Q2 2021 Seanergy Maritime Holdings Corp Earnings Call
Based on values have been on a clear upward trajectory in the past months and given the spot and time charter market conditions I believe that further improvements are well within reach given where asset prices have traded historically.
In Q2, we have concluded final.
Financing transactions of $117.3 million, including a $30.9 million sale and leaseback with a prominent Aegean financial institution.
As well as a new loan commitments from an existing bank.
Stablish will go into more detail on this but the average interest rates will be approximately 3.
335% margin over LIBOR.
This is a very significant improvement when compared to the facilities that were prepaid within 2021.
<unk> is today in an optimal financial position to capitalize on improving market conditions with a goal of creating substantial.
For investors in the next few years and.
And with this message I would like now to pass the call to our CFO Douglas who is going to discuss our financial results I will come back to the goal for the market update shortly.
Please go ahead.
Thank you so much welcome everyone to our.
Second earnings call for 2021 lets start by reviewing the main highlights of our financial statements for the second quarter and 6 months period that ended on June 32021.
Our financial performance benefited from the strong drybulk market as gross revenue was equal to $28.9 million an increase of 200.
Value for example from the second quarter of 2020.
Our daily time charter equivalent for the quarter was approximately $20100, a 270% increase compared to $5424 for the second quarter of 2020, our TCE performance was affected by the completion.
On a index linked charters to fixed during the fourth quarter of 2020, which was done as part of our Frac chasing strategy.
For the third quarter. The majority of our fleets available days have been fixed day rate that is roughly in line with the quarter to date average of the PCI, including 8 conversions of index linked rates.
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Based on our commercial performance. So far we are on track to see stronger financial results in the <unk> in the next quarter.
At the moment 13 vessels are employed on the index linked charters that allows the company to benefit from the positive freight market trends and 8 of these charters have conversion.
Allowing us to convert to fluctuate based on the prevailing FFA curve.
For the fourth quarter with a fixed only to index linked chips at around 32, 5000, but we'll continue to moving towards the movements will be interface and May proceed with more similar fixtures adjust.
Adjusted EBITDA in the second.
Current quarter of 2021 was $11.3 million up from negative adjusted EBITDA of $1.8 million in the same quarter of 2020, while cynosure also generated net income of $2 million compared to a net loss of $11.3 million in the same quarter last year and a net loss of 1.
1.3 million in the first quarter of 2021.
For the 6 months period that ended June 32021, synergy recorded a daily time charter equivalent of $18327 compared to $6985 and 8360.
In the corresponding period of 2020 and 2019.
Gross revenue was equal to $50 million, an increase of 116% from last years corresponding interim period.
Adjusted EBITDA for the first 6 months of 2021 was equal.
$619.2 million, a big improvement from a negative adjusted EBITDA of cost per million in 2020.
Lastly, we recorded net income of <unk> 6 million compared to a net loss of $19.7 million in the first 6 months of 2020.
As a reminder from.
Call to next quarter earnings release, our daily breakeven for the rest of 2021 is around 13000, excluding on anticipated vessel Capex, which are fully funded by cash reserves.
So we expect the high operating leverage to result in continued cash flow improvement going forward.
Moving.
Our first on operating results Im very glad to see that the financial restructuring that was completed in December last year in combination with the aggressive prepayment of our legacy loans from the first quarter of 2021 are now bearing fruit in the form of significantly lower interest and finance expenses.
Quarter 2021 interest in.
1 from expenses were equal to $4.3 million compared to $5.6 million in the same period of 2020.
When factoring in the non cash items the company incurred approximately $2.9 million of cash interest and finance costs, a significant decrease from $4 million in the second quarter of 2020.
<unk> for the 6 months period that ended June 32021 interest and finance expense was equal to $8.3 million compared to 11.2 million on 'twenty.
Excluding non cash items, the cash interest expense for the interim period was equal to $5.2 million when compared to $8.2 million in the same period last year.
As a reminder, the large non cash expenses relate mainly to the amortization feature of the convertible notes and to the amount of deferred finance charges.
The expense of legacy debt that was repaid and refinanced over the past year was generally replaced with competitively priced financing arrangements.
That reflects the improved financial footing of our company.
The weighted average interest rate on the facilities were fully prepaid was 8.4% as compared to 335% for the new $104.3 million incoming financing.
Given the market environment dry bulk shipping.
Track record, we have established with our lenders, we expect that terms for financing will improve further going forward.
For the time being as regards our current results. It is encouraging to see the significant reduction in interest expenses with little variation in siding that period over period as our debt.
On the talents as of the end of the second quarter of 2021 was about $204 million compared to $213 million in the end of the second quarter of 2020.
When compared to the end of 2020 total debt outstanding has decreased by approximately $35 million against an expected increase in the book.
Book value per fleet of announced on 160 million. This implies that the effective loan to value on new vessel acquisitions is in any case lower than 30%.
I would like to sales to the ability to low both the average age and leverage ratio of our fleet. During this positive market inflection.
<unk> reported positive development for the future.
Moreover, we ended the second quarter with a cash balance of $56.4 million up from $23.7 million at the end of 2020.
Total shareholders' equity has increased $199.4 million as of June 32021 from <unk> 95.
Is <unk> 7 million at the end of 2020.
As was also vacation on previous earnings call. The rapid increase in vessel value since the start of the year has caused the market value of our vessels as we enter the second quarter 2 hires on the book value on the balance sheet.
Market value of the equity is therefore higher.
5 than what is reflected on our balance sheet.
Indicative link we note that based on third party book evaluations as of the end of June the market value of the 6 vessels on we have agreed to acquire this year has already appreciated by approximately 15%.
Excuse me $15 million versus the.
Physician price.
Based on on the same market values for our fleet as per June 32021, our corporate leverage is estimated at approximately 50%.
I will now move on to discuss the financing transactions that have taken place since our last update.
During the quarter the company.
<unk> has secured approximately $104.3 million in vessel financing while it has also received.
And later for an additional secured loan of about $13 million.
As a brief recap of what was mentioned previously in our first quarter results between April and May 'twenty 'twenty 1.
We entered into a 37 point 45 Willow facility, we filed for 1 for the financing of the leadership this quarter shipping the lordship at $25 million sale and leaseback with Cargill for the flagship and $15.5 million low loan facility with a channel Baltic bond for the trade the ships on the Gucci.
The terms of this financing range between 4 and 5 years and the weighted average interest rate is approximately 3.3%.
