Press Releases

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16.02.2005 at 17:19CET

Letter to shareholders regarding 2004 PFIC Information Statement


TO: The Shareholders of <!-- hugin-supplied --><br> Knightsbridge Tankers Limited <!-- hugin-supplied --><br> That Are United States Taxpayers
 
            As you are aware, Knightsbridge Tankers Limited ("Knightsbridge" or the "Company") has been a "Passive Foreign Investment Company" ("PFIC") for United States income tax purposes and in previous years has provided shareholders with an annual PFIC information statement so that a shareholder could report his pro rata share of Knightsbridge's income in the event that the shareholder elected to treat Knightsbridge as a "qualified electing fund" ("QEF") under the applicable provisions of the United States Internal Revenue Code.
 
            As a result of a change in its activities during 2004, Knightsbridge generally will not be treated as a PFIC in 2004 in the case of a shareholder who had a QEF election in effect for the entire period that he held Knightsbridge shares, and such a shareholder is not required to report his pro rata share of Knightsbridge's 2004 income.  Since Knightsbridge expects that a shareholder who made a QEF election typically would have had the election in effect during the entire period that he held Knightsbridge shares, Knightsbridge does not intend to send a 2004 PFIC information statement to all of its shareholders.
 
            Under the PFIC rules, if a shareholder had a QEF election in effect for part of, but not all of, the period that he held Knightsbridge shares, Knightsbridge may continue to be treated as a PFIC with respect to that shareholder and such a shareholder may be required to report his pro rata share of Knightsbridge's 2004 income.  Any shareholder who wishes to receive a PFIC information statement for 2004 should contact Knightsbridge or obtain the PFIC information statement for 2004 from our website at www.knightsbridgetankers.com.
 
            We note that since the amount of distributions made by Knightsbridge during 2004 did not exceed Knightsbridge's earnings and profits for 2004, no portion of the 2004 distributions is a return of capital for United States income tax purposes.
 
            THIS LETTER DOES NOT CONSTITUTE TAX ADVICE.  SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE OVERALL TAX CONSEQUENCES OF THE OWNERSHIP OF KNIGHTSBRIDGE SHARES ARISING IN THEIR OWN PARTICULAR SITUATIONS UNDER UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN LAW.