Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017March 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934

For the transition period from           to         

Commission file number File Number 001-33393


GENCO SHIPPING & TRADING LIMITED

(Exact name of registrant as specified in its charter)

Republic of the Marshall Islands

98-043-975898-0439758

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

299 Park Avenue 12th, 12th Floor, New York, New York10171

(Address of principal executive offices) (Zip Code)

(646) (646) 443-8550

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common stock, par value $0.01 per share

GNK

New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

(Do not check if a smaller reporting company)

Emerging growth company 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No

The number of shares outstanding of each of the issuer’s classes of common stock, as of November 7, 2017:May 5, 2021: Common stock, par value $0.01 per share — 34,532,00441,912,432 shares.


Table of Contents

Genco Shipping & Trading Limited

Page

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

4

a)

Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2021 and December 31, 20162020

4

b)

Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2017March 31, 2021 and 20162020

5

c)

Condensed Consolidated Statements of Comprehensive LossIncome (Loss) for the Three and Nine Months ended September 30, 2017March 31, 2021 and 20162020

6

d)

Condensed Consolidated Statements of Equity for the NineThree Months ended September 30, 2017March 31, 2021 and 20162020

7

e)

Condensed Consolidated Statements of Cash Flows for the NineThree Months ended September 30, 2017March 31, 2021 and 20162020

8

f)

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

40

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

71

49

Item 4.

Controls and Procedures

72

50

PART II —OTHER INFORMATION

Item 1.1A.

Legal ProceedingsRisk Factors

73

51

Item 6.

Exhibits

73

51

2


Table of Contents

Website Information

We intend to use our website, www.GencoShipping.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor section. Accordingly, investors should monitor the Investor portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please submit your e-mail address at the Investor Relations Home page of the Investor section of our website. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

3


Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Genco Shipping & Trading Limited

Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2021 and December 31, 20162020

(U.S. Dollars in thousands, except for share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

 

    

2017

    

2016

 

 

    

 

    

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

152,511

 

$

133,400

 

Restricted cash

 

 

8,593

 

 

8,242

 

Due from charterers, net of a reserve of $165 and $283, respectively

 

 

10,868

 

 

10,373

 

Prepaid expenses and other current assets

 

 

22,611

 

 

15,750

 

Vessels held for sale

 

 

 —

 

 

4,840

 

Total current assets

 

 

194,583

 

 

172,605

 

 

 

 

 

 

 

 

 

Noncurrent assets:

 

 

 

 

 

 

 

Vessels, net of accumulated depreciation of $197,090 and $163,053, respectively

 

 

1,281,918

 

 

1,354,760

 

Deferred drydock, net of accumulated amortization of $8,370 and $6,340 respectively

 

 

14,455

 

 

12,637

 

Fixed assets, net of accumulated depreciation and amortization of $932 and $759, respectively

 

 

1,012

 

 

1,018

 

Other noncurrent assets

 

 

514

 

 

514

 

Restricted cash

 

 

24,001

 

 

27,426

 

Total noncurrent assets

 

 

1,321,900

 

 

1,396,355

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,516,483

 

$

1,568,960

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

22,531

 

$

22,885

 

Current portion of long-term debt

 

 

12,076

 

 

4,576

 

Deferred revenue

 

 

2,632

 

 

1,488

 

Total current liabilities:

 

 

37,239

 

 

28,949

 

 

 

 

 

 

 

 

 

Noncurrent liabilities:

 

 

 

 

 

 

 

Long-term lease obligations

 

 

2,408

 

 

1,868

 

Long-term debt, net of deferred financing costs of $9,618 and $11,357, respectively

 

 

504,896

 

 

508,444

 

Total noncurrent liabilities

 

 

507,304

 

 

510,312

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

544,543

 

 

539,261

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Series A Preferred Stock, par value $0.01; aggregate liquidation preference of $0 and $120,789 at September 30, 2017 and December 31, 2016, respectively

 

 

 —

 

 

120,789

 

Common stock, par value $0.01; 500,000,000 shares authorized; issued and outstanding 34,434,538 and 7,354,449 shares at September 30, 2017 and December 31, 2016, respectively

 

 

344

 

 

74

 

Additional paid-in capital

 

 

1,627,839

 

 

1,503,784

 

Retained deficit

 

 

(656,243)

 

 

(594,948)

 

Total equity

 

 

971,940

 

 

1,029,699

 

Total liabilities and equity

 

$

1,516,483

 

$

1,568,960

 

March 31, 

December 31, 

    

2021

    

2020

 

    

    

 

Assets

Current assets:

Cash and cash equivalents

$

123,191

$

143,872

Restricted cash

 

40,519

 

35,492

Due from charterers, net of a reserve of $493 and $669, respectively

 

11,243

 

12,991

Prepaid expenses and other current assets

13,149

10,856

Inventories

24,148

21,583

Vessels held for sale

15,630

22,408

Total current assets

 

227,880

 

247,202

Noncurrent assets:

Vessels, net of accumulated depreciation of $215,970 and $204,201, respectively

 

924,468

 

919,114

Vessels held for exchange

38,214

Deferred drydock, net of accumulated amortization of $9,377 and $8,124 respectively

 

14,374

 

14,689

Fixed assets, net of accumulated depreciation and amortization of $2,664 and $2,266, respectively

 

6,139

 

6,393

Operating lease right-of-use assets

 

6,538

 

6,882

Restricted cash

 

315

 

315

Fair value of derivative instruments

 

629

 

Total noncurrent assets

 

952,463

 

985,607

Total assets

$

1,180,343

$

1,232,809

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses

$

24,402

$

22,793

Current portion of long-term debt

 

65,277

 

80,642

Deferred revenue

 

7,389

 

8,421

Current operating lease liabilities

1,788

1,765

Total current liabilities:

 

98,856

 

113,621

Noncurrent liabilities:

Long-term operating lease liabilities

7,606

8,061

Contract liability

 

 

7,200

Long-term debt, net of deferred financing costs of $8,677 and $9,653, respectively

327,064

358,933

Total noncurrent liabilities

 

334,670

 

374,194

Total liabilities

 

433,526

 

487,815

Commitments and contingencies (Note 13)

Equity:

Common stock, par value $0.01; 500,000,000 shares authorized; 41,912,432 and 41,801,753 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

419

418

Additional paid-in capital

1,713,082

1,713,406

Accumulated other comprehensive income

 

161

 

Accumulated deficit

 

(966,845)

 

(968,830)

Total equity

 

746,817

 

744,994

Total liabilities and equity

$

1,180,343

$

1,232,809

See accompanying notes to condensed consolidated financial statements.

4


Table of Contents

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2021 and 20162020

(U.S. Dollars in Thousands, Except for Earnings Per Share and Share Data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2017

    

2016

    

2017

    

2016

   

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenues

 

$

51,161

 

$

37,871

 

$

134,780

 

$

89,461

 

Service revenues

 

 

 —

 

 

1,016

 

 

 —

 

 

2,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

51,161

 

 

38,887

 

 

134,780

 

 

91,701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Voyage expenses

 

 

5,550

 

 

2,262

 

 

9,743

 

 

9,232

 

Vessel operating expenses

 

 

25,131

 

 

28,460

 

 

73,867

 

 

86,125

 

General and administrative expenses (inclusive of nonvested stock amortization expense of $1,255,  $3,584,  $3,536 and $14,512, respectively)

 

 

5,889

 

 

7,943

 

 

16,550

 

 

30,101

 

Technical management fees

 

 

1,883

 

 

2,210

 

 

5,735

 

 

6,760

 

Depreciation and amortization

 

 

17,836

 

 

18,127

 

 

54,194

 

 

58,152

 

Other operating income

 

 

 —

 

 

 —

 

 

 —

 

 

(182)

 

Impairment of vessel assets

 

 

18,654

 

 

 —

 

 

21,993

 

 

69,278

 

(Gain) loss on sale of vessels

 

 

 —

 

 

 —

 

 

(7,712)

 

 

77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

74,943

 

 

59,002

 

 

174,370

 

 

259,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(23,782)

 

 

(20,115)

 

 

(39,590)

 

 

(167,842)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of investment

 

 

 —

 

 

 —

 

 

 —

 

 

(2,696)

 

Other (expense) income

 

 

(37)

 

 

125

 

 

(152)

 

 

(49)

 

Interest income

 

 

494

 

 

49

 

 

1,006

 

 

143

 

Interest expense

 

 

(7,857)

 

 

(7,073)

 

 

(22,559)

 

 

(21,199)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense

 

 

(7,400)

 

 

(6,899)

 

 

(21,705)

 

 

(23,801)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before reorganization items, net

 

 

(31,182)

 

 

(27,014)

 

 

(61,295)

 

 

(191,643)

 

Reorganization items, net

 

 

 —

 

 

(83)

 

 

 —

 

 

(243)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(31,182)

 

 

(27,097)

 

 

(61,295)

 

 

(191,886)

 

Income tax expense

 

 

 —

 

 

(417)

 

 

 —

 

 

(766)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(31,182)

 

$

(27,514)

 

$

(61,295)

 

$

(192,652)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share-basic

 

$

(0.90)

 

$

(3.80)

 

$

(1.80)

 

$

(26.65)

 

Net loss per share-diluted

 

$

(0.90)

 

$

(3.80)

 

$

(1.80)

 

$

(26.65)

 

Weighted average common shares outstanding-basic

 

 

34,469,998

 

 

7,245,268

 

 

34,135,736

 

 

7,228,660

 

Weighted average common shares outstanding-diluted

 

 

34,469,998

 

 

7,245,268

 

 

34,135,736

 

 

7,228,660

 

For the Three Months Ended

March 31, 

    

2021

    

2020

   

Revenues:

Voyage revenues

$

87,591

$

98,336

Total revenues

87,591

 

98,336

Operating expenses:

Voyage expenses

35,074

 

48,368

Vessel operating expenses

19,046

 

21,813

Charter hire expenses

5,435

3,075

General and administrative expenses (inclusive of nonvested stock amortization expense of $522 and $481, respectively)

6,102

 

5,767

Technical management fees

1,464

1,854

Depreciation and amortization

13,441

 

17,574

Impairment of vessel assets

112,814

Loss on sale of vessels

720

486

Total operating expenses

81,282

 

211,751

Operating income (loss)

6,309

 

(113,415)

Other income (expense):

Other income (expense)

146

 

(584)

Interest income

71

 

594

Interest expense

(4,541)

(6,945)

Other expense, net

(4,324)

 

(6,935)

Net income (loss)

$

1,985

$

(120,350)

Net earnings (loss) per share-basic

$

0.05

$

(2.87)

Net earnings (loss) per share-diluted

$

0.05

$

(2.87)

Weighted average common shares outstanding-basic

41,973,782

 

41,866,357

Weighted average common shares outstanding-diluted

42,276,380

 

41,866,357

See accompanying notes to condensed consolidated financial statements.

5


Table of Contents

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Comprehensive LossIncome (Loss)

For the Three and Nine Months Ended September 30, 2017March 31, 2021 and 20162020

(U.S. Dollars in Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2017

    

2016

    

2017

    

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(31,182)

 

$

(27,514)

 

$

(61,295)

 

$

(192,652)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 —

 

 

316

 

 

 —

 

 

311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$

(31,182)

 

$

(27,198)

 

$

(61,295)

 

$

(192,341)

 

For the Three Months Ended

March 31, 

    

2021

    

2020

 

Net income (loss)

$

1,985

 

$

(120,350)

Other comprehensive income

161

 

0

Comprehensive income (loss)

$

2,146

 

$

(120,350)

See accompanying notes to condensed consolidated financial statements.

6


Table of Contents

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Equity

For the NineThree Months Ended September 30, 2017March 31, 2021 and 20162020

(U.S. Dollars in Thousands)

(Unaudited)

Accumulated

Additional

Other

Common

Paid-in

Comprehensive

Accumulated

Stock

Capital

Income

Deficit

Total Equity

Balance — January 1, 2021

$

418

$

1,713,406

$

$

(968,830)

$

744,994

Net income

1,985

1,985

Other comprehensive income

161

161

Issuance of shares due to vesting of RSUs and exercise of options

1

(1)

Cash dividends declared ($0.02 per share)

(845)

(845)

Nonvested stock amortization

522

522

Balance — March 31, 2021

$

419

$

1,713,082

$

161

$

(966,845)

$

746,817

Accumulated

Additional

Other

Common

Paid-in

Comprehensive

Accumulated

Stock

Capital

Income

Deficit

Total Equity

Balance — January 1, 2020

$

417

$

1,721,268

$

$

(743,257)

$

978,428

Net loss

(120,350)

(120,350)

Issuance of shares due to vesting of RSUs, net of forfeitures

1

(1)

Cash dividends declared ($0.175 per share)

(7,363)

(7,363)

Nonvested stock amortization

481

481

��

Balance — March 31, 2020

$

418

$

1,714,385

$

$

(863,607)

$

851,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Series A

 

 

 

 

Additional

 

Comprehensive

 

 

 

 

 

 

 

 

Preferred

 

Common

 

Paid-in

 

Income

 

Retained

 

 

 

 

 

Stock

 

Stock

 

Capital

 

(Loss)

 

Deficit

 

Total Equity

 

Balance — January 1, 2017

 

$

120,789

 

$

74

 

$

1,503,784

 

$

 —

 

$

(594,948)

 

$

1,029,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(61,295)

 

 

(61,295)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of 27,061,856 shares of Series A Preferred Stock

 

 

(120,789)

 

 

270

 

 

120,519

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of 18,234 shares of vested RSUs

 

 

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonvested stock amortization

 

 

 

 

 

 

 

 

3,536

 

 

 

 

 

 

 

 

3,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — September 30, 2017

 

$

 —

 

$

344

 

$

1,627,839

 

$

 —

 

$

(656,243)

 

$

971,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Series A

 

 

 

 

Additional

 

Comprehensive

 

 

 

 

 

 

 

 

Preferred

 

Common

 

Paid-in

 

Income

 

Retained

 

 

 

 

 

 

Stock

 

Stock

 

Capital

 

(Loss)

 

Deficit

 

Total Equity

 

Balance — January 1, 2016

 

$

 —

 

$

73

 

$

1,483,105

 

$

(21)

 

$

(377,191)

 

$

1,105,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(192,652)

 

 

(192,652)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

311

 

 

 

 

 

311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of 61,244 shares of nonvested stock

 

 

 

 

 

 1

 

 

(1)

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of 3,138 shares of vested RSUs

 

 

 

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonvested stock amortization

 

 

 

 

 

 

 

 

14,512

 

 

 

 

 

 

 

 

14,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance — September 30, 2016

 

$

 —

 

$

74

 

$

1,497,616

 

$

290

 

$

(569,843)

 

$

928,137

 

See accompanying notes to condensed consolidated financial statements.

7


Table of Contents

Genco Shipping & Trading Limited

Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2021 and 20162020

(U.S. Dollars in Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

September 30, 

 

 

    

2017

    

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(61,295)

 

$

(192,652)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

54,194

 

 

58,152

 

Amortization of deferred financing costs

 

 

1,739

 

 

2,195

 

PIK interest, net

 

 

4,575

 

 

 —

 

Amortization of nonvested stock compensation expense

 

 

3,536

 

 

14,512

 

Impairment of vessel assets

 

 

21,993

 

 

69,278

 

(Gain) loss on sale of vessels

 

 

(7,712)

 

 

77

 

Impairment of investment

 

 

 —

 

 

2,696

 

Realized gain on sale of investment

 

 

 —

 

 

(64)

 

Change in assets and liabilities:

 

 

 

 

 

 

 

(Increase) decrease in due from charterers

 

 

(495)

 

 

2,115

 

(Increase) decrease in prepaid expenses and other current assets

 

 

(6,861)

 

 

4,221

 

Increase (decrease) in accounts payable and accrued expenses

 

 

766

 

 

(5,392)

 

Increase in deferred revenue

 

 

1,144

 

 

438

 

Increase in lease obligations

 

 

540

 

 

539

 

Deferred drydock costs incurred

 

 

(7,685)

 

 

(2,022)

 

Net cash provided by (used in) operating activities

 

 

4,439

 

 

(45,907)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of vessels, including deposits

 

 

(252)

 

 

(425)

 

Purchase of other fixed assets

 

 

(198)

 

 

(284)

 

Net proceeds from sale of vessels

 

 

15,513

 

 

1,923

 

Sale of AFS securities

 

 

 —

 

 

3,905

 

Changes in deposits of restricted cash

 

 

3,074

 

 

 —

 

Net cash provided by investing activities

 

 

18,137

 

 

5,119

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayments on the $400 Million Credit Facility

 

 

(300)

 

 

 —

 

Repayments on the $100 Million Term Loan Facility

 

 

 —

 

 

(5,769)

 

Repayments on the $253 Million Term Loan Facility

 

 

 —

 

 

(15,225)

 

Repayments on the 2015 Revolving Credit Facility

 

 

 —

 

 

(4,923)

 

Repayments on the $44 Million Term Loan Facility

 

 

 —

 

 

(2,062)

 

Repayments on the $148 Million Credit Facility

 

 

 —

 

 

(8,991)

 

Repayments on the $22 Million Term Loan Facility

 

 

 —

 

 

(1,125)

 

Repayments on the 2014 Term Loan Facilities

 

 

(2,062)

 

 

(2,062)

 

Cash settlement of non-accredited Note holders

 

 

 —

 

 

(101)

 

Payment of Series A Preferred Stock issuance costs

 

 

(1,103)

 

 

 —

 

Net cash used in financing activities

 

 

(3,465)

 

 

(40,258)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

19,111

 

 

(81,046)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

133,400

 

 

121,074

 

Cash and cash equivalents at end of period

 

$

152,511

 

$

40,028

 

For the Three Months Ended

March 31, 

    

2021

    

2020

 

Cash flows from operating activities:

Net income (loss)

 

$

1,985

$

(120,350)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

13,441

 

17,574

Amortization of deferred financing costs

976

 

951

Right-of-use asset amortization

344

337

Amortization of nonvested stock compensation expense

522

 

481

Impairment of vessel assets

 

112,814

Loss on sale of vessels

720

 

486

Amortization of premium on derivative

69

Interest rate cap premium payment

(240)

Insurance proceeds for protection and indemnity claims

41

101

Change in assets and liabilities:

Decrease (increase) in due from charterers

1,748

 

(1,303)

Increase in prepaid expenses and other current assets

(2,692)

 

(1,074)

Increase in inventories

(2,565)

(2,134)

Increase (decrease) in accounts payable and accrued expenses

1,548

 

(9,916)

(Decrease) increase in deferred revenue

(1,032)

 

1,191

Decrease in operating lease liabilities

(432)

(412)

Deferred drydock costs incurred

(939)

 

(2,784)

Net cash provided by (used in) operating activities

13,494

 

(4,038)

Cash flows from investing activities:

Purchase of vessels and ballast water treatment systems, including deposits

(1,190)

 

(273)

Purchase of scrubbers (capitalized in Vessels)

(41)

(7,778)

Purchase of other fixed assets

(152)

 

(1,039)

Net proceeds from sale of vessels

21,272

14,510

Insurance proceeds for hull and machinery claims

61

157

Net cash provided by investing activities

19,950

 

5,577

Cash flows from financing activities:

Repayments on the $133 Million Credit Facility

(22,740)

(1,580)

Proceeds from the $495 Million Credit Facility

11,250

Repayments on the $495 Million Credit Facility

(25,470)

(16,660)

Cash dividends paid

(888)

(7,290)

Net cash used in financing activities

(49,098)

 

(14,280)

Net decrease in cash, cash equivalents and restricted cash

(15,654)

 

(12,741)

Cash, cash equivalents and restricted cash at beginning of period

179,679

 

162,249

Cash, cash equivalents and restricted cash at end of period

 

$

164,025

$

149,508

See accompanying notes to condensed consolidated financial statements.

8


Table of Contents

Genco Shipping & Trading Limited

(U.S. Dollars in Thousands, Except Per Share and Share Data)

Notes to Condensed Consolidated Financial Statements (unaudited)

1 - GENERAL INFORMATION

The accompanying condensed consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its direct and indirect wholly-owned subsidiaries (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&Tvessels and operates in 1 business segment.

At March 31, 2021, the Company’s fleet consists of 41 drybulk vessels, including 17 Capesize drybulk carriers, 9 Ultramax drybulk carriers and 15 Supramax drybulk carriers, with an aggregate carrying capacity of approximately 4,422,300 dwt and an average age of approximately 10.3 years.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus strain, or COVID-19, to be a pandemic. The COVID-19 pandemic is incorporated underhaving widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Governments have implemented measures in an effort to contain the lawsvirus, including social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes, and closure of non-essential businesses. This has led to a significant slowdown in overall economic activity levels globally and a decline in demand for certain of the Marshall Islands,raw materials that our vessels transport.

At present, it is not possible to ascertain any future impact of COVID-19 on the Company’s operational and as of September 30, 2017, isfinancial performance, which may take some time to materialize and may not be fully reflected in the directresults for 2021.  However, an increase in the severity or indirect owner of allduration or a resurgence of the outstanding shares or limited liability company interests of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; Genco RE Investments LLC; Genco Shipping Pte. Ltd.; Baltic Trading Limited;COVID-19 pandemic, any potential variants and the ship-owning subsidiaries as set forth below under “Other General Information.”  Astiming of September 30, 2017, Genco Ship Management LLC iswide-scale vaccine distribution could have a material adverse effect on the sole ownerCompany’s business, results of all ofoperations, cash flows, financial condition, the outstanding limited liability company interests of Genco Management (USA) LLC (“Genco (USA)”).

On April 15, 2016, the shareholders of the Company approved, at a Special Meeting of Shareholders (the “Special Meeting”), proposals to amend the Second Amended and Restated Articles of Incorporation of the Company to (i) increase the number of authorized shares of common stock of the Company from 250,000,000 to 500,000,000 and (ii) authorize the issuance of up to 100,000,000 shares of preferred stock, in one or more classes or series as determined by the Board of Directors of the Company. The authorized shares did not change as a result of the reverse stock split as discussed below. Following the Special Meeting on such date, the Company filed Articles of Amendment of its Second Amended and Restated Articles of Incorporation with the Registrar of Corporations of the Republic of the Marshall Islands to implement to the foregoing amendments. Additionally, at the Special Meeting, the shareholders of the Company approved a proposal to amend the Second Amended and Restated Articles of Incorporation of the Company to effect a reverse stock split of the issued and outstanding shares of Common Stock at a ratio between 1-for-2 and 1-for-25 with such reverse stock split to be effective at such time and date, if at all, as determined by the Board of Directors of the Company, but no later than one year after shareholder approval thereof.  On July 7, 2016, the Company completed a one-for-ten reverse stock split of its common stock. 

On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a director of the Company.  The Board of Directors appointed Arthur L. Regan, a current director of the Company, as Interim Executive Chairman of the Board.  In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016.  Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos received an amount equal to the annual Chairman’s fee awarded to him in recent years of $500 as a severance payment and full vesting of his unvested equity awards, which consisted of grants of 68,581 restricted sharescarrying value of the Company’s common stock and warrants exercisable for approximately 213,937 sharesassets, the fair values of the Company’s common stock with an exercise price per share ranging $259.10 to $341.90.  Refer to Note 17 — Stock-Based Compensation.  The agreements also contain customary provisions pertaining to confidential information, releases of claims by Mr. Georgiopoulos,vessels, and other restrictive covenants.

On November 15, 2016, pursuant to the Purchase Agreements (as defined in Note 8 — Debt), the Company completed the private placement of 27,061,856 shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) which included 25,773,196 shares at a price per share of $4.85 and an additional 1,288,660 shares issued as a commitment fee on a pro rata basis.  The Company received net proceeds of $120,789 after deducting placement agents’ fees and expenses.  On January 4, 2017, the Company’s shareholders approved at a Special Meeting of Shareholders the issuance of upability to 27,061,856 shares of common stock of the Company upon the conversion of shares of the Series A Preferred Stock, par value $0.01 per share, which were purchased by certain investors in a private placement (the “Conversion Proposal”).  As a result of shareholder approval of the Conversion Proposal, all outstanding 27,061,856 shares of Series A Preferred Stock were automatically and mandatorily converted into 27,061,856 shares of common stock of the Company on January 4, 2017.pay dividends. 

9


Table of Contents

Other General Information

Below is the list of the Company’s wholly owned ship-owning subsidiaries as of September 30, 2017:

 

 

 

 

 

 

 

 

 

 

Wholly Owned Subsidiaries

    

Vessel Acquired

    

Dwt

    

Delivery Date

    

Year Built

 

 

 

 

 

 

 

 

 

 

 

Genco Vigour Limited

 

Genco Vigour

 

73,941

 

12/15/04

 

1999

 

Genco Explorer Limited

 

Genco Explorer

 

29,952

 

12/17/04

 

1999

 

Genco Progress Limited

 

Genco Progress

 

29,952

 

1/12/05

 

1999

 

Genco Beauty Limited

 

Genco Beauty

 

73,941

 

2/7/05

 

1999

 

Genco Knight Limited

 

Genco Knight

 

73,941

 

2/16/05

 

1999

 

Genco Muse Limited

 

Genco Muse

 

48,913

 

10/14/05

 

2001

 

Genco Surprise Limited

 

Genco Surprise

 

72,495

 

11/17/06

 

1998

 

Genco Augustus Limited

 

Genco Augustus

 

180,151

 

8/17/07

 

2007

 

Genco Tiberius Limited

 

Genco Tiberius

 

175,874

 

8/28/07

 

2007

 

Genco London Limited

 

Genco London

 

177,833

 

9/28/07

 

2007

 

Genco Titus Limited

 

Genco Titus

 

177,729

 

11/15/07

 

2007

 

Genco Challenger Limited

 

Genco Challenger

 

28,428

 

12/14/07

 

2003

 

Genco Charger Limited

 

Genco Charger

 

28,398

 

12/14/07

 

2005

 

Genco Warrior Limited

 

Genco Warrior

 

55,435

 

12/17/07

 

2005

 

Genco Predator Limited

 

Genco Predator

 

55,407

 

12/20/07

 

2005

 

Genco Hunter Limited

 

Genco Hunter

 

58,729

 

12/20/07

 

2007

 

Genco Champion Limited

 

Genco Champion

 

28,445

 

1/2/08

 

2006

 

Genco Constantine Limited

 

Genco Constantine

 

180,183

 

2/21/08

 

2008

 

Genco Raptor LLC

 

Genco Raptor

 

76,499

 

6/23/08

 

2007

 

Genco Cavalier LLC

 

Genco Cavalier

 

53,617

 

7/17/08

 

2007

 

Genco Thunder LLC

 

Genco Thunder

 

76,588

 

9/25/08

 

2007

 

Genco Hadrian Limited

 

Genco Hadrian

 

169,025

 

12/29/08

 

2008

 

Genco Commodus Limited

 

Genco Commodus

 

169,098

 

7/22/09

 

2009

 

Genco Maximus Limited

 

Genco Maximus

 

169,025

 

9/18/09

 

2009

 

Genco Claudius Limited

 

Genco Claudius

 

169,001

 

12/30/09

 

2010

 

Genco Bay Limited

 

Genco Bay

 

34,296

 

8/24/10

 

2010

 

Genco Ocean Limited

 

Genco Ocean

 

34,409

 

7/26/10

 

2010

 

Genco Avra Limited

 

Genco Avra

 

34,391

 

5/12/11

 

2011

 

Genco Mare Limited

 

Genco Mare

 

34,428

 

7/20/11

 

2011

 

Genco Spirit Limited

 

Genco Spirit

 

34,432

 

11/10/11

 

2011

 

Genco Aquitaine Limited

 

Genco Aquitaine

 

57,981

 

8/18/10

 

2009

 

Genco Ardennes Limited

 

Genco Ardennes

 

58,018

 

8/31/10

 

2009

 

Genco Auvergne Limited

 

Genco Auvergne

 

58,020

 

8/16/10

 

2009

 

Genco Bourgogne Limited

 

Genco Bourgogne

 

58,018

 

8/24/10

 

2010

 

Genco Brittany Limited

 

Genco Brittany

 

58,018

 

9/23/10

 

2010

 

Genco Languedoc Limited

 

Genco Languedoc

 

58,018

 

9/29/10

 

2010

 

Genco Loire Limited

 

Genco Loire

 

53,430

 

8/4/10

 

2009

 

Genco Lorraine Limited

 

Genco Lorraine

 

53,417

 

7/29/10

 

2009

 

Genco Normandy Limited

 

Genco Normandy

 

53,596

 

8/10/10

 

2007

 

Genco Picardy Limited

 

Genco Picardy

 

55,257

 

8/16/10

 

2005

 

Genco Provence Limited

 

Genco Provence

 

55,317

 

8/23/10

 

2004

 

Genco Pyrenees Limited

 

Genco Pyrenees

 

58,018

 

8/10/10

 

2010

 

Genco Rhone Limited

 

Genco Rhone

 

58,018

 

3/29/11

 

2011

 

Baltic Lion Limited

 

Baltic Lion

 

179,185

 

4/8/15

(1)

2012

 

Baltic Tiger Limited

 

Genco Tiger

 

179,185

 

4/8/15

(1)

2011

 

Baltic Leopard Limited

 

Baltic Leopard

 

53,446

 

4/8/10

(2)

2009

 

Baltic Panther Limited

 

Baltic Panther

 

53,350

 

4/29/10

(2)

2009

 

Baltic Cougar Limited

 

Baltic Cougar

 

53,432

 

5/28/10

(2)

2009

 

Baltic Jaguar Limited

 

Baltic Jaguar

 

53,473

 

5/14/10

(2)

2009

 

Baltic Bear Limited

 

Baltic Bear

 

177,717

 

5/14/10

(2)

2010

 

Baltic Wolf Limited

 

Baltic Wolf

 

177,752

 

10/14/10

(2)

2010

 

Baltic Wind Limited

 

Baltic Wind

 

34,408

 

8/4/10

(2)

2009

 

Baltic Cove Limited

 

Baltic Cove

 

34,403

 

8/23/10

(2)

2010

 

Baltic Breeze Limited

 

Baltic Breeze

 

34,386

 

10/12/10

(2)

2010

 

Baltic Fox Limited

 

Baltic Fox

 

31,883

 

9/6/13

(2)

2010

 

Baltic Hare Limited

 

Baltic Hare

 

31,887

 

9/5/13

(2)

2009

 

Baltic Hornet Limited

 

Baltic Hornet

 

63,574

 

10/29/14

(2)

2014

 

Baltic Wasp Limited

 

Baltic Wasp

 

63,389

 

1/2/15

(2)

2015

 

Baltic Scorpion Limited

 

Baltic Scorpion

 

63,462

 

8/6/15

 

2015

 

Baltic Mantis Limited

 

Baltic Mantis

 

63,470

 

10/9/15

 

2015

 


(1)

The delivery date for these vessels represents the date that the vessel was purchased from Baltic Trading Limited (“Baltic Trading”).

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Table of Contents

(2)

The delivery date for these vessels represents the date that the vessel was delivered to Baltic Trading.

The Company formerly provided technical services for drybulk vessels purchased by Maritime Equity Partners LLC (“MEP”).  These services included oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but did not include chartering services.  The services were initially provided for a fee of $750 per ship per day plus reimbursement of out-of-pocket costs and were provided for an initial term of one year.   On September 30, 2015, under the oversight of an independent committee of our Board of Directors, Genco (USA) entered into certain agreements which reduced the daily service fee from $750 to $650 per day, which was effective October 1, 2015. During January 2016, five of MEP’s vessels were sold to third parties and were no longer subject to the agency agreement.  Based upon the September 30, 2015 agreement, termination fees were due in the amount of $296 which was assumed by the new owners of the five MEP vessels that were sold and were paid in full during February 2016.  Additionally, during the three months ended September 30, 2016, the remaining seven of MEP’s vessels were sold to third parties, and the agency agreement was deemed terminated upon the sale of these vessels.  Based upon the September 30, 2015 agreement, termination fees were due in the amount of $830, which was assumed by the new owners of the seven MEP vessels that were sold and were paid in full as of September 30, 2016.  MEP has been dissolved, and all previous outstanding amounts have been settled as of December 31, 2016.  Refer to Note 7 Related Party Transactions for amounts due to or from MEP as of September 30, 2017 and December 31, 2016. 

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which includes the accounts of GS&T and its direct and indirect wholly-owned subsidiaries, including Baltic Trading.subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and operating results have been included in the statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 20162020 (the “2016“2020 10-K”). The results of operations for the three and nine months ended September 30, 2017March 31, 2021 are not necessarily indicative of the operating results to be expected for the year ending December 31, 2017.2021.

SegmentThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates include vessel valuations, the valuation of amounts due from charterers, residual value of

9

Table of Contents

vessels, useful life of vessels and the fair value of derivative instruments, if any.  Actual results could differ from those estimates.

Cash, cash equivalents and restricted cash

The Company reports financial informationconsiders highly liquid investments, such as money market funds and evaluates its operations by charter revenuescertificates of deposit with an original maturity of three months or less to be cash equivalents. Current and not bynon-current restricted cash includes cash that is restricted pursuant to our credit facilities. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the length of ship employment for its customers, i.e., spot or time charters.  EachCondensed Consolidated Balance Sheets that sum to the total of the Company’s vessels serve the same type of customer, have similar operations and maintenance requirements, operateamounts shown in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment which is engaged in the ocean transportationCondensed Consolidated Statements of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. Cash Flows:

March 31, 

December 31, 

    

2021

    

2020

 

Cash and cash equivalents

 

$

123,191

 

$

143,872

Restricted cash - current

40,519

35,492

Restricted cash - noncurrent

 

315

 

315

Cash, cash equivalents and restricted cash

 

$

164,025

 

$

179,679

General and administrative expenses

During the three months and year ended December 31, 2016, the Company opted to break out expenses previously classified as General, administrative and management fees into two separate categories to provide a greater level of detail of the underlying expenses.  These fees were broken out into General and administrative expenses and

11


Technical management fees.  This change was made retrospectively for comparability purposes, and there was no effect on the Net Loss for the three and nine months ended September 30, 2017 and 2016.

Vessels, net

Vessels, net is stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage. The Company also capitalizes interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard. Depreciation expense for vessels for the three months ended September 30, 2017 and 2016 was $16,575 and $17,077, respectively.  Depreciation expense for vessels for the nine months ended September 30, 2017 and 2016 was $50,173  and $54,752, respectively.

Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the estimated scrap value of $310 per lightweight ton (“lwt”) times the weight of the ship noted in lwt.    

Vessels held for sale

During December 2016, theThe Company’s Board of Directors authorizedhas approved a strategy of divesting specifically identified older, less fuel-efficient vessels as part of a fleet renewal program to streamline and modernize the Company’s fleet.

On January 22, 2021 and January 25, 2021, the Company entered into agreements to sell the Genco Lorraine and the Baltic Leopard. The relevant vessels assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of March 31, 2021. The Baltic Leopard was sold on April 8, 2021 and the Genco Lorraine is expected to be sold during the second quarter of 2021. Refer to Note 4 — Vessel Acquisitions and Dispositions for details of the Genco Success, Genco Prosperityagreements.

On November 3, 2020, November 27, 2020 and Genco Wisdom.  As such, theseNovember 30, 2020, the Company entered into agreements to sell the Baltic Panther, the Baltic Hare and the Baltic Cougar, respectively. The relevant vessel assets werehave been classified as held for sale in the Condensed Consolidated Balance Sheet as of December 31, 2016.  During2020. The Baltic Panther, the nine months ended September 30, 2017, theseBaltic Hare and the Baltic Cougar were sold on January 4, 2021, January 15, 2021 and February 24, 2021, respectively.

Vessels held for exchange

The vessel assets for the remaining 5 vessels to be exchanged as part of an agreement entered into by the Company on December 17, 2020 have been classified as vessels held for exchange in the Condensed Consolidated Balance Sheet as of December 31, 2020 in the amount of $38,214, after recognition of impairment. This includes the vessel assets for the Baltic Cove, the Baltic Fox, the Genco Avra, the Genco Mare and the Genco Spirit. These vessels were sold.exchanged during the first quarter of 2021. Refer to Note 4 — Vessel Acquisitions and Dispositions for additional information.

Deferred revenue

Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned. Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues. As of September 30, 2017 and December 31, 2016, the Company had an accrual of $483 and $220, respectively, related to these estimated customer claims.

Revenue recognition

Since the Company’s inception, revenues have been generated from time charter agreements, pool agreements and spot market-related time charters.  A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily hire rate, including any ballast bonus payments received pursuant to the time charter agreement.  Spot market-related time charters are the same as other time charter agreements, except the time charter rates are variable and are based on a percentagedetails of the average daily rates as published by the Baltic Dry Index (“BDI”).  Voyage revenues also include the sale of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.

The Company has entered into spot market voyage charters.  Revenue for spot market voyage charters is recognized ratably over the total transit time of each voyage, which commences at the time the vessel departs from its last discharge port and ends at the time the discharge of cargo is completed at the discharge port. The Company does not begin recognizing revenue until an agreement has been entered into between the charterer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage. 

Voyage expense recognition

In time charters, spot market-related time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port

12


charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. As such, there are significantly higher voyage expenses for spot market voyage charters as compared to time charters, spot market-related time charters and pool agreements. Refer to Note 11 — Voyage Revenues for further discussion of the

10

Table of Contents

accounting for fuel expenses for spot market voyage charters. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost or marketand net realizable value adjustments to re-value the bunker fuel on a quarterly basis.basis for certain time charter agreements where the inventory is subject to gains and losses. These differences in bunkers, including any lower of cost or marketand net realizable value adjustments, resulted in a net gain (loss)(gain) loss of $269($493) and ($390)$841 during the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and $1,205 and ($4,195) during the nine months ended September 30, 2017 and 2016,2020, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.

United States Gross Transportation Tax

The Company believes that it will not qualify for the Section 883 exemption during the year ended December 31, 2017.  In the absence of the exemption, 50% of the Company’s gross shipping income attributable to transportation beginning or ending in the U.S. (but not both beginning and ending in the U.S.) will be subject to a 4% tax without allowance for deductions (the “U.S. gross transportation tax”) during the year ended December 31, 2017.  During the three and nine months ended September 30, 2017, the Company has recorded estimated U.S. gross transportation tax of $149 and $246, respectively, which has been recorded in Voyage expenses in the Condensed Consolidated Statements of Operation.  During the year ended December 31, 2016, the Company qualified for the Section 883 exemption and, therefore, did not record any U.S. gross transportation tax.

