SB-D Safe Bulkers Inc

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K/A

(Amendment No. 2)

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR

15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2021

SAFE BULKERS, INC.

(Translation of registrant’s name into English)

Apt. D11, Les Acanthes 6, Avenue des Citronniers, MC98000 Monaco

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ý          Form 40-F   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether the registrant by furnishing the information contained in the Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o          No  ý

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

EXPLANATORY NOTE

Safe Bulkers, Inc. (the “Company”) is filing this Amendment No. 2 to the Company’s Form 6-K that was filed with the Securities and Exchange Commission on November 5, 2021 (the “Original Filing”) to amend and restate the Original Filing solely to include the Report of Independent Registered Public Accounting Firm relating to the review of the Interim Financial Information. Except as described above, no other information in the Original Filing has been updated and this Amendment No. 2 continues to speak as of the date of the Original Filing. This Amendment No. 2 does not reflect events that have occurred after the filing date of the Original Filing, and does not amend, modify or update in any way disclosures made in the Original Filing except as set forth in this explanatory note.

INFORMATION CONTAINED IN THIS FORM 6-K/A REPORT

This Report on Form 6-K/Α are the unaudited consolidated interim financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company for the nine-month period ended September 30, 2021, subject to the Explanatory Note set forth above. This Report on Form 6-K/A is formatted in inline eXtensible Business Reporting Language (iXBRL).

INCORPORATION BY REFERENCE

This Report on Form 6-K/A shall be incorporated by reference into our registration statement on Form F-3, as filed with the Securities and Exchange Commission on July 1, 2020 (File No. 333-239618) and as may be further amended, to the extent not superseded by documents or reports subsequently filed by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2021

ABOUT THIS REPORT

As used herein, “we”, “us”, “our”, and the “Company” all refer to Safe Bulkers, Inc. and its subsidiaries (as well as the predecessors of the foregoing). This management’s discussion and analysis of financial condition and results of operations should be read together with the discussion included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2020. These expressions are also used where no useful purpose is served by identifying the particular company or companies. Our affiliated management companies, Safety Management Overseas S.A., a company incorporated under the laws of the Republic of Panama (“Safety Management”), and Safe Bulkers Management Limited, a company organized and existing under the laws of the Republic of Cyprus (“Safe Bulkers Management”), are each sometimes referred to as a “Manager,” and together as our “Managers.” This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements.

A. Overview

We are an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the world’s largest consumers of marine drybulk transportation services. As of October 29, 2021, our fleet comprised 40 vessels, of which 13 are Panamax class vessels, 8 are Kamsarmax class vessels, 15 are Post-Panamax class vessels and 4 are Capesize class vessels, with an aggregate carrying capacity of 3,721,300 deadweight tons, or dwt and an average age of 10.32 years. As of October 29, 2021, the Company had placed orders for eight newbuild vessels, had committed to the purchase of one second-hand Capesize vessel and had committed to sell two of its vessels which were not yet delivered to their new owners.

We employ our vessels on both period time charters and spot time charters, or infrequently on voyage charters, according to our assessment of market conditions, with some of the world’s largest consumers of marine drybulk transportation services. The vessels we deploy on period time charters provide us with visible and relatively stable cash flow, while the vessels we deploy in the spot market allow us to maintain our flexibility in low charter market conditions and have a potential upside in our revenue when charter market conditions improve. The majority of vessels in our fleet have sister ships with similar specifications in our existing fleet. We believe using sister ships provides cost savings because it facilitates efficient inventory management and allows for the substitution of sister ships to fulfill our period time charter obligations.

Safe Bulkers, Inc. (“Safe Bulkers”) was incorporated in the Republic of the Marshall Islands on December 11, 2007, under the Marshall Islands Business Corporations Act, for the purpose of acquiring ownership of various subsidiaries that either owned or were scheduled to own vessels. We are controlled by the Hajioannou family, which has a long history of operating and investing in the international shipping industry, including a long history of vessel ownership. Our vessels are managed by our affiliated management companies, Safety Management and Safe Bulkers Management.

B. Recent Developments in Our Fleet and Employment Profile

During the period from January 1, 2021, until October 29, 2021 the following developments occurred with respect to our fleet and employment profile:

In January 2021, the Company entered into an agreement for the sale of the Panamax class MV Paraskevi, built 2003, at a gross sale price of $7.3 million. The vessel was delivered to her new owners in April 2021.

