Welcome to the Stolt-Nielsen Limited fourth quarter 2016 results presentation and conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Niels Stolt-Nielsen. Please go ahead.
Good afternoon and good morning. Thank you for joining us here from Oslo for our fourth quarter's earnings release, fourth quarter 2016 results presentation. I will be referring to our presentation, which is now on our website. Together with me, as always, Jan Engelhardtsen, CFO. We also have Jens Grüner-Hegge, Senior Vice President of Finance, and Christa Mathiesen, Assistant General Counsel for Stolt-Nielsen. Moving on to the agenda, we will go through the fourth quarter highlights. I will go through each of the divisions. Jan will take you through financials, and we will open up at the end for question and answers. If we move to page five, the fourth quarter highlights. The operating profit for Stolt Tankers came in at $30.4. That's down from $31.4 as the chemical tanker market weakened. The J.O. acquisition was also closed in the fourth quarter on November 23rd.
The terminal operating profit came in at $14 million compared to $14.8 million. Results declined mainly due to lower equity income from our joint ventures and the number of one-off costs. That was also partly offset by lower A&G from cost reduction initiatives. Pleasant surprise from Stolt Tank Containers, the operating profit up to $15.1 compared to $10.7 in the previous quarter, reflecting a higher profit margin due to lower ocean freight and lower amount of repositionings. Also here we had lower A&G from cost reduction initiatives. Stolt Sea Farm's operating profit before the fair value adjustment of inventories was $2.1 million, and that's up from $1.9 million from the previous quarter, and that is the result of the increase in turbot prices.
Corporate and other operating loss, $10 million compared to $6.7 million. That is due to a one-off cost of the transaction cost related of $2.2 million related to the J.O. acquisition, and also some provisions on some receivables at the Stolt Bitumen. That gave us a net profit for the quarter of $22.8, which compared to $22.2, very consistent with the previous quarter. Moving on to page six, where we do the net profit variant analysis between the third quarter and the fourth quarter. In the third quarter, we had $22.2 million. Lower operating profit from Tankers, lower terminal operating profit of $0.8, higher tank container of $4.4, higher from Stolt Sea Farm of almost a million dollars.
Accrual for doubtful receivable for Stolt Bitumen, J.O. acquisition cost of $2.2, lower corporate cost and others of $1.6 compared to previous quarter, which brings us to $22.8 million for the fourth quarter. Moving on to page seven, Stolt Tankers. The operating revenue decreased by 2.5% from previous quarter, and that is mainly due to a reduction in deep-sea volume and also freight rates as the market continued to soften. The average deep-sea COA rate invoiced increased by 1.6% due to cargo and trade mix. Spot rates saw a large drop of 21% in the quarter. Compared with prior quarter, 13% was due to weakening in the spot market and 8% was due to inter-regional short haul position fixtures demanding lower spot rates. We will talk more about the tanker market later. The COAs that was renewed during the quarter was down by 4.1%.
I repeat, this is on the contracts that we renewed. We lost some contracts, which we then decided not to defend because of dramatic competition from some of our competitors. The contracts that we did renew, an average of 4.1% down. Moving to the operating profit variance between the third and the fourth quarter. In the third quarter, we had $31.4 million operating profit. We had a lower trading result of $11.6 million. We had the lower bunker cost, net of bunker surcharge, even though the bunker price has gone up, because of the lower surcharge, so we didn't give as much money back to the customer because of the higher bunker price. We had a gain on the hedge of $3.9, higher than previous quarter. Lower MLR of $2.4. Gain on sale of asset of $2.1.
Lower depreciation of $1.3, the lower equity income from our joint ventures of $1 million and the lower A&G of half a million, which brings us to $30.4 million for the quarter. As I mentioned earlier, even though the bunker prices, the average price of IFO consumed increased to $260 per ton, up from $230 in the third quarter. The average price that we purchased increased to 273 tons from 245 tons in the third quarter. As you can see, our total bunker cost actually went down for the quarter by $1.9 million, and that is because the surcharge or the money that we have been given back under the bunker clauses is less this quarter as a result of the bunker prices going up. We have a realized gain in the quarter of $2.4 million.
