After adjusting for an impairment charge totalling $7.5 mill related to the sale of ‘DHT Ann’ and ‘DHT Phoenix’, the net income was $21.8 mill.
Adjusted net revenue was $70.7 mill for the quarter, compared with $90.2 mill in 1Q16. Adjusted EBITDA was $50.6 mill, compared with $69.5 mill for 1Q16.
DHT's VLCCs achieved TCE earnings of $40,100 per day in 1Q17 of which the VLCCs on timecharter earned $38,800 per day and the VLCCs operating in the spot market achieved $40,900 per day.
To date, DHT has taken delivery of seven of the BW Group’s VLCCs it agreed to purchase in March and novated the two newbuilding contracts. A total of about 31.2 mill shares of common stock have been issued to BW. DHT expects the remaining two vessels to be delivered during the second quarter of this year.
As a result of the acquisition, DHT will have a fleet with an average age of 6.9 years, consisting of 30 VLCCs (including four newbuildings for delivery in 2018), and two Aframaxes.
The Board has expanded with the appointment of BW's designee, Carsten Mortensen, CEO of BW Group.
In April, 2017, the company entered into a six-year term loan and revolving credit facility agreement totalling $300 mill, of which $74 is a revolving credit facility, with ABN Amro, DNB and Nordea for the financing of the cash portion of the acquisition of BW's VLCC fleet, as well as the remaining instalments under the two newbuilding contracts.
Around $204 mill is expected to be drawn in connection with the delivery of the nine vessels in the water and the remaining $96 mill in connection with the delivery of the two newbuildings in 2Q18. Borrowings bear interest at a rate equal to Libor + 2.4% and are repayable with quarterly instalments calculated based on the borrowings being repaid to zero, assuming a 20-year economic life for the vessels.
On 16th January, 2017, DHT took delivery of the last of six VLCC newbuildings ordered from HHI in 2013 and 2014. The vessel - ‘DHT Tiger’ - is trading in the spot market.
In February, 2017, the company agreed to sell the ‘DHT Phoenix’ for $19.1 mill. The debt free vessel is expected to be delivered to the buyers in 2Q17 and is expected to retire from the trading fleet. DHT recorded a book loss of about $3.5 mill in 1Q17 in connection with the sale.
The following month, it was agreed to sell the ‘DHT Ann’, a 2001-built VLCC, for $24.8 mill. The vessel was delivered to the buyers in May, 2017 and is also expected to retire from the trading fleet. About $13.3 mill of bank debt, which has been recorded as current portion of long term debt as of 31st March, 2017, was repaid in connection with the sale. A book loss of about $4 mill was recorded in 1Q17 related to the sale.
In January, 2017 DHT contracted HHI to build two VLCCs of 318,000 dwt scheduled for delivery in July and September, 2018. The contracts will be financed with cash at hand and bank debt.
A month later, financing commitment totalling $82.5 mill was obtained to fund the acquisition of the two VLCC newbuildings through a secured term credit facility with DNB and Nordea.
This credit facility is divided 50/50 between a term loan and a revolving credit facility, will be for a five-year term and borrowings will bear interest at a rate equal to LIBOR plus a margin of 250 basis points. Borrowings are repayable with quarterly instalments calculated based on the borrowings being repaid to zero assuming a 20-year economic life for the vessels.
Still rejecting Frontline’s takeover advances, on 7th May, 2017 - DHT Holdings’ Board unanimously rejected the 25th April proposal to acquire all of the outstanding shares of common stock of DHT at a ratio of 0.8 Frontline shares for each DHT share and sent a strong letter to Robert Hvide Macleod, Frontline’s principal executive officer outlining its position.