Crude Carriers Corp. (NYSE: CRU)
Highlights:
- Reported second quarter net loss of $7.5 million or $0.48 per
share ("EPS").
- Earned average Time Charter Equivalent ("TCE") of $13,499 per
day for the two Very Large Crude Carriers ("VLCCs") and $12,173 per
day for the three Suezmaxes in the Company's fleet.
- Announced on May 5, 2011 that Crude Carriers Corp. entered into
a definitive agreement to merge with Capital Product Partners L.P.
("CPLP").
Crude Carriers Corp. ("Crude Carriers" or the "Company") (NYSE:
CRU) today reported its financial results for the second quarter of
2011.
The Company reported a net loss for the quarter of $7.5 million
or $0.48 per share, which compares with a $0.37 net income per
share from the second quarter of 2010. The Company's reported net
loss for the quarter includes $1.7 million in general and
administrative expenses related to the definitive merger agreement
with CPLP and the proxy statement on Form F-4 filed with the
Securities and Exchange Commission.
Revenues for the second quarter 2011 amounted to $9.8 million,
which is lower compared to the $20.7 million in the second quarter
of 2010. The Company's drop in revenues reflects primarily the
weaker crude tanker spot market, when compared to a year ago.
Total voyage and vessel operating expenses for the quarter
amounted to $9.0 million, lower by $2.2 million compared to $11.2
million in the second quarter of 2010, as a result of the increased
number of vessels under voyage charters at the time, which
increased voyage expenses in the second quarter of 2010. Vessel
operating expenses for the second quarter amounted to $4.1 million,
which is $1.6 million higher when compared to the second quarter of
2010 as a result of the higher average number of vessels in
operation in the second quarter 2011.
General and administrative expenses were $3.0 million for the
quarter, of which $0.5 million was a non-cash charge related to the
Equity Incentive Plan and $1.7 million relate to the expenses for
the definitive merger agreement with CPLP and the proxy statement
on Form F-4 filed with the Securities and Exchange Commission. The
general and administrative expenses in the second quarter of 2010
stood at $0.6 million.
Interest expense and finance cost for the second quarter of 2011
was $1.4 million which is $0.5 million higher than the interest
expense paid in the second quarter of 2010, as the interest
expenses a year ago were incurred for only a part of the quarter
following the debt drawdown in June 2010.
Quarterly Dividend Per Share
Due to the charter rate environment and the expenses related to
the definitive merger agreement, the Company did not generate any
cash available for distribution during the quarter. As a result,
the Board has determined not to declare a dividend with respect to
the quarter from April 1 to June 30, 2011.
Cash available for distribution is a non US GAAP financial
measure described on Appendix A of this earnings release.
Crude Tanker Market Overview
The VLCC and Suezmax spot markets remained close to multi year
lows, as increased demand for crude oil imports in the East was
offset by oversupply of tonnage, higher bunker prices and weak US
crude oil imports in the first half of 2011.
During the second quarter 2011, the TD3 (Middle East - Japan)
and the TD5 (West Africa - US East Coast) indices average TCE
earnings were $9,400 and $9,646 per day, respectively, compared to
$13,499 and $12,173 per day, respectively, earned by the Company's
VLCC and Suezmax fleets.
Activity in the crude tanker period market remains limited due
to the poor performance of the spot market.
On a positive note, orderbook slippage remains at high levels,
as approximately 35% of the expected VLCC and Suezmax newbuildings
have not been delivered in the first half of 2011.
Definitive Merger Agreement With Capital
Product Partners L.P.