For the fiscal year, we had a realized gain of $2.4, we have also an unrealized gain of $5.4 of what is remaining of the paper hedge that we have. Moving to page 10, STJS, our Stolt-Tankers Joint Service Sail-In Time Charter index. You can see here the dramatic drop in the fourth quarter as a result of the lower freight rates. Deepsea market spot rate development, page 11. Since the peak of the market, which was in late 2015, the spot specialty freight rates have dropped almost 20%, while the commodity rates have dropped 32%. A significant drop in the market. This is all very much influenced by the weak MR or product tank product market. When swing tonnage in that segment goes from carrying clean petroleum products and coming into and carry commodity chemicals.
The MR market has recovered from the fourth quarter's low, the MR spot earnings remain lower than the chemical earnings, therefore, we will think that tonnage will remain in our segment. Spot freight rates appear to have bottomed out, the significant chemical order book and the uncertainty of the MR market presents a challenge for a recovery in 2017. We are repeating what we have said for several quarters, is that we believe that the chemical tanker market in 2017 will be a challenge because of the ships coming into our segment, the new buildings, plus the MR market being under pressure, will also influence our market. With few ships ordered recently and additional chemical production plants coming online in the U.S. and the Middle East, we expect or we hope that demand will catch up with supply in 2018.
Here you can see what is represented in the red line is actually our spot rates. This is not the market, but this is what we have achieved. You can see that in the fourth quarter, we saw a dramatic decline. What I've said earlier is that the reason we made money in 2015, and also in 2016, was not really driven by increased volume or increased freight rates, but it was driven by lower bunker prices, which is reflected here in the blue line. In a perfect market, when the bunker prices go down, the spot market should, in reality, also go down. We didn't see that, and that's why we enjoyed a good market in 2015 and 2016.
I think that was very much driven by the customers who were quite happy under our COAs when they received the surcharge, when they got compensated under the bunker clause. Eventually, the market caught up, and now I see that the spot rates have declined more in line with what we see with the bunker prices. Our COA portfolio remains at 76%, which protects us from the impact of short-term swings in the spot market. Low spot rate ratio allows us to be more selective on the spot cargoes that we take on. However, fourth quarter was impacted by short-haul repositioning fixtures at low spot rates. In a weaker market with lower volume, you need to be more aggressive, and you need to reposition your ship, unfortunately.
To be able to get any cargo to reposition a ship to load the COA, for example, you need to be aggressive with the spot rates, and that was what happened in the fourth quarter. The spot market weakness does impact the COA rates negotiations, the change in COA rates is typically less than the change in spot rates. We are seeing, even though the spot rates have dramatically declined, the rates that the COA renewals that we did, we had on average a little over 4% reduction in our COA rates. On page 13, chemical tanker fleet and order book for the fourth quarter. The outstanding in our order book is now at 20.5% of existing fleet, out of which stainless steel tonnage accounts for 20.2%. Basically, most of the tonnage remaining to be delivered is stainless steel tonnage.
This, again, is what we've been talking about. There's a lot of tonnage coming in in 2017, but a significant drop in 2018. We are seeing that the volume under the contracts, being nominated under the contracts, are healthy. They are well. We are actually seeing a stop in the fall in the spot rates. We are seeing increased activity. The beginning of 2017 looks healthy. However, the uncertainty or the impact of this order book being delivered in 2017 is, we believe, going to put a bit of pressure in this segment. The newbuildings. We have two of the ships that we ordered from Hudong have been delivered. We have Stolt Integrity, which will be delivered in the first quarter of 2017. We have two ships in the second quarter and the last ship from that series in the third quarter of 2017.
We are fairly certain that timing will remain. After the acquisition of J.O., they have a joint venture with TRM. TRM sold their 50% stake to J.O. Invest. We have a 50/50 joint venture with J.O. Invest. That's eight ships, out of which two have been delivered. This joint venture is fully financed, which Jan will talk about. We will have one ship in the first quarter, one in the second quarter, two in the third quarter, and the remaining two in the first quarter of 2018. Jo Tankers update on integration. As I said, closing happened at the end of November. The transaction encompasses most of the Jo Tankers
organization, including four offices, 13 chemical tankers, out of which Stolt already had six of them on time charter, and it's the 50% of the joint venture, which owns the eight newbuildings that I just talked about. We estimate that the synergies are actually better than what we estimated when we did the investment decision of approximately $8 million per year, expected from savings on A&G through reduced headcounts and office closure, and also through the IT, insurance, purchasing and operational efficiencies, et cetera. The integration process is progressing very well. Change of vessel, legal ownership structure, flag and name change is ongoing, expected the completion in the second quarter of 2017. The refinancing of Jo Tankers debt progressing in line with flag and ownership change. I think Jan will talk about that a little. Commercial operation integration is already completed.