In January 2021, the Company entered into an agreement for the sale of the Panamax class MV Vassos, built 2004, at a gross sale price of $8.7 million. The vessel was delivered to her new owners in in May 2021.

In February 2021, the Company entered into an agreement for the acquisition of the 2011-built Japanese Panamax class MV Paraskevi 2, at a gross price of $14.1 million. She was delivered to us in March 2021 and commenced an 11 to 14 month charter at a gross daily rate of $13,800. The vessel is a sister vessel with two other vessels owned by the Company, and her acquisition was funded from the cash reserves of the Company.

In May 2021, the Company entered into an agreement for the sale of the Kamsarmax class MV Pedhoulas Builder, built 2012, at a gross sale price of $22.5 million. The vessel was delivered to her new owners in June 2021.

In May 2021, the Company entered into an agreement for the sale of the Kamsarmax class MV Pedhoulas Farmer, built 2012, at a gross sale price of $22.0 million. The vessel was delivered to her new owners in September 2021.

In May 2021, the Company entered into an agreement for the sale of the Panamax class MV Maria, built 2003, at a gross sale price of $12.0 million. The vessel was delivered to her new owners in September 2021.

In May 2021, the Company entered into agreements for the acquisition of two Energy Efficiency Design Index (''EEDI''), Phase 3 NOX-Tier III Japanese-built 87,000 dwt, newbuild vessels at attractive prices with scheduled deliveries in the first and second quarter of 2023 respectively.

In June 2021, the Company entered into an agreement for the acquisition of a 2013-built Japanese Panamax class vessel to be named Koulitsa 2, at a gross price of $22.0 million. The vessel was delivered to us in July 2021.

In June 2021, the Company entered into an agreement for the sale of the Panamax class MV Koulitsa, built 2003, at a gross sale price of $13.6 million. The vessel was delivered to her new owners in November 2021.

In June 2021, the Company entered into an agreement for the acquisition of one EEDI, Phase 3 NOX-Tier III Japanese-built 82,000 dwt, newbuild vessel at an attractive price with scheduled delivery in the fourth quarter of 2023.

In July 2021, the Company entered into an agreement for the acquisition of three EEDI, Phase 3 NOX-Tier III Japanese-built 82,000 dwt, newbuild vessels at attractive prices with scheduled deliveries 1 in the fourth quarter of 2023, and 2 in the first quarter 2024.

In July 2021, the Company entered into an agreement for the acquisition of the Post-Panamax class MV Venus Harmony, built 2013 at a gross price of $23.1 million. The vessel was delivered to us in October 2021 and her acquisition was funded from the cash reserves of the Company. She is a sister with three other vessels owned by the Company,

In July 2021, the Company entered into an agreement for the acquisition of the 2012-built Japanese Capesize class to be named MV Stelios Y. The vessel will be acquired by the Company under a twelve-month bareboat charter agreement, with a down payment of $4.5 million on signing, a payment of $4.5 million on delivery of the vessel to the Company scheduled for November 2021, payment of a daily charter rate of $14,500 over the period of the twelve month bareboat charter and of an amount of $18.0 million at the end of the bareboat charter; in aggregate the acquisition cost for the vessel being $32.3 million.

In September 2021, the Company entered into an agreement for the sale of the Kamsarmax class MV Pedhoulas Fighter, built 2012, at a gross price of $23.7 million. The sale is expected to be consummated in December 2021.

As of October 29, 2021, the orderbook of the Company consisted of eight Japanese, dry-bulk newbuilds of which five were Kamsarmax class vessels and three were Post-Panamax class vessels, with scheduled deliveries two within 2022, four within 2023 and two within 2024. All eight newbuild vessels described above are designed to meet the Phase 3 requirements of Energy Efficiency Design Index related to the reduction of green house gas emissions (''GHG -EEDI Phase 3'') as adopted by the International Maritime Organization, ("IMO") and also comply with the latest NOx emissions regulation, NOx-Tier III (IMO, MARPOL Annex VI, reg. 13).

As of October 29, 2021 the Company has entered into agreements to acquire one second-hand Capesize class vessel and to sell two vessels, of which one is a Panamax and one is a Kamsarmax class vessel.