As announced on May 5, 2011, the Partnership entered into a
definitive agreement to merge with Crude Carriers in a unit for
share transaction. The exchange ratio was set at 1.56 CPLP common
units for each Crude Carriers share. CPLP will be the surviving
entity in the merger and will continue to be structured as a master
limited partnership but will remain a corporation for US tax
purposes and unit holders will continue to receive the standard
1099 form. The merger must be approved by: (i) holders of a
majority of the voting power of the shares of Crude common stock
and Crude Class B stock outstanding and entitled to vote at the
Special Meeting, voting together as a single class; (ii) by the
sole holder of the shares of Crude Class B stock outstanding and
entitled to vote at the Special Meeting, voting as a separate
class; and (iii) by the holders of a majority of the voting power
of the shares of Crude common stock outstanding and entitled to
vote at the Special Meeting that are held by the Unaffiliated
Shareholders, voting as a separate class, such majority being
49.45% or more of the outstanding shares of Crude common stock.
With respect to the merger, Evangelos M. Marinakis, Chairman of the
Board and CEO of Crude, Ioannis E. Lazaridis, President of Crude,
Gerasimos G. Kalogiratos, CFO of Crude, and Crude Carriers
Investment Corp, the holder of all of the outstanding shares of
Crude Class B stock, have entered into a support agreement pursuant
to which they have agreed to vote their shares in favor of the
merger. Assuming the requisite shareholder approval is received,
Crude expects that the merger will occur during the third quarter
of 2011.
Management Commentary
Mr. Evangelos Marinakis, the Company's CEO, commented: "Our
second quarter results have been affected by the weakness of the
crude tanker market and by the costs related to the merger process
with CPLP. However, our commercial arrangements and our high
specification fleet allow us to perform more favorably, when
compared to the TD3 and TD5 routes in particular."
Mr. Marinakis continued: "During the second quarter, the
respective boards of CPLP and Crude Carriers agreed to enter into a
definitive merger agreement as previously announced. We believe
that the merger is to the benefit of the shareholders of Crude
Carriers as it will allow them to receive attractive distributions,
based on the $0.93 per common unit annual distribution guidance of
CPLP, which translates to $1.45 per Crude Carriers share under the
agreed exchange ratio. The combined fleet of the two merged
entities will be diversified in both the product and crude tanker
space. Together, having one of the youngest, high specification
tanker fleets, along with the technical and commercial support of
Capital Maritime & Trading Corp., which brings with it the
vetting qualifications of oil majors around the world, will allow
the new unit holders of CPLP to benefit from a recovery in both
segments."
Conference Call and Webcast Today August
5, 2011, at 10:00 a.m. EDT, the Crude Carriers management team will
hold a conference call to discuss the financial results.
Conference Call Details: Participants
should dial into the call 10 minutes before the scheduled time
using the following numbers: by dialing 1 866 819 7111 (US Toll
Free Dial In), 0800 953 0329 (UK Toll Free Dial In) or +44 (0)1452
542 301 (Standard International Dial In). Please quote "Crude
Carriers."
A telephonic replay of the conference call will be available
until August 12, 2011 by dialing 1 866 247 4222 (US Toll Free Dial
In), 0800 953 1533 (UK Toll Free Dial In) or +44 (0)1452 55 00 00
(Standard International Dial In). Access Code required for the
reply is: 70469247#
Slides and Audio Webcast: There will also
be a live, and then archived, webcast of the conference call,
available through the Company's website
(www.crudecarrierscorp.com). Participants to the live webcast
should register on the website approximately 10 minutes prior to
the start of the webcast.
Important Information For Investors And
Shareholders This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. The proposed merger
transaction between Crude Carriers and CPLP will be submitted to
the shareholders of Crude Carriers for their consideration. CPLP
has filed with the Securities and Exchange Commission ("SEC") a
registration statement on Form F-4 that includes a proxy statement
of Crude Carriers that also constitutes a prospectus of CPLP. Crude
Carriers and CPLP also plan to file other documents with the SEC
regarding the proposed transaction. INVESTORS AND
SECURITY HOLDERS OF CRUDE CARRIERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors and shareholders will be able
to obtain free copies of the proxy statement/prospectus and other
documents containing important information about Crude Carriers,
through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by Crude Carriers will
be available free of charge on Crude Carriers' website at
www.crudecarrierscorp.com under the tab "Investor Relations" or by
contacting Crude Carriers' Investor Relations Department at (212)
661-7566.
