Shares of Bermuda-based oil tanker operator Nordic American Tanker Shipping Ltd. (NAT) plunged more than seven percent on Friday after the company priced an offering of four million shares at $30.50.

The business model of the company, which is run out of Norway, involves raising money for expansion by selling shares and paying out all free cash flow to shareholders in the form of dividends.

While the numerous share sales over the years have diluted the value of company stock, the policy has allowed NAT to expand its fleet while remaining debt-free.

The additional tankers have boosted its earning power, in turn increasing its ability to pay out attractive dividends.

NAT has a fleet of 15 tankers and this year expects to take delivery of three more that it has already agreed to purchase.

NAT's stock dipped to $30.31 on Friday, falling below the price level of the new issuance, compared to its closing price on Thursday of $32.65.

Net proceeds from the offering, which is expected to raise more than $120 million, will be used to fund further acquisitions. The company said the capital raised, together with other forms of financing available to the company, would allow it to buy at least four more vessels.

NAT expects its fourth-quarter dividend to be in the region of 23 cents per share, compared to 10 cents per share for the third quarter of 2009.

The average spot market rate for modern Suezmax The average spot market rate for modern Suezmax tankers, the type of vessel operated by NAT, was $23,682 per day during the fourth quarter of 2009, compared to $13,012 per day for the previous quarter.

NAT described average spot rates so far in 2010, as being "well above" those seen in the last three months of last year.