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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
 
20549
FORM
20-F
(Mark One)
 
 
REGISTRATION STATEMENT
 
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended
December 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report:
Not applicable
 
For the transition period from ___________________________
 
to ___________________________
 
Commission file number
001-32458
DIANA SHIPPING INC.
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
 
(
Exact name of Registrant as specified in its charter)
Diana Shipping Inc.
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
(Translation of Registrant’s
 
name into English)
 
Republic of the Marshall Islands
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
 
(Jurisdiction of incorporation or organization)
Pendelis 16
,
175 64 Palaio Faliro
,
Athens
,
Greece
 
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
 
(Address of principal executive offices)
Mr. Ioannis Zafirakis
Pendelis 16, 175 64 Palaio Faliro,
 
Athens, Greece
 
Tel:
 
+
30
-
210
-
9470-100
, Fax: +
30-210-9470-101
E-mail:
izafirakis@dianashippinginc.com
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
 
(Name, Telephone, E-mail and/or
 
Facsimile number and Address of Company Contact Person)
 
Securities registered or to be
 
registered pursuant
 
to Section 12(b) of the Act.
 
 
 
 
 
 
 
 
 
 
 
 
 
Title of each class
Trading
Symbol(s)
Name of each exchange on which
registered
Common Stock, $0.01 par value including the Preferred Stock Purchase Rights
DSX
New York Stock Exchange
8.875% Series B Cumulative Redeemable Perpetual Preferred Shares, $0.01 par value
DSXPRB
New York Stock Exchange
Warrants to Purchase Common Stock, Expiring on or about December 14, 2026
DSX WS
New York Stock Exchange
 
Securities registered or to be registered pursuant
 
to Section 12(g) of the Act.
 
None
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
 
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section
 
15(d) of the Act.
 
None
____________________________________________________________________________________________________________________________________________________________________________________________________________
 
 
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock
 
as of the close of the period covered by
the annual report.
 
As of December 31, 2023, there were
113,065,725
 
shares of the registrant’s
 
common stock outstanding
Indicate by check mark if the registrant is a well-known seasoned issuer,
 
as defined in Rule 405 of the Securities Act.
 
Yes
No
If this report is an annual or transition report, indicate by check mark if the registrant
 
is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.
 
Yes
No
 
Note – Checking the box above will not relieve any registrant
 
required to file reports pursuant to Section 13 or
 
15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.
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
 
every Interactive Data File required to
 
be submitted 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 such files).
Yes
 
No
Indicate by check mark whether the registrant is a large accelerated
 
filer, an accelerated filer,
 
a non-accelerated filer,
 
or an emerging
growth company.
 
See definition of “large accelerated filer”,
 
“accelerated filer” and "emerging growth company" in Rule 12b-2 of the
Exchange Act.
 
Large accelerated filer
Accelerated filer
 
Non-accelerated filer
 
 
Emerging growth company
 
If an emerging growth company that prepares its financial statements
 
in accordance with U.S. GAAP,
 
indicate by check mark if the
registrant has elected not to use the extended transition period for
 
complying with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act. □
 
† The term “new or revised financial accounting standard” refers
 
to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
 
Indicate by check mark whether the registrant has filed a report on and attestation
 
to its management’s assessment of the
effectiveness of its internal control
 
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate
 
by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to
 
previously issued financial statements.
 
Indicate by check mark whether any of those error corrections are restatements
 
that required a recovery analysis of incentive-
based compensation received by any of the registrant’s
 
executive officers during the relevant recovery
 
period pursuant to §240.10D-
1(b).
 
Indicate by check mark which basis of accounting the registrant has used to
 
prepare the financial statements included in this
filing:
 
U.S. GAAP
 
 
International Financial Reporting Standards as issued
 
Other
 
 
by the International Accounting Standards Board □
 
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement
 
item the registrant has
elected to follow.
 
Item 17
 
Item 18
 
If this is an annual report, indicate by check mark whether the registrant is a shell company
 
(as defined in Rule 12b-2 of the Exchange Act).
 
Yes
No
 
(APPLICABLE ONLY TO
 
ISSUERS INVOLVED IN BANKRUPTCY
 
PROCEEDINGS DURING THE PAST FIVE YEARS)
 
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
5
FORWARD-LOOKING STATEMENTS
 
Matters
 
discussed
 
in
 
this
 
annual
 
report
 
and
 
the
 
documents
 
incorporated
 
by
 
reference
 
may
 
constitute
forward-looking
 
statements.
 
The
 
Private
 
Securities
 
Litigation
 
Reform
 
Act
 
of
 
1995
 
provides
 
safe
 
harbor
protections
 
for
 
forward-looking
 
statements
 
in
 
order
 
to
 
encourage
 
companies
 
to
 
provide
 
prospective
information about
 
their business.
 
Forward-looking statements
 
include, but
 
are not
 
limited to,
 
statements
concerning plans, objectives, goals,
 
strategies, future events
 
or performance, underlying
 
assumptions and
other statements, which are other than statements of historical facts.
Diana Shipping
 
Inc., or
 
the Company, desires
 
to take
 
advantage of
 
the safe
 
harbor provisions
 
of the
 
Private
Securities Litigation Reform Act of
 
1995 and is including this
 
cautionary statement in connection with this
safe harbor legislation.
 
This document and any other written or oral statements made by the Company
 
or
on its behalf may include forward-looking statements, which reflect its current views with respect to future
events and financial performance, and
 
are not intended to
 
give any assurance as to
 
future results. When
used in this document, the words “believe”,
 
“anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,”
“potential,”
 
“will,”
 
“may,”
 
“should,”
 
“expect,”
 
“targets,”
 
“likely,”
 
“would,”
 
“could,”
 
“seeks,”
 
“continue,”
“possible,”
 
“might,”
 
“pending,”
 
and
 
similar
 
expressions,
 
terms
 
or
 
phrases
 
may
 
identify
 
forward-looking
statements.
Please note in this annual report, “we”,
 
“us”, “our” and “the Company” all refer to
 
Diana Shipping Inc. and
its subsidiaries, unless otherwise indicated.
The forward-looking statements in
 
this document are based
 
upon various assumptions,
 
many of which are
based,
 
in
 
turn,
 
upon
 
further
 
assumptions,
 
including
 
without
 
limitation,
 
management’s
 
examination
 
of
historical
 
operating
 
trends,
 
data
 
contained
 
in
 
its
 
records
 
and
 
other
 
data
 
available
 
from
 
third
parties.
 
Although the
 
Company believes that
 
these assumptions
 
were reasonable when
 
made, because
these assumptions are inherently
 
subject to significant uncertainties and
 
contingencies which are difficult
or impossible to predict and are beyond its control, the
 
Company cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections.
Such
 
statements
 
reflect
 
the
 
Company’s
 
current
 
views
 
with
 
respect
 
to
 
future
 
events
 
and
 
are
 
subject
 
to
certain risks,
 
uncertainties and
 
assumptions. Should
 
one or
 
more of
 
these risks
 
or uncertainties
 
materialize,
or should underlying assumptions prove
 
incorrect, actual results may vary
 
materially from those described
herein as anticipated, believed,
 
estimated, expected or
 
intended. The Company
 
is making investors
 
aware
that such forward-looking
 
statements, because
 
they relate to
 
future events, are
 
by their very
 
nature subject
to many important factors that could cause actual results
 
to differ materially from those contemplated.
In addition
 
to these important
 
factors and
 
matters discussed
 
elsewhere herein,
 
including under
 
the heading
"Item
 
3.
 
Key
 
Information—D.
 
Risk
 
Factors,"
 
and
 
in
 
the
 
documents
 
incorporated
 
by
 
reference
 
herein,
important factors that, in
 
its view, could cause actual results
 
to differ materially from
 
those discussed in
 
the
forward-looking statements include, but are not limited to:
 
the strength of world economies;
fluctuations in currencies,
 
interest rates, and inflationary pressures;
general market conditions, including fluctuations in charter hire rates
 
and vessel values;
changes in demand in the dry-bulk shipping industry;
changes
 
in
 
the
 
supply
 
of
 
vessels,
 
including
 
when
 
caused
 
by
 
new
 
newbuilding
 
vessel
 
orders
 
or
changes to or terminations of existing orders, and vessel scrapping
 
levels;
6
changes
 
in
 
the
 
Company's operating
 
expenses, including
 
bunker
 
prices, crew
 
costs,
 
drydocking
and insurance costs;
the Company’s future operating or financial results;
availability
 
of
 
financing
 
and
 
refinancing
 
and
 
changes
 
to
 
the
 
Company’s
 
financial
 
condition
 
and
liquidity, including the Company’s
 
ability to pay
 
amounts that
 
it owes and
 
obtain additional
 
financing
to fund capital expenditures,
 
acquisitions and other
 
general corporate activities
 
and the Company’s
ability to
 
obtain financing
 
and comply
 
with the
 
restrictions and
 
other covenants in
 
the Company’s
financing arrangements;
changes in governmental rules and regulations or actions taken by
 
regulatory authorities;
potential liability from pending or future litigation;
compliance with governmental, tax, environmental and safety regulation, any non-compliance with
the U.S.
 
Foreign Corrupt Practices
 
Act of
 
1977 (FCPA)
 
or other
 
applicable regulations relating
 
to
bribery;
the failure of counter-parties to fully perform their contracts with the Company;
the Company’s dependence on key personnel;
adequacy of insurance coverage;
the volatility of the price of the Company’s common shares;
the Company’s incorporation under the
 
laws of the Marshall
 
Islands and the different rights
 
to relief
that may be available compared to other countries, including the United
 
States;
general domestic and international political conditions or labor disruptions;
the impact of port or canal congestion or disruptions;
any continuing
 
impacts of
 
coronavirus (COVID-19)
 
or other
 
global or
 
regional pandemics
 
and its
impact in the dry-bulk shipping industry;
potential physical
 
disruption of
 
shipping routes
 
due to
 
accidents, climate-related
 
reasons (acute
 
and
chronic), political events, public health threats, international
 
hostilities and instability, piracy or acts
by terrorists; and
other
 
important factors
 
described from
 
time to
 
time
 
in the
 
reports filed
 
by the
 
Company with
 
the
Securities and
 
Exchange Commission,
 
or the
 
SEC, including
 
those factors
 
discussed in
 
“Item 3.
Key
 
Information-
 
D.
 
Risk
 
Factors” in
 
this
 
Annual Report
 
on
 
Form
 
20-F
 
and
 
the
 
New
 
York
 
Stock
Exchange, or the NYSE.
This report may
 
contain assumptions,
 
expectations, projections,
 
intentions and
 
beliefs about future
 
events.
These statements are intended as forward-looking statements.
 
The Company may also from time
 
to time
make forward-
 
looking statements
 
in other
 
documents and
 
reports that
 
are filed
 
with or
 
submitted to
 
the
Commission, in
 
other information sent
 
to the
 
Company’s security
 
holders, and in
 
other written materials.
The Company
 
also cautions
 
that assumptions,
 
expectations, projections,
 
intentions and
 
beliefs about
 
future
events
 
may
 
and
 
often
 
do
 
vary
 
from
 
actual
 
results
 
and
 
the
 
differences
 
can
 
be
 
material.
 
The
 
Company
7
undertakes no
 
obligation to
 
publicly update
 
or revise
 
any forward-looking
 
statement contained
 
in this
 
report,
whether as a result of new information, future events or otherwise,
 
except as required by law.
8
PART I
Item 1.
 
Identity of Directors, Senior Management and Advisers
 
Not Applicable.
Item 2.
 
Offer Statistics and Expected Timetable
Not Applicable.
Item 3.
 
Key Information
A.
 
[Reserved]
 
B.
 
Capitalization and Indebtedness
 
Not Applicable.
 
C.
 
Reasons for the Offer and Use of Proceeds
 
Not Applicable.
D.
 
Risk Factors
Summary of Risk Factors
The below bullets summarize the principal risk factors related
 
to an investment in our Company.
 
Industry Specific Risk Factors
Charter hire rates
 
for dry bulk
 
vessels are
 
volatile and
 
have fluctuated
 
significantly in
 
the
past years, which may adversely affect
 
our earnings, revenues and profitability and our
ability to comply with our loan covenants.
The current
 
state of
 
the global
 
financial markets
 
and economic
 
conditions may
 
adversely
impact
 
our
 
ability
 
to
 
obtain
 
additional
 
financing
 
on
 
acceptable
 
terms
 
and
 
otherwise
negatively impact our business.
Our operating results may be affected by seasonal fluctuations.
An increase in the price of fuel, or bunkers, may adversely affect our
 
profits.
We
 
are
 
subject
 
to
 
complex laws
 
and
 
regulations, including
 
environmental regulations
that can adversely affect the cost, manner or feasibility of doing business.
9
Increased inspection
 
procedures, tighter
 
import
 
and export
 
controls and
 
new
 
security
regulations could increase costs and disrupt our business.
Operational risks and damage to our vessels could adversely
 
impact our performance.
 
If
 
our
 
vessels
 
call
 
on
 
ports
 
located
 
in
 
countries
 
or
 
territories
 
that
 
are
 
the
 
subject
 
of
sanctions
 
or
 
embargoes
 
imposed
 
by
 
the
 
U.S.
 
government,
 
the
 
European
 
Union,
 
the
United
 
Nations,
 
or
 
other
 
governmental
 
authorities,
 
it
 
could
 
lead
 
to
 
monetary
 
fines
 
or
penalties and may adversely affect our reputation and the market for
 
our securities.
We
 
conduct business
 
in China,
 
where the
 
legal system
 
is not
 
fully developed
 
and has
inherent uncertainties that could limit the legal protections available
 
to us.
Failure
 
to
 
comply
 
with
 
the
 
U.S.
 
Foreign
 
Corrupt
 
Practices
 
Act
 
could
 
result
 
in
 
fines,
criminal penalties and an adverse effect on our business.
Changing laws and
 
evolving reporting requirements
 
could have an
 
adverse effect on
 
our
business.
Company Specific Risk Factors
The market
 
values of
 
our vessels could
 
decline, which could
 
limit the
 
amount of
 
funds
that we can borrow and could trigger breaches of certain financial covenants contained
in
 
our
 
loan
 
facilities,
 
which
 
could
 
adversely
 
affect
 
our
 
operating
 
results,
 
and
 
we
 
may
incur a loss if we sell vessels following a decline in their market values.
We
 
charter
 
some
 
of
 
our
 
vessels
 
on
 
short-term
 
time
 
charters
 
in
 
a
 
volatile
 
shipping
industry and a decline
 
in charter hire rates
 
could affect our results
 
of operations and
 
our
ability to pay dividends.
Rising crew costs could adversely affect our results of operations.
Our investment in
 
Diana Wilhelmsen Management
 
Limited may expose us
 
to additional
risks.
A cyber-attack could materially disrupt our business.
Climate change
 
and greenhouse
 
gas restrictions
 
may adversely
 
impact our
 
operations
and markets.
Increasing scrutiny and
 
changing expectations
 
from investors,
 
lenders and other
 
market
participants
 
with
 
respect
 
to
 
our
 
ESG
 
policies
 
may
 
impose
 
additional
 
costs
 
on
 
us
 
or
expose us to additional risks.
Our earnings may be
 
adversely affected if we
 
are not able to
 
take advantage of favorable
charter rates.
Investment in derivative instruments such as forward
 
freight agreements could result in
losses.
We cannot
 
assure you that
 
we will be
 
able to borrow
 
amounts under loan
 
facilities and
restrictive covenants in our loan facilities impose financial and
 
other restrictions on us.
10
We
 
are
 
subject
 
to
 
certain
 
risks
 
with
 
respect
 
to
 
our
 
counterparties
 
on
 
contracts,
 
and
failure of such
 
counterparties to meet
 
their obligations could
 
cause us to
 
suffer losses
or otherwise adversely affect our business.
In the highly competitive
 
international shipping industry, we
 
may not be able
 
to compete
for charters with new entrants or established companies with greater resources, and as
a result, we may be unable to employ our vessels profitably.
We may be unable
 
to attract and
 
retain key management
 
personnel and other
 
employees
in
 
the
 
shipping
 
industry,
 
which
 
may
 
negatively
 
impact
 
the
 
effectiveness
 
of
 
our
management and results of operations.
Technological
 
innovation and
 
quality and
 
efficiency requirements
 
from our
 
customers
could reduce our charter hire income and the value of our vessels.
We
 
may
 
not
 
have
 
adequate
 
insurance
 
to
 
compensate
 
us
 
if
 
we
 
lose
 
our
 
vessels
 
or
 
to
compensate third parties.
Our vessels
 
may suffer
 
damage and we
 
may face
 
unexpected drydocking costs,
 
which
could adversely affect our cash flow and financial condition.
The aging of our fleet may result in increased operating costs in the future, which could
adversely affect our earnings.
We
 
are exposed
 
to U.S.
 
dollar and
 
foreign currency
 
fluctuations and
 
devaluations that
could harm our reported revenue and results of operations.
We
 
depend upon
 
a few
 
significant customers
 
for
 
a large
 
part of
 
our revenues
 
and the
loss of
 
one or
 
more of
 
these customers
 
could adversely
 
affect our
 
financial performance.
We are a holding
 
company, and we depend
 
on the ability
 
of our subsidiaries
 
to distribute
funds to us in order to satisfy our financial obligations.
Because we
 
are organized under
 
the laws
 
of the
 
Marshall Islands, it
 
may be
 
difficult to
serve
 
us
 
with
 
legal
 
process
 
or
 
enforce
 
judgments
 
against
 
us,
 
our
 
directors
 
or
 
our
management.
If we expand our
 
business further, we
 
may need to improve our
 
operating and financial
systems and will need to recruit suitable employees and crew for our
 
vessels.
We may have to pay tax on U.S. source income, which would reduce
 
our earnings.
U.S. federal
 
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.
Risks Relating to Our Common Stock
We cannot assure
 
you that our board
 
of directors will continue
 
to declare dividends on
shares of our common stock in the future.
The market
 
prices and trading
 
volume of our
 
shares of
 
common stock may
 
experience
rapid
 
and
 
substantial
 
price
 
volatility,
 
which
 
could
 
cause
 
purchasers
 
of
 
our
 
common
stock to incur substantial losses.
11
Since we are
 
incorporated in the
 
Marshall Islands,
 
which does not
 
have a well-developed
body
 
of
 
corporate
 
law,
 
you
 
may
 
have
 
more
 
difficulty
 
protecting
 
your
 
interests
 
than
shareholders of a U.S. corporation.
As
 
a
 
Marshall
 
Islands
 
corporation
 
and
 
with
 
some
 
of
 
our
 
subsidiaries
 
being
 
Marshall
Islands
 
entities
 
and
 
also
 
having
 
subsidiaries
 
in
 
other
 
offshore
 
jurisdictions,
 
our
operations may
 
be subject
 
to economic
 
substance requirements,
 
which could
 
impact our
business.
Certain existing shareholders will be able to exert
 
considerable control over matters on
which our shareholders are entitled to vote.
 