Further to these refinancings, we concluded successfully at 39 million on sale and leaseback agreement with China merchant Bank financing leasing 1 of the.
The most prominent Chinese leasehold in order to finance 2 of our new acquisitions, the last ship and deposits there.
On the applicable interest rate is LIBOR plus a margin of 3.5%. This financing has an important strategic R&D for synergy since we expand our exposure to the Chinese financing market, which has.
To be a reliable and efficient source of capital for shipping.
Lastly, most recently in July we agreed terms with Alfa bank for a secured loan facility of up $13 million to finance our latest acquisition. The 2009 built capesize that was named friendship.
<unk>.
<unk> will be for a term of 4 years with bear interest at a rate of LIBOR, plus 325% and will be structured as an additional clients in our existing loan with Alfa Bank 1 of our key lenders that has supported our company from <unk>.
Following a proactive approach to managing the company.
Overall leverage we are glad to be able to negotiate competitive terms with our lenders in this respect the financing concluded from 'twenty to 'twenty, 1 have daily debt service rate ranging from approximately 3000 to about $6.5000 per vessel per day as a result, the overall fleet breakeven when including anticipated.
Weighted daily operating expenses is expected to remain low, especially when compared to current charter market and <unk> levels.
This is a very important improvement from previous years, and I would probably highlight it as the main take away from my remarks today.
The actions taken since April 2020 positions.
If favorably for the significant improvement in the dry bulk market that started in the second half of last year and has accelerated within 2021.
At this point I would like to conclude by acknowledging the fact that purely from a financing perspective, we are undergoing a transitional period with radical changes.
The changes on capital structure have been quite extensive by any standard and we will take some time before we see the full benefit of lower interest rate margins, a low breakeven rate, reflecting our financial results.
As regards our fleet.
To take delivery of 1 more vessel, while the delivery of the recently sold.
Bold leadership to its new owners has still not been concluded net.
Les mentioned that operating and general administrative expenses continue to be somewhat inflated as we manage the implications of the pandemic in the worldwide operations of our fleet, let alone ranging in successfully completing the delivery of newly acquired vessels the.
I missed the statements therefore do not reflect the full revenue generating capacity of our fleet and I expect that the second half of the year will be more representative.
This concludes my review.
I'll now turn the call back some artists who will discuss the market and industry fundamentals from.
<unk>.
Thank you Sabra.
The current once again, we're very excited to be in the strongest market in a decade.
After years of market imbalances, which seem to have ended a long term period of strong demand and slower fleet growth.
In 2021, and 22 dry bulk demand is expected to rise by approximately 4% on 2% respectively on.
My basis, while net fleet growth is projected to be around 3.3% and 1.2% respectively in 2021'twenty 2.
These figures are very constructive for the dry bulk market, especially when viewed in the context of strong fiscal spending and infrastructure construction in many parts of the world.
On a ton during the second quarter from first half of 2021, the Baltic Capesize index averaged about 31002 thousand and 4000, respectively.
These healthy levels have been realized even as the market has not yet recovered completely from the operational inefficiencies in Brazilian iron ore mines that started in early.
From 19.
Capesize day rates are currently at around $30000 per day.
This performance is truly exceptional considering the weak seasonality over the first half.
All major miners are estimating more than 90 million tons of additional iron ore production.
<unk> on the second half of 2021, which implies much stronger seaborne iron ore volumes in the next months.
Global demand for steel and iron ore remains very strong as China continues at record volumes of sales, making with a 12% year on year rise.
In addition high.
High quality iron ore exports from Brazil have lower emissions and are benefiting from China's environmental pollution product reduction targets.
Very simply stated its target of achieving 400 million tons of iron ore production by the end of 2022 and given the long distance that long distance voids.
Out of Brazil expectation to generate significant incremental capesize demand.
Coal seaborne volume side also staging a very strong recovery from the extreme COVID-19 induced weakness of 2020, while the tensions between China and Australia have helped corn coal ton miles to increase even more.
It's called generated electricity in China has outpaced the growth in domestic coal mining by a wide margin in 2021, which we expect to be positive for coal import demand.
As mentioned before we have already fixed 2 of our vessels on a 1 year time charters above 31.
And we'll.
We see additional demand from Peter charters at a lucrative fixed rates and.
In addition, capesize as advisors have risen by more than 45% since the end of 2020.
Looking at vessel supply over the next 2 years, we're very optimistic as the upcoming environmental regulations will have a pull.
The effect in the market day.
On immediate reduction of emissions that will be enforced in 2023.
Which is on Nevada, unavoidable will it lead to speed the reduction of 10% to 15% for the global fleet and create a strong vessel supply squeeze there.
This event will likely boost from market even more.
The effect will be even greater when adjusted for the larger ships like Capes and Panamaxes and.
In addition, the uncertainty surrounding future prevailing marine technologies compatible with the 2013 global shipping emissions and the extensive orders for vessels like container ships have.
Led to the lowest new building order book in decades.
Going back to my initial point, we have and the periods of strong demand and low fleet growth that we expect will last for the next few years.
Over the last years, we have carefully positions synergy to take advantage of this super cycle on.
Great.
With full market exposure is expected to benefit substantially from the smartphone.
We're fully committed to creating shareholder value.
And with that I would like to turn the call over to the operator and answer any questions. You may have operator, please cyclical.
Thank you.
Ladies and gentlemen, we will now begin the question and ask a question.
If you wish to ask a question. Please press star 1 on your telephone keypad and wait for your name to be announced if you wish to cancel your request. Please press the husky. Please standby, while we compile the Q&A queue. This may take some moments.
The first question comes from the line of Tate Sullivan from Maxim Group. Please ask your question.
Thank you good day everyone.
Hi, based on here Hi, Hello, good on your TCE guidance commentary that mostly of around 29000 per.
3 Q well well most of the contracts.
Ladies converted fix reassess.
<unk>.
Okay.
Well, yes, they do reset.
The fixtures, which has a weighted average of the spot rates are what we expect to be at the end of the quarter.
Right that we will receive from the.
The index linked ones as well as the fixed rates and the ones that we have converted from floating to fixed. So this is pretty much a figure that we can be a quite.
Quite certain that we can meet for Q3.
Yeah.
And then but then going into <unk>.
Q4 and.
Yes, that's great stay around 30, K 30000 would you.
On a point.
The same type of strategy I think you mentioned earlier, maybe continuing to consider fixed as well ex floating.
Yes, so we have already fixed 2 ships from floating to fixed in Q4.
Right.
