Nordic American Tankers' refinancing plan is earning positive reviews from both analysts and investors.
The $306m loan deal with shipping newcomer Beal Bank was hailed by Seaport Global's Magnus Fyhr and Randy Giveans at Jefferies and the Herbjorn Hansson-led company's shares are up since it was announced 12 February.
“We believe the added liquidity should help NAT continue pursuing its fleet renewal strategy and position the company for a recovery in the tanker market," said Fyhr, who maintained a neutral rating.
Evercore ISI's Jonathan Chappell was more lukewarm on the plan.
He said it was "a good outcome" but "not a panacea" and that Nordic American Tankers faces "a high bar to return to sustainable profitability."
"Although the new debt facility ... lowers the all-in cost of debt, removes strict dividend restrictions, and eliminates the imminent need for an equity infusion, the relative cost of the new debt is still high, keeping breakeven costs elevated and limiting the immediate dividend upside potential," Chappell wrote in a Wednesday afternoon note.
He gave shares — which were trading at $2.21 midday Wednesday, down slightly from the open but up $0.11 from last week — an underperform rating.
The five-year refinancing deal was announced last week. The interest rate is between 6% and 8%, according to Hansson on the company's earnings conference call, a drop from its previous revolving loan.
For the fourth quarter, the company posted a $10.5m loss.
