Financial instruments

12 Months Ended

Dec. 31, 2018

Note 8 - Financial instruments

Categories of financial instruments

(Dollars in thousands)	Carrying amount
Financial assets	2018		2017
Cash and cash equivalents (1)(3)		94,944		77,292
Accounts receivable and accrued revenues (1)		60,196		42,212
Total	$	155,140	$	119,504

Financial liabilities
Accounts payables and accrued expenses (1)	$	28,634	$	17,427
Derivative financial liabilities, current (2)		1,250		545
Current portion long-term debt (1)		93,815		65,053
Long-term debt (1)		873,460		721,151
Derivative financial liabilities, non-current (2)		4,486		-
Total financial liabilities	$	1,001,645	$	804,177

(1)

Amortized cost.

(2)

Fair value through profit or loss.

(3)

Cash and cash equivalents include $638 thousand in restricted cash in 2018 and $322 thousand in 2017, including employee withholding tax.

F-29

Table of Contents

Fair value of non-derivative financial instruments

It is assumed that fair value of non-derivative financial instruments is equal to the nominal amount for all financial assets and liabilities. With regards to trade receivables, the credit risk is not viewed as significant. With regards to the credit facilities, these are floating rate with terms and conditions considered to be according to market terms and no material change in credit risk; consequently, it is assumed that carrying value has no material deviation from fair value.

Measurement of fair value

It is only derivatives that are classified within a fair value measurement category and recognized at fair value in the statement of financial position. Fair value measurement is based on Level 2 in the fair value hierarchy as defined in IFRS 13 Fair Value Measurement. Such measurement is based on techniques for which all inputs that have a significant effect on the recorded fair value are observable. Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.

Derivatives - interest rate swaps

		Notional amount				Fair value
(Dollars in thousands)	Expires	2018		2017		2018		2017
Swap pays 3.315%, receive floating	Jun. 29, 2018	$	-		19,396		-		156
Swap pays 3.565%, receive floating	Jun. 29, 2018	$	-		20,417		-		187
Swap pays 2.865%, receive floating	Jun. 29, 2018	$	-		35,729		-		202
Swap pays 2.987%, receive floating	Apr. 20, 2023	$	46,800		-		699		-
Swap pays 3.012%, receive floating	Apr. 20, 2023	$	46,800		-		743		-
Swap pays 3.019%, receive floating	Sept. 29, 2023	$	35,877		-		580		-
Swap pays 3.019%, receive floating	Sept. 29, 2023	$	34,963				563
Swap pays 2.8715%, receive floating	Jul. 24, 2023	$	51,400		-		606		-
Swap pays 2.8785%, receive floating	Jun. 30, 2023	$	45,807		-		503		-
Swap pays 2.895%, receive floating	Sept. 29, 2023	$	50,115		-		653		-
Swap pays 2.897%, receive floating	Sept. 30, 2023	$	45,986		-		597		-
Swap pays 3.020%, receive floating	Sept. 29, 2023	$	44,301		-		793		-
Total carrying amount		$	402,049		75,542		5,736		545

Interest-bearing debt

				Remaining		Carrying amount
(Dollars in thousands)	Interest			notional		2018		2017
Nordea Samco Credit Facility	LIBOR + 2.50		%		-		-		217,921
Credit Agricole Credit Facility	LIBOR + 2.19		%		62,717		62,166		68,591
Danish Ship Finance Credit Facility	LIBOR + 2.25		%		41,600		41,437		43,937
Nordea/DNB Credit Facility	LIBOR + 2.25		%		-		-		44,647
Nordea/DNB Credit Facility	LIBOR + 2.75		%		-		-		9,884
ABN Amro Credit Facility	LIBOR + 2.60		%		-		-		119,844
Nordea BW VLCC Acquisition Credit Facility	LIBOR + 2.40		%		258,483		254,870		183,119
ABN Amro Credit Facility	LIBOR + 2.40		%		469,639		464,826		-
Convertible Senior Notes due 2019		4.50	%		32,860		32,009		98,262
Convertible Senior Notes due 2021		4.50	%		125,000		111,968		-
Total carrying amount					990,299		967,275		786,204

Interest on all our credit facilities is payable quarterly in arrears except the Danish Ship Finance Credit Facility and the Convertible Notes which have interest payable semi-annual in arrears. The credit facilities are principally secured by the first-priority mortgages on the vessels financed by the credit facility, assignments of earnings, pledge of shares in the borrower, insurances and the borrowers' rights under charters for the vessels, if any, as well as a pledge of the borrowers' bank account balances.

F-30

Table of Contents

Reconciliation of liabilities arising from financing activities

The table below details changes in liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Company's consolidated statement of cash flows as cash flows from financing activities.

											Non-cash changes
	As of January 1		Financing cash flows (1)		Fair value changes (2)			Repurchase convertible notes			Amortization		Equity component of convertible notes			Other changes (3)			As of December 31
2018
Bank loans		687,942		129,400								6,826					(869	)		823,299
Convertible Senior Notes due 2019		98,262				(74,644	)		-			3,188		1,613			3,589			32,009
Convertible Senior Notes due 2021				38,945		74,644			-			1,545		(3,165	)					111,968
Total (4)		786,204		168,345		-			-			11,559		(1,553	)		2,720			967,275

2017
Bank loans		591,579		93,157		-						3,206								687,942
Convertible Senior Notes due 2019		109,916				-			(17,104	)		4,170		2,213			(932	)		98,262
Total (4)		701,495		93,157		-			(17,104	)		7,375		2,213			(932	)		786,204

(1)

The cash flows from bank loans make up the net amount of issuance of long-term debt and repayment of long-term debt in the statement of cash flows. In 2018 the cash flows from the transaction related to the exchange of convertible senior notes due 2019 of $38.9 million consists of $41.6 million cash received upon issue, less transaction costs of $2.7 million.

(2)

Fair value changes reflects the loss arising from the exchange of the convertible senior notes due 2019 to convertible senior notes due 2021 below market fair value.

(3)

Other changes represents the (gain)/loss on extinguishment of debt, including previously capitalized fees.

(4)

The reconciliation does not include interest rate swaps, which are described in note 8.