That are exiting.
The dollar.
That's what we have said for Q3.
And we are optimistic that they will try and beat.
Q4 is going to be 2.3 in Q3 will.
Surely beat Q2 by a lot. So we're very optimistic with the trend off the rates going forward.
Great and can you call.
And given you had the 2 contracts 1 year terms I believe maybe the options go a little longer what what is the longest term contract that you would consider in this type of market and were term contracts longer than a year available to us.
Starkly going back 15, 20 years or a year about Atlanta do yourself.
Well.
First of all in a normalized market you see a lot of conduct availability.
For 235 years, and it's kind of obvious that the market is now recovering from multi year lows.
So you know.
The chart on this are only now starting to provide fixed rates.
Rates for longer periods of time, so it's kind of natural course of events, we expect that the change in the near future.
So we hope and we expect that you will see a longer period.
Fixed rate contracts.
Offer then taken by a number of companies. So we're optimistic we're getting.
Of course.
We're still in a volatile.
What the market with strength depending.
Depending on a day by day basis, and we are pretty sure that we will see in the next 3 to 6 months longer periods of fixed contracts being offered.
Great well, thank you and that in great detail on the growth in your fleet and the current.
And that's pretty acute market. Thank you.
Thank you very much thank you.
Your next question comes from the line of Peter USB from final Securities. Please ask your question.
Hi, guys.
Just a couple quick ones from me.
So on the fleet side, you've obviously been quite aggressive in.
In recent months and are you now in a position where you can basically lock in a lot of free cash flow through the triggering catastrophe further options on the flow through time charters.
But with that backdrop, how are you kind of thinking on your capital allocation priorities going forward both in terms of.
Refinancing the debt.
Returning value to shareholders on assets.
And further acquisitions, if you could just elaborate a bit on that that'd be great.
Well. This is a great question and you know we have been discussing that internally a lot I was going on.
Since the beginning of the year, we have already on the fleet by 60% So I wouldn't anticipate.
Dissipate another same rate.
The increase in the near future.
I think that we will come to a point, where we will.
Start considering more aggressively to reward our shareholders in the near future.
Again management on board are in constant discussions about this matter and come September.
I think that we will be in a better position to assess.
Where we see the short medium and longer term.
The effect of the cash flow.
Net position is now quite comfortable on saying I mean, we are in the low 40%.
Net loan to value so.
I wouldn't consider except for some time.
<unk> here and there I wouldn't expect any radical debt reduction, we're very comfortable levels.
But shareholder rewards on top of our priorities.
We will make sure to it.
All of them as much as we can.
On the future.
Alright. Thank you and then just a quick 1.
The answer that would be great, but could you just give us a quick status.
Outstanding balance on the Genco notes on the convertibles or per quarter right.
Yes of course, our CFO will give you that covers right now.
Good morning also from my side.
There has been no change from the southern convert will continue to be <unk> $38.7.
<unk> million dollars and there is also $1.8 million of loans outstanding. So the loans have been reduced from from a 26 million balance at the beginning of 2022, only $1.8 million now.
Okay. That's perfect. Thank you very much guys.
Thank you very welcome thank you.
Thank you. The next question comes from the line of pay front from Noble capital markets. Please ask your question.
Good morning.
The modest in scrubbers can you.
And a lot of good questions before.
Some of the questions I had a bad.
1 thing I noticed in the second quarters that Opex.
Picked up on.
On a per day basis.
And you know.
I'm, hoping that it's associated with the acquisition could be closed in the quarter, but can you just talk about on.
Opex in the third quarter and the rest of the year.
Yeah, Paul first of all I mean, if you look I think we have discussed a number.
Understood.
The picture of the Opex, if you look at quarter, So 6 months periods historically nevertheless.
<unk> for the first 6 months of the year at 5700 is in line.
Our average Opex for 2020, so wouldn't you.
Compared with 2020, there is no not.
Not much difference so I think 1.5% increase.
Now of course, the fact that we have taken delivery within the first 6 months of 4 ships.
The number of pre delivery expenses.
Fly inclusive all over the world.
And therefore, the Minto optimized for delivery reports of the ships has.
Just on inexpensive exercise and let alone. The fact, that's also pre delivery inspections of the ships or not.
The way you used to do to do them. So I mean some expense.
Ordering on especially on equipment.
It should also be faster, but nonetheless, I mean going from the second the second class.
Has been going through the fourth quarter of the year.
You should expect that Opex would normalize at the levels.
It used to so around 5000.705800 per day on an average basis.
Great that's helpful.
Thank you.
It sounds like.
And actually if I heard correctly.
T SEC guidance incorporates 30000 per the rest of the quarter.
Yes S S a S.
Moved up a little bit is there any potential for you to lock in.
Those higher rates through.
No.
On the FFA market or said something.
Your.
You know you're not looking at right now.
Well Paul for Q3, we have effectively locked in as much as we could have locked in so we're at the maximum put themselves looking into now that we're call. It so I wouldn't anticipate on additional.
Floating to fixed.
Provisions for.
For Q4, however, we still have.
A lot of potential and we have set a number internally as to what would that watermark be for us to start doing that and we had I mean right now we have already fixed 2 ships.
For Q4.
When we.
Please the market strengthening that we strongly believe it's going to strengthen a lot.
In the second half further.
Suddenly see into additional conversions to fixed.
Okay, and just to clarify the matters that would mean that you have for 4 ships total fixed in the fourth.
We see.
Including the 2 time charters.
Once the.
Once the world ships delivered.
Yes, yes on the weighted average of these 4 ships is higher than on the guidance. We have provided for Q3.
So north of 30000, okay.
Yes.
Can you break out.
On them.
It would be helpful.
Some more color on sort of the cash flow.
Can you break out Capex current second quarter, you know what your Scranton acquisition.
And then what you expect to spend on acquisitions in the third quarter I know there isn't much left but it could.
Those 2 figures.
It'd be helpful.
Well, we can provide you that in greater detail since the beginning of the year, but it's somewhere in the region of 159.8 or $158.9 million I'm not 100% certain right now that have the analysis, but the salaries can send you the full breakdown on a per quarter basis.
For Q1, Q2, and Q3, having said that in Q3, which have a remaining of taking delivery of 1 more ship and provide giving delivery of the ship to new owners. So it's going to be a timing event between end of August beginning of September asked of how these things will materialize for Q4, we don't anticipate an additional.
All acquisition Capex.
I think there is going to be the first quarter with or without any additional acquisition capex to the best of our.
