AMERICAN TANKER, INC.
ANNUAL REPORT 2022
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Board of Directors’ Report for 2022
Introduction
American Tanker, Inc. (“ATI” or the “Company”) is a ship owning and lease finance company with a modern fleet of nine product tankers
and one shuttle tanker operating in the U.S. domestic (“Jones Act”) trades. For most of 2022, all ten tankers were in operation on
bareboat charters to Overseas Shipholding Group, Inc. and its subsidiaries (collectively “OSG”), one of the largest operators in the Jones
Act tanker market, and domiciled in Tampa, Florida. During December 2022, OSG redelivered three tankers to ATI, which were
subsequently employed to a subsidiary of Keystone Shipping Co. (“Keystone”), a U.S. shipowner and operator founded in Philadelphia
in 1909, on three-year bareboat charters. Seven vessels remain on bareboat charters to OSG.
The Group’s business activities
The main entities in the ATI Group (the “Group”) are American Tanker, Inc. (ATI), American Shipping Corporation (ASC), and the ten
single purpose leasing companies (ASC Leasing I through X, Inc.), each owning one of the ten tankers and domiciled in the U.S. ATI is
wholly owned by American Tanker Holding Company, Inc. (ATHC), a wholly owned subsidiary of AMSC ASA (“AMSC” or “Parent”). AMSC
ASA is domiciled in Lysaker, Norway, and listed on the Oslo Stock Exchange, with the U.S. subsidiaries located in Kennett Square,
Pennsylvania. As wholly owned subsidiaries of AMSC, the Group is directed, controlled and managed by the Parent and its Board of
Directors and executive management.
ATI’s business model is to own and bareboat charter-out vessels for operation in the U.S. Jones Act market, earning fixed bareboat
charter revenues generating stable cash flows to protect against short-term market fluctuations, and, in addition, with profit share
potential generated by the bareboat charterers’ operations in the time or voyage charter markets.
In accordance with this business model, all of ATI’s vessels are on fixed rate bareboat charters with OSG and Keystone, together
with profit sharing agreements which gives ATI the upside of sharing the profits generated by the operators. ATI’s counterparties employ
the vessels on voyage and time charters to major oil companies, refineries and trading companies.
The vessels were built at Philly Shipyard (“PHLY”), a leading U.S. shipyard and delivered between 2007 and 2011.
The Company has no research and development activity.
The Jones Act market
The U.S. cabotage law, commonly referred to as the Jones Act, requires all commercial vessels transporting cargoes between points in
the United States to be U.S. built, owned, operated and manned by U.S. citizens, and registered under the U.S. flag. The Jones Act has
existed since 1920 and enjoys strong bipartisan political support in the USA.
ATI’s operation in the Jones Act market is made possible by the lease finance exception of the Jones Act, which permits foreign
ownership of the ships under certain conditions. Compliance with the lease finance exception requires, among other things, that the
vessels are bareboat chartered to qualified U.S. citizen operators, such as OSG and Keystone.
Key events 2022
Keystone Charters
During December 2022, the Company took redelivery of three U.S. Jones Act tankers from OSG which were subsequently employed to
a subsidiary of Keystone Shipping Co. on three-year bareboat charters. Keystone has two 1-year extension options on two of the three
vessels, and all are secured on back-to-back time charters with U.S. Jones Act end users. The contracts added almost USD 90 million in
fixed lease backlog.
OSG bareboat charter update
In December 2022, the Company announced OSG’s exercise of 3-year options for six ships, moving the charter expiries to December
2026, and adding another USD 159.5 million in contracted lease backlog. Following the extensions, ATI has seven vessels on bareboat
charter to OSG, of which OSG has options to extend the charter terms.
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Vessel
Charter Expiration
Operator
Remaining Charter Extension
Options
Overseas Houston
Dec 2026
OSG
Unlimited 3 and 5 year
Overseas Long Beach
Dec 2026
OSG
Unlimited 3 and 5 year
Seakay Star
Jan 2026
Keystone
2 x 1 year
Seakay Valor
Jan 2026
Keystone
None
Seakay Sky
Jan 2026
Keystone
2 x 1 year
Overseas Boston
Dec 2026
OSG
Unlimited 3 and 5 year
Overseas Nikiski
Dec 2026
OSG
Unlimited 3 and 5 year
Overseas Martinez
Dec 2026
OSG
Unlimited 3 and 5 year
Overseas Anacortes
Dec 2026
OSG
Unlimited 3 and 5 year
Overseas Tampa
Jun 2025
OSG
2 x 5 year followed by 5 x 1 year
Review of the consolidated annual accounts
ATI prepares and presents its consolidated accounts according to International Financial Reporting Standards (IFRS) as adopted by the
EU, and has one operating segment.