Future sales of our
 
common stock could
 
cause the market
 
price of our common
 
stock to
decline.
Our
 
Series
 
B
 
Preferred
 
Shares
 
are
 
senior
 
obligations
 
of
 
ours
 
and
 
rank
 
prior
 
to
 
our
common shares with respect
 
to dividends, distributions
 
and payments upon
 
liquidation,
which could have an adverse effect on the value of our common shares.
Risks Relating to Our Series B Preferred Stock
We may
 
not have sufficient
 
cash from our
 
operations to enable
 
us to pay
 
dividends on
our Series B Preferred
 
Shares following the payment
 
of expenses and
 
the establishment
of any reserves.
Our Series B
 
Preferred Shares are subordinate
 
to our indebtedness, and
 
your interests
could
 
be
 
diluted
 
by
 
the
 
issuance
 
of
 
additional
 
preferred
 
shares,
 
including
 
additional
Series B Preferred Shares, and by other transactions.
We may redeem the Series
 
B Preferred Shares, and you may not
 
be able to reinvest the
redemption price you receive in a similar security.
Risks Relating to Our Outstanding Warrants
 
The issuance of our common stock upon the exercise of our Warrants may depress our
stock price.
Some
 
of
 
the
 
following
 
risks
 
relate
 
principally
 
to
 
the
 
industry
 
in
 
which
 
we
 
operate
 
and
 
our
 
business
 
in
general. Other
 
risks relate
 
principally to
 
the securities
 
market and ownership
 
of our securities,
 
including our
common stock and our Series
 
B Preferred Shares. The
 
occurrence of any of the
 
events described in this
section could
 
significantly and
 
negatively affect
 
our business,
 
financial condition,
 
operating results,
 
cash
available for
 
the payment
 
of dividends
 
on our
 
shares and
 
interest on
 
our loan
 
facilities and
 
Bond, or
 
the
trading price of our securities.
Industry Specific Risk Factors
Charter
 
hire
 
rates
 
for
 
dry
 
bulk
 
vessels
 
are
 
volatile
 
and
 
have
 
fluctuated
 
significantly
 
in
 
the
 
past
years, which
 
may adversely
 
affect our earnings,
 
revenues and
 
profitability and
 
our ability
 
to comply
with our loan covenants.
Substantially all of our revenues
 
are derived from a single
 
market, the dry bulk segment,
 
and therefore our
financial results
 
are subject
 
to
 
cyclicality of
 
the
 
dry bulk
 
shipping industry
 
and any
 
attendant volatility
 
in
12
charter hire
 
rates and profitability. The
 
degree of
 
charter hire
 
rate volatility
 
among different types
 
of dry
 
bulk
vessels has
 
varied widely,
 
and time
 
charter and spot
 
market rates
 
for dry
 
bulk vessel
 
have in
 
the recent
past declined below
 
the operating costs
 
of vessels. When
 
we charter our
 
vessels pursuant
 
to spot or
 
short-
term time
 
charters, we
 
are exposed
 
to changes
 
in spot
 
market and
 
short-term charter
 
rates for
 
dry bulk
carriers and such changes
 
may affect our earnings
 
and the value
 
of our dry
 
bulk carriers at any
 
given time.
We cannot
 
assure you
 
that we
 
will be
 
able to
 
successfully charter
 
our vessels
 
in the
 
future or
 
renew existing
charters at
 
rates sufficient
 
to allow
 
us to
 
meet our
 
obligations
 
or pay
 
any dividends
 
in the
 
future. Fluctuations
in charter rates
 
result from changes
 
in the supply
 
of and demand
 
for vessel capacity
 
and changes in
 
the
supply
 
of
 
and
 
demand
 
for
 
the
 
major
 
commodities
 
carried
 
by
 
water
 
internationally.
 
Because
 
the
 
factors
affecting the supply
 
of and demand
 
for vessels are
 
outside of our
 
control and
 
are unpredictable,
 
the nature,
timing, direction
 
and degree
 
of changes
 
in industry
 
conditions are
 
also unpredictable.
 
A significant
 
decrease
in charter rates would
 
adversely affect our
 
profitability, cash flows and may
 
cause vessel values
 
to decline,
and,
 
as a
 
result, we
 
may have
 
to record
 
an impairment
 
charge in
 
our consolidated
 
financial statements
which could adversely affect our financial results.
In 2023, the period market for dry bulk vessels experienced
 
fluctuations influenced by various factors. Dry
bulk market conditions
 
remained volatile
 
reflecting the
 
impact of
 
war in
 
Ukraine, geopolitical
 
tensions, trade
policies,
 
and
 
environmental
 
regulations.
 
However,
 
there
 
were
 
regional
 
variations
 
in
 
market
 
conditions,
with China's demand
 
recovering and
 
some other
 
areas experiencing
 
stronger demand
 
due to
 
infrastructure
projects or agricultural exports.
 
Panama Canal and Suez
 
Canal disruptions during the
 
year surely affected
market
 
and
 
the
 
longer these
 
issues
 
go
 
on,
 
the
 
more
 
of
 
a
 
market support
 
it
 
will
 
be.
 
The markets
 
rallied
strongly at
 
the end
 
of last
 
year,
 
with the
 
Baltic Capesize
 
index rallying
 
to heights
 
which since
 
2010 was
only exceeded
 
in October
 
2021. The
 
Panamax, Ultramax,
 
Supramax and
 
Handysize indices
 
rallied to
 
levels
which since 2010 was exceeded only during most of 2021 and early 2022. Fundamentals maintain bullish
and can support a positive outlook for 2024 which as always are
 
subject to revisions.
 
Factors that influence demand for dry bulk vessel capacity include:
supply
 
of
 
and
 
demand
 
for
 
energy
 
resources,
 
commodities,
 
and
 
semi-finished
 
and
 
finished
consumer and industrial products;
changes in the exploration or production of
 
energy resources, commodities, and semi-finished
and finished consumer and industrial products;
the location of regional and global exploration, production and manufacturing
 
facilities;
the location
 
of consuming
 
regions for
 
energy resources,
 
commodities, and
 
semi-finished and
finished consumer and industrial products;
the globalization of production and manufacturing;
global and
 
regional economic
 
and political
 
conditions, armed
 
conflicts, including
 
the
 
ongoing
conflicts between Russia and Ukraine and Israel and Hamas, and fluctuations in industrial and
agricultural production;
disruptions and developments in international trade;
changes
 
in
 
seaborne
 
and
 
other
 
transportation
 
patterns,
 
including
 
the
 
distance
 
cargo
 
is
transported by
 
sea for
 
reasons including
 
but not
 
limited to
 
reductions in
 
canal capacities
 
and
geopolitical conflicts and military responses;
international sanctions, embargoes,
 
import and export
 
restrictions, nationalizations, piracy, and
terrorist attacks;
13
legal and regulatory changes including regulations
 
adopted by supranational authorities and/or
industry bodies, such as safety and environmental regulations and
 
requirements;
weather and acts of God and natural disasters;
environmental and other regulatory developments;
currency exchange rates, specifically versus USD; and
economic slowdowns caused by public health pandemics.
Demand for
 
our dry
 
bulk oceangoing
 
vessels is
 
dependent upon
 
economic
 
growth in
 
the world’s
 
economies,
seasonal and regional changes in
 
demand and changes to the
 
capacity of the global dry
 
bulk fleet and the
sources and supply for dry bulk cargo transported by sea. Continued adverse economic, political
 
or social
conditions
 
or
 
other
 
developments
 
could
 
negatively
 
impact
 
charter
 
rates
 
and
 
therefore
 
have
 
a
 
material
adverse effect on our business results, results of operations and ability to pay dividends.
Factors that influence the supply of dry bulk vessel capacity include:
the number of newbuilding orders and deliveries, including
 
slippage in deliveries;
the number of shipyards and ability of shipyards to deliver vessels;
port or canal congestion;
potential disruption,
 
including supply chain
 
disruptions, of
 
shipping routes due
 
to accidents
 
or
political events;
the scrapping of older vessels;
speed of vessel operation;
vessel casualties;
technological advances in vessel design and capacity;
the
 
degree
 
of
 
scrapping
 
or
 
recycling
 
of
 
older
 
vessels,
 
depending,
 
among
 
other
 
things,
 
on
scrapping or recycling rates and international scrapping or recycling
 
regulations;
the price of steel and vessel equipment;
product imbalances (affecting level of trading activity) and developments
 
in international trade;
the number
 
of vessels
 
that are
 
out of
 
service, namely
 
those that
 
are laid-up,
 
drydocked, awaiting
repairs or otherwise not available for hire;
 
availability of financing for new vessels and shipping activity;
changes
 
in
 
international
 
regulations
 
that
 
may
 
effectively
 
cause
 
reductions
 
in
 
the
 
carrying
capacity of vessels or early obsolescence of tonnage; and
14
changes
 
in
 
environmental
 
and
 
other
 
regulations
 
that
 
may
 
limit
 
the
 
useful
 
lives
 
and
 
trading
patterns of vessels.
In
 
addition
 
to
 
the
 
prevailing
 
and
 
anticipated
 
freight
 
rates,
 
factors
 
that
 
affect
 
the
 
rate
 
of
 
newbuilding,
scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices,
costs of
 
bunkers and
 
other operating
 
costs, costs
 
associated with
 
classification society
 
surveys, normal
maintenance and insurance coverage costs,
 
the efficiency and
 
age profile of the
 
existing dry bulk fleet
 
in
the
 
market
 
and
 
government
 
and
 
industry
 
regulation
 
of
 
maritime
 
transportation
 
practices,
 
particularly
environmental
 
protection
 
laws
 
and regulations.
 
These factors
 
influencing the
 
supply
 
of
 
and
 
demand
 
for
shipping capacity are outside of our
 
control, and we may not be able
 
to correctly assess the nature, timing
and degree of changes in industry conditions.
We anticipate that the future demand for our dry bulk carriers will be dependent upon economic growth in
the world’s economies, including China and India, seasonal and regional changes in demand, changes in
the capacity of the global
 
dry bulk carrier fleet
 
and the sources and
 
supply of dry bulk
 
cargo transported by
sea. While there has been a general decrease in new dry bulk carrier ordering
 
since 2014, the capacity of
the global
 
dry bulk
 
carrier fleet
 
could increase
 
and economic
 
growth may
 
not resume
 
in areas
 
that have
experienced
 
a
 
recession
 
or
 
continue
 
in
 
other
 
areas.
 
Adverse
 
economic,
 
political,
 
social
 
or
 
other
developments could have a material adverse effect on our business and operating
 
results.
In
 
addition,
 
the
 
conflict
 
between
 
Israel
 
and
 
Hamas,
 
which
 
began
 
in
 
October
 
2023,
 
has
 
resulted
 
in
 
an
increased
 
number
 
of
 
vessel
 
attacks
 
in
 
the
 
Red
 
Sea.
 
Various
 
shipping
 
companies
 
and/or
 
commercial
managers have indicated that their vessels
 
would avoid crossing the Red Sea
 
and consequently the Suez
Canal,
 
and
 
for
 
the
 
time
 
being
 
divert
 
vessels
 
around
 
southern
 
Africa’s
 
Cape
 
of
 
Good
 
Hope,
 
which
occasionally adds substantial
 
time and cost
 
to East-West voyages.
 
While we are
 
unable to ascertain
 
the
immediate impact of this conflict, any
 
further attacks or piracy attempts, or continued
 
diversion of vessels
from the Suez Canal, may affect our business, financial condition, and results of operations.
The current
 
state of
 
the global
 
financial markets
 
and economic
 
conditions may
 
adversely impact
our ability to obtain additional financing on acceptable terms and otherwise negatively impact our
business.
Global
 
financial
 
markets
 
can
 
be
 
volatile
 
and
 
contraction
 
in
 
available
 
credit
 
may
 
occur
 
as
 
economic
conditions change.
 
In recent
 
years, operating
 
businesses in
 
the global
 
economy have
 
faced
 
weakening
demand for
 
goods and
 
services, deteriorating
 
international liquidity
 
conditions, and
 
declining markets
 
which
lead
 
to
 
a
 
general
 
decline
 
in
 
the
 
willingness
 
of
 
banks
 
and
 
other
 
financial
 
institutions
 
to
 
extend
 
credit,
particularly in
 
the shipping industry. As
 
the shipping industry
 
is highly dependent
 
on the
 
availability of
 
credit
to finance and expand operations, it may be negatively affected by such
 
changes and volatility.
We face risks attendant to changes in economic environments, changes
 
in interest rates, and instability in
the
 
banking
 
and
 
securities
 
markets
 
around
 
the
 
world,
 
among
 
other
 
factors
 
which
 
may
 
have
 
a
 
material
adverse effect on our results
 
of operations and
 
financial condition and
 
may cause the price
 
of our common
shares to
 
decline. As
 
of December
 
31, 2023,
 
we had
 
total outstanding
 
indebtedness of
 
$517.0 million
 
under
our various credit facilities and bond and a further $133.3 million
 
of finance liabilities.
 
Global economic conditions may continue to negatively impact
 
the drybulk shipping industry.
Major market disruptions
 
and adverse changes
 
in market conditions
 
and regulatory climate
 
in China, the
United States, the European Union and
 
worldwide may adversely affect our business
 
or impair our ability
to borrow amounts under credit facilities or any future financial arrangements.
 
Chinese dry bulk imports have accounted
 
for the majority of global dry bulk
 
transportation growth annually
over the
 
last decade.
 
Accordingly,
 
our financial
 
condition and results
 
of operations,
 
as well
 
as our
 
future
15
prospects,
 
would
 
likely
 
be
 
hindered
 
by
 
an
 
economic
 
downturn
 
in
 
any
 
of
 
these
 
countries
 
or
 
geographic
regions. In recent
 
years China and
 
India have been
 
among the world’s
 
fastest growing economies
 
in terms
of gross
 
domestic product.
 
The growth
 
of China’s
 
economy has
 
slowed during
 
2023. A
 
continued
 
economic
slowdown
 
in
 
China
 
or
 
the
 
Asia
 
Pacific
 
region
 
or
 
in
 
India
 
may
 
adversely
 
affect
 
demand
 
for
 
seaborne
transportation of our
 
products and our
 
results of operations.
 
Moreover, any deterioration in the
 
economy of
the United States or the European Union, may further adversely affect economic
 
growth in Asia.
Economic growth is expected to slow, including due to supply-chain disruption, inflationary pressures and
related actions
 
by central
 
banks and
 
geopolitical conditions,
 
with a
 
significant risk
 
of recession
 
in many
parts
 
of
 
the
 
worlds
 
in
 
the
 
near
 
term.
 
In
 
particular,
 
an
 
adverse
 
change
 
in
 
economic
 
conditions
 
affecting
China, Japan, India or Southeast Asia generally could have a negative
 
effect on the drybulk market.
 
The dry bulk carrier charter market has improved but
 
remains significantly below its high in 2008,
which may affect
 
our revenues, earnings and
 
profitability, and our
 
ability to comply with
 
our loan
covenants.
The abrupt and
 
dramatic downturn in the
 
dry bulk charter
 
market until the
 
beginning of 2021,
 
from which
we
 
derive
 
substantially
 
all
 
of
 
our
 
revenues,
 
severely
 
affected
 
the
 
dry
 
bulk
 
shipping
 
industry
 
and
 
our
business. The
 
Baltic Dry
 
Index, or
 
the BDI,
 
a daily
 
average of
 
charter rates
 
for key
 
dry bulk
 
routes published
by the Baltic Exchange Limited, has long been viewed as the main benchmark to monitor the movements
of the dry bulk vessel charter market and the performance of the entire dry bulk shipping market. The BDI
declined
 
94%
 
in
 
2008
 
from
 
a
 
peak
 
of
 
11,793
 
in
 
May
 
2008
 
to
 
a
 
low
 
of
 
663
 
in
 
December 2008
 
and
 
has
remained volatile since then,
 
reaching a record low of
 
290 in February 2016. In
 
2023, the BDI ranged from
a low of 530 to
 
a high of 3,346 and
 
closed at 1,714 on April 2,
 
2024. There can be no
 
assurance that the
dry bulk charter market will not
 
decline further. The
 
decline and volatility in charter rates is
 
due to various
factors,
 
including
 
the
 
lack
 
of
 
trade
 
financing
 
for
 
purchases
 
of
 
commodities
 
carried
 
by
 
sea,
 
which
 
has
resulted in a significant decline in cargo shipments, and the excess supply of iron ore in China, which has
resulted in
 
falling iron
 
ore prices
 
and increased
 
stockpiles in
 
Chinese ports.
 
The decline
 
and volatility
 
in
charter rates in the dry bulk market also affects the value of our dry bulk vessels, which follows the trends
of dry bulk
 
charter rates, and earnings
 
on our charters,
 
and similarly,
 
affects our cash
 
flows, liquidity and
compliance with the covenants contained in our loan agreements.
Any
 
decline
 
in
 
the
 
dry
 
bulk
 
carrier
 
charter
 
market
 
may
 
have
 
additional
 
adverse
 
consequences
 
for
 
our
industry,
 
including
 
an
 
absence
 
of
 
financing
 
for
 
vessels,
 
no
 
active
 
secondhand
 
market
 
for
 
the
 
sale
 
of
vessels,
 
charterers
 
seeking
 
to
 
renegotiate
 
the
 
rates
 
for
 
existing
 
time
 
charters,
 
and
 
widespread
 
loan
covenant defaults in the dry bulk shipping
 
industry. Accordingly, the value of our common shares could be
substantially reduced or eliminated.
Worldwide inflationary
 
pressures could
 
negatively impact
 
our results
 
of operations
 
and cash
 
flows.
The
 
previous
 
year
 
worldwide
 
economies
 
experienced
 
inflationary
 
pressures,
 
with
 
price
 
increases
 
seen
across
 
many
 
sectors
 
globally.
 
For
 
example,
 
the
 
U.S.
 
consumer
 
price
 
index,
 
an
 
inflation
 
gauge
 
that
measures costs across dozens of items was 6.5% in December 2022, driven in large
 
part by increases in
energy costs.
 
In December
 
2023, the
 
U.S. consumer
 
price index
 
dropped to
 
3.4% and
 
it remains
 
to
 
be
seen
 
whether
 
inflationary
 
pressures
 
will
 
increase
 
again
 
and
 
to
 
what
 
degree.
 
In
 
the
 
event
 
that
 
inflation
becomes a significant
 
factor in the
 
global economy
 
generally and in
 
the shipping
 
industry more specifically,
inflationary pressures would result in increased operating, voyage
 
and administrative costs. Furthermore,
the effects of
 
inflation on the supply and demand of
 
the products we transport could alter
 
demand for our
services. Interventions
 
in the
 
economy by
 
central banks
 
in response
 
to inflationary
 
pressures may
 
slow
down economic
 
activity,
 
including by
 
altering consumer
 
purchasing habits
 
and reducing
 
demand for
 
the
commodities and products we carry, and cause a reduction in trade. As a result, the volumes of goods
 
we
deliver and/or charter
 
rates for our
 
vessels may be
 
affected. Any of
 
these factors could
 
have an adverse
effect on our business, financial condition, cash flows and operating results.
16
Risks
 
associated
 
with
 
operating
 
ocean-going
 
vessels
 
could
 
affect
 
our
 
business
 
and
 
reputation,
which could have a material adverse effect on our results of operations and
 
financial condition.
The operation of ocean-going vessels carries inherent risks. These
 
risks include the possibility of:
marine disaster;
acts of God;
terrorism;
environmental accidents;
cargo and property losses or damage;
business
 
interruptions
 
caused
 
by
 
mechanical
 
failures,
 
human
 
error,
 
war,
 
political
 
action
 
in
various countries, labor strikes or adverse weather conditions; and
piracy or robbery.
In
 
addition,
 
international
 
shipping
 
is
 
subject
 
to
 
various
 
security
 
and
 
customs
 
inspection
 
and
 
related
procedures
 
in
 
countries of
 
origin
 
and
 
destination and
 
trans-shipment points.
 
Inspection
 
procedures can
result in the
 
seizure of the
 
cargo and/or our
 
vessels, delays in
 
the loading, offloading
 
or delivery and
 
the
levying
 
of
 
customs
 
duties,
 
fines
 
or
 
other
 
penalties
 
against
 
us.
 
It
 
is
 
possible
 
that
 
changes
 
to
 
inspection
procedures
 
could
 
impose
 
additional
 
financial
 
and
 
legal
 
obligations
 
on
 
us.
 
Furthermore,
 
changes
 
to
inspection procedures
 
could also
 
impose additional
 
costs and
 
obligations on
 
our customers
 
and may,
 
in
certain
 
cases,
 
render
 
the
 
shipment
 
of
 
certain
 
types
 
of
 
cargo
 
uneconomical
 
or
 
impractical.
 
Any
 
such
changes or developments may
 
have a material adverse
 
effect on our business, results
 
of operations, cash
flows, financial condition and available cash.
Our
 
operations outside
 
the
 
United States
 
expose us
 
to
 
global risks,
 
such as
 
political instability,
terrorist
 
or
 
other
 
attacks,
 
war,
 
international
 
hostilities
 
and
 
global
 
public
 
health
 
concerns,
 
which
may affect the seaborne transportation industry and adversely affect our business.
We are an international
 
shipping company and
 
primarily conduct most
 
of our operations
 
outside the United
States, and our business,
 
results of operations, cash
 
flows, financial condition and
 
ability to pay dividends,
if any, in the future may be adversely affected by changing economic, political and government conditions
in
 
the
 
countries and
 
regions where
 
our
 
vessels are
 
employed or
 
registered. Moreover,
 
we
 
operate in
 
a
sector of the economy that is likely to be adversely impacted by the effects of political
 
conflicts.
 