Crude Carriers and certain of its directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the shareholders of Crude Carriers in connection with
the proposed transaction. Information about the directors and
executive officers of Crude Carriers is set forth in its Annual
Report on Form 20-F, which was filed with the SEC on April 18,
2011. This document can be obtained free of charge from the sources
indicated above. Other information regarding the participants in
the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
contained in the proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available.
Forward-Looking Statements This
communication contains "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 that are not limited to historical
facts, but reflect Crude Carriers' current beliefs, expectations or
intentions regarding future events. Words such as "may," "will,"
"could," "should," "expect," "plan," "project," "intend,"
"anticipate," "believe," "estimate," "predict," "potential,"
"pursue," "target," "continue," and similar expressions are
intended to identify such forward-looking statements. These
forward-looking statements include, without limitation, statements
with respect to our outlook on the market and our expectations with
respect to our strategy and dividend payment; expectations with
respect to the synergies, costs and other anticipated financial
impacts of the proposed transaction; future financial and operating
results of the combined company; the combined company's plans,
objectives, expectations, growth prospects and intentions with
respect to future operations and services; expected distributions;
approval of the proposed transaction by Crude Carriers'
shareholders and obtaining any necessary consents; the satisfaction
of the closing conditions to the proposed transaction; and the
timing of the completion of the proposed transaction. Included
among the important factors that, in our view, could cause actual
results to differ materially from the forward-looking statements
contained in this press release are the following: (i) conditions
in global capital and financial markets; (ii) conditions affecting
the spot market for crude and the other products transported by
Crude Carriers and CPLP and the markets generally for crude and
these other products; and (iii) other factors listed from time to
time under "Risk Factors" and other sections of our public filings
with the SEC including, without limitation, Crude Carriers' Annual
Report on Form 20-F. We make no prediction or statement about the
performance of shares.
All forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements, many of which are
generally outside the control of Crude Carriers and are difficult
to predict. Examples of such risks and uncertainties include, but
are not limited to, (i) the possibility that the proposed
transaction is delayed or does not close, including due to the
failure to receive required stockholder approvals, the taking of
governmental action (including the passage of legislation) to block
the transaction, or the failure of other closing conditions and
(ii) the possibility that the expected synergies will not be
realized, or will not be realized within the expected time period,
because of, among other things, the leverage of the combined
company, the ability to obtain financing and to refinance the
combined company's debt, the impact of labor relations, global
economic conditions, fluctuations in exchange rates, competitive
actions taken by other shipping companies, terrorist attacks,
natural disasters, actions taken or conditions imposed by
governments or other regulatory matters, excessive taxation, and
the availability and cost of insurance.
Crude Carriers cautions that the foregoing list of factors is
not exclusive. Additional information concerning these and other
risk factors is contained in Crude Carriers' most recently filed
Annual Report on Form 20-F, recent Reports of Foreign Private
Issuer on Form 6-K, and other SEC filings. All subsequent written
and oral forward-looking statements concerning Crude Carriers, the
proposed transaction or other matters and attributable to Crude
Carriers or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above.
Crude Carriers does not undertake any obligation to publicly update
any of these forward-looking statements to reflect events or
circumstances that may arise after the date hereof.
About Crude Carriers Corp. Crude Carriers
Corp. (NYSE: CRU) is a Marshall Islands corporation focusing on the
maritime transportation of crude oil cargoes. The company owns a
modern, high specification fleet of crude oil tankers, which
currently comprises two VLCC (Very Large Crude Carrier) and three
Suezmax tankers. The Company's fleet is employed in the crude oil
spot tanker market. Crude Carriers Corp.'s common shares trade on
The New York Stock Exchange under the symbol "CRU."