The technical and the crew management will transition over to Stolt Tankers throughout 2017. The ship operators and the ship brokers are already in our offices, but the technical management of the ships and their technical organization, that transition we want to do in the orderly fashion. We would like to maintain our vettings and approvals with our major customers. We're doing that in a more. Takes a little more time to complete. Moving on to Stolthaven Terminals. The revenues remain stable in the fourth quarter compared to the previous quarter, despite a slight reduction in capacity. That's due to a small increase in utilization from 90.8% up to 91.8%, and a marginal improvement in utility and other revenues.
The reduction in capacity followed the cancellation of a contract in Houston and related write-offs of the tanks and a planned closure of a small terminal in New Zealand. Cost-saving initiatives are slowly starting to have impact. That was reflected in cost per cubic meter. If we look at the operating profit variance, the third quarter was $14.8 million. Higher gross operating margin of $1.5, higher depreciation of $1.3, lower equity income from our joint venture of $1.9, and lower A&G, including impact from cost reduction initiative $1.2, bringing it to $14 million for the quarter. Stolthaven Terminals on page 18. The average lease capacity for the consolidated terminals has increased with the biggest improvement in our New Orleans terminal. Houston continues its business optimization program, pursuing long-term contracts to lock in revenue.
We continue to focus on the ship-to-shore interface, which has been our strategy from the start, to reduce the ship time spent at port. With continued progress in Houston-based waiting time and tons per hour. This doesn't only have impact for the terminal division, but has huge impact for our ships, to reduce the waiting time on our ships. Focus on completing the ongoing expansion projects and make these commercially viable with further opportunities available. Customer contract reviews ongoing to ensure commercial terms are aligned with the market. The full impact of all the action that we have been doing or they've been working on in 2016, you won't see until the full year 2017. I think you will see a continued improvement from the terminal division. Stolt Tank Containers.
Revenue was down $2.8 due to fewer shipments and lower utilization. That was offset by higher demurrage revenue. The gross profit increased by 11% from previous quarter. That's mainly driven by improved shipment margin, driven by the lower freight rates that we were able to get from the container line and also less repositionings of empty containers. The A&G cost was down due to adjustment related to pension and post-retirement medical plans. If we look at the variance analysis for the operating revenue between the two quarters, third quarter was $10.7. Lower operating revenue of $3.3, lower operating costs of $6 million. Lower A&G of $1.9, which brings it to $15.1. Seasonally weak demand drove shipments down. Market was reasonably balanced during the quarter, with food grade shipments remaining strong. We continue to remain aggressive on pricing to improve utilization and increase turns per tank.
We're willing to offer margin to increase the utilization or reduce price to increase the utilization of our fleet. We continue to focus on system development and implementation of global platforms that reduce expense, increase scale, efficiency of operation, and effectiveness of sales. We will continue to develop our depot network around the world in strategic locations in order to support our global operations. Focus on leasing tanks to meet future demand. There are huge leasing opportunities out there that we are considering at very competitive pricing. Margin deterioration has slowed. We believe that we have actually bottomed out, if not maybe started to bounce slightly up again. Actually, in the first quarter or the first month of 2017, remember our fiscal year ends up in the end of November, we saw healthy movements both in December and in the beginning of this year.
This business has been extremely profitable for Stolt-Nielsen. The margin has been phenomenal. The returns on this business has been above 20%. It's not natural to believe that that could continue forever. We have seen increased competition develop over the last six to seven years. However, even with the lower profits that we're getting from this business, it's still the most profitable business that our group is in. We believe, actually, that we have reached the bottom. Stolt Sea Farm, very quickly. The price for turbot continued to improve during the quarter. The average sale price was flat for fourth quarter compared to the third quarter, but volume down marginally by 2%. We still have an issue with the growth that we are able to achieve in Iceland. Caviar volume down during the quarter, but price was down reflecting sales of cheaper grade of caviar.