Estimate right now.
Yep.
We will also be finding next next week with the commission.
<unk> with the full.
Sales of maintaining financial shortly will be detailed cash flow there.
Okay great.
And then when you look at it semantics, you sort of alluded to it from the standpoint of acquisition activity.
Pleasant.
Positive.
B.
The.
Looking at your.
Balance ending in the second quarter GAAP.
Given the acquisition activity it was only down $2 million roughly from the first quarter level.
And with less ex acquisition activity and the sale in the third quarter.
My gut is the cash should.
Remain relatively high.
Right.
Is that can you just talk about your potential capital needs looking at the second half of the year also in the context of the S..3 filing that you recently did and just whether you.
If you could just talk about why you why you filed they are free and and.
Yeah.
Sort of how you're looking at that at this point in time.
Yes, Great question Paul. Thank you first of all I was supposed to be a free we do not anticipate raising any equity in the immediate future.
We just do it does part of the companies.
Normal course of business do not have enough free in place.
For whatever reason so for US you know NSA is not something that would be used immediately but it's something that you may use within a 3 year period of time.
With the previous 3 years channel at the same like what we anticipate will be the next 3 years. So you know having said that would be not really anticipate to have a big use of that F free and less.
That's super spectacular opportunity knocks on the door, which you know I don't have anything in mind right now to be on the show yesterday is effectively.
On the normal course of business from the company and we have it as part of our governance and as part of our I spoke of on a normal a going concern in respect of.
Yes.
The accumulated cash yes, so we on ocean discussions with a couple of lenders.
Lenders.
And Shirley finance some of the debt free ships, not because we have to but because of our relationships and the like suburbs said then we already stated in the press release all of our new lending has been at around.
On 20% loan to value so for us on the matter of needed as a matter of relationship with a number of lenders and we do it just to expand further our banking universal we might have some additional liquidity coming in now.
Other great ship comes across wound seriously consider if not and we feel that we need to reward our shareholders.
Further we will do that so again as I mentioned in the previous question we will.
Examine the whole matter in September and we will decide how to best on vacate the cash in.
To share holder returns or additional acquisitions.
Great that's helpful.
Could you remind.
How many.
Capes are not encumbered at this point in time.
Currently we have taken delivery of the strategy.
A moment east not income, but we have nevertheless received a commitment letter from us from Unquote machine, we expect to close the facility within the next.
Couple of weeks.
After that I mean, we have the ball cheap come in we'll take delivery using our own cash discuss on hand.
And we have.
We have not concluded on the financing full share yet.
So after the delivery world cheap, but we expect to have around 45 million in cash.
Mind made free version.
Okay, great and.
I'm not sure.
If you can talk about this much but.
So you do have the converts out there and my sense is the convert might be from an overhang for the stock price.
Can you.
And then talk about what your potential plans for either trying to refinance that or take out the convert them.
That's a very good point.
We are considering various solutions with that and when the time comes also from September onwards, we will have a discussion with the holder.
Just tell the convertible note then we will discuss what are the potential options, but surely it's going to be for the benefit of the shareholders and they fully appreciate the fact that this is an overhang for our shares outstanding we realize that internally. We have been discussing that then we will try to resolve it with the best possible way for our shareholders.
Hold on great. Thank you some ex every time.
Youre very welcome Paul have a great day.
Yeah.
Okay.
We have no further questions at this time please continue.
For low rise there are no further questions then I guess, we should.
Terminate the call.
And thanks, everyone for participating in our Q2 and first 6 months of 2021 financial results.
So thanks, everyone for participating and thank Laura for hosting this call for us.
Thank you that does conclude the conference for today. Thank you for participating you may all disconnect.
Speakers please standby.
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Thank you for standing by and welcome to the synergy Maritime Holdings Corp, second quarter 2021 financial results webcast.
This press release contains forward looking statements as defined in section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act from 1934 as amended concerning future events words, such as May should expects intends plans believes anticipates hopes estimates.
[music] variations of such words and similar expressions are intended to identify forward looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies many of which are beyond the control of the company.
Actual results may differ materially from those expressed or implied.
And these forward looking statements factors that could cause actual results to differ materially include but are not limited to the company's operating on financial results, the companys liquidity, including its ability to service its indebtedness competitive factors in the markets in which the company operates shipping industry trends, including charter rates. This low.
I'll use in factories.
Affecting vessel supply and demand.
Future pending on recent acquisitions and dispositions business strategy areas of possible expansion or contraction unexpected capital spending or operating expenses risks associated with operations outside the United States risks associated with the length and severity of the ongoing Novo Corona virus Covid.
With 19 outbreak, including its effect on demand for dry bulk products on the transportation thereof, and other factors listed from time to time in the Companys filings with the SEC, including its most recent annual report on form 20-F, the company's filings can be obtained free of charge on the SEC's website at Www Dot SEC don't.
Except to the extent required by law the company expressly disclaims any obligations on to taking 2 of these publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the companys expectations with respect thereto or any change in events conditions or circumstances on which any statement is based at this time all.
All participants are currently in listen only mode. There will be a presentation followed by a question and answer session at which time if you wish to ask a question. Please press star 1 on your telephone I must advise you. This conference is being recorded today I would now like to hand, the call over to your first speaker today, Mr. Stomata, sometimes CEO. Please go ahead Sir.
Thank you operator.
Hello, everyone and thank you for joining our call.
They will discuss our results for the second quarter and first 6 months with pellets on day, 1 and we will provide you with a general update of the major corporate event.
A good place.
I'm very excited to see that.
Our strategic plan has started to pay off and as soon as it is expected to prosper for years to come on.
Our substantial growth on the law.
12 months has been well done and has allowed soon is it amongst its participation in this current market price.
I'm also happy to see the freight rates have recovered.
Close to historical average is after a decade from that performance I believe that as soon as workplace to reward shareholders in this environment.
In addition.
And obviously the transactions over the past 12 months have solidified our capital structure and we expect to take full advantage of the strongest.
Market in a decade.
I think the following highlights are the most important.
The company's fleet has reached 16 K per vessels with 2.8 million deadweight.
We have grown our fleet by more than 50%. Since then Q3.2020 and those vessels.
Strongest wired or build on the highest quality shipyards in Japan was 2 of them come with exhaust gas scrubbers installed.
Since our last update in May we have purchased and already taken delivery of 1 more Japanese 2019, built capesize vessel and we have agreed to dispose of the leadership.
It took us on a non built vessel that was acquired in 2015.
