, 1999, in the amount of
$ 0.45 per share for the period April 1 through June 30, 1999.
(For the period April 1 through June 30, 1998, the distribution
was $ 0.63 per share.)
The Company has agreed to provide information to shareholders
that are United States income tax payers by February 15, 2000, so
that they may make the appropriate tax reporting and elections
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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
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, 1999.
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 1999
REVENUES
The Company's revenues consist of charter hire of $ 20.0 million
for the period commencing January 1, 1999 and ending June 30,
1999. (The charter hire in first half last year was 23.3.)
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 $ 54,656 was earned during the period. In
addition the Company received interest income of $ 198,412 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 $ 4,641,758 for the period.
LIQUIDITY AND CAPITAL RESOURCES
Total shareholders equity of the Company at June 30, 1999, was $
283.0 million compared to $ 292.2 million at December 31, 1998.
The decrease was due to net income for the period January 1
through June 30, 1999, in the amount of $ 6.2 million less
distribution to shareholders for the fourth quarter of 1998 and
for the first quarter 1999 in the aggregate amount of $ 15.4
million.
The Company's long-term debt as of June 30, 1999, consists of the
principal amounts borrowed under its credit facility in the
aggregate amount of $ 130.4 million. Of this amount,
$ 5.0 million represents the "Amortizing Loan" which is payable
in three 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 JUN 30, 1999 DEC 31, 1998
Cash 79,159 315,223
Current installments of notes
receivable 5,044,614 6,726,152
Charter hire receivable 10,110,733 10,268,805
Prepaid expenses 84,000 14,000
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TOTAL CURRENT ASSETS 15,318,506 17,324,180
Notes receivable - 1,681,538
Vessels under capital lease, less
accumulated depreciation of
$41,245,483 and $32,449,055 398,576,063 407,372,491
Capitalized financing fees and
expenses, less accumulated
amortization of $871,063
and $685,291 1,729,741 1,915,513
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TOTAL ASSETS 415,624,310 428,293,722
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LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Accrued expenses and other current
liabilities 2,228,292 2,300,568
Current installments of credit
facility 5,044,614 6,726,152
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TOTAL CURRENT LIABILITIES 7,272,906 9,026,720
Credit facility 125,397,399 127,078,936
SHAREHOLDERS EQUITY
COMMON SHARES, PAR VALUE $0.01 PER
SHARE:
Authorized and outstanding
17,100,000 171,000 171,000
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Contributed capital surplus account 282,783,005 292,017,066
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TOTAL SHAREHOLDERS EQUITY 282,954,005 292,188,066
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 415,624,310 428,293,722
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN U.S. DOLLARS)
JAN 1, 1999 JAN 1, 1998
-JUN 30, 1999 -JUN 30, 1998
------------- -------------
CHARTER HIRE REVENUE 19,972,445 23,348,545
OPERATING EXPENSES:
Depreciation of vessels under
capital leases -8,796,430 -8,796,430
Management fee -375,000 -375,000
Administration expenses -45,615 -45,549
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OPERATING INCOME 10,755,400 14,131,566
Interest income 253,068 495,673
Interest expense -4,641,758 -4,856,972
Other financial costs -210,772 -210,772
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NET INCOME 6,155,938 9,559,495
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN U.S. DOLLARS)
CASH FLOWS FROM JAN 1, 1999 JAN 1, 1998
OPERATING ACTIVITIES -JUN 30, 1999 -JUN 30, 1998
Net income 6,155,938 9,559,495
ITEMS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING
ACTIVITIES:
Depreciation 8,796,430 8,796,430
Amortization of capitalized fees and
expenses 185,772 185,771
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
Receivables 3,451,148 5,163,389
Accrued expenses and other current
liabilities -72,276 -38,862
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NET CASH PROVIDED BY OPERATING
ACTIVITIES 18,517,012 23,666,223
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of loan -3,363,076 -3,363,076
Distribution to shareholders -15,390,000 -20,520,000
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NET CASH USED IN FINANCING
ACTIVITIES -18,753,076 -23,883,076
Net increase/decrease in cash and
cash equivalents -236,064 -216,853
Cash and cash equivalents at
beginning of period 315,223 217,374
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CASH AND CASH EQUIVALENTS AT END OF
PERIOD 79,159 521
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CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED)
(IN U.S. DOLLARS)
CONTRIBUTED
ADDITIONAL CAPITAL
SHARE PAID-IN SURPLUS RETAINED
CAPITAL CAPITAL ACCOUNT EARNINGS TOTAL
- -----------------------------------------------------------------------------
BALANCE AT
DEC 31, 1997 171,000 314,987,247 - - 315,158,247
Reallocation
Share Premium - -314,987,247 314,987,247 - -
Net income - - - 17,385,820 17,385,820
Distribution
to shareholders - - -22,970,180 -17,385,820 -40,356,000
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BALANCE AT
DEC 31, 1998 171,000 - 292,017,067 - 292,188,067
Net income - - - 6,155,938 6,155,938
Distribution
to shareholders - - -9,234,062 -6,155,938 -15,390,000
- -----------------------------------------------------------------------------
BALANCE AT
JUN 30, 1999 171,000 - 282,783,005 - 282,954,005
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KNIGHTSBRIDGE TANKERS LIMITED
HEAD OFFICE
Cedar House
41 Cedar Avenue
Hamilton HM 12
Bermuda
Telephone + 46-8-613 30 30
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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 22, 1999 By: /s/ Ola Loventzon
___________________
Ola Loventzon
Director, Deputy Chairman
and Treasurer
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01655002.AG8