Set out below is a table showing the Company’s existing vessels and their contracted employment as of October 29, 2021. Scrubber benefit for scrubber fitted vessels, (the ''Scrubber Benefit'') is calculated on the basis of the price differential between high sulfur fuel oil with 3.5% sulfur content and the new fuel with reduced sulfur content below 0.5% for the specific voyage. In the table the Scrubber Benefit is included in the referenced charter rate, in cases when it can be calculated or it is a part of the charter rate. A special notation on the table is provided in cases when the Scrubber Benefit is not part of the referenced charter rate and it cannot be calculated.

(1) For existing vessels, the year represents the year built. For any newbuilds, the date shown reflects the expected delivery dates.

(2) Quoted charter rates are the recognized daily gross charter rates. For charter parties with variable rates among periods or consecutive charter parties with the same charterer, the recognized gross daily charter rate represents the weighted average gross daily charter rate over the duration of the applicable charter period or series of charter periods, as applicable. In the case of a charter agreement that provides for additional payments, namely ballast bonus to compensate for vessel repositioning, the gross daily charter rate presented has been adjusted to reflect estimated vessel repositioning expenses. Gross charter rates are inclusive of commissions. Net charter rates are charter rates after the payment of commissions. In the case of voyage charters, the charter rate represents revenue recognized on a pro rata basis over the duration of the voyage from load to discharge port less related voyage expenses.

(3) Commissions reflect payments made to third-party brokers or our charterers.

(4) The start dates listed reflect either actual start dates or, in the case of contracted charters that had not commenced as of October 29, 2021, the scheduled start dates. Actual start dates and redelivery dates may differ from the referenced scheduled start and redelivery dates depending on the terms of the charter and market conditions and does not reflect the options to extend the period time charter.

(5) The Company has entered an agreement for the acquisition of the Japanese 2012-built Capesize class vessel to be named MV Stelios Y.

(6) MV Pedhoulas Rose was sold and leased back, in 2017 on a bareboat charter basis for a period of 10 years, with a purchase obligation at the end of the bareboat charter period and purchase options in favor of the Company after the second year of the bareboat charter, at annual intervals and predetermined purchase prices.

(7) Charterer of MV Kanaris agreed to reimburse us for part of the cost of the scrubbers and BWTS to be installed on the vessel, which is recorded by increasing the recognized daily charter rate by $634 over the remaining tenor of the time charter party.

(8) A period time charter with forward delivery date, for a duration of 3 years at a gross daily charter rate of $22,500 plus an one-off $3.0 million payment upon charter commencement, scheduled for end January to end May 2022. The charter agreement also grants the charterer an option to extend the period time charter for an additional year at a gross daily charter rate of $27,500.

(9) MV Lake Despina was sold and leased back in April 2021 on a bareboat charter basis for a period of seven years with a purchase option in favor of the Company five years and six months following the commencement of the bareboat charter period at a predetermined purchase price.

(10) MV Kypros Sky and MV Kypros Spirit were sold and leased back in December 2019 on a bareboat charter basis for a period of eight years, with purchase options in favor of the Company commencing three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.

(11) MV Panayiota K and MV Agios Spyridonas were sold and leased back in January 2020 on a bareboat charter basis for a period of six years, with purchase options in favor of the Company commencing three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.

(12) MV Zoe, MV Kypros Land, MV Venus Heritage and MV Venus History were sold and leased back in November 2019, on a bareboat charter basis, one for a period of eight years and three for a period of seven and a half years, with a purchase option in favor of the Company five years and nine months following the commencement of the bareboat charter period at a predetermined purchase price.

(13) MV Pedhoulas Cedrus was sold and leased back in February 2021 on a bareboat charter basis for a period of ten years with a purchase option in favor of the Company three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.

(14) In October 2021, the Company entered into a period time charter for MV Stelios Y, for a duration of 3 years at a gross daily charter rate of $24,400, which is expected to commence in November 2021 upon delivery of the vessel to the Company by her present owners. The charter agreement also grants the charterer an option to extend the period time charter for an additional year at a gross daily charter rate of $26,500.

(15) The newbuild vessel will be sold and leased back upon delivery in 1H 2022, on a bareboat charter basis for a period of ten years with a purchase option in favor of the Company three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.

(16) The Company has entered an agreement to sell the vessel which was delivered to her new owners in November 2021.

(17) The Company has entered an agreement to sell the vessel with expected delivery to her new owners within the fourth quarter of 2021.

(18) Scrubber benefit was agreed on the basis of fuel consumption of heavy fuel oil and the price differential between the heavy fuel oil and the compliant fuel cost for the voyage and is included on the daily gross charter rate presented.