Consolidated Income statement
In 2022 and 2021, ATI had operating revenues of USD 87.4 million and USD 88.2 million, respectively. Revenues are recognized on a
monthly basis and represent the income from the bareboat charter agreements. There were no profits generated under profit sharing
agreements in 2022 or 2021.
Depreciation was USD 34.8 million in 2022 versus USD 34.4 million in 2021. ATI’s operating profit (EBIT) was USD 47.5 million in
2022 versus USD 50.3 million in 2021.
Net financial items were negative USD 31.9 million in 2022 compared to negative USD 36.1 million in 2021. Net financial items of
negative USD 31.9 million in 2022 consist primarily of net interest expense of USD 38.9 million and other financial expenses of USD
4.2 million, offset by change in the mark-to-market valuation of interest rate swap agreements of USD 11.2 million. Net financial items
of negative USD 36.1 million in 2021 consist primarily of net interest expense of USD 36.4 million and other financial expenses of USD
4.5 million, offset by non-cash gain on the mark-to-market valuation of interest rate swap agreements of USD 4.8 million.
Net profit before tax for 2022 was USD 15.6 million (USD 14.2 million for 2021).
Deferred income tax expense was USD 2.4 million in 2022 (USD 6.7 million in 2021). Income tax expense in 2022 was USD 0.6
million (USD 0.5 million in 2021).
ATI’s 2022 net income was USD 12.6 million versus USD 7.0 million in 2021. The 2022 basic and diluted earnings per share (EPS)
were USD 12.60. The corresponding figures for 2021 were USD 7.02, for both basic and diluted EPS.
Consolidated Cash flow statement
The Company’s operating cash flow is primarily composed of bareboat charter hire received, less interest paid. Total net cash flow from
operating activities in 2022 was positive USD 55.5 million (USD 48.2 million in 2021).
Net cash flow used in investing activities in 2022 was USD 15.0 million, representing the Company’s investment in five ballast water
management systems. In 2021, there were no cash flows used in investing activities.
Net cash flow used in financing activities in 2021 was USD 55.7 million, which included USD 26.9 million in vessel debt installments
and USD 39.0 million in dividends paid/return of capital, offset by proceeds from early termination of interest rate swaps of USD 10.2
million. Net cash flow used in financing activities in 2021 was USD 20.3 million, which included USD 26.9 million in vessel debt
installments, USD 13.0 million in dividends paid/return of capital, USD 0.4 million in loan fees paid, offset by the bond tap issue raised
in 2021 of USD 20.0 million.
Consolidated Statement of financial position
As of 31 December 2022, ATI had cash on deposit with banks totaling USD 34.8 million. Of this total amount, USD 5.0 million is cash held
for specified uses. The corresponding amounts for 2021 were USD 50.0 million in cash on deposit with banks and USD 5.4 million in cash
held for specified uses.
Receivables and other current assets were USD 5.4 million as of 31 December 2022 and USD 14.5 million as of 31 December 2021
and related mostly to the current portion of the long-term receivable due from OSG.
Property, plant and equipment as of 31 December 2022 was USD 594.3 million (USD 614.1 million as of 31 December 2021),
consisting of ten vessels.
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Interest-bearing long-term receivables totaled USD 6.5 million as of 31 December 2022 (USD 7.3 million as of 31 December 2021)
and represent the DPO due from OSG. Receivable from group companies was USD 2.6 million as of 31 December 2022 (USD 2.8 million
as of 31 December 2020) and relates to the borrowing of U.S. federal NOLs amongst the ATHC Group.
Derivative financial assets were USD 4.7 million as of 31 December 2021 (USD 3.6 million in 2021).
At 31 December 2022, total assets were USD 648.8 million (USD 692.6 million as of 31 December 2021).
At 31 December 2022 total equity was USD 12.3 million. The equity ratio was 2% of total assets. Corresponding amounts for 2021
were USD 38.6 million and 5.6%, respectively.
Total current liabilities as of 31 December 2022 were USD 37.8 million, consisting of USD 35.4 million in short-term interest-bearing
debt and accrued interest and USD 2.2 million in accrued expenses and USD 0.3 million in tax payable. Total current liabilities as of
31 December 2021 were USD 35.9 million, consisting of USD 35.4 million in short-term interest-bearing debt and accrued interest and
USD 0.2 million in accrued expenses and USD 0.4 million in tax payable.