CRUDE CARRIERS CORP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(NOTES 1, 2)
(In thousands of United States Dollars, except number of shares and net
(loss)/income per share)
For the three month period For the six month period
ended June 30, ended June 30,
-------------------------- --------------------------
2011 2010 2011 2010
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Revenues $ 9,791 $ 20,670 $ 22,621 28,290
------------ ------------ ------------ ------------
Expenses:
Voyage expenses 4,767 8,427 7,023 11,873
Voyage expenses-
related party 123 260 284 267
Vessel operating
expenses 3,685 2,365 7,245 3,217
Vessel operating
expenses -related
party 395 164 779 304
General and
administrative
expenses 2,988 584 4,604 623
Vessel depreciation 4,006 2,406 8,011 3,304
------------ ------------ ------------ ------------
Operating (loss) /
income (6,173) $ 6,464 (5,325) 8,702
------------ ------------ ------------ ------------
Other income
(expense), net:
Interest expense and
finance cost (1,358) (873) (2,705) (986)
Interest and other
income 25 130 57 328
------------ ------------ ------------ ------------
Total other expense,
net (1,333) (743) (2,648) (658)
------------ ------------ ------------ ------------
Net (loss) / income $ (7,506) $ 5,721 $ (7,973) $ 8,044
------------ ------------ ------------ ------------
Net (loss) / income
per share (basic
and diluted): $ (0.48) $ 0.37 $ (0.51) $ 0.80
Weighted-average
number of shares
Common shares (basic
and diluted) 13,500,000 13,500,000 13,500,000 7,906,077
Class B shares
(basic and diluted) 2,105,263 2,105,263 2,105,263 2,105,263
Total shares (basic
and diluted) 15,605,263 15,605,263 15,605,263 10,011,340
CRUDE CARRIERS CORP
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of United States Dollars)
As of As of
June 30, 2011 December 31, 2010
----------------- -----------------
ASSETS
Current assets
Cash and cash equivalents $ 7,576 $ 10,925
Trade accounts receivable 4,280 5,722
Prepayments and other assets 350 453
Inventories 3,216 1,630
----------------- -----------------
Total current assets 15,422 18,730
----------------- -----------------
Fixed assets
Vessels, net 385,327 392,969
----------------- -----------------
Total fixed assets 385,327 392,969
Other non-current assets
Deferred charges, net 1,770 1,598
Restricted cash 5,000 5,000
----------------- -----------------
Total non-current assets 392,097 399,567
----------------- -----------------
TOTAL ASSETS $ 407,519 $ 418,297
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long term debt $ 19,305 $ 9,652
Trade accounts payable 4,810 1,726
Due to related parties 2,930 2,333
Accrued liabilities 3,303 2,038
----------------- -----------------
Total current liabilities 30,348 15,749
----------------- -----------------
Long-term liabilities
Long term debt 115,275 124,928
----------------- -----------------
Total long-term liabilities 115,275 124,928
----------------- -----------------
Total liabilities 145,623 140,677
----------------- -----------------
Commitments and contingencies
----------------- -----------------
Total stockholder's equity 261,896 277,620
----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 407,519 $ 418,297
================= =================
CRUDE CARRIERS CORP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(NOTE 1)
(In thousands of United States Dollars)
For the six months
period ended June 30,
2011 2010
----------- -----------
Cash flows from operating activities:
Net (loss) / income $ (7,973) $ 8,044
Adjustments to reconcile net (loss) / income to
net cash provided by operating activities:
Vessel depreciation 8,011 3,304
Amortization of deferred charges 135 426
Share based compensation expense 1,050 -
Changes in operating assets and liabilities:
Trade accounts receivable 1,442 (20,807)
Due from related parties - 1,878
Prepayments and other assets 103 (374)
Inventories (1,586) (4,334)
Trade accounts payable 3,108 6,266
Due to related parties 597 (1,585)
Accrued liabilities 589 3,535
----------- -----------
Net cash provided by / (used in) operating
activities 5,476 (3,647)
----------- -----------
Cash flow for investing activities:
Vessels' acquisition (24) (398,948)
Additions in restricted cash - (5,000)
----------- -----------