Fair value adjustment of inventory at a gain of $0.6, flat results compared to third quarter. I'll just skip this. The operating profit for the third quarter was $2.5. It ended at $2.7 in the previous quarter. If we move to Stolt-Nielsen Gas, nothing has really changed here. We will continue to focus on developing small scale shipping and storage of LNG. We have not made any commitments. Yet we have ordered ships, but they are still on subject. What we are working on and we are making nice progress on is to build up off-take agreement on the locations that we're working on. When we have sufficient off-take commitment from our customers, we will take investment decision to order ships and also to build a terminal.
As it stands right now, we have not made the commitment to build the two ships that we have on subs. Moving on to financials. I wish you a Happy New Year.
Thank you very much, Niels. Good afternoon and good morning to those on the line. I will as I normally do, make some additional comments to the financials that we have released today, and also give some guidance on some of the lines in the P&L for the next coming quarter. We have today also filed our interim accounts with the Oslo Stock Exchange, and that is for the three months and the full year ending November 30, 2016. All of this information you can also find on our website, the press release, the interim, as well as this presentation that we have here. If we now go to the net profit slide 26. You can see here that the operating profit before one-offs for the quarter is $55 million, down $2.7 million. That clearly reflects the slight deterioration in tankers.
This is before one-off, so even in the Terminals, there was a slight deterioration, mostly, as Niels mentioned, relating to the joint ventures we have. This was if you will, offset by the nice improvements that we saw on the Stolt Tank Containers side. If you look at the one-offs and what we here call one-offs, and we do it so that those of you that follow us can get a better understanding for what is actually the underlying market doing relative to or instead of the noise that some of these other one-off activities represents. When you look at in this short quarter, we had $1.9 million in accelerated depreciation. What that refers to is the fact that in determining the residual value of the ships, we use an average of the last three, four years' steel price.
As you know, that steel price has gone down, then we have to adjust the residual value. Certainly on ships that have relatively few years to go before they will be recycled, there obviously will be a greater impact when you write down the residual value, bring that down, then you have to increase the depreciation over a very short period of time. This period in the fourth quarter was $1.9 million, but you can see that compares to $3.1 million in the previous quarter, and that is now going down. For next year, the quarterly figure to expect here is $1.4 million. Terminals accelerated depreciation refers to a couple of things that we did.
In Houston, we had a contract with a customer that came to an end, and we had to write off some of the assets that we had put into some of the storage tanks, since it's the end of the lease with that customer. We also wrote off some IT systems because we're part of the Project Phoenix, as we call it, which is to bring that terminal in Houston back into much higher profitability. We have to write off some IT systems as we're bringing in new, more up-to-date, and more effective automated systems. We also had a situation in New Zealand where we wrote off some lease improvements, again, at the end of a determination of a lease period. That was $1.5 million. We had impairment, Niels also mentioned, of $2.7 million. This was on receivables related to customers in Indonesia.
They haven't been incurred necessarily, but they have been outstanding for a very long period, extended period, and we have taken a $2.7 million provision towards the collection. We already mentioned $2.2 million of, call it legal fees and other consulting fees tied to the acquisition of Jo Tankers. Offsetting this, and you've heard this mentioned a couple of times already, is $5.6 million of these are gains, if you will, pertaining to changes that we have done to our defined benefit plan and to our also medical plans for retirees. It's $5.6 million. I'll talk a little bit more about it later on. Below the line interest reflects the new ship from China. It also reflects three ships that we bought. We had them on bareboat charter. They are operating in our Caribbean service.
We terminated the bareboat and bought them, and they are now involved in that trade. That brings us down to $22.8 million versus $22.1. EBITDA $110 versus $112. You can see clearly that there is a deterioration in the underlying performance overall. When you look at the full year, it's interesting to see certainly at the operating profit level how comparable these two years 2015 and 2016 were before, again, these one-offs. When you look at it, the main difference can be explained by these initiatives that we have taken to cut costs. In U.S. in 2016, we booked a curtailment gain of $19.8 million when we actually closed down our U.S. defined benefit plan. We took other steps, as I mentioned, for $5.6 million in this year, that difference more or less explains the entire drop in the year-end result. Okay.