Non-current liabilities totaled USD 598.7 million at 31 December 2022, consisting of long-term bank debt of USD 271.8 million
related to the ten vessels owned by ATI, a bond issue of USD 220.0 million, interest-bearing loan from AMSC of USD 92.5 million and
deferred tax liability of USD 19.1 million, offset by unamortized loan fees of USD 4.7 million.
Non-current liabilities totaled USD
618.0 million at 31 December 2021, consisting of long-term bank debt of USD 298.7 million related to the ten vessels owned by ATI, a
bond issue of USD 220.0 million, interest-bearing loan from AMSC of USD 89.6 million and deferred tax liability of USD 16.6 million,
offset by unamortized loan fees of USD 6.9 million.
Consolidated tax position
ATI has federal net operating losses carryforward (NOLs) as of 31 December 2022 of USD 412.3 million in the U.S. These NOLs have
been generated since inception from the tax losses of the Company, which are mostly due to the accelerated depreciation of the vessels
for tax purposes (10 years).
See note 5 in the consolidated accounts for further information.
Risks
ATI’s risks are managed by the Parent’s Board of Directors and executive management and are summarized below.
Counterparty risk and charter renewal risk
The operational risks facing ATI principally relate to the commercial and financial performance of ATI’s counterparties and from their
operation of our vessels, re-chartering risk as well as overall Jones Act market risk.
Of ATI’s ten vessels, six vessels have bareboat charters expiring in December 2026, three vessels have bareboat charters expiring
in January 2026, and one vessel is contracted through June 2025.
During 2022, the Company’s counterparties have been diversified and ATI is exposed to credit risk of its counterparties. ATI enjoys
downside market protection with “come hell or high water” bareboat contracts and through the twelve to six months’ notice period to
redeliver vessels, provides management with ample time to find alternative employment for the assets. The Jones Act vessels are all
on contracts towards reputable counterparts who have secured, in some cases, back-to-back medium term time charters for the vessels.
ATI continues to closely monitor its employment and counterparty risk, as well as Jones Act tanker market fundamentals.
ATI considered its climate risk. ATI's business could be affected by climate change through increased financing costs and costs for
regulatory changes to its vessels, amongst other things. ATI is also exposed to regulatory risk and political risk.
Financial risk and risk management
ATI’s activities expose it to a variety of financial risks: market risk, currency risk, interest rate risk, counterparty risk, price risk, credit
risk, and refinancing risk. ATI’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimize potential adverse effects on ATI’s financial performance. ATI uses derivative financial instruments to hedge certain risk
exposure. The Group is also exposed to risk related to changes in the tax code in the U.S.
ATI operates in a business environment that is capital intensive. The Company is dependent upon having access to long-term
funding for the vessels and other loan facilities to the extent its own cash flow from operations is insufficient to fund its operations. All
of the Company’s debt matures in 2025.
Through the vessel financing, the Company is exposed to fluctuations in interest rates on its long-term debt. The interest rate risk
related to the vessel financing is partially mitigated by the use of interest rate swap agreements to hedge the interest rate risk. The
Company has interest rate swaps to convert its floating rate debt to fixed rates for a portion of its vessel debt (USD 53.8 million as of
31 December 2022).
ATI is subject to financial covenants under the secured bank loans relating to minimum liquidity and collateral, and leverage and
debt service ratios. ATI is subject to financial covenants under the bond related to minimum liquidity and maximum leverage. ATI was
in compliance with all of its debt covenants as of 31 December 2022.
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The going concern assumption
In view of ATI’s financial position, the Board confirms the going concern assumptions and that the 2022 annual accounts have been
prepared based on the assumption of a going concern.
Outlook
The entire U.S. Jones Act tanker fleet is presently more or less fully employed on term charters. Charter rates are now around
USD 70,000 per day based on recent contract fixtures. The combination of demand for clean products across the USA, increasing
transportation needs for renewable fuel and favorable market conditions for transporting crude oil domestically, drives the demand
side in the Jones Act tanker market. The supply side of the market remains stable with limited U.S. yard capacity and rising
newbuilding costs, making it unlikely for newbuilds to enter the market for years to come. The combination of strong demand and
stable supply is likely to maintain a robust Jones Act tanker market going forward.
MR tankers are a reliable means of transportation and a key part of the infrastructure transporting fuel and crude oil across the
USA. ATI’s 10 tankers are a key part of the Jones Act fleet, represents about 30% of the modern tankers, and are attractive assets for
Jones Act charterers.
ATI continues to enjoy downside protection with “come hell or high water” bareboat contracts, with three vessels on contract
until January 2026, six vessels on contract until December 2026, and one vessel on contract until June 2025. The Jones Act tankers are
all on contracts towards reputable counterparts who have secured a solid time charter backlog for the vessels.