Net cash used in investing activities (24) (403,948)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long term debt - 134,580
Loan issuance costs - (1,370)
Offering proceeds - 278,545
Offering expenses paid - (590)
Commissions payable for vessel acquisition - (965)
Repayments of related party debt - (791)
Dividends paid (8,801) -
----------- -----------
Net cash (used in)/provided by financing
activities (8,801) 409,409
----------- -----------
Net (decrease) / increase in cash and cash
equivalents (3,349) 1,814
Cash and cash equivalents at beginning of the
period 10,925 1
----------- -----------
Cash and cash equivalents at end of period $ 7,576 $ 1,815
----------- -----------
Supplemental Cash Flow Information
Cash paid for interest $ 2,718 $ -
Non Cash Investing and Financing activities
Net liabilities assumed by CMTC upon contribution
of vessel to the Company - 56,908
Difference of net book value of the M/T Miltiadis
M II over the cash consideration paid to CMTC - 4,158
Capital and drydocking expenditures included in
liabilities at the end of the period 676 209
Offering included in liabilities at the end of the
period - 158
Commission payable to related party for vessel
acquisition - 965
Notes
(1) The unaudited condensed and consolidated statements of operations and
cash flows for the three and six month periods ended June 30, 2010 include
the results of operations of M/T Miltiadis M II which was acquired from
Capital Maritime & Trading Corp. ("Capital Maritime"), an entity which
prior to the offering was under common control, on March 30, 2010, as
though the transfer had occurred at the beginning of the earliest period
presented.
(2) The Company considers the Class B shares as an equity recapitalization
and used the number of Class B shares of 2,105,263 to calculate earnings
per share, prior to the offering, for the period from January 1, 2010 to
March 16, 2010.
Appendix A - Reconciliation of Non-GAAP
Financial Measure (In thousands of U.S.
dollars) Description of Non-GAAP Financial Measure -- Cash
Available for Distribution
Description of Non-GAAP Financial Measure -- Cash Available for
Distribution
Cash Available for Distribution is a quantitative standard used
in the publicly-traded Companies to assist in evaluating a
Company's ability to make quarterly cash distributions. Cash
Available for Distribution is not required by accounting principles
generally accepted in the United States and should not be
considered as an alternative to net income or any other indicator
of the Company's performance required by accounting principles
generally accepted in the United States.
We determine our Cash Available for Distribution as: Net income
(loss)
plus
- depreciation and amortization
- non-cash items
- loan fees amortization
- any write-offs or other non-recurring items
less
- any net income attributable to the historical results of
vessels acquired by the company from Capital Maritime, our
Manager.
- any amount required to maintain a reserve that our board of
directors determines from time to time is appropriate for the
conduct and growth of the company's fleet.
Appendix A - Reconciliation of Non-GAAP
Financial Measure -- Continued (In thousands
of U.S. dollars) Description of Non-GAAP Financial Measure -- Cash
Available for Distribution
The table below reconciles net loss to Cash Available for
Distribution for the three month period ended June 30, 2011
For the three-month
Reconciliation of Non-GAAP Financial Measure - Cash period ended
Available for distribution June 30, 2011
Net Loss (7,506)
Add:
Depreciation and Amortization 4,073
Share based compensation expense 515
Less:
Recommended Reserves 863
Cash Available for Distribution (3,781)
Number of total shares outstanding 16,004,663
For further information please contact: Company Contacts:
Ioannis Lazaridis President Tel: +30 (210) 4584 950 E-mail:
i.lazaridis@crudecarrierscorp.com Jerry Kalogiratos Chief Financial
Officer Tel: +30 (210) 4584 950 E-mail:
j.kalogiratos@crudecarrierscorp.com Investor Relations / Media:
Nicolas Bornozis President Matthew Abenante Capital Link, Inc. 230
Park Avenue - Suite 1536 New York, NY 10160, USA Tel: (212)
661-7566 Fax: (212) 661-7526 E-mail: crudecarriers@capitallink.com
www.capitallink.com
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