(19) Scrubber benefit was agreed on the basis of fuel consumption of heavy fuel oil and the price differential between the heavy fuel oil and the compliant fuel cost for the voyage and is not included on the daily gross charter rate presented..

(20) MV Troodos Sun was sold and leased back in September 2021 on a bareboat charter basis for a period of ten years, with purchase options in favor of the Company commencing three years following the commencement of the bareboat charter period and a purchase obligation at the end of the bareboat charter period, all at predetermined purchase prices.

The following table reflects our ownership days, available days, time charter equivalent rates, daily vessel operating expenses, daily vessel operating expenses excluding drydocking and pre-delivery expenses, daily general and administrative expenses for the periods indicated:

The following table reflects our computation of time charter equivalent revenue and time charter equivalent rate for the periods indicated:

(1) Ownership days represents the aggregate number of days in a period during which each vessel in our fleet has been owned by us.

(2) Available days represents the total number of days in a period during which each vessel in our fleet was in our possession, net of off-hire days associated with scheduled maintenance, which includes major repairs, drydockings, vessel upgrades or special or intermediate surveys.

(3) Average number of vessels in the period is calculated by dividing ownership days in the period by the number of days in that period.

(4) Time charter equivalent rate, or TCE rate, represents our charter revenues less commissions and voyage expenses during a period divided by the number of

available days during such period. TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels

on period time charters and spot time charters with daily earnings generated by vessels on voyage charters, because charter rates for vessels on voyage charters

are generally not expressed in per day amounts, while charter rates for vessels on period time charters and spot time charters generally are expressed in such

amounts. We have only rarely employed our vessels on voyage charters and, as a result, generally our TCE rates approximate our time charter rates.

(5) Daily vessel operating expenses are calculated by dividing vessel operating expenses for the relevant period by ownership days for such period. Vessel

operating expenses include crewing, insurance, lubricants, spare parts, provisions, stores, repairs, maintenance including dry-docking, statutory and classification expenses and other miscellaneous items.

(6) Daily vessel operating expenses excluding dry-docking and pre-delivery expenses are calculated by dividing vessel operating expenses excluding dry-docking and pre-delivery expenses for the relevant period by ownership days for such period. Dry-docking expenses include costs of shipyard, paints and agent expenses and pre-delivery expenses include initially supplied spare parts, stores, provisions and other miscellaneous items provided to a newbuild prior to its operation.

(7) Daily general and administrative expenses are calculated by dividing general and administrative expenses for the relevant period by ownership days for such

period. Daily general and administrative expenses include daily management fees payable to our Managers and daily company administration expenses.

D. Results of Operations

Nine -month period ended September 30, 2021 compared to Nine -month period ended September 30, 2020

 

Net income attributed to common shareholders was $101.1 million, or earnings per share of $0.91, in the nine -month period ended September 30, 2021, from net loss available to common shareholders of $29.6 million, or loss per share of $0.29, in the nine -month period ended September 30, 2020. The change from net loss to net income attributed to common shareholders of $130.7 million is attributed mainly to: (a) Net revenues increased by $90.7 million from $145.9 million to $236.6 million, (b) voyage expenses of $9.3 million compared to $36.9 million, (c) early redelivery income of $7.5 million compared to zero, (d) interest expense of $11.8 million, compared to $16.9 million, (e) depreciation of $39.2 compared to $40.4 and (f) gain on sale of vessels of $0.6 million, compared to zero, partially offset by the increased general and administrative expenses of $17.0 compared to $15.8 and the loss on derivatives of $2.0 million compared to $1.0 million, for the nine -month period ended September 30, 2021 and 2020, respectively.

During the nine -month period ended September 30, 2021, we had an average of 41.4 drybulk vessels in our fleet. During the nine -month period ended September 30, 2020, we had an average of 41.6 drybulk vessels in our fleet.

 

During the nine -month period ended September 30, 2021, we acquired Paraskevi 2 and Koulitsa 2, both Panamax second-hand vessels, and sold Paraskevi and Vassos and Maria, all Panamax vessels, Pedhoulas Builder and Pedhoulas Farmer both Kamsarmax vessels.

During the nine -month period ended September 30, 2020, we acquired Troodos Oak, a Post-Panamax resale newbuild vessel.

