CRUDE CARRIERS CORP. REPORTS FIRST QUARTER RESULTS AND ANNOUNCES

News Release Crude Carriers Corp May 13, 2011

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Highlights:
 Declared a cash dividend of $0.25 per share for the first
quarter of 2011.
 Reported first quarter net loss of $0.5 million or $0.03
per share (“EPS”).
 Earned average Time Charter Equivalent (“TCE”) of $30,050
per day for the two Very Large
Crude Carriers (“VLCCs”) and $18,536 per day for the three
Suezmaxes in the Company’s fleet.
 Announced on May 5, 2011 that Crude Carriers Corp.
entered into a definitive agreement to
merge with Capital Product Partners L.P. (“CPLP”).
ATHENS, Greece –
May 13, 2011 –
Crude Carriers Corp. (“Crude Carriers” or the “Company”)
(NYSE:
CRU), today reported its financial results and declared a cash
dividend of $0.25 per share for the first
quarter of 2011 payable on June 1, 2011 to shareholders of record
on May 23, 2011.
The Company reported a net loss for the quarter of $0.5 million,
or $0.03 per share, principally as a result
of the weaker spot crude tanker market. Revenues amounted to $12.8
million for the quarter, including
$1.0 million of profit sharing revenues earned by three of our
vessels employed under the spot index
linked time charter arrangement with Shell Shipping & Trading
Co.
Total voyage and vessel operating expenses for the quarter
amounted to $6.4 million, of which $2.4
million were voyage expenses, comprised mostly of bunker costs,
and $3.9 million of operating expenses.
General and administrative expenses were $1.6 million for the
quarter, of which $0.5 million was a noncash
charge related to the Equity Incentive Plan.
Interest expense and finance cost for the first quarter of 2011
was $1.3 million, principally relating to
interest on the $134.6 million outstanding debt drawn under our
$200.0 million revolving credit facility.
Quarterly Dividend of $0.25 per share
The Company’s dividend policy, as described in its listing
prospectus, is to pay a variable quarterly
dividend based on our cash available for distribution, which
represents net cash flow during the previous
quarter, generated by our vessels trading in the spot crude tanker
market less any amount required to
maintain a reserve that our Board of Directors (the “Board”)
determines from time to time is appropriate
for the operation and future growth of our fleet.
The Company generated $4.0 million in cash available for
distribution during the quarter, and its Board
declared a cash dividend of $0.25 per share for the period from
January 1 to March 31, 2011.The cash
dividend is payable on June 1, 2011, to all shareholders of record
on May 23, 2011.
Cash available for distribution is a non US GAAP financial measure
described on Appendix A of this
earnings release.
Crude Tanker Market Overview
Crude spot market rates experienced short spikes throughout the
quarter due to the high seasonal demand,
but long tonnage lists and higher bunker prices kept a lid on
rates and as a result first quarter TD3 and
TD5 average earnings remained close to historical lows.
During the first quarter 2011 the TD3 (Middle East – Japan) and
the TD5 (West Africa – US East Coast)
indices average TCE earnings were $22,871 and $17,831 per day,
respectively, compared to $30,050 and
$18,536 per day, respectively, earned by the Company’s VLCC and
Suezmax fleets, as our commercial
arrangements allowed us to continue to outperform these popular
market indices.
While activity in the crude tanker period market remains limited,
3 to 5 year employment time charters
command a substantial premium over shorter term employment,
reflecting owners’ and charterers’
expectations of an improving spot market in the medium to long
run. Currently, analysts estimate that
earnings under a 5 year VLCC and Suezmax time charter contract
would be close to $34,000 per day and
$26,000 per day, respectively, which is towards the bottom end of
the historical range.
Definitive Merger Agreement With Capital Product Partners
L.P.