As of the end of the second quarter the market value of our fleet was approximately $448 million against debt outstanding of about $213 million.
I thought on investment with 160 million.
So that has been made in 2021. So these purchases while total debt on the balance sheet is only reason by about $34.6 million.
This implies a loan to value of approximately 22% on the new vessels.
The weighted average interest rate on the new debt is about $3.35 per cent.
Which will also partially replace some legacy more expensive debt.
The governing our commercial development further to the 4 new period employments announced in previous items at least we'll have concluded 1 more fixed rate time charter on study $1750.
They put a 12 to 16 months.
This is the second vessel in our fleet to be employed at more of a 51000 Boes a day for at least it wasn't yet period.
Currently 12 vessels are employed on index linked time charters.
On the fixed time charter rates.
And to our employees on what gets basis.
Therefore, close to 88 per cent of our flip is in video content.
Our fleet achieved a Q2.2021 daily time charter equivalent rate of $20100 increased by 270%.
From the first quarter of 2020.
Our Q2 fleet TCE is obviously lower than the index due to set them on floating to fixed conversions. We did in the beginning of the year for hedging purposes. However in Q3, so far about 94% over fleet days on fixed at almost 29000.
On Boes, a day, which will ensure a significant improvement in financial performance over the first half of the duo.
Adjusted EBITDA was equal to $11.3 million compared to losses of 1 day to 5 million in the same quarter of last year net.
Net income was equal to $2 million in the quarter and 6.7%.
And in the 6 month period.
Cash on cash equivalent as of June 32021 stood at $56.4 million compared on $23.7 million as of December 31, 2020.
Debt outstanding at the end of the quarter was approximately 204 million shareholders equity at the end of the second quarter of content.
2 on the was $199.4 million compared to $95.7 million at the end of 2020, which means an increase of about 110%.
Sure.
Let's move on to discuss the most important developments since our last earnings call.
Overall during the year, we have acquired.
Ex Capesize vessels, while we also decided to show the oldest vessel in our fleet.
On July 27, 21, we took delivery of our newest addition to the fleet the friendship day.
Is it 2009 built capesize vessel that we agreed to acquire in July.
The vessel has been fixed on an index.
It's out there with and White K line, which is 1 of the leading Japanese ship owners and operators for a period of 17 to 24 months.
Employment will commence promptly the daily rate at a premium over the PCI.
During July we also agreed to shell the leadership to Asian buyers.
Link the leadership is a 20 year old Capesize vessels and was the first ship acquired by synergy in March 2015.
We're happy to take this opportunity to replace our oldest vessel during favorable market conditions. The delivery of the leadership to its new owners is expected in early September.
As a brief recap of information provided in the last earnings release, we took delivery of 4 new vessels from Q2.2021, 2 of which were delivered in May and 2 in June.
Our vessels have entered the new time charters to.
2 of which are fixed rates exceeding $31000 as mentioned.
As of day, we're pending delivery of the world Chip.
<unk> hundred 12 build capesize that we expect to take delivery by the end of August.
As a reminder, special surveys and ballast water treatment system installation for all new vessels was completed by the previous owners and therefore, we do not anticipate in.
With significant capital expenditure for at least the next 2 years. Moreover.
Moreover, 2 vessels come fitted with exhaust gas scrubber system.
Vessel values have been on a clear upward trajectory in the past months and given the sport on time charter market conditions I believe that further improvements are.
Well within reach given where asset prices have traded historically.
In Q2, we have concluded financing transactions of $117.3 million, including a $39 million sale and leaseback with a prominent Asian financial institutions.
<unk> as well as a new loan commitments from an existing bank.
The average will go into more detail on this but the average interest rate will be approximately $3, 35% margin over LIBOR.
It's a very significant improvement when compared to the facilities that were prepaid within 2021.
Synergy is to date in an optimal financial position to capitalize on improving market conditions with a goal of creating substantial value for the investors in the next few years.
And with this message I would like now to pass the call to our CFO Stablish was going to discuss our financial results.
We'll come back to the coal for the market update shortly.
Several please go ahead.
Thank you so much welcome everyone to our second earnings call for 2021 lets start by reviewing the main highlights of our financial statements for the second quarter and 6 months period that ended on June 32021.
Our financial performance benefited from the strong dry bulk market as gross revenue was equal to $28.9 million an increase of 209% from the second quarter of 2020.
Our daily time charter equivalent for the quarter was approximately $20100 a 270% increase.
Compared to $5424 for the second quarter of 2020.
Our TCE performance was affected by the completion of index linked charters to fixed during the fourth quarter of 2020, which was done as part of our Frac hedging strategy for.
For the third quarter, the majority of our fleet.
Available days have been fixed at day rates that is roughly in line with the quarter to date average of the PCI, including 8 conversions of index linked rates to fixed.
Based on our commercial performance. So far we are on track to see stronger financial results in the <unk> in the next quarter.
At the moment 13 vessels are.
Employed on the index linked charters that allows the company to benefit from the positive freight market trend and 8 of these charters have conversion options, allowing us to convert to flat rate based on the prevailing FFA curve.
For the fourth quarter with a fixed only to index linked chips at around 2000.
2.5 but we'll continue to monitor the movements will be interface and May proceed with more seamless fixtures.
Adjusted EBITDA in the second quarter of 2021 was $11.3 million up from negative adjusted EBITDA of $1.8 million in the same quarter of 2020, while senior deals.
To date, the net income of $2 million compared to a net loss of $11.3 million in the same quarter last year and a net loss of $1.3 million in the first quarter of 2021.
For the 6 months period that ended June 32021 synergy recorded a daily time charter equivalent.
<unk> $8327 compared to $6985 and $8368 in the corresponding periods of 2020 and 2019 gross revenue was equal to $50 million an increase of 100.
16% from last years corresponding interim period.
Adjusted EBITDA for the first 6 months of 2021 was equal to $19.2 million a big improvement from a negative adjusted EBITDA of <unk> million in 2020.
Lastly, we recorded net income of <unk> 6.
$6 million compared to a net loss of $19.7 million in the first 6 months of 2020.
As a reminder, from our first quarter earnings at least our daily breakeven for the rest of 2021 is around 13000, excluding on anticipated vessel Capex, which are fully funded by cash reserves.
So we expect a call operating leverage to result in continued cash flow improvement going forward.
Moving on from our operating results I'm very glad to see that the financing restructuring that was completed in December last year in combination with the aggressive prepayment of our legacy loans from the first quarter of 2000.
