Nordic American has declared its 80th consecutive quarterly dividend - but its payout for the second quarter of 2017 had a twist in the tale.
New York-listed NAT will hand out $0.15 per share to its investors for the three months to the end of June, below its previous payout of $0.20 per share.
However, only $0.10 per share will be paid in cash, with the balance handed over as paper in spin-off Nordic American Offshore, which is also listed in the US.
NAT, which is looking to create what it calls a "more sophisticated capital structure", stressed earlier this month that paying a dividend remained a high priority despite a weakening crude tanker market.
The owner, which was downgraded this week by analysts at Evercore ISI, has seen its payout to shareholders come into tighter focus this year given a possible future restriction linked to loan covenants.
'Financially strong'
Herbjorn Hansson, chief executive of NAT, said in a statement: “The strategic, financial and commercial position of NAT is very strong.
“The net debt of NAT is low compared with other listed shipping companies.
“Our objective is to have an equity ratio of minimum 80% as measured by the market capitalization of the company as the basis."
Hansson has been buying up shares in NAT and NAO of late and is one of the largest shareholders in both companies, today’s statement points out.
While some attention has focused on a covenants breach on an existing loan, NAT today said it has a new borrowing agreement for three newbuildings under review.
The fresh debt will help fund the trio of suezmaxes for delivery in 2018, for which 30% has already been paid and the balance is due when they are handed over.
NAT is also looking at the bond market as one of the options in hand as part of a wish to establish a fresh capital structure, the statement said.
NAO was listed on the New York Stock Exchange in 2014, raising around $100m.
Today it has a fleet of 10 vessels on the water and a market capitalisation of $75.62m. Its stock closed at $1.22 each in the US yesterday.
'Using a ladle'
Reducing his earnings estimates for the company after the dividend announcement, Maxim Group analyst James Jang wash sharply critical of NAT's move.
He described today's decision as "using a ladle to bail out a sinking ship".
"We believe NAT's continued insistence on paying out an unsustainable dividend is unwarranted," he told clients as he unveiled expectations that NAT will deliver a loss of $0.18 per share in the second quarter, worse than the analyst's previous bet of a $0.02-per-share loss.
"The inclusion of partial shares of NAO should signal to investors that NAT does not have the operational leverage to traverse a weakened tanker market."