Currently, the world economy faces a number of challenges, including trade tensions between the
United States and China,
 
stabilizing growth in China, continuing threat
 
of terrorist attacks around
the world,
 
continuing instability and
 
conflicts and other
 
ongoing occurrences in
 
the Middle
 
East,
Ukraine, and in other geographic areas and countries, economic
 
sanctions restrictions.
 
In the
 
past, political
 
instability has
 
also resulted
 
in attacks
 
on vessels,
 
mining of
 
waterways and
 
other efforts
to disrupt international shipping, particularly in the Arabian Gulf region and most recently in the Black Sea
in connection with the
 
recent conflicts between
 
Russia and Ukraine,
 
and in the Red
 
Sea in connection
 
with
the conflict between Israel
 
and Hamas. Acts
 
of terrorism and piracy have
 
also affected vessels trading
 
in
regions
 
such
 
as
 
the
 
South
 
China
 
Sea
 
and
 
the
 
Gulf
 
of
 
Aden
 
off
 
the
 
coast
 
of
 
Somalia.
 
Any
 
of
 
these
occurrences could have
 
a material
 
adverse impact on
 
our future
 
performance, results of
 
operation, cash
flows and financial position.
17
Beginning
 
in
 
February
 
of
 
2022,
 
President
 
Biden
 
and
 
several
 
European
 
leaders
 
announced
 
various
economic sanctions against Russia in connection with the aforementioned conflicts in the Ukraine region,
which may adversely impact our business.
The United
 
States Department
 
of the
 
Treasury’s
 
Office
 
of Foreign
 
Assets Control
 
(“OFAC”)
 
administers
and
 
enforces
 
multiple
 
authorities
 
under
 
which
 
sanctions
 
have
 
been
 
imposed
 
on
 
Russia,
 
including:
 
the
Russian
 
Harmful
 
Foreign
 
Activities
 
sanctions
 
program,
 
established
 
by
 
the
 
Russia-related
 
national
emergency declared in
 
Executive Order (E.O.)
 
14024 and subsequently
 
expanded and addressed
 
through
certain
 
additional
 
authorities,
 
and
 
the
 
Ukraine-Russia-related
 
sanctions
 
program,
 
established
 
with
 
the
Ukraine-related national emergency
 
declared in E.O.
 
13660 and subsequently
 
expanded and addressed
through
 
certain additional
 
authorities.
 
The
 
United
 
States
 
has
 
also
 
issued
 
several
 
Executive Orders
 
that
prohibit
 
certain
 
transactions
 
related
 
to
 
Russia,
 
including
 
the
 
importation
 
of
 
certain
 
energy
 
products
 
of
Russian Federation origin
 
(including crude oil,
 
petroleum, petroleum fuels,
 
oils, liquefied
 
natural gas and
coal), and all new investments in Russian by U.S. persons, among
 
other prohibitions and export controls.
Furthermore, the United
 
States has also
 
prohibited a variety
 
of specified services related
 
to the maritime
transport
 
of
 
Russian
 
Federation
 
origin
 
crude
 
oil
 
and
 
petroleum
 
products,
 
including
 
trading/commodities
brokering, financing,
 
shipping, insurance
 
(including reinsurance
 
and protection
 
and indemnity),
 
flagging,
and customs brokering. These prohibitions
 
took effect on
 
December 5, 2022 with respect
 
to the maritime
transport
 
of
 
crude
 
oil
 
and
 
February
 
5,
 
2023
 
with
 
respect
 
to
 
the
 
maritime
 
transport
 
of
 
other
 
petroleum
products.
 
An exception exists
 
to permit such
 
services when the
 
price of the
 
seaborne Russian oil
 
does not
exceed the
 
relevant price
 
cap; but
 
implementation of
 
this price
 
exception relies
 
on a
 
recordkeeping and
attestation process that
 
allows each
 
party in
 
the supply chain
 
of seaborne Russian
 
oil to
 
demonstrate or
confirm that oil has been purchased
 
at or below the price cap.
 
Violations of the price cap policy
 
or the risk
that information,
 
documentation, or
 
attestations provided
 
by parties
 
in the
 
supply chain
 
are later
 
determined
to be false may pose additional risks adversely affecting our business.
While Ukraine
 
continued to
 
deploy a
 
number of
 
counter-attacks in
 
2023 and
 
as of
 
December 2023
 
held
important areas in ground operations, after over two years of fighting Russia still maintains a foothold in a
number
 
of
 
key
 
cities
 
and
 
areas.
 
The
 
ongoing
 
conflict
 
could
 
result
 
in
 
the
 
imposition
 
of
 
further
 
economic
sanctions
 
or
 
new
 
categories
 
of
 
export
 
restrictions
 
against
 
persons
 
in
 
or
 
connected
 
to
 
Russia.
 
While
 
in
general much uncertainty remains regarding the global impact of the
 
conflict in Ukraine, it is possible that
such tensions could adversely affect the Company’s
 
business, financial condition, results of
 
operation and
cash
 
flows.
 
Our
 
business
 
could
 
also
 
be
 
adversely
 
impacted
 
by
 
trade
 
tariffs,
 
trade
 
embargoes
 
or
 
other
economic sanctions that limit trading activities by the United States or other countries against countries in
the
 
Middle
 
East,
 
Asia
 
or
 
elsewhere
 
as
 
a
 
result
 
of
 
terrorist
 
attacks,
 
hostilities
 
or
 
diplomatic
 
or
 
political
pressures, including as a result of the current conflict between
 
Israel and Hamas.
 
Outbreaks
 
of
 
epidemic
 
and
 
pandemic
 
diseases
 
and
 
governmental
 
responses
 
thereto
 
could
adversely affect our business.
Our operations are subject to risks related to pandemics, epidemics or other infectious disease outbreaks
and
 
government
 
responses
 
thereto.
 
COVID-19,
 
which
 
was
 
initially
 
declared
 
a
 
pandemic
 
by
 
the
 
World
Health Organization on March 11, 2020 and was declared no longer a global
 
health emergency on May 5,
2023,
 
negatively
 
affected
 
economic
 
conditions,
 
supply
 
chains,
 
labor
 
markets,
 
and
 
demand
 
for
 
certain
shipped
 
goods
 
both
 
regionally
 
and
 
globally
 
as
 
a
 
result
 
of
 
government
 
efforts
 
to
 
combat
 
the
 
pandemic,
including
 
the
 
enactment
 
or
 
imposition
 
of
 
travel
 
bans,
 
quarantines
 
and
 
other
 
emergency
 
public
 
health
measures.
The
 
extent
 
to
 
which
 
our
 
business,
 
the
 
global
 
economy
 
and
 
dry
 
bulk
 
transportation
 
industry
 
may
 
be
negatively
 
affected
 
by
 
future
 
pandemics,
 
epidemics
 
or
 
other
 
outbreaks
 
of
 
infectious
 
diseases
 
is
 
highly
uncertain and will
 
depend on numerous evolving
 
factors that we
 
cannot predict, including, but
 
not limited
to (i) the duration and
 
severity of the infectious
 
disease outbreak; (ii)
 
the imposition of restrictive
 
measures
 
 
18
to combat the outbreak and slow disease transmission; (iii) the introduction of financial support measures
to reduce the impact
 
of the outbreak on the
 
economy; (iv) volatility in the
 
demand for and price
 
of oil and
gas; (v) shortages or reductions in the supply of essential goods, services or labor; and (vi) fluctuations in
general economic or financial conditions tied to the outbreak, such as a sharp increase
 
in interest rates or
reduction in
 
the
 
availability of
 
credit. We
 
cannot predict
 
the
 
effect that
 
an
 
outbreak of
 
a new
 
COVID-19
variant
 
or
 
strain,
 
or
 
any
 
future
 
infectious
 
disease
 
outbreak,
 
pandemic
 
or
 
epidemic
 
may
 
have
 
on
 
our
business, results of operations and financial condition, which could be
 
material and adverse.
Our operating results may be affected by seasonal fluctuations.
We operate our vessels in markets that have
 
historically exhibited seasonal variations in demand and, as
a result,
 
in charter
 
hire rates.
 
This seasonality
 
may result
 
in quarter-to-quarter
 
volatility in
 
our operating
results.
 
The
 
dry
 
bulk
 
carrier
 
market
 
is
 
typically
 
stronger
 
in
 
the
 
fall
 
and
 
winter
 
months
 
in
 
anticipation
 
of
increased
 
consumption
 
of
 
coal
 
and
 
other
 
raw
 
materials
 
in
 
the
 
northern
 
hemisphere
 
during
 
the
 
winter
months. In addition, unpredictable
 
weather patterns in these
 
months tend to disrupt vessel
 
scheduling and
supplies of certain
 
commodities. As
 
a result, our
 
revenues may
 
be weaker during
 
the fiscal quarters
 
ending
June 30
 
and
 
September 30,
 
and,
 
conversely,
 
our
 
revenues
 
may
 
be
 
stronger
 
in
 
fiscal
 
quarters
 
ending
December 31 and March 31.
 
While this seasonality
 
does not directly
 
affect our operating
 
results, it could
materially
 
affect
 
our
 
operating results
 
to
 
the
 
extent
 
our
 
vessels
 
are
 
employed
 
in
 
the
 
spot
 
market
 
in
 
the
future.
An increase in the price of fuel, or bunkers, may adversely affect our
 
profits.
While we generally will not bear the
 
cost of fuel or bunkers for vessels
 
operating on time charters, fuel is
 
a
significant
 
factor
 
in
 
negotiating
 
charter
 
rates.
 
As
 
a
 
result,
 
an
 
increase
 
in
 
the
 
price
 
of
 
fuel
 
beyond
 
our
expectations
 
may
 
adversely
 
affect
 
our
 
profitability
 
at
 
the
 
time
 
of
 
charter
 
negotiation.
 
Fuel
 
is
 
also
 
a
significant, if not
 
the largest, expense
 
in shipping when
 
vessels are under
 
voyage charter.
 
The price and
supply of
 
fuel is
 
unpredictable and
 
fluctuates based
 
on events
 
outside our
 
control, including
 
geopolitical
developments, supply
 
and demand
 
for
 
oil
 
and
 
gas,
 
actions by
 
the
 
Organization of
 
Petroleum Exporting
Countries (the
 
"OPEC"), and
 
other oil
 
and gas
 
producers, war
 
and unrest
 
in oil
 
producing countries
 
and
regions, regional production patterns
 
and environmental concerns. Any
 
future increase in the
 
cost of fuel
may reduce the profitability and competitiveness of our business.
In addition, if the recent sharp
 
increase in crude oil prices and widening of the
 
spread between the prices
of high
 
sulfur fuel
 
and low
 
sulfur fuel
 
resulting from
 
conflict between
 
Russia and
 
Ukraine and
 
Israel and
Hamas continues,
 
this might
 
lead to
 
a decrease
 
in the
 
economic viability
 
of
 
older vessels
 
that lack
 
fuel
efficiency and a reduction of useful lives of these vessels.
We
 
are
 
subject
 
to
 
complex
 
laws
 
and
 
regulations,
 
including
 
environmental
 
regulations
 
that
 
can
adversely affect the cost, manner or feasibility of doing business.
Our business and the operations of our vessels
 
are materially affected by environmental regulation in the
form of international conventions, national, state
 
and local laws and regulations in force in
 
the jurisdictions
in which
 
our vessels
 
operate, as
 
well as
 
in the
 
country or
 
countries of
 
their registration,
 
including those
governing the
 
management and
 
disposal of
 
hazardous substances
 
and wastes,
 
the cleanup
 
of oil
 
spills
and other contamination, air emissions (including greenhouse gases), water discharges and ballast water
management. These regulations include, but
 
are not limited
 
to, European Union
 
regulations, the U.S.
 
Oil
Pollution
 
Act
 
of
 
1990,
 
requirements
 
of
 
the
 
U.S.
 
Coast
 
Guard,
 
or
 
USCG
 
and
 
the
 
U.S.
 
Environmental
Protection Agency, the U.S. Clean Air Act of 1970 (including
 
its amendments of 1977 and 1990)
 
, the U.S.
Clean Water
 
Act, and the U.S.
 
Maritime Transportation Security
 
Act of 2002, and
 
regulations of the IMO,
including the International Convention on Civil Liability for Oil Pollution Damage of
 
1969, the International
Convention
 
for
 
the
 
Prevention
 
of
 
Pollution
 
from
 
Ships
 
of
 
1973,
 
as
 
modified
 
by
 
the
 
Protocol
 
of
 
1978,
collectively referred to as MARPOL 73/78 or MARPOL, including designations of Emission Control Areas,
19
thereunder, SOLAS,
 
the International Convention on
 
Load Lines of 1966,
 
the International Convention of
Civil Liability for
 
Bunker Oil Pollution
 
Damage, and the
 
ISM Code. Because such
 
conventions, laws, and
regulations are often revised, we
 
cannot predict the ultimate cost
 
of complying with such requirements or
the impact
 
thereof on the
 
re-sale price
 
or useful life
 
of any
 
vessel that
 
we own
 
or will acquire.
 
Additional
conventions, laws
 
and regulations may
 
be adopted
 
that could
 
limit our
 
ability to
 
do business
 
or increase
the
 
cost
 
of
 
our
 
doing
 
business
 
and
 
which
 
may
 
materially
 
adversely
 
affect
 
our
 
operations.
 
Government
regulation
 
of
 
vessels,
 
particularly
 
in
 
the
 
areas
 
of
 
safety
 
and
 
environmental
 
requirements,
 
continue
 
to
change, requiring us
 
to incur significant
 
capital expenditures on our
 
vessels to keep
 
them in compliance,
or even
 
to scrap
 
or sell
 
certain vessels
 
altogether.
 
In addition,
 
we may
 
incur significant
 
costs in
 
meeting
new
 
maintenance
 
and
 
inspection
 
requirements,
 
in
 
developing
 
contingency
 
arrangements
 
for
 
potential
environmental violations and in obtaining insurance coverage.
In addition, we
 
are required by
 
various governmental and
 
quasi-governmental agencies to
 
obtain certain
permits,
 
licenses,
 
certificates,
 
approvals
 
and
 
financial
 
assurances
 
with
 
respect
 
to
 
our
 
operations.
 
Our
failure to
 
maintain necessary
 
permits, licenses,
 
certificates, approvals
 
or financial
 
assurances could
 
require
us to incur substantial costs or temporarily suspend operation of one or more of the vessels in our fleet or
lead to the invalidation or reduction of our insurance coverage.
Environmental
 
requirements
 
can
 
also
 
affect
 
the
 
resale
 
value
 
or
 
useful
 
lives
 
of
 
our
 
vessels,
 
require
 
a
reduction in
 
cargo capacity,
 
ship modifications
 
or operational
 
changes or
 
restrictions, lead
 
to decreased
availability
 
of
 
insurance
 
coverage
 
for
 
environmental
 
matters
 
or
 
result
 
in
 
the
 
denial
 
of
 
access
 
to
 
certain
jurisdictional waters or
 
ports, or detention
 
in certain ports.
 
Under local, national and
 
foreign laws, as
 
well
as
 
international
 
treaties
 
and
 
conventions,
 
we
 
could
 
incur
 
material
 
liabilities,
 
including
 
for
 
cleanup
obligations and natural resource damages, in
 
the event that there is
 
a release of petroleum or hazardous
substances from
 
our vessels
 
or otherwise
 
in connection
 
with our
 
operations. We
 
could also
 
become subject
to personal injury
 
or property damage claims
 
relating to the
 
release of hazardous substances
 
associated
with our
 
existing or
 
historic operations. Violations
 
of, or
 
liabilities under,
 
environmental requirements can
result in substantial
 
penalties, fines
 
and other
 
sanctions, including
 
in certain
 
instances, seizure
 
or detention
of our vessels.
Increased inspection procedures, tighter import and export controls and new security regulations
could increase costs and disrupt our business.
International
 
shipping
 
is
 
subject
 
to
 
various
 
security
 
and
 
customs
 
inspection
 
and
 
related
 
procedures
 
in
countries of origin,
 
destination and trans-shipment
 
points. Under the
 
U.S. Maritime Transportation Security
Act
 
of
 
2002 (“MTSA”),
 
the
 
U.S.
 
Coast Guard
 
issued regulations
 
requiring
 
the
 
implementation of
 
certain
security requirements
 
aboard vessels
 
operating in
 
waters subject
 
to the
 
jurisdiction of
 
the United
 
States
and
 
at
 
certain ports
 
and facilities.
 
These security
 
procedures may
 
result
 
in
 
cargo seizure,
 
delays in
 
the
loading, offloading,
 
trans-shipment or delivery
 
and the
 
levying of customs
 
duties, fines or
 
other penalties
against us. It is possible
 
that changes to inspection
 
procedures could impose additional
 
financial and legal
obligations on us.
 
Changes to inspection
 
procedures could also
 
impose additional
 
costs and obligations
 
on
our customers and
 
may,
 
in certain cases,
 
render the shipment of
 
certain types of
 
cargo uneconomical or
impractical.
 
Any
 
such
 
changes
 
or
 
developments
 
may
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
our
 
business,
customer relations, financial condition and earnings.
 
Operational risks and damage to our vessels could adversely
 
impact our performance.
 
The operation of an ocean-going vessel carries inherent
 
risks. Our vessels and their cargoes are
 
at risk of
being damaged or
 
lost because of
 
events such as
 
marine disasters, bad weather
 
and other acts
 
of God,
business
 
interruptions caused
 
by mechanical
 
failures,
 
grounding, fire,
 
explosions and
 
collisions, human
error, war, terrorism,
 
piracy, labor strikes,
 
boycotts and
 
other circumstances
 
or events.
 
Changing
 
economic,
regulatory
 
and
 
political conditions
 
in
 
some
 
countries, including
 
political and
 
military
 
conflicts,
 
have from
time
 
to
 
time
 
resulted
 
in
 
attacks
 
on
 
vessels,
 
mining
 
of
 
waterways,
 
piracy,
 
terrorism,
 
labor
 
strikes
 
and
20
boycotts. Damage to the
 
environment could also
 
result from our operations,
 
particularly through spillage
 
of
fuel,
 
lubricants
 
or
 
other
 
chemicals
 
and
 
substances
 
used
 
in
 
operations,
 
or
 
extensive
 
uncontrolled
 
fires.
These
 
hazards
 
may
 
result
 
in
 
death
 
or
 
injury
 
to
 
persons,
 
loss
 
of
 
revenues
 
or
 
property,
 
the
 
payment
 
of
ransoms,
 
environmental
 
damage,
 
higher
 
insurance
 
rates,
 
damage
 
to
 
our
 
customer
 
relationships
 
and
market disruptions, delay
 
or rerouting, any
 
of which may
 
subject us to
 
litigation. As a
 
result, we could
 
be
exposed
 
to
 
substantial
 
liabilities
 
not
 
recoverable
 
under
 
our
 
insurances.
 
Further,
 
the
 
involvement
 
of
 
our
vessels in a serious accident could harm our reputation as a safe and reliable vessel operator and lead to
a
 
loss
 
of
 
business. Epidemics
 
and
 
other
 
public health
 
incidents
 
may
 
also
 
lead
 
to
 
crew member
 
illness,
which
 
can
 
disrupt
 
the
 
operations
 
of
 
our
 
vessels,
 
or
 
to
 
public
 
health
 
measures,
 
which
 
may
 
prevent
 
our
vessels from calling
 
on ports or
 
discharging cargo in
 
the affected
 
areas or in
 
other locations
 
after having
visited the affected areas.
 
If our vessels suffer
 
damage, they may need
 
to be repaired at
 
a drydocking facility.
 
The costs of drydock
repairs are unpredictable
 
and may
 
be substantial.
 