Kennett Square, 28 April 2023
The Board of Directors
American Tanker, Inc. Leigh Jaros, Director
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Board Responsibility statement
Today, the sole director reviewed and approved the Board of Directors’ Report and the consolidated annual financial statements for
American Tanker, Inc. as of and for the year ended 31 December 2022 (Annual Report 2022).
American Tanker Inc.’s consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the EU and additional disclosure requirements in the Norwegian Accounting Act. The Board of Directors’ Report
for the group is in accordance with the requirements in the Norwegian Accounting Act and Norwegian Accounting Standard no. 16 as
of 31 December 2022.
To the best of my knowledge:
The consolidated annual financial statements for 2022 have been prepared in accordance with the applicable accounting standards.
The consolidated annual financial statements give a true and fair view of the assets, liabilities, financial position, and profit as a
whole as of and for the year ended 31 December 2022 for the group.
The Board of Directors’ Report for the group includes a true and fair review of:
∎ the development and performance of the business and the position of the group
∎ the principal risks and uncertainties the group faces
Kennett Square, 28 April 2023
The Board of Directors
American Tanker, Inc.
Leigh Jaros, Director
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American Tanker, Inc. & Subsidiaries
Consolidated Statement of Financial Position as of 31 December
Amounts in USD thousands
Note
2022
2021
Assets
Non‐current assets
Interest‐bearing Long‐term Receivable
7, 16
Derivative Financial Assets
9, 16
Receivable from Group companies
16, 17
Other non‐current Assets
Property, plant and equipment
6
Total non‐current assets
Current Assets
Cash & Cash Equivalents
16
Cash held for specified uses
16
Receivables and other current assets
8, 16
Tax Receivable
5
Total Current Assets
Total Assets
Liabilities & Equity
Equity
Share capital and share premium
11
Retained Earnings/(Accumulated deficit)
(26,350 )
Total Equity
Long‐Term Liabilities
Interest bearing loans
13, 16
Deferred Tax Liability
5
Total Long‐Term Liabilities
Current Liabilities
Current portion of long‐term loans
13, 16
Trade and other payables
15
Tax Payable
5
Total Current Liabilities
Total Liabilities & Equity
28 April 2023
Leigh Jaros, Director/President/CEO
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American Tanker, Inc. & Subsidiaries
Consolidated Income Statement for the years ended
Amounts in USD thousands
Note
2022
2021
Leasing Revenue
14
Total Revenues
Operating Expenses
Wages and other personnel expenses
2
(368 )
(290 )
Other operating expenses
3
(4,761 )
(3,185 )
Total Operating Expenses
(5,129 )
(3,475 )
Operating Profit before Depreciation
Depreciation
6
(34,770 )
(34,383 )
Operating Profit
Financial income
4
Financial expenses
4
(44,566 )
(42,723 )
Net Financial Items
(31,910 )
(36,103 )
Profit/(Loss) before tax
Income tax benefit/(expense)
5
(3,017 )
(7,210 )
Net Profit/(Loss) for the period
(1)
Basic and diluted earnings per share
10
American Tanker, Inc. & Subsidiaries
Consolidated Statement of comprehensive income for the
years ended
Amounts in USD thousands
2022 2021
Net income/(loss) for the year 12,603 7,022
Other comprehensive income for the period, net of tax - -
Total comprehensive income/(loss) for the year
(1)
(1)
Applicable to common shareholders of ATI
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American Tanker, Inc. & Subsidiaries
Consolidated Statement of changes in equity
Share
Share
Retained earnings/
(Accumulated
Amounts in USD thousands
Note
capital
premium
deficit)
Total equity
Balance at 31 December 2020
(6,974 )
Total comprehensive income for the year
Dividends paid, classified as return of capital
11
(13,000 )
(13,000 )
Balance at 31 December 2021
Total comprehensive income for the year
Dividends paid
11
(39,000 )
(39,000 )
Balance at 31 December 2022
(26,350 )
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Cash and cash equivalents, including cash for specified uses, as of 1 January
Cash and cash equivalents, including cash for specified uses, as of 31 December
American Tanker, Inc. & Subsidiaries
Consolidated Cash flow for the years ended
Amounts in USD thousands
Note
2022
2021
Net profit/(loss) before tax
Add back:
Depreciation expense
6
Net interest expense
4
Unrealized (gain)/loss on interest swaps
9
(11,199 )
(4,841 )
Non-cash interest expense/(income)
4
(443 )
Other non-cash items (amortization of prepaids & loan fees)
(Increase)/Decrease in:
Other current assets
8
(326 )
(168 )
Long term receivables
7
Other assets
(315 )
Increase/(Decrease) in:
Accounts payable
15
(311 )
(462 )
Accrued liabilities
15
(966 )
Interest paid
4
(37,437 )
(37,289 )
Interest received
4
Net cash from/(used in) operating activities 55,515
Investments in vessels
6
(14,978 )
Net cash from/(used in) investing activities (14,978 )
Proceeds from long term interest-bearing debt
13
Repayment of long term interest-bearing debt
13
(26,863 )
(26,863 )
Loan fees paid
13
(423 )
Proceeds from early termination of interest rate swaps
9
Dividends paid / return of capital
11
(39,000 )
(13,000 )
Net cash from/(used in) financing activities (55,691 )
(20,286 )
Net increase/(decrease) in cash (15,154 )
Cash and cash equivalents as of 31 December 29,781 44,506
Cash held for specified uses 31 December 5,020 5,449
Cash and cash equivalents, including cash for specified uses, as of 31 December 34,801 49,955
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31 December 2021
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PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the General Meeting of American Tanker, Inc.
