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HAMILTON, Bermuda, Nov. 27, 2013 (GLOBE NEWSWIRE) -- In a press release November 1 2013, the investor market was informed that NAT was coordinating the establishment of Nordic American Offshore Ltd. ("NAO"). NAO, an offshore supply ship company, has now been established and NAT is its largest shareholder (26%) with an investment of $65 mill.
NAO has agreed to buy six platform supply vessels (PSVs) from the highly reputable Ulstein engineering and shipbuilding group of Norway that holds 4% of NAO. The ships (2012 and 2013 built) are operating already and are expected to be taken over in December 2013. NAO has an option for a 7
th vessel on the same terms as for the 6 units.
A PSV is a part of the logistical chain in the offshore oil exploration business, transporting stores, provisions and equipment to offshore oil installations in such places as the North Sea, the US Gulf of Mexico, off the coast of Brazil and in other locations where there are offshore oil activities. Typically, a PSV is about 4,000 deadweight tons (dwt), i.e. much smaller than a suezmax tanker of about 150,000 dwt.
Nordic American Offshore has now completed a $250 million equity private placement. The transaction was upsized from $230 million to accommodate high demand. NAO will use the proceeds from the offering to finance the purchase of the six PSVs. More than 80% of the acquisition costs are expected to be financed with equity.
The objective of the NAT investment in NAO is over time to produce higher dividend for shareholders of NAT than otherwise would have been the case. Like Nordic American Tankers, NAO will pursue a strategy of accretive growth based on a conservative financial strategy of high equity capitalization and a full dividend pay-out model. The new company will have existing time charter contracts in place for several of the vessels and spot charters for the remainder. NAO can be expected to operate on a cash break-even basis that is highly competitive within the industry. Cost synergies are expected to be achieved both for NAT and NAO. The suezmax strategy for NAT will remain firmly in place.
The NAO share is expected to begin trading in the Norwegian OTC (Over The Counter) market shortly. Later the OTC listing in Oslo is expected to cease concurrently with the planned listing of NAO on the New York Stock Exchange, which we expect will take place during the first quarter of 2014.