TORM announces new Distribution Policy for stronger alignment between cash generation and shareholder distributions
Today, the Board of Directors of TORM plc (“TORM”) has decided to adjust TORM’s Distribution Policy to ensure a more direct link from cash generation to shareholder distribution.
Going forward, TORM intends to distribute on a quarterly basis excess liquidity above a fixed threshold cash level as at the balance sheet day. For each quarter, the threshold cash level will be determined as the product of cash requirement per vessel and the number of owned and leased vessels in TORM’s fleet as at the balance sheet day.
Excess liquidity is determined as TORM’s readily available liquidity less the threshold cash level. The readily available liquidity is defined as i) TORM’s cash balance at the last day of the quarter preceding the relevant distribution date excluding restricted cash, plus ii) undrawn amounts on TORM’s working capital facilities, minus iii) proceeds received from vessel sales, or additional proceeds from vessel refinancing, or securities offerings in the past 12 months earmarked for share repurchases, debt prepayment, vessel acquisitions, or general corporate purposes.
The cash requirement per vessel is fixed at:
- USD 1.5m for 30 June 2022
- USD 1.8m for 30 September 2022 onwards
No dividend will be paid out in connection with the first quarter report of 2022.
TORM’s Distribution Policy will be periodically reviewed and the actual distribution for each quarter will be at the Board of Director’s discretion.
In addition to or instead of dividends, TORM will also consider share repurchases. Currently, TORM has authorization to acquire A-shares equivalent to a total of up to 9% of TORM’s share capital.