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated financial statements of American Tanker, Inc. and its subsidiaries
(the Group), which comprise the statement of financial position as at 31 December 2022, the income
statement, statement of comprehensive income, statement of changes in equity and cash flow for the
year then ended, and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion the consolidated financial statements give a true and fair view of the financial position of
the Group as at 31 December 2022, and its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the EU.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Group as required
by relevant laws and regulations in Norway and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Group for 1 year from the election by the general meeting of the
shareholders on 28 April 2023 for the accounting year 2022.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
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Key Audit Matters
How our audit addressed the Key Audit
Matter
Impairment assessment of vessels and
equipment
On 31 December 2022, the Group held nine
product tankers and one shuttle tanker. The
vessels had a carrying amount of USD 594,331
thousand.
Indicators of impairment for the vessels were
assessed and management concluded that no
such indicators were present. As a result,
management has not performed an impairment
test.
We focused on management’s impairment
assessment of vessels and equipment due to the
significant carrying value of the vessels and the
judgment inherent in the assessment of
indicators of impairment.
We refer to note 1 - Accounting Principles and
note 6 - Property, plant and equipment where
management explains how they assess the
value of their vessels.
We obtained, evaluated and challenged
management’s assessment of indicators of
impairment and the process by which this was
performed. We assessed management’s
accounting policy against IFRS and obtained
explanations from management as to how the
specific requirements of the standards, in
particular IAS 36 - Impairment of assets, were
met.
As part of management’s assessment,
management compiled independent broker
valuations for the vessels. We satisfied
ourselves that the external brokers had both the
objectivity and the competence to provide the
estimate. To assess this, we interviewed
selected brokers to understand how the
estimates for fair value were compiled. We also
satisfied ourselves that the brokers were
provided with relevant facts to determine such
an estimate, by testing key inputs such as build
date, build location and certain key specifications
back to the ships register.
To assess each of the assumptions in the
impairment indicator assessment, we
interviewed management and challenged their
assumptions. For key assumptions, such as
market rates, we inspected supporting
documentation from third parties on the basis of
which the assumptions were made. We found
that freight rates used by management were
within an appropriate range and that changes did
not lead to any indication of impairment.
We also assessed management’s process and
results for identification and classification of
CGUs to ensure that they were appropriate and
in accordance with relevant accounting
standards.
We read note 1 - Accounting Principles and note
6 – Property, plant and equipment and assessed
them to be in line with the requirements.
No matters of consequence arose from the
procedures above.
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Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appear to be materially misstated. We are required
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable statutory requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statement on Corporate
Governance.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the EU, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
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obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group's internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
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Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of American Tanker, Inc., we have performed an
assurance engagement to obtain reasonable assurance about whether the financial statements
included in the annual report, with the file name 549300NF6T0U83EHY418-2022-12-31-en.zip, have
been prepared, in all material respects, in compliance with the requirements of the Commission
Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation)
and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes
requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of
the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all
material respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
regulation. This responsibility comprises an adequate process and such internal control as
management determines is necessary.
Auditor’s Responsibilities
For a description of the auditor’s responsibilities when performing an assurance engagement of the
ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 28 April 2023
PricewaterhouseCoopers AS
Anne Kristin Huuse
State Authorised Public Accountant
(This document is signed electronically)
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Signers:
Name
This document package contains:
- Closing page
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- The electronic signatures. These are not visible in the
document, but are electronically integrated.
This le is sealed with a digital signature.
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of the document.