Other operating income

During the three and nine months ended September 30, 2016, the Company recorded other operating income of $0 and $182, respectively.  There was no operating income earned during the three and nine months ended September 30, 2017.  Other operating income recorded during the nine months ended September 30, 2016 consisted primarily of $157 received from Samsun Logix Corporation (“Samsun”) pursuant to the revised rehabilitation plan that was approved by the South Korean courts on April 8, 2016.  Refer to Note 16 — Commitments and Contingencies for further information regarding the bankruptcy settlement with Samsun. 

Impairment of vessel assets

During the three months ended September 30, 2017March 31, 2021 and 2016,2020, the Company recorded $18,654$0 and $0,$112,814, respectively, related to the impairment of vessel assets in accordance with Accounting Standards Codification (“ASC”) 360 — “Property,Property, Plant and Equipment”Equipment (“ASC 360”).  Additionally,

At March 31, 2020, the Company determined that the expected estimated future undiscounted cash flows for 4 of its Supramax vessels, the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Warrior, did not exceed the net book value of these vessels as of March 31, 2020. The Company adjusted the carrying value of these vessels to their respective fair market values as of March 31, 2020. This resulted in an impairment loss of $27,046 during the ninethree months ended September 30, 2017 and 2016, the Company recorded $21,993 and $69,278, respectively, related to the impairment of vessel assets in accordance with ASC 360.March 31, 2020.

On August 4, 2017,February 24, 2020, the Board of Directors determined to dispose of the Company’s vessels built in 1999, namelyfollowing 10 Handysize vessels: the Baltic Hare, the Baltic Fox, the Baltic Wind, the Baltic Cove, the Baltic Breeze, the Genco Beauty,Ocean, the Genco Explorer,Bay, the Genco Knight,Avra, the Genco ProgressMare and the Genco Vigour,Spirit, at times and on terms to be determined in the future. Given this decision, and that the revised estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel we havegiven the estimated probabilities of whether the vessels will be sold, the Company adjusted the values of these older vessels to their respective fair market values during the three months ended September 30, 2017.March 31, 2020. Subsequent to February 24, 2020, the Company has entered into agreements to sell 3 of these vessels during the three months ended March 31, 2020, namely the Baltic Wind, the Baltic Breeze and the Genco Bay, which were adjusted to their net sales price. This resulted in an impairment loss of $18,654$85,768 during the three and nine months ended September 30, 2017.March 31, 2020.

At June 30, 2017, the Company determined that the sum of the estimated undiscounted future cash flows attributable to the Genco Surprise did not exceed the carrying value of the vessel at June 30, 2017 and reduced the carrying value of the Genco Surprise, a 1998-built Panamax vessel, to its fair market value as of June 30, 2017.  This resulted in an impairment loss of $0 and $3,339 during the three and nine months ended September 30, 2017, respectively. 

At June 8, 2016, the Company determined that the scrapping of nine of its vessels, the Genco Acheron, Genco Carrier, Genco Leader, Genco Pioneer, Genco Prosperity, Genco Reliance, Genco Success, Genco Sugar, and Genco Wisdom, was more likely than not pursuant to the Commitment Letter entered into for the $400 Million Credit Facility as defined and disclosed in Note 8 — Debt.  Therefore, at June 8, 2016, the time utilized to determine the recoverability

13


of the carrying value of the vessel assets was significantly reduced.  After determining that the sum of the estimated undiscounted future cash flows attributable to the aforementioned nine vessels did not exceed the carrying value of the vessels at June 8, 2016, the Company reduced the carrying value of the nine vessels to their net realizable value, which was based on the expected net proceeds from scrapping the vessels.  This resulted in an impairment loss of $0 and $67,594 during the three and nine months ended September 30, 2016, respectively.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further information aboutdetail regarding the sale of thesecertain aforementioned vessels.

At March 31, 2016, the Company determined that the scrapping of the Genco Marine was more likely than not based on discussions with the Company’s Board of Directors.  Therefore, at March 31, 2016, the time utilized to determine the recoverability of the carrying value of the vessel asset was significantly reduced.  After determining that the sum of the estimated undiscounted future cash flows attributable to the Genco Marine did not exceed the carrying value of the vessel at March 31, 2016, the Company reduced the carrying value of the Genco Marine to its net realizable value, which was based on the expected proceeds from scrapping the vessel.  This resulted in an impairment loss of $0 and $1,684 during the three and nine months ended September 30, 2016, respectively.  On April 5, 2016, the Board of Directors unanimously approved scrapping the Genco Marine, and the sale of the Genco Marine to the scrap yard was completed on May 17, 2016. 

(Gain) lossLoss on sale of vessels

During the three and nine months ended September 30, 2017,March 31, 2021, the Company recorded a net gainloss of $0 and $7,712, respectively,$720 related to the sale of vessels. The net gainloss of $7,712$720 recorded during the ninethree months ended September 30, 2017March 31, 2021 related primarily to the sale of the Baltic Panther, Baltic Hare and Baltic Cougar, as well as net losses associated with the exchange of the Baltic Cove, Baltic Fox, Genco Spirit, Genco Avra and Genco Mare. During the three months ended March 31, 2020, the Company recorded a net loss of $486 related to the sale of vessels. The net loss of $486 recorded during the three months ended March 31, 2020 related primarily to the sale of the Genco Wisdom, theCharger and Genco Reliance, the Genco Carrier, the Genco SuccessThunder. Refer to Note 4 — Vessel Acquisitions and the Genco Prosperity. 

During the three and nine months ended September 30, 2016, the Company recorded a net loss of $0 and $77, respectively, related toDispositions for further detail regarding the sale of the Genco Marine.these vessels.

Investments

The Company previously held an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”) and in Korea Line Corporation (“KLC”).  Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping.  KLC is a marine transportation service company which operates a fleet of carriers which includes carriers for iron ore, liquefied natural gas and tankers for oil and petroleum products.  The investments in Jinhui and KLC were designated as Available For Sale (“AFS”) and were reported at fair value, with unrealized gains and losses recorded in equity as a component of accumulated other comprehensive income (loss) (“AOCI”).  The Company classified the investments as current or noncurrent assets based on the Company’s intent to hold the investments at each reporting date.  As of December 31, 2016, the Company no longer held investments in Jinhui or KLC.  Refer to Note 5 — Investments.

Investments were reviewed quarterly to identify possible other-than-temporary impairment in accordance with ASC Subtopic 320-10, “Investments — Debt and Equity Securities” (“ASC 320-10”).  When evaluating its investments, the Company reviewed factors such as the length of time and extent to which fair value has been below the cost basis, the financial condition of the issuer, the underlying net asset value of the issuer’s assets and liabilities, and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in market value.  Should the decline in the value of any investment be deemed to be other-than-temporary, the investment basis would be written down to fair market value, and the write-down would be recorded to earnings as a loss.  Refer to Note 5 — Investments.

Income taxes

Pursuant to certain agreements, GS&T technically and commercially managed vessels for Baltic Trading until the merger with Baltic Trading on July 17, 2015, and also provided technical management of vessels for MEP in exchange for specified fees for such services until the sale of all of MEP’s vessels.  These services were performed by Genco (USA), which elected to be taxed as a corporation for United States federal income tax purposes.  As such, Genco (USA) was subject to United States federal income tax on its worldwide net income, including the net income derived

14


from providing these services.  Genco (USA) entered into a cost-sharing agreement with the Company and Genco Ship Management LLC, collectively Manco, pursuant to which Genco (USA) agreed to reimburse Manco for the costs incurred by Genco (USA) for the use of Manco’s personnel and services in connection with the provision of the services for both Baltic Trading and MEP’s vessels.

There was no income tax expense recorded during the three and nine months ended September 30, 2017 as there was no revenue earned by Genco (USA).

Total revenue earned by the Company for these services during the three months ended September 30, 2016 was $1,016, of which $0 was eliminated upon consolidation. After allocation of certain expenses, there was taxable income of $829 associated with these activities for the three months ended September 30, 2016. This resulted in estimated income tax expense of $417 for the three months ended September 30, 2016. 

Total revenue earned by the Company for these services during the nine months ended September 30, 2016 was $2,240, of which $0 eliminated upon consolidation.  After allocation of certain expenses, there was taxable income of $1,619 associated with these activities for the nine months ended September 30, 2016.  This resulted in estimated income tax expense of $766 for the nine months ended September 30, 2016.

Recent accounting pronouncements

In May 2017,March 2020, the FASBFinancial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, “Compensation – Stock Compensation2020-04, “Reference Rate Reform (Topic 718), Scope848): Facilitation of Modification Account” (“the Effects of Reference Rate Reform on Financial Reporting (“ASU 2017-09”2020-04”).  This ASU” which provides guidance on determining which changestemporary optional expedients and exceptions to the termsguidance in U.S. GAAP on contract modifications and conditionshedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848) –

11

Table of share-based payment awards require an entityContents

Scope (“ASU 2021-01”),” which permits entities to apply modification account.  Thisoptional expedients in Topic 848 to derivative instruments modified because of discounting transition resulting from reference rate reform. ASU is2020-04 became effective for fiscal years beginning after December 15, 2017,upon issuance and for interim periods within those years and early adoption is permitted.  ASU 2017-09 mustmay be applied prospectively to an award modifiedcontract modification made on or after the adoption date.  The Company will adoptbefore December 31, 2022. ASU 2017-09 during the first quarter of 2018.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”).  This ASU adds or clarifies the guidance in ASC 230 – Statement of Cash Flows regarding the classification2021-01 became effective upon issuance and presentation of restricted cash in the statement of cash flows.  ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flow.  This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those years and early adoption is permitted.  ASU 2016-18 must be adopted retrospectively.  Other than presentation, we do not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.  The Company expects to adopt ASU 2016-18 during the fourth quarter of 2017.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230):  Classification of Certain Cash Receipts and Cash Payments.”  This ASU adds or clarifies the guidance in ASC 230 – Statement of Cash Flows regarding the classification of certain cash receipts and payments in the statement of cash flows.  This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those years and early adoption is permitted.  This ASU shall be applied retrospectively to all periods presented, but may be applied prospectivelyon a full retrospective basis as of any date from the earliest date practicable if retrospective application would be impracticable.  Other than presentation, we do not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements. 

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which replaces the existing guidance in ASC 840 – Leases.  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability for leases with lease terms of more than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize a straight-line total lease expense. Accounting by lessors will remain largely unchanged from current U.S. GAAP.  The requirements of this standard include an increase in required disclosures.  This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  Lessees and lessors will be required to apply the new standard at the beginning of the earliestan interim period

15


presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. that includes or is subsequent to March 12, 2020 or prospectively for contract modification made on or before December 31, 2022. The requirements of this standard include a significant increase in required disclosures. The Company is currently evaluating the impact of thisthe adoption of ASU 2020-04 and ASU 2021-01 on its condensed consolidated financial statements and related disclosures.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). This ASU will require that equity investments be measured at fair value with changes in fair value recognized in net income (loss). ASU 2016-01 will be effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements as the Company currently does not have any equity investments.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption. In May 2016 and, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients.”  This update provides further guidance on applying collectability criterion to assess whether the contract is valid and represents a substantive transaction on the basis whether a customer has the ability and intention to pay the promised consideration.  The requirements of this standard include an increase in required disclosures.  Management is currently analyzing contracts with our customers covering the significant streams of the Company’s annual revenues under the provisions of the new standard as well as change necessary to information technology systems, processes and internal controls to capture new data and address changes in financial reporting.  The Company intends to adopt the aforementioned ASUs for the interim periods after December 31, 2017, using the modified retrospective transition method applied to those contracts which were not completed as of that date. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to its opening balance of retained earnings as of January 1, 2018. Prior periods will not be retrospectively adjusted. While the assessment is still ongoing, based on the progress made to date, the Company expects that the timing of recognition of revenue for certain ongoing charter contracts will be impacted as well as the timing of recognition of certain voyage related costs.  The financial impact of adoption will depend on the number of spot market voyage charters and time charter arrangements as well as their percentage of completion at January 1, 2018.  The Company is also evaluating the presentation of revenue in its consolidated statements of operations after the adoption of ASU 2014-09.

3 - CASH FLOW INFORMATION

For the ninethree months ended September 30, 2017,March 31, 2021, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $9$975 for the Purchase of vessels and ballast water treatment systems, including deposits, and $56$17 for the Purchase of Scrubbers, $154 for the Purchase of other fixed assets.

Professional feesassets and trustee fees$61 for the Net proceeds from sale of vessels. For the three months ended March 31, 2021, the Company had non-cash financing activities not included in the amountCondensed Consolidated Statement of $0 were recognized by the Company in ReorganizationCash Flows for items net for the nine months ended September 30, 2017 (refer to Note 15 —  Reorganizations Items, net).  During this period, $25 of professional fees and trustee fees were paid through September 30, 2017 and $0 is included in Accounts payable and accrued expenses asexpense consisting of September 30, 2017.$71 for Cash dividends payable.

For the ninethree months ended September 30, 2016,March 31, 2020, the Company had non-cash investing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $45$2,950 for the Purchase of scrubbers, $1,314 for the Purchase of vessels and ballast water treatment systems, including deposits, and $18$548 for the Purchase of other fixed assets.  Additionally,assets and $196 for the nineNet proceeds from sale of vessels. For the three months ended September 30, 2016,March 31, 2021, the Company had non-cash investingfinancing activities not included in the Condensed Consolidated Statement of Cash Flows for items included in Prepaid expenses and other current assets consisting of $58 associated with the sale of AFS securities.

16


Professional fees and trustee fees in the amount of $243 were recognized by the Company in Reorganization items, net for the nine months ended September 30, 2016 (refer to Note 15 — Reorganizations Items, net).  During this period, $173 of professional fees and trustee fees were paid through September 30, 2016 and $117 is included in Accounts payable and accrued expenses asexpense consisting of September 30, 2016.$97 for Cash dividends payable.

During the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, cash paid for interest net of amounts capitalized, was $17,837$3,583 and $19,408,$6,051, respectively.

During the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, there was 0 cash paid for estimated income taxes was $0taxes.

During the three months ended March 31, 2021, the Company made a reclassification of $15,630 from Vessels, net of accumulated depreciation to Vessels held for sale as the Company entered into agreements to sell the Baltic Leopard and $512, respectively.Genco Lorraine prior to March 31, 2021.  Refer to Note 4 — Vessel Acquisitions and Dispositions.

During the three months ended March 31, 2020, the Company made a reclassification of $23,129 from Vessels, net of accumulated depreciation to Vessels held for sale as the Company entered into agreements to sell the Baltic Wind, Baltic Breeze and Genco Bay prior to March 31, 2020.  Refer to Note 4 — Vessel Acquisitions and Dispositions.

On May 17, 2017,February 23, 2021, the Company issued 25,197 restricted stock units to certain members of the Board of Directors.  The aggregate fair value of these restricted stock units was $255.  Refer to Note 17 — Stock-Based Compensation.   

On March 23, 2017, the Company issued 292,398103,599 restricted stock units and options to purchase 133,000118,552 shares withof the Company’s stock at an exercise price of $11.13 per share$9.91 to John C. Wobensmith, Chief Executive Officer and President.certain individuals. The fair value of these restricted stock units and stock options were $3,254$1,027 and $853,$513, respectively.  Refer to Note 17 — Stock-Based Compensation.   

On May 18, 2016,February 25, 2020, the Company issued 66,666173,749 restricted stock units and options to purchase 344,568 shares of the Company’s stock at an exercise price of $7.06 to certain members of the Board of Directors.individuals. The aggregate fair value of these restricted stock units was $340.  and stock options were $1,227 and $693, respectively.

Refer to Note 1714 — Stock-Based Compensation.   Compensation for further information regarding the aforementioned grants.

On February 17, 2016, the Company granted 40,816 and 20,408 shares under the 2015 Equity Incentive PlanSupplemental Condensed Consolidated Cash Flow information related to Peter C. Georgiopoulos, former Chairmanleases is as follows:

12

Table of the Board of Directors, and John C. Wobensmith, Chief Executive Officer and President, respectively.  The grant date fair value of such nonvested stock was $318.  Refer to Note 17 — Stock-Based Compensation.Contents

For the Three Months Ended

March 31, 

2021

2020

 

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating lease

$

557

$

557

4 - VESSEL ACQUISITIONS AND DISPOSITIONS

Vessel Exchange

On December 17, 2020, the Company entered into an agreement to acquire 3 Ultramax vessels in exchange for 6 Handysize vessels for a fair value of $46,000 less a 1.0% commission payable to a third party. The Genco Magic, a 2014-built Ultramax vessel, and the Genco Vigilant and the Genco Freedom, both 2015-built Ultramax vessels, were delivered to the Company on December 23, 2020, January 28, 2021 and February 20, 2021, respectively. The Genco Ocean, the Baltic Cove and the Baltic Fox, all 2010-built Handysize vessels, were delivered to the buyers on December 29, 2020, January 30, 2021 and February 2, 2021, respectively. The Genco Spirit, the Genco Avra and the Genco Mare, all 2011-built Handysize vessels, were delivered to the buyers on February 15, 2021, February 21, 2021 and February 24, 2021, respectively. As of December 31, 2020, the vessel assets for the Baltic Cove, the Baltic Fox, the Genco Avra, the Genco Mare and the Genco Spirit have been classified as held for exchange in the Condensed Consolidated Balance Sheet.

Vessel Dispositions

On January 25, 2021, the Company entered into an agreement to sell the Baltic Leopard, a 2009-built Supramax vessel, to a third party for $8,000 less a 2.0% commission payable to a third party. The sale was completed on April 8, 2021. The vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of March 31, 2021.

On January 22, 2021, the Company entered into an agreement to sell the Genco Lorraine, a 2009-built Supramax vessel, to a third party for $7,950 less a 2.5% commission payable to a third party. The sale is expected to be completed during the second quarter of 2021. The vessel assets have been classified as held for sale in the Condensed Consolidated Balance Sheet as of March 31, 2021.

During December 2016,November 2020, the Board of Directors unanimously approvedCompany entered into agreements to sell the sale ofBaltic Cougar, the Genco Success, Genco ProsperityBaltic Hare and Genco Wisdom and these vessel assets werethe Baltic Panther. These vessels have been classified as held for sale in the Condensed Consolidated Balance Sheet as of December 31, 2016.  These vessels were sold during the nine months ended September 30, 2017, as described below. 

On December 19, 2016, the Board of Directors unanimously approved selling the Genco Prosperity, a 1997-built Handymax vessel, and on December 21, 2016, the Company reached an agreement to sell the Genco Prosperity to a third party for $3,050 less a 3.5% broker commission payable to a third party.  2020. The sale was completed on May 16, 2017.

On December 5, 2016,of the Board of Directors unanimously approved selling the Genco Success, a 1997-built Handymax vessel,Baltic Hare, Baltic Panther and on December 15, 2016, the Company reached an agreement to sell the Genco Success to a third party for $2,800 less a 3.0% broker commission payable to a third party.  The sale was completed on March 19, 2017. 

During January 2017, the Board of Directors unanimously approved selling the Genco Carrier, a 1998-built Handymax vessel, and on January 25, 2017, the Company reached an agreement to sell the Genco Carrier to a third party for $3,560 less a $92 broker commission payable to a third party.  The sale was completed on February 16, 2017. 

During January 2017, the Board of Directors unanimously approved selling the Genco Reliance, a 1999-built Handysize vessel, and on January 12, 2017, the Company reached an agreement to sell the Genco Reliance to a third party for $3,500 less a 3.5% broker commission payable to a third party.  The sale was completed on February 9, 2017.

On December 19, 2016, the Board of Directors unanimously approved selling the Genco Wisdom, a 1997-built Handymax vessel. On December 21, 2016, the Company reached an agreement to sell the Genco Wisdom to a third party for $3,250 less a 3.5% broker commission payable to a third party.  The sale wasBaltic Cougar were completed on January 9, 2017.15, 2021, January 4, 2021 and February 24, 2021, respectively.

17


On November 7, 2016, the Board of Directors unanimously approved selling the Genco Acheron, a 1999-built Panamax vessel, and on November 14, 2016, the Company reached an agreement to sell the Genco Acheron to a third party for $3,480 less a 5.5% broker commission payable to a third party.  The sale was completed on December 12, 2016.

On October 24, 2016, the Board of Directors unanimously approved selling the Genco Leader, a 1999-built Panamax vessel, and on October 25, 2016, the Company reached an agreement to sell the Genco Leader to a third party for $3,470 less a 3.0% broker commission payable to a third party.  The sale was completed on November 4, 2016.  On November 4, 2016, the Company utilized the net proceeds from the sale to pay down $3,366 on the $148 Million Credit Facility, as the Genco Leader was a collateralized vessel under this facility prior to the refinancing of the $148 Million Credit Facility with the $400 Million Credit Facility, refer to Note 8 —  Debt.

On September 30, 2016, the Board of Directors unanimously approved selling the Genco Pioneer, a 1999-built Handysize vessel, and on October 8, 2016, the Company reached an agreement to sell the Genco Pioneer to a third party for $2,650 less a 5.5% broker commission payable to a third party.  The sale was completed on October 26, 2016.  On October 26, 2016 the Company utilized the net proceeds from the sale to pay down $2,504 on the $148 Million Credit Facility, as the Genco Pioneer was a collateralized vessel under this facility prior to the refinancing of the $148 Million Credit Facility with the $400 Million Credit Facility, refer to Note 8 —  Debt.

On September 30, 2016, the Board of Directors unanimously approved selling the Genco Sugar, a 1998-built Handysize vessel, and on October 10, 2016, the Company reached an agreement to sell the Genco Sugar to a third party for $2,450 less a 5.5% broker commission payable to a third party.  The sale was completed on October 20, 2016.  On October 21, 2016, the Company utilized the net proceeds from the sale to pay down $2,315 on the $100 Million Term Loan Facility, as the Genco Sugar was a collateralized vessel under this facility prior to the refinancing of the $100 Million Term Loan Facility with the $400 Million Credit Facility, refer to Note 8 —  Debt.

On April 5, 2016, the Board of Directors unanimously approved scrapping the Genco Marine.  The Company reached an agreement on May 6, 2016 to sell the Genco Marine, a 1996-built Handymax vessel, to be scrapped with Ace Exim Pte Ltd., a demolition yard, for a net amount $2,187 less a 2.0% broker commission payable to a third party.  On May 17, 2016, the Company completed the sale of the Genco Marine.  

Refer to Note 1 — General Information for a listing of the delivery dates for the vessels in the Company’s fleet.

5 – INVESTMENTS

The Company held an investment in the capital stock of Jinhui and the stock of KLC.  Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping.  KLC is a marine transportation service company which operates a fleet of carriers which includes carriers for iron ore, liquefied natural gas and tankers for oil and petroleum products.  These investments were designated as AFS and were reported at fair value, with unrealized gains and losses recorded in equity as a component of AOCI.  At September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company did not hold any shareshas recorded $40,519 and $35,492 of Jinhui capital stock or shares of KLC stock.

Prior to the sale of its remaining shares of Jinhui capital stock, the Company reviewed the investment in Jinhui for indicators of other-than-temporary impairment in accordance with ASC 320-10. Based on the Company’s review, it deemed the investment in Jinhui to be other-than-temporarily impaired as of June 30, 2016 due to the duration and severity of the decline in its market value versus its cost basis and the absence of the intent and ability to recover the initial carrying value of the investment.  As a result, the Company recorded impairment expenserestricted cash in the Condensed Consolidated StatementBalance Sheets which represents the net proceeds received from the sale of Operations9 and 8 vessels, respectively, that served as collateral under the $495 Million Credit Facility. The net proceeds for each vessel will remain classified as restricted cash for 360 days following the respective sale dates. These amounts can be used towards the financing of $0a replacement vessel or vessels meeting certain requirements and $2,696added as collateral under the facility. If such a replacement vessel is not added as collateral within such 360 day period, the Company will be required to use the proceeds as a loan prepayment.  Refer to Note 7 — Debt for further information.

Refer to the “Impairment of vessel assets” and “Loss on sale of vessels” sections in Note 2 — Summary of Significant Accounting Policies for discussion of impairment expense and the net loss on sale of vessels recorded during the three and nine months ended September 30, 2016. The Company reviewed its investments in JinhuiMarch 31, 2021 and KLC for impairment on a quarterly basis.  The Company’s investment in Jinhui was a Level 1 item under the fair value hierarchy, refer to Note 10 — Fair Value of Financial Instruments for the fair value hierarchy.2020.

1813


The unrealized gain (losses) on the Jinhui capital stock and KLC stock were a component of AOCI since these investments were designated as AFS securities.  If the investment in Jinhui was deemed other-than-temporarily impaired, the cost basis for the investment would be revised to its fair value on that date.

Refer to Note 9 — Accumulated Other Comprehensive Income (Loss) for a breakdown of the components of AOCI during the three and nine months ended September 30, 2016, including any effects of any sales of Jinhui shares and other-than-temporary impairment of the investment in Jinhui, if applicable.

6 -5 – NET LOSSEARNINGS (LOSS) PER SHARE

The computation of basic net lossearnings (loss) per share is based on the weighted-average number of common shares outstanding during the reporting period. The computation of diluted net lossearnings (loss) per share assumes the vesting of nonvested stock awards and the exercise of stock options (refer to Note 1714 — Stock-Based Compensation), for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive. Of the 331,200There were 215,240 restricted stock units and 164,910 nonvested shares outstanding, including RSUs, and the 133,000 and 087,358 stock options outstanding at September 30, 2017that were dilutive during the three months ended March 31, 2021. There were 288,185 restricted stock units and 2016, respectively,837,338 stock options excluded from the computation of diluted net loss per share during the three months ended March 31, 2020 because they were anti-dilutive (refer to Note 1714 — Stock-Based Compensation), all are anti-dilutive. .

The Company’s diluted net lossearnings (loss) per share will also reflect the assumed conversion of the equity warrants issued when the Company emerged from bankruptcy on the Effective DateJuly 9, 2014 (the “Effective Date”) and MIP Warrants issued by the Company (refer to Note 1714 — Stock-Based Compensation) if the impact is dilutive under the treasury stock method. OfThe equity warrants have a 7-year term that commenced on the 0day following the Effective Date and 2,852,487are exercisable for one tenth of unvesteda share of the Company’s common stock. All MIP Warrants outstanding at September 30, 2017 and 2016, respectively, and during the three months ended March 31, 2020 were excluded from the computation of diluted net earnings (loss) per share because they were anti-dilutive. The MIP Warrants expired on August 7, 2020. There were 3,936,761 of equity warrants outstandingexcluded from the computation of diluted net earnings (loss) per share during the three months ended March 31, 2021 and 2020 because they were anti-dilutive. The equity warrants expire at September 30, 2017 and 2016, all are anti-dilutive. 5:00 p.m. on July 9, 2021.

The components of the denominator for the calculation of basic and diluted net lossearnings (loss) per share are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30, 

 

September 30, 

 

 

2017

    

2016

    

2017

    

2016

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

March 31, 

    

2021

    

2020

 

Common shares outstanding, basic:

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

34,469,998

 

7,245,268

 

34,135,736

 

7,228,660

 

41,973,782

 

41,866,357

 

 

 

 

 

 

 

 

 

Common shares outstanding, diluted:

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

34,469,998

 

7,245,268

 

34,135,736

 

7,228,660

 

41,973,782

 

41,866,357

 

 

 

 

 

 

 

 

 

Dilutive effect of warrants

 

 —

 

 —

 

 —

 

 —

 

 

 

 

 

 

 

 

 

 

 

Dilutive effect of stock options

 

 —

 

 —

 

 —

 

 —

 

87,358

 

 

 

 

 

 

 

 

 

Dilutive effect of restricted stock awards

 

 —

 

 —

 

 —

 

 —

 

215,240

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, diluted

 

34,469,998

 

7,245,268

 

34,135,736

 

7,228,660

 

42,276,380

 

41,866,357

76 - RELATED PARTY TRANSACTIONS

On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a Director of the Company. Refer to Note 1 — General Information. During the three and nine months ended September 30, 2017,March 31, 2021 and 2020, the

19


Company did not identifyhave any related party transactions. The following represent related party transactions reflected in these condensed consolidated financial statements during the nine months ended September 30, 2016:

The Company incurred travel and other office related expenditures from Gener8 Maritime, Inc. (“Gener8”), where the Company’s former Chairman, Peter C. Georgiopoulos, serves as Chairman14

Table of the Board.  During the nine months ended September 30, 2016, the Company incurred travel and other office related expenditures totaling $73 reimbursable to Gener8 or its service provider. At December 31, 2016, the amount due to Gener8 from the Company was $0.Contents

During the nine months ended September 30, 2016, the Company did not incur any expenses for legal services (primarily in connection with vessel acquisitions) from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos.  At September 30, 2017 and December 31, 2016, the amount due to Constantine Georgiopoulos was $0 and $10, respectively.

The Company has entered into agreements with Aegean Marine Petroleum Network, Inc. (“Aegean”) to purchase lubricating oils for certain vessels in its fleet.  Peter C. Georgiopoulos was formerly the Chairman of the Board of Aegean.  During the nine months ended September 30, 2016, Aegean supplied lubricating oils and bunkers to the Company’s vessels aggregating $1,189.  At December 31, 2016, $0 remained outstanding.

During the nine months ended September 30, 2016, the Company invoiced MEP for technical services provided, including termination fees, and expenses paid on MEP’s behalf aggregating $2,225. Peter C. Georgiopoulos was a director of and had a minority interest in MEP.  At December 31, 2016, $0 was due to the Company from MEP.  Total service revenue earned by the Company, including termination fees, for technical service provided to MEP for the nine months ended September 30, 2016 was $2,240.  

87 – DEBT

Long-term debt, net consists of the following:

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2017

    

2016

 

March 31, 

December 31, 

    

2021

    

2020

 

Principal amount

 

$

521,215

 

$

523,577

 

 

$

401,018

 

$

449,228

PIK interest

 

 

5,375

 

 

800

 

Less: Unamortized debt issuance costs

 

 

(9,618)

 

 

(11,357)

 

Less: Unamortized debt financing costs

 

(8,677)

 

(9,653)

Less: Current portion

 

 

(12,076)

 

 

(4,576)

 

 

(65,277)

 

(80,642)

 

 

 

 

 

 

 

Long-term debt, net

 

$

504,896

 

$

508,444

 

 

$

327,064

 

$

358,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2017

 

December 31, 2016

 

 

 

 

 

 

Unamortized

 

 

 

 

Unamortized

 

 

 

 

 

 

Debt Issuance

 

 

 

 

Debt Issuance

 

 

    

Principal

    

Cost

    

Principal

    

Cost

 

$400 Million Credit Facility

 

$

399,700

 

$

6,744

 

$

400,000

 

$

7,967

 

$98 Million Credit Facility

 

 

95,271

 

 

1,495

 

 

95,271

 

 

1,868

 

2014 Term Loan Facilities

 

 

26,244

 

 

1,379

 

 

28,306

 

 

1,522

 

PIK interest

 

 

5,375

 

 

 —

 

 

800

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

526,590

 

$

9,618

 

$

524,377

 

$

11,357

 

March 31, 2021

December 31, 2020

Unamortized

Unamortized

Debt Issuance

Debt Issuance

    

Principal

    

Cost

    

Principal

    

Cost

 

$495 Million Credit Facility

$

308,818

$

7,381

$

334,288

$

8,222

$133 Million Credit Facility

92,200

1,296

114,940

1,431

Total debt

$

401,018

 

$

8,677

$

449,228

 

$

9,653

As of September 30, 2017March 31, 2021 and December 31, 2016, $9,6182020, $8,677 and $11,357$9,653 of deferred financing costs, respectively, were presented as a direct deduction within the outstanding debt balance in the Company’s Condensed Consolidated Balance Sheet. Amortization expense for deferred financing costs was $586and $737 for the three months ended September 30, 2017 and 2016, respectively, and $1,739 and $2,195 for the nine months ended September 30, 2017

20


and 2016, respectively.  This amortization expense is recorded as a component of Interest expense in the Condensed Consolidated Statements of Operations.Sheets.

Commitment Letter

$495 Million Credit Facility

On June 8, 2016,May 31, 2018, the Company entered into the $460 Million Credit Facility, a Commitment Letter (the “Commitment Letter”) for afive-year senior secured loancredit facility (the “$400 Million Credit Facility”) for an aggregate principal amount of up to $400,000 with Nordea Bank Finland plc, New York Branch, Skandinaviska Enskilda Banken AB (publ), DVB Bank SE, ABN AMRO Capital USA LLC, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG Filiale Deutschlandgeschäft, Crédit Industriel et Commercial, and BNP Paribas.  The $400 Million Credit Facility refinanced$460,000 which was used to (i) refinance all of the Company’s $100 Million Term Loan Facility, $253 Million Term Loan Facility, $148 Million Credit Facility, $22 Million Term Loan Facility, $44 Million Term Loan Facilityprior credit facilities into one facility and 2015 Revolving Credit Facility, each as defined below (collectively,(ii) pay down the “Prior Facilities”) and was finalizeddebt on November 10, 2016 (refer to the “$400 Million Credit Facility” section below).  As a condition to the effectiveness7 of the Commitment Letter, the Company entered into separate equity commitment letters for a portion of such financing on June 8, 2016 with each of the following: (i) funds or related entities managed by Centerbridge Partners, L.P. or its affiliates (“Centerbridge”) for approximately $31,200, (ii) funds or related entities managed by Strategic Value Partners, LLC (“SVP”) for approximately $17,300, and (iii) funds managed by affiliates of Apollo Global Management, LLC (“Apollo”) for approximately $14,000, each ofCompany’s oldest vessels, which are subject to a number of conditions.  Additionally, pursuant to the Commitment Letter, the waivers with regard to the collateral maintenance covenants under the $100 Million Term Loan Facility, $253 Million Term Loan Facility, $148 Million Credit Facility, $22 Million Term Loan Facility, $44 Million Term Loan Facility and the 2015 Revolving Credit Facility, as defined below, were initially extended to July 29, 2016 subject to the entry into a definitive purchase agreement for the equity financing referred to above by June 30, 2016.have been sold.

On June 30, 2016February 28, 2019, the Company entered into an amendment and restatement of the Commitment Letter (the “Amended Commitment Letter”).  This amendment extended the collateral maintenance waivers under the Prior Facilities through 11:59 p.m. on September 30, 2016, which were further extended to October 7, 2016 pursuant to an additional agreement entered into with the lenders on September 30, 2016.  On October 6, 2016, the collateral maintenance waivers were further extended through November 15, 2016 pursuant to the Second Amended Commitment Letter (as defined below).  Additionally, the Second Amended Commitment Letter (as defined below), as well as the Amended $98$460 Million Credit Facility, Commitment Letter (referwhich provided an additional tranche of up to $35,000 to finance a portion of the “$98 Million Credit Facility” section below) providedacquisitions, installations, and related costs for waiversscrubbers for 17 of the Company’s company-wide minimum cash covenants,Capesize vessels (as so long as cash and cash equivalentsamended, the “$495 Million Credit Facility”). 

On June 5, 2020, the Company entered into an amendment to the $495 Million Credit Facility to extend the period that collateral vessels can be sold or disposed of without prepayment of the loan if a replacement vessel or vessels meeting certain requirements are included as collateral from 180 days to 360 days. On February 18, 2021 and February 26, 2021, the Company are at least $25,000,utilized $3,471 and $5,339 of the Company’s maximum leverage ratio through November 15, 2016.  Lastly,proceeds from the collateral maintenance waiverssale of the Genco Charger and maximum leverage ratio waiversGenco Thunder, respectively, as loan prepayment under these terms. These amounts were classified as restricted cash in the Condensed Consolidated Balance Sheet as of December 31, 2020 and are included in the total debt repayments below.

As a result of the loan prepayments for vessel sales, scheduled amortization payments were recalculated in accordance with the terms of the facility during April 2021. Scheduled amortization payments under the 2014 Term Loan Facility$460 million tranche were extended through November 15, 2016 pursuantrevised to $12,400 which will commence on June 30, 2021, with a waiverfinal payment of $189,605 due on the maturity date.

On December 17, 2020, the Company entered into on October 14, 2016.  In addition, from August 31 through November 15, 2016,an amendment to the amount of cash$495 Million Credit Facility that allowed the Company would need to maintain under its minimum cash covenants applicable only to obligors in each Prior Facility would be reduced by up to $250 per vessel, subject to an overall maximum cash withdrawal of $10,000 to pay expenses and additional conditions.  The effectiveness of such new waivers and waiver extensions was conditioned on extension of the equity commitment letters entered into on June 8, 2016 as described above through September 30, 2016, which were so extended by amendments entered into on June 29, 2016.   The Amended Commitment Letter also conditioned such waivers on the Company entering into a definitive purchase agreement or file a registration statement for an equity financing by 11:59 p.m. on August 15, 2016.  Pursuant to additional agreements entered into with the lenders on August 12, 2016, August 30, 2016, September 14, 2016 and September 30, 2016, the deadline to enter into a definitive purchase agreement or file a registration statement for an equity financing was further extended to October 7, 2016.  Stock purchase agreements were entered into on October 6, 2016 pursuant to the Second Amended Commitment Letter as defined below.

On October 6, 2016,vessel transaction in which the Company entered into a second amendment and restatement of the Commitment Letter (the “Second Amended Commitment Letter”).  This amendment further extended the collateral maintenance waivers under the Prior Facilities through November 15, 2016. As a conditionagreed to the effectiveness of the Second Amended Commitment Letter, the Company entered into stock purchase agreements (the “Purchase Agreements”) effective as of October 4, 2016 with Centerbridge, SVP and Apollo (the “Investors”)acquire 3 Ultramax vessels in exchange for the purchase6 of the Company’s Series A Preferred Stock for an aggregate of up to $125,000 in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended.  The Series A Preferred Stock to be sold pursuant to the Purchase Agreements

21


will be automatically and mandatorily convertible into the Company’s common stock, par value $0.01 per share, upon approval by the Company’s shareholders of such conversion.  The purchase price of the Series A Preferred Stock under each of the Purchase Agreements was $4.85 per share.  An additional 1,288,660 shares of Series A Preferred Stock were issued to Centerbridge, SVP and Apollo as a commitment fee on a pro rata basis.  The purchase price and the other terms and conditions of the transaction were established in arm’s length negotiations between an independent special committee of the Board of the Directors of the Company (the “Special Committee”).  The Special Committee unanimously approved the transaction.