On are now bearing fruit in the form of significantly lower interest and finance expenses.
Quarter, 2021 interest and finance expenses were equal to $4.3 million compared to $5.6 million in the same period of 2020, when factoring in the non cash items the company incurred.
Mainly $2.9 million of cash interest and finance costs, a significant decrease from $4 million in the second quarter of 2020.
For the 6 months period that ended June 32002 on interest and finance expense was equal to $8.3 million compared to $11.2 million in 2020.
Excluding non cash items, the cash interest expense for the interim period was equal to $5.2 million when compared to $8.2 million in the same period last year.
As a reminder, the large non cash expenses relate mainly to the amortization feature of the convertible note and to be on most of deferred.
Net finance charges.
The expense of legacy debt that was repaid and refinanced over the past year were generally placed with competitively priced financing arrangements that reflects the improved financial footing of our company.
The weighted average interest rate on the facilities were fully prepaid was 8.4%.
As compared to 335% for the new $104.3 million incoming financing.
Given the market environment dry bulk shipping and the track record we have established with our lenders. We expect that terms for financing will improve further going forward.
For the time being.
<unk> as regards our current results it is encouraging to see the significant reduction in interest expenses with little variation in starting that period over period as our debt balance as of the end of the second quarter of 2021 was about $204 million compared to $213 million in the end of the.
The second quarter of 2020.
When compared to the end of 2020 total debt outstanding has decreased by approximately $35 million against an expected increase in the book value per fleet of announced on 160 million. This implies that the effective low to value on new vessel acquisitions is in any case lowered.
Lower than 30%.
I would like to suggest is our ability to low both the average age and leverage ratio of our fleet. During this positive market inflection is an important positive development for the future.
Moreover, we ended the second quarter with a cash balance of $56.4 million up from 20.
$3.7 million at the end of 2020.
Total shareholders' equity has increased $199.4 million as of June 32021 from $95.7 million at the end of 2020.
As a result from vacation on previous earnings call. The rapid increase in vessel value since the start of the year.
Cash cost and market value Super vessels, as we enter the second quarter to be higher than the book value on the balance sheet.
The market value adjusted equity is therefore higher than what is reflected on our balance sheet.
Indicative Lee we note that based on third party broker valuations as of the end of June.
The market value of the 6 vessels that we have agreed to acquire this year has already appreciated by approximately 15%.
Excuse me 50 million versus the acquisition price based on on the same market values for our fleet as per June 32021, our corporate leverage is estimated at.
Year to <unk>, 50%.
I will now move on to discuss the financing transaction sales have taken place since our last update.
During the quarter. The company has secured approximately $104.3 million in vessel financing. While it has also received a commitment letter for an additional skus.
Our portfolio of about $13 million.
As a brief recap of what was mentioned previously in our first quarter results between April and May 2021, we entered into a 37.45 Willow facility with Alpha 1 for the financing of the leadership this quarter shipping the low tech at 20.
<unk> 5 million sale and leaseback with Cargill for the flagship and $15.5 million low loan facility with the channel Baltic months for the traded shipping the Gucci.
The terms of this financing range between 4 and 5 years and the weighted average interest rate is approximately 3.3%.
Further to these refinancings, we concluded successfully at $39 million sale and leaseback agreement with China merchants Bank financing leasing 1 of the most prominent Chinese resource in order to finance 2 of 4 new acquisitions, the last ship and deposits.
The applicable interest rate is LIBOR.
Plus a margin of 15, 5%. This financing has important strategic R&D for synergy since we expand our exposure to the Chinese financing market, which has proven to be a reliable and efficient source of capital for shipping.
Lastly, most recently in July we agreed terms with.
<unk> bank for a secured loan facility of up $13 million to finance our latest acquisition. The 2009 built capesize vessel named friendship.
The facility will be for a term of 4 years with bear interest at a rate of LIBOR, plus 325% and will be structured as an additional accounts.
In our existing low sulfur bunker 1 of our key lenders that has supported our company through thick and thin.
Following a proactive approach to managing the company's overall leverage we are glad to be able to negotiate competitive terms with the lenders.
With respect to financing concluded in 2021 have daily.
Daily debt service rate ranging from approximately 3000 to about $6.5000 per vessel per day as a result, the overall fleet breakeven when including anticipated daily operating expenses is expected to remain low, especially when compared to current charter market unnecessary levels.
This is a very.
Very important improvement from previous years, and I would probably highlight it as the main take away from my remarks today.
On the actions taken since April 2020 positions in a day favorably for the significant improvement in the dry bulk market that started in the second half of last year and has accelerated within 2021.
At this point I would like to conclude by acknowledging the fact that purely from a financing perspective, we are undergoing a transitional period with radical changes the.
On the changes on capital structure has been quite extensive by any standard and we will take some time before we see the full benefit of lower interest rate margins, a low breakeven rate.
Reflecting on financial results.
As regards our fleet.
To take delivery of 1 more vessel, while the delivery of the recently sold leadership to its new owners has still not been concluded.
Needless to mention that operating and general administrative expenses continue to be somewhat inflated as we manage.
The implication of the pandemic in the worldwide operations of our fleet, let alone are ranging in successfully completing the delivery from newly acquired vessels. The current financial statements. Therefore, do not reflect the full revenue generating capacity of our fleet and I expect that the second half of the year will be more representative.
<unk>.
Management review I will now turn the call back some artists who will discuss the market and industry fundamentals commodities.
Thank you Sabra.
Once again, we're very excited to be in the strongest market in a decade.
After years of market imbalances, which seemed to have ended a long term period of stress.
And so low fleet growth.
In 2021, and 'twenty 2 dry bulk demand is expected to rise by approximately 4% net 2% respectively on a ton mile basis, while net fleet growth is projected to be around 3.3% and 1.2% respectively. In 2021 on 1 and the 2.
From the best figures are very constructive for the dry bulk market, especially 1 viewed in the context of strong fiscal spending and infrastructure construction in many parts of the world.
During the second quarter from first half of 2021, the Baltic Capesize index averaged about 31020.4000, respectively.
There is healthy levels have been realized even as the market has not yet recovered completely from the operational inefficiencies in Brazilian iron ore mines.
<unk> 2019.
Capesize day rates are currently at around $30000 per day.
This performance is truly exceptional.
Considering the weak seasonality over the first half.
All major miners are estimating more than 90 million tons of additional iron ore production from the second half of 2021, which implies much stronger seaborne iron ore volumes in the next months.
