Company Announcement 4/2021

March 24, 2021

NORDIC SHIPHOLDING A/S

Company Announcement: 04/2021





Published via NASDAQ OMX on March 24, 2021

Nordic Shipholding A/S – Annual Report 2020

Further to the Company Announcement 03/2021 dated March 23, 2021, the Board of Directors of NSH A/S 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 provider 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 tanker (Nordic Anne) remained commercially managed by Hafnia LR Pool.
  
   
• Revenue earned by the vessels reached USD 42.3 million, which resulted in a Time Charter Equivalent (“TCE”) revenue of USD 27.8 million and an EBITDA of USD 13.9 million.
  
   
• The very high TCE rates in the first half of the year arising from the short-term surge in demand for tonnage caused by the COVID-19 pandemic and the oil price war which started in Q1 2020 positively impacted the Group’s earnings in 2020. Despite the downward correction in daily TCE rate from May 2020, the average daily TCE rate earned in 2020 by the five vessels was approximately 21% higher than the average TCE rate earned in 2019.
  
   
• After accounting for depreciation, impairment loss and financial income and expenses, the Group incurred a loss of USD 16.5 million.  Due to the accumulated losses, equity stood at negative USD 8.5 million.
  
   
• As part of the loan restructuring concluded in Q4 2018 which expired on 30 December 2020, the quarterly loan instalments due from December 2018 to September 2020 were deferred to December 2020.
  
   
• Following successful negotiations between the major shareholder of the Group, management and the lenders, an agreement was reached with the lenders for an extension of the Company’s loan facility by another year to 30 December 2021.  Terms of the re-negotiated financing agreements include but are not limited to (i) the sale of two vessels, Nordic Hanne and Nordic Pia, within the first half of 2021 (ii) extension of the existing USD 3.85 million Banker’s Guarantee provided by the majority shareholder until early 2022 (iii) re-instatement of quarterly loan instalments from December 2020, and (iv) new financial covenants such as revised minimum liquidity level 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.  Excess cash totalling USD 13.3 million was used to pay down the loan, in addition to the USD 1.5 million regular loan amortisation 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 loss on the vessels, the actual results for 2020 was in line with the revised expectations of the Board, as indicated in the Company Announcement 11/2020 on 11 December 2020. 

Outlook for 2021:

             

• As part of the loan restructuring with the lenders that 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.  The entire net proceeds from the sale of these two vessels will be used to pay down the respective loans associated with the vessels.
  
   
• Since early 2021, preliminary discussions have been held with potential merger partners to evaluate the possibility of a combination to grow the Company and reverse the negative equity position.  As of the date of this report, discussions are still continuing.  While the Board remains optimistic that a merger may be consummated, it is still too early to provide any indication whether these discussions will lead to a successful transaction.
  
   
• In the event the merger discussion fails, it is management’s expectation that the lenders will finance the Company in a period longer than 30 December 2021 to secure an orderly sale of the vessels.
  
   
• If no merger is to take place and assuming the remaining three vessels remain in the Hafnia Handy Pool and Hafnia LR Pool respectively until the end of 2021, the TCE revenue for 2021 is forecasted to be in the region of USD 13.5 million – USD 15.5 million.  After accounting for operating expenditure budgeted by the respective technical managers, the Group’s expected EBITDA (earnings before interest, tax, depreciation, and amortisation) for 2021 would be in the range of USD 3.0 million – USD 5.0 million, and the result before tax would be between USD -2.5 million – USD -0.5 million.  The outlook for 2021 does not take into account any impairment or write-back of impairment of the vessels’ carrying values.

For further information please contact:

Knud Pontoppidan, Chairman of the board, Nordic Shipholding A/S:

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