Under the Purchase Agreements, Centerbridge made a firm commitment to purchase 6,597,938 shares of Series A Preferred Stock for an aggregate purchase price of $32,000, SVP made a firm commitment to purchase 7,628,866 shares of Series A Preferred Stock for an aggregate purchase price of $37,000, and Apollo made a firm commitment to purchase 3,587,629 shares of Series A Preferred Stock for an aggregate purchase price of $17,400.  In addition, Centerbridge, SVP and Apollo agreed to provide a backstop commitment to purchase up to 3,402,062,  2,371,134 and 2,185,568 additional shares of Series A Preferred Stock, respectively, for $4.85 per share.

Subsequently, on October 27, 2016, the Company entered into a stock purchase agreement (the “Additional Purchase Agreement”) with certain of the Investors; John C. Wobensmith, the Company’s Chief Executive Officer and President; and other investors for the sale of shares of Series A Preferred Stock for an aggregate purchase price of $38,600 at a purchase price of $4.85 per share.  The purchase price and the other terms and conditions of these transactions were established in arm’s length negotiations between an independent special committee of the board of directors of the Company (the “Special Committee”) and the investors.  The Special Committee unanimously approved the transactions.

On November 15, 2016, pursuant to the Purchase Agreements, the Company completed the private placement of 27,061,856 shares of Series A Preferred Stock which included 25,773,196 shares at a price per share of $4.85 and an additional 1,288,660 shares issued as a commitment fee on a pro rate basis as noted above. These shares were converted to common shares on January 4, 2017.  Refer to Note 1 — General Information.

$400 Million Credit Facility

On November 10, 2016, the Company entered into a senior secured term loan facility, the $400 Million Credit Facility, in an aggregate principal amount of up to $400,000 with Nordea Bank Finland plc, New York Branch, Skandinaviska Enskilda Banken AB (publ), DVB Bank SE, ABN AMRO Capital USA LLC, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG Filiale Deutschlandgeschäft, Crédit Industriel et Commercial and BNP Paribas.  On November 15, 2016, the proceeds under the $400 Million Credit Facility were used to refinance the Prior Facilities (as defined above under “Commitment Letter”).  The $400 Million Credit Facility is collateralized by 45 of the Company’s vessels and at December 31, 2016 required the Company to sell five remaining unencumbered vessels, which were sold during the nine months ended September 30, 2017.Handysize vessels. Refer to Note 4 — Vessel Acquisitions and Dispositions.

On November 14, 2016,August 28, 2019, September 23, 2019 and March 12, 2020, the Company borrowedmade total drawdowns of $9,300, $12,200 and $11,250, respectively, under the maximum available amount$35 million tranche of $400,000.  the $495 Million Credit Facility. As of September 30, 2017,March 31,

15

Table of Contents

2021, the Company has drawn down a total of $32,750, and this tranche is considered fully drawn. Scheduled quarterly repayments under this tranche are $2,339.

As of March 31, 2021, there was no0 availability under the $400$495 Million Credit Facility. Total debt repayments of $100$25,470 and $0$16,660 were made during the three months ended September 30, 2017March 31, 2021 and 2016, respectively, and total debt repayments of $300 and $0 were made during the nine months ended September 30, 2017 and 2016, respectively,2020 under the $400 Million Credit Facility.  As of September 30, 2017 and December 31, 2016, the total outstanding net debt balance, including PIK interest as defined below, was $398,331 and $392,833, respectively.

The $400$495 Million Credit Facility, has a final maturity date of November 15, 2021 and the principal borrowed under the facility will bear interest at the London Interbank Offered Rate (“LIBOR”) for an interest period of three months plus a margin of 3.75%.  The Company has the option to pay 1.50% of such rate in-kind (“PIK interest”) through December 31, 2018, of which will be payable on the maturity date of the facility.  The Company has opted to make the PIK interest election and as of September 30, 2017 and December 31, 2016, has recorded $5,375 and $800, respectively, of PIK interest which has been recorded in Long-term debt in the Condensed Consolidated Balance Sheet.  The $400 Million Credit Facility has scheduled amortization payments of (i) $100 per quarter through December 31, 2018, (ii) $7,610 per quarter from March 31, 2019 through December 31, 2020, (iii) $18,571 per quarter from March 31, 2021

22


through September 30, 2021 and (iv) $282,605 upon final maturity on November 15, 2021, which does not include PIK interest. respectively.

There is no collateral maintenance testing for the $400 Million Credit Facility prior to June 30, 2018.  Thereafter, there will be required collateral maintenance testing with a gradually increasing threshold calculated as the value of the collateral under the facility as a percentage of the loan outstanding as follows: 105% from June 30, 2018 to December 30, 2018, 115% from December 31, 2018 to December 30, 2020 and 135% thereafter. 

The $400 Million Credit Facility requires the Company to comply with a number of covenants substantially similar to those in the Company’s other credit facilities, including financial covenants related to debt to total book capitalization, minimum working capital, minimum liquidity, and dividends; collateral maintenance requirements (as described above); and other customary covenants.  The Company is required to maintain a ratio of total indebtedness to total capitalization of not greater than 0.70 to 1.00 at all times.  Minimum working capital as defined in the $400 Million Credit Facility is not to be less than $0 at all times.  The $400 Million Credit Facility has minimum liquidity requirements at all times for all vessels in its fleet of (i) $250 per vessel to and including December 31, 2018, (ii) $400 per vessel from January 1, 2019 to and including December 31, 2019 and (iii) $700 per vessel from January 1, 2020 and thereafter. The Company is prohibited from paying dividends without lender consent through December 31, 2020.  The Company may establish non-recourse subsidiaries to incur indebtedness or make investments, but it will be restricted from incurring indebtedness or making investments (other than through non-recourse subsidiaries).  Excess cash from the collateralized vessels under the $400 Million Credit Facility are subject to a cash sweep.  The cash flow sweep will be 100% of excess cash flow through December 31, 2018, 75% through December 31, 2020 and the lesser of 50% of excess cash flow or an amount that would reflect a 15-year average vessel age repayment profile thereafter; provided no prepayment under the cash sweep is required from the first $10,000 in aggregate of the prepayments otherwise required under the cash sweep.

At September 30, 2017 and December 31, 2016, the Company has deposited $11,180 that has been reflected as noncurrent restricted cash.  Noncurrent restricted cash as of September 30, 2017 and December 31, 2016 includes $11,180 which represents restricted pledged liquidity amounts pursuant to the $400 Million Credit Facility. 

As of September 30, 2017,March 31, 2021, the Company believed it was in compliance with all of the financial covenants under the $400$495 Million Credit Facility.

$98133 Million Credit Facility

On November 4, 2015, thirteenAugust 14, 2018, the Company entered into the $108 Million Credit Facility, a five-year senior secured credit facility that was used to finance a portion of the Company’s wholly-owned subsidiaries entered into a Facility Agreement, by and among such subsidiariespurchase price of 6 vessels, which also serve as borrowers (collectively, the “Borrowers”); Genco Holdings Limited, a newly formed direct subsidiary of Genco of which the Borrowers are direct subsidiaries (“Holdco”); certain funds managed or advised by Hayfin Capital Management, Breakwater Capital Ltd, or their nominee, as lenders; and Hayfin Services LLP, as agent and security agent (the “$98 Million Credit Facility”).

The Borrowers borrowed the maximum available amount of $98,271collateral under the facility, on November 10, 2015. As of September 30, 2017, there was no availability underwhich were delivered to the $98 Million Credit Facility.  DuringCompany during the three and nine months ended September 30, 2017 and 2016, there were no debt repayments made under the $98 Million Credit Facility.  As of September 30, 2017 and December 31, 2016, the total outstanding net debt balance was $93,776 and $93,403, respectively.2018.

Borrowings under the facility are available for working capital purposes.  The facility has a final maturity date of September 30, 2020, and the principal borrowed under the facility will bear interest at LIBOR for an interest period of three months plus a margin of 6.125% per annum.  The facility has no fixed amortization payments for the first two years and fixed amortization payments of $2,500 per quarter thereafter.  To the extent the value of the collateral under the facility is 182% or less of the loan amount outstanding, the Borrowers are to prepay the loan from earnings received from operation of the thirteen collateral vessels after deduction of the following amounts:  costs, fees, expenses, interest, and fixed principal repayments under the facility; operating expenses relating to the thirteen vessels; and the Borrowers’ pro rata share of general and administrative expenses based on the number of vessels they own.

23


The Facility Agreement requires the Borrowers and, in certain cases, the Company and Holdco to comply with a number of covenants substantially similar to those in the other credit facilities of Genco and its subsidiaries, including financial covenants related to maximum leverage, minimum consolidated net worth, minimum liquidity, and dividends; collateral maintenance requirements; and other customary covenants. The Company is prohibited from paying dividends under this facility until December 31, 2018. Following December 31, 2018, the amount of dividends the Company may pay is limited based on the amount of the repayment of at least $25 million of the loan under such facility, as well as the ratio of the value of vessels and certain other collateral pledged under such facility.  The Facility Agreement includes usual and customary events of default and remedies for facilities of this nature.

Borrowings under the facility are secured by first priority mortgage on the vessels owned by the Borrowers, namely the Genco Constantine, the Genco Augustus, the Genco London, the Genco Titus, the Genco Tiberius, the Genco Hadrian, the Genco Knight, the Genco Beauty, the Genco Vigour, the Genco Predator, the Genco Cavalier, the Genco Champion, and the Genco Charger, and related collateral.  Pursuant to the Facility Agreement and a separate Guarantee executed by the Company, the Company and Holdco are acting as guarantors of the obligations of the Borrowers and each other under the Facility Agreement and its related documentation.

On June 29, 2016, the Company entered into a commitment letter (the “$98 Million Credit Facility Commitment Letter”) which provided for certain covenant relief through September 30, 2016.  For such period, compliance with the company-wide minimum cash covenant was waived so long as cash and cash equivalents of the Company were at least $25,000; compliance with the maximum leverage ratio was waived; and the ratio required to be maintained under the Company’s collateral maintenance covenant was 120% rather than 140%.  An amendment to the $98 Million Credit Facility Commitment Letter was entered into on September 30, 2016 (the “Amended $98 Million Credit Facility Commitment Letter”) which extended this covenant relief through November 15, 2016.  Refer to the “Commitment Letter” section above for further discussion.

On November 15, 2016,11, 2020, the Company entered into an Amendingamendment and Restating Agreement which amended and restatedrestatement agreement to the credit agreements and the guarantee for the $98$108 Million Credit Facility which provided for a revolving credit facility of up to $25,000(the “Restated $98“Revolver”) for general corporate and working capital purposes (as so amended, the “$133 Million Credit Facility”). The Restated $98key terms associated with the Revolver are as follows:

The final maturity date of the Revolver is August 14, 2023.

Borrowings under the Revolver may be incurred pursuant to multiple drawings on or prior to July 1, 2023 in minimum amounts of $1,000.

Borrowings under the Revolver will bear interest at LIBOR plus 3.00%

The Revolver is subject to consecutive quarterly commitment reductions commencing on the last day of the fiscal quarter ending September 30, 2020 in an amount equal to approximately $1.9 million each quarter.
Borrowings under the Revolver are subject to a limit of 60% for the ratio of outstanding total term and revolver loans to the aggregate appraised value of collateral vessels under the $133 Million Credit Facility.

The collateral and financial covenants otherwise remain substantially the same as they were under the $108 Million Credit Facility.

On June 15, 2020, the Company drew down $24,000 under the Revolver of the $133 Million Credit Facility. On March 31, 2021, the Company repaid the remaining $21,160 outstanding balance under the Revolver from this drawdown.

As of March 31, 2021, there was $19,240 availability under the Revolver of the $133 Million Credit Facility. Total debt repayments of $22,740 and $1,580 were made during the three months ended March 31, 2021 and 2020 under the $133 Million Credit Facility, provides for the following: reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility, except the minimum liquidity amount for the collateral vessels under this facility is $750 per vessel, which is reflected as restricted cash; netting of certain amounts against the measurements of the collateral maintenance covenant, which remains in place with a 140% value to loan threshold; a portion of amounts required to be maintained under the minimum liquidity covenant for this facility may, under certain circumstances, be used to prepay the facility to maintain compliance with the collateral maintenance covenant; elimination of the original maximum leverage ratio and minimum net worth covenants; and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to those provided for in the $400 Million Credit Facility.  The minimum working capital and the total indebtedness to total capitalization are the same as the $400 Million Credit Facility. respectively.

As of September 30, 2017 and DecemberMarch 31, 2016,2021, the Company had deposited $8,593 and $8,242, respectively, that has been reflected as current restricted cash.  As of September 30, 2017 and December 31, 2016, the Company had deposited $12,506 and $15,931, respectively, that has been reflected as noncurrent restricted cash.  These amounts include certain restricted deposits associated with the Debt Service Account and Capex Account as defined in the $98 Million Credit Facility.

As of September 30, 2017, the Company believed it was in compliance with all of the financial covenants under the Restated $98$133 Million Credit Facility.

2014 Term Loan Facilities

On October 8, 2014, Baltic Trading and its wholly-owned subsidiaries, Baltic Hornet Limited and Baltic Wasp Limited, each entered into a loan agreement and related documentation for a credit facility in a principal amount of up to $16,800 with ABN AMRO Capital USA LLC and its affiliates (the “2014 Term Loan Facilities”) to partially finance the newbuilding Ultramax vessel that each subsidiary acquired, namely the Baltic Hornet and Baltic Wasp, respectively. 

2416


Amounts borrowed under the 2014 Term Loan Facilities may not be reborrowed.  The 2014 Term Loan Facilities have a ten-year term, and the facility amount is to be the lowest of 60% of the delivered cost per vessel, $16,800 per vessel, and 60% of the fair market value of each vessel at delivery.  The 2014 Term Loan Facilities are insured by the China Export & Credit Insurance Corporation (Sinosure) in order to cover political and commercial risks for 95% of the outstanding principal plus interest, which was recorded in deferred financing fees.  Borrowings under the 2014 Term Loan Facilities bear interest at the three or six-month LIBOR rate plus an applicable margin of 2.50% per annum.  Borrowings are to be repaid in 20 equal consecutive semi-annual installments of 1/24 of the facility amount plus a balloon payment of 1/6 of the facility amount at final maturity.  Principal repayments commenced six months after the actual delivery date for each respective vessel.

Borrowings under the 2014 Term Loan Facilities are secured by liens on the vessels acquired with borrowings under these facilities, namely the Baltic Hornet and Baltic Wasp, and other related assets. The Company guarantees the obligations of the Baltic Hornet and Baltic Wasp under the 2014 Term Loan Facilities.

As of September 30, 2017, the Company had utilized its maximum borrowing capacity, and there was no further availability. Total debt repayments of $681 were made during the three months ended September 30, 2017 and 2016 and $2,062 were made during the nine months ended September 30, 2017 and 2016 under the 2014 Term Loan Facilities.  At September 30, 2017 and December 31, 2016, the total outstanding net debt balance was $24,865 and $26,784, respectively. 

A waiver was entered into on June 30, 2016 with the lenders under the 2014 Term Loan Facilities which waived the collateral maintenance covenant through September 30, 2016.  On August 9, 2016, the Company entered into waiver agreements which extend the existing collateral maintenance covenant through October 15, 2016 and provided for waivers of the maximum leverage ratio covenant through such time.  On October 14, 2016, these waivers were further extended to November 15, 2016. 

On November 15, 2016, the Company entered into Supplemental Agreements with lenders under our 2014 Term Loan Facilities which, among other things, amended the Company’s collateral maintenance covenants under the 2014 Term Loan Facilities to provide that such covenants will not be tested through December 30, 2017 and the minimum collateral value to loan ratio will be 100% from December 31, 2017, 105% from June 30, 2018, 115% from December 31, 2018 and 135% from December 31, 2019.  These Supplemental Agreements also provided for certain other amendments to the 2014 Term Loan Facilities, which included reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to the $400 Million Credit Facility. Additionally, the minimum working capital required is the same as under the $400 Million Credit Facility.  Lastly, the maximum leverage requirement is equivalent to the debt to total capitalization requirement in the $400 Million Credit Facility.

As of September 30, 2017, the Company believed it was in compliance with all of the financial covenants under the 2014 Term Loan Facilities.

2015 Revolving Credit Facility

On April 7, 2015, the Company’s wholly-owned subsidiaries, Genco Commodus Limited, Genco Maximus Limited, Genco Claudius Limited, Genco Hunter Limited and Genco Warrior Limited (collectively, the “Subsidiaries”) entered into a loan agreement by and among the Subsidiaries, as borrowers, ABN AMRO Capital USA LLC, as arranger, facility agent, security agent, and as lender, providing for a $59,500 revolving credit facility, with an uncommitted accordion feature that has since expired (the “2015 Revolving Credit Facility”).  On April 7, 2015, the Company entered into a guarantee of the obligations of the Subsidiaries under the 2015 Revolving Credit Facility, in favor of ABN AMRO Capital USA LLC.

On April 7, 2016, the Company entered into a waiver agreement with the lenders under the 2015 Revolving Credit Facility to postpone the due date of the $1,641 amortization payment due April 7, 2016 to May 31, 2016.  As a condition thereof, the amount of the debt service required under the 2015 Revolving Credit Facility was $3,241 through

25


May 30, 2016.  Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.

During the three and nine months ended September 30, 2016, the Company made total debt repayments of $1,641 and $4,923, respectively, under the 2015 Revolving Credit Facility.

During the three and nine months ended September 30, 2016, borrowings under the 2015 Revolving Credit Facility bore interest at LIBOR plus a margin based on a combination of utilization levels under the 2015 Revolving Credit Facility and a security maintenance cover ranging from 3.40% per annum to 4.25% per annum.  The commitment under the 2015 Revolving Credit Facility was subject to quarterly reductions of $1,641. Borrowings under the 2015 Revolving Credit Facility were subject to 20 equal consecutive quarterly installment repayments commencing three months after the date of the loan agreement, or July 7, 2015.

On November 15, 2016, the 2015 Revolving Credit Facility was refinanced with the $400 Million Credit Facility; refer to the “Commitment Letter” and “$400 Million Credit Facility” sections above.  At September 30, 2017 and December 31, 2016, the total outstanding debt balance was $0.     

$148 Million Credit Facility

On December 31, 2014, Baltic Trading entered into a $148,000 senior secured credit facility with Nordea Bank Finland plc, New York Branch (“Nordea”), as Administrative and Security Agent, Nordea and Skandinaviska Enskilda Banken AB (Publ) (“SEB”), as Mandated Lead Arrangers, Nordea, as Bookrunner, and the lenders (including Nordea and SEB) party thereto (the “$148 Million Credit Facility”).  The $148 Million Credit Facility was comprised of an $115,000 revolving credit facility and $33,000 term loan facility.  Borrowings under the revolving credit facility were used to refinance Baltic Trading’s outstanding indebtedness under the 2010 Credit Facility.  Amounts borrowed under the revolving credit facility of the $148 Million Credit Facility could not be re-borrowed.  Borrowings under the term loan facility of the $148 Million Credit Facility could be incurred pursuant to two single term loans in an amount of $16,500 each that were used to finance, in part, the purchase of two newbuilding Ultramax vessels that the Company had agreed to acquire, namely the Baltic Scorpion and Baltic Mantis.  Amounts borrowed under the term loan facility of the $148 Million Credit Facility could not be re-borrowed.

A waiver was entered into on April 12, 2016 which extended the cure period for the collateral maintenance covenants to May 31, 2016.  Pursuant to additional agreements with the lenders under the $148 Million Credit Facility entered into on May 31, 2016, June 3, 2016 and June 8, 2016, the waiver was further extended through June 8, 2016.  Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.

During the three and nine months ended September 30, 2016, the Company made total debt repayments of $2,997 and $8,991, respectively, under the $148 Million Credit Facility.

During the three and nine months ended September 30, 2016, borrowings under this facility bore interest at LIBOR plus an applicable margin of 3.00% per annum.  The commitment under the revolving credit facility of the $148 Million Credit Facility was subject to equal consecutive quarterly reductions of $2,447 each beginning June 30, 2015 through September 30, 2019.  Borrowings under the term loan facility of the $148 Million Credit Facility were subject to equal consecutive quarterly installment repayments commencing three months after delivery of the relevant newbuilding Ultramax vessel, each in the amount of 1/60 of the aggregate outstanding term loan.  All remaining amounts outstanding under the $148 Million Credit Facility were to be repaid in full on the maturity date, December 31, 2019.

On November 15, 2016, the $148 Million Credit Facility was refinanced with the $400 Million Credit Facility; refer to the “Commitment Letter” and “$400 Million Credit Facility” sections above.  As of September 30, 2017 and December 31, 2016, the outstanding debt under the $148 Million Credit Facility was $0.

26


$44 Million Term Loan Facility

On December 3, 2013, Baltic Tiger Limited and Baltic Lion Limited, wholly-owned subsidiaries of Baltic Trading, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $44,000 (the “$44 Million Term Loan Facility”). Amounts borrowed and repaid under the $44 Million Term Loan Facility could not be reborrowed.  Borrowings under the $44 Million Term Loan Facility bore interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum. Borrowings were to be repaid in 23 quarterly installments of $688 each commencing three months after the last drawdown date, or March 24, 2014, and a final payment of $28,188 due on the maturity date.

On June 8, 2016, the Company entered into an amendment to the $44 Million Term Loan Facility which provided for cross-collateralization with the $22 Million Term Loan Facility.  Pursuant to this amendment, the security coverage ratio (collateral maintenance calculation) was revised to include the fair market value of the Genco Tiger, Baltic Lion, Baltic Fox and Baltic Hare less the outstanding indebtedness under the $22 Million Term Loan Facility as the total security effective June 30, 2016. Refer also to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.

During the three and nine months ended September 30, 2016, the Company made total debt repayments of $687 and $2,062, respectively, under the $44 Million Term Loan Facility. 

On November 15, 2016, the $44 Million Term Loan Facility was refinanced with the $400 Million Credit Facility; refer to the “Commitment Letter” and “$400 Million Credit Facility” sections above.  At September 30, 2017 and December 31, 2016, the total outstanding net debt balance was $0. 

$22 Million Term Loan Facility

On August 30, 2013, Baltic Hare Limited and Baltic Fox Limited, wholly-owned subsidiaries of Baltic Trading, entered into a secured loan agreement with DVB Bank SE for a term loan facility of up to $22,000 (the “$22 Million Term Loan Facility”).  Amounts borrowed and repaid under the $22 Million Term Loan Facility were not to be reborrowed.  Borrowings under the $22 Million Term Loan Facility bore interest at the three-month LIBOR rate plus an applicable margin of 3.35% per annum. Borrowings were to be repaid in 23 quarterly installments of $375 each commencing three months after the last vessel delivery date, or December 4, 2013, and a final payment of $13,375 due on the maturity date.

On June 8, 2016, the Company entered into an amendment to the $22 Million Term Loan Facility which provided for cross-collateralization with the $44 Million Term Loan Facility.  Pursuant to this amendment, the security coverage ratio (collateral maintenance calculation) was revised to include the fair market value of the Baltic Fox, Baltic Hare, Genco Tiger and Baltic Lion less the outstanding indebtedness under the $44 Million Term Loan Facility as the total security effective June 30, 2016.  Additionally, this amendment increased the collateral maintenance requirement to 125% from 110% commencing July 1, 2016.  Refer also to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.

During the three and nine months ended September 30, 2016, the Company made total debt repayments of $375 and $1,125, respectively, under the $22 Million Term Loan Facility. 

On November 15, 2016, the $22 Million Term Loan Facility was refinanced with the $400 Million Credit Facility; refer to the “Commitment Letter” and “$400 Million Credit Facility” sections above.  At September 30, 2017 and December 31, 2016, the total outstanding net debt balance was $0.

27


$253 Million Term Loan Facility

On August 20, 2010, the Company entered into the $253 Million Term Loan Facility. The Company utilized the $253 Million Term Loan Facility to fund a portion of the purchase price of the acquisition of 13 vessels from affiliates of Bourbon SA. Borrowings were to be repaid quarterly with outstanding principal amortized on a per vessel basis and any outstanding amount under the $253 Million Term Loan Facility was to be paid in full on the maturity date.  Repaid amounts were no longer available and could not be reborrowed.  During the three and nine months ended September 30, 2016, borrowings under the $253 Million Term Loan Facility bore interest at LIBOR plus an applicable margin of 3.50% per annum. 

A waiver was entered into on March 11, 2016 which required the Company to prepay the $5,075 debt amortization payment due on April 11, 2016 and which waived the collateral maintenance covenant through April 11, 2016. On April 11, 2016, the Company entered into additional agreements with the lenders under the $253 Million Term Loan Facility which extended the waiver through May 31, 2016. Pursuant to additional agreements with the lenders under the $253 Million Term Loan Facility entered into on May 31, 2016, June 3, 2016 and June 8, 2016, the waiver was further extended through June 10, 2016.  Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.

During the three and nine months ended June 30, 2016, the Company made total debt repayments of $5,075 and $15,225, respectively, under the $253 Million Term Loan Facility.

On November 15, 2016, the $253 Million Term Loan Facility was refinanced with the $400 Million Credit Facility; refer to the “Commitment Letter” and “$400 Million Credit Facility” sections above.  At September 30, 2017 and December 31, 2016, the total outstanding net debt balance was $0.

$100 Million Term Loan Facility

On August 12, 2010, the Company entered into the $100 Million Term Loan Facility. The Company used the $100 Million Term Loan Facility to fund or refund the Company a portion of the purchase price of the acquisition of five vessels from companies within the Metrostar group of companies. Borrowings were to be repaid quarterly, with the outstanding principal amortized on a 13-year profile, with any outstanding amount under the $100 Million Term Loan Facility to be paid in full on the final maturity date.  Repaid amounts were no longer available and could not be reborrowed.  During the three and nine months ended September 30, 2016, borrowings under the $100 Million Term Loan Facility bore interest at LIBOR plus an applicable margin of 3.50% per annum.

A waiver was entered into on March 29, 2016 which required the Company to prepay the $1,923 debt amortization payment due on June 30, 2016 and which waived the collateral maintenance covenant through April 11, 2016. On April 11, 2016, the Company entered into additional agreements with the lenders under the $100 Million Term Loan Facility which extended the waiver through May 31, 2016.  Pursuant to additional agreements with the lenders under the $100 Million Term Loan Facility entered into on May 31, 2016, June 3, 2016 and June 8, 2016, the waiver was further extended through June 10, 2016.  Refer to the “Commitment Letter” section above for additional waivers entered into by the Company which have extended the waivers of certain financial covenants through November 15, 2016.

During the three and nine months ended September 30, 2016, the Company made total debt repayments of $1,923 and $5,769, respectively, under the $100 Million Term Loan Facility.

On November 15, 2016, the $100 Million Term Loan Facility was refinanced with the $400 Million Credit Facility; refer to the “Commitment Letter” and “$400 Million Credit Facility” sections above.  At September 30, 2017 and December 31, 2016, the total outstanding net debt balance was $0.

28


Interest rates

The following table sets forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the cost associated with unused commitment fees, if applicable. The following table also includes the range of interest rates on the debt, excluding the impact of unused commitment fees, if applicable:

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

 

 

2016

 

2017

 

  

2016

 

For the Three Months Ended March 31,

    

2021

2020

Effective Interest Rate

 

5.42

%  

 

4.47

%  

5.24

%  

  

4.40

%  

3.18

%  

4.76

%  

Range of Interest Rates (excluding unused commitment fees)

 

3.65 % to 7.46

%  

 

3.13 % to 6.96

%  

3.36 % to 7.46

%  

  

2.69 % to 6.96

%  

2.61 % to 3.48

%  

3.45 % to 5.05

%  

9 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

8 – DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risk on its floating rate debt. As of March 31, 2021, the Company had 3 interest rate cap agreements outstanding to manage interest costs and the risk associated with variable interest rates. The 3 interest rate cap agreements have been designated and qualify as cash flow hedges. The premium paid is recognized in income on a rational basis and all changes in the value of the caps are deferred in Accumulated other comprehensive income (“AOCI”) and are subsequently reclassified into Interest expense in the period when the hedged interest affects earnings.

The following table summarizes the interest rate cap agreements in place as of March 31, 2021.

Interest Rate Cap Detail

Notional Amount Outstanding

March 31, 

Trade date

Cap Rate

Start Date

End Date

    

2021

March 25, 2021

0.75

%

April 29, 2021

March 28, 2024

$

50,000

July 29, 2020

0.75

%

July 31, 2020

December 29, 2023

100,000

March 6, 2020

1.50

%

March 10, 2020

March 10, 2023

50,000

$

200,000

The Company records the fair value of the interest rate caps as Fair value of derivatives in the non-current asset section on its condensed consolidated balance sheet. The Company has elected to use the income approach to value the interest rate derivatives using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted) reflecting current market expectations about those future amounts. Level 2 inputs for derivative valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR cash and swap rates, implied volatility, basis swap adjustments, and credit risk at commonly quoted intervals). Mid-market pricing is used as a practical expedient for most fair value measurements.

The Company recorded a $161 gain for the three months ended March 31, 2021. The estimated income that is currently recorded in AOCI as of March 31, 2021 that is expected to be reclassified into earnings within the next twelve months is $167.

17

Table of Contents

The Effect of Fair Value and Cash Flow Hedge Accounting on the Statement of Operations

For the Three Months Ended March 31,

2021

    

2020

Interest Expense

Interest Expense

Total amounts of income and expense line items presented in the statement of operations in which the effects of fair value or cash flow hedges are recorded

$

4,541

$

6,945

The effects of fair value and cash flow hedging

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20:

Interest contracts:

Amount of gain or (loss) reclassified from AOCI to income

$

$

Premium excluded and recognized on an amortized basis

69

Amount of gain or (loss) reclassified from AOCI to income as a result that a forecasted transaction is no longer probable of occurring

The following table shows the interest rate cap assets as of March 31, 2021:

March 31, 

Derivatives designated as hedging instruments

Balance Sheet Location

2021

Interest rate caps

Fair value of derivative instruments - noncurrent

$

629

The components of AOCI included in the accompanying Condensed Consolidated Statements of Equity consistcondensed consolidated balance sheet consists of net unrealized gains (losses) from investments in Jinhui stock and KLC stock.  The Company sold its remaining sharesgain (loss) on cash flow hedges as of Jinhui and KLC stock during the three months ended DecemberMarch 31, 2016.  Therefore, there was no AOCI activity recorded during the three and nine months ended September 30, 2017, and the opening AOCI balance at January 1, 2017 was $0.  Refer to Note 5 Investments for further information.2021.

AOCI — January 1, 2021

$

Amount recognized in OCI on derivative, intrinsic

 

(97)

Amount recognized in OCI on derivative, excluded

 

258

Amount reclassified from OCI into income

 

AOCI — March 31, 2021

$

161

Changes in AOCI by ComponentThe

For the Three Months Ended September 30, 2016

 

 

 

 

 

 

    

Net Unrealized

 

 

 

Gain (Loss)

 

 

 

on

 

 

 

Investments

 

AOCI — July 1, 2016

 

$

(26)

 

 

 

 

 

 

OCI before reclassifications

 

 

316

 

Amounts reclassified from AOCI

 

 

 —

 

Net current-period OCI

 

 

316

 

 

 

 

 

 

AOCI — September 30, 2016

 

$

290

 

Changes in AOCI by Component

For the Nine Months Ended September 30, 2016

 

 

 

 

 

 

    

Net Unrealized

 

 

 

Gain (Loss)

 

 

 

on

 

 

 

Investments

 

AOCI — January 1, 2016

 

$

(21)

 

 

 

 

 

 

OCI before reclassifications

 

 

(2,385)

 

Amounts reclassified from AOCI

 

 

2,696

 

Net current-period OCI

 

 

311

 

 

 

 

 

 

AOCI — September 30, 2016

 

$

290

 

29


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassifications Out of AOCI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

Affected Line Item in

 

 

 

September 30, 

 

September 30, 

 

the Statement Where

 

Details about AOCI Components

 

2017

    

2016

    

2017

    

2016

 

Net Loss is Presented

 

Net unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Impairment of AFS investment

 

 

 —

 

 

 —

 

 

 —

 

 

(2,696)

 

Impairment of investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total reclassifications for the period

 

$

 —

 

$

 —

 

$

 —

 

$

(2,696)

 

 

 

109 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values and carrying values of the Company’s financial instruments at September 30, 2017as of March 31, 2021 and December 31, 20162020 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.

March 31, 2021

December 31, 2020

    

Carrying

    

    

Carrying

    

 

    

Value

    

Fair Value

    

Value

    

Fair Value

 

Cash and cash equivalents

$

123,191

$

123,191

$

143,872

$

143,872

Restricted cash

 

40,834

 

40,834

 

35,807

 

35,807

Principal amount of floating rate debt

 

401,018

 

401,018

 

449,228

 

449,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2017

 

December 31, 2016

 

 

    

Carrying

    

 

 

    

Carrying

    

 

 

 

 

    

Value

    

Fair Value

    

Value

    

Fair Value

 

Cash and cash equivalents

 

$

152,511

 

$

152,511

 

$

133,400

 

$

133,400

 

Restricted cash

 

 

32,594

 

 

32,594

 

 

35,668

 

 

35,668

 

Floating rate debt

 

 

526,590

 

 

526,590

 

 

524,377

 

 

524,377

 

18

Table of Contents

The faircarrying value of the floating rate debtborrowings under the $400$495 Million Credit Facility is based on rates obtained onand the effective date of the facility, November 10, 2016.  The fair value of the floating rate debt under the $98$133 Million Credit Facility is based on rates the Company obtained upon the effective dateas of this facility on November 4, 2015, which did not change under the Restated $98 Million Credit Facility effective on November 15, 2016. TheMarch 31, 2021 and December 31, 2020 approximate their fair value ofdue to the 2014 Term Loan Facilities is based on rates that Baltic Trading initially obtained upon the effective datesvariable interest nature thereof as each of these credit facilities which did not change pursuant to the Amended 2014 Term Loan Facilities effective on November 15, 2016.  Refer to Note 8 — Debt for further information.  The carrying value approximates the fair market value for theserepresent floating rate loans. The carrying amounts of the Company’s other financial instruments at September 30, 2017as of March 31, 2021 and December 31, 20162020 (principally Due from charterers and Accounts payable and accrued expenses) approximate fair values because of the relatively short maturity of these instruments.

ASC Subtopic 820-10, “FairFair Value Measurements & Disclosures”Disclosures (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumption (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 requires significant management judgment. The three levels are defined as follows:

·

Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.

·

Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

·

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

30


Cash and cash equivalents and restricted cash are considered Level 1 items, as they represent liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item, as the Company considers the estimate of rates it could obtain for similar debt or based upon transactions amongst third parties. Interest rate cap agreements are considered to be a Level 2 item. Refer to Note 8 — Derivative Instruments for further information. Nonrecurring fair value measurements include a vessel impairment assessmentassessments completed at June 30, 2017 and during the interim period during the year ended December 31, 2016and at year-end as determined based on third-party scrap or broker quotes, which are based on various data points, including comparable sales of similar vessels, which are Level 2 inputs. As of June 30, 2017, theThere was no vessel asset for the Genco Surprise was written down as part of the impairment recorded during the ninethree months ended September 30, 2017.March 31, 2021. During the three months ended September 30, 2017,March 31, 2020, the vessel assets for 14 of the five 1999-builtCompany’s vessels were written down as part of the impairment recorded during the three and nine months ended September 30, 2017.March 31, 2020. The vessels held for sale as of March 31, 2021 and December 31, 20162020 were written down as part of the impairment recorded in the interim period during the year ended December 31, 2016.  There were no additional adjustments required as of December 31, 2016 when the held for sale criteria was met.2020. Refer to the “Impairment of vessel assets” and “Vessels held for sale” sectionssection in Note 2 — Summary of Significant Accounting Policies.

Nonrecurring fair value measurements also include impairment tests conducted by the Company during the three months ended March 31, 2021 and 2020 of its operating lease right-of use assets.  The fair value determination for the operating lease right-of-use assets was based on third party quotes, which is considered a Level 2 input. During the three months ended March 31, 2021 and 2020, there were 0 indicators of impairment of the operating lease right-of-use assets.

The Company did not have any Level 3 financial assets or liabilities as of September 30, 2017March 31, 2021 and December 31, 2016.2020.

11 - PREPAID EXPENSES AND OTHER CURRENT AND NONCURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

 

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

 

    

2017

    

2016

 

Lubricant inventory, fuel oil and diesel oil inventory and other stores

 

$

11,397

 

$

9,634

 

Prepaid items

 

 

1,963

 

 

2,552

 

Insurance receivable

 

 

4,973

 

 

1,030

 

Other

 

 

4,278

 

 

2,534

 

Total prepaid expenses and other current assets

 

$

22,611

 

$

15,750

 

Other noncurrent assets in the amount of $514 at September 30, 2017 and December 31, 2016 represents the security deposit related to the operating lease entered into effective April 4, 2011. Refer to Note 16 — Commitments and Contingencies for further information related to the lease agreement.

12 - FIXED ASSETS

Fixed assets, net consists of the following:

 

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

 

    

2017

    

2016

 

Fixed assets, at cost:

 

 

 

 

 

 

 

Vessel equipment

 

$

1,302

 

$

1,173

 

Furniture and fixtures

 

 

462

 

 

462

 

Computer equipment

 

 

180

 

 

142

 

Total costs

 

 

1,944

 

 

1,777

 

Less: accumulated depreciation and amortization

 

 

(932)

 

 

(759)

 

Total fixed assets, net

 

$

1,012

 

$

1,018

 

Depreciation and amortization expense for fixed assets for the three months ended September 30, 2017 and 2016 was $67 and $97, respectively.  Depreciation and amortization expense for fixed assets for the nine months ended September 30, 2017 and 2016 was $203 and $289, respectively.

3119


1310 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

    

2017

    

2016

 

    

March 31, 

    

December 31, 

    

2021

    

2020

 

Accounts payable

 

$

8,971

 

$

6,703

 

$

14,888

$

11,864

Accrued general and administrative expenses

 

 

1,376

 

 

5,618

 

 

1,765

 

3,258

Accrued vessel operating expenses

 

 

12,184

 

 

10,564

 

 

7,749

 

7,671

Total accounts payable and accrued expenses

 

$

22,531

 

$

22,885

 

$

24,402

$

22,793

1411 – VOYAGE REVENUEREVENUES

Total voyage revenue includesrevenues include revenue earned on fixed rate time charters, vessel pools, spot market voyage charters and spot market-related time charters, as well as the sale of bunkers consumed during short-term time charters. For the three months ended September 30, 2017March 31, 2021 and 2016,2020, the Company earned $51,161$87,591 and $37,871$98,336 of voyage revenue, respectively,revenues, respectively.