Crude Carriers announced on May 5, 2011, that it entered into a
definitive agreement to merge with
Capital Product Partners L.P. Under the terms of the merger
agreement, CPLP would acquire Crude
Carriers in a unit-for-share transaction, with Crude Carriers
shareholders receiving 1.56 CPLP common
units for each Crude Carriers share. Based on a CPLP unit closing
price of $11.27 on May 4, 2011, and
the 1.56 exchange ratio, the transaction is valued at $17.58 per
Crude Carriers share, which is a
substantial premium of 35.3% to the Crude Carriers closing share
price of $12.99 on May 4, 2011. Based
on vessel appraisals received by the Company from independent
shipbrokers as of March 31, 2011, the
$17.58 per share transaction value paid to Crude Carriers
shareholders is in excess of the Company’s per
share Net Asset Value (“NAV”) calculated at the midpoint of those
appraisals. The merger was negotiated
by certain of the members of the Company’s Independent Directors’
Committee, which negotiated the
terms of the merger agreement, approved the transaction, and
recommended it to the Company’s Board of
Directors, which in turn unanimously approved the transaction.
The consummation of the merger is subject to approval by the
holders of a majority of the voting power
of Crude Carriers Common Stock voting together as a single class;
by the sole holder of the Company’s
Class B Stock, voting as a separate class; and by a majority of
shares of Crude Carriers Common Stock
held by unaffiliated shareholders who are not affiliates of either
Crude Carriers or CPLP, voting
separately. Evangelos M. Marinakis, Chairman of the Board and CEO,
Ioannis E. Lazaridis, President,
Gerasimos G. Kalogiratos, CFO, and Crude Carriers Investments
Corp., holder of all of the Company’s
Class B Stock, have entered into a support agreement pursuant to
which they have agreed to vote their
shares in favour of the transaction. The consummation of the
merger is also subject to other customary
closing conditions.
CPLP will be the surviving entity in the merger and will continue
to be structured as a master limited
partnership with its common units trading on the Nasdaq Global
Market. CPLP currently pays a
distribution of $0.2325 per common unit per quarter, or $0.93 per
common unit on an annualized basis.
Importantly, CPLP will remain a corporation for U.S. tax purposes
and, accordingly, holders of CPLP
common units will continue to receive Form 1099 information.
Please refer to the Company’s press
release of May 5, 2011, for full details of the merger agreement
and relevant disclosures.
Management Commentary
Mr. Evangelos Marinakis, the Company’s CEO commented: “Our first
quarter results continue to
demonstrate the Company’s capacity to generate attractive
dividends even in a weak market environment.
In addition, our commercial arrangements and our high
specification fleet allow us to perform very
favorably, when compared to the overall market and the TD3 and TD5
routes in particular.”
Mr. Marinakis continued: “We are also very pleased that the
respective boards of CPLP and Crude
Carriers have entered into a definitive merger agreement, which
has received the support of both Crude
Carriers’ founding shareholder, Crude Carriers Investment Corp.,
and the senior management of the
Company. We believe that the agreed unit per share exchange ratio
is attractive for our shareholders as it
translates to a premium of 35.3% to the Crude Carriers closing
share price of $12.99 on May 4, 2011, and
is at a premium to its NAV based on the closing unit price of CPLP
on the same date. The shareholders of
Crude Carriers should receive attractive distributions, based on
the $0.93 per common unit annual
distribution guidance of CPLP, which translates to $1.45 per Crude
Carriers share under the agreed
exchange ratio. The merger will result in Crude Carriers’
shareholders becoming part of one of the larger
U.S. listed tanker companies, with a pro forma market
capitalization of approximately $800 million and a
pro forma public float in excess of $500 million. The combined
fleet will be diversified in both the
product and crude tanker space, while retaining the benefits of a
close relationship with Capital Maritime
& Trading Corp. As a result, the new unitholders of CPLP can
expect strong growth prospects.”
Conference Call and Webcast
Today, Friday, May 13, 2011, at 10:00 a.m. EDT, the Crude Carriers
management team will hold a
conference call to discuss the financial
results.
Conference Call Details:
Participants should dial into the call 10 minutes before the
scheduled time using the following numbers:
by dialing 1 866 819 7111 (US Toll Free Dial In), 0800 953 0329
(UK Toll Free Dial In) or +44 (0)1452
542 301 (Standard International Dial In). Please quote "Crude
Carriers."
A telephonic replay of the conference call will be available until
May 20, 2011 by dialing 1 866 247 4222
(US Toll Free Dial In), 0800 953 1533 (UK Toll Free Dial In) or
+44 (0)1452 55 00 00 (Standard
International Dial In). Access Code required for the reply is:
70469247#
Slides and Audio Webcast:
There will also be a live, and then archived, webcast of the
conference call, available through the
Company’s website (www.crudecarrierscorp.com). Participants to the
live webcast should register on the
website approximately 10 minutes prior to the start of the
webcast.