Revenues

 

Revenues increased by 63%, or $95.4 million, to $247.0 million during the nine -month period ended September 30, 2021 from $151.6 million during the nine -month period ended September 30, 2020, as a result of the improved market, assisted by the additional revenues earned by our scrubber fitted vessels.

 

Commissions

 

Commissions to unaffiliated ship brokers, other brokers associated with our charterers and our charterers during the nine -month period ended September 30, 2021 amounted to $10.4 million, an increase of $4.7 million, or 82%, compared to $5.7 million during the nine -month period ended September 30, 2020 mainly due to the increase in our revenue earned, together with a slight increase in commission rates. Commissions as a percentage of revenues increased to 4.2% of revenues during the nine -month period ended September 30, 2021 compared to 3.8% of revenues during the nine -month period ended September 30, 2020.

 

Vessel operating expenses

 

Vessel operating expenses decreased by 2% to $53.5 million during the nine -month period ended September 30, 2021 from $54.7 million during the nine -month period ended September 30, 2020, due to

i.the decrease of ownership days by 1% from 11,402 in 2020 to 11,307 in 2021,

ii.the decrease of repairs, maintenance and drydocking costs by 41% to $5.5 million during nine -month period ended September 30, 2021, compared to $9.3 million during the nine -month period ended September 30, 2020, primary due to zero drydockings during the nine -month period ended September 30, 2021, compared to four completed and one partially completed dry dockings for the same period of 2020,

iii.the decrease in the cost for spares, stores and provisions by 3% to $11.7 million during the nine -month period ended September 30, 2021 compared to $12.0 million during the nine -month period ended September 30, 2020 due to zero drydockings performed during the nine -month period ended September 30, 2021, compared to four completed and one partially completed for the same period of 2020, and which are affecting costs of spares, and

iv.partially offset by the increase in crew wages and related cost by 11% to $28.0 million during the nine -month period ended September 30, 2021, compared to $25.2 million during the nine -month period ended September 30, 2020, mainly due to increased crew changes performed in the current period as a result of COVID 19 restrictions.

The Company expenses drydocking and pre-delivery costs as incurred, which costs may vary from period to period. Drydocking expense is related to the number of drydockings in each period and pre-delivery expense is related to the number of vessel deliveries in each period. Excluding dry-docking and pre-delivery costs of $2.5 million and $5.5 million for the nine -month period ended September 30, 2021 and 2020, respectively, vessel operating expenses increased by 4% to $51.0 million during the nine -month period ended September 30, 2021, compared to $49.2 million during the nine -month period ended September 30, 2020. Certain other shipping companies may defer and amortize drydocking expense.

Daily operating expenses, calculated by dividing vessel operating expenses by the ownership days of the relevant period, decreased by 1% to $4,729 during the nine -month period ended September 30, 2021 from $4,799 during the nine -month period ended September 30, 2020. Daily operating expenses, excluding vessel drydocking and pre-delivery costs, increased by 4% to $4,511 during the nine -month period ended September 30, 2021 from $4,318 during the nine -month period ended September 30, 2020.

Voyage expenses

 

During the nine -month period ended September 30, 2021, we recorded voyage expenses of $9.3 million, compared to $36.9 million during the nine -month period ended September 30, 2020. The decrease is mainly due to the net effect of decreased vessel repositioning expenses, lower loss on bunkers sales and reduced bunker consumption costs for scrubber fitted vessels under charter agreements which provide for variable consideration based on the bunker consumption.

Depreciation

 

Depreciation expense decreased by 3% to $39.2 million during the nine -month period ended September 30, 2021, compared to $40.4 million during the nine -month period ended September 30, 2020, as a result of the cessation of depreciation for the vessels Paraskevi and Vassos which were classified as assets held for sale during the fourth quarter of 2020 and during the first quarter of 2021, respectively, for the vessels Pedhoulas Builder, Pedhoulas Farmer, Koulitsa and Maria which were all classified as assets held for sale during the second quarter of 2021 and Pedhoulas Fighter which was classified as an asset held for sale during the third quarter of 2021, partially offset by the acquisition of the MV Paraskevi 2 during the first quarter of 2021 and Koulitsa 2 during the third quarter of 2021.

