Nordic American Tankers Ltd (NYSE: NAT) – The company is in an active phase of development

Rhea-AI Summary

Nordic American Tankers (NYSE: NAT) reported significant fleet developments in early 2025. The company purchased two 2016-built Suezmax tankers (Nordic Galaxy and Nordic Moon) for $66 million each, with 50% lease financing from Ocean Yield. NAT exercised purchase options on two 2018-built vessels (Nordic Aquarius and Nordic Cygnus) for $24 million each. The company also sold two older vessels: Nordic Apollo (2003) for $22.9 million and Nordic Castor (2004) for $22.5 million. Additionally, NAT secured a new five-year $150 million Senior Secured Credit Agreement with Beal Bank/CLMG, using 7 Suezmax vessels as collateral. The company emphasizes its commitment to dividend payments and describes this period as its most active in several years.

Positive

• Strategic fleet modernization with acquisition of two 2016-built Suezmax tankers
• Exercise of purchase options on two 2018-built vessels, capitalizing on market value appreciation
• Secured new $150 million financing agreement with improved terms
• Successful divestment of older vessels (2003 and 2004-built) for combined $45.4 million

Negative

• Significant capital expenditure with $132 million spent on new vessel acquisitions
• Increased debt exposure through new financing arrangements

Insights

Maritime Investment Analyst

NAT is actively rejuvenating its fleet by adding newer vessels and selling older ones while optimizing financing arrangements.

Nordic American Tankers has executed a significant fleet renewal strategy in early 2025, demonstrating strategic capital allocation in a strong tanker market. The company has purchased two 2016-built Suezmax tankers (Nordic Galaxy and Nordic Moon) for $66 million each, while divesting two older vessels built in 2003-2004 (Nordic Apollo and Nordic Castor) for approximately $22.5-22.9 million each. This represents a clear fleet modernization initiative that reduces the average age of their fleet.

The company has also demonstrated financial acumen by exercising purchase options on two 2018-built vessels (Nordic Aquarius and Nordic Cygnus) at $24 million each, then refinancing them to capture their appreciated market value. Additionally, NAT has restructured its debt through a new $150 million credit agreement with Beal Bank/CLMG, using 7 vessels as collateral.

The strategic relevance here is three-fold: First, the company is capitalizing on strong vessel valuations by selling older tonnage at attractive prices. Second, they're reinvesting in newer, more efficient assets that command premium charter rates and have longer useful lives. Third, they're optimizing their capital structure through strategic refinancing.

What's most telling is that NAT is financing 50% of its acquisitions through lease arrangements with Ocean Yield, suggesting a disciplined approach to leverage while still expanding capacity. This balanced approach to fleet renewal indicates management's confidence in the tanker market's medium-term outlook while maintaining financial flexibility to sustain their dividend priority.

Shipping Industry Strategist

This series of transactions reveals Nordic American's clear strategic pivot toward fleet modernization while capitalizing on strong asset valuations in the Suezmax segment. The company has effectively executed a vessel rotation strategy - selling vessels that are 20+ years old (2003-2004 builds) while acquiring mid-aged tonnage (2016 builds) that offers better operational efficiency and compliance with tightening environmental regulations.

The timing of these transactions is particularly noteworthy. By selling older vessels in the current strong market, NAT is maximizing residual value recovery before these vessels face increasing commercial obsolescence as they approach typical 20-25 year scrapping age. The $22.5-22.9 million realization for 20-year-old vessels represents strong pricing historically.

Simultaneously, the purchase of 2016-built vessels at $66 million each represents strategic positioning in the "sweet spot" of the age curve - young enough to have many productive years ahead but avoiding the premium commanded by newbuilds. The company's declaration of purchase options on the two 2018-built vessels further demonstrates this preference for modern tonnage.

The refinancing activities indicate NAT is taking advantage of asset appreciation while restructuring its debt profile. The new $150 million credit agreement consolidates debt against 7 vessels, potentially streamlining their debt servicing while creating flexibility for future growth.

This activity suggests management is positioning NAT to capture value from both strong tanker rates in the near term while building a more sustainable fleet profile for the long term, supporting their clearly stated dividend priority.