Important Information For Investors And
Shareholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities
or a solicitation of any vote or approval. The proposed merger
transaction between Crude Carriers and
CPLP will be submitted to the shareholders of Crude Carriers for
their consideration. CPLP will file with
the Securities and Exchange Commission (“SEC”) a registration
statement on Form F-4 that will include
a proxy statement of Crude Carriers that also constitutes a
prospectus of CPLP. Crude Carriers and CPLP
also plan to file other documents with the SEC regarding the
proposed transaction. INVESTORS AND
SECURITY HOLDERS OF CRUDE CARRIERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY
BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE
PROPOSED TRANSACTION. Investors and
shareholders will be able to obtain free copies of the
proxy statement/prospectus and other documents containing
important information about Crude Carriers,
once such documents are filed with the SEC, through the website
maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
Crude Carriers will be available free
of charge on Crude Carriers’ website at www.crudecarrierscorp.com
under the tab “Investor Relations” or
by contacting Crude Carriers’ Investor Relations Department at
(212) 661-7566.
Crude Carriers and certain of its directors and executive officers
may be deemed to be participants in the
solicitation of proxies from the shareholders of Crude Carriers in
connection with the proposed
transaction. Information about the directors and executive
officers of Crude Carriers is set forth in its
Annual Report on Form 20-F, which was filed with the SEC on April
18, 2011. This document can be
obtained free of charge from the sources indicated above. Other
information regarding the participants in
the proxy solicitation and a description of their direct and
indirect interests, by security holdings or
otherwise, will be contained in the proxy statement/prospectus and
other relevant materials to be filed
with the SEC when they become available.
Forward Looking Statements
This communication contains “forward-looking statements” within
the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
that are not limited to historical facts,
but reflect Crude Carriers’ current beliefs, expectations or
intentions regarding future events. Words such
as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,”
“intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” “pursue,” “target,”
“continue,” and similar expressions are intended to
identify such forward-looking statements. These forward-looking
statements include, without limitation,
statements with respect to our outlook on the market and our
expectations with respect to our strategy and
dividend payment; expectations with respect to the synergies,
costs and other anticipated financial
impacts of the proposed transaction; future financial and
operating results of the combined company; the
combined company’s plans, objectives, expectations, growth
prospects and intentions with respect to
future operations and services; expected distributions; approval
of the proposed transaction by Crude
Carriers’ shareholders and obtaining any necessary consents; the
satisfaction of the closing conditions to
the proposed transaction; and the timing of the completion of the
proposed transaction. Included among
the important factors that, in our view, could cause actual
results to differ materially from the forward
looking statements contained in this press release are the
following: (i) conditions in global capital and
financial markets; (ii) conditions affecting the spot market for
crude and the other products transported by
Crude Carriers and CPLP and the markets generally for crude and
these other products; and (iii) other
factors listed from time to time under “Risk Factors” and other
sections of our public filings with the SEC
including, without limitation, Crude Carriers’ Annual Report on
Form 20-F. We make no prediction or
statement about the performance of shares.
All forward-looking statements involve significant risks and
uncertainties that could cause actual results
to differ materially from those in the forward-looking statements,
many of which are generally outside the
control of Crude Carriers and are difficult to predict. Examples
of such risks and uncertainties include, but
are not limited to, (i) the possibility that the proposed
transaction is delayed or does not close, including
due to the failure to receive required stockholder approvals, the
taking of governmental action (including
the passage of legislation) to block the transaction, or the
failure of other closing conditions and (ii) the
possibility that the expected synergies will not be realized, or
will not be realized within the expected time
period, because of, among other things, the leverage of the
combined company, the ability to obtain
financing and to refinance the combined company’s debt, the impact
of labor relations, global economic
conditions, fluctuations in exchange rates, competitive actions
taken by other shipping companies,
terrorist attacks, natural disasters, actions taken or conditions
imposed by governments or other regulatory
matters, excessive taxation, and the availability and cost of
insurance.