Revenue for spot market voyage charters is recognized ratably over the total transit time of the voyage which begins when the vessel arrives at the loading port and ends at the time the discharge of cargo is completed at the discharge port in accordance with ASC 606 — Revenue from Contracts with Customers. Spot market voyage charter agreements do not provide the charterers with substantive decision-making rights to direct how and for what purpose the nine months ended September 30, 2017 and 2016,vessel is used, therefore revenue from spot market voyage charters is not within the scope of ASC 842 — Leases (“ASC 842”). Additionally, the Company earned $134,780has identified that the contract fulfillment costs of spot market voyage charters consist primarily of the fuel consumption that is incurred by the Company from the latter of the end of the previous vessel employment and $89,461the contract date until the arrival at the loading port in addition to any port expenses incurred prior to arrival at the load port, as well as any charter hire expenses for third-party vessels that are chartered in. The fuel consumption and any port expenses incurred prior to arrival at the load port are capitalized and recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets and are amortized ratably over the total transit time of the voyage from arrival at the loading port until the vessel departs from the discharge port and expensed as part of Voyage Expenses. Similarly, for any third party vessels that are chartered in, the charter hire expenses during this period are capitalized and recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets and are amortized and expensed as part of Charter hire expenses.

During time charter agreements, including fixed rate time charters and spot market-related time charters, the charterers have substantive decision-making rights to direct how and for what purpose the vessel is used. As such, the Company has identified that time charter agreements contain a lease in accordance with ASC 842. During time charter agreements, the Company is responsible for operating and maintaining the vessels. These costs are recorded as vessel operating expenses in the Condensed Consolidated Statements of Operation. The Company has elected the practical expedient that allows the Company to combine lease and non-lease components under ASC 842 as the Company believes (1) the timing and pattern of recognizing revenues for operating the vessel is the same as the timing and pattern of recognizing vessel leasing revenue; and (2) the lease component, if accounted for separately, would be classified as an operating lease.

Total voyage revenue respectively. Included in voyage revenue for the three months ended September 30, 2017 and 2016 was $1 and $836 of net profit sharing revenue, respectively.  Included in voyage revenue for the nine months ended September 30, 2017 and 2016 was $2,325 and $1,442 of net profit sharing revenue, respectively. 

15 - REORGANIZATION ITEMS, NET

On April 21, 2014 (the “Petition Date”), GS&T and its subsidiaries, other than Baltic Trading and its subsidiaries, (collectively, the “Debtors”) filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”)recognized in the United States Bankruptcy Court for the Southern DistrictCondensed Consolidated Statements of New York (the “Bankruptcy Court”).  The Company subsequently emerged from bankruptcy on July 9, 2014, the Effective Date.  Refer to the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016 for further detail regarding the bankruptcy filing.

Reorganization items, net represents amounts incurred and recovered subsequent to the bankruptcy filing as a direct result of the filing of the Chapter 11 Cases and are comprised ofOperations includes the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2017

    

2016

    

2017

    

2016

 

Professional fees incurred

 

$

 —

 

$

70

 

$

 —

 

$

192

 

Trustee fees incurred

 

 

 —

 

 

13

 

 

 —

 

 

51

 

Total reorganization fees

 

$

 —

 

$

83

 

$

 —

 

$

243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total reorganization items, net

 

$

 —

 

$

83

 

$

 —

 

$

243

 

For the Three Months Ended

March 31, 

    

2021

    

2020

Lease revenue

$

18,900

$

19,151

Spot market voyage revenue

68,691

79,185

Total voyage revenues

$

87,591

$

98,336

20

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16

12 - COMMITMENTS AND CONTINGENCIESLEASES

Effective April 4, 2011,On June 14, 2019, the Company entered into a seven-year sub-subleasesublease agreement for additionala portion of the leased space for its main office space in New York, New York.  The termYork that commenced on July 26, 2019 and will end on September 29, 2025. There was $306 of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments were $82 per month until May 31, 2015 and thereafter will be $90 per month until the end of the seven-year term.  Pursuant to the sub-sublease agreement, the sublessor was obligated to contribute $472 toward the cost of the Company’s alterations to the sub-subleased office space.  The Company has also entered into a direct lease with the over-landlord of such office space that will commence immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provides for a free base rental period from May 1, 2018 to September 30, 2018.  Following the expiration of the free base rental period, the monthly base rental payments will be

32


$186 per month from October 1, 2018 to April 30, 2023 and $204 per month from May 1, 2023 to September 30, 2025.  For accounting purposes, the sub-sublease agreement and direct lease agreement with the landlord constitutes one lease agreement.  As a result of the straight-line rent calculation generated by the free rent period and the tenant work credit, the monthly straight-line rental expense for the term from the Effective Date to September 30, 2025 is $150.  The Company had a long-term lease obligation at September 30, 2017 and December 31, 2016 of $2,408 and $1,868, respectively.  Rent expense pertaining to this lease for the three months ended September 30, 2017 and 2016 was $452 during both periods and $1,356 during the nine months ended September 30, 2017 and 2016.  

Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $269 for the remainder of 2017, $916 for 2018, $2,230 annually for 2019, 2020 and 2021, and a total of $8,900 for the remaining term of the lease.

During the beginning of 2009, the Genco Cavalier, a 2007-built Supramax vessel, was on charter to Samsun when Samsun filed for the equivalent of bankruptcy protection in South Korea, otherwise referred to as a rehabilitation application.  On July 3, 2015, Samsun filed for rehabilitation proceedings for the second time with the South Korean courts due to financial distress.  On April 8, 2016, the revised rehabilitation plan was approved by the South Korean court whereby 26% of the remainder of the $3,979 unpaid cash claim settlement from the prior rehabilitation plan, or $1,035,  which was to be settled pursuant to a payment plan over the next ten-year period.  The remaining 74% of the claim was to be converted to Samsun Shares.  Refer to Note 2 — Summary of Significant Accounting Policies for Other Operating Incomesublease income recorded during the three and nine months ended September 30, 2016.  The full and final settlement of the remaining claim with Samsun was settled during the fourth quarter of 2016.

17 - STOCK-BASED COMPENSATION

On October 13, 2016, Peter C. Georgiopoulos resigned as Chairman of the Board and a director of the Company.  In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016.  Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos received an amount equal to the annual Chairman’s fee awarded to him in recent years of $500 as a severance payment and full vesting of his unvested equity awards, which consisted of grants of 68,581 restricted shares of the Company’s common stock and warrants exercisable for approximately 213,937 shares of the Company’s common stock with an exercise price per share ranging $259.10 to $341.90. The acceleration of the vesting of Mr. Georgiopoulos’ restricted shares and warrants resulted in $5,317 of nonvested stock amortization expense during the three months ended DecemberMarch 31, 2016.

2014 Management Incentive Plan

On2021 and 2020. Sublease income is recorded net with the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”). An aggregate of 966,806 shares of Common Stock were available for award under the MIP.  Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values.  The number of shares of common stock available under the Plan represented approximately 1.8% of the shares of post-emergence Common Stock outstanding as of the Effective Date on a fully-diluted basis. Awards under the MIP were available to eligible employees, non-employee directors and/or officers of the Company and its subsidiaries (collectively, “Eligible Individuals”). Under the MIP, a committee appointed by the Board from time to time (or, in the absence of such a committee, the Board) (in either case, the “Plan Committee”) may grant a variety of stock-based incentive awards, as the Plan Committee deems appropriate, to Eligible Individuals. The MIP Warrants are exercisable on a cashless basis and contain customary anti-dilution protection in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction. 

On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant can be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 238,066,  246,701 and 370,979 shares and have exercise prices of $259.10 (the “$259.10 Warrants”), $287.30 (the “$287.30 Warrants”) and $341.90 (the “$341.90 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $259.10 Warrants, $6.63 for the $287.30

33


Warrants and $5.63 for the $341.90 Warrants. The warrant values were based upon a calculation using the Black-Scholes-Merton option pricing formula. This model uses inputs such as the underlying price of the shares issued when the warrant is exercised, volatility, cost of capital interest rate and expected life of the instrument. The Company has determined that the warrants should be classified within Level 3 of the fair value hierarchy by evaluating each input for the Black-Scholes-Merton option pricing formula against the fair value hierarchy criteria and using the lowest level of input as the basis for the fair value classification. The Black-Scholes-Merton option pricing formula used a volatility of 43.91% (representing the six-year volatility of a peer group), a risk-free interest rate of 1.85% and a dividend rate of 0%.  The aggregate fair value of these awards upon emergence from bankruptcy was $54,436. The warrants vested 33.33% on each of the first three anniversaries of the grant date, with accelerated vesting upon a change in control of the Company.

For the three and nine months ended September 30, 2017 and 2016, the Company recognized amortization expense of the fair value of these warrants, which is includedtotal operating lease costs in General and administrative expenses as follows:in the Condensed Consolidated Statements of Operation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2017

    

2016

    

2017

    

2016

 

General and administrative expenses

 

$

153

 

$

2,442

 

$

902

 

$

9,973

 

AsThe Company charters in third-party vessels and the Company is the lessee in these agreements under ASC 842. The Company has elected the practical expedient under ASC 842 to not recognize right-of-use assets and lease liabilities for short-term leases. During the three months ended March 31, 2021 and 2020, all charter-in agreements for third-party vessels were less than twelve months and considered short-term leases.

13 – COMMITMENTS AND CONTINGENCIES

During the second half of September 30, 2017, there was no unamortized stock-based compensation2018, the Company entered into agreements for the warrants.purchase of ballast water treatments systems (“BWTS”) for 36 of its vessels.  The following table summarizescost of these systems vary based on the unvested warrant activitysize and specifications of each vessel and whether the systems will be installed in China during the vessels’ scheduled drydockings.  Based on the contractual purchase price of the BWTS and the estimated installation fees, the Company estimates the cost of the systems to be approximately $0.9 million for Capesize vessels, $0.6 million for Supramax vessels and $0.5 million for Handysize vessels. These costs are capitalized and depreciated over the nine months ended September 30, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

Weighted

 

 

 

Number of

 

Average Exercise

 

Average Fair

 

 

    

Warrants

    

Price

 

Value

 

Outstanding at January 1, 2017 - Unvested

 

713,122

 

$

303.12

 

$

6.36

 

Granted

 

 —

 

 

 —

 

 

 —

 

Exercisable

 

(713,122)

 

 

303.12

 

 

6.36

 

Exercised

 

 —

 

 

 —

 

 

 —

 

Forfeited

 

 —

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

Outstanding at September 30, 2017 - Unvested

 

 —

 

$

 —

 

$

 —

 

The following table summarizes certain information aboutremainder of the warrants outstandinglife of the vessel.  Prior to any adjustments for vessel impairment and vessel sales, the Company recorded cumulatively $17,774 and $17,009 in Vessel assets in the Condensed Consolidated Balance Sheets as of September 30, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants Outstanding and Unvested,

 

Warrants Outstanding and Exercisable,

 

 

 

 

September 30, 2017

 

September 30, 2017

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

Average

 

 

 

Weighted

 

Average

 

 

 

Weighted

 

Average

 

Exercise Price of

 

 

 

Average

 

Remaining

 

 

 

Average

 

Remaining

 

Outstanding

 

Number of

 

Exercise

 

Contractual

 

Number of

 

Exercise

 

Contractual

 

Warrants

    

Warrants

    

Price

    

Life

    

Warrants

    

Price

    

Life

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

303.12

 

 —

 

$

 —

 

 —

 

8,557,461

 

$

303.12

 

2.86

 

As of September 30, 2017March 31, 2021 and December 31, 2016, a total of 8,557,461 of warrants were outstanding. 2020, respectively, related to BWTS additions.  

34


14 - STOCK-BASED COMPENSATION

The nonvested stock awards granted under the MIP vested ratably on each of the three anniversaries of August 7, 2014. The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2017 which were issued under the MIP:

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

Number of

 

Average Grant

 

 

    

Shares

    

Date Price

 

Outstanding at January 1, 2017

 

9,255

 

$

200.00

 

Granted

 

 —

 

 

 —

 

Vested

 

(9,255)

 

 

200.00

 

Forfeited

 

 —

 

 

 —

 

 

 

 

 

 

 

 

Outstanding at September 30, 2017

 

 —

 

$

 —

 

The total fair value of MIP restricted shares that vested during the nine months ended September 30, 2017 and 2016 was $106 and $190, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the three and nine months ended September 30, 2017 and 2016, the Company recognized nonvested stock amortization expense for the MIP restricted shares, which is included in General and administrative expenses, as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2017

 

2016

    

2017

    

2016

 

General and administrative expenses

 

$

62

 

$

996

 

$

368

 

$

4,069

 

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures.  As of September 30, 2017, there was $0 of unrecognized compensation cost. 

2015 Equity Incentive Plan

Stock Options

On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 400,000 shares of common stock (the “2015 Plan”).  Under the 2015 Plan, the Company’s Board of Directors, the compensation committee, or another designated committee of the Board of Directors may grant a variety of stock-based incentive awards to the Company’s officers, directors, employees, and consultants.  Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock.  As of June 30, 2017, the Company has awarded restricted stock units, restricted stock and stock options under the 2015 Plan.

On MarchFebruary 23, 2017, the Board of Directors approved an amendment and restatement of the 2015 Plan.  This amendment and restatement increases the number of shares available for awards under the plan from 400,000 to 2,750,000, subject to shareholder approval; sets the annual limit for awards to non-employee directors and other individuals as 500,000 and 1,000,000 shares, respectively; and modifies the change in control definition.  The Company’s shareholder’s approved the increase in the number of shares at the Company’s 2017 Annual Meeting of Shareholders on May 17, 2017.

Stock Options

On March 23, 2017,2021, the Company issued options to purchase 133,000118,552 of the Company’s shares of common stock to John C. Wobensmith, Chief Executive Officer and President,certain individuals with an exercise price of $11.13$9.91 per share. One-thirdOne third of the options become exercisable on each of the first three anniversaries of October 15, 2016,February 23, 2021, with accelerated vesting uponthat may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date. The fair value of each option was estimated on the date of the grant using the Black-Scholes-MertonCox-Ross-Rubinstein pricing formula, resulting in a value of $6.41$4.33 per share, or $853$513 in the aggregate. The assumptions used in the Black-Scholes-MertonCox-Ross-Rubinstein option pricing formula are as follows: volatility of 79.80%60.91% (representing a blend of the Company’s historical volatility and a peer-based volatility estimate)volatility), a risk-free interest rate of 1.68%0.41%, a dividend yield of 0%0.98%, and expected

35


life of 3.784 years (determined using the simplified method as outlined in Staff Accounting Bulletin 14 – Share-Based Payment (“SAB Topic 14”)14 due to lack of historical exercise data).

For the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, the Company recognized amortization expense of the fair value of these options, which is included in General and administrative expenses, as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2017

 

2016

 

2017

    

2016

 

General and administrative expenses

 

$

201

 

$

 —

 

$

419

 

$

 —

 

For the Three Months Ended

March 31, 

2021

    

2020

 

General and administrative expenses

$

180

$

205

Amortization of the unamortized stock-based compensation balance of $434$823 as of September 30, 2017March 31, 2021 is expected to be expensed $93,  $254$456, $278, $81 and $87$8 during the remainder of 20172021 and during the years endedending December 31, 20182022,

21

Table of Contents

2023 and 2019,2024, respectively. The following table summarizes the unvestedstock option activity for the ninethree months ended September 30, 2017:March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

Weighted

 

 

Number of

 

Average Exercise

 

Average Fair

 

    

Options

    

Price

 

Value

 

Outstanding at January 1, 2017 - Unvested

 

 —

 

$

 —

 

$

 —

 

Weighted

Weighted

Number

Average

Average

of

Exercise

Fair

    

Options

    

Price

    

Value

    

Outstanding as of January 1, 2021

 

837,338

 

$

8.86

4.02

Granted

 

133,000

 

 

11.13

 

 

6.41

 

 

118,552

9.91

4.33

Exercisable

 

 —

 

 

 —

 

 

 —

 

Exercised

 

 —

 

 

 —

 

 

 —

 

 

(16,742)

7.47

2.72

Forfeited

 

 —

 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

 

 

 

Outstanding at September 30, 2017 - Unvested

 

133,000

 

$

11.13

 

$

6.41

 

Outstanding as of March 31, 2021

 

939,148

 

$

9.02

$

4.08

Exercisable as of March 31, 2021

 

511,830

 

$

9.84

$

5.00

The following table summarizes certain information about the options outstanding as of September 30, 2017:March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Outstanding and Unvested,

 

Options Outstanding and Exercisable,

 

 

 

September 30, 2017

 

September 30, 2017

 

Options Outstanding and Unvested,

Options Outstanding and Exercisable,

March 31, 2021

March 31, 2021

Weighted

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

Weighted

Weighted

 

Weighted

Average

Average

 

 

 

Weighted

 

Average

 

 

 

Weighted

 

Average

 

Average

 

Weighted

Average

Weighted

Average

Exercise Price of

Exercise Price of

 

 

 

Average

 

Remaining

 

 

 

Average

 

Remaining

 

Exercise Price of

 

Average

Remaining

Average

Remaining

Outstanding

Outstanding

 

Number of

 

Exercise

 

Contractual

 

Number of

 

Exercise

 

Contractual

 

Outstanding

Number of

Exercise

Contractual

Number of

Exercise

Contractual

Options

Options

    

Options

    

Price

    

Life

    

Warrants

    

Price

    

Life

 

Options

    

Options

    

Price

    

Life

    

Options

    

Price

    

Life

 

$

11.13

 

133,000

 

$

11.13

 

5.48

 

 —

 

$

 —

 

 —

 

9.02

 

427,318

$

8.04

5.00

511,830

$

9.84

3.38

As of September 30, 2017, thereMarch 31, 2021 and December 31, 2020, a total of 939,148 and 837,338 stock options were no vested stock options.outstanding, respectively.

Restricted Stock Units

The Company has issued restricted stock units (“RSUs”) under the 2015 Plan to certain members of the Board of Directors and John C. Wobensmith, Chief Executive Officercertain executives and President,employees of the Company, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests. As of September 30, 2017March 31, 2021 and December 31, 2016, 21,3722020, 478,848 and 3,138373,588 shares of the Company’s common stock were outstanding in respect of the RSUs, respectively. Such shares of common stock will only be issued in respect of vested RSUs issued to directors when the director’s service with the Company as a director terminates. Such shares of common stock will only be issued to Mr. Wobensmithexecutives and employees when histheir RSUs vest under the terms of his contracttheir grant agreements and the amended 2015 Plan described above.  On May 17, 2017, 18,234 shares of common stock

36


were issued to Eugene Davis, the former Chairman of the Audit Committee, in respect of vested RSUs following his departure from the Board.Plan.

The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. In lieu of cash dividends issued for vested and nonvested shares held by certain members of the Board of Directors, the Company will grant additional vested and nonvested RSUs, respectively, which are calculated by dividing the amount of the dividend by the closing price per share of the Company’s common stock on the dividend payment date and will have the same terms as other RSUs issued to members of the Board of Directors.  The RSUs that have been issued to John C. Wobensmithother individuals vest ratably on each of the

22

Table of Contents

three anniversaries of October 15, 2016.the determined vesting date. The table below summarizes the Company’s unvested RSUs for the ninethree months ended September 30, 2017:March 31, 2021:

 

 

 

 

 

 

 

 

 

Weighted

 

 

Number of

 

Average Grant

 

    

RSUs

 

Date Price

 

Outstanding at January 1, 2017

 

66,666

 

$

5.10

 

Weighted

Number of

Average Grant

RSUs

Date Price

Outstanding as of January 1, 2021

298,834

$

7.49

Granted

 

317,595

 

 

11.05

 

103,870

9.91

Vested

 

(66,666)

 

 

5.10

 

(105,458)

8.29

Forfeited

 

 —

 

 

 —

 

 

 

 

 

 

 

Outstanding at September 30, 2017

 

317,595

 

$

11.05

 

Outstanding as of March 31, 2021

297,246

$

8.06

The total fair value of the RSUs that vested during the ninethree months ended September 30, 2017March 31, 2021 and 20162020 was $675$1,130 and $30,$351, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.    On February 17, 2016, the vesting of 2,328 outstanding RSUs was accelerated upon the resignation of two members on the Company’s Board of Directors.

The following table summarizes certain information of the RSUs unvested and vested as of September 30, 2017:March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

Unvested RSUs

Unvested RSUs

 

Vested RSUs

 

Unvested RSUs

Vested RSUs

September 30, 2017

 

September 30, 2017

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

Average

 

 

 

Weighted

 

 

Average

 

Remaining

 

 

 

Average

 

March 31, 2021

March 31, 2021

March 31, 2021

Weighted

Weighted

Average

Weighted

Average

Remaining

Average

Number of

 

Grant Date

 

Contractual

 

Number of

 

Grant Date

 

Grant Date

Contractual

Number of

Grant Date

RSUs

    

Price

    

Life

    

RSUs

    

Price

 

    

Price

    

Life

    

RSUs

    

Price

 

317,595

 

$

11.05

 

1.93

 

74,106

 

$

11.73

 

297,246

$

8.06

1.88

611,355

$

10.59

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures. As of September 30, 2017,March 31, 2021, unrecognized compensation cost of $1,815$1,534 related to RSUs will be recognized over a weighted-average period of 1.931.88 years.

For the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2017

 

2016

    

2017

    

2016

 

General and administrative expenses

 

$

830

 

$

86

 

$

1,822

 

$

320

 

For the Three Months Ended

March 31, 

    

2021

    

2020

 

General and administrative expenses

$

342

$

276

Restricted Stock

Under the 2015 Plan, grants of restricted common stock issued to executives and Peter C. Georgiopoulos, the Company’s former Chairman of the Board, ordinarily vest ratably on each of the three anniversaries of the determined

37


vesting date.  The table below summarizes the Company’s nonvested stock awards for the nine months ended September 30, 2017 which were issued under the 2015 Plan:

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

Number of

 

Average Grant

 

 

    

Shares

    

Date Price

 

Outstanding at January 1, 2017

 

13,605

 

$

5.20

 

Granted 

 

 —

 

 

 —

 

Vested 

 

 —

 

 

 —

 

Forfeited 

 

 —

 

 

 —

 

 

 

 

 

 

 

 

Outstanding at September 30, 2017

 

13,605

 

$

5.20

 

There were no shares that vested under the 2015 Plan during the nine months ended September 30, 2017 and 2016.  The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.

For the three and nine months ended September 30, 2017 and 2016, the Company recognized nonvested stock amortization expense for the 2015 Plan restricted shares, which is included in General and administrative expenses, as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2017

 

2016

 

2017

 

2016

 

General and administrative expenses

 

$

9

 

$

60

 

$

25

 

$

150

 

The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures.  As of September 30, 2017, unrecognized compensation cost of $17 related to nonvested stock will be recognized over a weighted-average period of 1.13 years.

1815 - LEGAL PROCEEDINGS

In April 2015, six class action complaints were filed in the Supreme Court of the State of New York, County of New York.  On May 26, 2015, the six actions were consolidated under the caption In Re Baltic Trading Ltd. Stockholder Litigation, Index No. 651241/2015, and a consolidated class action complaint was filed on June 10, 2015 (the “Consolidated Complaint”).  The Consolidated Complaint is purported to be brought by and on behalf of Baltic Trading’s shareholders and alleges that the then-proposed July 2015 merger did not fairly compensate Baltic Trading’s shareholders and undervalued Baltic Trading.  The Consolidated Complaint names as defendants the Company, Baltic Trading, the individual members of Baltic Trading’s board, and the Company’s merger subsidiary. The claims generally allege (i) breaches of fiduciary duties of good faith, due care, disclosure to shareholders, and loyalty, including for failing to maximize shareholder value, and (ii) aiding and abetting those breaches. Among other relief, the complaints seek an injunction against the merger, declaratory judgments that the individual defendants breached fiduciary duties, rescission of the merger agreement, and unspecified damages.

On July 9, 2015, plaintiffs in that action moved to enjoin the merger vote, scheduled to take place on July 17, 2015.  The motion was thereafter fully briefed and argued on July 15, 2015.  The motion to enjoin the vote was denied on July 15, 2015.  Plaintiffs sought an emergency injunction and temporary restraining order from the New York State Appellate Division, First Department the following day, on July 16, 2015.  The Appellate Division denied the request, and the vote, and subsequent merger, proceeded as scheduled on July 17, 2015.  Plaintiffs thereafter withdrew that appeal.

On June 30, 2015, defendants had moved to dismiss the Consolidated Complaint in its entirety.  Plaintiffs subsequently served an Amended Consolidated Complaint, and defendants directed their motion to dismiss to that amended complaint.  The motion to dismiss was granted and the Amended Consolidated Complaint was dismissed with prejudice on August 29, 2016.

38


On September 29, 2016, plaintiffs filed a Notice of Appeal with the Appellate Division of the Supreme Court of the State of New York, County of New York.

On June 28, 2017, plaintiffs moved the Appellate Division to extend the time to perfect the appeal to October 2, 2017.  The motion was granted, and on that date, plaintiffs subsequently filed an appellate brief and record.  Briefing on the appeal is continuing and is presently scheduled to be completed for the Appellate Division’s February 2018 term.

Based on currently available information, the Company cannot reasonably estimate the loss, if any, in the event of an unfavorable outcome in any of these matters. However, the Company does not believe that it is probable that the resolution of these matters will have a material effect on the Company, its financial condition, results of operations or cash flows.

From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material effect on the Company, its financial condition, results of operations or cash flows besides those noted above.flows.

1916 – SUBSEQUENT EVENTS

On May 4, 2021, the Company announced a regular quarterly dividend of $0.05 per share to be paid on or about May 25, 2021 to shareholders of record as of May 17, 2021. The aggregate amount of the dividend is expected to be approximately $2.1 million, which the Company has evaluated all subsequent events throughanticipates will be funded from cash on hand at the date these condensed consolidated financial statements were issued and determined that there are no subsequent eventstime the payment is to record or disclose.be made.

3923


On May 4, 2021, the Company’s Board of Directors awarded grants of 18,428 RSUs to the Chairman of the Board under the 2015 Plan.  The awards generally vest ratably in one-third increments on the first three anniversaries of May 4, 2021.

On April 20, 2021, the Company entered into an agreement to purchase a 2016-built, 64,000 dwt Ultramax vessel for a purchase price of $20,200, to be renamed the Genco Enterprise. The vessel is expected to deliver during the second or third quarter of 2021, and the Company intends to use a combination of cash on hand and debt to finance the purchase. On April 29, 2021, we paid a deposit of $4,040, which is being held in an escrow account until we take delivery of the vessel.

On April 8, 2021, the Company completed the sale of the Baltic Leopard, a 2009-built Supramax vessel, to a third party for $8,000 less a 2.0% commission payable to a third party. The vessel asset for the Baltic Leopard has been classified as held for sale in the Condensed Consolidated Balance Sheet as of March 31, 2021 at its estimated net realizable value. This vessel served as collateral under the $495 Million Credit Facility, therefore $4,087 of the net proceeds received from the sale will remain classified as restricted cash for 360 days following the sale date. That amount can be used towards the financing of replacement vessels or vessels meeting certain requirements and added as collateral under the facility. If such a replacement vessel is not added as collateral within such 360 day period, the Company will be required to use the proceeds as a loan prepayment.

24

ITEM 2.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

"Safe Harbor" Statement Underunder the Private Securities Litigation Reform Act of 1995

This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as “anticipate,” “budget”, “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on our management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this report are the following: (i) further declines or sustained weakness in demand in the drybulk shipping industry; (ii) continuation of weakness or further declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, and general and administrative expenses, and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy; (x) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (xi) the Company’s acquisition or disposition of vessels; (xii) the amount of offhire time needed to complete maintenance, repairs, and installation of equipment to comply with applicable regulations on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims, including offhire days; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results continue to be affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the relative cost and availability of low sulfur and high sulfur fuel, worldwide compliance with sulfur emissions regulations that took effect on January 1, 2020 and our ability to realize the economic benefits or recover the cost of the scrubbers we have installed; (xix) our financial results for the year ending December 31, 2021 and other factors relating to determination of the tax treatment of dividends we have declared; (xx) the financial results we achieve for each quarter that apply to the formula under our new dividend policy, including without limitation the actual amounts earned by our vessels and the amounts of various expenses we incur, as a significant decrease in such earnings or a significant increase in such expenses may affect our ability to carry out our new value strategy; (xxi) the exercise of the discretion of our Board regarding the declaration of dividends, including without limitation the amount that our Board determines to set aside for reserves under our dividend policy; (xxii) our ability to refinance and amend the terms of our credit facilities as contemplated in connection with our new dividend policy; (xxiii) the duration and impact of the COVID-19 novel coronavirus epidemic, which may negatively affect general global and regional economic conditions, our ability to charter our vessels at all and the rates at which are able to do so; our ability to call on or depart from ports on a timely basis or at all; our ability to crew, maintain, and repair our vessels, including without limitation the impact diversion of our vessels to perform crew rotations may have on our revenues, expenses, and ability to consummate vessel sales, expense and disruption to our operations that may arise from the inability to rotate crews on schedule, and delay and added expense we may incur in rotating crews in the current environment; our ability to staff and maintain our headquarters and administrative operations; sources of cash and liquidity; our ability to sell vessels in the secondary market, including without limitation the compliance of purchasers and us with the terms of vessel sale contracts, and the prices at which vessels are sold; and other factors relevant to our business described from time to time in our filings with the Securities and Exchange Commission; and (xxiv) other factors listed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 20162020 and subsequent reports on Form 8-K and Form 10-Q.10-Q. Our ability to pay dividends in any period will depend upon various factors, including the limitations under any credit agreements to which we may be a party, applicable provisions of Marshall Islands law and the final determination by the Board of Directors each quarter after its

25

review of our financial performance, market developments, and the best interests of the Company and its shareholders. The timing and amount of dividends, if any, could also be affected by factors affecting cash flows, results of operations, required capital expenditures, or reserves. As a result, the amount of dividends actually paid may vary. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following management’s discussion and analysis should be read in conjunction with our historical consolidated financial statements and the related notes included in this Form 10-Q.

General

We are a Marshall Islands company that transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk carrier vessels. OurAfter the anticipated sale of one of our Supramax vessels and the anticipated acquisition of one Ultramax vessel, our fleet currently consistswill consist of 6040 drybulk vessels, including 1317 Capesize six Panamax, fourdrybulk carriers, ten Ultramax 21drybulk carriers and thirteen Supramax one Handymax and 15 Handysize drybulk carriers, with an aggregate carrying capacity of approximately 4,688,0004,379,400 dwt and thean average age of our fleet is currently approximately 9.610.2 years. We seek to deploy our vessels on time charters, spot market-related timemarket voyage charters, spot market voyagemarket-related time charters or in vessel pools trading in the spot market, to reputable charterers,charterers.

See pages 34 - 35 for a table of our current fleet.

Genco’s approach towards fleet composition is to own a high-quality fleet of vessels that focuses primarily on Capesize, Ultramax and Supramax vessels. Capesize vessels represent our major bulk vessel category and the other vessel classes, including Cargill International S.A., Swissmarine Services S.A.Ultramax, Supramax and Clipper Bulk Shipping Ltd.  We gave notice to withdraw our Handysize vessels, from the Clipper Logger Pool, for which Clipper Group acts as pool manager, during May 2017. Additionally, during August 2017,represent our minor bulk vessel category. On February 24, 2021, we gave notice to withdraw our Supramax vessels from the Bulkhandling Handymax A/S pool with Klaveness.  The majoritydisposed of the vesselslast Handysize vessel in our currentfleet. Our major bulk vessels are primarily used to transport iron ore and coal, while our minor bulk vessels are primarily used to transport grains, steel products and other drybulk cargoes such as cement, scrap, fertilizer, bauxite, nickel ore, salt and sugar. This approach of owning ships that transport both major and minor bulk commodities provide us with exposure to a wide range of drybulk trade flows. We employ an active commercial strategy which consists of a global team located in the U.S., Copenhagen and Singapore. Overall, our fleet are presently engaged underdeployment strategy remains weighted towards short-term fixtures, which provides us with optionality on our sizeable fleet. However, depending on market conditions, we may seek to enter into longer term time charter spot market-relatedcontracts.  In addition to both short and long-term time charter,charters, we fix our vessels on spot market voyage charters as well as spot market-related time charters depending on market conditions and vessel pool contracts that expire (assumingmanagement’s outlook.

Drawing on one of the option periodsstrongest balance sheets in the time chartersdrybulk industry, in April 2021 we announced a new comprehensive value strategy. Specifically, we intend to use a phased in approach to further reduce our debt and refinance our current credit facilities in order to lower our cash flow breakeven levels and position us to pay a sizeable quarterly dividend across diverse market environments. Utilizing this approach, we maintain significant flexibility to grow the fleet through accretive vessel acquisitions. We are not exercised) between November 2017targeting the fourth quarter of 2021 results for our anticipated first dividend under our new corporate strategy, which would be payable in the first quarter of 2022.

In implementing this strategy, we will focus on the following specific priorities for the remainder of 2021:

Continue to pay down debt through regularly scheduled quarterly repayments and prepayments from a combination of cash flow generation and cash on the balance sheet;
Opportunistically grow the fleet on a low levered basis utilizing proceeds from previous vessel sales; and
Refinance credit facilities to increase flexibility, improve key terms and lower cash flow breakeven rates

COVID-19

In March 2020, the World Health Organization (the “WHO”) declared the outbreak of a novel coronavirus strain, or COVID-19, to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving, and July 2018.

See pages 50-54 for a table of all vessels in our fleet.

The Genco Tigerunpredictable impacts on global society, economies, financial markets, and Baltic Lion were offhire for a total of approximately 115 days and 34 days, respectively, during the nine months ended September 30, 2017 to complete repairs to their main engines.  The Genco Tiger’s mainbusiness practices. Governments have

4026


engine experiencedimplemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes, and closure of non-essential businesses. This led to a breakdown associatedsignificant slowdown in overall economic activity levels globally and a decline in demand for certain of the raw materials that our vessels transport.

Drybulk shipping rates, and therefore our voyage revenues, depend to a significant degree on global economic activity levels and specifically, economic activity in China. As the world’s second largest economy, China is the largest importer of drybulk commodities globally, which drives demand for iron ore, coal and other cargoes we carry. In particular, earlier in 2020, the COVID-19 pandemic resulted in reduced industrial activity in China on which our business is substantially dependent, with the vessel’s lube filtration systemtemporary closures of factories and other facilities. The pandemic resulted in a 6.8% contraction in China’s GDP during the first quarter of 20172020, with the most significant impact occurring in January and underwent repairsFebruary. Since March 2020, China’s economy has substantially improved, as various economic indicators such as fixed asset investment and industrial production rose as compared to rectify the issue.previous months of the year, which led to GDP growth of 3.2%, 4.9% and 6.5% during the second, third and fourth quarters of 2020, respectively. However, economic activity levels in regions outside of China declined significantly beginning in the first quarter of 2020 and continuing into the second quarter of the year due to various forms of nationwide shutdowns being imposed to prevent the spread of COVID-19. India, Japan, Europe and the U.S., which are important drivers of demand for drybulk trade, saw meaningful contractions in economic output in 2020. Several economies around the world gradually eased measures taken earlier in 2020 resulting in improved activity levels from earlier year lows. The Baltic Lion,impact of the economic contraction remains highly dependent on the trajectory of COVID-19, potential variants and the timing of wide-scale vaccine distribution, which remains uncertain.

While global economic activity levels, led by China, have improved, the outlook for China and the rest of the world remains uncertain and is highly dependent on the path of COVID-19 and measures taken by governments around the world in response to it. Drybulk commodities that are closely tied to global GDP growth, such as coal and various minor bulk cargoes, experienced reduced trade flows in 2020 due to lower end user demand resulting from a decline in global economic activity. As countries worldwide gradually reopened their respective economies in mid-2020, trade flows and demand for raw materials increased, particularly during the second half of 2020. This demand has continued so far in 2021 to date. Drybulk spot freight rates increased off of the year to date lows towards the end of the second quarter and remained firm in the second half of 2020. In 2021 to date, spot rates for Capesize vessels have experienced their best first quarter since 2014, while Supramax rates have exceeded $20,000 per day, marking the highest point since 2010. During the fourth quarter of 2020 and early 2021, there has been a resurgence of the virus in some European countries, Brazil and the U.S. that may impact the sustainability of this recovery in addition to drybulk specific seasonality described in further detail below.

As our vessels trade commodities globally, we have taken measures to safeguard our crew and work toward preventing the spread of COVID-19. Crew members have received gloves, face masks, hand sanitizer, goggles and handheld thermometers. Genco requires its vessel crews to wear masks when in contact with other individuals who board the vessel. We continue to monitor the Centers for Disease Control and Prevention (the “CDC”) and the WHO guidelines and are also limiting access of shore personnel boarding our vessels. Specifically, no shore personnel with fever or respiratory symptoms are allowed on board, and those that are allowed on board are restricted to designated areas that are thoroughly cleaned after their use. Face masks are also provided to shore personnel prior to boarding a vessel. Precautionary materials are posted in common areas to supplement safety training while personal hygiene best practices are strongly encouraged on board.

We have implemented protocols with regard to crew rotations to keep our crew members safe and healthy which includes polymerase chain reaction (PCR) antibody testing as well as a 14-day quarantine period prior to boarding a vessel. Genco is enacting crew changes where permitted by regulations of the ports and of the country of origin of the mariners, in addition to strict protocols that safeguard our crews against COVID-19 exposure. Crew rotations have been challenging due to port and travel restrictions globally, as well as promoting the health and safety of both on and off signing crew members.

Onshore, our offices located in New York and Singapore are temporarily closed with our personnel working remotely. Our office in Copenhagen reopened in June 2020 following approximately three months during which our

27

team worked remotely. Regarding our headquarters in New York, we are planning to implement a phased-in approach towards reopening the office; we currently estimate that we will return to the office during September 2021. We currently have placed a ban on all non-essential travel.

