Following Company Announcement 03/2021 on March 23, 2021, the NSH A / S Board of Directors is pleased to announce that the Annual Report for 2020 is approved on March 24, 2021.
2020 in brief:
The Group, with its five vessels, continued to be a tonnage supplier in the product tanker segment in 2020. The four handysize tankers remained commercially managed by the Hafnia Handy Pool (Nordic Agnetha, Nordic Amy, Nordic Pia and Nordic Hanne) while the LR1 the tanker (Nordic Anne) remained commercially managed by Hafnia LR Pool.
Vessel-generated revenue reached $ 42.3 million, resulting in Charter Time Equivalent (“TCE”) revenue of $ 27.8 million and EBITDA of 13.9 million USD.
The very high TCE rates in the first half of the year resulting from the short-term surge in tonnage demand caused by the COVID-19 pandemic and the oil price war that began in the first quarter of 2020 had a positive impact on the results of the Group in 2020. Despite the downward correction of the daily TCE rate from May 2020, the average daily TCE rate gained in 2020 by the five vessels was approximately 21% higher than the average TCE rate earned in 2019.
After taking into account depreciation, impairment losses and financial income and expenses, the Group incurred a loss of USD 16.5 million. As a result of the accumulated losses, shareholders’ equity amounted to less than $ 8.5 million.
As part of the loan restructuring concluded in the fourth quarter of 2018 which expired on December 30, 2020, the quarterly installments of loans due from December 2018 to September 2020 have been postponed to December 2020.
Following successful negotiations between the Group’s main shareholder, management and the lenders, an agreement was reached with the lenders for an extension of the Company’s loan facility for one year to December 30, 2021. The terms of the agreements of renegotiated financing include, but are not limited to (i) the sale of two vessels, Nordic Hanne and Nordic Pia, during the first half of 2021 (ii) extension of the existing bank guarantee of 3.85 million USD provided by the majority shareholder until early 2022 (iii) reinstatement of quarterly loan payments from December 2020, and (iv) new financial commitments such as revised minimum liquidity and minimum value clauses. The loan extension was to give the company more time to explore various sustainable scenarios, including the possibility of a merger.
The cash sweep mechanism under the loan agreement was activated in 2020. A cash surplus totaling $ 13.3 million was used to repay the loan, in addition to the regular amortization of $ 1.5. million USD which was reinstated after the loan restructuring concluded in December 2020.
Nordic Hanne and Nordic Pia were reclassified as assets held for sale in June 2020 and December 2020, respectively.
Without taking into account the additional impairment on the vessels, the actual results for 2020 were in line with the revised expectations of the Board, as stated in the company press release 11/2020 of December 11, 2020.
Outlook for 2021:
As part of the loan restructuring with lenders which concluded in December 2020, Nordic Hanne and Nordic Pia were sold in early 2021 and will be delivered in March 2021 and April 2021 respectively. All net proceeds from the sale of these two vessels will be used to repay the respective loans associated with the vessels.
Since the start of 2021, preliminary discussions have taken place with potential merger partners to assess the possibility of a combination to grow the company and reverse the negative equity position. As of the date of this report, discussions are continuing. While the board remains optimistic about the possibility of a merger, it is still too early to give any indication that these discussions will lead to a successful transaction.
If the merger discussion fails, management expects lenders to fund the company longer than December 30, 2021 to ensure an orderly sale of the vessels.
If no merger is to take place and assuming the three remaining vessels remain in the Hafnia Handy Pool and Hafnia LR Pool respectively until the end of 2021, TCE’s revenue for 2021 is expected to be in the order of 13, $ 5 million to $ 15.5 million. After accounting for operating expenses budgeted by the respective technical managers, the expected Group EBITDA (earnings before interest, taxes, depreciation and amortization) for 2021 would be in the order of USD 3.0 million to USD 5.0 million, and the profit before taxes is between -2.5 million USD and -0.5 million USD. The outlook for 2021 does not take into account any write-downs or reversals of depreciation of the book value of vessels.
Source: Northic Shipholding