We may have
 
to pay
 
drydocking costs
 
that our
 
insurance
does not
 
cover at
 
all or
 
in full.
 
The loss
 
of revenues
 
while these
 
vessels are
 
being repaired
 
and repositioned,
as well
 
as the
 
actual cost
 
of these
 
repairs, may
 
adversely affect
 
our business
 
and financial
 
condition. In
addition, space
 
at drydocking
 
facilities is
 
sometimes limited
 
and not
 
all drydocking
 
facilities are
 
conveniently
located. We may be
 
unable to find space at
 
a suitable drydocking facility or our vessels
 
may be forced to
travel to a drydocking facility that is not conveniently located relative to
 
our vessels' positions. The loss of
earnings while these
 
vessels are forced
 
to wait for
 
space or to
 
travel to more
 
distant drydocking facilities
may adversely affect our business and financial condition.
The operation
 
of dry
 
bulk vessels has
 
certain unique operational
 
risks. With
 
a dry
 
bulk vessel, the
 
cargo
itself and its
 
interaction with the
 
ship can be a
 
risk factor. By their nature,
 
dry bulk cargoes
 
are often heavy,
dense
 
and
 
easily
 
shifted,
 
and
 
react
 
badly
 
to
 
water
 
exposure.
 
In
 
addition,
 
dry
 
bulk
 
vessels
 
are
 
often
subjected to
 
battering treatment
 
during unloading
 
operations with
 
grabs, jackhammers
 
(to pry
 
encrusted
cargoes out of the
 
hold), and small bulldozers. This
 
treatment may cause damage to
 
the dry bulk vessel.
Dry bulk
 
vessels damaged
 
due to
 
treatment during
 
unloading procedures
 
may be
 
more susceptible
 
to a
breach at sea. Hull breaches in dry
 
bulk vessels may lead to the flooding of
 
their holds. If flooding occurs
in the forward holds, the bulk
 
cargo may become so waterlogged that
 
the vessel's bulkheads may buckle
under the resulting
 
pressure leading
 
to the loss of
 
the dry bulk vessel.
 
These risks may
 
also impact the
 
risk
of loss of life or harm to our crew.
If
 
we
 
are
 
unable to
 
adequately maintain
 
or
 
safeguard
 
our
 
vessels,
 
we may
 
be
 
unable to
 
prevent these
events. Any of these circumstances or events could negatively impact our business, financial condition or
results of operations. In addition, the loss of any
 
of our vessels could harm our crew and our
 
reputation as
a safe and reliable vessel owner and operator.
If our
 
vessels call
 
on ports
 
located in
 
countries or
 
territories that
 
are the
 
subject of
 
sanctions or
embargoes
 
imposed
 
by
 
the
 
U.S.
 
government,
 
the
 
European
 
Union,
 
the
 
United
 
Nations,
 
or
 
other
governmental authorities, it
 
could lead to
 
monetary fines or penalties
 
and may adversely affect
 
our
reputation and the market for our securities.
We have not engaged in
 
shipping activities in countries
 
or territories or with
 
government-controlled entities
in 2023
 
in violation
 
of any
 
applicable sanctions or
 
embargoes imposed by
 
the U.S.
 
government, the EU,
the United Nations or other applicable governmental authorities.
 
Our contracts with our charterers prohibit
them
 
from
 
causing
 
our
 
vessels to
 
call
 
on
 
ports
 
located
 
in
 
sanctioned
 
countries or
 
territories or
 
carrying
cargo for entities that
 
are the subject of
 
sanctions. Although our charterers may,
 
in certain cases, control
the
 
operation
 
of
 
our
 
vessels,
 
we
 
have
 
monitoring
 
processes
 
in
 
place
 
to
 
ensure
 
our
 
compliance
 
with
applicable economic
 
sanctions and
 
embargo laws.
 
Nevertheless, it
 
remains possible
 
that our
 
charterers
may cause
 
our vessels to
 
trade in
 
violation of sanctions
 
provisions without our
 
consent. If such
 
activities
result
 
in
 
a
 
violation
 
of
 
applicable
 
sanctions
 
or
 
embargo
 
laws,
 
we
 
could
 
be
 
subject
 
to
 
monetary
 
fines,
21
penalties, or
 
other sanctions,
 
and our
 
reputation and
 
the market
 
for our
 
common shares
 
could be
 
adversely
affected.
The
 
applicable sanctions
 
and
 
embargo laws
 
and regulations
 
of
 
these
 
different
 
jurisdictions vary
 
in
 
their
application and do not all apply to the same covered persons or proscribe the same activities. In addition,
the sanctions
 
and embargo
 
laws and
 
regulations of
 
each jurisdiction
 
may be
 
amended to
 
increase or
 
reduce
the restrictions they
 
impose over time,
 
and the
 
lists of
 
persons and entities
 
designated under these
 
laws
and regulations are amended
 
frequently. Moreover, most sanctions regimes provide that entities
 
owned or
controlled by the
 
persons or entities
 
designated in such
 
lists are
 
also subject to
 
sanctions. The U.S.
 
and
EU have
 
enacted new
 
sanctions programs
 
in recent
 
years. Additional
 
countries or
 
territories, as
 
well as
additional persons or
 
entities within or affiliated
 
with those countries
 
or territories, have, and
 
in the future
will,
 
become
 
the
 
target
 
of
 
sanctions.
 
These
 
require
 
us
 
to
 
be
 
diligent
 
in
 
ensuring
 
our
 
compliance
 
with
sanctions
 
laws.
 
Further,
 
the
 
U.S.
 
has
 
increased
 
its
 
focus
 
on
 
sanctions enforcement
 
with
 
respect to
 
the
shipping sector. Current or
 
future counterparties of ours may be affiliated
 
with persons or entities that are
or may be
 
in the future
 
the subject of
 
sanctions or embargoes imposed
 
by the United
 
States, EU, and/or
other international
 
bodies. If
 
we determine
 
that such
 
sanctions require
 
us to
 
terminate existing
 
or future
contracts to which we, or our subsidiaries, are party or if we are found to be in violation
 
of such applicable
sanctions, our results of operations may be adversely affected, or we may
 
suffer reputational harm.
As a result
 
of Russia’s actions
 
in Ukraine, the
 
U.S., EU and
 
United Kingdom,
 
together with numerous
 
other
countries, have imposed
 
significant sanctions on
 
persons and entities
 
associated with Russia
 
and Belarus,
as
 
well
 
as
 
comprehensive
 
sanctions
 
on
 
certain
 
areas
 
within
 
the
 
Donbas
 
region
 
of
 
Ukraine,
 
and
 
such
sanctions apply
 
to entities
 
owned or
 
controlled by
 
such designated
 
persons or
 
entities. These
 
sanctions
adversely affect our ability to operate in the region and also restrict parties
 
whose cargo we may carry.
 
Although we believe that we
 
have been in compliance with
 
all applicable sanctions and
 
embargo laws and
regulations in 2023 and
 
up to the date of
 
this annual report, and intend
 
to maintain such compliance,
 
there
can be no assurance that we
 
or our charterers will be
 
in compliance in the future, particularly
 
as the scope
of certain
 
laws may be
 
unclear and may
 
be subject to
 
changing interpretations. Any
 
such violation could
result
 
in
 
fines,
 
penalties or
 
other
 
sanctions that
 
could severely
 
impact
 
our
 
ability to
 
access
 
U.S.
 
capital
markets and conduct our business and could result in our
 
reputation and the markets for our securities to
be adversely affected
 
and/or in some
 
investors deciding, or being
 
required, to divest their
 
interest, or not
to invest, in us. In
 
addition, certain institutional investors may have investment policies or
 
restrictions that
prevent them
 
from holding
 
securities of
 
companies that
 
have contracts
 
with countries
 
or territories
 
identified
by the U.S. government as state sponsors of terrorism. The determination
 
by these investors not to invest
in, or
 
to divest
 
from, our shares
 
may adversely
 
affect the
 
price at
 
which our
 
shares trade. Moreover,
 
our
charterers may violate applicable sanctions
 
and embargo laws and
 
regulations as a result
 
of actions that
do
 
not
 
involve
 
us
 
or
 
our
 
vessels,
 
and
 
those
 
violations
 
could
 
in
 
turn
 
negatively
 
affect
 
our
 
reputation.
 
In
addition, our reputation
 
and the market
 
for our securities
 
may be adversely
 
affected if we engage
 
in certain
other
 
activities,
 
such
 
as
 
entering
 
into
 
charters
 
with
 
individuals
 
or
 
entities
 
that
 
are
 
not
 
controlled
 
by
 
the
governments of countries
 
or territories that
 
are the subject
 
of certain U.S.
 
sanctions or embargo
 
laws, or
engaging in operations
 
associated with
 
those countries or
 
territories pursuant
 
to contracts with
 
third parties
that
 
are
 
unrelated
 
to
 
those
 
countries
 
or
 
territories
 
or
 
entities
 
controlled
 
by
 
their
 
governments.
 
Investor
perception of the value of our common stock may
 
be adversely affected by the consequences of war,
 
the
effects of terrorism, civil unrest and governmental actions in countries or
 
territories that we operate in.
The smuggling
 
of drugs
 
or
 
other contraband
 
onto our
 
vessels may
 
lead to
 
governmental claims
against us.
We
 
expect that
 
our vessels
 
will call
 
in
 
ports in
 
areas where
 
smugglers attempt
 
to
 
hide drugs
 
and other
contraband on
 
vessels, with
 
or
 
without the
 
knowledge of
 
crew members.
 
To
 
the
 
extent our
 
vessels are
found with contraband, whether inside
 
or attached to the hull
 
of our vessel and whether with
 
or without the
22
knowledge of any of our crew, we may
 
face governmental or other regulatory claims which could have an
adverse effect on our business, results of operations, cash flows and financial
 
condition.
Maritime claimants
 
could arrest
 
or
 
attach one
 
or
 
more
 
of our
 
vessels, which
 
could interrupt
 
our
business or have a negative effect on our cash flows.
Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders, and other parties
may
 
be
 
entitled
 
to
 
a
 
maritime
 
lien
 
against
 
a
 
vessel
 
for
 
unsatisfied
 
debts,
 
claims
 
or
 
damages.
 
In
 
many
jurisdictions, a
 
maritime lien
 
holder may
 
enforce its
 
lien by
 
“arresting” or
 
“attaching” a
 
vessel through
 
judicial
or foreclosure proceedings.
 
The arrest or
 
attachment of
 
one or
 
more of our
 
vessels could interrupt
 
the cash
flow of
 
the charterer
 
and/or require
 
us to
 
pay a
 
significant amount
 
of money
 
to have
 
the arrest
 
or attachment
lifted, which would have an adverse effect on our cash flows.
In addition, in some jurisdictions, such
 
as South Africa, under the “sister-ship”
 
theory of liability, a claimant
may arrest
 
both the
 
vessel that
 
is subject
 
to the claimant’s
 
maritime lien
 
and any
 
“associated” vessel,
 
which
is any
 
vessel owned
 
or controlled
 
by the
 
same owner.
 
Claimants could
 
try to
 
assert “sister-ship”
 
liability
against
 
one
 
vessel
 
in
 
our
 
fleet
 
for
 
claims
 
relating
 
to
 
another
 
of
 
our
 
ships.
 
Under
 
some
 
of
 
our
 
present
charters, if the vessel is arrested or detained as a result of a claim against us, we may be in default of our
charter
 
and
 
the
 
charterer
 
may
 
suspend
 
the
 
payment
 
of
 
hire
 
under
 
the
 
charter
 
and
 
charge
 
us
 
with
 
any
additional expenses
 
incurred during
 
that period,
 
which may
 
negatively impact
 
our revenues
 
and cash
 
flows.
We
 
conduct
 
business
 
in
 
China,
 
where
 
the
 
legal
 
system
 
is
 
not
 
fully
 
developed
 
and
 
has
 
inherent
uncertainties that could limit the legal protections available
 
to us.
Some
 
of
 
our
 
vessels may
 
be
 
chartered to
 
Chinese
 
customers and
 
from
 
time
 
to
 
time
 
on
 
our
 
charterers'
instructions,
 
our
 
vessels
 
may
 
call
 
on
 
Chinese
 
ports.
 
Such
 
charters
 
and
 
voyages
 
may
 
be
 
subject
 
to
regulations in China
 
that may require
 
us to incur
 
new or additional
 
compliance or other
 
administrative costs
and
 
may require
 
that
 
we pay
 
to
 
the
 
Chinese government
 
new taxes
 
or other
 
fees.
 
Applicable laws
 
and
regulations in
 
China may
 
not be
 
well publicized
 
and may
 
not be
 
known to
 
us or
 
to our
 
charterers in
 
advance
of us
 
or our
 
charterers becoming
 
subject to
 
them, and
 
the implementation
 
of such
 
laws and
 
regulations
may be
 
inconsistent. Changes in
 
Chinese laws and
 
regulations, including with
 
regards to
 
tax matters, or
changes
 
in
 
their
 
implementation
 
by
 
local
 
authorities
 
could
 
affect
 
our
 
vessels
 
if
 
chartered
 
to
 
Chinese
customers as well
 
as our vessels
 
calling to Chinese
 
ports and could
 
have a material
 
adverse impact
 
on our
business, financial condition and results of operations.
Governments could
 
requisition our
 
vessels during
 
a period
 
of war
 
or emergency, resulting
 
in a
 
loss
of earnings.
A government could
 
requisition one or
 
more of
 
our vessels for
 
title or
 
for hire.
 
Requisition for title
 
occurs
when
 
a
 
government takes
 
control of
 
a vessel
 
and becomes
 
her
 
owner,
 
while requisition
 
for
 
hire occurs
when
 
a
 
government takes
 
control of
 
a
 
vessel and
 
effectively
 
becomes her
 
charterer at
 
dictated charter
rates. Generally, requisitions occur
 
during periods of war or emergency,
 
although governments may elect
to requisition vessels in other circumstances. Although we would be entitled to compensation in the event
of
 
a
 
requisition
 
of
 
one
 
or
 
more
 
of
 
our
 
vessels,
 
the
 
amount
 
and
 
timing
 
of
 
payment
 
would
 
be
 
uncertain.
Government requisition of one or
 
more of our vessels may negatively
 
impact our revenues and reduce
 
the
amount
 
of
 
cash
 
we
 
may
 
have
 
available
 
for
 
distribution
 
as
 
dividends
 
to
 
our
 
shareholders,
 
if
 
any
 
such
dividends are declared.
Failure
 
to
 
comply
 
with
 
the
 
U.S.
 
Foreign
 
Corrupt
 
Practices
 
Act
 
could
 
result
 
in
 
fines,
 
criminal
penalties and an adverse effect on our business.
We may
 
operate in a
 
number of countries
 
throughout the world,
 
including countries suspected
 
to have
 
a
risk of corruption. We are committed to doing business in accordance with applicable anti-corruption laws
23
and have adopted measures
 
designed to ensure compliance with
 
the U.S. Foreign Corrupt
 
Practices Act
of 1977, as
 
amended (the “FCPA”).
 
We are
 
subject, however,
 
to the risk
 
that we, our
 
affiliated entities or
our
 
or
 
their
 
respective
 
officers,
 
directors,
 
employees
 
and
 
agents
 
may
 
take
 
actions
 
determined to
 
be
 
in
violation of
 
such anti-corruption
 
laws, including
 
the FCPA.
 
Any such
 
violation could
 
result in
 
substantial
fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might
adversely affect our business,
 
earnings or financial
 
condition. In addition,
 
actual or alleged violations
 
could
damage
 
our
 
reputation
 
and
 
ability
 
to
 
do
 
business.
 
Furthermore,
 
detecting,
 
investigating,
 
and
 
resolving
actual
 
or
 
alleged
 
violations
 
is
 
expensive
 
and
 
can
 
consume
 
significant
 
time
 
and
 
attention
 
of
 
our
 
senior
management.
Changing laws and
 
evolving reporting requirements
 
could have an
 
adverse effect on
 
our business.
Changing laws,
 
regulations and
 
standards relating
 
to reporting
 
requirements, including
 
the European
 
Union
General Data Protection Regulation, or GDPR, may create additional
 
compliance requirements for us.
GDPR broadens the
 
scope of personal
 
privacy laws to
 
protect the rights
 
of European Union
 
citizens and
requires organizations to
 
report on
 
data breaches within
 
72 hours
 
and be bound
 
by more
 
stringent rules
for obtaining the consent of individuals
 
on how their data can be used.
 
GDPR has become enforceable
 
on
May 25, 2018
 
and non-compliance
 
may expose entities
 
to significant fines
 
or other regulatory
 
claims which
could have an adverse effect on our business, financial condition, and operations.
Company Specific Risk Factors
The market values of our vessels could decline,
 
which could limit the amount of funds
 
that we can
borrow and
 
could trigger
 
breaches of
 
certain financial
 
covenants contained
 
in our
 
loan facilities,
which
 
could
 
adversely
 
affect
 
our
 
operating
 
results,
 
and
 
we
 
may
 
incur
 
a
 
loss
 
if
 
we
 
sell
 
vessels
following a decline in their market values.
While the
 
market values
 
of vessels
 
and the
 
freight charter
 
market have
 
a very
 
close relationship
 
as the
charter market
 
moves from
 
trough to
 
peak, the
 
time lag
 
between the
 
effect of
 
charter rates
 
on market
 
values
of ships can vary.
The market
 
values of
 
our vessels
 
have generally
 
experienced high
 
volatility,
 
and you
 
should expect
 
the
market values of our vessels to fluctuate depending on a number of
 
factors including:
the prevailing level of charter hire rates;
general economic and market conditions affecting the shipping industry;
competition from other shipping companies and other modes
 
of transportation;
the types, sizes and ages of vessels;
the supply of and demand for vessels;
applicable governmental or other regulations;
technological advances;
 
the need
 
to upgrade
 
vessels as
 
a result
 
of charterer
 
requirements, technological
 
advances in
 
vessel
design or equipment or otherwise; and
the cost of newbuildings.
24
 
If the market values of
 
our vessels decline, we
 
may not be in compliance
 
with certain covenants contained
in our
 
loan facilities
 
and we
 
may not
 
be able
 
to refinance
 
our debt
 
or obtain
 
additional financing or
 
incur
debt on terms that are acceptable
 
to us or at all. As of December
 
31, 2023, we were in compliance
 
with all
of the covenants in our loan facilities. If
 
we are not able to comply with the
 
covenants in our loan facilities
or are unable
 
to obtain
 
waivers or
 
amendments or
 
otherwise remedy
 
the relevant
 
breach, our
 
lenders could
accelerate our debt and foreclose on our vessels.
 
Furthermore, if
 
we sell
 
any of
 
our owned
 
vessels at
 
a time
 
when prices
 
are depressed,
 
our business,
 
results
of operations, cash flow and financial condition
 
could be adversely affected. Moreover,
 
if we sell a vessel
at a time when vessel prices have fallen, the sale may be at less than the vessel's carrying amount in our
financial statements, resulting
 
in a
 
loss and
 
a reduction in
 
earnings. In
 
addition, if
 
vessel values decline,
we may have to record an impairment adjustment in our financial statements which could adversely
 
affect
our financial results.
 
We charter
 
some of
 
our vessels
 
on short-term time
 
charters in
 
a volatile
 
shipping industry and
 
a
decline in charter hire rates could affect our results of operations and our ability
 
to pay dividends.
Although significant exposure to
 
short-term time charters is
 
not unusual in the
 
dry bulk shipping industry,
the short-term
 
time charter
 
market is
 
highly competitive
 
and spot
 
market charter
 
hire rates
 
(which affect
time charter
 
rates) may
 
fluctuate significantly
 
based upon
 
available charters
 
and the
 
supply of,
 
and demand
for,
 
seaborne
 
shipping
 
capacity.
 