Interest expense 

 

Interest expense decreased by 30% to $11.8 million during the nine -month period ended September 30, 2021, compared to $16.9 million, during the nine -month period ended September 30, 2020. This was the result of the decrease in the weighted average interest rate of our outstanding indebtedness of 2.691% per annum (“p.a.”) for the nine -month period ended September 30, 2021, compared to the weighted average interest rate of our outstanding indebtedness of 3.584% p.a. for the nine -month period ended September 30, 2020, and the decrease in average loans outstanding of $579.8 million during the nine -month period ended September 30, 2021, compared to the average loans outstanding of $625.6 million during the nine -month period ended September 30, 2020. The total principal amount of loans outstanding as of September 30, 2021 was $418.8 million, compared to $613.7 million as of September 30, 2020.

 

Cash Flows

 

Cash and cash equivalents increased to $94.5 million as of September 30, 2021, compared to $64.0 million as of September 30, 2020. We consider highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents were primarily held in U.S. dollars.

 

Net Cash Provided by Operating Activities

 

Net cash provided by operating activities amounted to $154.0 million in the nine -month period ended September 30, 2021 and $34.2 million in the nine -month period ended September 30, 2020, consisting of net income after non-cash items of $146.2 million and $22.7 million respectively plus an increase in working capital of $7.8 million during the nine -month period ended September 30, 2021, and an increase in working capital of $11.5 million during the same period of 2020, respectively.

The major drivers of the increase in the net cash provided by operating activities are mainly attributable to the higher revenues we earned from chartering our vessels and the decrease in the voyage and interest expenses during the nine -month period ended September 30, 2021, compared to the same period of 2020.

Net Cash Used in Investing Activities

 

Net cash flows used in investing activities were $3.8 million for the nine -month period ended September 30, 2021 compared to $35.5 million for the nine -month period ended September 30, 2020. The decrease in cash flows used in investing activities of $31.7 million from the nine -month period ended September 30, 2020 is mainly attributable to the following factors: (i) an increase of $70.6 million in net proceeds from sale of five of our vessels during the first nine months of 2021, from zero during the same period of 2020, (ii) a net decrease of $10.6 million in time deposits during the nine -month period ended September 30, 2021, compared to a net decrease of $3.9 million during the same period of 2020, partially offset by an increase of $45.6 million in payments for vessel acquisitions and advances for vessels under construction and major improvements during the nine -month period ended September 30, 2021, compared to the same period of 2020.

 

    Net Cash Used in Financing Activities

Net cash flows used in financing activities were $154.5 million for the nine -month period ended September 30, 2021, compared to $8.1 million for the nine -month period ended September 30, 2020. This increase in cash flows used in financing activities of $146.4 million, compared to the nine -month period ended September 30, 2020, is mainly attributable to (i) an increase of $255.8 million in long term debt principal payments and loan prepayments, (ii) an increase of $0.9 million in payments of deferred financing costs, (iii) the cash outflows relating to the redemption of preferred stock in one of our subsidiaries of $17.7 million partially offset by an increase in proceeds from long-term debt of $50.4 million, proceeds of $71.5 million from sale of common stock under our “at-the-market” equity offering program, and a decrease in repurchases of common and preferred stock of $6.1 million, for the nine -month period ended September 30, 2021 compared to the nine -month period ended September 30, 2020.

E. Loan Facilities

In September 2021, the Company entered into a new credit facility of $60.0 million with a five-year tenor secured by five vessels, comprising of a term loan tranche of $30.0 million and a revolving credit facility tranche providing for a draw down capacity of up to $30.0 million reducing from its fourth year onwards. This agreement represents the Company’s first sustainability linked credit facility and incorporates an incentive discount on interest rate, linked to independently verified predetermined emission targets. The proceeds from the credit facility were used to refinance loan facilities with the same financial institution with an outstanding term loan of $71.1 million and a revolving credit facility tranche with a drawdown capacity of $7.0 million, secured by six vessels and maturing in 2024. Five of those vessels secure the new credit facility and one has remained debt free. The Company does not intend to utilize the full capacity of the reducing revolving credit facility tranche at this time. The agreement contains financial covenants in line with the existing loan and credit facilities of the Company.

In October 2021, the Company signed a commitment letter for a new credit facility of $100.0 million with a five-year tenor to be secured by six vessels, which will comprise a term loan tranche of $50.0 million and a revolving credit facility tranche providing for a draw down capacity of up to $50.0 million reducing from its fourth year onwards. The anticipated proceeds from the credit facility will be used to refinance loan facilities of an aggregate outstanding amount of $50.0 million secured by the five vessels and maturing up to 2024 and the repurchase of one vessel under a sale and leaseback agreement for an amount of $20.7 million. The Company does not intend to utilize the full capacity of the reducing revolving credit facility tranche at this time. The agreement is expected to contain financial covenants in line with the existing loan and credit facilities of the Company.

