A closer look at DHT Holdings’ liabilities and leverage ratios
An investor's guide to crude tanker heavyweight DHT Holdings (Part 5 of 10)
Total liabilities
As of September 30, 2014, DHT Holdings’ total liabilities stand at $685.9 million, compared to $161.8 million as of December 31, 2013. Out of this total, long-term debt stands at $585.4 million, compared to $156.0 million earlier, mainly due to the debt raised for DHT’s acquisition of vessels.
Leverage ratios: Well-managed debt
The low leverage ratios recorded by DHT show that the company has well-managed debt. DHT Holdings recorded a debt-to-assets ratio of 48.03% while it has a debt-to-equity ratio of 98.9%. Industry (SEA) peers like Teekay Tanker (TNK), Nordic American Tanker (NAT), Frontline (FRO), and Tsakos Energy Navigation (TNP) recorded debt-to-assets ratios of 62.4%, 21.1%, 104.0%, and 52.9%, respectively, while their debt-to-equity ratios were 196.4%, 27.7%, N/A, and 121.0%, respectively. Lower leverage makes DHT a less volatile company, which is a positive when the industry faces a downtrend. However, it could lag companies like Frontline and Teekay Tanker when the industry recovers or rates rise.
Pre-delivery payments
As of September 30, 2014, DHT Holdings (DHT) had made $171.0 million in pre-delivery payments related to the six newbuild contracts it entered into in December 2013 as well as January and February 2014.
The remaining pre-delivery payments, totalling $114.0 million, are due with $76.5 million in 2015 and $37.6 million in 2016. The final payments at delivery of the vessels, totalling $288.1 million, are planned to be funded with debt financing, of which $190.4 million related to four of the newbuilds has been secured. The company views the debt market as favorable and will pursue debt financing for the remaining two vessels in due course.
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