Global demand for.
And iron ore remains very strong as China continues at record volumes of sales, making with a 12% year on year rise.
In addition high quality iron ore exports from Brazil have lower emissions and are benefiting from China's environmental pollution product reduction targets.
We're still value recently stated target of achieving 400 million tons of iron ore production by the end of 2022 and given the long distance that low.
Based on this mortgage out of Brazil expectation to generate significant incremental capesize demand.
Coal seaborne volumes are also staging a very strong recovery.
Average from the extreme COVID-19 induced weak measure of 2020, while redemptions between China, and Australia have helped calm coal ton miles to increase even more.
Coal generated electricity in China has outpaced the growth in domestic coal mining by a wide margin in 2021, which we expect to be positive.
For coal import demand.
As mentioned before we have already fixed 2 of our vessels on a 1 year time charters above 31.
Additional demand from Pedro charters at the lucrative fixed rates.
In addition, capesize asset values have risen by more than.
5 per cent since the end of 2020.
Looking at vessel supply over the next 2 years, we're very optimistic as the upcoming environmental regulations will have a positive effect in the market.
The immediate reduction of emissions that will be enforced in 2023.
Which is on a bold unavoidable.
Lead to speed the reduction of 10% to 15% for the global fleet and create a strong vessel supply squeeze.
This event will likely boost the market even more.
The effect will be even greater when adjusted for the larger ships like Capes and Panamaxes.
In addition, the uncertainty surrounding future.
Future prevailing marine technologies compatible with a 2030 global shipping emissions and the extensive orders for vessels like container ships.
Have led to the lowest new building order book in decades.
Going back to my initial point, we have and the periods of strong demand and slow fleet.
Net growth that we expect will last for the next few years.
Over the last few years, we have carefully position synergy to take advantage of this super cycle.
A great fleet with full market exposure is expected to benefit substantially from this month.
We're fully committed to creating shareholder.
And with that I would like to turn the call over to the operator and answer any questions. You may have operator, please take the call.
Thank you ladies and gentlemen, we will now begin the question and ask a question.
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Your first question comes from the line of Tate Sullivan from Maxim Group. Please ask your question.
Thank you good.
Day, everyone.
Hi base on here Hi, Hello, good on your TCE guidance commentary.
Mostly of around 29000 per 3 Q will will most of the contracts that you've converted to fix reassert high for Q.
Well, yes.
They do reset.
Fixtures.
The weighted average of the spot rates.
We expect to be at the end of the quarter right that we will receive from the index linked ones as well as the fixed rates and the ones that we have converted from floating to fixed. So this is.
Yes.
On a figure that we can be.
Quite certain that we can meet for Q3.
And then but then going into Q.
Q4, and given if rates stay around.
Around 30, K 30000 would you.
Employee back.
The same type of.
<unk> I think.
Earlier, maybe continuing to consider fixed as well as floating.
Yes, so we have already fixed 2 ships from floating to fixed in Q4.
Rates that are exiting the $70000 that we have set for Q3.
And we are optimistic that the world.
Per the might've beep.
Q4 is going to be 2.3 in Q3 will.
Surely beat Q2 by a lot. So we're very optimistic with the trend of the rates going forward.
Great and can you comment I know you have the 2 contracts with year terms I believe maybe the options go a little longer what what is the longest term contract.
Contract that you would consider in this type of market and were term contracts longer than a year available historically going back 15, 20 years, there is a year about Atlanta detail.
Well of course first of all in a normalized market you see a lot of contract availability.
Okay.
We will try 5 years and it is.
It's kind of obvious that the market is now recovering from multiyear lows. So.
The the charterers are only now starting to provide fixed rates for longer periods of time. So that it's kind of natural course of events, but we expect that to change in the near future.
We hope and we expect that you will see a longer period.
Fixed rate contracts being offered and taken by a number of companies. So we're optimistic we're getting there.
We're still in a volatile.
Spot market, which depending on a day by day basis.
And we are pretty sure that we will see in the next 3 to 6 months longer periods of fixed contracts being offered.
Great well. Thank you in great detail on the growth in your fleet and the current and non <unk> market. Thank you.
Thank you very much day. Thank you.
Your next question comes from the line of Peter Yes.
From final Securities. Please ask your question.
Hi, guys.
Just a.
Couple of quick ones from me.
So on the fleet side, you've obviously been quite aggressive in.
In recent months on.
You are now in a position where you can basically lock in a lot of free cash flow through.
Triggering potassium further options on the flow time charters.
But with that backdrop, how are you kind of thinking on your capital allocation priorities going forward both in terms of refi.
Refinancing the deaths are returning value to shareholders on assets.
And further acquisitions, if you could just elaborate a bit.
That'd be great.
Well this is a great question.
We have been discussing that internally a lot I was going on.
Since the beginning of the year, we have already got on the fleet by 60%. So I wouldn't anticipate another same rates operating.
The increase in the near future.
I think that will come from.
We will start.
Start considering more aggressively to reward our shareholders in the near future.
Again my husband on board are in constant discussions about this matter and come September I think that we will be in a better position to assess.
Where we see the short medium and longer term.
Effect of the cash flow.
Net position is now quite comfortable on my saying I mean, we're in the low 40% net loan to value. So.
I wouldn't consider except for some fine tuning here and there I wouldn't expect any radical debt reduction we're very comfortable levels.
But shareholders.
The awards on top of our priorities.
We will make sure to reward them as much as we can.
The near future.
Alright. Thank you and then just a quick 1 if you have the the answer that'd be great, but could you just give us a quick status.
On the balance on the Genco notes on the convertibles or per quarter.
Yeah.
Yes of course, our CFO will give you that covers right now.
Hi, Good morning also from my side I mean.
There has been no change in that channel and convert we'll still continue to be <unk> $38.7 million and there is also $1.8 million of loans outstanding. So the loans have been reduced from from.
26 million balance at the beginning of 2022, only $1.8 million now.
Yeah.
Okay. That's perfect. Thank you very much guys.
Thank you very welcome thank you.
Thank you. The next question comes from the line of pay from from Noble capital markets. Please ask your question.
Good morning.
Okay.
The modest <unk>.
You know a lot of good questions before.
Some of the questions I had to price.
1 thing I noticed in the second quarters that Opex ticked up.
On a per day basis and I'm.
I'm, hoping that it's associated with the acquisition.
Could be closed in the quarter, but can you just talk about.
Opex in the third quarter and the rest of the year.