Method
Date
2023-04-28 12:49
BANKID
Huuse, Anne Kristin
Revisjonsberetning
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Corporate governance
American Tanker, Inc. (“ATI” or the “Company”) is a corporation duly incorporated under the laws of the
State of Delaware. The Company is a 100% indirectly owned subsidiary of AMSC ASA (the “Parent” and
together with its subsidiaries the “Group”). The Group’s focus is on building a premier ownership position
in the Jones Act market to create maximum value for the Parent’s shareholders. Good corporate
governance will help to reduce risk and ensure sustainable value creation.
The corporate governance principles applicable to the Company are based on the Parent’s corporate governance
principles, Sections 141, 211, and 212 of the Delaware General Corporation Law (the “DGCL”),its Certificate of
Incorporation and its Bylaws, as each have been amended. As a consequence of the Company having issued bonds
that are listed on the Oslo Stock Exchange (the “OSE”), the Company is required to prepare this corporate governance
report pursuant to the Norwegian Securities Trading Act and the principles set out in the Continuing Obligations for
issuers of bonds on the OSE which can be found on https://www.oslobors.no/ob_eng/Oslo-Boers/Regulations/The-
Issuer-Rules. The Board of Directors (the “Board”) of the Company has reviewed and approved the Company’s
principles for corporate governance. The Board’s statement of corporate governance is included in the annual report.
The principles are based on the Norwegian Code of Practice for Corporate Governance, dated 14 October 2021 (the
“Code of Practice”), the principles set out in the continuing obligations of companies admitted to trading on the Oslo
Stock Exchange, and the relevant Norwegian background law such as the Norwegian Accounting Act and the
Norwegian Public Limited Liability Companies Act. The Code of Practice is available at www.nues.no and the continuing
obligations for companies listed on the Oslo Stock Exchange may be found at www.oslobors.no. The following presents
the Group’s practice regarding each of the recommendations contained in the Code of Practice. Any deviations from
the recommendations are found under the item in question.
Purpose
These Corporate Governance principles are intended to ensure an appropriate division of roles and responsibilities
among the Group’s owner and the relevant Group company’s Board, and that the Company’s activities are subject to
satisfactory control by its stockholder. These principles contribute to the greatest possible value creation over time,
to the benefit of owners and other stakeholders. It is the responsibility of the Board of ATI to ensure that the Company
implements sound corporate governance.
Business
The Group’s business model is to own and bareboat charter vessels for operation in the U.S. Jones Act market through
its wholly owned subsidiary leasing companies. The corporate structure of the Parent, through its operating
subsidiaries in the United States, is in conformance with the applicable requirements of the Jones Act. All of its vessels
are fully qualified to utilize the lease finance law exception to the Jones Act to bareboat charter vessels to Jones Act
citizens for operation in the domestic maritime trades of the United States.
Pursuant to Article THIRD of the Company’s Certificate of Incorporation, as amended, which has been filed with
the Secretary of State of the State of Delaware under File Number 3899715, the purpose of the Company is “to engage
in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State
of Delaware.” Pursuant to Section 3 of the Parent’s Articles of Association, which is registered with the Norwegian
Business Registry, the Parent’s objective is “to own and carry out industrial business and other activities hereto,
including ownership of vessels, capital management and other functions for the group, as well as participation in or
acquisition of other companies.”
The function of the business purpose clauses is to ensure that the relevant company’s shareholders have control
of the business and its risk profile, without limiting the respective Board or management’s ability to carry out strategic
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and financially viable decisions within the defined purpose. The Group’s financial goals and main strategies are as
follows:
∎ Be a preferred ship owning and lease finance company in the Jones Act market
∎ Generate stable cash flow from long term bareboat charters
∎ Have a modern, safe and operationally friendly fleet
∎ Explore and invest in value creating opportunities for the relevant company’s shareholders
∎ Ensure an optimal use of capital
The Board defines clear objectives, strategies and risk profiles for the Company’s business activities such that the
Company creates value for its stockholder and in turn the Group’s shareholders. The Group has guidelines for how it
integrates considerations related to the Group’s stakeholders into its value creation. The Board evaluates these
objectives, strategies and risk profiles at least yearly.
Equity and dividends
Equity
The Company’s book equity as of 31 December 2022 was USD 12.3 million corresponding to an equity ratio of
2 percent. The Company’s Board frequently monitors the Company’s equity level in accordance with its
responsibilities under Section 141 of the DGCL and the Company’s Bylaws. As such, the Company regards its current
equity as sound. The Board also monitors the Company’s capital structure and ensures that the Company’s capital
structure is appropriate to the Group’s objective, strategy and risk profile.
Dividends
Any payment of dividends by the Company will be based upon its earnings for the last year ended and other factors,
the financial situation at the relevant point in time and applicable restrictions under the Group’s financial agreements,
Sections 154 and 170 of the DGCL, and any other applicable laws and regulations.