The COVID-19 pandemic and measures to contain its spread thus have negatively impacted and could continue to impact regional and global economies and trade patterns in markets in which we operate, the way we operate our business, and the businesses of our charterers and suppliers. These impacts may continue or become more severe. Although we have successfully completed many crew changes over the course of the pandemic to date, additional crew changes could remain challenging due to COVID-19 related factors. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic; governmental, business, and individuals’ actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability.

U.S.-China Trade Dispute

Over the course of 2018 and 2019, the United States imposed a series of tariffs on several goods imported from various countries. Certain of these countries, including China, undertook retaliatory actions by implementing tariffs on select U.S. products. Most notably in terms of drybulk trade volumes is China’s tariff placed upon U.S. soybean exports, which could adversely affect drybulk rates. With the signing of the “phase one” trade agreement between China and the U.S. in January 2020, China has agreed in principle to purchase meaningful quantities of agricultural products, including soybeans, from the U.S.  Peak North American grain season historically ramps up during the fourth quarter and extends into the early first quarter of the following year. In recent months, China has purchased large amounts of agricultural products that are transported on drybulk vessels which has helped support freight rates for the mid-sized and smaller vessel classes. It remains to be seen the stance the new U.S. administration will take towards China as well as any previously agreed upon trade deals. Any deterioration in the trading relationship or a re-escalation of protectionist measures taken between these countries or others could lead to reduced volumes of drybulk trade.

IMO 2020 Compliance

On October 27, 2016, the Marine Environment Protection Committee (“MEPC”) of the International Maritime Organization (“IMO”) announced the ratification of regulations mandating reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020 rather than pushing the deadline back to 2025. Accordingly, ships now have to reduce sulfur emissions, for which the principal solutions are the use of exhaust gas cleaning systems (“scrubbers”) or buying fuel with low sulfur content. If a vessel is not retrofitted with a scrubber, it will need to use low sulfur fuel, which is currently more expensive than standard marine fuel containing 3.5% sulfur content. This increased demand for low sulfur fuel resulted in an increase in prices for such fuel during the beginning of 2020. Following a sister vessel to the Genco Tiger, also underwent main engine repairs associated with the lube filtration system.  We received approval from the insurance underwriters during June 2017 for payment on account under our loss of hire insurance in the amount of $1.4 million and $0.3 million for the Genco Tiger and Baltic Lion, respectively, which was recorded as voyage revenuedecrease during the second quarter of 2017.  During September 2017, we received the approval of the final remaining loss of hire insurance claim for the Genco Tiger of $0.4 million which was recorded as voyage revenue2020, fuel prices began to increase again during the third quarter of 2017.  2020 and continue to increase due to such demand.

We are awaiting approvalhave installed scrubbers on our 17 Capesize vessels, 16 of the final remaining losswhich were completed during 2019 and one of hire insurance claim for the Baltic Lion.  Our losswhich was completed in January 2020.  The remainder of hire insurance covers the revenue days lost for the two vessels at a rate of twenty thousand dollars per day upour fleet began consuming compliant, low sulfur fuel beginning in 2020, although we intend to 90 days after a deductible of fourteen days.  As the Genco Tiger had total offhire days of approximately 115 days, 11 days of this offhire exceeded the 90 day loss of hirecontinue to evaluate other options.  

Vessel Sales and fourteen day deductible period and was not covered by insurance.Acquisitions

On June 8, 2016,April 20, 2021, we entered into an agreement to purchase a Commitment Letter2016-built, 64,000 dwt Ultramax vessel for a senior secured loan facility (the “$400 Million Credit Facility”) for an aggregate principal amount of up to $400 million, which was subject to completion of an equity financing of at least $125 million.  We entered into subsequent amendments to the Commitment Letters which extended existing waivers through November 15, 2016 and the $400 Million Credit Facility was finalized on November 10, 2016.  The $400 Million Credit Facility was utilized to refinance the outstanding debt under the $100 Million Term Loan Facility, $253 Million Term Loan Facility, $148 Million Credit Facility, $22 Million Term Loan Facility, $44 Million Term Loan Facility and 2015 Revolving Credit Facility, each as defined in Note 8 — Debt of the Condensed Consolidated Financial Statements (collectively, the “Prior Facilities”).  Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements for further information about the $400 Million Credit Facility.

As a condition to the effectiveness of the amended Commitment Letter, we entered into stock purchase agreements (the “Purchase Agreements”) effective as of October 4, 2016 with funds or related entities managed by Centerbridge Partners, L.P. or its affiliates (“Centerbridge”), Strategic Value Partners, LLC (“SVP”) and Apollo Global Management, LLC (“Apollo” and, together with Centerbridge and SVP, the “Investors”) for the purchase of our Series A Convertible Preferred Stock for an aggregate of up to $125 million in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended.  The purchase price of the Series A Preferred Stock under each of the Purchase Agreements was $4.85 per share.  An additional 1,288,660 shares of Series A Preferred Stock were issued to Centerbridge, SVP and Apollo as a commitment fee on a pro rata basis.  The purchase price and the other terms and conditions of the transaction were established in arm’s length negotiations between an independent special committee of the Board of the Directors of the Company (the “Special Committee”).  The Special Committee unanimously approved the transaction.

Subsequently, on October 27, 2016, the Company entered into a stock purchase agreement (the “Additional Purchase Agreement”) with certain of the Investors; John C. Wobensmith, the Company’s Chief Executive Officer and President; and other investors for the sale of shares of Series A Preferred Stock for an aggregate purchase price of $38.6 million at a purchase price of $4.85 per share.$20.2 million, to be renamed the Genco Enterprise. The purchase pricevessel is expected to deliver during the second or third quarter of 2021, and we intend to use cash on hand and debt to finance the purchase.

On December 17, 2020, we entered into an agreement to acquire three modern, eco Ultramax vessels in exchange for six of our older Handysize vessels. The Genco Magic, a 2014-built Ultramax vessel, and the other terms and conditions of these transactions were established in arm’s length negotiations between an independent special committee of our board of directors (the “Special Committee”)Genco Vigilant and the investors.  The Special Committee unanimously approved the transactions.

On November 15, 2016, pursuantGenco Freedom, both 2015-built Ultramax vessels, were delivered to the Purchase Agreements,Company on December 23, 2020, January 28, 2021 and February 20, 2021, respectively. We delivered the Genco Ocean, Baltic Cove and Baltic Fox, all 2010-built Handysize vessels, and the Genco Spirit, Genco Avra and Genco Mare, all 2011-built Handysize

28

vessels, on December 29, 2020, January 30, 2021, February 2, 2021, February 15, 2021, February 21, 2021 and February 24, 2021, respectively.

During April 2021, we completed the private placementsale of 27,061,856 sharesone Supramax vessel. During the first quarter of Series A Preferred Stock which included 25,773,196 shares at a price per share2021, we completed the sale of $4.85eight of our vessels, including three Supramax vessels and an additional 1,288,660 shares issued as a commitment fee on a pro rata basisfive of the Handysize vessels as noted above. On January 4, 2017, our shareholders approved at a Special Meeting of Shareholders the issuance of up to 27,061,856 shares of common stock of the Company upon the conversion of shares of the Series A Preferred Stock, par value $0.01 per share, which were purchased by certain investorsWe have entered in a private placement.  As a result of such shareholder approval, all outstanding 27,061,856 shares of Series A Preferred Stock were automatically and mandatorily converted into 27,061,856 shares of common stock of the Company on January 4, 2017.  Refer to Note 1 — General Information and Note 8 — Debt in our Condensed Consolidated Financial Statements. 

Pursuant to the Commitment Letter entered into on June 8, 2016 and the final executed $400 Million Credit Facility, we were requiredagreements to sell or scrap tenone additional Supramax vessel that is classified as held for sale as of our vessels.  On April 5, 2016,March 31, 2021.

During 2020, we completed the Boardsale of Directors unanimously approved scrapping the Genco Marine.  We reached an agreement on May 6, 2016 to sell the Genco Marine, a 1996-built

41


Handymax vessel, to be scrapped with Ace Exim Pte Ltd., a demolition yard, which was completed on May 17, 2016.    During October 2016, we reached agreements with third-parties to sell threenine of our vessels, including one of the Genco Pioneer (a 1999-built Handysize vessel), the Genco Sugar (a 1998-built Handysize vessel)vessels as noted above. Three vessels were classified as held for sale as of December 31, 2020 and the Genco Leader (a 1999-built Panamax vessel).   These sales were completed during October and November 2016. Additionally, during November 2016 we reached an agreement with a third-party to sell the Genco Acheron (a 1999-built Panamax vessel) for which the sale was completed during December 2016.  Also, during December 2016 the Board of Directors unanimously approved the sale of the Genco Success (a 1997-built Handymax vessel), the Genco Prosperity (a 1997-built Handymax vessel) and the Genco Wisdom (a 1997-built Handymax vessel).  The sale of the Genco Wisdom and Genco Success were completed during January and March 2017, respectively, and the sale of the Genco Prosperity was completed during May 2017.  Lastly, during January 2017, the Board of Directors unanimously approved the sale of the Genco Carrier (a 1998-built Handymax vessel) and the Genco Reliance (a 1999-builtfive Handysize vessel).  The sales of these vessels were completed during February 2017.  Referclassified as held for exchange as of December 31, 2020.

We will continue to Note 4 — Vessel Acquisitions and Dispositions inseek opportunities to renew our Condensed Consolidated Financial Statements for further details.fleet going forward. 

Our Operations

We report financial information and evaluate our operations by charter revenues and not by the length of ship employment for our customers, i.e., spot or time charters.  Each of our vessels serveserves the same type of customer, havehas similar operations and maintenance requirements, operateoperates in the same regulatory environment, and areis subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment in which we are engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. 

Our management team and our other employees are responsible for the commercial and strategic management of our fleet. Commercial management includes the negotiation of charters for vessels, managing the mix of various types of charters, such as time charters, spot market voyage charters and spot market-related time charters, and monitoring the performance of our vessels under their charters. Strategic management includes locating, purchasing, financing and selling vessels. We currently contract with twothree independent technical managers to provide technical management of our fleet at a lower cost than we believe would be possible in-house.fleet. Technical management involves the day-to-day management of vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies. Members of our New York City-based management team oversee the activities of our independent technical managers.

On October 13, 2016, Peter C. Georgiopoulos resigned as our Chairman of the Board and a director of the Company.  The Board of Directors appointed Arthur L. Regan, a current director of the Company, as Interim Executive Chairman of the Board.  In connection with his departure, Mr. Georgiopoulos entered into a Separation Agreement and a Release Agreement with the Company on October 13, 2016.  Under the terms of these agreements, subject to customary conditions, Mr. Georgiopoulos received an amount equal to the annual Chairman’s fee awarded to him in recent years of $0.5 million as a severance payment and full vesting of his unvested equity awards, which consist of grants of 68,581 restricted shares of the Company’s common stock and warrants exercisable for approximately 213,937 shares of the Company’s common stock with an exercise per share ranging $259.10 to $341.90.  Refer to Note 17 — Stock-Based Compensation of our Condensed Consolidated Financial Statements.  The agreements also contain customary provisions pertaining to confidential information, releases of claims by Mr. Georgiopoulos, and other restrictive covenants.

Prior to December 31, 2016, we held an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”) and Korea Line Corporation (“KLC”). Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping. KLC is a marine transportation service company which operates a fleet of carriers which includes carriers for iron ore, liquefied natural gas and tankers for oil and petroleum products.

We formerly provided technical services for drybulk vessels purchased by Maritime Equity Partners LLC (“MEP”) under an agency agreement between us and MEP.  These services included oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but did not include chartering services.  The services were initially provided for a fee of $750 per ship per day plus reimbursement of out-of-pocket costs and were provided for an initial term of one year.  This arrangement was approved by an independent committee of our Board of Directors.  On September 30, 2015, under the oversight of an independent committee of our Board of Directors, Genco Management (USA) LLC (“Genco (USA)”) and MEP entered into certain agreements under which MEP paid $2.2

42


million of the amount of service fees in arrears (of which $0.3 million was paid in 2016 by the new owners of five of the MEP vessels sold in January 2016 as described below) and the daily service fee was reduced from $750 to $650 per day effective on October 1, 2015.  During January 2016 and the three months ended September 30, 2016, five and seven of MEP’s vessels, respectively, were sold to third parties, upon which these vessels were no longer subject to the agency agreement.  Based upon the September 30, 2015 agreement, termination fees were due in the amount $0.3 million and $0.8 million, respectively, which was assumed by the new owners of the MEP vessels that were sold.  The amount of these termination fees has been paid in full.  The daily service fees earned for the year ended December 31, 2016 have been paid in full.  At December 31, 2016, all MEP vessels have been sold and the Companies have been dissolved.

See Note 8 — Debt of our Condensed Consolidated Financial Statements included in this report for the defined terms we use for each of our credit facilities and a description of each facility.

43


Factors Affecting Our Results of Operations

We believe that the following table reflects important measures for analyzing trends in our results of operations. The table reflects our ownership days, chartered-in days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 on a consolidated basis. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

September 30, 

 

Increase

 

 

 

 

    

2017

    

2016

    

(Decrease)

    

% Change

 

Fleet Data:

 

 

 

 

 

 

 

 

 

 

 

 

Ownership days (1)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

1,196.0

 

 

1,196.0

 

 

 —

 

 —

%

Panamax

 

 

552.0

 

 

736.0

 

 

(184.0)

 

(25.0)

%

Ultramax

 

 

368.0

 

 

368.0

 

 

 —

 

 —

%

Supramax

 

 

1,932.0

 

 

1,932.0

 

 

 —

 

 —

%

Handymax

 

 

92.0

 

 

460.0

 

 

(368.0)

 

(80.0)

%

Handysize

 

 

1,380.0

 

 

1,656.0

 

 

(276.0)

 

(16.7)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

5,520.0

 

 

6,348.0

 

 

(828.0)

 

(13.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Available days (2)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

1,196.0

 

 

1,182.3

 

 

13.7

 

1.2

%

Panamax

 

 

463.8

 

 

627.3

 

 

(163.5)

 

(26.1)

%

Ultramax

 

 

368.0

 

 

368.0

 

 

 —

 

 —

%

Supramax

 

 

1,838.6

 

 

1,915.4

 

 

(76.8)

 

(4.0)

%

Handymax

 

 

92.0

 

 

455.3

 

 

(363.3)

 

(79.8)

%

Handysize

 

 

1,361.9

 

 

1,613.0

 

 

(251.1)

 

(15.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

5,320.3

 

 

6,161.3

 

 

(841.0)

 

(13.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating days (3)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

1,162.4

 

 

1,181.8

 

 

(19.4)

 

(1.6)

%

Panamax

 

 

462.8

 

 

627.3

 

 

(164.5)

 

(26.2)

%

Ultramax

 

 

365.9

 

 

368.0

 

 

(2.1)

 

(0.6)

%

Supramax

 

 

1,797.0

 

 

1,885.2

 

 

(88.2)

 

(4.7)

%

Handymax

 

 

87.4

 

 

453.0

 

 

(365.6)

 

(80.7)

%

Handysize

 

 

1,330.9

 

 

1,607.6

 

 

(276.7)

 

(17.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

5,206.4

 

 

6,122.9

 

 

(916.5)

 

(15.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet utilization (4)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

97.2

%  

 

100.0

%  

 

(2.8)

%  

(2.8)

%

Panamax

 

 

99.8

%  

 

100.0

%  

 

(0.2)

%  

(0.2)

%  

Ultramax

 

 

99.4

%  

 

100.0

%  

 

(0.6)

%  

(0.6)

%

Supramax

 

 

97.7

%  

 

98.4

%  

 

(0.7)

%  

(0.7)

%

Handymax

 

 

95.0

%  

 

99.5

%  

 

(4.5)

%  

(4.5)

%

Handysize

 

 

97.7

%  

 

99.7

%  

 

(2.0)

%  

(2.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet average

 

 

97.9

%  

 

99.4

%  

 

(1.5)

%  

(1.5)

%

For the Three Months Ended

 

March 31, 

Increase

 

    

2021

    

2020

    

(Decrease)

    

% Change

 

Fleet Data:

 

Ownership days (1)

Capesize

 

1,530.0

1,547.0

(17.0)

 

(1.1)

%

Panamax

 

64.8

(64.8)

 

(100.0)

%

Ultramax

 

731.8

546.0

185.8

 

34.0

%

Supramax

 

1,407.7

1,820.0

(412.3)

 

(22.7)

%

Handymax

 

 

%

Handysize

 

227.5

964.7

(737.2)

 

(76.4)

%

Total

 

3,897.0

4,942.5

(1,045.5)

 

(21.2)

%

Chartered-in days (2)

Capesize

%

Panamax

%

4429


For the Three Months Ended

 

March 31, 

Increase

 

    

2021

    

2020

    

(Decrease)

    

% Change

 

Ultramax

232.5

178.3

54.2

30.4

%

Supramax

108.3

204.1

(95.8)

 

(46.9)

%

Handymax

14.5

(14.5)

(100.0)

%

Handysize

25.1

(25.1)

(100.0)

%

Total

340.8

422.0

(81.2)

(19.2)

%

Available days (owned & chartered-in fleet) (3)

Capesize

 

1,505.6

1,528.4

(22.8)

 

(1.5)

%

Panamax

 

64.4

(64.4)

 

(100.0)

%

Ultramax

 

955.6

668.4

287.2

 

43.0

%

Supramax

 

1,512.2

1,971.0

(458.8)

 

(23.3)

%

Handymax

 

14.5

(14.5)

 

(100.0)

%

Handysize

 

227.5

982.2

(754.7)

 

(76.8)

%

Total

 

4,200.9

5,228.9

(1,028.0)

 

(19.7)

%

Available days (owned fleet) (4)

Capesize

1,505.6

1,528.4

(22.8)

 

(1.5)

%

Panamax

64.4

(64.4)

 

(100.0)

%

Ultramax

723.1

490.1

233.0

 

47.5

%

Supramax

1,403.9

1,766.9

(363.0)

 

(20.5)

%

Handymax

 

%

Handysize

227.5

957.1

(729.6)

 

(76.2)

%

Total

3,860.1

4,806.9

(946.8)

 

(19.7)

%

Operating days (5)

Capesize

 

1,499.1

1,528.4

(29.3)

 

(1.9)

%

Panamax

 

60.1

(60.1)

 

(100.0)

%

Ultramax

 

950.0

667.8

282.2

 

42.3

%

Supramax

 

1,482.0

1,944.9

(462.9)

 

(23.8)

%

Handymax

 

14.5

(14.5)

 

(100.0)

%

Handysize

 

191.3

910.4

(719.1)

 

(79.0)

%

Total

 

4,122.4

5,126.1

(1,003.7)

 

(19.6)

%

Fleet utilization (6)

Capesize

 

99.6

%  

99.9

%  

(0.3)

%  

(0.3)

%

Panamax

 

%  

92.7

%  

(92.7)

%  

(100.0)

%  

Ultramax

 

98.5

%  

99.9

%  

(1.4)

%  

(1.4)

%

Supramax

 

97.8

%  

98.6

%  

(0.8)

%  

(0.8)

%

Handymax

 

%  

100.0

%  

(100.0)

%  

(100.0)

%

Handysize

 

84.1

%  

92.0

%  

(7.9)

%  

(8.6)

%

Fleet average

 

97.8

%  

97.8

%  

%  

%

For the Three Months Ended

March 31, 

Increase

    

2021

    

2020

    

(Decrease)

    

% Change

 

Average Daily Results:

Time Charter Equivalent (7)

Capesize

$

13,595

$

16,660

$

(3,065)

 

(18.4)

%

Panamax

 

 

5,439

 

(5,439)

 

(100.0)

%

Ultramax

 

10,582

 

8,107

 

2,475

 

30.5

%

Supramax

 

12,292

 

6,492

 

5,800

 

89.3

%

Handymax

 

 

 

 

%

Handysize

 

7,912

 

5,734

 

2,178

 

38.0

%

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

September 30, 

 

Increase

 

 

 

 

    

2017

    

2016

    

(Decrease)

    

% Change

 

Average Daily Results:

 

 

 

 

 

 

 

 

 

 

 

 

Time Charter Equivalent (5)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

$

12,178

 

$

5,689

 

$

6,489

 

114.1

%

Panamax

 

 

10,096

 

 

5,815

 

 

4,281

 

73.6

%

Ultramax

 

 

8,461

 

 

7,115

 

 

1,346

 

18.9

%

Supramax

 

 

7,565

 

 

6,003

 

 

1,562

 

26.0

%

Handymax

 

 

7,598

 

 

6,060

 

 

1,538

 

25.4

%

Handysize

 

 

6,345

 

 

5,183

 

 

1,162

 

22.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet average

 

 

8,573

 

 

5,779

 

 

2,794

 

48.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily vessel operating expenses (6)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

$

5,019

 

$

4,753

 

$

266

 

5.6

%

Panamax

 

 

4,391

 

 

4,298

 

 

93

 

2.2

%

Ultramax

 

 

4,592

 

 

4,776

 

 

(184)

 

(3.9)

%

Supramax

 

 

4,729

 

 

4,675

 

 

54

 

1.2

%

Handymax

 

 

4,102

 

 

4,173

 

 

(71)

 

(1.7)

%

Handysize

 

 

3,986

 

 

4,169

 

 

(183)

 

(4.4)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet average

 

 

4,553

 

 

4,483

 

 

70

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

 

 

September 30, 

 

Increase

 

 

 

 

    

2017

    

2016

    

(Decrease)

    

% Change

 

Fleet Data:

 

 

 

 

 

 

 

 

 

 

 

 

Ownership days (1)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

3,549.0

 

 

3,562.0

 

 

(13.0)

 

(0.4)

%

Panamax

 

 

1,638.0

 

 

2,192.0

 

 

(554.0)

 

(25.3)

%

Ultramax

 

 

1,092.0

 

 

1,096.0

 

 

(4.0)

 

(0.4)

%

Supramax

 

 

5,733.0

 

 

5,754.0

 

 

(21.0)

 

(0.4)

%

Handymax

 

 

540.8

 

 

1,507.7

 

 

(966.9)

 

(64.1)

%

Handysize

 

 

4,134.6

 

 

4,932.0

 

 

(797.4)

 

(16.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

16,687.4

 

 

19,043.7

 

 

(2,356.3)

 

(12.4)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Available days (2)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

3,492.9

 

 

3,534.3

 

 

(41.4)

 

(1.2)

%

Panamax

 

 

1,354.6

 

 

2,043.5

 

 

(688.9)

 

(33.7)

%

Ultramax

 

 

1,092.0

 

 

1,096.0

 

 

(4.0)

 

(0.4)

%

Supramax

 

 

5,449.2

 

 

5,591.6

 

 

(142.4)

 

(2.5)

%

Handymax

 

 

539.3

 

 

1,358.9

 

 

(819.6)

 

(60.3)

%

Handysize

 

 

4,042.4

 

 

4,857.7

 

 

(815.3)

 

(16.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

15,970.4

 

 

18,482.0

 

 

(2,511.6)

 

(13.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating days (3)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

3,327.3

 

 

3,533.8

 

 

(206.5)

 

(5.8)

%

Panamax

 

 

1,330.7

 

 

2,032.6

 

 

(701.9)

 

(34.5)

%

Ultramax

 

 

1,083.7

 

 

1,090.5

 

 

(6.8)

 

(0.6)

%

Supramax

 

 

5,377.1

 

 

5,506.4

 

 

(129.3)

 

(2.3)

%

Handymax

 

 

492.7

 

 

1,294.2

 

 

(801.5)

 

(61.9)

%

Handysize

 

 

3,999.8

 

 

4,835.2

 

 

(835.4)

 

(17.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

15,611.3

 

 

18,292.7

 

 

(2,681.4)

 

(14.7)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet utilization (4)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

 

95.3

%  

 

100.0

%  

 

(4.7)

%

(4.7)

%

Panamax

 

 

98.2

%  

 

99.5

%  

 

(1.3)

%  

(1.3)

%

Ultramax

 

 

99.2

%  

 

99.5

%  

 

(0.3)

%  

(0.3)

%

Supramax

 

 

98.7

%  

 

98.5

%  

 

0.2

%

0.2

%

Handymax

 

 

91.4

%  

 

95.2

%  

 

(3.8)

%

(4.0)

%

Handysize

 

 

98.9

%  

 

99.5

%  

 

(0.6)

%

(0.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fleet average

 

 

97.8

%  

 

99.0

%  

 

(1.2)

%

(1.2)

%

45


 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

 

September 30, 

 

Increase

 

 

 

    

2017

    

2016

    

(Decrease)

    

% Change

 

Average Daily Results:

 

 

 

 

 

 

 

 

 

 

 

 

Time Charter Equivalent (5)

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

March 31, 

Increase

    

2021

    

2020

    

(Decrease)

    

% Change

 

Fleet average

 

12,197

 

9,755

 

2,442

 

25.0

%

Major bulk vessels

13,595

16,660

(3,065)

(18.4)

%

Minor bulk vessels

11,303

6,536

4,767

72.9

%

Daily vessel operating expenses (8)

Capesize

 

$

10,272

 

$

3,456

 

$

6,816

 

197.2

%

$

5,208

$

4,886

$

322

 

6.6

%

Panamax

 

 

8,033

 

 

4,297

 

 

3,736

 

86.9

%

 

 

4,175

 

(4,175)

 

(100.0)

%

Ultramax

 

 

8,140

 

 

5,691

 

 

2,449

 

43.0

%

 

4,972

 

4,637

 

335

 

7.2

%

Supramax

 

 

7,158

 

 

4,621

 

 

2,537

 

54.9

%

 

4,484

 

4,209

 

275

 

6.5

%

Handymax

 

 

7,024

 

 

3,857

 

 

3,167

 

82.1

%

 

 

 

 

%

Handysize

 

 

6,578

 

 

4,512

 

 

2,066

 

45.8

%

 

4,931

 

3,884

 

1,047

 

27.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Fleet average

 

 

7,829

 

 

4,341

 

 

3,488

 

80.4

%

 

4,887

 

4,413

 

474

 

10.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Daily vessel operating expenses (6)

 

 

 

 

 

 

 

 

 

 

 

 

Capesize

 

$

4,789

 

$

4,784

 

$

 5

 

0.1

%

Panamax

 

 

4,493

 

 

4,429

 

 

64

 

1.4

%

Ultramax

 

 

4,462

 

 

4,629

 

 

(167)

 

(3.6)

%

Supramax

 

 

4,521

 

 

4,701

 

 

(180)

 

(3.8)

%

Handymax

 

 

4,240

 

 

4,330

 

 

(90)

 

(2.1)

%

Handysize

 

 

3,973

 

 

4,202

 

 

(229)

 

(5.4)

%

 

 

 

 

 

 

 

 

 

 

 

 

Fleet average

 

 

4,427

 

 

4,523

 

 

(96)

 

(2.1)

%

46


Definitions

Definitions

In order to understand our discussion of our results of operations, it is important to understand the meaning of the following terms used in our analysis and the factors that influence our results of operations.

(1) Ownership days. We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.

(2) Chartered-in days. We define chartered-in days as the aggregate number of days in a period during which we chartered-in third-party vessels.

(3) Available days (owned and chartered-in fleet). We define available days, which we have recently updated and incorporated in the table above to better demonstrate the manner in which we evaluate our business, as the number of our ownership days in a periodand chartered-in days less the aggregate number of days that our vessels are off-hire due to scheduledfamiliarization upon acquisition, repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels between time charters.surveys. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.

(3)(4) Available days (owned fleet). We define available days for the owned fleet as available days less chartered-in days.

(5) Operating days. We define operating days as the number of our total available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.

(4)(6) Fleet utilization. We calculate fleet utilization, by dividingwhich we have recently updated and incorporated in the table above to better demonstrate the manner in which we evaluate our business, as the number of our operating days during a period divided by the number of our availableownership days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number ofplus chartered-in days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.less drydocking days.

(5)(7) TCE rates. We define TCE rates as netour voyage revenue (voyage revenues less voyage expenses)expenses and charter-hire expenses, divided by the number of ourthe available days of our owned fleet during the period, which is consistent with industry standards.period. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not

31

expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

    

2017

    

2016

 

Entire Fleet

Major Bulk

Minor Bulk

 

For the Three Months Ended

For the Three Months Ended

For the Three Months Ended

March 31, 

March 31, 

March 31, 

 

2021

    

2020

2021

    

2020

2021

    

2020

 

Voyage revenues (in thousands)

 

$

51,161

 

$

37,871

 

$

134,780

 

$

89,461

 

$

87,591

$

98,336

$

37,657

$

44,448

$

49,934

$

53,888

Voyage expenses (in thousands)

 

 

5,550

 

 

2,262

 

 

9,743

 

 

9,232

 

 

35,074

 

48,368

 

17,187

 

18,984

 

17,887

 

29,384

 

 

45,611

 

 

35,609

 

 

125,037

 

 

80,229

 

Total available days

 

 

5,320.3

 

 

6,161.3

 

 

15,970.4

 

 

18,482.0

 

Charter hire expenses (in thousands)

5,435

3,075

5,435

3,075

 

47,082

 

46,893

 

20,470

 

25,464

 

26,612

 

21,429

Total available days for owned fleet

 

3,860

 

4,807

 

1,506

 

1,528

 

2,355

 

3,279

Total TCE rate

 

$

8,573

 

$

5,779

 

$

7,829

 

$

4,341

 

$

12,197

$

9,755

$

13,595

$

16,660

$

11,303

$

6,536

(6)(8) Daily vessel operating expenses.  We define daily vessel operating expenses as vessel operating expenses divided by ownership days for the period.  Vessel operating expensesto include crew wages and related costs, the cost of insurance expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.

4732


Operating Data

The following tables representtable represents the operating data for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 on a consolidated basis.

For the Three Months Ended

 

March 31, 

 

    

2021

    

2020

    

Change

    

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

September 30, 

 

 

 

 

 

 

    

2017

    

2016

    

Change

    

% Change

 

 

(U.S. dollars in thousands, except for per share amounts)

 

(U.S. dollars in thousands, except for per share amounts)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenues

 

$

51,161

 

$

37,871

 

$

13,290

 

35.1

%

 

$

87,591

 

$

98,336

 

$

(10,745)

 

(10.9)

%

Service revenues

 

 

 —

 

 

1,016

 

 

(1,016)

 

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

51,161

 

 

38,887

 

 

12,274

 

31.6

%

 

87,591

 

98,336

 

(10,745)

 

(10.9)

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Voyage expenses

 

 

5,550

 

 

2,262

 

 

3,288

 

145.4

%

 

35,074

 

48,368

 

(13,294)

 

(27.5)

%

Vessel operating expenses

 

 

25,131

 

 

28,460

 

 

(3,329)

 

(11.7)

%

 

19,046

 

21,813

 

(2,767)

 

(12.7)

%

General and administrative expenses (inclusive of nonvested stock amortization expense of $1,255 and $3,584, respectively)

 

 

5,889

 

 

7,943

 

 

(2,054)

 

(25.9)

%

Charter hire expenses

5,435

3,075

2,360

76.7

%

General and administrative expenses (inclusive of nonvested stock amortization expense of $522 and $481, respectively)

 

6,102

 

5,767

 

335

 

5.8

%

Technical management fees

 

 

1,883

 

 

2,210

 

 

(327)

 

(14.8)

%

1,464

1,854

(390)

(21.0)

%

Depreciation and amortization

 

 

17,836

 

 

18,127

 

 

(291)

 

(1.6)

%

 

13,441

 

17,574

 

(4,133)

 

(23.5)

%

Impairment of vessel assets

 

 

18,654

 

 

 —

 

 

18,654

 

100.0

%

 

112,814

(112,814)

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

Loss on sale of vessels

 

720

486

234

48.1

%

Total operating expenses

 

 

74,943

 

 

59,002

 

 

15,941

 

27.0

%

 

81,282

 

211,751

 

(130,469)

 

(61.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(23,782)

 

 

(20,115)

 

 

(3,667)

 

18.2

%

Other expense

 

 

(7,400)

 

 

(6,899)

 

 

(501)

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Loss before reorganization items, net

 

 

(31,182)

 

 

(27,014)

 

 

(4,168)

 

15.4

%

Reorganization items, net

 

 

 —

 

 

(83)

 

 

83

 

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(31,182)

 

 

(27,097)

 

 

(4,085)

 

15.1

%

Income tax expense

 

 

 —

 

 

(417)

 

 

417

 

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(31,182)

 

$

(27,514)

 

$

(3,668)

 

13.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.90)

 

$

(3.80)

 

$

2.90

 

(76.3)

%

Net loss per share - diluted

 

$

(0.90)

 

$

(3.80)

 

$

2.90

 

(76.3)

%

Operating income (loss)

 

6,309

 

(113,415)

 

119,724

 

(105.6)

%

Other expense, net

 

(4,324)

 

(6,935)

 

2,611

 

(37.6)

%

Net income (loss)

$

1,985

$

(120,350)

$

122,335

 

(101.6)

%

Net earnings (loss) per share - basic

 

$

0.05

 

$

(2.87)

$

2.92

 

(101.7)

%

Net earnings (loss) per share - diluted

 

$

0.05

 

$

(2.87)

$

2.92

 

(101.7)

%

Weighted average common shares outstanding - basic

 

 

34,469,998

 

 

7,245,268

 

 

27,224,730

 

375.8

%

 

41,973,782

 

41,866,357

 

107,425

 

0.3

%

Weighted average common shares outstanding - diluted

 

 

34,469,998

 

 

7,245,268

 

 

27,224,730

 

375.8

%

 

42,276,380

 

41,866,357

 

410,023

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

 

$

(5,983)

 

$

(1,946)

 

$

(4,037)

 

207.5

%

 

$

19,896

 

$

(96,425)

 

$

116,321

 

(120.6)

%

4833


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

 

 

September 30, 

 

 

 

 

 

 

 

    

2017

    

2016

    

Change

    

% Change

 

 

 

(U.S. dollars in thousands, except for per share amounts)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Voyage revenues 

 

$

134,780

 

$

89,461

 

$

45,319

 

50.7

%

Service revenues 

 

 

 —

 

 

2,240

 

 

(2,240)

 

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues 

 

 

134,780

 

 

91,701

 

 

43,079

 

47.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Voyage expenses 

 

 

9,743

 

 

9,232

 

 

511

 

5.5

%

Vessel operating expenses 

 

 

73,867

 

 

86,125

 

 

(12,258)

 

(14.2)

%

General and administrative expenses (inclusive of nonvested stock amortization expense of $3,536 and $14,512, respectively)

 

 

16,550

 

 

30,101

 

 

(13,551)

 

(45.0)

%

Technical management fees

 

 

5,735

 

 

6,760

 

 

(1,025)

 

(15.2)

%

Depreciation and amortization 

 

 

54,194

 

 

58,152

 

 

(3,958)

 

(6.8)

%

Other operating income

 

 

 —

 

 

(182)

 

 

182

 

(100.0)

%

Impairment of vessel assets 

 

 

21,993

 

 

69,278

 

 

(47,285)

 

(68.3)

%

(Gain) loss on sale of vessels

 

 

(7,712)

 

 

77

 

 

(7,789)

 

(10,115.6)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses 

 

 

174,370

 

 

259,543

 

 

(85,173)

 

(32.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss 

 

 

(39,590)

 

 

(167,842)

 

 

128,252

 

(76.4)

%

Other expense 

 

 

(21,705)

 

 

(23,801)

 

 

2,096

 

(8.8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before reorganization items, net 

 

 

(61,295)

 

 

(191,643)

 

 

130,348

 

(68.0)

%

Reorganization items, net 

 

 

 —

 

 

(243)

 

 

243

 

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes 

 

 

(61,295)

 

 

(191,886)

 

 

130,591

 

(68.1)

%

Income tax expense 

 

 

 —

 

 

(766)

 

 

766

 

(100.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss 

 

$

(61,295)

 

$

(192,652)

 

$

131,357

 

(68.2)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic 

 

$

(1.80)

 

$

(26.65)

 

 

24.85

 

(93.2)

%

Net loss per share - diluted 

 

$

(1.80)

 

$

(26.65)

 

 

24.85

 

(93.2)

%

Weighted average common shares outstanding - basic 

 

 

34,135,736

 

 

7,228,660

 

 

26,907,076

 

372.2

%

Weighted average common shares outstanding - diluted 

 

 

34,135,736

 

 

7,228,660

 

 

26,907,076

 

372.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1) 

 

$

14,452

 

$

(112,678)

 

$

127,130

 

(112.8)

%


(1)

(1)

EBITDA represents net income (loss) income plus net interest expense, taxes and depreciation and amortization. EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in our consolidated internal financial statements, and it is presented for review at our board meetings. We believe that EBITDA is useful to investors as the shipping industry is capital intensive which often results in significant depreciation and cost of financing. EBITDA presents investors

49


with a measure in addition to net income to evaluate our performance prior to these costs. EBITDA is not an item recognized by U.S. GAAP (i.e., non-GAAP measure) and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a measure of liquidity or cash flows as shown in our Condensed Consolidated Statements of Cash Flows. The definition of EBITDA used here may not be comparable to that used by other companies. The following table demonstrates our calculation of EBITDA and provides a reconciliation of EBITDA to net income (loss) income for each of the periods presented above:

 

For the Three Months Ended

 

 

March 31, 

 

    

2021

    

2020

 

Net income (loss)

$

1,985

 

$

(120,350)

Net interest expense

 

4,470

 

6,351

Income tax expense

 

 

Depreciation and amortization

 

13,441

 

17,574

EBITDA (1)

$

19,896

 

$

(96,425)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2017

 

2016

    

2017

    

2016

 

Net loss

 

$

(31,182)

 

$

(27,514)

 

$

(61,295)

 

$

(192,652)

 

Net interest expense

 

 

7,363

 

 

7,024

 

 

21,553

 

 

21,056

 

Income tax expense

 

 

 —

 

 

417

 

 

 —

 

 

766

 

Depreciation and amortization

 

 

17,836

 

 

18,127

 

 

54,194

 

 

58,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1)

 

$

(5,983)

 

$

(1,946)

 

$

14,452

 

$

(112,678)

 

Results of Operations

The following tables set forth information about the current employment of the vessels in our fleet as of November 6, 2017:May 4, 2021:

 

 

 

 

 

 

 

 

 

 

  

Year

  

 

  

Charter

  

 

 

  

Year

  

Charter

  

Vessel

    

Built

    

Charterer

    

Expiration(1)

    

Cash Daily Rate(2)

 

    

Built

    

Expiration(1)

    

Cash Daily Rate(2)

 

 

 

 

 

 

 

 

 

 

 

Capesize Vessels

 

 

 

 

 

 

 

 

 

 

Genco Augustus

 

2007

 

Swissmarine Services S.A.

