DHT Holdings, Inc. (NYSE:DHT) (DHT): It is DHT's policy to inspect all newbuildings, including underwater areas, during their respective warranty periods. During such routine inspection of the DHT Jaguar, a fracture surrounding the inspection window of the rudder was identified.
Following a root cause analysis conducted by the builder Hyundai Heavy Industries (HHI) and classification society American Bureau of Shipping (ABS), DHT implemented a permanent repair plan for a rudder design improvement on the DHT Jaguar and its sister ships. DHT has completed the work and has in relation to this incurred 105 off-hire days during the fourth quarter of 2016, equaling to about 5% of its trading days during the same period. The repair cost has been covered by HHI under its warranty obligation.
VLCC DHT Jaguar - Image courtesy: DHT
DHT agreed with HHI to defer the delivery of its final newbuilding originally scheduled for delivery during the fourth quarter of 2016.
The vessel, which will be named DHT Tiger, will be delivered during January 2017 at no additional cost to DHT, positively impacting her value.
DHT is also taking this opportunity to update on its VLCC spot trading. The spot earnings for the fourth quarter of 2016 came in at $34,300 per day. DHT has to date booked 32% of its first quarter 2017 VLCC spot days at an average rate of $53,000 per day.
Further, during the fourth quarter the company has under its buy-back program repurchased $23 million of its convertible senior notes in the open market at an average price of 90.4%. Including repurchases made during the first half of 2016, the company has during 2016 repurchased $27 million at an average price of 91.7%. At the current conversion price of $6.6570, the company has reduced the potential dilution related to the convertible notes by 4,055,880 shares, equal to about 4% based on the current outstanding share count.