I'm not sure what to do here, this is page 27. In terms of the balance sheet, shareholder equity, $1.38 billion. That's down from $1.4. Most of that drop is, you may recall that in November we declared a dividend of $0.50 per share. That's reflected in the November 30 balance sheet and was paid in December. Against that, we also had a little bit of a drop in the CTA, that contributed in total to bring the equity down to $1.38. If you look at the debt, that is now $2.4 billion. It's basically up from $1.9, it's almost half a billion dollars up, when you look from the third quarter to the fourth quarter. What is that made of? It's made up, of course, the acquisition of Jo Tankers, and we paid $275 million for the equity on closing in November.
In addition, we took on $190 million of debt that was already in J.O., and I'll come back to that a little bit more in detail. $275 for the equity at that time, and $190 of additional debt. You can see here that debt to tangible net worth, of course, went from 119 to 149. Limit there is 2 to 1, we're okay. EBITDA went also down from $4.5 to $4.08. When you look at the liquidity post-closing of the J.O., we had $310 million of unused committed lines, if you will, on our revolver. We had $93 million of cash, and we had $77 million of uncommitted lines. Altogether, $490 million post the closing. Average interest rates actually came down to 4.3%, that was from almost 4.6%.
This ties in with the fact that we now did repay the more expensive bond issue that we did mid-year, and that was replaced by cheaper, if you will, bank financing at very attractive terms. That brought the average down. We do expect that the interest for the first quarter will be roughly $30 million. This is page or slide 28. This is the JOT purchase price allocation. You'll find details also in our interim, this will be detailed in even further details in the annual report once we come out with that. Up here you have two tables. One is the equity price calculation. You all know that we bought the company, it was valued at $575 million. That was the gross purchase price.
That includes our share of the ships in the joint venture that had been formed, but still to be delivered. Closing debt that was on the books of J.O., we went to the various banks, quite a number of them, just short of 20, we agreed with them to actually leave the funding in place. Our share of the joint venture debt of the ship that has been delivered is $33 million. There was $44 million of cash and bonds, $33 million cash and $11 million marketable securities, adding up to $40 million. Of course, with the new building program, there was another $100 million, which was our share of the remaining ships. That's how you get up to $296 million. We actually paid on the 23rd, $275 million, we have another $21 million to pay.
The reason for the $21 million, it's not the fact that the price has changed, it's just the fact that there was less debt in the company than when we agreed on the price with them. Therefore, because there's less debt that we take over, we have to pay the remaining to bring it all up to $575 million. On the other side, again, this is maybe for the analysts mostly. You can see here that out of the $575 million, we're putting on our balance sheet $380 million of assets. We're putting $45 million of cash and marketable securities. We're putting investments in Hassel Shipping 4, as it's called, the joint venture, $48 million. There's some working capital for $7 million. Brings it up to $480 million.
We're bringing on the $190 million in debt for $290 million net, which leaves $6 million of goodwill that we will take into our balance sheet. That's the accounting for the purchase. The second bullet point here, I think, also is important for you. Including the joint venture, as we take in delivery and will take delivery, as you saw on the previous slide, all through tail end of 2016, 2017, and then into 2018. There will be a little bit of a build-up of the activity. You can see here that including the joint venture's basis and equity method of accounting, we expect the EBITDA in 2017 to be up by $62 million. As more and more ships are being delivered, we actually expect that it will go up to actually $80 million.
If we just look at the proportional consolidation method, the EBITDA in 2017 would be $78 million. I'm sorry about that. The $78 million, if you will, compares to the $62 million, if you compare the two ways of accounting. We will account for it on the basis of equity pickup. On the EBITDA, if you look at the value that's being generated, you can see that when all the ships are delivered and in effect in 2019, the EBITDA that we expect from this is $134 million. You can put that in relations to the purchase price of $575 million. Next, cash flow. Cash flow from operation was a little bit down from $90 million to $71 million, mostly because depreciation and amortization items were down, you see, down by $11 million.
If you look at the cash used in investing activities, of course, you see on this slide 29, you see $275 million, which is what we paid for JO. You see $95 million in other CapEx, which is progress payments towards the Chinese new buildings. It's also the purchase of the three ships we had on bare boat that we are now employing in the Caribbean trade. There was also investments to the terminal, including to Houston as part of the Project Phoenix. Altogether, net cash we used for investing activity is $347 million. Increase in short-term bank loans and the revolver was $303 million. $295 million of that was drawn down on the revolver. Out of the $295 million, $150 million is what we used to pay the remaining part to JO.