 

February 2018

 

 

106% of BCI

 

 

2007

 

June 2021

 

Voyage

Genco Tiberius

 

2007

 

Jiangsu Steamship Pte. Ltd.

 

November 2017

 

 

$18,100

 

 

2007

 

June 2021

 

Voyage

Genco London

 

2007

 

Swissmarine Services S.A.

 

May 2018

 

 

98% of BCI

 

 

2007

 

June 2021

$11,600

Genco Titus

 

2007

 

Louis Dreyfus Company Freight Asia Pte. Ltd.

 

Oct. 2017/Feb. 2018

 

 

$12,000/$17,750

(3)

 

2007

 

May 2021

Voyage

Genco Constantine

 

2008

 

Oldendorff GMBH & Co.

 

Oct./Nov. 2017

 

 

$18,500/$21,750

(4)

 

2008

 

May 2021

Voyage

Genco Hadrian

 

2008

 

Swissmarine Services S.A./Pacific Bulk Cape Company Ltd.

 

Oct. 2017/Jan. 2018

 

 

98.5% of BCI/$16,600

(5)

 

2008

 

May 2021

Voyage

Genco Commodus

 

2009

 

Swissmarine Asia Pte. Ltd.

 

January 2018

 

 

88% of BCI

 

 

2009

 

June 2021

Voyage

Genco Maximus

 

2009

 

Oldendorff GMBH & Co.

 

Oct./Nov. 2017

 

 

$14,750/$14,750

(6)

 

2009

 

May 2021

Voyage

Genco Claudius

 

2010

 

Louis Dreyfus Company Freight Asia Pte. Ltd.

 

December 2017

 

 

$13,000

 

 

2010

 

May 2021

Voyage

Genco Tiger

 

2011

 

Uniper Global Commodities SE.

 

December 2017

 

 

$10,750

 

 

2011

 

May 2021

Voyage

Baltic Lion

 

2012

 

Koch Shipping Pte. Ltd.

 

December 2017

 

 

$15,300

 

 

2012

 

May 2021

Voyage

Baltic Bear

 

2010

 

Trafigura Maritime Logistics Pte. Ltd.

 

December 2017

 

 

$10,750

(7)

 

2010

 

May 2021

Voyage

Baltic Wolf

 

2010

 

Cargill International S.A.

 

February 2018

 

 

$15,350

 

 

2010

 

May 2021

Voyage

 

 

 

 

 

 

 

 

 

 

Panamax Vessels

 

 

 

 

 

 

 

 

 

 

Genco Beauty

 

1999

 

Swissmarine Asia Pte. Ltd.

 

December 2017

 

 

$9,000

(8)

Genco Knight

 

1999

 

Raffles Shipping International Pte. Ltd.

 

November 2017

 

 

$12,000

(9)

Genco Vigour

 

1999

 

Trafigura Maritime Logistics Pte. Ltd.

 

November 2017

 

 

$9,750

(10)

Genco Surprise

 

1998

 

Swissmarine Asia Pte., Ltd.

 

December 2017

 

 

$8,000

(11)

Genco Raptor

 

2007

 

Golden Ocean Trading Ltd. Bermuda/Aquavita International S.A.

 

Oct. 2017/Feb. 2018

 

 

$9,650/$12,300

(12)

Genco Thunder

 

2007

 

Raffles Shipping International Pte. Ltd.

 

October 2017

 

 

$10,500

(13)

 

 

 

 

 

 

 

 

 

 

Genco Resolute

2015

May 2021

Voyage

Genco Endeavour

2015

June 2021

Voyage

Genco Defender

2016

May 2021

Voyage

Genco Liberty

2016

February 2022

$31,000

Ultramax Vessels

 

 

 

 

 

 

 

 

 

 

Baltic Hornet

 

2014

 

Swissmarine Asia Pte. Ltd.

 

June 2018

 

 

113.5% of BSI

 

 

2014

 

June 2021

$13,250

Baltic Wasp

 

2015

 

Pioneer Navigation Ltd.

 

July 2018

 

 

$11,000

 

 

2015

 

May 2021

$20,000

Baltic Scorpion

 

2015

 

SK Shipping Co., Ltd./Mosaic Global Sales

 

Oct. 2017/Jan. 2018

 

 

$8,500/Voyage

 

 

2015

 

May 2021

Voyage

Baltic Mantis

 

2015

 

Gavilon Grain LLC

 

November 2017

 

 

Voyage

(14)

 

2015

 

May 2021

Voyage

 

 

 

 

 

 

 

 

 

 

5034


  

Year

  

Charter

  

Vessel

    

Built

    

Expiration(1)

    

Cash Daily Rate(2)

 

Genco Weatherly

2014

May 2021

Voyage

Genco Columbia

2016

June 2021

Voyage

Genco Magic

2014

October 2021

$25,000

Genco Vigilant

2015

June 2021

$10,000

Genco Freedom

2015

June 2021

Voyage

Supramax Vessels

Genco Predator

 

2005

 

July 2021

Voyage

Genco Warrior

 

2005

 

July 2021

$23,625

Genco Hunter

 

2007

 

June 2021

Voyage

Genco Lorraine

 

2009

 

June 2021

$15,000

Genco Aquitaine

 

2009

 

May 2021

$25,000

Genco Ardennes

 

2009

 

June 2021

Voyage

Genco Auvergne

 

2009

 

June 2021

$8,400

Genco Bourgogne

 

2010

 

May 2021

Voyage

Genco Brittany

 

2010

 

May 2021

$14,500

Genco Languedoc

 

2010

 

May 2021

$14,000

Genco Picardy

 

2005

 

May 2021

$21,500

Genco Provence

 

2004

 

May 2021

Voyage

Genco Pyrenees

 

2010

 

October 2021

$23,000

Genco Rhone

 

2011

 

June 2021

$26,250

Supramax Vessels

 

 

 

 

 

 

 

 

 

 

Genco Predator

 

2005

 

D/S Norden A/S

 

November 2017

 

 

$10,250

(15)

Genco Warrior

 

2005

 

Americas Bulk Transport (BVI) Ltd./Ultrabulk A/S

 

Oct./Nov. 2017

 

 

$10,750/$12,000

(16)

Genco Hunter

 

2007

 

Daewoo Logistics Corp.

 

November 2017

 

 

$3,500

(17)

Genco Cavalier

 

2007

 

Bulkhandling Handymax A/S/Transwind Shipping Co., Ltd.

 

Oct./Nov. 2017

 

 

Spot Pool/$10,500

 

Genco Lorraine

 

2009

 

Bulkhandling Handymax A/S

 

November 2017

 

 

Spot Pool

 

Genco Loire

 

2009

 

Bulkhandling Handymax A/S / Medi Supra Pool Management Ltd. / BaltNav A/S

 

Oct./Nov./Nov. 2017

 

 

Spot Pool/$13,500/$8,000

(18)

Genco Aquitaine

 

2009

 

ADMIntermare/S. Norton & Co. Ltd.

 

Oct./Nov. 2017

 

 

$16,000/$20,000

(19)

Genco Ardennes

 

2009

 

Norvic Shipping International Ltd./Clipper Bulk Shipping Ltd.

 

Oct./Nov. 2017

 

 

$14,000/$7,000

(20)

Genco Auvergne

 

2009

 

Western Bulk Pte. Ltd., Singapore/International Materials Inc.

 

Oct./Nov. 2017

 

 

$9,350/Voyage

(21)

Genco Bourgogne

 

2010

 

Phoenix Global DMCC

 

November 2017

 

 

Voyage

 

Genco Brittany

 

2010

 

Trafigura Maritime Logistics Pte. Ltd.

 

November 2017

 

 

$15,000

(22)

Genco Languedoc

 

2010

 

Oldendorff Carriers GMBH & Co.

 

November 2017

 

 

$7,900

(23)

Genco Normandy

 

2007

 

Bulkhandling Handymax A/S / SK Shipping Co., Ltd.

 

Oct./Dec. 2017

 

 

Spot Pool/$5,000

(24)

Genco Picardy

 

2005

 

Centurion Bulk Pte. Ltd., Singapore

 

November 2017

 

 

$9,000

(25)

Genco Provence

 

2004

 

HC Trading Malta Ltd.

 

November 2017

 

 

Voyage

(26)

Genco Pyrenees

 

2010

 

Kawasaki Kisen Kaisha Ltd. / Western Bulk Pte. Ltd. / Western Bulk Pte. Ltd.

 

Oct./Nov. 2017/Mar. 2018

 

 

$17,600/$13,000/$16,500

(27)

Genco Rhone

 

2011

 

Camden Iron and Metal / Ameropa S.A. Lausanne

 

Oct./Nov. 2017

 

 

Voyage/Voyage

(28)

Baltic Leopard

 

2009

 

Bulkhandling Handymax A/S

 

November 2017

 

 

Spot Pool

 

Baltic Panther

 

2009

 

Bulkhandling Handymax A/S

 

November 2017

 

 

Spot Pool

 

Baltic Jaguar

 

2009

 

Bunge Latin America LLC/Sims Group Global Trade Corp.

 

Oct./Nov. 2017

 

 

$11,000/Voyage

(29)

Baltic Cougar

 

2009

 

Bulkhandling Handymax A/S / Nordic Bulk Carriers A/S

 

Oct. 2017/Jan. 2018

 

 

Spot Pool/$10,500

 

 

 

 

 

 

 

 

 

 

 

 

Handymax Vessels

 

 

 

 

 

 

 

 

 

 

Genco Muse

 

2001

 

Centurion Bulk Pte. Ltd., Singapore

 

November 2017

 

 

$8,500

(30)

 

 

 

 

 

 

 

 

 

 

 

Handysize Vessels

 

 

 

 

 

 

 

 

 

 

Genco Progress

 

1999

 

Sun United Maritime Ltd.

 

November 2017

 

 

$6,000

(31)

Genco Explorer

 

1999

 

Daiichi Chuo Kisen Kaisha / ADMIntermare / ADMIntermare

 

Oct./Nov./Nov. 2017

 

 

$4,000/Voyage/Voyage

(32)

Baltic Hare

 

2009

 

NYK Bulk & Projects Carriers Ltd. / Norden Shipping (Singapore) Pte. Ltd.

 

Oct./Nov. 2017

 

 

$8,300/$5,000

(33)

Baltic Fox

 

2010

 

Clipper Logger Pool

 

November 2017

 

 

Spot Pool

 

Genco Charger

 

2005

 

Agriculture & Energy Carriers Ltd.

 

November 2017

 

 

$4,000

(34)

Genco Challenger

 

2003

 

Mitsui OSK Lines, Ltd.

 

November 2017

 

 

$7,000

(35)

Genco Champion

 

2006

 

Clipper Logger Pool / Cargill Ocean Transportation, Singapore Pte. Ltd.

 

Oct./Nov. 2017

 

 

Spot Pool/$7,250

(36)

Baltic Wind

 

2009

 

Ultrabulk Parcel Service A/S

 

November 2017

 

 

$7,500

(37)

Baltic Cove

 

2010

 

Clipper Bulk Shipping Ltd. / MUR Shipping B.V.

 

Nov./Nov. 2017

 

 

$5,750/$10,000

(38)

Baltic Breeze

 

2010

 

ADMIntermare / CAI Trading LLC

 

Oct./Nov. 2017

 

 

Voyage/Voyage

(39)

Genco Ocean

 

2010

 

Empremar S.A. / Cargill International S.A.

 

Oct./Nov. 2017

 

 

$8,500/$8,000

(40)

Genco Bay

 

2010

 

Pacific Basin Handysize Ltd. / Bulk Atlantic Inc.

 

Oct./Nov. 2017

 

 

$9,500/$12,000

(41)

Genco Avra

 

2011

 

Sims Group Global Trade Corp. / NYK Bulk & Projects Carriers Ltd.

 

Oct./Nov. 2017

 

 

Voyage/$10,500

(42)

Genco Mare

 

2011

 

Pioneer Navigation Ltd.

 

November 2017

 

 

103.5% of BHSI

 

Genco Spirit

 

2011

 

Norvic Shipping International Ltd. / BBC Chartering Carriers GMBH & Co. KG

 

Oct./Dec. 2017

 

 

$5,250/$12,500

(43)


(1)

(1)

The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course. Under the terms of certain contracts, the charterer is entitled to extend the time charter from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire.

51


(2)

(2)

Time charter rates presented are the gross daily charterhire rates before third-party brokerage commission generally ranging from 1.25% to 6.25%. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues.

(3)

We have agreed to an extension with Louis Dreyfus Company Freight Asia Pte. Ltd. on a time charter for 3.5 to 6 months at a rate of $17,750 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The extension began on October 21, 2017.

(4)

We have agreed to an extension with Oldendorff GMBH & Co. on a time charter for approximately 35 days at a rate of $21,750 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The extension began on October 20, 2017.

(5)

We have reached an agreement with Pacific Bulk Cape Company Ltd. on a time charter for 3.5 to 6.5 months at a rate of $16,600 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 4, 2017.

(6)

We have agreed to an extension with Oldendorff GMBH & Co. on a time charter for approximately 35 days at a rate of $14,750 per day Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The extension began on October 6, 2017.

(7)

We have reached an agreement with Trafigura Maritime Logistics Pte. Ltd. on a time charter for 3.5 to 7.5 months at a rate of $10,750 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on July 12, 2017.

(8)

We have reached an agreement with Swissmarine Asia Pte. Ltd. on a time charter for 3.5 to 6.5 months at a rate of $9,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on August 4, 2017 after completion of drydocking for scheduled maintenance. The vessel had redelivered to Genco on June 29, 2017.

(9)

We have reached an agreement with Raffles Shipping International Pte. Ltd. on a time charter for approximately 75 days at a rate of $12,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on September 1, 2017 after repositioning. The vessel had redelivered to Genco on August 26, 2017.

(10)

We have reached an agreement with Trafigura Maritime Logistics Pte. Ltd. on a time charter for approximately 25 days at a rate of $9,750 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 4, 2017 after repositioning. A ballast bonus was awarded after the repositioning period. The vessel redelivered to Genco on September 4, 2017.

(11)

We have reached an agreement with Swissmarine Asia Pte., Ltd. on a time charter for 3.5 to 8.5 months at a rate of $8,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on June 18, 2017.

(12)

We have reached an agreement with Aquavita International S.A. on a time charter for 4 to 6.5 months at a rate of $12,300 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 8, 2017.

(13)

The vessel redelivered to Genco on October 31, 2017 and is currently awaiting next employment.

(14)

We have reached an agreement with Gavilon Grain LLC for one voyage for approximately 90 days.

(15)

We have reached an agreement with D/S Norden A/S on a time charter for approximately 45 days at a rate of $10,250 per day. If the duration of the time charter exceeds 47 days, the hire rate will be $12,500 thereafter. Hire is paid every 15 days

52


in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on September 22, 2017 after repositioning. The vessel redelivered to Genco on September 16, 2017.

(16)

We have reached an agreement with Ultrabulk A/S on a time charter for approximately 50 days at a rate of $12,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 1, 2017.

(17)

We have reached an agreement with Daewoo Logistics Corp. on a time charter for approximately 60 days at a rate of $3,500 per day. If the duration of the time charter exceeds 66 days, the hire rate will be $10,000 per day thereafter. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on September 11, 2017 after completion of drydocking for scheduled maintenance. The vessel had redelivered to Genco on August 18, 2017.

(18)

We have reached an agreement with BaltNav A/S on a time charter for approximately 20 days at a rate of $8,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on November 1, 2017.

(19)

We have reached an agreement with S. Norton & Co. Ltd. on a time charter for approximately 20 days at a rate of $20,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 18, 2017.

(20)

We have reached an agreement with Clipper Bulk Shipping Ltd. on a time charter for approximately 35 days at a rate of $7,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 17, 2017.

(21)

We have reached an agreement with International Materials Inc. for one voyage for approximately 50 days.

(22)

We have reached an agreement with Trafigura Maritime Logistics Pte. Ltd. on a time charter for approximately 50 days at a rate of $15,000. Hire is paid every 15 days in advance less a 5.00% third-party broker commission. The vessel delivered to charterers on September 18, 2017.

(23)

We have reached an agreement with Oldendorff Carriers GMBH & Co. on a time charter for 3 to 5.5 months at a rate of $7,900 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on June 21, 2017.

(24)

We have reached an agreement with SK Shipping Co., Ltd. on a time charter for approximately 65 days at a rate of $5,000 per day. If the duration of the time charter exceeds 67 days, the hire rate will be $11,000 per day thereafter. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 24, 2017.

(25)

We have agreed to an extension with Centurion Bulk Pte. Ltd., Singapore on a time charter at a rate of $9,000 per day. The minimum and maximum expiration dates of the time charter are October 1, 2017 and December 1, 2017, respectively. Hire is paid every 15 days in advance less a 5.00% third-party broker age commission.

(26)

We have reached an agreement with HC Trading Malta Ltd. for one voyage for approximately 25 days.

(27)

We have reached an agreement with Western Bulk Pte. Ltd. on a time charter for 3.5 to 6.5 months at a rate of $16,500 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel is expected to deliver to charterers on or about November 15, 2017.

(28)

We have reached an agreement with Ameropa S.A. Lausanne for one voyage for approximately 45 days.

(29)

We have reached an agreement with Sims Group Global Trade Corp. for one voyage for approximately 45 days.

53


(30)

We have agreed to an extension with Centurion Bulk Pte. Ltd. Singapore on a time charter for 2.5 to 5.5 months at a rate of $8,500 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The extension began on July 4, 2017.

(31)

We have reached an agreement with Sun United Maritime Ltd. on a time charter for approximately 65 days at a rate of $6,000 per day. If the time charter extends beyond 65 days, the hire rate will be $7,500 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on August 17, 2017.

(32)

We have reached an agreement with ADMIntermare for one voyage for approximately 20 days.

(33)

We have reached an agreement with Norden Shipping (Singapore) Pte. Ltd. on a time charter for approximately 40 days at a rate of $5,000 per day. If the time charter extends beyond 50 days, the hire rate will be $10,500 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 21, 2017 after repositioning. The vessel had redelivered to Genco on October 13, 2017.

(34)

We have reached an agreement with Agriculture & Energy Carriers Ltd. on a time charter for approximately 65 days at a rate of $4,000 per day. If the time charter exceeds 67 days then the hire rate will be $7,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on August 27, 2017.

(35)

We have reached an agreement with Mitsui OSK Lines, Ltd. on a time charter for approximately 60 days at a rate of $7,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on August 26, 2017 after repositioning. The vessel redelivered to Genco on August 22, 2017.

(36)

We have reached an agreement with Cargill Ocean Transportation, Singapore Pte. Ltd. on a time charter for approximately 20 days at a rate of $7,250 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 5, 2017.

(37)

We have reached an agreement with Ultrabulk Parcel Service A/S on a time charter for approximately 55 days at a rate of $7,500 per day for the first 45 days and $9,250 per thereafter. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on September 17, 2017.

(38)

We have reached an agreement with MUR Shipping B.V. on a time charter for approximately 25 days at a rate of $10,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterer on November 3, 2017.

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We have reached an agreement with CAI Trading LLC for one voyage for approximately 30 days.

(40)

We have reached an agreement with Cargill International S.A. on a time charter for approximately 40 days at a rate of $8,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 5, 2017.

(41)

We have reached an agreement with Bulk Atlantic Inc. on a time charter for approximately 35 days at a rate of $12,000 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 16, 2017.

(42)

We have reached an agreement with NYK Bulk & Projects Carriers Ltd. on a time charter for approximately 15 days at a rate of $10,500 per day. Hire is paid every 15 days in advance less a 5.00% third-party broker commission. The vessel delivered to charterers on October 14, 2017.

(43)

We have reached an agreement with BBC Chartering Carriers GMBH & Co. KG on a time charter for approximately 45 days at a rate of $12,500 per day. Hire is paid every 15 days in advance less a 5.00% third-party brokerage commission. The vessel delivered to charterers on October 21, 2017.

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Three months ended September 30, 2017March 31, 2021 compared to the three months ended September 30, 2016March 31, 2020

VOYAGE REVENUES-

For the three months ended September 30 2017,March 31, 2021, voyage revenues increaseddecreased by $13.3$10.7 million, or 35.1%10.9%, to $51.2$87.6 million as compared to $37.9$98.3 million for the three months ended September 30, 2016.March 31, 2020. The increasedecrease in voyage revenues was primarily due to higher spot market rates achieved by the majority of our vessels partially offset by the operation of fewer vessels in our fleet, in addition to lower rates achieved by our Capesize vessels. These decreases were partially offset by higher rates achieved by our minor bulk vessels. During the fourth quarter of 2020, we had fixed a portion of our fleet on time charters and spot market voyage charters through the first quarter of 2021 in anticipation of a seasonally softer first quarter. However, the freight market experienced a counter-seasonal rise in freight rates during the thirdperiod. Certain of our Capesize vessels were also repositioning towards the Atlantic basin during the first quarter of 2017 as compared2021, impacting their ability to benefit from the rising market. We now have approximately seven Capesize vessels coming open for employment in the coming weeks during this strong market, of which we plan to ballast two to the same periodAtlantic basin.

During the first quarter of 2021, the drybulk market continued to improve following the firm end to 2020. Despite various drybulk seasonal factors such as the timing of newbuilding deliveries, the Lunar New Year holiday celebration in China and weather-related cargo disruptions that materialized during 2016.the quarter, the earnings environment strengthened. This has led to continued robust demand from China as steel production continues to reach new record levels, while iron ore cargo volume from Brazil increased by 17% year-over-year. Minor bulk earnings have been supported by large scale purchases of U.S. agricultural products by China following the phase-one trade deal, as well as the country’s recovery from African Swine Fever. On the supply side, while newbuilding deliveries are frontloaded towards the beginning of the year, the historically low overall orderbook as a percentage of the fleet has resulted in lower newbuilding deliveries on a year-over-year basis.

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The average Time Charter Equivalent (“TCE”) rate of our overall fleet increased 48.3%25% to $8,573$12,197 a day forduring the three months ended September 30, 2017first quarter of 2021 from $5,779$9,755 a day during the first quarter of 2020. The TCE for our major bulk vessels decreased by 18.4% from $16,660 a day during the three months ended September 30, 2016.  The increase in TCE ratesfirst quarter of 2020 to $13,595 a day during the first quarter of 2021. This decrease was primarily due to higher spota result of lower rates achieved by the majority of theour Capesize vessels. The TCE for our minor bulk vessels in our fleetincreased by 72.9% from $6,536 a day during the thirdfirst quarter of 2017 as compared2020 to $11,303 a day during the same period last year.  The drybulk freight market strengthened considerably during Q3 2017 asfirst quarter of 2021 primarily a result of record Chinese steel outputhigher rates achieved by our Supramax vessels.

The overall uncertainty surrounding the impact of COVID-19 on our business, together with reduced economic activity and in turn trade flows, could continue to negatively impact the revenue generated by our vessels. While we believe that the gradual reopening of economies affected by COVID-19 has begun to lead to increased global trade flows and a rise in drybulk shipping rates, the sustainability of the recovery cannot be predicted and could be affected by a resurgence of the virus and the timing of wide-scale vaccine distribution. Furthermore, deviation time associated with positioning our vessels to countries in which ledwe can undertake a crew rotation due to heightened demand for seaborne iron orevarious travel and coal cargoes. This increaseport restrictions related to COVID-19, resulted in demand has been met with marginal net fleet growth so fardays in the second halffirst quarter of the year leading2021 in which our vessels were unable to tighter tonnage availability across the sectors.earn revenue and may continue to do so.

For the three months ended September 30, 2017March 31, 2021 and 2016,2020, we had 5,520.03,897.0 and 6,348.04,942.5 ownership days, respectively. The decrease in ownership days is a result ofprimarily due to the sale of nine of ourvessels during 2020 and eight vessels during the fourthfirst quarter of 20162021, partially offset by the delivery of one and two vessels during 2020 and the first half of 2017, in addition to the scrapping of one vessel during the second quarter of 2016.2021, respectively. Fleet utilization decreased to 97.9%was 97.8% during the three months ended September 30, 2017 from 99.4% during the three months ended September 30, 2016 primarily as a result of 30.9 offhire days for the Genco Tiger related to repairs completed to its main engine.both periods.

Refer to the “General” section above for further discussion of the repairs made to the Genco Tiger.

SERVICE REVENUES-

Service revenues consisted of revenues earned from providing technical services to MEP pursuant to the agency agreement between us and MEP.  These services included oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but did not include chartering services.  The services were provided for a fee of $650 per ship per day effective October 1, 2015 pursuant to the agency agreement entered into between Genco (USA).  There was no service revenue earned during the three months ended September 30, 2017 as MEP was dissolved effective December 31, 2016 and the remaining MEP vessels were sold during 2016.  The $1.0 million of service revenue recorded during the three months ended September 30, 2016 consisted of $0.2 million of management fees and $0.8 million of termination fees related to the sale of seven MEP vessels during the third quarter of 2016. 

VOYAGE EXPENSES-

In time charters, spot market-related time charters and pool agreements, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. These expenses are borne by the Company during spot market voyage charters. There are certain other non-specified voyage expenses such as commissions, which are typically borne by us. Voyage expenses include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated third parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on spot market voyage charters because these expenses are for the account of the vessel owner. At the inception of a time charter, we record the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Voyage expenses andalso include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement. Additionally, we may record the lower of cost or marketand net realizable value adjustments to re-value the bunker fuel on a quarterly basis.basis for certain time charter agreements where the inventory is subject to gains and losses. Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements.

Due to various travel and port restrictions relating to COVID-19 and our strong emphasis on maintaining the health and safety of both our on-signing and off-signing crew members, we experienced increased deviation time for certain of our vessels to undertake crew rotations during the second half of 2020 and the first quarter of 2021. As such, we have experienced higher voyage expenses for certain crew changes that we have completed, which we expect to continue as a result of COVID-19 restrictions imposed by various counties. These increased voyage expenses are due to the incremental fuel consumption of deviating to certain ports on which we would ordinarily not call during a typical voyage. Additionally, during the first quarter of 2021, fuel prices began to increase, which could result in higher bunker expenses during the remainder of 2021.

Voyage expenses increased by $3.3were $35.1 million from $2.3and $48.4 million during the three months ended September 30, 2016 as compared to $5.6 million during the three months ended  September 30, 2017.  The increase was primarily due to voyage expenses recorded for the eight vessels that were fixed on spot market voyage charters during the third quarter of 2017.

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VESSEL OPERATING EXPENSES-

Vessel operating expenses decreased by $3.3 million from $28.5 million during the three months ended September 30, 2016 to $25.1 million during the three months ended September 30, 2017.  March 31, 2021 and 2020, respectively. This decrease was primarily due to the operation of a smaller fleetfewer vessels, as well as a resultdecrease in bunker consumption.

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VESSEL OPERATING EXPENSES-

Vessel operating expenses decreased by $2.8 million from $21.8 million during the sale of ninethree months ended March 31, 2020 to $19.0 million during the three months ended March 31, 2021. The decrease was primarily due to fewer owned vessels during the fourthfirst quarter of 2016 and first half of 2017, in addition2021 as compared to the scrapping of one vessel during the secondfirst quarter of 2016. 2020, as well as lower drydocking expenses, partially offset by COVID-19 related expenditures and higher crew related expenses.

DailyAverage daily vessel operating expenses for our fleet increased to $4,553$4,887 per vessel per day for the three months ended September 30, 2017March 31, 2021 from $4,483$4,413 per day for the three months ended September 30, 2016.  March 31, 2020. The increase in daily vessel operating expensesexpense was predominantly due to the timing of drydockingCOVID-19 related expenditures and higher crew related expenses, as well higher spares and purchases of stores and spare parts,maintenance related expenditures, partially offset by lower crew costs.drydocking expenditures. Refer to “Capital Expenditures” below for further detail. We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation. Our actual daily vessel operating expenses per vessel for the three months ended September 30, 2017March 31, 2021 were $113 abovebelow the weighted-average budgeted rate of $4,440$5,000 per vessel per day for the entire year foryear. The budgeted rate reflects the corelarger weighting of our fleet towards Capesize vessels following our sales of 60 vessels.smaller Supramax and Handysize vessels, as well as an anticipated increase in COVID-19 related expenses. The potential impacts of COVID-19 are beyond our control and are difficult to predict due to uncertainties surrounding the pandemic.

As a result of COVID-19 restrictions with regard to crew rotations, we still expect higher crew related costs. Travel and port restrictions together with promoting the health of the on-signing crew boarding the ship while the off-signing crew gets home safely have all been increasing challenges that shipowners are facing globally. As crew members worldwide have in many cases, including on certain of our vessels, exceeded the duration of their contracts there is an increased urgency to work towards completing more crew rotations in the coming months. Given this urgency, since June 2020, certain of these crew rotations have led to and could continue to lead to additional deviation time of our vessels as well as unbudgeted expenses due to testing, PPE, quarantine periods and higher than normal travel expenses due to increased airfare costs.

The timing of crew rotations remains dependent on the duration and severity of COVID-19 in countries from which our crews are sourced as well as any restrictions in place at ports in which our vessels call. In cases when crew rotations have been delayed further, we have paid additional costs related to crew bonuses to retain the existing crew members on board since June 2020 and may continue to do so.

Our vessel operating expenses, which generally represent fixed costs for each vessel, increase to the extent our fleet expands. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for crewing, lubes, and insurance, may also cause these expenses to increase. The impact of COVID-19 could result in potential shortages or a lack of access to required spare parts for the operation of our vessels, potential delays in any unscheduled repairs, deviations for crew changes or increased costs to successfully execute a crew change, which could lead to business disruptions and delays. We expect that crew costs for the crew that we utilize on our vessels will increase going forward due to expected higher wages, as well as the impact of COVID-19 restrictions.

CHARTER HIRE EXPENSES-

Charter hire expenses increased by $2.4 million from $3.1 million during the three months ended March 31, 2020 to $5.4 million during the three months ended March 31, 2021. The increase was primarily due to higher charter in rates during the first quarter of 2021 as compared to the first quarter of 2020.

GENERAL AND ADMINISTRATIVE EXPENSES-

We incur general and administrative expenses whichthat relate to our onshore non-vessel-related activities. Our general and administrative expenses include our payroll expenses, including those relating to our executive officers, rent,operating lease expense, legal, auditing and other professional expenses.  General and administrative expenses include nonvested stock amortization expense which represent the amortization of stock-based compensation that has been

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issued to our Directors and employees pursuant to Management Incentive Program (the “MIP”) and the 2015 Equity Incentive Plan, referPlan. Refer to Note 1714 — Stock-Based Compensation in our Condensed Consolidated Financial Statements.  General and administrative expenses also include legal and professional fees associated with our credit facilities, which are not capitalizable to deferred financing costs.We also incur general and administrative expenses for our overseas offices located in Singapore and Copenhagen.

For the three months ended September 30, 2017March 31, 2021 and 2016,2020, general and administrative expenses were $5.9$6.1 million and $7.9$5.8 million, respectively. The $2.0$0.3 million decreaseincrease was primarily due to a $2.3 million decrease in nonvested stock amortization expense.   Refer to Note 17 — Stock-Based Compensation in our Condensed Consolidated Financial Statements for further information.    higher legal and professional fees.

TECHNICAL MANAGEMENT FEES-

We incur management fees to third-party technical management companies for the day-to-day management of our vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies.

For Technical management fees were $1.5 million and $1.9 million during the three months ended September 30, 2017March 31, 2021 and 2016, technical management fees were $1.9 million and $2.2 million,2020, respectively. The $0.3 million decrease was due to the salea result of ninefewer owned vessels during the fourthfirst quarter of 2016 and first half of 2017, in addition2021 as compared to the scrapping of one vessel during the secondfirst quarter of 2016.2020.

DEPRECIATION AND AMORTIZATION-

We depreciate the cost of our vessels on a straight-line basis over the expected useful life of each vessel. Depreciation is based on the cost of the vessel less its estimated residual value. We estimate the useful life of our vessels to be 25 years and we estimate the residual value by taking the estimated scrap value of $310 per lightweight ton times the weight of the ship in lightweight tons.

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Depreciation and amortization expense decreased by $0.3$4.1 million to $17.8$13.4 million during the three months ended September 30, 2017March 31, 2021 as compared to $18.1$17.6 million during the three months ended September 30, 2016.  March 31, 2020. This decrease was primarily due to a decrease in depreciation expense for the fivefifteen vessels that were deemed to be impaired assold during the second half of August 4, 20172020 and the Genco Surprise which was deemed to be impairedfirst quarter of 2021, as of June 30, 2017.  Thesewell as a decrease in depreciation for certain vessels were reduced to their respective fair market values and are being depreciated over their remaining useful life.  Refer to Note 2 Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements for further information. fleet that were impaired during 2020.

IMPAIRMENT OF VESSEL ASSETS-

During the three months ended March 31, 2020, we recorded $112.8 million of impairment of vessel assets. There was no vessel impairment recorded during the three months ended March 31, 2021. During the three months ended September 30, 2017 and 2016,March 31, 2020, we recorded $18.7 millionimpairment losses for four of our Supramax vessels and $0ten of impairment of vessel assets, respectively.  On August 4, 2017, our Board of Directors determined to dispose of the Genco Beauty, the Genco Explorer, the Genco Knight, the Genco Progress and the Genco Vigour at times and on terms to be determined in the future.  Given this decision, and that the estimated future undiscounted cash flows for each of these vessels did not exceed the net book value for each vessel, we reduced the carrying value of these vessels to their respective fair market values at August 4, 2017.  This resulted in an $18.7 million impairment loss during the three months ended September 30, 2017.Handysize vessels.

Refer to Note 2 Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statement for further information. 

OTHER (EXPENSE) INCOME-

NET INTEREST EXPENSE

Net interest expense increased by $0.4 million from $7.0 million during the three months ended September 30, 2016 to $7.4 million during the three months ended September 30, 2017.  Net interest expense during the three months ended September 30, 2017 and 2016 consisted of interest expense under our credit facilities and amortization of deferred financing costs for those facilities. The increase in net interest expense is primarily due to a $0.8 million increase in interest expense as a result of higher interest rates during the third quarter of 2017 as compared to the same period during 2016.  These increases were partially offset by a $0.4 million increase in interest income earned during the third quarter of 2017 as compared to the same period during 2016 primarily as a result of interest income earned on time deposits as well as a higher cash balance due to proceeds from the equity issuance during the fourth quarter of 2016 and proceeds from the sale of vessels.    Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements for information regarding our credit facilities and the equity issuance.

REORGANIZATION ITEMS, NET–

Reorganization items, net decreased to $0 during the three months ended September 30, 2017 from $0.1 million during the three months ended September 30, 2016.  These reorganization items include trustee fees and professional fees incurred after we emerged from bankruptcy on July 9, 2014 in relation to the Chapter 11 Cases.  The decrease is due to the winding down of settlement payments related to the Chapter 11 Cases.  As of December 31, 2016, all outstanding claims arising from the Chapter 11 Cases were settled.  Refer to Note 15 — Reorganization items, net in our Condensed Consolidated Financial Statements for further detail.

INCOME TAX EXPENSE-

Income tax expense decreased to $0 during the three months ended September 30, 2017 from $0.4 million during the three months ended September 30, 2016.  Income tax expense during the three months ended September 30, 2016 consisted of federal, state and local income taxes on net income earned by Genco (USA), one of our wholly-owned subsidiaries.  Pursuant to certain agreements, we provided technical management of vessels for MEP in exchange for specified fees for these services provided.  These services were provided by Genco (USA), which has elected to be taxed

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as a corporation for United States federal income tax purposes.  As such, Genco (USA) was subject to United States federal income tax on its worldwide net income, including the net income derived from providing these services. 

The decrease in income tax expense during the three months ended September 30, 2017 as compared to the same period during the prior year is primarily due to a decrease in service revenue recorded by Genco (USA) which was earned from MEP during 2016 as a result of the sale of MEP’s twelve vessels during 2016.  MEP was subsequently dissolved by December 31, 2016.  As such, there was no income tax recorded during the third quarter of 2017. 

Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016

VOYAGE REVENUES-

For the nine months ended September 30, 2017, voyage revenues increased by $45.3 million, or 50.7%, to $134.8 million as compared to $89.5 million for the nine months ended September 30, 2016.  The increase in voyage revenues was primarily due to higher spot market rates achieved by the majority of our vessels partially offset by the operation of fewer vessels during the nine months ended September 30, 2017 as compared to the same period during 2016.

The average Time Charter Equivalent (“TCE”) rate of our fleet increased 80.4% to $7,829 a day for the nine months ended September 30, 2017 from $4,341 a day for the nine months ended September 30, 2016.  The increase in TCE rates was primarily due to higher rates achieved by the majority of our vessels during the nine months ended September 30, 2017 as compared to the same period last year.    

For the nine months ended September 30, 2017 and 2016, we had 16,687.4 and 19,043.7 ownership days, respectively. The decrease in ownership days is a result of the sale of nine of our vessels during the fourth quarter of 2016 and the first half of 2017, in addition to the scrapping of one vessel during the second quarter of 2016.  Fleet utilization decreased to 97.8% during the nine months ended September 30, 2017 from 99.0% during the nine months ended September 30, 2016 primarily as a result of 114.6 offhire days and 34.0 offhire days for the Genco Tiger and Baltic Lion, respectively, related to repairs completed to their main engines.

Refer to the “General” section above for further discussion of the repairs made to the Genco Tiger and Baltic Lion.

SERVICE REVENUES-

Service revenues consist of revenues earned from providing technical services to MEP pursuant to the agency agreement between us and MEP.  These services included oversight of crew management, insurance, drydocking, ship operations and financial statement preparation, but did not include chartering services.  The services were provided for a fee of $650 per ship per day effective October 1, 2015 pursuant to an agreement entered into between Genco (USA) and MEP.  There was no service revenue earned during the nine months ended September 30, 2017 as MEP was dissolved effective December 31, 2016 and the remaining MEP vessels were sold during 2016.  The  $2.2 million of service revenue recorded during the nine months ended September 30, 2016 consisted of $1.1 million of management fees and $1.1 million of termination fees related to the sale of the twelve MEP vessels. 