Board authorizations
Under the DGCL and the Company’s Certificate of Incorporation, the Company’s Board does not have authority to
increase the number of shares that the Company is authorized to issue. However, because the Company’s Certificate
of Incorporation authorizes the issuance of up to 2,000 shares of common stock and the Company has issued only
1,000 of such shares to date, the Board has the authority to issue an additional 1,000 shares of common stock in
accordance with the requirements of the DGCL.
Equal treatment of shareholders and transactions with close associates
The Parent is attentive to the principle of equal treatment of all shareholders. As the Company is indirectly wholly-
owned by the Parent, there are no equal treatment issues in relation to the Company and its sole stockholder.
If there are material transactions between the Company and its sole stockholder or a director, officer, member
of executive management, the Parent or other subsidiaries in the Group or a party closely related to any of the
aforementioned, the Board shall ensure that independent valuations are available.
See information on transactions with related parties in Note 15 to ATI’s consolidated accounts.
Shares and negotiability
The Company has a single class of shares of common stock. Under Article FIFTH of the Company’s Certificate of
Incorporation, the Company is authorized to issue 2,000 shares of common stock with a par value of $0.01 per share.
As noted above, the Company has previously issued 1,000 shares to its sole stockholder and has the authority to issue
the remaining 1,000 shares. However, the Company notes that the shares in the Parent are subject to certain
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ownership and voting restrictions on “Shipping Operators” due to the fact that the Company’s indirect wholly owned
subsidiary leasing companies are operating under the lease finance law, which is an exception to the U.S. citizen
ownership requirements of the Jones Act. A “Shipping Operator” is defined in the Parent’s articles of association as a
person or entity that operates any vessel for hire or directly or indirectly controls, is controlled by, or is under common
control with any company or person who operates any vessel for hire.
Annual Meetings
In accordance with the DGCL and its Bylaws, the Company holds an annual meeting of its stockholders on the first
Tuesday of May followed by an annual meeting of the Board. (An annual meeting for a Delaware corporation is the
basic equivalent of a general meeting for a Norwegian company). These annual meetings are accomplished through
the adoption of a written consent in lieu of the annual meeting since the Company only has one stockholder. Thus,
the procedures for carrying out the annual meetings deviate from the procedures set out in the Code of Practice.
Nomination Committee Not Required
The Code of Practice recommends that the Company has a nomination committee. However, the Company is not,
required to establish a nomination committee under the DGCL or its Certificate of Incorporation or Bylaws, and the
Board is of the opinion that there are, for the time being, not sufficient reasons to establish a nomination committee.
The Board will consult with its sole stockholder prior to proposing candidates for Directors and will ensure that the
Board consists of Directors with the expertise and competence as shall be required by the Company from time to
time.
The Parent has a nomination committee which is set out in the Parent’s articles of association and governed by
guidelines adopted by the general meeting. The current members of the Parent’s nomination committee, as elected
by the general meeting, are Charlotte Håkonsen (Chairperson), Ingebret G. Hisdal and Hilde Kristin Ramsdal.
Board of Directors: composition and independence
Pursuant to the Company’s Bylaws, the Board shall be comprised of a minimum of one (1) Director, and the
number of Directors may be designated from time to time by resolutions of the Board. The Directors are elected at
the annual meeting of the stockholders by plurality vote to succeed the Directors whose terms have expired and to
fill any vacancies then existing. The term of office of each Director is from the time of his or her election and
qualification until the next annual meeting of the stockholders and until his or her successor is duly elected and
qualified or until his or her earlier death, resignation, or removal. The current Director is Leigh Jaros, who is not
independent of the Company’s sole stockholder and the Parent, but is independent of the Parent’s significant business
associates.
The sole Director is up for election at the next annual meeting of the stockholders, which will occur on May 2,
2023, and be accomplished through a written consent in lieu of the annual meeting.
The work of the Board of Directors
The Board manages the Company in accordance with the requirements of Section 141 of the DGCL and its
Certificate of Incorporation and Bylaws. The Board also acts at the direction of its sole stockholder. The Code of
Practice recommends that the Board established an audit committee. However, the Company is not required to
establish an audit committee under the DGCL or the Company’s Certificate of Incorporation or Bylaws, and the Board
is of the opinion that there is no reason to establish an audit committee at present and will rely on the audit committee
of the Parent for certain audit related matters. Thus, the Company deviates from the Code of Practice in this respect.
Further, as the Board is comprised of one Director, it has not deemed it necessary to establish any other board
committees at this time and does not carry out any regular self-assessment.