Yeah, Paul first of all I mean, if you look on.
We have discussed a number of times that the the picture of the OPEC say, if you look at quarter, So 6 months periods distort it Nevertheless.
The average opex for the first 6 months of the year at 5700 is in line.
With our average.
Opex for 2020, so when you compare with 2020, there is no not much difference so I think 1.5% increase.
Now of course, the fact that we have taken delivery.
Listen the first 6 months of 4 ships.
A number of pre delivery expenses.
Fly inclusive all over the world.
Therefore, the Minto optimized from a delivery reports of the ships has been an expensive exercise and let alone. The fact that also pre delivery inspections from the ships or not.
The way you used to do to do.
Do them, so I mean, some excessive ordering.
<unk>, especially on equipment and it should also be factored in but nonetheless, I mean going from the second the second half on actually going through the fourth quarter of the year you should expect that the opex would normalize at the levels.
You used to so around 5000.705800 per day on an average basis.
Great that's helpful.
Thank you.
It sounds like.
Heard correctly.
The guidance incorporates 30000 from the rest of the quarter.
<unk>.
Yes.
Moved up a little bit is there any potential for you to lock in.
Those higher rates through.
And they offer a free market or is that something you're you're.
You know youre not looking at right now.
Well Paul.
Q3, we have effectively locked in as much as we could have locked in so we're at the maximum potential looking into now that we could so I wouldn't anticipate any additional.
Floating to fixed rate conversions.
For Q4, however, we still have.
A lot of potential and we have.
Set a number internally as to what would that watermark be for us to start doing that.
We have I mean, right now we have already fixed 2 ships.
Q4, and when we see the market strengthening that we strongly believe it is going to strength in a lot.
In the second half further.
Sure.
We will certainly see into additional conversions to fixed.
Okay, and just to clarify can you manage that would mean that you have for 4 ships total fixed in the fourth quarter income.
<unk> net to time charters.
Once the.
Once the world ships.
<unk> delivered.
Yes, yes on the weighted average of these 4 ships is higher than on the guidance. We have provided for Q3.
So north of 30000, okay.
Yes.
Can you break out.
It would be helpful to get some more color on sort of the cash flow.
Can you.
Capex for the second quarter, you know what your Scranton acquisition.
And then what do you expect to spend in acquisitions in the third quarter I know there isn't much left but it could.
Get those 2 figures that'd be helpful.
Well, we can provide you that in a greater detail since the beginning of the year.
But it's somewhere in the region of 159.8 or $158.9 million I'm not 100% shut in right now it doesn't day analysis, but are established and send you the full breakdown on a per quarter basis for Q1, Q2, and Q3, having said that in Q3, which have a remaining of taking delivery of 1.
1 more ship and giving the liberty of Oh, the ship to the new owners. So it's gonna be a timing event between end of August beginning of September obviously all of these things so will materialize for Q4, we don't anticipate an additional acquisition capex.
I think there's going to be the first quarter with or without any additional acquisition capex.
Capex to the best of our estimates.
Estimate right now.
Yep.
We will also be finding a mix next week with the commission.
<unk>.
The full set of interim financing so that will be detailed cash flow there.
Okay great.
And then.
We look at it semantics, you sort of alluded to it from the standpoint of acquisition activity.
Non pleasant the positive.
You know the I guess the.
Looking at your cash balance ending the second quarter.
Given the acquisition activity it was only down $2 million of profit.
From the first quarter levels.
And with less ex acquisition activity and the sale in the third quarter.
My gut is the cash should.
<unk> remained relatively high.
Is that can you just talk about your potential capital needs looking.
When you can have a day there.
Also in the context of the.
3 filing that you recently did and just whether you.
If you could just talk about why.
Why you filed your free.
And.
Sort of how youre looking at that at this point in time.
Yes, a great question.
Sure Paul. Thank you first of all ask for their free we do not anticipate raising any equity in the immediate future.
Just 2 it does part of the company's.
Normal course of business to have enough free in place for whatever reason so for us.
It's not something that would be used immediately but it's something that you may use.
Within a 3 year period of time.
Obviously the previous 3 years are not the same like what we anticipate will be the next 3 years. So having said that we're not really anticipate to have a big useful without the S..3 and less super spectacular opportunity knocks on the door.
I don't have anything in mind right now to be on the show yesterday.
Is effectively.
On the normal course of business on the company and we have it there as part of our governance and as part of our.
You know as part of our normal a going concern.
In respect of the.
On the accumulated cash yes, so we on ocean discussions with a couple of.
Lenders.
Yesterday to potentially finance some of the debt free ships, not because we have to but because of our relationships.
Several said then we already stated in the press release, all the new lending has been at around 20% low value. So for us it's a matter of needed as a matter of relationship with a number of lenders and we do.
To expand further our banking universal we might have some additional liquidity coming in now if another great ship comes across we would seriously consider if not and we feel that we need to reward our shareholders. Further we will do that so again as I mentioned in the previous question.
We will.
It's a free examine the whole matter in September and we will decide how to best allocate the cash.
In the shareholder returns on additional acquisitions.
Great that's helpful.
Would you remind me how many.
Capes are not encumbered at this point in time.
Currently we have taken delivery of the friendship, which at the moment is not income, but we have nevertheless.
On a letter from us of uncoated free sheet, we expect to close the facility within the next couple of weeks and after that somebody can come from all cheap come in we'll take delivery using our own cash.
As discussed on hand.
And we will.
Have not concluded on the financing for share gain.
So after the delivery world cheap, but we expect to have around 45 million cash and debt free vessels.
Okay great.
I'm not sure.
If you can talk about this much but.
You know you do have the converts out there and my sense is that convert might be from an overhang for the stock price.
Can you just talk about what your potential plans for either trying to refinance that or take out the convert debt.
That's a V.
Very good point.
We are considering various solutions with that and when the time comes also from September onwards, we will have a discussion with the holder of the convertible note and we will discuss what are the potential options, but surely is going to be for the benefit of the shareholders and I fully appreciate.
The fact that this is an overhang for our shares outstanding.
We realize that internally, we have been discussing that and we will try to resolve it with the best possible way for our shareholders.
Great. Thank you so much for your time.
You're very welcome Paul have a great day.
Okay.
Yes.
We have no further questions at this time please continue.
Well Laura if there are no further questions then I guess, we should.
Terminate the call.
And thank everyone for participating in our Q2 and first 6 months of 2021 financial results.
So thanks, everyone for participating and thank you Laura for hosting this call for us.