VOYAGE EXPENSES-

Voyage expenses increased marginally by $0.5 million from $9.2 million during the nine months ended September 30, 2016 as compared to $9.7 million during the nine months ended September 30, 2017.   

VESSEL OPERATING EXPENSES-

Vessel operating expenses decreased by $12.3 million from $86.1 million during the nine months ended September 30, 2016 to $73.9 million during the nine months ended September 30, 2017.  This decrease was primarily due to the operation of a smaller fleet as a result of the sale of nine vessels during the fourth quarter of 2016 and first half

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of 2017, in addition to the scrapping of one vessel during the second quarter of 2016.  Additionally, the decrease was due to lower expenses related to crewing and insurance, partially offset by higher drydocking related expenses.

Daily vessel operating expenses decreased to $4,427 per vessel per day for the nine months ended September 30, 2017 from $4,523 per day for the nine months ended September 30, 2016.  The decrease in daily vessel operating expenses was predominantly due to lower expenses related to crewing and insurance, partially offset by higher drydocking related expenses.    We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation.  Our actual daily vessel operating expenses per vessel for the nine months ended September 30, 2017 were $13 below the weighted-average budgeted rate of $4,440 per vessel per day for the entire year for the core fleet of 60 vessels.

GENERAL AND ADMINISTRATIVE EXPENSES-

For the nine months ended September 30, 2017 and 2016, general and administrative expenses were $16.6 million and $30.1 million, respectively.  The $13.5 million decrease was primarily due to an $11.0 million decrease in nonvested stock amortization expense.  Refer to Note 17 — Stock-Based Compensation in our Condensed Consolidated Financial Statements for further information.  The decrease in general and administrative expenses was also due to a $3.4 million decrease in financing related advisory and legal fees.

TECHNICAL MANAGEMENT FEES-

For the nine months ended September 30, 2017 and 2016, technical management fees were $5.7 million and $6.8 million, respectively.  The $1.0 million decrease was primarily due to the sale of nine vessels during the fourth quarter of 2016 and first half of 2017, in addition to the scrapping of one vessel during the second quarter of 2016.

DEPRECIATION AND AMORTIZATION-

We depreciate the cost of our vessels on a straight-line basis over the expected useful life of each vessel. Depreciation is based on the cost of the vessel less its estimated residual value. We estimate the useful life of our vessels to be 25 years and we estimate the residual value by taking the estimated scrap value of $310 per lightweight ton times the weight of the ship in lightweight tons.

Depreciation and amortization expense decreased by $4.0 million to $54.2 million during the  nine months ended September 30, 2017 as compared to $58.2 million during the  nine months ended September 30, 2016.  This difference was primarily due to a decrease in depreciation expense for the nine vessels which were deemed impaired at June 30, 2016 and were written down to their net realizable value at June 30, 2016.  These vessels were subsequently sold during the fourth quarter of 2016 and the first half of 2017.  Additionally, there was a decrease in depreciation for the Genco Marine which was scrapped on May 17, 2016.  Lastly, there was a decrease in depreciation expense for the six vessels that were deemed impaired at August 4, 2017 and June 30, 2017 and were written down to their fair market value.  These decreases were partially offset by an increase in drydocking amortization expense as a result of additional vessels drydocking during the nine months ended September 30, 2017 as compared to the same period last year.

Refer to Note 2 Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statement for further information regarding the impairment of these vessels.

OTHER OPERATING INCOME –

For our impairment analysis, we utilize the nine months ended September 30, 2017ten-year historical one-year time charter average to project future charter rates, which we believe appropriately takes into account the volatility and 2016, other operating income was $0highs and $0.2 million, respectively.  The decrease is primarily due to a payment of $0.2 million received from Samsun Logix Corporation as partlows of the cash settlementshipping cycle.  In addition, we consider the current market rate environment and, if necessary, adjust our estimates of the revised rehabilitation plan approved by the South Korean courts on April 8, 2016.  Refer to Note 16 — Commitments and Contingencies in our Condensed Consolidated Financial Statements for further information regarding the settlement. 

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IMPAIRMENT OF VESSEL ASSETS -

During the nine months ended September 30, 2017 and 2016, we recorded $22.0 million and $69.3 million of impairment of vessel assets, respectively.  On August 4, 2017, our Board of Directors determined to dispose of the Genco Beauty, the Genco Explorer, the Genco Knight, the Genco Progress and the Genco Vigour at times and on terms to be determined in the future.  Given this decision, and that the estimated future undiscounted cash flows to reflect the current rate environment. For our older vessels, those vessels in operation for each of these vessels did not exceedat least 18 years, we evaluate the net book value for each vessel, we reducedcurrent rate environment compared to the carrying value of these vesselsten-year historical one-year time charter rate and adjust the rate to their respective fair market values at August 4, 2017.  This resulted in an $18.7 million impairment loss duringbetter reflect the nine months ended September 30, 2017.  Additionally, at June 30, 2017, we determined that the sum of the estimated undiscounted futureexpected cash flows attributable toover the Genco Surprise did not exceed the carrying valueremaining useful lives of the vessel at June 30, 2017.  As such, we reduced the carrying value of the Genco Surprise to its fair market value as of June 30, 2017, which resulted in an impairment loss of $3.3 million during the nine months ended September 30, 2017. 

During the nine months ended September 30, 2016, we recorded $67.6 million of impairment for nine of our vessels, the Genco Acheron, Genco Carrier, Genco Leader, Genco Pioneer, Genco Prosperity, Genco Reliance, Genco Success, Genco Sugar, and Genco Wisdom, for which we had deemed that it was more likely than not would be scrapped.  These vessels were subsequently sold during the fourth quarter of 2016 and the first half of 2017.  Additionally, we recorded $1.7 million of impairment of vessel assets to adjust the net realizable value of the Genco Marine which was scrapped on May 17, 2016. 

Refer to Note 2 — Summary of Significantthose vessels. Please see “Critical Accounting Policies – Impairment of long-lived assets” in our Condensed ConsolidatedItem 7, “Management’s Discussion and Analysis of Financial Statements for further information. Condition and Results of Operation” in the 2020 10-K.

(GAIN) LOSS ON SALE OF VESSELS –VESSELS-

During the nine months ended September 30, 2017, we recorded a net gain on salefirst quarter of $7.7 million related primarily to the sale of the Genco Prosperity, Genco Success, Genco Carrier, Genco Reliance and Genco Wisdom for which the sales were completed during the first half of 2017.  During the nine months ended September 30, 2016,2021, we recorded a net loss on sale of vessels of $0.1$0.7 million related primarily to the scrappingsale of the Baltic Panther, Baltic Hare and Baltic Cougar, as well as net losses associated with the exchange the Baltic Cove, Baltic Fox, Genco Spirit, Genco Avra and Genco Mare. During the first quarter of 2020, we recorded a net loss on sale of vessels of $0.5 million related primarily to the sale of the Genco Marine on May 17, 2016.Charger and Genco Thunder.

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OTHER INCOME (EXPENSE) INCOME--

IMPAIRMENT OF INVESTMENT –

During the nine months ended September 30, 2016, we recorded Impairment of investment of $2.7 million.  Prior to selling our remaining investment in Jinhui during the fourth quarter of 2016, we reviewed our investment in Jinhui for indicators of other-than-temporary impairment on a quarterly basis.  Based on our review, we deemed the investment in Jinhui to be other-than-temporarily impaired as of June 30, 2016. Refer to Note 5 — Investments in our Condensed Consolidated Financial Statements for further details.  

NET INTEREST EXPENSE

Net interest expense increaseddecreased by $0.5$1.9 million from $21.1$6.4 million during the ninethree months ended September 30, 2016March 31, 2020 to $21.6$4.5 million during the ninethree months ended September 30, 2017.March 31, 2021. Net interest expense during the ninethree months ended September 30, 2017March 31, 2021 and 20162020 consisted primarily of interest expense under our credit facilities and amortization of deferred financing costs for those facilities. The increase in net interest expense isThis decrease was primarily due to a $1.4$2.4 million increasedecrease in interest expense as a result of higherlower interest rates, during the nine months ended September 30, 2017 as compared to the same period during 2016.  These increases were partiallywell as lower outstanding debt. This was offset by a $0.9$0.5 million increasedecrease in interest income earned during the nine months ended September 30, 2017 as compared to the same period during 2016 primarily as a result of interest income earned on time deposits as well as a higher cash balance due to proceeds from the equity issuance during the fourth quarter of 2016 and proceeds from the sale of vessels.  Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements for information regarding our credit facilities and the equity issuance. 

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REORGANIZATION ITEMS, NET

Reorganization items, net decreased to $0 during the nine months ended September 30, 2017 from $0.2 million during the nine months ended September 30, 2016.  These reorganization items include trustee fees and professional fees incurred after we emerged from bankruptcy on July 9, 2014 in relation to the Chapter 11 Cases.  The decrease is due to the winding down of settlement payments related to the Chapter 11 Cases.  As of December 31, 2016, all outstanding claims arising from the Chapter 11 Cases were settled.  Refer to Note 15 — Reorganization items, net in our Condensed Consolidated Financial Statements for further detail.

INCOME TAX EXPENSE-

Income tax expense decreased to $0 during the nine months ended September 30, 2017 from $0.8 million during the nine months ended September 30, 2016.  Income tax expense during the nine months ended September 30, 2016 consisted of federal, state and local income taxes on net income earned by Genco (USA), one of our wholly-owned subsidiaries.  Pursuant to an agency agreement, we provided technical management of vessels for MEP in exchange for specified fees for these services provided.  These services were provided by Genco (USA), which has elected to be taxed as a corporation for United States federal income tax purposes.  As such, Genco (USA) was subject to United States federal income tax on its worldwide net income, including the net income derived from providing these services. 

The decrease in income tax expense during the nine months ended September 30, 2017 as compared to the same period during the prior year is primarily due to a decrease in service revenue recorded by Genco (USA) which wasinterest earned from MEP during 2016 as a result of the sale of MEP’s twelve vessels during 2016.  MEP was subsequently dissolved by December 31, 2016.  As such, there was no income tax recorded during the nine months ended September 30, 2017. on our time deposits and cash accounts.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity needs arise primarily from drydocking for our vessels and working capital requirements as may be needed to support our business and payments required under our indebtedness. Our primary sources of liquidity are cash flow from operations, cash on hand, equity offerings and credit facility borrowings. We currently use our funds primarily for the acquisition of vessels generally and under our ongoing fleet renewal program, drydocking for our vessels, and satisfying working capital requirements as may be needed to support our business and make required payments under our indebtedness.  Our ability to continue to meet our liquidity needs is subject to and will be affected by cash utilized in operations, the economic or business environment in which we operate, weakness in shipping industry conditions, the financial condition of our customers, vendors and service providers, our ability to comply with the financial and other covenants of our indebtedness, and other factors.

While supply and demand fundamentals have been improving during 2017, persistent, historically lowWe believe, given our current cash holdings, if drybulk shipping rates prior to 2017 resulted in decreases in our prior period revenues.  As a result, we experienced negative cash flows, and in turn, our liquidity had been negatively impacted.  To address our liquidity and covenant compliance issues, in November 2016 we refinanced or amended our credit facilities and completed a $125 million capital raise as described below.  Based ondo not decline significantly from current market conditions, we believe these measures are sufficient to address such issues and thatlevels, our capital resources, including cash anticipated to be generated within the year, are sufficient to fund our operations for at least the next twelve months. Such resources include unrestricted cash and cash equivalents of $123.2 million as of March 31, 2021, which compares to a minimum liquidity requirement under our credit facilities of approximately $30 million as of the date of this report. Given future quarterly amortization payments of $16.3 million under our credit facilities (which reflects the reset of amortization payments under the $495 Million Credit Facility), anticipated capital expenditures related to drydockings and the installation of ballast water treatment systems (“BWTS”), as well as any quarterly dividend payments, we anticipate to continue to have significant cash expenditures. However, if market conditions were to worsen significantly due to the current COVID-19 pandemic or other causes, then our cash resources may decline to a level that may put at risk our ability to service timely our debt and capital expenditure commitments.

On November 10, 2016, we entered into a senior secured loan facility for anOur credit facilities contain collateral maintenance covenants that require the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of $400 million (the “$400 Million Credit Facility”) which was utilized to refinance our $100 Million Term Loan Facility, $253 Million Term Loan Facility, $148 Million Credit Facility, $22 Million Term Loan Facility, $44 Million Term Loan Facility and 2015 Revolving Credit Facility, as defined in Note 8 — Debt in our Condensed Consolidated Financial Statements.  The $400 Million Credit Facility was subject to the completion of an equity financing satisfactory toloan outstanding under each such facility. If the lenders with gross proceeds to us including the equity commitments as described in Note 8 — Debt in our Condensed Consolidated Financial Statements of at least $125 million and amendmentsvalues of our other credit facilities on terms satisfactoryvessels were to the lenders and other customary conditions. 

As a condition to the effectiveness of the Second Amended Commitment Letter entered into on October 6, 2016 related to the aforementioned $400 Million Credit Facility, we entered into stock purchase agreements effective as of October 4, 2016 (the “Initial Purchase Agreements”) with funds or related entities managed by Centerbridge, SVP and Apollo (the “Investors”) for an aggregate of up to $125 million in a private placement exempt from the registration

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requirements of the Securities Act of 1933, as amended.  The Investors made a firm commitment to purchase shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) for an aggregate of $86.4 million and a backstop commitment to purchase additional shares of common stock for up to $38.6 million, in each case at a purchase price of $4.85 per share. The Series A Preferred Stock was automatically and mandatorily converted into our common stock, par value $0.01 per share, upon approval by our shareholders of such conversion.  An additional 1,288,660 shares of Series A Preferred Stock were issued to the Investorsdecline as a commitment fee on a pro rata basis.   Subsequently, on October 27, 2016,result of COVID-19 or otherwise, we entered into a stock purchase agreement (the “Additional Purchase Agreement”) with certain of the Investors; John C. Wobensmith, our Chief Executive Officer and President; and other investors for the sale of shares of Series A Preferred Stock for an aggregate purchase price of $38.6 million at a purchase price of $4.85 per share.  The purchase price and the other terms and conditions of these transactions were established in arm’s length negotiations between an independent special committee of our board of directors (the “Special Committee”) and the investors.  The Special Committee unanimously approved the transactions. Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements for further details.  On November 15, 2016, pursuant to the Initial Purchase Agreements and Additional Purchase Agreement, we completed the private placement of 27,061,856 shares of Series A Preferred Stock which included 25,773,196 shares at a price per share of $4.85 and an additional 1,288,660 shares issued as a commitment fee on a pro rata basis as noted above.  Refer to Note 1 — General Information. 

Additionally, on November 15, 2016, we entered into Supplemental Agreements with lenders under our 2014 Term Loan Facilities (as defined in Note 8 — Debt in our Condensed Consolidated Financial Statements) which, among other things, amended the Company’smay not satisfy this collateral maintenance covenants under the 2014 Term Loan Facilities to provide that such covenants willrequirement. If we do not be tested through December 30, 2017 and the minimum collateral value to loan ratio will be 100% from December 31, 2017, 105% from June 30, 2018, 115% from December 31, 2018 and 135% from December 31, 2019.  These Supplemental Agreements also provided for certain other amendments to the 2014 Term Loan Facilities, which included reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to the $400 Million Credit Facility. 

Lastly, on November 15, 2016, we also entered into an Amending and Restating Agreement which amended and restated the credit agreements and the guarantee for the $98 Million Credit Facility (as defined in Note 8 — Debt in our Condensed Consolidated Financial Statements) (the “Restated $98 Million Credit Facility”).  The Restated $98 Million Credit Facility provides for the following: reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility; netting of certain amounts against the measurements ofsatisfy the collateral maintenance covenant,requirement, we will need to post additional collateral or prepay outstanding loans to bring us back into compliance, or we will need to seek waivers, which remains in place with a 140% value to loan threshold; a portion of amounts required tomay not be maintained under the minimum liquidity covenant for this facilityavailable or may under certain circumstances, be used to prepay the facility to maintain compliance with the collateral maintenance covenant; elimination of the original maximum leverage ratio and minimum net worth covenants; and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to those provided for in the $400 Million Credit Facility.

At September 30, 2017, we believe we were in compliance with all financial covenants under the $400 Million Credit Facility, the 2014 Term Loan Facilities and the Restated $98 Million Credit Facility. 

Excess cash from the collateralized vessels under our $400 Million Credit Facility are subject to a cash sweep.  The cash sweep will be 100% of excess cash flow through December 31, 2018, 75% through December 31, 2020 and the lesser of 50% of excess cash flow or an amount that would reflect a 15-year average vessel age repayment profile thereafter; provided no prepayment under the cash sweep is required from the first $10 million in aggregate of the prepayments otherwise required under the cash sweep. As of September 30, 2017, the amount of our aggregate excess cash flow was approximately $8.5 million.  If our revenues and expenses for the third quarter were to remain at such levels, we anticipate that our aggregate excess cash flow would exceed $10 million as early as the fourth quarter of 2017 and excess cash would be payable under the cash sweep during the fourth quarter of 2017.conditions.

In the future, we may require capital to fund acquisitions or to improve or support our ongoing operations and debt service, and growth andstructure, particularly in light of economic conditions resulting from the ongoing COVID-19 pandemic.  We may from time to maintain compliance with our credit facility covenants.time seek to raise additional capital through equity or debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise.  We may also from time to time seek to incur additional debt financing from private or public sector sources, refinance our indebtedness or obtain waivers or modifications to our credit agreements fromto obtain more favorable terms, enhance flexibility in conducting our lenders (whichbusiness, or otherwise.  We may be unavailablealso seek to manage our interest rate exposure through hedging transactions. We may seek to accomplish any of these independently or subject to conditions)in conjunction with one or raise additional capital through selling assets (including vessels), reduce or delay capital expenditures, or pursue strategic

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opportunities and equity or debt offerings.these actions.  However, if market conditions are unfavorable, we may be unable to accomplish any of the foregoing on acceptable terms or at all.

Dividends

We are currently prohibited from paying dividends under certain ofentered into the $495 Million Credit Facility on May 31, 2018, which was initially used to refinance our facilities other than limited dividend amounts attributable to wholly-owned, non-recourse subsidiaries that meet certain criteria under ourprior credit facilities.  The longest such restriction is in effect until December 31, 2020.  Following December 31, 2020, the amount of dividends we may pay is generally limited based on the amount of our unrestricted cash and cash equivalents as compared to the minimum liquidity amount in effect from time to time underfacilities: the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities on June 5, 2018 and originally allowed borrowings of up to $460 million. On February 28, 2019, we entered into an amendment to the repayment$495 Million Credit Facility that provides for an additional tranche of at least $25up to $35 million to finance a

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portion of the acquisitions, installations, and related costs for exhaust cleaning systems (or “scrubbers”) for 17 of the Company’s Capesize vessels. On June 5, 2020, we entered into an amendment to the $495 Million Credit Facility to extend the period that collateral vessels can be sold or disposed of without prepayment of the loan if a replacement vessel or vessels meeting certain requirements are included as collateral from 180 days to 360 days. On December 17, 2020, we entered into an amendment to the $495 Million Credit Facility that allowed us to enter into a vessel transaction in which we agreed to acquire three modern Ultramax vessels in exchange for six of our older Handysize vessels.

We entered into the $133 Million Credit Facility on August 14, 2018, which was initially used to finance a portion of the purchase price for the six vessels that were purchased during the third quarter of 2018 and originally allowed borrowings of up to $108 million. On June 11, 2020, we entered into an amendment to the $133 Million Credit Facility that provides us with a $25 million revolving credit facility to be used for general corporate and working capital purposes. As of March 31, 2021, the revolver has been fully repaid. We currently have $19.2 million of availability remaining under the $98revolving credit facility. Refer to Note 7 — Debt in our Condensed Consolidated Financial Statements.

At March 31, 2021, we were in compliance with all financial covenants under the $495 Million Credit facility and the $133 Million Credit Facility.

Dividends

We disclosed on April 19, 2021 that, on management’s recommendation, our Board of directors adopted a new quarterly dividend policy for dividends payable commencing in the first quarter of 2022 in respect of our financial results for the fourth quarter of 2021. Under the new quarterly dividend policy, the amount available for quarterly dividends is to be calculated based on the following formula:

Operating cash flow

Less: Debt repayments

Less: Capital expenditures for drydocking

Less: Reserve

Cash flow distributable as dividends

The amount of dividends payable under the foregoing formula for each quarter of the year will be determined on a quarterly basis.

For purposes of the foregoing calculation, operating cash flow is defined as voyage revenue less voyage expenses, charter hire expenses, vessel operating expenses, general and administrative expenses other than non-cash restricted stock expenses, technical management fees, and interest expense other than non-cash deferred financing costs. Anticipated uses for the reserve include, but are not limited to, vessel acquisitions, debt repayments, and general corporate purposes. In order to set aside funds for these purposes, the reserve will be set on a quarterly basis in the discretion of our Board and is anticipated to be based on future quarterly debt repayments and interest expense.

On May 4, 2021, our Board declared a quarterly dividend of $0.05 per share. Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with applicable law and contractual obligations (including our credit facilities) and our Board’s determination that each declaration and payment is at that time in the best interests of the Company and its shareholders after its review of our financial performance.

In connection with our new dividend policy, we will seek to pay down additional indebtedness under our existing credit facilities and refinance these credit facilities to reduce its breakeven rates and achieve more favorable terms, including to minimize any restrictions on dividend payments. There can be no assurance that we will be able to do so. If we do not refinance its existing credit facilities, dividends under its new quarterly dividend policy will continue to be subject to the terms of our credit facilities, which are described below.

On November 5, 2019, we entered into amendments with our lenders to the dividend covenants of the credit agreements for our $495 Million Credit Facility and our $133 Million Credit Facility. Under the terms of these two

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facilities as so amended, dividends or repurchases of our stock are subject to customary conditions. We may pay dividends or repurchase stock under these facilities to the extent our total cash and cash equivalents are greater than $100 million and 18.75% of our total indebtedness, whichever is higher; if we cannot satisfy this condition, we are subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter, for which purpose the full commitment of the valueup to $35 million of vesselsour new scrubber tranche is assumed to be drawn. As of March 31, 2021, we had unrestricted cash and certain other collateral pledgedcash equivalents of $123.2 million. We have commitments for quarterly amortization payments of $16.3 million under the each of our credit facilities, which reflects the reset of amortization payments under the $495 Million Credit Facility. Therefore, if we do not generate cash flow from operations, we would be unlikely to be able to declare or pay dividends in the future under the terms of our existing credit facilities, except to the amountextent of permissible dividends from net income.

The declaration and payment of any dividend or any stock repurchase is subject to the loan outstanding under such facility.  In addition, under the $98 Million Credit Facility, dividends may only be paid outdiscretion of excess cash flow of Genco and its subsidiaries (as defined such facility).    Moreover, we would make dividend payments to our shareholders only if our Board of Directors. Our Board of Directors actingand management continue to closely monitor market developments together with the evaluation of our quarterly dividend policy in its sole discretion, determines that such payments would be in our best interest and in compliance with relevant legal and contractual requirements.the current market environment. The principal business factors that our Board of Directors wouldexpects to consider when determining the timing and amount of dividend payments would beor stock repurchases include our earnings, financial condition, and cash requirements at the time. Marshall Islands law generally prohibits the declaration and payment of dividends or stock repurchases other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends or stock repurchases while a company is insolvent or would be rendered insolvent by the payment of such a dividend.dividend or such a stock repurchase. Heightened economic uncertainty and the potential for renewed drybulk market weakness as a result of the COVID-19 pandemic and related economic conditions may result in our suspension, reduction, or termination of future quarterly dividends.

U.S. Federal Income Tax Treatment of Dividends

U.S. Holders

For purposes of this discussion, the term "U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, (i) an individual U.S. citizen or resident, (ii) a corporation that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or any other U.S. entity taxable as a corporation, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (x) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (y) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership, or an entity treated for U.S. federal income tax purposes as a partnership, such as a limited liability company, holds common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. If you are a partner in such a partnership holding our common stock, you are encouraged to consult your tax advisor. A beneficial owner of our common stock (other than a partnership) that is not a U.S. Holder is referred to below as a "Non-U.S. Holder."

Subject to the discussion of passive foreign investment company (PFIC) status on pages 33 – 34 in the 2020 10-K, any distributions made by us to a U.S. Holder with respect to our common shares generally will constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of those earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in our common shares (determined on a share-by-share basis), and thereafter as capital gain. U.S. Holders that own at least 10% of our shares may be able to claim a dividends-received-deduction and should consult their tax advisors.

Dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate, or a "non-corporate U.S. Holder," will generally be treated as "qualified dividend income" that is taxable to such non-corporate U.S. Holder at preferential tax rates, provided that (1) our common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we have been, are, or will be); (3) the non-corporate U.S. Holder's holding period of our common shares includes more than 60 days in the 121-day period beginning 60 days before the date on which our common shares becomes ex-dividend; and

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(4) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. A non-corporate U.S. Holder will be able to take qualified dividend income into account in determining its deductible investment interest (which is generally limited to its net investment income) only if it elects to do so; in such case, the dividend will be taxed at ordinary income rates. Non-corporate U.S. Holders also may be required to pay a 3.8% surtax on all or part of such holder's "net investment income," which includes, among other items, dividends on our shares, subject to certain limitations and exceptions. Investors are encouraged to consult their own tax advisors regarding the effect, if any, of this surtax on their ownership of our shares.

Amounts taxable as dividends generally will be treated as passive income from sources outside the U.S. However, if (a) we are 50% or more owned, by vote or value, by U.S. Holders and (b) at least 10% of our earnings and profits are attributable to sources within the U.S., then for foreign tax credit purposes, a portion of our dividends would be treated as derived from sources within the U.S. With respect to any dividend paid for any taxable year, the U.S. source ratio of our dividends for foreign tax credit purposes would be equal to the portion of our earnings and profits from sources within the U.S. for such taxable year divided by the total amount of our earnings and profits for such taxable year. The rules related to U.S. foreign tax credits are complex and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available.

 

Cash FlowSpecial rules may apply to any "extraordinary dividend" — generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder's adjusted basis (or fair market value in certain circumstances) in a share of our common shares — paid by us. If we pay an "extraordinary dividend" on our common shares that is treated as "qualified dividend income", then any loss derived by a non-corporate U.S. Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.

Tax Consequences if We Are a Passive Foreign Investment Company

As discussed in “U.S. tax authorities could treat us as a ‘passive foreign investment company,’ which could have adverse U.S. federal income tax consequences to U.S. shareholders” in Item 1.A Risk Factors in our 2020 10-K, a foreign corporation generally will be treated as a PFIC for U.S. federal income tax purposes if, after applying certain look through rules, either (1) at least 75% of its gross income for any taxable year consists of “passive income” or (2) at least 50% of the average value or adjusted bases of its assets (determined on a quarterly basis) produce or are held for the production of passive income, i.e., “passive assets.”  As discussed above, we do not believe that our past or existing operations would cause, or would have caused, us to be deemed a PFIC with respect to any taxable year.  No assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC.  Moreover, there can be no assurance that we will not become a PFIC in any future taxable year because the PFIC test is an annual test, there are uncertainties in the application of the PFIC rules, and although we intend to manage our business so as to avoid PFIC status to the extent consistent with our other business goals, there could be changes in the nature and extent of our operations in future taxable years.

If we were to be treated as a PFIC for any taxable year in which a U.S. Holder owns shares of our common stock (and regardless of whether we remain a PFIC for subsequent taxable years), the tax consequences to such a U.S. holder upon the receipt of distributions in respect of such shares that are treated as “excess distributions” would differ from those described above. In general, an excess distribution is the amount of distributions received during a taxable year that exceed 125% of the average amount of distributions received by a U.S. Holder in respect of the common shares during the preceding three taxable years, or if shorter, during the U.S. Holder’s holding period prior to the taxable year of the distribution. The distributions that are excess distributions would be allocated ratably over the U.S. Holder’s holding period for the common shares. The amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income. The amount allocated to each of the other taxable years would be subject to tax at the highest marginal rate in effect for the U.S. Holder for that taxable year, and an interest charge for the deemed deferral benefit would be imposed on the resulting tax allocated to such other taxable years. The tax liability with respect to the amount allocated to taxable years prior to the year of the distribution cannot be offset by net operating losses. As an alternative to such tax treatment, a U.S. Holder may make a “qualified electing fund” election or “mark to market” election, to the extent available, in which event different rules would apply.  The U.S. federal income tax consequences to a U.S. Holder if we were to be classified as a PFIC are complex. A U.S. Holder

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should consult with his or her own advisor with regard to those consequences, as well as with regard to whether he or she is eligible to and should make either of the elections described above.

Non-U.S. Holders

Non-U.S. Holders generally will not be subject to U.S. federal income tax on dividends received from us on our common shares unless the income is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (“effectively connected income”) (and, if an applicable income tax treaty so provides, the dividends are attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.).  Effectively connected income (or, if an income tax treaty applies, income attributable to a permanent establishment maintained in the U.S.) generally will be subject to regular U.S. federal income tax in the same manner discussed above relating to taxation of U.S. Holders. In addition, earnings and profits of a corporate Non-U.S. Holder that are attributable to such income, as determined after allowance for certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty. Non-U.S. Holders may be subject to tax in jurisdictions other than the United States on dividends received from us on our common shares.

 

Dividends paid on our common shares to a non-corporate U.S. Holder may be subject to U.S. federal backup withholding tax if the non-corporate U.S. Holder:

fails to provide us with an accurate taxpayer identification number;
is notified by the IRS that they have become subject to backup withholding because they previously failed to report all interest and dividends required to be shown on their federal income tax returns; or
fails to comply with applicable certification requirements

A holder that is not a U.S. Holder or a partnership may be subject to U.S. federal backup withholding with respect to such dividends unless the holder certifies that it is a non-U.S. person, under penalties of perjury, or otherwise establishes an exemption therefrom.  Backup withholding tax is not an additional tax. Holders generally may obtain a refund of any amounts withheld under backup withholding rules that exceed their income tax liability by timely filing a refund claim with the IRS.

You are encouraged to consult your own tax advisor concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local, or foreign law from the payment of dividends on our common stock.

Cash Flow

Net cash provided by operating activities for the ninethree months ended September 30, 2017March 31, 2021 was $4.4$13.5 million as compared to net cash used in operating activities of $4.0 million for the ninethree months ended September 30, 2016 of $45.9 million.  IncludedMarch 31, 2020. This increase in the net loss during the nine months ended September 30, 2017 and 2016 are $22.0 million and $72.0 million of non-cash impairment charges, respectively. Also included in the net loss during the nine months ended September 30, 2017 and 2016 are $3.5 million and $14.5 million, respectively, of non-cash amortization of nonvested stock compensation related to the Company’s equity incentive plans. Therecash provided by operating activities was also a gain on sale of vessels in the amount of $7.7 million due to the sale of five vessels and paid in kind interest of $4.6 million related to the $400 Million Credit Facility during the nine months ended September 30, 2017. Depreciation and amortization expense for the nine months ended September 30, 2017 decreased by $4.0 million primarily due to the operation of fewerhigher rates achieved by our minor bulk vessels, during the nine months ended September 30, 2017changes in working capital, as well as the revaluation of ten of our vessels to their estimated net realizable value during the first half of 2016. Additionally, the fluctuationa decrease in prepaid expenses and other current assets decreased by $11.1 million due to the timing of prepaid payments made, a portion of which includes the hull and machinery insurance claims for repairs of the Genco Tiger and Baltic Lion.  Lastly, there was a $5.7 million increase in deferred drydocking costs incurred because there were more vessels that completed drydocking during the nine months ended September 30, 2017 as compared to the same period during 2016.  This was offset by an increase in the fluctuation in accounts payable and accrued expenses of $6.2 million due to the timing payments.related expenditures.

Net cash provided by investing activities was $18.1 million during the ninethree months ended September 30, 2017 as compared to $5.1March 31, 2021 and 2020 was $20.0 million during the nine months ended September 30, 2016.  The increase isand $5.6 million, respectively. This fluctuation was primarily due to a  $13.6 millionan increase in thenet proceeds from the sale of five vessels during the nine months ended September 30, 2017first quarter of 2021 as compared to the scrappingfirst quarter of one vessel2020, as well as a decrease in scrubber related expenditures. 

Net cash used in financing activities during the ninethree months ended September 30, 2016. Additionally, thereMarch 31, 2021 and 2020 was a $3.1$49.1 million decrease in depositsand $14.3 million, respectively.  The increase was primarily due to the $21.2 million repayment of restricted cashthe revolver under the $133 Million Credit Facility during the nine months ended September 30, 2017 primarilyfirst quarter of 2021. Additionally, this increase was due to the $11.3 million drawdown on the $495 Million Credit Facility during the first quarter of 2020, as a resultwell as an $8.8 million increase in debt repayments under the $495 Million Credit Facility during the first quarter of 2021 as compared to the releasefirst quarter of restricted cash for required capital expenditures for our vessels.

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2020. These increases were partially offset by a $6.4 million decrease in the payment of $3.9 million for the proceeds from the sale of available-for-sale securities for the nine months ended September 30, 2016. 

Net cash used in financing activities was $3.5 million and $40.3 milliondividends during the nine months ended September 30, 2017 and 2016, respectively.  Net cash used in financing activitiesfirst quarter of $3.5 million for2021 as compared to the nine months ended September 30, 2017 consisted primarilyfirst quarter of 2020.

Credit Facilities

We entered into the following:  $1.1 million payment of Series A Preferred Stock issuance costs; $2.1 million repayment of debt under the 2014 Term Loan Facilities; and $0.3 million repayment of debt under the $400 Million Credit Facility.  Net cash used in financing activities of $40.3 million for the nine months ended

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September 30, 2016 consisted primarily of the following: $15.2 million repayment of debt under the $253 Million Term Loan Facility, $9.0 million repayment of debt under the $148$133 Million Credit Facility $5.8 million repaymenton August 14, 2018, which was initially used to finance a portion of debt under the $100 Million Term Loan Facility, $4.9 million repaymentpurchase price for the six vessels that were purchased during the third quarter of debt under2018. On June 11, 2020, we entered into an amendment to the 2015 Revolving Credit Facility, $2.1 million repayment of debt under the $44 Million Term Loan Facility, $2.1 million repayment of debt under the 2014 Term Loan Facilities; and $1.1 million repayment of debt under the $22 Million Term Loan Facility.  On November 15, 2016, the $400$133 Million Credit Facility refinanced the following sixwhich provided us with a $25 million revolving credit facilities: the $253 Million Term Loan Facility, the $148 Million Credit Facility, the $100 Million Term Loan Facility, the 2015 Revolving Credit Facility, the $44 Million Term Loan Facilityfacility to be used for general corporate and the $22 Million Term Loan Facility.

Credit Facilities

Refer to the 2016 10-K for a summary and description of our outstanding credit facilities, including the underlying financial and non-financial covenants, which are incorporated herein by reference.  On November 10, 2016,working capital purposes. Additionally, we entered into the $400$495 Million Credit Facility on May 31, 2018, which was initially used to refinance our prior credit facilities. On February 28, 2019, we entered into an amendment to the $495 Million Credit Facility, which refinancedprovides for an additional tranche of up to $35 million to finance a portion of the followingacquisitions, installations, and related costs for exhaust cleaning systems (or “scrubbers”) for 17 of our Capesize vessels. On June 5, 2020, we entered into an amendment to the $495 Million Credit Facility to extend the period that collateral vessels can be sold or disposed of without prepayment of the loan if a replacement vessel or vessels meeting certain requirements are included as collateral from 180 days to 360 days. On December 17, 2020, we entered into an amendment to the $495 Million Credit Facility that allowed us to enter into a vessel transaction in which we agreed to acquire three modern Ultramax vessels in exchange for six of our credit facilities on November 15, 2016: the $100 Million Term Loan Facility, the $253 Million Term Loan Facility, the 2015 Revolving Credit Facility, the $44 Million Term Loan Facility, the $148 Million Credit Facility and the $22 Million Term Loan Facility.older Handysize vessels.

Refer to Note 8 —Debt in our Condensed Consolidated Financial Statements for information regarding agreements and waivers that were entered into, in addition to the terms and fees associated with those agreements.

At September 30, 2017, we believed we were in compliance with all of the financial covenants under the $400 Million Credit Facility, the Restated $98 Million Credit Facility and the 2014 Term Loan Facilities.

Interest Rate Swap and Cap Agreements, Forward Freight Agreements and Currency Swap Agreements

At September 30, 2017March 31, 2021, we had three interest rate cap agreements to manage interest costs and the risk associated with changing interest rates. Such agreements cap the borrowing rate on our variable debt to provide a hedge against the risk of rising rates. At March 31, 2021, the total notional principal amount of the interest rate cap agreements is $200.0 million. At December 31, 2016,2020, we did not have any material interest rate cap or interest rate swap agreements.

Refer to the table in Note 8 — Derivative instruments of our Condensed Consolidated Financial Statements which summarizes the interest rate cap agreements in place as of March 31, 2021.

As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates. In determining the fair value of interest rate derivatives, we would consider the creditworthiness of both the counterparty and ourselves immaterial. Valuations prior to any adjustments for credit risk would be validated by comparison with counterparty valuations. Amounts would not and should not be identical due to the different modeling assumptions. Any material differences would be investigated.

As part of our business strategy, we may enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage our exposure to the charter market risks relating to the deployment of our existing fleet of vessels.  These arrangements may include future contracts, or commitments to perform in the future a shipping service between ship owners, charterers and traders.  Generally, these arrangements would bind us and each counterparty in the arrangement to buy or sell a specified tonnage freighting commitment “forward” at an agreed time and price and for a particular route.  Upon settlement, if the contracted charter rate is less than the average of the rates (as reported by an identified index) for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate multiplied by the number of days in the specific period.  Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum.  Although FFAs can be entered into for a variety of purposes, including for hedging, as an option, for trading or for arbitrage, if we decided to enter into FFAs, our objective would be to hedge and manage market risks as part of our commercial management. It is not currently our intention to enter into FFAs to generate a stream of income independent of the revenues we derive from the operation of our fleet of vessels.  If we determine to enter into FFAs, we may reduce our exposure to any declines in our results from operations due to weak market conditions or downturns, but may also limit our ability to benefit economically during periods of strong demand in the market.  We have not entered into any FFAs as of September 30, 2017March 31, 2021 and December 31, 2016.