While
 
the
 
short-term
 
time
 
charter
 
market
 
may
 
enable
 
us
 
to
 
benefit
 
in
periods
 
of
 
increasing charter
 
hire
 
rates,
 
we
 
must
 
consistently
 
renew
 
our
 
charters
 
and
 
this
 
dependence
makes us
 
vulnerable to
 
declining charter
 
rates. As
 
a result
 
of the
 
volatility in
 
the dry
 
bulk carrier
 
charter
market, we may
 
not be able
 
to employ our
 
vessels upon the
 
termination of their
 
existing charters at their
current charter
 
hire rates
 
or at
 
all. The
 
dry bulk
 
carrier charter
 
market is
 
volatile, and
 
in the
 
recent past,
short-term
 
time
 
charter
 
and
 
spot
 
market
 
charter
 
rates
 
for
 
some
 
dry
 
bulk
 
carriers
 
declined
 
below
 
the
operating
 
costs
 
of
 
those
 
vessels
 
before
 
rising.
 
We
 
cannot
 
assure
 
you
 
that
 
future
 
charter
 
hire
 
rates
 
will
enable us to operate our vessels profitably, or to pay dividends.
 
Rising crew costs could adversely affect our results of operations.
 
Due to an increase in the size of the global shipping fleet, the limited supply of
 
and increased demand for
crew
 
has
 
created
 
upward
 
pressure
 
on
 
crew
 
costs.
 
Additionally,
 
the
 
return
 
of
 
a
 
number
 
of
 
Ukrainian
seafarers to
 
their homes as
 
a result
 
of the
 
ongoing war in
 
Ukraine has
 
reduced the number
 
of seafarers
globally,
 
and
 
thereby
 
increased
 
the
 
pressure
 
on
 
crew
 
wages.
 
Continued
 
higher
 
crew
 
costs
 
or
 
further
increases in crew costs could adversely affect our results of operations.
Our investment in Diana Wilhelmsen Management Limited may expose
 
us to additional risks.
During
 
2015
 
we
 
invested
 
in
 
a
 
50/50
 
joint
 
venture
 
with
 
Wilhelmsen
 
Ship
 
Management
 
which
 
provides
management
 
services
 
to
 
a
 
limited
 
number
 
of
 
vessels
 
in
 
our
 
fleet
 
and
 
to
 
affiliated
 
companies,
 
but
 
our
eventual goal
 
is to
 
provide fleet
 
management services
 
to unaffiliated
 
third party
 
vessel operators.
 
While
this joint
 
venture may
 
provide us
 
in the
 
future with
 
a potential
 
revenue source,
 
it may
 
also expose
 
us to
risks such
 
as low
 
customer satisfaction, increased
 
operating costs compared
 
to those we
 
would achieve
for our
 
vessels, and
 
inability to
 
adequately staff
 
our vessels
 
with crew
 
that meets
 
our expectations
 
or to
maintain our vessels according to our standards, which would adversely affect our
 
financial condition.
A cyber-attack could materially disrupt our business.
We
 
rely
 
on
 
information
 
technology
 
systems
 
and
 
networks
 
in
 
our
 
operations
 
and
 
administration
 
of
 
our
business.
 
Information
 
systems
 
are
 
vulnerable
 
to
 
security
 
breaches
 
by
 
computer
 
hackers
 
and
 
cyber
terrorists. We
 
rely on
 
industry accepted
 
security measures
 
and technology
 
to securely
 
maintain confidential
 
25
and
 
proprietary
 
information
 
maintained
 
on
 
our
 
information
 
systems.
 
However,
 
these
 
measures
 
and
technology may not adequately prevent security breaches. Our
 
business operations could be targeted by
individuals or groups seeking to sabotage or disrupt our information technology systems and networks, or
to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our
operations, or lead to unauthorized release of
 
information or alteration of information in our
 
systems. Any
such attack or other
 
breach of our information
 
technology systems could
 
have a material
 
adverse effect on
our
 
business
 
and
 
results
 
of
 
operations.
 
In
 
addition,
 
the
 
unavailability
 
of
 
the
 
information
 
systems
 
or
 
the
failure
 
of
 
these
 
systems to
 
perform
 
as
 
anticipated for
 
any reason
 
could
 
disrupt
 
our
 
business
 
and could
result
 
in
 
decreased
 
performance
 
and
 
increased
 
operating
 
costs,
 
causing
 
our
 
business
 
and
 
results
 
of
operations
 
to
 
suffer.
 
Any
 
significant
 
interruption
 
or
 
failure
 
of
 
our
 
information
 
systems
 
or
 
any
 
significant
breach of
 
security could
 
adversely affect
 
our business
 
and results
 
of operations.
 
Our systems
 
were the
subject of a malicious attack
 
in September 2020 that resulted in
 
disruptions to our computer networks for
a period of several days. We were able
 
to successfully fully restore our systems
 
without interruption to our
business
 
or
 
operations.
 
Since
 
then, we
 
have
 
taken
 
extensive
 
measures
 
to
 
enhance
 
our
 
security
infrastructure, reform network
 
architecture, and implement
 
rigorous security policies
 
in line with
 
ISO27001.
Key
 
initiatives
 
include
 
establishing
 
security
 
testing,
 
business
 
continuity,
 
disaster
 
recovery,
 
and
 
incident
response programs, as
 
well as
 
implementing multi-factor
 
authentication and a
 
vulnerability management
framework. Despite these improvements we cannot assure you that we will be able to successfully thwart
all future attacks with causing material and adverse effect on our business.
Moreover, our risk of cyber-attacks and other sources of security breaches
 
and incidents may be elevated
as
 
a result
 
of the
 
ongoing conflicts
 
between Russia
 
and
 
Ukraine. and
 
the
 
Israel-Hamas conflict.
 
To
 
the
extent
 
such
 
attacks
 
have
 
collateral
 
effects
 
on
 
global
 
critical
 
infrastructure
 
or
 
financial
 
institutions,
 
such
developments could adversely affect our business, operating results and financial condition. At this time it
is difficult to assess the likelihood of such threat and any potential impact.
Even
 
without
 
actual
 
breaches
 
of
 
information
 
security,
 
protection
 
against
 
increasingly
 
sophisticated
 
and
prevalent cyberattacks
 
may result
 
in significant
 
future prevention,
 
detection, response
 
and management
costs, or
 
other costs,
 
including the
 
deployment of
 
additional cybersecurity
 
technologies, engaging
 
third-
party
 
experts,
 
deploying
 
additional
 
personnel
 
and
 
training
 
employees.
 
Further,
 
as
 
cyberthreats
 
are
continually evolving,
 
our
 
controls and
 
procedures may
 
become inadequate,
 
and we
 
may be
 
required to
devote additional resources to modify or enhance our systems in the future. Such expenses could have a
material adverse effect on our future performance, results of operations,
 
cash flows and financial position.
Further,
 
in
 
July
 
2023,
 
the
 
SEC
 
adopted
 
amendments
 
to
 
its
 
rules
 
on
 
cybersecurity
 
risk
 
management,
strategy, governance, and
 
incident disclosure.
 
The amendments,
 
require us
 
to report
 
material cybersecurity
incidents involving our
 
information systems and
 
periodic reporting regarding our
 
policies and procedures
to identify and manage cybersecurity risks, amongst other disclosures.
Climate
 
change
 
and
 
greenhouse
 
gas
 
restrictions
 
may
 
adversely
 
impact
 
our
 
operations
 
and
markets.
Due to concern over the risk
 
of climate change, a number of
 
countries and the IMO have adopted, or
 
are
considering the
 
adoption of,
 
regulatory frameworks
 
to reduce
 
greenhouse gas
 
emissions. These
 
regulatory
measures
 
may
 
include,
 
among
 
others,
 
adoption
 
of
 
cap
 
and
 
trade
 
regimes,
 
carbon
 
taxes,
 
increased
efficiency
 
standards
 
and
 
incentives
 
or
 
mandates
 
for
 
renewable
 
energy.
 
In
 
July
 
2023,
 
nations
 
at
 
the
International Maritime Organization’s
 
Marine Environment Protection
 
Committee (“MEPC”) 80
 
updated the
initial strategy
 
to reduce
 
greenhouse gas
 
emissions from
 
ships. The
 
initial strategy
 
identifies ―levels
 
of
ambition to reducing greenhouse gas
 
emissions, including (1) decreasing the
 
carbon intensity from ships
through implementation
 
of further phases
 
of the EEDI
 
for new ships;
 
(2) reducing
 
carbon dioxide
 
emissions
per transport
 
work, as
 
an average
 
across international
 
shipping, by
 
at least
 
20% by
 
2030, compared
 
to
2008 emission
 
levels; and
 
(3) reducing
 
the total
 
annual greenhouse
 
emissions by
 
at least
 
70% by
 
2040
compared to 2008 while pursuing efforts towards phasing them out entirely.
 
 
 
26
Since January
 
1, 2020,
 
ships have
 
to either
 
remove sulfur
 
from emissions
 
or buy
 
fuel with
 
low sulfur
 
content,
which may lead to
 
increased costs and supplementary investments for
 
ship owners. The interpretation of
"fuel
 
oil used
 
on board"
 
includes use
 
in main
 
engine, auxiliary
 
engines and
 
boilers. We
 
have elected
 
to
comply with this regulation
 
by using 0.5% sulfur fuels
 
on board, which are
 
available around the world but
often at a higher cost
 
and may result in higher
 
costs than other companies
 
that elected to install scrubbers
on their vessels.
In
 
addition,
 
although
 
the
 
emissions
 
of
 
greenhouse
 
gases
 
from
 
international
 
shipping
 
currently
 
are
 
not
subject
 
to
 
the
 
Kyoto
 
Protocol
 
to
 
the
 
United
 
Nations
 
Framework
 
Convention
 
on
 
Climate
 
Change,
 
which
required adopting countries
 
to implement national programs
 
to reduce emissions
 
of certain gases,
 
or the
Paris
 
Agreement
 
(discussed
 
further
 
below),
 
a
 
new
 
treaty
 
may
 
be
 
adopted
 
in
 
the
 
future
 
that
 
includes
restrictions on shipping emissions. Compliance with
 
changes in laws, regulations and
 
obligations relating
to climate
 
change could increase
 
our costs related
 
to operating
 
and maintaining our
 
vessels and require
us
 
to
 
install
 
new
 
emission
 
controls,
 
acquire
 
allowances
 
or
 
pay
 
taxes
 
related
 
to
 
our
 
greenhouse
 
gas
emissions
 
or
 
administer
 
and
 
manage
 
a
 
greenhouse
 
gas
 
emissions
 
program.
 
Revenue
 
generation
 
and
strategic growth opportunities may also be adversely affected.
Increasing
 
scrutiny
 
and
 
changing
 
expectations
 
from
 
investors,
 
lenders
 
and
 
other
 
market
participants with respect
 
to our ESG
 
policies may impose
 
additional costs on
 
us or
 
expose us to
additional risks.
Companies
 
across
 
all
 
industries
 
are
 
facing
 
increasing
 
scrutiny
 
relating
 
to
 
their
 
ESG
 
policies.
 
Investor
advocacy groups,
 
certain institutional
 
investors, investment
 
funds, lenders
 
and other
 
market participants
are increasingly focused on ESG practices and in recent years have placed increasing importance on the
implications and social
 
cost of their
 
investments. Companies
 
which do not
 
adapt to or
 
comply with investor,
lender
 
or
 
other
 
industry
 
shareholder
 
expectations
 
and
 
standards,
 
which
 
are
 
evolving,
 
or
 
which
 
are
perceived
 
to
 
have
 
not
 
responded
 
appropriately
 
to
 
the
 
growing
 
concern
 
for
 
ESG
 
issues,
 
regardless
 
of
whether
 
there
 
is
 
a
 
legal requirement
 
to
 
do
 
so,
 
may
 
suffer
 
from
 
reputational damage
 
and
 
the
 
business,
financial condition, and/or stock price of such a company could be
 
materially and adversely affected.
In
 
February 2021,
 
the
 
Acting Chair
 
of the
 
SEC issued
 
a statement
 
directing the
 
Division of
 
Corporation
Finance to enhance
 
its focus on
 
climate-related disclosure in
 
public company filings
 
and in March
 
2021 the
SEC announced the creation of a Climate and ESG Task
 
Force in the Division of Enforcement (the “Task
Force”).
 
The
 
Task
 
Force’s
 
goal
 
is
 
to
 
develop
 
initiatives
 
to
 
proactively
 
identify
 
ESG-related
 
misconduct
consistent
 
with
 
increased
 
investor
 
reliance
 
on
 
climate
 
and
 
ESG-related
 
disclosure
 
and
 
investment.
 
To
implement
 
the
 
Task
 
Force’s
 
purpose,
 
the
 
SEC
 
has
 
taken
 
several
 
enforcement
 
actions,
 
with
 
the
 
first
enforcement action taking
 
place in May
 
2022, and promulgated
 
new rules. On
 
March 21, 2022,
 
the SEC
proposed that all
 
public companies are
 
to include extensive
 
climate-related information in
 
their SEC filings.
On May 25, 2022, SEC proposed
 
a second set of rules
 
aiming to curb the practice of
 
"greenwashing" (i.e.,
making unfounded
 
claims about
 
one's ESG
 
efforts)
 
and would
 
add proposed
 
amendments to
 
rules and
reporting
 
forms
 
that
 
apply
 
to
 
registered
 
investment
 
companies
 
and
 
advisers,
 
advisers
 
exempt
 
from
registration,
 
and
 
business
 
development
 
companies.
 
On
 
March
 
6,
 
2024,
 
the
 
SEC
 
adopted
 
final
 
rules
 
to
require registrants
 
to disclose
 
certain climate-related
 
information in
 
SEC filings
 
of all
 
public companies.
 
The
final rules
 
require companies
 
to disclose,
 
among other
 
things: material
 
climate-related risks;
 
activities to
mitigate or
 
adapt to such
 
risks; information about
 
the registrant's board
 
of directors' oversight
 
of climate-
related risks
 
and management’s
 
role in
 
managing material
 
climate-related risks;
 
and information
 
on any
climate-related
 
targets
 
or
 
goals
 
that
 
are
 
material
 
to
 
the
 
registrant's
 
business,
 
results
 
of
 
operations,
 
or
financial condition.
 
Further, to facilitate
 
investors' assessment
 
of certain
 
climate-related risks,
 
the final
 
rules
require
 
disclosure
 
of
 
Scope
 
1
 
and/or
 
Scope
 
2
 
greenhouse
 
gas
 
(GHG)
 
emissions
 
on
 
a
 
phased-in
 
basis
when those
 
emissions are
 
material; the
 
filing of
 
an attestation
 
report covering
 
the required
 
disclosure of
such
 
registrants’
 
Scope
 
1
 
and/or
 
Scope
 
2
 
emissions,
 
also
 
on
 
a
 
phased-in
 
basis;
 
and
 
disclosure of
 
the
financial statement
 
effects of
 
severe weather
 
events and other
 
natural conditions including,
 
for example,
 
27
costs
 
and
 
losses.
 
The
 
final
 
rules
 
include
 
a
 
phased-in
 
compliance
 
period
 
for
 
all
 
registrants,
 
with
 
the
compliance date dependent on the registrant’s filer
 
status and the content of the
 
disclosure. However, on
March 15, 2024, the
 
U.S. Court of Appeals
 
for the Fifth Circuit
 
granted an administrative
 
stay on the
 
SEC's
recent climate disclosure rule.
We may
 
face increasing pressures
 
from investors, future
 
lenders and other
 
market participants, who
 
are
increasingly
 
focused
 
on
 
climate
 
change,
 
to
 
prioritize
 
sustainable
 
energy
 
practices,
 
reduce
 
our
 
carbon
footprint and
 
promote sustainability.
 
As a
 
result, we
 
may
 
be required
 
to
 
implement more
 
stringent ESG
procedures or
 
standards so that
 
our existing and
 
future investors
 
and lenders remain
 
invested in us
 
and
make further investments
 
in us. For
 
example, in February
 
2021, we established
 
a Sustainability
 
Committee
and in March 2021, we signed an agreement with American Bureau of Shipping (“ABS”) to implement the
ABS
 
Environmental
 
MonitorTM
 
digital
 
sustainability
 
solution
 
across
 
all
 
our
 
vessels
 
managed
 
by
 
Diana
Shipping Services S.A. Additionally, in May 2021, we signed a sustainability - linked loan facility with ABN
AMRO Bank N.V., through six wholly-owned subsidiaries. Under this loan, the margin amount that we are
required
 
to
 
pay
 
can
 
be
 
either
 
increased
 
or
 
decreased
 
depending
 
on
 
our
 
ability
 
to
 
achieve
 
certain
sustainability performance targets related to our fleet’s carbon emissions.
 
If we do not meet the standards
in this loan, our business could be harmed.
Additionally,
 
certain
 
investors
 
and
 
lenders
 
may
 
exclude
 
companies,
 
such
 
as
 
us,
 
from
 
their
 
investing
portfolios
 
altogether
 
due
 
to environmental,
 
social and
 
governance
 
factors.
 
These
 
limitations
 
in
 
both
 
the
debt and
 
equity capital
 
markets may
 
affect our
 
ability to
 
grow as
 
our plans
 
for growth
 
may include
 
accessing
the
 
equity
 
and
 
debt
 
capital
 
markets.
 
If
 
those
 
markets
 
are
 
unavailable,
 
or
 
if
 
we
 
are
 
unable
 
to
 
access
alternative means of
 
financing on acceptable
 
terms, or at all,
 
we may be unable
 
to implement our business
strategy,
 
which would have
 
a material
 
adverse effect
 
on our
 
financial condition and
 
results of
 
operations
and impair our ability to service
 
our indebtedness. Further, it is likely that we
 
will incur additional costs and
require
 
additional
 
resources
 
to
 
monitor,
 
report
 
and
 
comply
 
with
 
wide
 
ranging
 
ESG
 
requirements.
 
The
occurrence
 
of
 
any
 
of
 
the
 
foregoing
 
could
 
have
 
a
 
material
 
adverse
 
effect
 
on
 
our
 
business
 
and
 
financial
condition.
 
Moreover,
 
from time to
 
time, in
 
alignment with
 
our sustainability priorities,
 
we may
 
establish and publicly
announce
 
goals
 
and
 
commitments
 
in
 
respect
 
of
 
certain
 
ESG
 
items.
 
While
 
we
 
may
 
create
 
and
 
publish
voluntary disclosures regarding ESG matters from time to time,
 
many of the statements in those voluntary
disclosures are
 
based on
 
hypothetical expectations
 
and assumptions
 
that may
 
or may
 
not be
 
representative
of current or actual risks or events or forecasts of expected risks or events, including
 
the costs associated
therewith.
 
Such
 
expectations and
 
assumptions
 
are
 
necessarily uncertain
 
and
 
may
 
be
 
prone to
 
error
 
or
subject to
 
misinterpretation given
 
the long
 
timelines involved
 
and the
 
lack of
 
an established
 
single approach
to identifying, measuring and reporting on many ESG matters. If we fail to achieve or improperly
 
report on
our progress toward achieving our environmental goals and commitments, the resulting negative publicity
could adversely affect our reputation and/or our access to capital.
The Public Company Accounting Oversight Board inspection of our independent accounting firm,
could lead to findings
 
in our auditors’ reports
 
and challenge the accuracy
 
of our published audited
consolidated financial statements.
Auditors of
 
U.S. public
 
companies are
 
required by
 
law to
 
undergo periodic
 
Public Company
 
Accounting
Oversight
 
Board,
 
or
 
PCAOB,
 
inspections
 
that
 
assess
 
their
 
compliance
 
with
 
U.S.
 
law
 
and
 
professional
standards in connection with performance of audits of financial statements filed with the SEC. For several
years
 
certain
 
European
 
Union
 
countries,
 
including
 
Greece,
 
did
 
not
 
permit
 
the
 
PCAOB
 
to
 
conduct
inspections of accounting firms established and operating in such European Union countries, even if
 
they
were part of
 
major international firms.
 
Accordingly, unlike for most U.S.
 
public companies, the
 
PCAOB was
prevented
 
from
 
evaluating
 
our
 
auditor’s
 
performance
 
of
 
audits
 
and
 
its
 
quality
 
control
 
procedures,
 
and,
unlike stockholders of
 
most U.S. public
 
companies, we and
 
our stockholders were
 
deprived of the
 
possible
benefits of such inspections. Since 2015, Greece
 
has agreed to allow the PCAOB
 
to conduct inspections
28
of accounting firms operating in Greece. In the
 
future, such PCAOB inspections could result in findings in
our
 
auditors’
 
quality
 
control
 
procedures,
 
question
 
the
 
validity
 
of
 
the
 
auditor’s
 
reports
 
on
 
our
 
published
consolidated financial statements and
 
the effectiveness of our internal control
 
over financial reporting, and
cast doubt upon the accuracy of our published audited financial
 
statements.
 