I said JO $275 million, we took up a loan for $125 million. We drew down on the revolver for $150 million. That's the $275 million. The rest or a significant part of the remaining amount that we used the revolver for was to prepay and part of a refinancing of a loan that we had outstanding, which was backed by six of our chemical tankers. We repay that by $129 million. By drawing down on the revolver, we refinanced our revolver. So we put those additional ships in and increased, actually renegotiated, refinanced our revolver to bring it from roughly $450 million to $650 million. That closed in October. It's a six-year facility. It has 40 ships in it. I said it's six years. The rest here that I can also just mention that was done with DNB, Nordea, and Danske, just to give credit where credit is due.
You also see here the $139 million that we drew down. That is, call it a bridge loan that we used to pay for the JO shares, the equity. You can also see the $148 million that we prepaid. That is the loan I was talking about, $129 million that released the four ships. So that brings the cash provided down to $294 million. You can see it ended up with a cash balance at $93 million at the end of the year. The EBITDA, I'm not going to talk too much about. It clearly shows the EBITDA contraction in tankers. Terminals were slightly up and actually maintaining its level. I think it was up by $1 million. Tank containers, we clearly see the improvement there. At a consolidated level, we're down by $2 million, $210 million for the quarter. A&G, $49 million down from $52 million.
All of the businesses were getting the benefit from some of these cost initiatives that I talked about earlier. Really what we're trying to do is to work our way out of our defined benefit pension plans and the liabilities that goes with those. Those of you that are involved with these kind of pension plans, you'll see how volatile they are relative to the interest rate development and the mortality tables. We have a plan to actually work our way out of the defined benefit plans. These changes will benefit all of the businesses. That's why you see in this fourth quarter that all of the businesses, tankers, terminals, and tank containers, are actually doing better than we forecasted and also better than the quarter. In here, you see the cost relating to JO acquisition.
This, as I said, typically legal fees and other consulting fees for $2.2 million. If you look at the guidance, is $56 million. Out of the $56, roughly three, let's call it $3.5 million-$4 million relate directly to the JO. These are additional people, these are offices that we pay for, and that will be with us for a couple of quarters. Obviously, we are moving forward with the transition and the integration of JO as quickly as we can, but we are still paying for the offices and a number of the people, and we try to reduce this, if you will, double amount as quickly as we can. You will see roughly $3.5 million-$4 million per quarter going forward. Depreciation, not much really to say here.
The main variance on the terminal side, I've already talked about accelerated depreciation in Houston and Velsen. The updated guidance is $68 million. Next quarter is, of course, the first quarter where we get the full impact of the fleet that we took over from JO. JVs, this is slide 33, down from $8.6-$5.5. The tanker JVs, yes, they are also affected by the slower market of tankers. That's down by $1 million. Stolt terminals, you can see here, almost all our JV terminals did worse than in the previous month. In particular, there were a number of one-time expenses in the joint venture we have in Antwerp with Oiltanking. Taxes, not much to say other than we are finalizing and fine-tuning the tax estimate for the year. We went down by $600,000 or $700,000. Next slide, 34, also important.
A lot of you have been concerned about our CapEx program and commitments going forward. The fourth quarter was $370 million, of which $275 million was JO. In 2017, the amount is $408 million, of which $245 million, more than half relates to the new buildings in China, the C38s. Also you have the $21 million that we have to pay towards JO for the remaining payment there for the equity, as I mentioned this earlier. Overall, the commitment for the five-year period is just under $600 million. You can see tankers is almost half or a little bit less than half, and Stolthaven Terminals, $218 million, of which just under $70 million relates to Houston on its own and the improvements that we do there to the automation and the profitability, working very hard to get the costs down.
I should also mention that out of the program for 2017, $235 million of the $245 is already financed with KEXIM. If you look at the debt maturity profile, this is the next slide 36. The blue, just regular principal payments, scheduled principal payments. The green, balloon payments. Here we have two payments for 2017. One is for the terminal in Singapore, and that matures in the fourth quarter, and we're already working with the banks to renew and bring that up. It's going to be closer to $200 million refinancing there. We expect to have that financing locked up and closed before the summer. That's the summer here.