Contractual Obligations

The following table sets forth our contractual obligations and their scheduled maturity dates as of September 30, 2017.  The table incorporates the employment agreement entered into in September 2007 with our Chief Executive Officer and President, John C. Wobensmith, which was amended on March 23, 2017.  The interest and borrowing fees and scheduled credit agreement payments below reflect the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities, as well as other fees associated with the facilities.  For the interest and scheduled credit agreement payments for the $400 Million Credit Facility, we have assumed that we will elect that 1.50% of the interest expense will be paid in-kind (“PIK interest”) through December 31, 2018, of which will be payable on the2020.

6444


maturity date of the facility, November 15, 2021. Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements for further information regarding the terms of the aforementioned credit facilities.  The following table also incorporates the future lease payments associated with the lease for our current space.  Refer to Note 16 — Commitments and Contingencies in our Condensed Consolidated Financial Statements for further information regarding the terms of our current lease agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Less Than

    

One to

    

Three to

    

 

 

 

 

 

 

 

 

One

 

Three

 

Five

 

More than

 

 

 

Total

 

Year (1)

 

Years

 

Years

 

Five Years

 

 

 

(U.S. dollars in thousands)

 

Credit Agreements

    

$

534,341

    

$

2,213

    

$

56,365

    

$

461,269

    

$

14,494

 

Interest and borrowing fees

 

 

96,867

 

 

5,802

 

 

50,461

 

 

39,442

 

 

1,162

 

Executive employment agreement

 

 

631

 

 

164

 

 

467

 

 

 —

 

 

 —

 

Office leases

 

 

16,775

 

 

269

 

 

3,146

 

 

4,460

 

 

8,900

 

Totals

 

$

648,614

 

$

8,448

 

$

110,439

 

$

505,171

 

$

24,556

 


(1)

Represents the three-month period ending December 31, 2017.

Interest expense has been estimated using 1.34% plus the applicable margin of 3.75% for the $400 Million Credit Facility, 6.125% for the $98 Million Credit Facility and 2.50% for the 2014 Term Loan Facilities.

Capital Expenditures

We make capital expenditures from time to time in connection with our vessel acquisitions. OurAfter the anticipated sale of one Supramax vessel and the anticipated acquisition of one Ultramax vessel, our fleet currently consistswill consist of 6040 drybulk vessels, including 1317 Capesize drybulk carriers, six Panamax drybulk carriers, fourten Ultramax drybulk carriers 21and thirteen Supramax drybulk carriers, one Handymax drybulk carriers and 15 Handysize drybulk carriers.

As previously announced, we have initiatedimplemented a fuel efficiency upgrade program for certain of our vessels. We believe this program willvessels in an effort to generate considerable fuel savings going forward and increase the future earnings potential for these vessels. Twenty-two of our vessels are outfitted with energy saving devices which are meant to reduce the fuel consumption of these vessels. The upgrades have been successfully installed on 16 of our vessels, which completed their respective planned drydockings during 2014 and 2015.  We did not install fuel efficiency upgrades on any vessels during 2016.  During the second quarter of 2017 we installed the fuel efficiency upgrade on the Genco London for approximately $0.2 million during its planned drydocking. previous drydockings.

Under U.S. Federal law and 33 CFR, Part 151, Subpart D, U.S. approved ballast water treatment systemsBWTS will be required to be installed in all vessels at the first out of water drydocking after January 1, 2016 if these vessels are to discharge ballast water inside 12 nautical miles of the coast of the U.S. U.S. authorities did not approve ballast water treatment systems until December 2016. Therefore, the U.S. Coast Guard (“USCG”) has granted us extensions for our vessels with 2016 drydocking deadlines until January 1, 2018; however, an alternative management system (“AMS”) may be installed in lieu. For example, in February 2015, the USCG added Bawat to the list of ballast water treatment systems that received AMS acceptance. An AMS is valid for five years from the date of required compliance with ballast water discharge standards, by which time it must be replaced by an approved system unless the AMS itself achieves approval. Furthermore, we received extensions for vessels drydocking in 2016 whichthat allowed for further extensions to the vessels’ next scheduled drydockings in year 2021.  Additionally, for our vessels that were scheduled to drydock in 2017 and 2018, the USCG has granted an extension that enables us to defer installation to the next scheduled out of water drydocking.  Any newbuilding vessels that we acquire will have a USCG approved system or at least an AMS installed when the vessel is being built.

 

In addition, on September 8, 2016, the Ballast Water Management (“BWM “)BWM”) Convention was ratified and had an original effective date of September 8, 2017.  However, on July 7, 2017, the effective date of the BWM Convention was extended two years to September 8, 2019.2019 for existing ships.  This will require vessels to have ballast water treatment systemsa BWTS installed to coincide with the vessels’ next International Oil Pollution Prevention Certificate (“IOPP”) renewal survey after September 8, 2019.  In order for a vessel to trade in U.S. waters, it must be compliant with the installation date as required by the USCG as outlined above. 

 

65


2018, we have entered into agreements for the purchase of BWTS for 36 of our vessels.  The cost of these systems will vary based on the size and specifications of each vessel and whether the systems will be installed in China.  Based on the contractual purchase price of the vessel,BWTS and the estimated installation fees, the Company estimates the cost of the systems to be $1.0approximately $0.9 million for Capesize, $0.8 million for Panamax, $0.8$0.6 million for Supramax $0.7 million for Handymax and $0.7$0.5 million for Handysize vessels. TheseThe BWTS will be installed during a vessel’s scheduled drydocking and these costs will be capitalized and depreciated over the remainder of the life of the vessel, assumingvessel.  During the systemyears ended December 31, 2020 and 2019, we completed the Company installs becomes approved by bothinstallation of BWTS on nine and 17 of our vessels, respectively.  There were no BWTS installations completed during the International Maritime Organization (“IMO”)first quarter of 2021. Eight of these vessels have since been sold. We anticipate that we will complete the installation of BWTS on 5 vessels during 2021 and five vessels during 2022. We intend to fund the remaining BWTS purchase price and installation fees using cash on hand.  

Under maritime regulations that went into effect January 1, 2020, our vessels were required to reduce sulfur emissions, for which the principal solutions are the use of scrubbers or buying fuel with low sulfur content.  We have completed the installation of scrubbers on our 17 Capesize vessels, 16 of which were completed as of December 31, 2019 and the USCG. These amounts wouldlast one of which was completed on January 17, 2020. The remainder of our vessels are consuming VLSFO.  The costs for the scrubber equipment and installation will be in additioncapitalized and depreciated over the remainder of the life of the vessel.  This does not include any lost revenue associated with offhire days due to the amounts budgetedinstallation of the scrubbers.  During February 2019, we entered into an amendment to our $495 Million Credit Facility for drydocking below.an additional tranche of up to $35 million to cover a portion of the expenses to the acquisition and installation of scrubbers on our 17 Capesize vessels.  We have funded the remainder of the costs with cash on hand.  

45

In addition to acquisitions that we may undertake in future periods, we will incur additional expenditures due to special surveys and drydockings for our fleet.  Through March 31, 2021, we have paid $42.8 million in cash installments towards our scrubber program and have drawn down $32.8 million under the scrubber tranche under our $495 Million Credit Facility.  

We estimate our drydocking costs, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, BWTS costs, and scheduled off-hire days for our fleet through 20182022 to be:

 

 

 

 

 

 

 

Year

    

Estimated Drydocking Cost

    

Estimated Off-hire Days

 

 

 

(U.S. dollars in millions)

 

 

 

 

 

 

 

 

2017 (October 1 - December 31, 2017)

 

$

0.9

 

20

 

2018

 

$

3.4

 

80

 

Year

    

Estimated Drydocking 
Cost (1)

Estimated BWTS
Cost (2)

    

Estimated Off-hire 
Days (3)

 

(U.S. dollars in millions)

 

Remainder of 2021

$

7.4

$

3.2

170

2022

$

7.5

$

4.0

185

The costs reflected are estimates based on drydocking our vessels in China. Actual costs will vary based on various factors, including where the drydockings are actually performed. We expect to fund these costs with cash from operations.on hand. These costs do not include drydock expense items that are reflected in vessel operating expenses or potential costs associated with the installation of ballast water treatment systems and fuel efficiency upgrades as noted above.expenses.

Actual length of drydocking will vary based on the condition of the vessel, yard schedules and other factors. Higher repairs and maintenance expense during drydocking for vessels which are over 15 years old typically result in a higher number of off-hire days depending on the condition of the vessel.

During the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, we incurred a total of $7.7$0.9 million and $2.0$2.8 million of drydocking costs, respectively, excluding costs incurred during drydocking that were capitalized to vessel assets or vessel equipment.

Fourteen of our vesselsOne vessel completed drydockingsits drydocking during the ninethree months ended September 30, 2017.March 31, 2021. We estimate that oneeight of our vessels will be drydocked during the remainder of 20172021 and fourseven of our vessels will be drydocked during 2018.2022.

As of January 17, 2020, we completed the installation of scrubbers on our 17 Capesize vessels. 

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Inflation

Inflation has only a moderate effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, general and administrative, and financing costs.

CRITICAL ACCOUNTING POLICIES

There have been no changes or updates to theour critical accounting policies as disclosed in the 20162020 10-K.

66


Vessels and Depreciation

We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. We depreciate our drybulk vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from the date of

46

initial delivery from the shipyard. Depreciation is based on cost less the estimated residual scrap value of $310/lwt based on the 15-year average scrap value of steel. An increase in the residual value of the vessels will decrease the annual depreciation charge over the remaining useful life of the vessels. Similarly, an increase in the useful life of a drybulk vessel would also decrease the annual depreciation charge. Comparatively, a decrease in the useful life of a drybulk vessel or in its residual value would have the effect of increasing the annual depreciation charge. However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, we will adjust the vessel’s useful life to end at the date such regulations preclude such vessel’s further commercial use.

The carrying value of each of our vessels does not represent the fair market value of such vessel or the amount we could obtain if we were to sell any of our vessels, which could be more or less. Under U.S. GAAP, we would not record a loss if the fair market value of a vessel (excluding its charter) is below our carrying value unless and until we determine to sell that vessel or the vessel is impaired as discussed in the 20162020 10-K.  Excluding the three Bourbon vessels we resold immediately upon delivery to MEP at our cost, we have sold thirteen of our vessels since our inception and realized a profit in each instance, with the exception of the Genco Marine which was scrapped on May 17, 2016.  Additionally, we incurred a $53.8 million loss from the forfeiture of our deposit and related interest when we determined to cancel an acquisition of six drybulk newbuildings in November 2008.

During the three and nine months ended September 30, 2017,March 31, 2020, we recorded losses of $18.7$112.8 million and $22.0 million, respectively, related to the impairment of vessel assets.  There was $18.7 million ofwere no impairment expenselosses recorded during the three and nine months ended September 30, 2017March 31, 2021. During the three months ended March 31, 2020, we recorded impairment for fiveten of our vessels;Handysize vessels (the Genco Avra, the Genco Beauty,Bay, the Genco Explorer,Mare, the Genco Knight,Ocean, the Genco ProgressSpirit, the Baltic Breeze, the Baltic Cove, the Baltic Fox, the Baltic Hare and the Baltic Wind) and four of our Supramax vessels (the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Vigour.  On August 4, 2017, the Board of Directors determined to dispose of these vessels at times and on terms to be determined in the future.  As such, the future undiscounted cash flows did not exceed the net book value of these vessels and the vessel values were adjusted to their respective fair market values which resulted in an impairment loss.  Additionally, during the nine months ended September 30, 2017, a $3.3 million impairment loss was recorded for the Genco Surprise  at June 30, 2017 when we determined that the future undiscounted cash flows did not exceed the net book value for the Genco Surprise. Therefore, we adjusted the value of the Genco Surprise to its fair market value which resulted in an impairment loss of $3.3 million.Warrior). Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial StatementsStatement for further information.

Duringinformation regarding the three and nine months ended September 30, 2016, we recorded losses of $0 and $69.3 million, respectively, related to the impairment of vessel assets.  There was $67.6 million of impairment expense recorded during the nine monthsthree month period ended September 30, 2016 for nine of our vessels, the Genco Acheron, Genco Carrier, Genco Leader, Genco Pioneer, Genco Prosperity, Genco Reliance, Genco Success, Genco Sugar, and Genco Wisdom, for which we had determined it was more likely than not would be scrapped pursuant to the terms of the Commitment Letter that we entered into on June 8, 2016.  These vessels have been subsequently sold during the fourth quarter of 2016 and the first half of 2017.  Additionally, during the nine months ended September 30, 2016, a $1.7 million impairment loss was recorded for the Genco Marine when we had determined that it was more likely than not that the vessel would be scrapped.  On April 5, 2016, the Board of Directors unanimously approved scrapping the Genco Marine, and it was sold to a demolition yard and scrapped on May 17, 2016.  Refer to Note 2 — Summary of Significant Accounting Policies in our Condensed Consolidated Financial Statements for further information which describes how we determined that these vessel assets were impaired.    March 31, 2020.

Pursuant to our credit facilities, we regularly submit to the lenderslenders’ valuations of our vessels on an individual charter free basis in order to evidence our compliance with the collateral maintenance covenants under our credit facilities. Such a valuation is not necessarily the same as the amount any vessel may bring upon sale, which may be more or less, and should not be relied upon as such. We were in compliance with the collateral maintenance covenantscovenant under our $400 Million Credit Facility, $98$495 Million Credit Facility and the 2014 Term Loan Facilities$133 Million Credit Facility as of September 30, 2017.  Refer to Note 8 — Debt in our Condensed Consolidated Financial Statements for further details.March 31, 2021. We obtained

67


valuations for all of the vessels in our fleet pursuant to the terms of the credit facilities.  For unencumbered vessels, we utilized$495 Million Credit Facility and the June 30, 2016 vessel valuations at December 31, 2016 as these vessels were impaired as of June 30, 2016 and vessels valuations were not obtained since.$133 Million Credit Facility. In the chart below, we list each of our vessels, the year it was built, the year we acquired it, and its carrying value at September 30, 2017March 31, 2021 and December 31, 2016.2020. Vessels have been grouped according to their collateralized status as of September 30, 2017.  March 31, 2021 and does not include any vessels held for sale or held for exchange. The carrying value of the Genco Surprise, Genco Beauty, Genco Explorer, Genco Knight, Genco Progressour thirteen and Genco Vigour at September 30, 2017fifteen Supramax vessels that were not held for sale as of March 31, 2021 and the carrying value of the Genco Carrier, Genco Prosperity, Genco Reliance, Genco Success and Genco Wisdom at December 31, 20162020, respectively, reflect the impairment loss recorded for these vessels.during the year ended December 31, 2020.

At September 30, 2017,As of March 31, 2021, the vessel valuations of all of our vessels for covenant compliance purposes under our credit facilities as of the most recent compliance testing date were lower than their carrying values at September 30, 2017,March 31, 2021, with the exception of our 13 Supramax vessels that were impaired during the year ended December 31, 2020, the Baltic Lion, the Genco Tiger and the sixthree Ultramax vessels that were written down to their fair market valueacquired during the nine months ended September 30, 2017 as noted above (Genco Surprise,fourth quarter of 2020 (the Genco Beauty,Magic) and the first quarter of 2021 (the Genco Explorer,Vigilant and the Genco Knight, Genco Progress and Genco Vigour)Freedom). AtAs of December 31, 2016,2020, the vessel valuations of all of our vessels for covenant compliance purposes under our credit facilitiesfacility as of the most recent compliance testing date were lower than their carrying values at December 31, 2016,2020, with the exception of nine of the five aforementionedSupramax vessels (Genco Carrier, Genco Prosperity, Genco Reliance, Genco Success and Genco Wisdom) whichthat were unencumbered atimpaired as of December 31, 20162020 (the Genco Aquitaine, the Genco Ardennes, the Genco Auvergne, the Genco Bourgogne, the Genco Brittany, the Genco Hunter, the Genco Languedoc, the Genco Pyrenees and were written down to their estimated net realizable value asthe Genco Rhone) and the Genco Magic that was acquired during the fourth quarter of June 30, 2016 when it was determined that the vessel assets were impaired. 2020.

The amount by which the carrying value at September 30, 2017March 31, 2021 of all of the vessels in our fleet, with the exception of the eight18 aforementioned vessels, exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $4.1$0.6 million to $14.0$13.0 million per vessel, and $404.8$159.9 million on an aggregate fleet basis. The amount by which the carrying value at December 31, 20162020 of all of the vessels in our fleet, with the exception of the fiveten aforementioned vessels, exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual vessel basis, from $4.3$0 million to $23.2$18.3 million per vessel, and $678.9$260.8 million on an aggregate fleet basis. The average amount by which the carrying value of our vessels exceeded the valuation of such vessels for covenant compliance purposes was $7.8$7.6 million at September 30, 2017March 31, 2021 and $11.3$9.0 million as of December 31, 2016.2020. However, neither

47

such valuation nor the carrying value in the table below reflects the value of long-term time charters, if any, related to some of our vessels.

Carrying Value (U.S.

 

dollars in

 

thousands) as of

 

    

    

Year

    

March 31, 

    

December 31, 

 

Vessels

    

Year Built

    

Acquired

    

2021

    

2020

 

$495 Million Credit Facility

Genco Commodus

 

2009

 

2009

$

36,820

$

37,356

Genco Maximus

 

2009

 

2009

 

36,824

 

37,355

Genco Claudius

2010

 

2009

 

38,540

 

39,091

Baltic Bear

 

2010

 

2010

38,283

38,813

Baltic Wolf

 

2010

 

2010

 

38,531

 

39,050

Baltic Lion

 

2009

 

2013

 

30,462

 

30,811

Genco Tiger

2010

2013

29,184

29,020

Baltic Scorpion

 

2015

 

2015

 

24,258

 

24,520

Baltic Mantis

 

2015

 

2015

 

24,505

 

24,768

Genco Hunter

 

2007

 

2007

 

8,136

 

8,250

Genco Warrior

 

2005

 

2007

 

7,295

 

7,422

Genco Aquitaine

 

2009

 

2010

 

8,898

 

9,000

Genco Ardennes

 

2009

 

2010

 

8,899

 

9,000

Genco Auvergne

 

2009

 

2010

 

8,900

 

9,000

Genco Bourgogne

 

2010

 

2010

 

9,639

 

9,750

Genco Brittany

 

2010

 

2010

 

9,640

 

9,750

Genco Languedoc

 

2010

 

2010

 

9,640

 

9,750

Genco Lorraine

 

2009

 

2010

 

 

7,751

Baltic Leopard

 

2009

 

2009

 

 

7,840

Genco Picardy

 

2005

 

2010

 

7,755

 

7,890

Genco Provence

 

2004

 

2010

 

6,813

 

6,930

Genco Pyrenees

 

2010

 

2010

 

9,642

 

9,750

Genco Rhone

 

2011

 

2011

 

10,776

 

10,625

Genco Constantine

 

2008

 

2008

 

33,624

 

34,179

Genco Augustus

 

2007

 

2007

 

31,502

 

32,049

Genco London

 

2007

 

2007

 

31,086

 

31,587

Genco Titus

 

2007

 

2007

 

31,796

 

32,306

Genco Tiberius

 

2007

 

2007

 

31,448

 

32,007

Genco Hadrian

 

2008

 

2008

 

34,121

 

34,633

Genco Predator

 

2005

 

2007

 

7,680

 

7,816

Baltic Hornet

 

2014

 

2014

 

22,800

 

23,055

Baltic Wasp

 

2015

 

2015

 

23,053

 

23,308

Genco Magic

2014

2020

14,764

14,683

Genco Vigilant

2015

2021

15,748

Genco Freedom

2015

2021

15,733

TOTAL

$

696,795

$

689,115

$133 Million Credit Facility

Genco Endeavour

2015

2018

 

43,611

 

44,069

Genco Resolute

2015

2018

 

43,880

 

44,320

Genco Columbia

2016

2018

 

25,289

 

25,553

Genco Weatherly

2014

2018

 

20,510

 

20,740

Genco Liberty

2016

2018

 

47,217

 

47,676

Genco Defender

2016

2018

 

47,166

 

47,641

$

227,673

$

229,999

6848


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Value (U.S.

 

 

 

 

 

 

 

dollars in

 

 

 

 

 

 

 

thousands) as of

 

 

    

 

    

Year

    

September 30, 

    

December 31, 

 

Vessels

    

Year Built

    

Acquired

    

2017

    

2016

 

Unencumbered

 

 

 

 

 

 

 

 

 

 

 

Genco Carrier

 

1998

 

2004

 

$

 —

 

 

1,614

 

Genco Prosperity

 

1997

 

2005

 

 

 —

 

 

1,614

 

Genco Reliance

 

1999

 

2004

 

 

 —

 

 

1,373

 

Genco Success

 

1997

 

2005

 

 

 —

 

 

1,612

 

Genco Wisdom

 

1997

 

2005

 

 

 —

 

 

1,614

 

TOTAL

 

 

 

 

 

$

 —

 

$

7,827

 

 

 

 

 

 

 

 

 

 

 

 

 

$400 Million Credit Facility

 

 

 

 

 

 

 

 

 

 

 

Baltic Bear

 

2010

 

2010

 

 

42,136

 

 

43,595

 

Baltic Lion

 

2009

 

2013

 

 

32,380

 

 

33,320

 

Baltic Wolf

 

2010

 

2010

 

 

42,263

 

 

43,694

 

Genco Claudius

 

2010

 

2009

 

 

42,721

 

 

44,233

 

Genco Commodus

 

2009

 

2009

 

 

40,684

 

 

42,146

 

Genco Maximus

 

2009

 

2009

 

 

40,730

 

 

42,181

 

Genco Tiger

 

2010

 

2013

 

 

30,161

 

 

31,024

 

Genco Raptor

 

2007

 

2008

 

 

17,253

 

 

17,948

 

Genco Surprise

 

1998

 

2006

 

 

5,643

 

 

9,273

 

Genco Thunder

 

2007

 

2008

 

 

17,310

 

 

17,993

 

Baltic Mantis

 

2015

 

2015

 

 

28,234

 

 

29,032

 

Baltic Scorpion

 

2015

 

2015

 

 

27,977

 

 

28,773

 

Baltic Cougar

 

2009

 

2010

 

 

17,925

 

 

18,579

 

Baltic Jaguar

 

2009

 

2010

 

 

17,935

 

 

18,587

 

Baltic Leopard

 

2009

 

2009

 

 

17,902

 

 

18,561

 

Baltic Panther

 

2009

 

2010

 

 

17,911

 

 

18,568

 

Genco Aquitaine

 

2009

 

2010

 

 

18,493

 

 

19,165

 

Genco Ardennes

 

2009

 

2010

 

 

18,510

 

 

19,178

 

Genco Auvergne

 

2009

 

2010

 

 

18,700

 

 

19,368

 

Genco Bourgogne

 

2010

 

2010

 

 

19,581

 

 

20,279

 

Carrying Value (U.S.

 

dollars in

 

thousands) as of

 

    

    

Year

    

March 31, 

    

December 31, 

 

Vessels

    

Year Built

    

Acquired

    

2021

    

2020

 

Consolidated Total

$

924,468

$

919,114

69


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Value (U.S.

 

 

 

 

 

 

 

dollars in

 

 

 

 

 

 

 

thousands) as of

 

 

    

 

    

Year

    

September 30, 

    

December 31, 

 

Vessels

    

Year Built

    

Acquired

    

2017

    

2016

 

Genco Brittany

 

2010

 

2010

 

 

19,598

 

 

20,292

 

Genco Hunter

 

2007

 

2007

 

 

19,626

 

 

20,465

 

Genco Languedoc

 

2010

 

2010

 

 

19,609

 

 

20,302

 

Genco Loire

 

2009

 

2010

 

 

17,871

 

 

18,537

 

Genco Lorraine

 

2009

 

2010

 

 

17,847

 

 

18,519

 

Genco Normandy

 

2007

 

2010

 

 

16,289

 

 

16,945

 

Genco Picardy

 

2005

 

2010

 

 

17,176

 

 

18,036

 

Genco Provence

 

2004

 

2010

 

 

16,137

 

 

16,973

 

Genco Pyrenees

 

2010

 

2010

 

 

19,571

 

 

20,278

 

Genco Rhone

 

2011

 

2011

 

 

20,695

 

 

21,395

 

Genco Warrior

 

2005

 

2007

 

 

17,136

 

 

18,010

 

Genco Muse

 

2001

 

2005

 

 

11,724

 

 

12,512

 

Baltic Breeze

 

2010

 

2010

 

 

18,465

 

 

19,112

 

Baltic Cove

 

2010

 

2010

 

 

18,398

 

 

19,059

 

Baltic Fox

 

2010

 

2013

 

 

17,991

 

 

18,661

 

Baltic Hare

 

2009

 

2013

 

 

16,941

 

 

17,591

 

Baltic Wind

 

2009

 

2010

 

 

17,443

 

 

18,092

 

Genco Avra

 

2011

 

2011

 

 

19,496

 

 

20,164

 

Genco Bay

 

2010

 

2010

 

 

18,396

 

 

19,061

 

Genco Challenger

 

2003

 

2007

 

 

10,574

 

 

11,193

 

Genco Explorer

 

1999

 

2004

 

 

3,952

 

 

7,778

 

Genco Mare

 

2011

 

2011

 

 

19,524

 

 

20,187

 

Genco Ocean

 

2010

 

2010

 

 

18,447

 

 

19,100

 

Genco Progress

 

1999

 

2005

 

 

3,951

 

 

7,761

 

Genco Spirit

 

2011

 

2011

 

 

19,563

 

 

20,216

 

TOTAL

 

 

 

 

 

$

930,869

 

$

975,736

 

 

 

 

 

 

 

 

 

 

 

 

 

$98 Million Credit Facility

 

 

 

 

 

 

 

 

 

 

 

Genco Constantine

 

2008

 

2008

 

 

38,481

 

 

40,020

 

Genco Augustus

 

2007

 

2007

 

 

36,202

 

 

37,741

 

Genco London

 

2007

 

2007

 

 

35,423

 

 

36,572

 

Genco Titus

 

2007

 

2007

 

 

35,540

 

 

36,917

 

Genco Tiberius

 

2007

 

2007

 

 

36,132

 

 

37,663

 

Genco Hadrian

 

2008

 

2008

 

 

38,378

 

 

39,794

 

Genco Knight

 

1999

 

2005

 

 

6,179

 

 

10,144

 

 

 

 

 

 

 

 

 

 

 

 

 

70


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying Value (U.S.

 

 

 

 

 

 

 

dollars in

 

 

 

 

 

 

 

thousands) as of

 

 

    

 

    

Year

    

September 30, 

    

December 31, 

 

Vessels

    

Year Built

    

Acquired

    

2017

    

2016

 

Genco Beauty

 

1999

 

2005

 

 

6,183

 

 

10,234

 

Genco Vigour

 

1999

 

2004

 

 

6,184

 

 

10,255

 

Genco Predator

 

2005

 

2007

 

 

17,155

 

 

18,023

 

Genco Cavalier

 

2007

 

2008

 

 

16,236

 

 

16,905

 

Genco Champion

 

2006

 

2008

 

 

13,397

 

 

14,044

 

Genco Charger

 

2005

 

2007

 

 

12,495

 

 

13,116

 

TOTAL

 

 

 

 

 

$

297,985

 

$

321,428

 

 

 

 

 

 

 

 

 

 

 

 

 

2014 Term Loan Facilities

 

 

 

 

 

 

 

 

 

 

 

Baltic Hornet

 

2014

 

2014

 

 

26,406

 

 

27,178

 

Baltic Wasp

 

2015

 

2015

 

 

26,658

 

 

27,431

 

TOTAL

 

 

 

 

 

$

53,064

 

$

54,609

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Total

 

 

 

 

 

$

1,281,918

 

$

1,359,600

 

If we were to sell a vessel or hold a vessel for sale, and the carrying value of the vessel were to exceed its fair market value, we would record a loss in the amount of the difference. Refer to Note 2 — Summary of Significant Accounting Policies and Note 4 — Vessel Acquisitions and Dispositions in our Condensed Consolidated Financial Statements for information regarding the sale of vessel assets and the classification of the vessel assets held for sale and exchange as of March 31, 2021 and December 31, 2016.2020.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings. We held three interest rate cap agreements as of March 31, 2021 to manage future interest costs and the risk associated with changing interest rates. The total notional amount of the caps at March 31, 2021 is $200.0 million and the caps have specified rates and durations. Refer to Note 8 — Derivative Instruments of our condensed consolidated financial statements, which summarizes the interest rate caps in place as of March 31, 2021.

At September 30, 2017 and December 31, 2016,2020, we did not have any material interest rate cap or interest rate swap agreements to manage interest costs and the risk associated with changing interest rates.

The interest rate cap agreements cap the borrowing rate on our variable debt to provide a hedge against the risk of rising rates.

 

The total asset associated with the caps at March 31, 2021 is $0.6 million, which has been classified as a noncurrent asset on the balance sheet.  As of March 31, 2021, the Company has accumulated other comprehensive income (“AOCI”) of $0.2 million related to the interest rate cap agreements.  At March 31, 2021, $0.2 million of AOCI is expected to be reclassified into income over the next 12 months associated with interest rate derivatives.

We are subject to market risks relating to changes in LIBOR rates because we have significant amounts of floating rate debt outstanding. During the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, we were subject to the following interest rates on the outstanding debt under our credit facilities:

·

$133 Million Credit Facility

$400108 Million Tranche — one-month LIBOR plus 2.50%

$25 Million Tranche — one-month LIBOR plus 3.00%

$495 Million Credit Facility —

$460 Million Tranche – one-month or three-month LIBOR plus 3.75% effective November 14, 2016, when the draw down on this facility was made

3.25%.

·

$9835 Million Credit Facility — three-monthTranche – one-month LIBOR plus 6.125%

2.50%

·

2014 Term Loan Facilities — three-month or six-month LIBOR plus 2.50%

·

2015 Revolving Credit Facility — three-month LIBOR plus a range of 3.40% to 4.25% until November 15, 2016

·

$148 Million Credit Facility — LIBOR plus 3.00% until November 15, 2016

·

$44 Million Term Loan Facility — three-month LIBOR plus 3.35% until November 15, 2016

71


·

$22 Million Term Loan Facility — three-month LIBOR plus 3.35% until November 15, 2016

·

$253 Million Term Loan Facility — three-month or six-month LIBOR plus 3.50% until November 15, 2016

·

$100 Million Term Loan Facility — LIBOR plus 3.50% until November 15, 2016

A 1% increase in LIBOR would result in an increase of $4.0$1.1 million in interest expense for the ninethree months ended September 30, 2017.March 31, 2021.

49

Derivative financial instruments

As part of our business strategy, we may enter into interest rate swapswaps or interest rate cap agreements to manage interest costs and the risk associated with changing interest rates. As of September 30, 2017March 31, 2021, we held three interest rate cap agreements to manage interest costs and the risk associated with changing interest rates. As of December 31, 2016,2020, we did not have any material derivative financial instruments. The total notional amount of the caps at March 31, 2021 is $200.0 million and the caps have specified rates and durations. Refer to Note 8 — Derivative Instruments of our condensed consolidated financial statements which summarizes the interest rate caps in place as of March 31, 2021.

The Company is currently utilizing cash flow hedge accounting for the interest rate cap agreements. The premium paid is recognized in income on a rational basis, and all changes in the value of the caps are deferred in AOCI and are subsequently reclassified into Interest expense in the period when the hedged interest affects earnings. If for any period of time we did not designate the caps for hedge accounting, the change in the value of the interest rate cap agreements prior to designation would be recognized as other (expense) income.

 

Refer to “Interest rate risk” section above for further information regarding interest rate swap agreements.

Currency and exchange rates risk

The majority of transactions in the international shipping industry’s functional currency is theindustry are denominated in U.S. Dollar.Dollars. Virtually all of our revenues and most of our operating costs are in U.S. Dollars. We incur certain operating expenses in currencies other than the U.S. dollar, and the foreign exchange risk associated with these operating expenses is immaterial.

Investments

We held investments in equity securities of Jinhui, which were classified as available for sale (“AFS”) under Accounting Standards Codification 320-10, “Investments — Debt and Equity Securities” (“ASC 320-10”).  Pursuant to guidance in ASC 320-10, changes between our cost basis in these securities and their market value were recognized as an adjustment to their carrying values with an offsetting adjustment to AOCI at each reporting date.  Prior to the sale of our remaining shares of Jinhui during the fourth quarter of 2016, we reviewed the carrying value of such investments on a quarterly basis to determine if there were any indicators of other-than-temporary impairment in accordance with ASC 320-10.  Based on our review as of June 30, 2016, we deemed our investment in Jinhui to be other-than-temporarily impaired due to the duration and severity of the decline in its market value versus its cost basis and the absence of the intent and ability to recover the initial carrying value of the investment.  During the three and nine months ended September 30, 2016, a total loss of $0 and $2.7 million, respectively, has been recorded as impairment of investment in our Condensed Consolidated Statement of Operations.  Refer to Note 5 — Investments in the Condensed Consolidated Financial Statements.

ITEM 4.CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our Chief Executive Officer and President and our Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and President and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

7250


PART II:II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

1A.  RISK FACTORS 

In April 2015, six class action complaints were filedaddition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Supreme Court2020 10-K, which could materially affect our business, financial condition or future results. Below is an update to the risk factor entitled, “The COVID-19 pandemic and measures to contain its spread have impacted the markets in which we operate and could have a material adverse impact on our business and its operations”:

A severe outbreak of COVID-19 in India has placed crew members based in India at risk and led to a number of countries and territories imposing bans on travel from India, including Australia, Canada, France, Israel, Indonesia, Iran, Japan, Kuwait, Oman, Pakistan, Singapore, the State of New York, County of New York.  On May 26, 2015,United Arab Emirates, the six actions were consolidated under the caption In Re Baltic Trading Ltd. Stockholder Litigation, Index No. 651241/2015, and a consolidated class action complaint was filed on June 10, 2015 (the “Consolidated Complaint”).  The Consolidated Complaint is purported to be brought by and on behalf of Baltic Trading’s shareholders and alleges that the then-proposed July 2015 merger did not fairly compensate Baltic Trading’s shareholders and undervalued Baltic Trading.  The Consolidated Complaint names as defendants the Company, Baltic Trading, the individual members of Baltic Trading’s board,United Kingdom, and the Company’s merger subsidiary. The claims generally allege (i) breaches of fiduciary duties of good faith, due care, disclosureUnited States. As a result, we have experienced difficulties with regard to shareholders,crew rotations involving Indian crew members and loyalty, including for failinghave incurred increased costs and deviation to maximize shareholder value,conduct crew rotations and (ii) aiding and abetting those breaches. Among other relief, the complaints seek an injunction against the merger, declaratory judgments that the individual defendants breached fiduciary duties, rescission of the merger agreement, and unspecified damages.may continue to do so.

On July 9, 2015, plaintiffs in that action moved to enjoin the merger vote, scheduled to take place on July 17, 2015.  The motion was thereafter fully briefed and argued on July 15, 2015.  The motion to enjoin the vote was denied on July 15, 2015.  Plaintiffs sought an emergency injunction and temporary restraining order from the New York State Appellate Division, First Department the following day, on July 16, 2015.  The Appellate Division denied the request, and the vote, and subsequent merger, proceeded as scheduled on July 17, 2015.  Plaintiffs thereafter withdrew that appeal.

On June 30, 2015, defendants had moved to dismiss the Consolidated Complaint in its entirety.  Plaintiffs subsequently served an Amended Consolidated Complaint, and defendants directed their motion to dismiss to that amended complaint.  The motion to dismiss was granted and the Amended Consolidated Complaint was dismissed with prejudice on August 29, 2016.

On September 29, 2016, plaintiffs filed a Notice of Appeal with the Supreme Court of the State of New York, County of New York.

On June 28, 2017, plaintiffs moved the Appellate Division to extend the time to perfect the appeal to October 2, 2017.  The motion was granted, and on that date, plaintiffs subsequently filed an appellate brief and record.  Briefing on the appeal is continuing and is presently scheduled to be completed for the Appellate Division’s February 2018 term.

ITEM 6. EXHIBITS

The Exhibit Index attached to this report is incorporated into this Item 16 by reference.

51

73


3.9

Amendment to Amended and Restated By-Laws, dated June 4, 2018.(8)

3.10

Second Amendment to Amended and Restated By-Laws, dated July 15, 2020.(6)

3.11

Third Amendment to Amended and Restated By-laws, dated January 11, 2021(9)

4.1

Form of Specimen Stock Certificate of Genco Shipping & Trading Limited.(1)

4.2

Form of Specimen Warrant Certificate of Genco Shipping & Trading Limited.(1)

10.1

Letter Agreement by and among Genco Shipping & Trading Limited, Centerbridge Partners L.P., and the Investors named therein, dated March 22, 2021.(10)

31.1

Certification of Chief Executive Officer and President pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.(*)

31.2

Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.(*)

32.1

Certification of Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350.(*)

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.(*)

101

The following materials from Genco Shipping & Trading Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017,March 31, 2021 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2021 and December 31, 20162020 (Unaudited), (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 (Unaudited), (iii) Condensed Consolidated Statements of Comprehensive LossIncome (Loss) for the three and nine months ended September 30, 2017March 31, 2021 and 20162020 (Unaudited), (iv) Condensed Consolidated Statements of Equity for the ninethree months ended September 30, 2017March 31, 2021 and 20162020 (Unaudited), (v) Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2021 and 20162020 (Unaudited), and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).(*)

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


52

(*)

Filed with this report.

(1)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2014.

(2)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 17, 20152015.

(3)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on April 15, 2016.

(4)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 7, 2016.

(4)(5)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on January 4, 2017.

(5)(6)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2020.

(7)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on November 15, 2016.

(8)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on June 5, 2018.

(9)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on January 11, 2021.

(10)

Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on March 22, 2021.

7453


SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GENCO SHIPPING & TRADING LIMITED

DATE: November 7, 2017May 5, 2021

By:

/s/ John C. Wobensmith

John C. Wobensmith

Chief Executive Officer and President

(Principal Executive Officer)

DATE: November 7, 2017May 5, 2021

By:

/s/ Apostolos Zafolias

Apostolos Zafolias

Chief Financial Officer

(Principal Financial Officer)

7554