Crude Carriers cautions that the foregoing list of factors is not
exclusive. Additional information
concerning these and other risk factors is contained in Crude
Carriers’ most recently filed Annual Report
on Form 20-F, recent Reports of Foreign Private Issuer on Form
6-K, and other SEC filings. All
subsequent written and oral forward-looking statements concerning
Crude Carriers, the proposed
transaction or other matters and attributable to Crude Carriers or
any person acting on their behalf are
expressly qualified in their entirety by the cautionary statements
above. Crude Carriers does not undertake
any obligation to publicly update any of these forward-looking
statements to reflect events or
circumstances that may arise after the date
hereof.
About Crude Carriers Corp.
Crude Carriers Corp. (NYSE: CRU) is a Marshall Islands corporation
focusing on the maritime
transportation of crude oil cargoes. The company owns a modern,
high specification fleet of crude oil
tankers, which is currently comprised of two VLCC (Very Large
Crude Carrier) and three Suezmax
tankers. Four out of the five vessels are deployed under spot
market index linked arrangements with Shell
Trading & Shipping Co. Crude Carriers Corp. common shares
trade on The New York Stock Exchange
under the symbol "CRU".
For further information please contact:
Company contacts:
Ioannis Lazaridis, President
Tel: +30 (210) 4584 950
E-mail: i.lazaridis@crudecarrierscorp.com
Jerry Kalogiratos, CFO
Tel: +30 (210) 4584 950
E-mail: j.kalogiratos@crudecarrierscorp.com
Investor Relations / Media:
Nicolas Bornozis, President
Matthew Abenante
Capital Link, Inc.
230 Park Avenue – Suite 1536
New York, NY 10160, USA
Tel: (212) 661-7566
Fax: (212) 661-7526
E-mail: crudecarriers@capitallink.com
www.capitallink.com
CRUDE CARRIERS CORP.
UNAUDITED CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(NOTES 1, 2)
(In thousands of U.S. Dollars, except number of shares and
earnings per share)
For the three month period ended
March 31,
2011 2010
Revenues $12,831 $7,620
Expenses:
Voyage expenses 2,256 3,447
Voyage expenses - related party 161 7
Vessel operating expenses 3,559 852
Vessel operating expenses - related party 384 140
General and administrative expenses 1,616 39
Vessel depreciation 4,005 899
Operating income $850 $2,236
Other income (expense), net:
Interest expense and finance cost (1,347) (113)
Interest and other income 30 200
Total other expense, net (1,317) 87
Net (loss) / income $(467) $2,323
Net (loss) / income per share (basic and diluted): $(0.03)
$0.53
Weighted-average number of shares
Common shares (basic and diluted) 13,500,000 2,250,000
Class B shares (basic and diluted) 2,105,263 2,105,263
Total shares (basic and diluted) 15,605,263
4,355,263
CRUDE CARRIERS CORP.
UNAUDITED CONDENSED AND CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars)
As of
March 31, 2011
As of
December 31, 2010
ASSETS
Current assets
Cash and cash equivalents $11,244 $10,925
Trade accounts receivable 4,366 5,722
Prepayments and other assets 526 453
Inventories 2,432 1,630
Total current assets 18,568 18,730
Fixed assets
Vessels, net 388,964 392,969
Total fixed assets 388,964 392,969
Other non-current assets
Deferred charges, net 1,531 1,598
Restricted cash 5,000 5,000
Total non-current assets 395,495 399,567
TOTAL ASSETS $414,063 $418,297
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long term debt $14,479 $9,652
Trade accounts payable 3,140 1,726
Due to related parties 1,451 2,333
Accrued liabilities 2,003 2,038
Total current liabilities 21,073 15,749
Long-term liabilities
Long term debt 120,101 124,928
Total long-term liabilities 120,101 124,928
Total liabilities 141,174 140,677
Commitments and contingencies
Stockholders’ equity
Common stock (par value $0.0001 per share: 1 billion shares
authorized;
13,899,400 and 13,894,400 issued and outstanding at March 31, 2011
and
December 31, 2010, respectively. 2 2
Class B stock (par value $0.0001 per share: 100 million shares
authorized;
2,105,263 issued and outstanding at March 31, 2011 and December
31, 2010,
respectively. - -
Additional paid-in capital. 281,329 280,793
Accumulated deficit (8,442) (3,175)
Total stockholder’s equity 272,889 277,620
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $414,063
$418,297
CRUDE CARRIERS CORP.