In addition, it's the $125 million bridge loan that we got for Jo, or in connection with that expires in basically the 23rd of November in 2017, and we work on refinancing or actually just using our lines to pay off. That's all I had. Niels, if you want to take over.
Thank you, Jan. Just a few comments in regard to some of the projects that we're working on. We are, as we have mentioned earlier considering separating out Stolt Tankers as a standalone company. Today, the corporate structure, the company structure of Stolt-Nielsen is very much intertwined between Stolt Tankers, Stolthaven, and Stolt Tank Containers. We have started the project, and we are considering proposing, or we will be proposing to clean up that structure to make Stolt Tankers a clean subsidiary of Stolt-Nielsen. The reason we are doing this is, of course, it's good to clean up the corporate structure every 30 years. It also is to be able to, if the opportunity arises, to use Stolt Tankers as a vehicle as for further consolidation in the industry.
Today, as you saw in the fourth quarter, we paid cash for JL, I think there's plenty of room for further consolidation in our segment. Separating out Stolt Tankers as a standalone entity, we can use both cash and shares if the opportunity arises. We are not doing this exercise to purely separate out and do an IPO. It is really to prepare the company so that we have a share to do a merger if possible using shares or a combination of shares and cash. If the board approves or if we think it's the right thing to do, it's of course a complicated or it's not complicated, but it's a lot of work that needs to be done. It probably will take some time, probably half a year to have it ready and standalone.
It is the intention that Stolt Tankers will continue to be 100% owned by Stolt-Nielsen, there will be no need for to refinance the company in the short term. If a opportunity should arise where there's an acquisition or an opportunity to buy something or to merge, of course, then we will look at this in the form of cash and shares. Maybe one of the conditions with the merging partner will be to do an IPO. At that time, if the market conditions are correct, we will consider doing an IPO of Stolt Tankers. It's something that we are considering and hasn't been decided upon, but that's something that we've been working on and will consider. Again, this is to make a pure play chemical tanker company, to use the share to see if there are other companies that we could merge or acquire.
The other part is, of course, you saw the balance sheet in Stolt-Nielsen after on the Jo deal had gone up to one and a half to one, well within our covenant. The debt level has increased. We are reviewing all of our businesses if there are assets which are non-strategic for us. We are reviewing. If we do identify anything, we will consider selling if there are attractive prices out there. The takeaway, again, we delivered $113 million profit for the year. We have consistently delivered profit since the financial crisis. The major acquisition of J.O., as we said, is completed, and we are pleasantly surprised of the synergies that we're able to get out of that business. We have a strong performance in Tankers. The fundamentals remain strong in the terminal business, and we are seeing a clear turnaround.
The weaker tank container results in a highly competitive market, but again, we think that the bottom has been reached. The earnings per share is above $2 for 2016. The PE ratio is 7.7. Actually, the share price is down though, so it's actually higher. The P to net asset, the price to net asset value is 0.7. Some of the parts are still not reflected in the share price. It's clear that if we do a separation of Stolt Tankers, and we do actually do an IPO, it will kind of force the market to recognize. I don't think that even the share price today recognize the value of Tankers, which means that the share price is only, you get the rest of the businesses for free. The dividend yield is at 6%, this is $1 per share, at $132.
We have a strong relationship both with our lenders and our investors, which has helped us raise competitive funding for the group. We have sufficient liquidity, as you see. Even if we don't do anything, and based on our conservative five-year plan, I think you will see that the debt level will be coming dramatically, quickly down in 2017 and 2018. The last point, we have a diversified business portfolio or businesses. As it happened since 2000, the financial crisis, we have been able to deliver profits even in a very challenging shipping market. That completes our presentation, and then we will open up now for questions. We will start here in Oslo and then take any questions from the phone afterwards. I will try to repeat the questions here in Oslo so that the people listening in can also hear the questions.
Go ahead. Any questions here? Yes.
How do you feel your covenant if and the Jo transaction or acquisition impact the potential growth in LNG and the timing of that?