For other information relating to our credit facilities, please see Note 7 to our unaudited interim condensed consolidated financial statements included elsewhere herein.

F. Liquidity and Capital Resources as of September 30, 2021

 

We had $108.6 million in cash, cash equivalents, bank time deposits and restricted cash, $88.9 million in undrawn borrowing capacity available under revolving reducing credit facilities and $46.2 million in secured commitments for loan and sale and lease back agreements, in relation to two newbuild vessels. Furthermore, we have additional borrowing capacity in relation to three unencumbered vessels held for use and to six newbuilds upon their delivery.

We had a fleet of 39 vessels, two of which have been committed to be sold but have not yet been delivered to their new owners. In addition, the Company had committed to the purchase of one second-hand Panamax and a second-hand Capesize vessel, and had placed orders for eight newbuild vessels.

The remaining capital expenditure requirements amount to $264.2 million in aggregate, consisting of $216.6 million in relation to the eight newbuild vessels, $46.8 million in relation to the acquisition of the two second-hand vessels and $0.8 million in relation to one exhaust gas cleaning device (‘Scrubber’) and ballast water treatment systems (‘BWTS’) retrofits. The remaining capital expenditure are scheduled to be paid as follows $24.8 million in 2021, $81.4 million in 2022, $110.6 million in 2023 and $47.4 million in 2024

The expected gross proceeds in relation to the committed sales of the two vessels were $37.3 million.

We had $418.8 million of outstanding consolidated debt before deferred financing costs, reduced from $616.2 as of December 31, 2020. During the nine -month period ended September 30, 2021, we prepaid debt in relation to vessels sales or debt refinancing in the aggregate amount of $282.4 million, made scheduled principal payments of $43.8 million and had loan drawdowns of $128.8 million.

G. Liquidity and Capital Resources as of October 29, 2021

We had $92.2 million in cash, cash equivalents, bank time deposits, restricted cash, $88.9 million in undrawn borrowing capacity available under revolving credit facilities and $46.2 million in secured commitments including sale and lease back agreements in relation to two newbuild vessels. Furthermore, the Company upon the expected consummation of the agreement for the new credit facility of $50.0 million term loan and $50.0 million revolving reducing tranche, for which a commitment letter has been signed, and following full repayment of the relevant obligations of $70.7 million, will have an additional incremental revolving reducing credit facility of $29.3 million, resulting to an aggregate expected undrawn borrowing capacity available under revolving reducing credit facilities of $118.2 million. We have additional borrowing capacity in relation to four unencumbered vessels held for use and to six newbuilds upon their delivery.

We had a fleet of 40 vessels, two of which have been committed to be sold but have not yet been delivered to their new owners. In addition, the Company had committed to the purchase of one second-hand Capesize vessel, and had placed orders for eight newbuild vessels.

The remaining capital expenditure requirements were $245.2 million in aggregate, consisting of $216.3 million in relation to the eight newbuild vessels, $28.1 million in relation to the second-hand acquisition and $0.8 million in relation to one exhaust gas cleaning device (‘Scrubber’) and ballast water treatment systems (‘BWTS’) retrofits. The remaining capital expenditure are scheduled to be paid as follows $5.8 million were payable in 2021, $81.4 million in 2022, $110.6 million in 2023 and $47.4 million in 2024.

The remaining proceeds in relation to committed sale of the two vessels were $37.3 million.

We had $401.9 million of outstanding consolidated debt before deferred financing costs, reduced from $418.8 million as of September 30, 2021.

 

Our primary liquidity needs are to fund financing expenses, debt repayment or refinancing, vessel operating expenses, general and administrative expenses, capital expenditure requirements related to BWTS, and dividend payments to our stockholders. We anticipate that our primary sources of funds will be existing cash and cash equivalents and bank time deposits, cash generated from operations, available borrowing capacity of up to $88.9 million available under the revolving credit facility and $46.2 million from available commitments under loans and sale and lease back financing as of September 30, 2021 and, possibly, other future equity or debt financing.