Our earnings
 
may be
 
adversely affected
 
if we
 
are not
 
able to
 
take advantage of
 
favorable charter
rates.
We
 
charter
 
our
 
dry
 
bulk
 
carriers
 
to
 
customers
 
pursuant
 
to
 
short,
 
medium
 
or
 
long-term
 
time
 
charters.
However, as part of our business strategy,
 
the majority of our vessels are currently fixed on medium-term
time charters. We
 
may extend the
 
charter periods
 
for additional
 
vessels in
 
our fleet, including
 
additional dry
bulk carriers that
 
we may purchase in
 
the future, to
 
take advantage of the
 
relatively stable cash flow
 
and
high
 
utilization
 
rates
 
that
 
are
 
associated
 
with
 
long-term
 
time
 
charters.
 
While
 
we
 
believe
 
that
 
long-term
charters provide us with relatively
 
stable cash flows and higher
 
utilization rates than shorter-term charters,
our vessels that
 
are committed to
 
long-term charters may not
 
be available for
 
employment on short-term
charters
 
during
 
periods
 
of
 
increasing
 
short-term
 
charter
 
hire
 
rates
 
when
 
these
 
charters
 
may
 
be
 
more
profitable than long-term charters.
Investment in derivative instruments such as forward
 
freight agreements could result in losses.
Forward
 
freight
 
agreements, or
 
FFAs
 
and
 
other derivative
 
instruments may
 
be
 
used
 
to
 
hedge
 
a vessel
owner's
 
exposure
 
to
 
the
 
charter
 
market
 
by
 
providing
 
for
 
the
 
sale
 
of
 
a
 
contracted
 
charter
 
rate
 
along
 
a
specified route and period of time. 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 specified period. Conversely,
 
if the contracted rate is greater
than the settlement rate, the buyer is required to pay the seller the settlement sum. If we
 
take positions in
FFAs
 
or
 
other
 
derivative
 
instruments
 
and
 
do
 
not
 
correctly
 
anticipate
 
charter
 
rate
 
movements
 
over
 
the
specified route and time period, we could suffer losses in
 
the settling or termination of the FFA. This could
adversely affect our results of operations and cash flows.
We may have difficulty effectively managing our growth, which may adversely affect our earnings.
Since the completion of our initial public offering in
 
March 2005, we have increased our fleet to 51
 
vessels
in operation
 
in 2017, and
 
as of
 
the date
 
of this
 
annual report we
 
have 41
 
vessels of
 
which 39
 
vessels in
operation,
 
owned
 
and
 
chartered-in,
 
and
 
two
 
under
 
construction
 
and
 
we
 
have
 
agreed
 
to
 
sell
 
one
 
of
 
our
vessels. We may grow our fleet further in the future and this may
 
require us to increase the number of our
personnel. We may
 
also have to
 
increase our customer
 
base to provide
 
continued employment
 
for the new
vessels.
 
Any future growth will primarily depend on our ability to:
locate and acquire suitable vessels;
identify and consummate acquisitions or joint ventures;
enhance our customer base;
manage our expansion; and
obtain required financing on acceptable terms.
29
Growing
 
any
 
business
 
by
 
acquisition
 
presents
 
numerous
 
risks,
 
such
 
as
 
undisclosed
 
liabilities
 
and
obligations, the
 
possibility that
 
indemnification agreements
 
will be
 
unenforceable or
 
insufficient to
 
cover
potential
 
losses
 
and
 
difficulties
 
associated
 
with
 
imposing
 
common
 
standards,
 
controls,
 
procedures
 
and
policies, obtaining
 
additional qualified
 
personnel, managing
 
relationships with
 
customers and
 
integrating
newly acquired assets and
 
operations into existing infrastructure. We
 
cannot give any assurance that
 
we
will be
 
successful in
 
executing any future
 
growth plans or
 
that we
 
will not incur
 
significant expenses and
losses in connection with our future growth.
 
We cannot assure
 
you that we will
 
be able to borrow
 
amounts under loan facilities
 
and restrictive
covenants in our loan facilities impose financial and other restrictions
 
on us.
Historically, we have entered into several loan agreements
 
to finance vessel acquisitions,
 
the construction
of newbuildings and working capital.
 
As of December 31,
 
2023, we had $517.0 million
 
outstanding under
our
 
facilities
 
and
 
bond. Our
 
ability
 
to
 
borrow
 
amounts
 
under
 
our
 
facilities
 
is
 
subject
 
to
 
the
 
execution
 
of
customary
 
documentation
 
relating
 
to
 
the
 
facility,
 
including
 
security
 
documents,
 
satisfaction
 
of
 
certain
customary conditions
 
precedent and
 
compliance with
 
terms and
 
conditions included
 
in the
 
loan documents.
Prior
 
to
 
each
 
drawdown,
 
we
 
are
 
required,
 
among
 
other
 
things,
 
to
 
provide
 
the
 
lender
 
with
 
acceptable
valuations of the
 
vessels in our
 
fleet confirming that
 
the vessels in our
 
fleet have a minimum
 
value and that
the
 
vessels
 
in
 
our
 
fleet
 
that
 
secure
 
our
 
obligations under
 
the
 
facilities
 
are
 
sufficient
 
to
 
satisfy
 
minimum
security requirements.
 
To the extent that
 
we are
 
not able
 
to satisfy
 
these requirements,
 
including as
 
a result
of a decline
 
in the
 
value of
 
our vessels,
 
we may
 
not be
 
able to
 
draw down
 
the full
 
amount under
 
the facilities
without obtaining
 
a waiver
 
or consent
 
from the
 
lender.
 
We will
 
also not
 
be permitted
 
to borrow
 
amounts
under the facilities if we experience a change of control.
The loan facilities
 
also impose operating
 
and financial restrictions
 
on us. These
 
restrictions may limit
 
our
ability to, among other things:
pay dividends
 
if there
 
is a
 
default under
 
the loan
 
facilities or
 
if the payment
 
of the dividend
 
would
result in a default or breach of a loan covenants;
incur additional indebtedness, including through the issuance of guarantees;
change the flag, class or management of our vessels;
create liens on our assets;
sell our vessels;
enter into a
 
time charter
 
or consecutive
 
voyage charters
 
that have a
 
term that
 
exceeds, or
 
which
by virtue of any optional extensions may exceed a certain period;
merge or consolidate with, or transfer all or substantially all
 
our assets to, another person; and
enter into a new line of business.
Therefore, we
 
may need
 
to seek
 
permission from
 
our lenders
 
in order
 
to engage
 
in some
 
corporate actions.
Our lenders’ interests
 
may be different
 
from ours and
 
we cannot guarantee that
 
we will be
 
able to obtain
our
 
lenders'
 
permission when
 
needed.
 
This
 
may
 
limit
 
our
 
ability to
 
finance
 
our
 
future
 
operations, make
acquisitions or pursue business opportunities.
30
We
 
cannot
 
assure
 
you
 
that
 
we
 
will
 
be
 
able
 
to
 
refinance
 
indebtedness
 
incurred
 
under
 
our
 
loan
facilities and bond.
We cannot assure
 
you that we
 
will be able
 
to refinance our
 
indebtedness with
 
equity offerings or
 
otherwise,
on
 
terms that
 
are
 
acceptable to
 
us or
 
at
 
all. If
 
we
 
are
 
not able
 
to
 
refinance these
 
amounts with
 
the
 
net
proceeds of
 
equity offerings
 
or otherwise,
 
on terms
 
acceptable to us
 
or at
 
all, we
 
will have
 
to dedicate
 
a
greater portion of our cash flow from operations to pay the principal and interest
 
of this indebtedness than
if we were able to refinance such amounts. If we are not able to satisfy these obligations, we may have to
undertake alternative financing plans. The
 
actual or perceived credit quality
 
of our charterers, any defaults
by them, and
 
the market value of
 
our fleet, among other
 
things, may materially affect
 
our ability to obtain
alternative financing.
 
In addition,
 
debt service
 
payments under
 
our loan
 
facilities or
 
alternative financing
may limit funds otherwise available for working capital, capital expenditures and other purposes. If we are
unable to
 
meet our
 
debt obligations,
 
or if
 
we otherwise
 
default under
 
our loan
 
facilities or
 
an alternative
financing arrangement, our lenders could declare the
 
debt, together with accrued interest
 
and fees, to be
immediately due
 
and payable
 
and foreclose
 
on our
 
fleet, which
 
could result
 
in the
 
acceleration of
 
other
indebtedness that we
 
may have at
 
such time and
 
the commencement of
 
similar foreclosure proceedings
by other lenders.
Purchasing
 
and
 
operating
 
secondhand
 
vessels
 
may
 
result
 
in
 
increased
 
operating
 
costs
 
and
reduced operating days, which may adversely affect our earnings.
 
As part of our
 
current business
 
strategy to increase
 
our owned fleet,
 
we may acquire
 
new and secondhand
vessels. While we rigorously
 
inspect previously owned
 
or secondhand vessels prior
 
to purchase, this does
not
 
provide us
 
with the
 
same
 
knowledge about
 
their
 
condition and
 
cost of
 
any required
 
(or
 
anticipated)
repairs
 
that
 
we
 
would
 
have
 
had
 
if
 
these
 
vessels
 
had
 
been
 
built
 
for
 
and
 
operated
 
exclusively
 
by
 
us.
Accordingly, we may
 
not discover defects or other problems with secondhand vessels prior to purchasing
or
 
chartering-in,
 
or
 
may
 
incur
 
costs
 
to
 
terminate
 
a
 
purchase
 
agreement.
 
Any
 
such
 
hidden
 
defects
 
or
problems may require
 
us to put
 
a vessel into
 
drydock, which would
 
reduce our fleet
 
utilization and increase
our
 
operating
 
costs.
 
If
 
a
 
hidden
 
defect
 
or
 
problem
 
is
 
not
 
detected,
 
it
 
may
 
result
 
in
 
accidents
 
or
 
other
incidents for which we may become liable to third parties.
 
In general, the costs to maintain a vessel in
 
good operating condition increase with the age of the vessel.
Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements
in engine technology.
 
Cargo insurance rates increase with the age of a
 
vessel, making older vessels less
desirable to charterers.
Furthermore, governmental regulations, safety or other equipment
 
standards related to the age of vessels
may
 
require
 
expenditures for
 
alterations, or
 
the addition
 
of
 
new equipment
 
and may
 
restrict the
 
type
 
of
activities
 
in which
 
the
 
vessel may
 
engage. As
 
our
 
vessels age,
 
market conditions
 
may
 
not justify
 
those
expenditures or enable us to operate our vessels profitably during
 
the remainder of their useful lives.
 
We are subject to certain risks with respect to our counterparties on
 
contracts, and failure of such
counterparties
 
to
 
meet
 
their
 
obligations could
 
cause
 
us
 
to
 
suffer
 
losses
 
or
 
otherwise adversely
affect our business.
We
 
enter
 
into,
 
among
 
other
 
things,
 
charter
 
parties with
 
our
 
customers. Such
 
agreements
 
subject
 
us
 
to
counterparty risks. The
 
ability and willingness
 
of each of
 
our counterparties to
 
perform its obligations
 
under
a contract with us will depend on
 
a number of factors that are beyond
 
our control and may include, among
other things, general
 
economic conditions,
 
the condition of
 
the maritime and
 
offshore industries, the
 
overall
financial
 
condition
 
of
 
the
 
counterparty,
 
charter
 
rates
 
received
 
for
 
specific
 
types
 
of
 
vessels,
 
and
 
various
expenses. Should a counterparty fail to
 
honor its obligations under agreements with
 
us, we could sustain
significant losses, which could have a material adverse effect
 
on our business, financial condition, results
of operations and cash flows.
31
In addition, in
 
depressed market conditions, our
 
charterers may no
 
longer need a
 
vessel that is
 
currently
under charter
 
or may
 
be able
 
to obtain
 
a comparable
 
vessel at
 
lower rates.
 
As a
 
result, charterers
 
may
seek to
 
renegotiate the
 
terms of
 
their existing
 
charter agreements
 
or avoid
 
their obligations
 
under those
contracts.
 
If
 
our
 
charterers
 
fail
 
to
 
meet
 
their
 
obligations
 
to
 
us
 
or
 
attempt
 
to
 
renegotiate
 
our
 
charter
agreements,
 
it
 
may
 
be
 
difficult
 
to
 
secure substitute
 
employment for
 
such vessels,
 
and
 
any
 
new
 
charter
arrangements we
 
secure may
 
be
 
at
 
lower rates.
 
As
 
a result,
 
we
 
could
 
sustain significant
 
losses, which
could have
 
a material
 
adverse effect
 
on our
 
business, financial condition,
 
results of
 
operations and cash
flows.
 
In
 
the
 
highly
 
competitive
 
international
 
shipping
 
industry,
 
we
 
may
 
not
 
be
 
able
 
to
 
compete
 
for
charters with
 
new entrants
 
or established
 
companies with
 
greater resources,
 
and as
 
a result,
 
we
may be unable to employ our vessels profitably.
The
 
operation
 
of
 
dry
 
bulk
 
vessels
 
and
 
transportation
 
of
 
dry
 
bulk
 
cargoes
 
is
 
extremely
 
competitive
 
and
fragmented. Competition
 
for the transportation
 
of dry bulk
 
cargoes by sea
 
is intense and
 
depends on
 
price,
location,
 
size,
 
age,
 
condition
 
and
 
the
 
acceptability
 
of
 
the
 
vessel
 
and
 
its
 
operators
 
to
 
the
 
charterers.
Competition arises
 
primarily from
 
other vessel
 
owners, some
 
of whom
 
have substantially
 
greater resources
than we do. Due in part
 
to the highly fragmented market,
 
competitors with greater resources
 
than us could
enter the
 
dry bulk
 
shipping industry
 
and operate
 
larger fleets
 
through consolidations
 
or acquisitions
 
and
may
 
be able
 
to
 
offer
 
lower
 
charter rates
 
and
 
higher quality
 
vessels than
 
we
 
are
 
able to
 
offer.
 
If we
 
are
unable to successfully compete with other
 
dry bulk shipping companies, our results
 
of operations may be
adversely impacted.
We
 
may
 
be
 
unable to
 
attract
 
and
 
retain
 
key management
 
personnel and
 
other
 
employees in
 
the
shipping industry, which may
 
negatively impact the effectiveness of our
 
management and results
of operations.
Our success
 
depends to
 
a significant
 
extent upon
 
the abilities
 
and efforts
 
of our
 
management team. We
have
 
entered
 
into
 
employment
 
contracts
 
with
 
our
 
Chief
 
Executive
 
Officer
 
Mrs. Semiramis
 
Paliou;
 
our
President, Mr.
 
Anastasios Margaronis;
 
our Chief
 
Financial Officer,
 
Chief Strategy
 
Officer,
 
Treasurer
 
and
Secretary Mr. Ioannis Zafirakis
 
and our Chief
 
Operating Officer Mr. Eleftherios
 
Papatrifon. On
 
February 22,
2023, Mr.
 
Eleftherios Papatrifon
 
resigned from
 
his position
 
of the
 
Chief Operating
 
Officer and
 
since that
date serves as a member of the board of
 
directors. Our success will depend upon our ability to retain key
members of
 
our management
 
team and
 
to hire
 
new members
 
as may
 
be necessary.
 
The loss
 
of any
 
of
these individuals could adversely
 
affect our business prospects
 
and financial condition. Difficulty
 
in hiring
and retaining replacement personnel could have
 
a similar effect. We do not currently, nor do we intend to,
maintain “key man” life insurance on any of our officers or other members of
 
our management team.
Technological
 
innovation
 
and
 
quality
 
and
 
efficiency
 
requirements
 
from
 
our
 
customers
 
could
reduce our charter hire income and the value of our vessels.
Our customers have a high and increasing focus on quality and compliance standards with their suppliers
across
 
the
 
entire
 
supply
 
chain,
 
including
 
the
 
shipping
 
and
 
transportation
 
segment.
 
Our
 
continued
compliance with these
 
standards and quality
 
requirements is vital
 
for our operations.
 
The charter hire
 
rates
and the value and operational life
 
of a vessel are determined by a number
 
of factors including the vessel’s
efficiency, operational flexibility and physical
 
life. Efficiency includes
 
speed, fuel economy
 
and the ability
 
to
load
 
and
 
discharge
 
cargo quickly.
 
Flexibility includes
 
the
 
ability to
 
enter harbors,
 
utilize related
 
docking
facilities and pass through canals and straits. The length of a vessel’s physical life is
 
related to its original
design and construction, its maintenance and the impact of the stress
 
of operations. We face competition
from
 
companies
 
with
 
more
 
modern
 
vessels
 
having
 
more
 
fuel
 
efficient
 
designs
 
than
 
our
 
vessels, or
 
eco
vessels, and if
 
new dry bulk
 
vessels are built
 
that are
 
more efficient or
 
more flexible or
 
have longer
 
physical
lives than the current eco vessels, competition from the current eco vessels and any more technologically
32
advanced vessels could adversely
 
affect the amount
 
of charter hire payments
 
we receive for our
 
vessels
and
 
the
 
resale
 
value
 
of
 
our
 
vessels
 
could
 
significantly
 
decrease.
 
Similarly,
 
technologically
 
advanced
vessels are
 
needed to
 
comply with
 
environmental laws the
 
investment in
 
which along
 
with the
 
foregoing
could have a material adverse effect on
 
our results of operations, charter hire payments and resale value
of vessels. This could
 
have an adverse effect
 
on our results of
 
operations, cash flows, financial condition
and ability to pay dividends.
 
We may
 
not have adequate
 
insurance to
 
compensate us if
 
we lose
 
our vessels or
 
to compensate
third parties.
We procure
 
insurance for
 
our fleet
 
against risks
 
commonly insured
 
against by
 
vessel owners
 
and operators.
Our
 
current
 
insurance
 
includes
 
hull
 
and
 
machinery
 
insurance,
 
war
 
risks
 
insurance
 
and
 
protection
 
and
indemnity
 
insurance
 
(which
 
includes
 
environmental
 
damage
 
and
 
pollution
 
insurance).
 
We
 
can
 
give
 
no
assurance that we are
 
adequately insured against all risks
 
or that our insurers
 
will pay a particular
 
claim.
Even if
 
our insurance
 
coverage is
 
adequate to
 
cover our
 
losses, we
 
may not
 
be able
 
to timely
 
obtain a
replacement vessel
 
in the
 
event of
 
a loss.
 
Furthermore, in
 
the future,
 
we may
 
not be
 
able to
 
obtain adequate
insurance
 
coverage at
 
reasonable rates
 
for
 
our fleet.
 
We
 
may
 
also
 
be
 
subject to
 
calls,
 
or
 
premiums, in
amounts based not only
 
on our own
 
claim records but
 
also the claim records
 
of all other members
 
of the
protection
 
and
 
indemnity
 
associations
 
through
 
which
 
we
 
receive
 
indemnity
 
insurance
 
coverage
 
for
 
tort
liability.
 
Our
 
insurance
 
policies
 
also
 
contain
 
deductibles,
 
limitations
 
and
 
exclusions
 
which,
 
although
 
we
believe are standard in the shipping industry, may nevertheless increase our costs.
Our
 
vessels
 
may
 
suffer
 
damage
 
and
 
we
 
may
 
face
 
unexpected
 
drydocking
 
costs,
 
which
 
could
adversely affect our cash flow and financial condition.
If our vessels suffer
 
damage, they may need
 
to be repaired at
 
a drydocking facility.
 
The costs of drydock
repairs are unpredictable
 
and can be substantial.
 
