How do you interpret it ?
"First quarter dividend expected to be in the range of $0.33 to $0.37 per share"
Okay thats good.
"The Company's estimated dividend run-rate, as provided previously using illustrative spot tanker rates, is expected to increase by approximately 15 percent due to the previously announced acquisition ..."
Thats good too.
So, if tanker rates stayed in 2nd qtr and beyond, as they were in 1st qtr, are they saying that dividend could be 15% more from 33-37 C level ?
Page 8 (last page) of the recent 3 ship acquisition presentation PDF was intriguing. It showed a graph of daily spot rate vs dividend, and presented lines comparing post- versus pre-acquisition.
It appears that the post-acquisition line is, for the lack of a better word, "flatter" dividend with regard to daily spot rate. This may reflect the fact 2 out of 3 ships purchased was on time charter, and therefore results in higher dividend when spot rate is above 31/23k (suez/afra). Unfortunately, the reverse is also true; as with anything, we can't have cake and eat it too.
Hope you all read that PDF. It shows that the acquisition to not materially impact cash flow going forward. The massive repayment of long-term debt is pushed back 1 year to 2016.
By the way, has anyone else noticed a discrepancy between page 8 of 14 and 10 of 14:
Also look at page 9 of 14. Every 5k spot rate increase is +0.30 div annually.
Latest powerpoint detailing 3 ship acquisition shows that every 5k spot rate increase is now only +0.26 div annually.
I realize the time charter coverage is greater and this is shown by higher div payout below 35/30k (suez/afra) spot rate. I also realize that with this economy, the chance of spot rate being sustained above 35/30k isn't a given. However, what this shows is that the acquisitions is clearly not accretive in every instance.
Disclosure: I am currently long TNK shares and calls. Calls are short-term trading while the shares are long-term holdings.
Correction: Higher div when spot rate is above 31/23k is incorrect. Correctly stated, the div will be lower relative to pre-acquisition when spot rate is above 31/23k. This would be accurate with regard to a "flatter" dividend/spot rate chart.
Don't rely on me to interpret the meaning of TNK company announcements. Especially since I sold, went short around $13 to buy GMR on 02Apr (was more undervalued than TNK), then covered on TNK after the secondary was announced and I didnt get the % downward move I expected. I usually have a 'core' position in one of the crude shippers, and now its GMR and CRU.
I disclosed my reasons for bearish view, previously, and the event happened extremely close to my sell point, so I think my timing was correct. However, other market influences have taken over to negate the severity of this event, and as such, it was prudent to not stay too bearish, thus the cover. Effectively, it was just a shift from TNK to GMR and CRU, gaining some VLCC exposure.
Regardless of what my good friend Coursonc says, I think it was very good news, means costs of operation are being kept in line, charter rates are up, contracts look good, and cash flow is better than expected. What they did not say, and I think is happening, is that some of that cash flow is to be diverted to paying off revolving credit facility, not a major amount, but enough to slightly accelerate reduction of debt.
Next qtr divy will be at least .41/shr, as opposed to .33-.37 this qtr.
Best to all, discussion encouraged.
The increase in the Q1 divy came from increased spot rates for that qtr and was not impacted by the recent asquistions. So if the spot rates stay the same for Q2, that divy should be same amt. plus recent asquitions revenues.
As far as I could see, what you wrote matches TNK's press release. Perhaps the acquisition isn't so bad in terms of cash flow, although I'd like to see the ratio of asset/liability a bit higher than 1.