 

In our opinion, the contracted cash flow from operations, the available borrowing capacity, and the existing cash and cash equivalents will be sufficient to fund the operations of our fleet and any other present financial requirements of the Company, including our working capital requirements, and our capital expenditure requirements at least through the end of 2022. However, we may seek additional indebtedness to refinance our debt and to maintain a strong cash position. Future needs in relation to financing and investing activities may involve refinancing of existing debt and financing of any future fleet

replacement and expansion program or fleet upgrades and improvements. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering, including the actual or perceived credit quality of our charterers and the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial and equity markets and contingencies and uncertainties that are beyond our control. To the extent that market conditions deteriorate, charterers may default or seek to renegotiate charter contracts, and vessel valuations may decrease, resulting in a breach of our debt covenants. In addition, refinancing of our existing debt in the future may be difficult. Our contracted revenues may decrease and we may be required to make additional prepayments under existing loan facilities, resulting in additional financing needs. If we acquire additional vessels, our capital expenditure requirements will increase and we will need to rely on existing cash and time deposits, debt financing and operating cash surplus.

 

A failure to satisfy our financial commitments could result in the acceleration of our indebtedness and foreclosure on our vessels. Such events could adversely impact the dividends we intend to pay, and could have a material adverse effect on our business, financial condition and results of operations.

We have not paid any dividends to our common stockholders since the second quarter of 2015. During 2020, we declared and paid four quarterly consecutive dividends of $0.50 per share for each of the Series C Preferred Shares, totaling $4.6 million, and Series D Preferred Shares, totaling $6.4 million. During 2021, we declared four quarterly consecutive dividends of $0.50 per share for each of the Series C Preferred Shares, totaling $4.6 million, and Series D Preferred Shares, totaling $6.4 million, of which we have paid $3.5 million of the Series C Preferred Shares and $4.8 million of the Series D Preferred Shares, with $1.1 million of the Series C Preferred Shares and $1.6 million of the Series D Preferred Shares being payable on November 1, 2021.

Our future liquidity needs will impact our dividend policy. The declaration and payment of dividends, if any, will always be subject to the discretion of our board of directors. The timing and amount of any dividends declared will depend on, among other things: (i) our earnings, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to our leverage and growth strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in our existing and future debt instruments; and (v) global financial conditions. Dividends on our common stock might continue not to be paid in the future. In addition, cash dividends on our common stock are subject to the priority of dividends on our preferred shares.

H. Sales of equity securities

Common Stock

In August 2020, the Company filed a prospectus supplement with the Securities and Exchange Commission (“SEC”), under which it could offer and sell shares of its common stock (“Shares”)for aggregate gross offering proceeds of up to $23.5 million from time to time through an “at-the-market” equity offering program (the “ATM Program”). In May 2021, the Company filed a supplement to its prospectus supplement to increase the capacity under the ATM Program to allow for sales of Shares for aggregate gross offering proceeds of up to $100.0 million under the ATM Program.

As of September 30, 2021, the Company had sold 19,417,280 shares of common stock under the ATM Program with aggregate gross offering proceeds to the Company of $73.0 million. Shares of common stock with aggregate gross offering proceeds of up to approximately $27.0 million remain available for sale.

As of October 29, 2021, the Company had 121,640,839 shares of common stock issued and outstanding. Details on the shares sold under the ATM Program are set forth in the table below:

I. Significant Accounting Policies and Critical Accounting Policies

For a description of all of our significant accounting policies, see Note 2 to our audited financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2020 and Note 2 to our unaudited interim condensed consolidated financial statements included elsewhere herein. For a discussion of our critical accounting policies please see Item 5 included in our Annual Report on Form 20-F for the year ended December 31, 2020.

J. Recent Accounting Pronouncements

For a description of recent accounting pronouncements, see Note 2 to our unaudited interim condensed consolidated financial statements included elsewhere herein.

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

			Page
Report of Independent Registered Public Accounting Firm			F-1
Unaudited Interim Condensed Consolidated Balance Sheets as of December 31, 2020 and September 30, 2021			F-2
Unaudited Interim Condensed Consolidated Statements of Operations for the Nine Month Periods Ended September 30, 2020 and 2021			F-3
Unaudited Interim Condensed Consolidated Statements of Shareholders’ Equity for the Nine Month Periods Ended September 30, 2020 and 2021			F-4
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2020 and 2021			F-5
Notes to Unaudited Interim Condensed Consolidated Financial Statements			F-7