The loss of earnings
 
while a vessel is
 
being repaired and
repositioned, as well as the actual
 
cost of these repairs not covered
 
by our insurance, would decrease
 
our
earnings and available cash. We
 
may not have insurance that
 
is sufficient to cover
 
all or any of the
 
costs
or losses for damages
 
to our vessels and
 
may have to pay
 
drydocking costs not
 
covered
 
by our insurance.
The aging of our fleet may result in increased operating costs in the future, which could adversely
affect our earnings.
In general,
 
the cost
 
of maintaining
 
a vessel
 
in good
 
operating condition
 
increases with
 
the age
 
of the
 
vessel.
As of the
 
date of this
 
annual report, our
 
fleet consists of
 
41 vessels of
 
which 39 in
 
operation, owned and
chartered-in, having a combined carrying capacity of 4.4 million dead weight tons, or dwt, and a weighted
average age of
 
10.4 years and
 
two Kamsarmax vessels
 
under construction.
 
As our fleet
 
ages, we will
 
incur
increased
 
costs.
 
Older
 
vessels
 
are
 
typically
 
less
 
fuel
 
efficient
 
and
 
more
 
costly
 
to
 
maintain
 
than
 
more
recently constructed vessels
 
due to improvements
 
in engine technology.
 
Cargo insurance rates
 
increase
with the age of a vessel, making older vessels less desirable to charterers.
 
Governmental regulations and
safety
 
or
 
other
 
equipment
 
standards
 
related
 
to
 
the
 
age
 
of
 
vessels
 
may
 
also
 
require
 
expenditures
 
for
alterations or the addition of new
 
equipment to our vessels and may restrict
 
the type of activities in which
our
 
vessels may
 
engage. We
 
cannot assure
 
you that,
 
as our
 
vessels age,
 
market conditions
 
will
 
justify
those expenditures or
 
enable us to
 
operate our vessels
 
profitably during the
 
remainder of their
 
useful lives.
We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm
our reported revenue and results of operations.
We generate
 
all of
 
our revenues
 
in U.S.
 
dollars but incur
 
around half of
 
our operating
 
expenses and our
general and administrative expenses in currencies other than the U.S. dollar, primarily the Euro. Because
a significant portion of
 
our expenses is incurred
 
in currencies other
 
than the U.S. dollar, our expenses
 
may
from time to
 
time increase relative
 
to our revenues
 
as a result
 
of fluctuations in
 
exchange rates, particularly
33
between the U.S. dollar and the Euro,
 
which could affect the amount of net
 
income that we report in future
periods. While
 
we historically
 
have not
 
mitigated the
 
risk associated
 
with exchange
 
rate fluctuations
 
through
the use of financial derivatives, we
 
may employ such instruments from
 
time to time in the future
 
in order to
minimize this risk. Our use of
 
financial derivatives would involve
 
certain risks, including the risk
 
that losses
on a
 
hedged position
 
could exceed
 
the nominal
 
amount invested
 
in the
 
instrument and
 
the risk
 
that the
counterparty to the derivative transaction
 
may be unable or
 
unwilling to satisfy its
 
contractual obligations,
which could have an adverse effect on our results.
We depend
 
upon a few
 
significant customers for a
 
large part of
 
our revenues and the
 
loss of one
or more of these customers could adversely affect our financial performance.
 
We have historically
 
derived a significant part
 
of our revenues from
 
a small number of
 
charterers. During
2023, 2022, and
 
2021, approximately
 
13%, 34%
 
and 10%, respectively, of
 
our revenues
 
were derived
 
from
one,
 
two
 
and
 
one
 
charterers,
 
respectively.
 
If
 
one
 
or
 
more
 
of
 
our
 
charterers
 
chooses
 
not
 
to
 
charter
 
our
vessels
 
or
 
is
 
unable
 
to
 
perform
 
under
 
one
 
or
 
more
 
charters
 
with
 
us
 
and
 
we
 
are
 
not
 
able
 
to
 
find
 
a
replacement charter, we could suffer
 
a loss of revenues that could adversely affect our financial condition
and results of operations.
We are a holding company, and we
 
depend on the ability of our subsidiaries to distribute funds to
us in order to satisfy our financial obligations.
We are a holding company and our subsidiaries conduct all of our operations and own all of our
 
operating
assets. We
 
have no significant
 
assets other than
 
the equity
 
interests in our
 
subsidiaries. As a
 
result, our
ability to satisfy our financial obligations depends on our subsidiaries and their ability to distribute
 
funds to
us.
 
If
 
we
 
are
 
unable
 
to
 
obtain
 
funds
 
from
 
our
 
subsidiaries,
 
we
 
may
 
not
 
be
 
able
 
to
 
satisfy
 
our
 
financial
obligations.
Certain of our vessels
 
are owned through joint
 
ventures that we have entered
 
into, and our views
about
 
the
 
operations
 
of
 
those
 
vessels
 
may
 
differ
 
from
 
our
 
joint
 
venture
 
partners
 
and
 
adversely
affect our interest in the joint ventures.
We have entered into
 
two joint venture arrangements pursuant to
 
which we own minority interests in
 
four
CSOV newbuilding
 
contracts through
 
Windward Offshore
 
GmbH &
 
Co. KG
 
and one
 
dry bulk
 
vessel through
Bergen Ultra,
 
and we
 
may enter
 
into additional
 
joint venture
 
arrangement in
 
the future. As
 
a minority
 
interest
holder
 
in
 
these
 
joint
 
ventures,
 
we
 
share
 
voting
 
and
 
operational
 
control
 
of
 
these
 
joint
 
ventures
 
and
 
the
operations of these vessel that we own through these joint ventures. Our joint venture
 
partners may have
interests that are
 
different from ours
 
which may result in
 
conflicting views as to
 
the operation the vessels
owned by
 
the joint
 
ventures or
 
the
 
conduct of
 
the business
 
of the
 
joint venture.
 
We
 
may
 
not be
 
able to
resolve such conflicts in our favor and such conflicts
 
or differing view could have a material adverse effect
on our interest in the joint venture or our business in general.
 
Because we
 
are organized
 
under the
 
laws of
 
the Marshall
 
Islands, it
 
may be
 
difficult to
 
serve us
with legal process or enforce judgments against us, our directors
 
or our management.
We are
 
organized under
 
the laws
 
of the
 
Marshall Islands,
 
and substantially
 
all of
 
our assets
 
are located
outside of the United States. In addition, the majority of our directors and officers are non-residents of the
United States, and all or a substantial portion of the assets of these non-residents are located outside the
United States.
 
As a
 
result, it
 
may be
 
difficult or
 
impossible for
 
someone to
 
bring an
 
action against
 
us or
against these
 
individuals in
 
the
 
United
 
States if
 
they
 
believe that
 
their
 
rights
 
have been
 
infringed under
securities laws or
 
otherwise. Even if
 
you are successful
 
in bringing an
 
action of this
 
kind, the laws
 
of the
Marshall Islands and of other jurisdictions may prevent or restrict them from enforcing a judgment against
our assets or the assets of our directors or officers.
 
34
The international nature of our operations may make the
 
outcome of any bankruptcy proceedings
difficult to predict.
We are incorporated under the laws of the Republic of the
 
Marshall Islands and we conduct operations in
countries
 
around
 
the
 
world.
 
Consequently,
 
in
 
the
 
event
 
of
 
any
 
bankruptcy,
 
insolvency,
 
liquidation,
dissolution, reorganization or
 
similar proceeding involving
 
us or
 
any of
 
our subsidiaries,
 
bankruptcy laws
other
 
than
 
those
 
of
 
the
 
United
 
States
 
could
 
apply.
 
If
 
we
 
become
 
a
 
debtor
 
under
 
U.S.
 
bankruptcy
 
law,
bankruptcy
 
courts
 
in
 
the
 
United
 
States
 
may
 
seek
 
to
 
assert
 
jurisdiction
 
over
 
all
 
of
 
our
 
assets,
 
wherever
located, including
 
property situated
 
in other countries.
 
There can
 
be no assurance,
 
however, that we would
become
 
a
 
debtor
 
in
 
the
 
United
 
States,
 
or
 
that
 
a
 
U.S.
 
bankruptcy
 
court
 
would
 
be
 
entitled
 
to,
 
or
 
accept,
jurisdiction over such a
 
bankruptcy case, or
 
that courts in other
 
countries that have
 
jurisdiction over us
 
and
our operations would recognize a
 
U.S. bankruptcy court’s jurisdiction
 
if any other bankruptcy
 
court would
determine it had jurisdiction.
If we
 
expand our
 
business further,
 
we may
 
need to
 
improve our
 
operating and
 
financial systems
and will need to recruit suitable employees and crew for our vessels.
Our current operating and financial
 
systems may not be adequate
 
if we further expand the size
 
of our fleet
and our attempts to
 
improve those systems may be
 
ineffective. In addition, if we
 
expand our fleet further,
we
 
will
 
need
 
to
 
recruit
 
suitable
 
additional
 
seafarers
 
and
 
shoreside
 
administrative
 
and
 
management
personnel. While we have not
 
experienced any difficulty in recruiting
 
to date, we cannot guarantee
 
that we
will
 
be
 
able
 
to
 
continue
 
to
 
hire
 
suitable
 
employees
 
if
 
we
 
expand
 
our
 
fleet.
 
If
 
we
 
or
 
our
 
crewing
 
agents
encounter business or
 
financial difficulties,
 
we may not
 
be able to
 
adequately staff our
 
vessels. If we
 
are
unable to grow our financial and
 
operating systems or to recruit suitable employees
 
should we determine
to expand our fleet, our financial
 
performance may be adversely affected, among other things.
We may have to pay tax on U.S. source income, which would reduce
 
our earnings.
Under
 
the
 
U.S.
 
Internal
 
Revenue
 
Code
 
of
 
1986, as
 
amended,
 
or
 
the
 
Code,
 
50%
 
of
 
the
 
gross
 
shipping
income
 
of
 
a
 
vessel-owning
 
or
 
chartering
 
corporation,
 
such
 
as
 
ourselves
 
and
 
our
 
subsidiaries,
 
that
 
is
attributable to
 
transportation that
 
begins or
 
ends, but
 
that does
 
not both
 
begin and
 
end, in
 
the United
 
States
is characterized as
 
U.S. source shipping
 
income and such
 
income is generally
 
subject to a
 
4% U.S. federal
income tax
 
without allowance
 
for deductions,
 
unless that
 
corporation qualifies
 
for exemption
 
from tax under
Section 883 of the Code and the Treasury Regulations promulgated thereunder.
We expect that
 
we and each
 
of our subsidiaries
 
qualify for this
 
statutory tax exemption
 
for the 2023
 
taxable
year and
 
we will take
 
this position
 
for U.S. federal
 
income tax return
 
reporting purposes. However,
 
there
are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption
in future years
 
and thereby
 
become subject
 
to U.S.
 
federal income
 
tax on
 
our U.S. source
 
shipping income.
For example, in
 
certain circumstances we
 
may no longer
 
qualify for exemption
 
under Code Section 883
 
for
a particular taxable year if shareholders, other than “qualified shareholders”, with a five percent or greater
interest in our common shares owned, in the aggregate, 50% or more of our outstanding common shares
for more
 
than half
 
the days
 
during the
 
taxable year.
 
Due to
 
the factual
 
nature of the
 
issues involved, we
can give no assurances on our tax-exempt status or that of any of our subsidiaries.
If we or
 
our subsidiaries are not
 
entitled to this exemption
 
under Section 883 of
 
the Code for any
 
taxable
year, we or our subsidiaries would
 
be subject for those
 
years to a 4%
 
U.S. federal income
 
tax on our gross
U.S.-source shipping income. The imposition of this taxation
 
could have a negative effect on our business
and would
 
result in
 
decreased earnings
 
available for
 
distribution to
 
our shareholders,
 
although, for
 
the 2023
taxable year, we estimate
 
our maximum
 
U.S. federal
 
income tax
 
liability to be
 
immaterial if we
 
were subject
to
 
this
 
U.S.
 
federal
 
income
 
tax.
 
See
 
“Item
 
10.
 
Additional
 
Information—E.
 
Taxation"
 
for
 
a
 
more
comprehensive discussion of U.S. federal income tax considerations.
 
35
U.S. federal 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.
A foreign corporation will be treated as a
 
“passive foreign investment company”, or PFIC, for U.S. federal
income tax purposes if
 
either (1) at least 75%
 
of its gross income
 
for any taxable year
 
consists of certain
types of “passive income”
 
or (2) at least 50% of
 
the average value of the
 
corporation's assets produce or
are
 
held
 
for
 
the
 
production
 
of
 
those
 
types
 
of
 
“passive
 
income.”
 
For
 
purposes
 
of
 
these
 
tests,
 
“passive
income” includes
 
dividends, interest,
 
gains from
 
the sale
 
or exchange
 
of investment
 
property,
 
and rents
and royalties
 
other than rents
 
and royalties which
 
are received
 
from unrelated parties
 
in connection with
the
 
active
 
conduct
 
of
 
a
 
trade
 
or
 
business.
 
For
 
purposes
 
of
 
these
 
tests,
 
income
 
derived
 
from
 
the
performance of services does not constitute “passive income.” U.S. shareholders of a PFIC are subject to
a disadvantageous
 
U.S. federal
 
income tax
 
regime with
 
respect to
 
the income
 
derived by
 
the PFIC,
 
the
distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition
of their shares in the PFIC.
Based on
 
our current
 
and proposed
 
method of
 
operation, we
 
do not
 
believe that
 
we will
 
be a
 
PFIC with
respect to any taxable
 
year. In this regard, we intend
 
to treat the gross income
 
we derive or are
 
deemed to
derive from
 
our time
 
chartering activities
 
as services
 
income, rather
 
than rental
 
income. Accordingly,
 
we
believe that
 
our income
 
from our
 
time chartering activities
 
does not
 
constitute “passive
 
income,” and the
assets that we own and operate in connection with
 
the production of that income do not constitute assets
that produce or are held for the production of “passive income”.
There
 
is
 
substantial
 
legal
 
authority
 
supporting
 
this
 
position
 
consisting
 
of
 
case
 
law
 
and
 
U.S.
 
Internal
Revenue Service, or “IRS”, pronouncements concerning the characterization of income derived from time
charters and voyage charters as services income for other
 
tax purposes. However, it should be noted that
there
 
is
 
also
 
authority
 
which
 
characterizes
 
time
 
charter
 
income
 
as
 
rental
 
income
 
rather
 
than
 
services
income for other tax
 
purposes. Accordingly,
 
no assurance can be given
 
that the IRS or a
 
court of law will
accept this position, and there is a risk
 
that the IRS or a court of
 
law could determine that we are a PFIC.
Moreover, no assurance can be
 
given that we
 
would not constitute
 
a PFIC for any
 
future taxable year
 
if the
nature and extent of our operations changed.
If the
 
IRS or
 
a court
 
of law
 
were to
 
find that
 
we are
 
or have
 
been a
 
PFIC for
 
any taxable
 
year,
 
our U.S.
shareholders would
 
face adverse
 
U.S. federal
 
income tax
 
consequences. Under
 
the PFIC
 
rules, unless
those shareholders make
 
an election available
 
under the Code
 
(which election could
 
itself have adverse
consequences for such shareholders),
 
such shareholders would
 
be subject to
 
U.S. federal income
 
tax at
the then
 
prevailing U.S.
 
federal income
 
tax rates
 
on ordinary
 
income plus
 
interest upon
 
excess distributions
and upon any gain
 
from the disposition of
 
our common stock,
 
as if the excess
 
distribution or gain
 
had been
recognized ratably
 
over the
 
shareholder's holding
 
period of
 
our common
 
stock. See
 
“Item 10.
 
Additional
Information—E.
 
Taxation–United
 
States
 
Taxation
 
of
 
U.S.
 
Holders–PFIC
 
Status
 
and
 
Significant
 
Tax
Consequences" for
 
a more
 
comprehensive discussion
 
of the
 
U.S. federal
 
income tax
 
consequences to
 
U.S.
holders of our common stock if we are or were to be treated as a PFIC.
Changes in tax
 
laws and unanticipated
 
tax liabilities could
 
materially and adversely
 
affect the taxes
we pay, results of operations and financial results.
We are subject to income and other taxes in the United States and foreign jurisdictions, and our results of
operations and financial
 
results may be
 
affected by tax and
 
other initiatives around
 
the world. For
 
instance,
there is a high level of uncertainty in
 
today’s tax environment stemming from global initiatives put forth by
the
 
Organisation
 
for
 
Economic
 
Co-operation
 
and
 
Development’s
 
(“OECD”)
 
two-pillar
 
base
 
erosion
 
and
profit
 
shifting
 
project.
 
In
 
October
 
2021,
 
members
 
of
 
the
 
OECD
 
put
 
forth
 
two
 
proposals:
 
(i)
 
Pillar
 
One
reallocates profit to the market
 
jurisdictions where sales arise
 
versus physical presence; and
 
(ii) Pillar Two
compels multinational corporations with €750 million
 
or more in annual
 
revenue to pay a
 
global minimum
tax of 15% on income
 
received in each country in
 
which they operate. The reforms
 
aim to level the playing
 
36
field between countries by discouraging
 
them from reducing their
 
corporate income taxes to
 
attract foreign
business investment. Over 140 countries agreed to enact
 
the two-pillar solution to address the challenges
arising from the
 
digitalization of the
 
economy and, in
 
2024, these guidelines
 
were declared effective
 
and
must now be enacted by those OECD member
 
countries. It is possible that these guidelines,
 
including the
global
 
minimum
 
corporate
 
tax
 
rate
 
measure
 
of
 
15%,
 
could
 
increase
 
the
 
burden
 
and
 
costs
 
of
 
our
 
tax
compliance, the
 
amount of
 
taxes
 
we
 
incur in
 
those
 
jurisdictions and
 
our
 
global effective
 
tax
 
rate,
 
which
could have a material adverse impact on our results of operations and
 
financial results.
 
Risks Relating to Our Common Stock
We cannot
 
assure you that
 
our board of
 
directors will continue to
 
declare dividends on shares
 
of
our common stock in the future.
In order to position us to take advantage of market opportunities in a then-deteriorating market, our board
of directors, beginning with the fourth quarter of 2008, suspended
 
our common stock dividend. As a result
of improving market conditions in 2021, our
 
board of directors elected to declare quarterly dividends from
the fourth
 
quarter of
 
2021 until
 
the first
 
quarter of
 
2024 and
 
two special
 
non-cash dividends.
 
The actual
declaration of future
 
cash dividends, and
 
the establishment of
 
record and payment
 
dates, is subject
 
to final
determination
 
by
 
our
 
board
 
of
 
directors
 
each
 
quarter
 
after
 
its
 
review
 
of
 
the
 
company's
 
financial
performance.
 
We
 
cannot
 
assure
 
you
 
that
 
our
 
board
 
of
 
directors
 
will
 
declare
 
and
 
pay
 
dividends
 
going
forward. Our dividend policy
 
is assessed by
 
our board of
 
directors from time to
 
time, based on
 
prevailing
market conditions,
 
available cash, uses of capital, contingent liabilities, the terms of our loan facilities, our
growth strategy and other
 
cash needs, the requirements
 
of Marshall Islands law
 
and other factors deemed
relevant
 
to
 
our
 
board
 
of
 
directors.
 
In
 
addition,
 
other
 
external
 
factors,
 
such
 
as
 
our
 
lenders
 
imposing
restrictions on our
 
ability to pay
 
dividends.
 
Under the terms
 
of our agreements,
 
we may not
 
be permitted
to
 
pay
 
dividends
 
that
 
would
 
result
 
in
 
an
 
event
 
of
 
default
 
or
 
if
 
an
 
event
 
of
 
default
 
has
 
occurred
 
and
 
is
continuing.
Our strategy contemplates that we will finance the acquisition of additional vessels through a combination
of debt
 
and equity
 
financing on
 
terms acceptable
 
to us.
 
If financing
 
is not
 
available to
 
us on
 
acceptable
terms, our board
 
of directors
 
may determine to
 
finance or refinance
 
acquisitions with cash
 
from operations,
which could also reduce or even eliminate the amount of cash available
 
for the payment of dividends.
Marshall
 
Islands
 
law
 
generally
 
prohibits
 
the
 
payment
 
of
 
dividends
 
other
 
than
 
from
 
surplus
 
(retained
earnings and
 
the excess
 
of consideration
 
received for
 
the sale of
 
shares above
 
the par value
 
of the shares)
or while
 
a company
 
is insolvent
 
or would
 
be rendered
 
insolvent by
 
the payment
 
of such
 
a dividend.
 