Risk management and internal control
The Parent’s Board is to ensure that the Group, including the Company, maintains solid in-house control practices
and appropriate risk management systems tailored to the Company’s business activities and its values and ethical
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guidelines. The Parent’s Board annually reviews the Group’s most important risk areas and internal control systems
and procedures, and the main elements of these assessments are mentioned in the Board report.
Audit Committee
The Parent’s audit committee has reviewed the Group’s internal reporting systems, internal control and risk
management and had dialogue with the Group’s auditor. The Parent’s audit committee has also considered the
auditor’s independence.
The Group’s financial policies ensure follow-up of financial risk. Key targets are identified by the Board and
management of the Company to ensure timely control of currency exposure, interest rate exposure and compliance
with loan covenants.
Financial Statement Close Process
Consolidation and control over the financial statement close process is the responsibility of the Chief Financial
Officer of the Company and the Controller of the Parent. The Group’s current business includes bareboat chartering
of its vessels and therefore means that the activities of its employees are managing the financing of vessels and
overhead. The Parent has a small organization with three employees, who all have direct communication with the
Parent’s Board. Meetings between the management of the Company, the Parent and other subsidiaries in the Group,
the external auditor and members of the Board, to identify significant accounting issues or other issues are held prior
to completion of the Group’s annual report and in connection with management’s reporting to the audit committee.
The purpose of these meetings is to focus on new and amended accounting principles or other issues in the financial
statements. Financial results and cash development are analyzed and compared to the budget by the Chief Financial
Officer of the Company and the CFO and Controller of the Parent and reported to the Parent’s Board quarterly.
Because of the inherent segregation of duties matters caused by having only three employees, special actions
have been implemented in the Parent.
The Board approves the Company’s yearly budget and reviews deviations to the budget on a quarterly basis.
Remuneration of the Board of Directors
Board remuneration is to reflect the Board’s responsibility, expertise, time spent, and the complexity of the business.
Remuneration does not depend on the Company’s financial performance and the Company does not grant share
options to the Directors. Under the Company’s Bylaws, Directors do not receive any stated salary for their services as
directors, but Directors may receive a fixed fee and expenses of attendance at each meeting by resolutions of the
Board. Remuneration is not paid to Directors who are also employees of the Company and where compensation for
the Board position is included in their salary.
Remuneration of executive management
The Company is managed by its officers, who are elected by the Board and paid in accordance with guidelines adopted
by the Parent’s Board on remuneration for the executive management of each subsidiary in the Group in accordance
with the Norwegian Public Limited Company Act section 6-16a. Salary and other remuneration of AMSC’s CEO are
determined by the Parent’s Board.
Information and communications
The Parent Board has established guidelines for the reporting of financial and other information and is based on
openness and on equal treatment of shareholders, the financial community, and other interested parties. The long-
term goal of the Group’s investor relations activities is to ensure the Group’s access to capital at competitive terms
and to ensure shareholders’ correct pricing of shares.
These goals are to be accomplished through correct and timely distribution of information by the Company to its
sole stockholder that can affect the Parent’s share price. The Company is also to comply with current rules and market
practices. All stock exchange notifications and press releases are made available on the Group’s website
www.amscasa.com; stock exchange notices are also available from www.newsweb.no on the ticker “AMSC” in respect
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of the Parent and “ATI02” in respect of the Company. All information that is distributed on newsweb is simultaneously
published on the Group’s website.
Take-overs
The Company has not implemented anti-takeover principles on the basis that it is indirectly wholly-owned by the
Parent, and the Company’s Certificate of Incorporation and Bylaws do not contain any such restrictions nor is the
Company subject to the restrictions contained in Section 203 of the DGCL.
Auditor
The Group’s auditor will make an annual presentation to the Parent Board of a plan for the auditing work for the
year. Further, the auditor is to provide the Board with an annual written confirmation that the requirement of
independence has been met.
The Group’s auditor participates in at least one Board meeting of the Parent annually, including the meeting prior
to the annual general meeting. At this meeting, the auditor reviews any material changes in the Company’s accounting
policies, comments on any material estimated accounting figures and reports all material matters on which there has
been disagreement between the auditor and the executive management of the Company. The auditor also presents
to the Board a review of the Company’s internal control procedures, including identified weaknesses and proposals
for improvements.
Auditors are to provide the Board with an annual overview of services other than auditing that have been supplied
to the Company. Remuneration for auditors, presented in note 3 to the consolidated accounts, is stated for the four
categories of ordinary auditing, other attestation services, tax assistance and other assurance services. In addition,
these details are presented at the annual general meeting. The auditor has provided the Board with written
confirmation of its independence.
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