Good question. The question is the acquisition of J.O., how will that impact our investment capacity pursuing our strategy in LNG? It's clear that we have a self-imposed kind of limit of 1.5 to 1, which we are at now. Again, we are considering disposing or selling some of our non-strategic assets. At present time, we haven't made a commitment towards a financial or an investment commitment. However, the commitment towards the segment is there, but I think we have the flexibility with the timing. Right now, until we get a firm offtake agreement or a sufficient offtake agreement, which is quite a challenge, we don't have to be in a position right now to make that investment decision. I believe once we have to take the investment commitment, we will have a stronger balance sheet than we have today.
Could you elaborate on what not sufficient is?
We have 20 terminals around the world. The strategy in our terminals has always been where we can create synergies between the ships and the terminals, so that we bring terminal customers to our ships and shipping customers to our terminal. We have aggressively expanded the terminal business, as you know, over the last seven years. Now, if that synergy is not there, and it might be a nice terminal, but if it really doesn't fit into the core of our terminal strategy, that's something we will consider if the price is right.
We've seen a bit of a decline in the JVs of terminals while they have the ramp up for overall. Is that what you would think about the possibility of maybe going forward?
The JV decline was primarily driven by two things. The one that Jan talked about, the Oiltanking, which was a one-off settlement, and the other one is the Tianjin Terminal, driven by the explosion. The fundamentals for the JVs are still healthy.
That's why it's come down from seven to three and a half?
The contribution from the JV this quarter was driven by one-off. There's no fundamental change in the terminals in the two big JVs, one in Korea and in Antwerp. There's no fundamental change in the performance there. They were driven by one-offs. Any other questions? Yes.
I mean, the COA rate is down from 4% to 4.2%. I guess it is quite a test to come to the tankering category. Do you think those declines are reflected in the current [inaudible] profit figure, or do you expect that profit to be down?
I would say you should expect once the contract that the 4.2% comes into effect, you should see, I wouldn't say a dramatic decline, but you should see a decline compared to last year. We lost some contracts due to competition, which also will impact our results.
Just your operating profits in Q4 2016, $35 million, and now we have $30 million, but not a very big decline compared to the biggest year, same went down. $30 million is not a sustainable level in 2017, would you say?
We try not to give out guidance. I would say, as we have said again, that 2017 will be tougher than 2016, and I'm quite certain about that.
Secondly, can you remind how many of your terminals, both [inaudible] and owned, are primarily to be for [inaudible] products other than chemicals? Any one or?
You're trying to figure out which one we will be considering. I would say that if you look at the major ports, we are not considering. If you look at small terminals in remote locations where our ships don't call, we would consider. I'll keep you posted.
Sorry.
Any other questions?
Hey, can I ask?
Yes, of course.
There's discussions with border tax from the U.S.
Sorry?
Do you get any thoughts on how that might affect itself?
You talk about the Mexico.
Not just Mexico, but import border tax.
Yeah.
Restriction from the general.
Needless to say, a trade war between the United States and other countries, China, the Brexit. We haven't seen the impact of Brexit yet because they haven't negotiated a deal. It is clear for a shipping company that is dependent upon international trade, that that will impact all shipping, all trade, which is, of course, a big concern. Let's hope that he quickly can renegotiate better deals with these countries, but that we don't see a trade war. I think that will impact all businesses, regardless of shipping. Okay, there's no further questions here in Oslo. Operator, could you ask if any of the people on the phone have any questions?
Yes, certainly. If you'd like to ask a question at this time, please press the star or asterisk key followed by the digit one on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. Again, to ask a question, please press star one on your telephone. We'll pause now for just a moment to assemble the queue. There are no questions at this time.
Thank you very much. Are there any further questions here in Oslo? Yeah, one more question.
Are there any synergies that would be justified in spinning it out or separating?
No, because regardless of what we do of spinning off, initially it will be 100% owned by Stolt Tankers. It is always, and it's good that you brought this up, it's always our intention to remain control of the company where Stolt-Nielsen owns more than 50%, at least the scenarios that we're looking at now, which means that we will still have the same strategy between Tankers and Terminals.
Sorry, 2017, how you calculate the tangible net worth?
Yeah. How you calculate tangible net worth?
The tangible net worth would basically be your shareholder equity, and then we add back the CTAs. In CTA, you have OCI, and since they are negative, you add them back. That brings it off to $1.5. You'll find the details in the interims.
Thank you very much. If there are no further questions, that completes the fourth quarter 2016 earnings presentation. Thank you.
That will conclude today's conference call. Thank you for your participation.