Friday, May 9, 2025

 

Dear Shareholders and Investors,

The first months of 2025 since the end of 2024 has been the most active period in Nordic American (NAT) for several years. The path forward is up. Dividend is a priority.   

 As per previous communication to the market, we are in the process of acquiring two or three vessels and to sell a few ships.  

We have purchased two vessels, declared purchase options on two of our lease financed ships and subsequently refinanced them. As a part of our total plan, two of our early built vessels have been sold.

 

Below is pertinent information, reflecting the active period since the start of 2025:

 

1. January 22nd, 2025, NAT announced that it had declared the purchase option for the 2018 built Suezmax Nordic Aquarius. The purchase option price was $24 mill and a refinancing of the ship, reflecting the strong market value appreciation has been agreed with our finance partner Ocean Yield.

  

2. January 22nd, 2025, we also announced the sale of the 2003-built Suezmax tanker, Nordic Apollo, at a price of $22.9 million.

  

3. February 6th, 2025, we signed a five-year financing agreement with Beal Bank/CLMG for a Senior Secured Credit Agreement on new terms, referred to as the Amended and Restated Agreement. This arrangement replaces the facility of February 12, 2019, and is in the amount of $150 million. It is a single loan with collateral security in 7 of our suezmax vessels.

  

4. February 28th, 2025, NAT announced that it had purchased one 2016-built Suezmax, built in South Korea, which was named Nordic Galaxy. The price was $66 million, and the vessel was financed with 50% lease financing with Ocean Yield. The vessel was delivered to us April 4, 2025. 

  

5. February 28th, 2025, NAT announced it had declared the purchase option for the 2018-built Suezmax tanker Nordic Cygnus. The purchase option price was $24 mill and a refinancing of the ship, reflecting the strong market value appreciation, has been agreed with Ocean Yield. 

  

6. March 14, 2025, Nordic American announced that it had agreed to purchase a second 2016-built Suezmax tanker which was named Nordic Moon. This was a sister vessel of the previously purchased vessel and built at the Sungdong South Korean shipyard. The price was $66 million, and this acquisition has also been 50% lease financed with Ocean Yield. The vessel was delivered to us April 28, 2025.

 

7. On May 2nd, 2025, NAT entered into an agreement to sell the Nordic Castor (2004), at the price of $22.5 million net to us.

In summary:

Nordic American is in a strong position and is in one of the most active periods for years.   

  

Sincerely,

Herbjorn Hansson
Founder, Chairman & CEO

Nordic American Tankers Ltd.                                                        www.nat.bm

 

 

 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the tanker market, as a result of changes in OPEC’s petroleum production levels and worldwide oil consumption and storage, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission, including the prospectus and related prospectus supplement, our Annual Report on Form 20-F, and our reports on Form 6-K.

 

Contacts:       

Bjørn Giæver, CFO                                                             
Nordic American Tankers Ltd                                             
Tel: +1 888 755 8391                                  

Alexander Kihle, Finance Manager
Nordic American Tankers Ltd
Tel: +47 91 724 171    

 

FAQ

What vessels did Nordic American Tankers (NAT) acquire in early 2025?

NAT acquired two 2016-built Suezmax tankers: Nordic Galaxy and Nordic Moon, each for $66 million. The company also exercised purchase options on two 2018-built vessels: Nordic Aquarius and Nordic Cygnus, each for $24 million.

How much is Nordic American Tankers' (NAT) new credit agreement worth?

NAT secured a new five-year Senior Secured Credit Agreement with Beal Bank/CLMG worth $150 million, using 7 Suezmax vessels as collateral.

Which older vessels did Nordic American Tankers (NAT) sell in 2025?

NAT sold two older vessels: the 2003-built Nordic Apollo for $22.9 million and the 2004-built Nordic Castor for $22.5 million.

How did Nordic American Tankers (NAT) finance its new vessel acquisitions?

NAT financed the two new 2016-built vessels (Nordic Galaxy and Nordic Moon) with 50% lease financing from Ocean Yield. The company also refinanced its purchased vessels through Ocean Yield.