UNAUDITED CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
(NOTE 1)
(In thousands of U.S. Dollars)
For the three months period ended
March 31,
2011 2010
Cash flows from operating activities:
Net (loss) / income $(467) 2,323
Adjustments to reconcile net (loss) / income to net cash provided
by
operating activities:
Vessel depreciation 4,005 899
Amortization of deferred charges 67 3
Share based compensation expense 536 -
Changes in operating assets and
liabilities:
Trade accounts receivable 1,356 (2,051)
Due from related parties - 1,878
Prepayments and other assets (73) (383)
Inventories (802) (1,685)
Trade accounts payable 1,414 107
Due to related parties (882) (1,063)
Accrued liabilities (35) 514
Net cash provided by operating activities 5,119 542
Cash flow for investing activities:
Vessels’ acquisition - (184,574)
Net cash used in investing activities - (184,574)
Cash flows from financing activities:
Offering proceeds - 278,545
Offering expenses paid - (335)
Payment of advances from related party - (27)
Repayments of related party debt - (791)
Dividends paid (4,800) -
Net cash provided by financing activities (4,800)
277,392
Net increase in cash and cash equivalents 319 93,360
Cash and cash equivalents at beginning of the period 10,925
1
Cash and cash equivalents at end of period $11,244 93,361
Supplemental Cash Flow Information
Cash paid for interest $1,471 $142
Non Cash Investing and Financing
activities
Net liabilities assumed by CMTC upon contribution of vessel to
the
Company -
56,908
Difference of net book value of the M/T Miltiadis M II over the
cash
consideration paid to CMTC -
4,158
Capital expenditures included in liabilities at the end of the
period. - 3,122
Offering expenses not paid - 380
Purchase commissions not paid - 965
Notes
(1) The unaudited condensed and consolidated
statements of operations and cash flows for the three
month period ended March 31, 2010 include the results of
operations of M/T Miltiadis M II which
was acquired from Capital Maritime & Trading Corp. (“Capital
Maritime”), an entity which prior to
the offering was under common control, on March 30, 2010, as
though the transfer had occurred at
the beginning of the earliest period
presented.
(2) The Company considers the Class B shares as an
equity recapitalization and used the number of
Class B shares of 2,105,263 to calculate earnings per share, prior
to the offering, for the period from
January 1, 2010 to March 16, 2010.
Appendix A - Reconciliation of Non-GAAP Financial Measure
(In thousands of U.S. dollars)
Description of Non-GAAP Financial Measure – Cash Available for
Distribution
Description of Non-GAAP Financial Measure – Cash Available for
Distribution
Cash Available for Distribution is a quantitative standard used in
the publicly-traded Companies to assist in
evaluating a Company's ability to make quarterly cash
distributions. Cash Available for Distribution is not
required by accounting principles generally accepted in the United
States and should not be considered as
an alternative to net income or any other indicator of the
Company’s performance required by accounting
principles generally accepted in the United States.
We determine our Cash Available for Distribution as:
Net income (loss)
plus
- depreciation and amortization
- non- cash items,
- loan fees amortization
- any write-offs or other non-recurring
items
less
- any net income attributable to the historical results of
vessels acquired by the company from Capital
Maritime, our Manager.
- any amount required to maintain a reserve that our board
of directors determines from time to time
is appropriate for the conduct and growth of the company’s
fleet.

Appendix A - Reconciliation of Non-GAAP Financial Measure -
Continued
(In thousands of U.S. dollars)
Description of Non-GAAP Financial Measure – Cash Available for
Distribution
The tables below reconcile net loss to Cash Available for
Distribution for the three month period ended
March 31, 2011
Reconciliation of Non-GAAP Financial Measure
– Cash Available for distribution
For the three-month
period ended
March 31, 2011
Net Loss (467)
Add:
Depreciation and Amortization 4,073
Share based compensation expense 536
Less:
Recommended Reserves (141)
Cash Available for Distribution 4,001
Number of total shares outstanding
16,004,663
Dividend per Share 0.25</DIV></BODY></HTML>