We
may not have sufficient surplus in the future to pay dividends.
 
In
 
addition, our
 
ability to
 
pay dividends
 
to holders
 
of our
 
common shares
 
will be
 
subject to
 
the rights
 
of
holders
 
of
 
our
 
Series
 
B
 
Preferred
 
Shares,
 
which
 
rank
 
senior
 
to
 
our
 
common
 
shares
 
with
 
respect
 
to
dividends,
 
distributions and
 
payments
 
upon
 
liquidation. No
 
cash dividend
 
may
 
be
 
paid
 
on
 
our
 
common
stock unless full cumulative dividends have been or contemporaneously are being paid or provided for on
all outstanding
 
Series B
 
Preferred Shares
 
for all
 
prior and
 
the then-ending
 
dividend periods.
 
Cumulative
dividends
 
on
 
our
 
Series
 
B
 
Preferred
 
Shares
 
accrue
 
at
 
a
 
rate
 
of
 
8.875%
 
per
 
annum
 
per
 
$25.00
 
stated
liquidation preference
 
per Series
 
B Preferred
 
Share, subject
 
to increase
 
upon the
 
occurrence of
 
certain
events, and are payable, as and if
 
declared by our board of directors,
 
on January 15, April 15, July
 
15 and
October 15 of each year, or, if any such dividend payment date otherwise would
 
fall on a date that is not a
business
 
day,
 
the
 
immediately succeeding
 
business
 
day.
 
For
 
additional information
 
about
 
our
 
Series
 
B
Preferred Shares, please see the section entitled "Description of Registrant's Securities to be Registered"
of our
 
registration statement
 
on Form
 
8-A filed
 
with the
 
SEC on
 
February 13,
 
2014 and
 
incorporated by
reference herein.
37
The
 
market
 
prices
 
and
 
trading
 
volume
 
of
 
our
 
shares
 
of
 
common
 
stock
 
may
 
experience
 
rapid
 
and
substantial price
 
volatility, which
 
could cause
 
purchasers of
 
our common
 
stock to
 
incur substantial
losses.
Our shares of our common stock may experience
 
similar rapid and substantial price volatility unrelated
to our financial
 
performance, which
 
could cause purchasers
 
of our common
 
stock to incur
 
substantial
losses,
 
which
 
may
 
be
 
unpredictable
 
and
 
not
 
bear
 
any
 
relationship
 
to
 
our
 
business
 
and
 
financial
performance. Extreme fluctuations in
 
the market price of
 
our common stock may
 
occur in response to
strong
 
and
 
atypical
 
retail
 
investor
 
interest,
 
including
 
on
 
social
 
media
 
and
 
online
 
forums,
 
the
 
direct
access by retail investors
 
to broadly available trading
 
platforms, the amount and
 
status of short interest
in
 
our
 
common
 
stock
 
and
 
our
 
other
 
securities,
 
access
 
to
 
margin
 
debt,
 
trading
 
in
 
options
 
and
 
other
derivatives on our shares of common
 
stock and any related hedging
 
and other trading factors:
If
 
there
 
is
 
extreme
 
market
 
volatility
 
and
 
trading
 
patterns
 
in
 
our
 
common
 
stock,
 
it
 
may
 
create
 
several
risks for purchasers of
 
our shares, including the following:
the market
 
price
 
of our
 
common stock
 
may
 
experience
 
rapid and
 
substantial
 
increases or
decreases
 
unrelated
 
to
 
our
 
operating
 
performance
 
or
 
prospects,
 
or
 
macro
 
or
 
industry
fundamentals;
if
 
our
 
future
 
market
 
capitalization
 
reflects
 
trading
 
dynamics
 
unrelated
 
to
 
our
 
financial
performance or
 
prospects, purchasers
 
of our
 
common stock
 
could incur
 
substantial losses
as prices decline once
 
the level of market volatility
 
has abated;
if the
 
future market
 
price of
 
our common
 
stock declines,
 
purchasers of
 
shares of
 
common
stock in this offering may be unable to
 
resell such shares at or above the price
 
at which they
acquired
 
them.
 
We
 
cannot
 
assure
 
such
 
purchasers
 
that
 
the
 
market
 
of
 
our
 
common
 
stock
will not fluctuate or decline significantly in the
 
future, in which case investors in this offering
could incur substantial losses.
Further, we may
 
incur rapid and
 
substantial increases
 
or decreases
 
in our common
 
stock price in
 
the
foreseeable future
 
that may
 
not coincide
 
in timing
 
with the
 
disclosure of
 
news or
 
developments by
 
or
affecting us.
 
Accordingly, the
 
market price
 
of our
 
common stock
 
may fluctuate
 
dramatically, and
 
may
decline
 
rapidly,
 
regardless
 
of
 
any
 
developments
 
in
 
our
 
business.
 
Overall,
 
there
 
are
 
various
 
factors,
many
 
of
 
which
 
are
 
beyond
 
our
 
control,
 
that
 
could
 
negatively
 
affect
 
the
 
market
 
price
 
of
 
our
 
common
stock or result in
 
fluctuations in the price or trading
 
volume of our common
 
stock, including:
actual or anticipated variations in our annual or quarterly
 
results of operations, including our
earnings estimates and whether we
 
meet market expectations with regard
 
to our earnings;
our ability to pay dividends or
 
other distributions;
publication
 
of
 
research
 
reports
 
by
 
analysts
 
or
 
others
 
about
 
us
 
or
 
the
 
shipping
 
industry
 
in
which we
 
operate which
 
may be
 
unfavorable, inaccurate,
 
inconsistent or
 
not disseminated
on a regular basis;
changes in market valuations of similar
 
companies;
market reaction
 
to any
 
additional
 
equity, debt
 
or other
 
securities that
 
we may
 
issue in
 
the
future, and which may or
 
may not dilute the holdings
 
of our existing stockholders;
additions or departures of key
 
personnel;
38
actions by institutional or
 
significant stockholders;
short interest in our
 
common stock or our
 
other securities and the market
 
response to such
short interest;
the
 
dramatic
 
increase
 
in
 
the
 
number
 
of
 
individual
 
holders
 
of
 
our
 
common
 
stock
 
and
 
their
participation in social media platforms
 
targeted at speculative investing;
speculation in the press or investment community about our company or industries in which
we operate;
strategic actions by us or
 
our competitors, such as
 
acquisitions or other investments;
legislative, administrative, regulatory or
 
other actions affecting our business,
 
our industry;
investigations, proceedings, or litigation
 
that involve or affect
 
us;
the occurrence of
 
any of the
 
other risk factors
 
included in this
 
registration statement of
 
which
this prospectus forms a part;
 
and
general market and economic
 
conditions.
Since we are
 
incorporated in the Marshall
 
Islands, which does
 
not have a
 
well-developed body of
corporate law, you
 
may have more difficulty
 
protecting your interests than
 
shareholders of a U.S.
corporation.
Our corporate affairs are governed by our amended and restated articles of incorporation and bylaws and
by
 
the
 
Marshall
 
Islands
 
Business
 
Corporations
 
Act,
 
or
 
the
 
BCA.
 
The
 
provisions
 
of
 
the
 
BCA
 
resemble
provisions of the
 
corporation laws of
 
a number of
 
states in the
 
United States. However,
 
there have been
few judicial cases in the
 
Marshall Islands interpreting the BCA. The
 
rights and fiduciary responsibilities of
directors under the
 
laws of the
 
Marshall Islands are
 
not as clearly
 
established as the
 
rights and fiduciary
responsibilities of
 
directors under statutes
 
or judicial
 
precedent in existence
 
in the United
 
States. The
 
rights
of
 
shareholders
 
of
 
the
 
Marshall
 
Islands
 
may
 
differ
 
from
 
the
 
rights
 
of
 
shareholders
 
of
 
companies
incorporated in the United States. While the BCA
 
provides that it is to be interpreted according to the
 
laws
of the State of Delaware and other states with substantially similar legislative provisions, there have been
few, if any, court
 
cases interpreting
 
the BCA
 
in the
 
Marshall Islands
 
and we
 
cannot predict
 
whether Marshall
Islands courts
 
would reach
 
the same
 
conclusions as
 
U.S. courts.
 
Thus, you
 
may have
 
more difficulty
 
in
protecting your
 
interests in
 
the face
 
of actions
 
by the
 
management, directors
 
or controlling
 
shareholders
than
 
would
 
shareholders
 
of
 
a
 
corporation
 
incorporated
 
in
 
a
 
U.S.
 
jurisdiction
 
which
 
has
 
developed
 
a
relatively more substantial body of case law.
 
As a
 
Marshall Islands
 
corporation and
 
with some
 
of our
 
subsidiaries being
 
Marshall Islands
 
entities
and
 
also
 
having
 
subsidiaries
 
in
 
other
 
offshore
 
jurisdictions,
 
our
 
operations
 
may
 
be
 
subject
 
to
economic substance requirements, which could impact our business.
We
 
are
 
a
 
Marshall
 
Islands
 
corporation
 
and
 
some
 
of
 
our
 
subsidiaries
 
are
 
Marshall
 
Islands
 
entities.
 
The
Marshall Islands has
 
enacted economic substance laws and
 
regulations with which we
 
may be obligated
to
 
comply.
 
We
 
believe
 
that
 
we
 
and
 
our
 
subsidiaries
 
are
 
compliant
 
with
 
the
 
Marshall
 
Islands
 
economic
substance requirements. However, if there were a change in the requirements or interpretation thereof, or
if there were
 
an unexpected
 
change to our
 
operations, any
 
such change
 
could result
 
in noncompliance
 
with
the economic substance legislation and
 
related fines or other
 
penalties, increased monitoring and audits,
and dissolution of the non-compliant entity,
 
which could have an adverse effect on our business, financial
condition or operating results.
 
 
 
 
39
EU Finance ministers rate jurisdictions for tax rates and tax transparency,
 
governance and real economic
activity.
 
Countries that are
 
viewed by such
 
finance ministers as
 
not adequately cooperating,
 
including by
not implementing sufficient
 
standards in
 
respect of the
 
foregoing, may be
 
put on a
 
“grey list” or
 
a “blacklist”.
Effective as
 
of October 17,
 
2023 the Marshall
 
Islands has
 
been designated as
 
a cooperating
 
jurisdiction
for tax
 
purposes. If
 
the Marshall
 
Islands is
 
added to
 
the list
 
of non-cooperative
 
jurisdictions in
 
the future
and sanctions or other financial, tax or regulatory measures were applied by
 
European Member States to
countries on
 
the list
 
or further
 
economic substance requirements
 
were imposed
 
by the
 
Marshall Islands,
our business could be harmed.
Certain existing
 
shareholders will
 
be able
 
to exert
 
considerable influence
 
over matters
 
on which
our shareholders are entitled to vote.
 
As
 
of
 
the
 
date
 
of
 
this
 
annual
 
report,
 
Mrs.
 
Semiramis
 
Paliou,
 
our
 
Chief
 
Executive
 
Officer
 
and
 
Director,
beneficially owns 23,750,097 shares, or approximately 19.8% of
 
our outstanding common stock, which is
held indirectly
 
through entities
 
over which
 
she exercises
 
sole voting
 
power.
 
Mrs. Paliou
 
controls 10,675
shares of
 
Series C
 
Preferred Stock,
 
par value
 
$0.01 per
 
share, issued
 
on January
 
31, 2019,
 
and 400
 
shares
of Series D
 
Preferred Stock,
 
issued on
 
June 22,
 
2021. The
 
Series C Preferred
 
Stock vote
 
with our common
shares and
 
each share
 
of the
 
Series C
 
Preferred Stock
 
entitles the
 
holder thereof
 
to 1,000
 
votes on
 
all
matters submitted to a vote of the common stockholders of the Issuer.
 
The Series D Preferred Stock vote
with
 
the
 
common
 
shares of
 
the
 
Company,
 
and
 
each share
 
of
 
the
 
Series D
 
Preferred
 
Stock
 
entitles the
holder thereof
 
to up
 
to 200,000
 
votes, on
 
all matters
 
submitted
 
to a
 
vote of
 
the stockholders
 
of the
 
Company,
provided however, that
 
to the extent the
 
total number of votes one
 
or more holders of Series
 
D Preferred
Stock is entitled
 
to vote (including
 
any voting power
 
of such holders
 
derived from Series
 
D Preferred
 
Stock,
shares of
 
Common Stock
 
or any
 
other voting
 
security of
 
the Company
 
issued and
 
outstanding as
 
of the
date hereof or
 
that may be
 
issued in the
 
future) on any
 
matter submitted to
 
a vote of
 
stockholders of the
Company
 
would
 
exceed
 
36%
 
of
 
the
 
total
 
number
 
of
 
votes
 
eligible
 
to
 
be
 
cast
 
on
 
such
 
matter,
 
the
 
total
number of
 
votes that
 
holders of
 
Series D
 
Preferred Stock
 
may exercise
 
derived from
 
the Series
 
D Preferred
Stock together with
 
Common Shares and
 
any other voting
 
securities of the
 
Company beneficially owned
by such holder,
 
shall be reduced to 36% of
 
the total number of votes entitled to
 
vote on any matter put to
stockholders of the Company.
 
Through her beneficial ownership of common shares
 
and shares of Series
C
 
Preferred
 
Stock
 
and
 
Series
 
D
 
Preferred
 
Stock,
 
Mrs.
 
Paliou
 
controls
 
36%
 
of
 
the
 
vote
 
of
 
any
 
matter
submitted to the vote
 
of the common shareholders.
 
Please see "Item 7.
 
Major Shareholders and Related
Party Transactions—A. Major
 
Shareholders." While Mrs. Paliou and the entities
 
controlled by Mrs. Paliou
have no
 
agreement, arrangement
 
or understanding
 
relating to
 
the voting
 
of their
 
shares of
 
our common
stock, they
 
are able
 
to influence
 
the outcome
 
of matters
 
on which
 
our shareholders
 
are entitled
 
to vote,
including the election of directors and other significant corporate actions. This concentration of ownership
may
 
have
 
the
 
effect
 
of
 
delaying,
 
deferring
 
or
 
preventing
 
a
 
change
 
in
 
control,
 
merger,
 
consolidation,
takeover or other
 
business combination.
 
This concentration of
 
ownership could
 
also discourage a
 
potential
acquirer from
 
making a
 
tender offer or
 
otherwise attempting
 
to obtain
 
control of
 
us, which
 
could in
 
turn have
an adverse effect
 
on the market
 
price of our
 
shares. So long
 
as our
 
Chief Executive Officer
 
continues to
own a significant amount
 
of our equity,
 
even though the amount
 
held by her represents
 
less than 50% of
our voting power,
 
she will continue to
 
be able to exercise
 
considerable influence over our
 
decisions. The
interests of these shareholders may be different from your interests.
Future sales of our common stock could cause the market price
 
of our common stock to decline.
Our amended
 
and restated
 
articles of
 
incorporation authorize
 
us to
 
issue up
 
to 1,000,000,000
 
shares of
common stock, of which, as
 
of December 31, 2023, 113,065,725 shares were outstanding.
 
The number of
shares of
 
common stock available
 
for sale
 
in the public
 
market is limited
 
by restrictions applicable
 
under
securities laws
 
and agreements
 
that we
 
and our
 
executive officers,
 
directors and
 
principal shareholders
have entered into.
40
Sales of a substantial
 
number of shares of our
 
common stock in the public
 
market, or the perception that
these
 
sales
 
could
 
occur,
 
may
 
depress the
 
market
 
price
 
for
 
our
 
common
 
stock.
 
These
 
sales
 
could
 
also
impair our ability to raise additional capital through the sale of our equity
 
securities in the future.
Anti-takeover
 
provisions
 
in
 
our
 
organizational
 
documents
 
could
 
make
 
it
 
difficult
 
for
 
our
shareholders to
 
replace or
 
remove our
 
current board
 
of directors
 
or have
 
the effect
 
of discouraging,
delaying or
 
preventing a
 
merger or
 
acquisition, which
 
could adversely
 
affect
 
the market
 
price of
our common stock.
Several provisions of our amended and
 
restated articles of incorporation and
 
bylaws could make it difficult
for our shareholders to change the composition of our board
 
of directors in any one year, preventing them
from changing the composition
 
of management. In
 
addition, the same
 
provisions may discourage,
 
delay or
prevent a merger or acquisition that shareholders may consider
 
favorable.
These provisions include:
authorizing
 
our board
 
of directors
 
to
 
issue “blank
 
check” preferred
 
stock without
 
shareholder
approval;
providing for a classified board of directors with staggered, three-year
 
terms;
prohibiting cumulative voting in the election of directors;
authorizing
 
the
 
removal of
 
directors
 
only for
 
cause and
 
only
 
upon
 
the
 
affirmative
 
vote
 
of
 
the
holders
 
of
 
a
 
majority
 
of
 
the
 
outstanding shares
 
of
 
our
 
common
 
stock
 
entitled
 
to
 
vote
 
for
 
the
directors;
prohibiting shareholder action by written consent;
limiting the persons who may call special meetings of shareholders;
 
and
establishing advance notice requirements for nominations for election to our board of directors
or for proposing matters that can be acted on by shareholders at shareholder
 
meetings.
In addition,
 
we have
 
adopted a
 
Stockholders Rights
 
Agreement, dated
 
January 15,
 
2016, pursuant
 
to which
our board of directors may cause the substantial dilution
 
of any person that attempts to acquire us without
the approval of our board of directors.
These
 
anti-takeover
 
provisions,
 
including
 
provisions
 
of
 
our
 
Stockholders
 
Rights
 
Agreement,
 
could
substantially impede the ability of public shareholders to benefit from a change in control and, as a result,
may adversely affect the
 
market price of our
 
common stock and
 
your ability to
 
realize any potential
 
change
of control premium.
Our Series B Preferred Shares
 
are senior obligations of ours
 
and rank prior to our common
 
shares
with
 
respect
 
to
 
dividends,
 
distributions
 
and
 
payments
 
upon
 
liquidation,
 
which
 
could
 
have
 
an
adverse effect on the value of our common shares.
The rights of the holders
 
of our Series B Preferred Shares
 
rank senior to the obligations to
 
holders of our
common shares. Upon our liquidation, the holders of Series
 
B Preferred Shares will be entitled to receive
a liquidation preference
 
of $25.00 per share,
 
plus all accrued but
 
unpaid dividends, prior and
 
in preference
to any distribution to the holders of any other class of our equity securities, including our common shares.
The existence of the Series B Preferred
 
Shares could have an adverse effect on the value
 
of our common
shares.
41
Risks Relating to Our Series B Preferred Stock
We may not have
 
sufficient cash from our operations to
 
enable us to pay dividends on
 
our Series
B Preferred Shares following the payment of expenses and the establishment
 
of any reserves.
We
 
pay quarterly
 
dividends on
 
our Series
 
B Preferred
 
Shares only
 
from funds
 
legally available
 
for such
purpose when,
 
as and
 
if
 
declared by
 
our board
 
of
 
directors. We
 
may
 
not have
 
sufficient
 
cash available
each
 
quarter to
 
pay dividends.
 
The amount
 
of
 
dividends we
 
can pay
 
on our
 
Series B
 
Preferred Shares
depends upon the amount of cash we generate from and use in
 
our operations, which may fluctuate.
The
 
amount of
 
cash we
 
have
 
available for
 
dividends on
 
our Series
 
B Preferred
 
Shares will
 
not
 
depend
solely on our
 
profitability. The
 
actual amount of cash
 
we have available to
 
pay dividends on our
 
Series B
Preferred Shares depends on many factors, including
 
the following:
changes in
 
our operating
 
cash flow, capital expenditure
 
requirements, working
 
capital requirements
and other cash needs;
restrictions under our existing or future credit facilities or any future debt securities
 
on our ability to
pay dividends if an
 
event of default has
 
occurred and is
 
continuing or if
 
the payment of the
 
dividend
would result in
 
an event of
 
default, or under
 
certain facilities
 
if it would
 
result in the
 
breach of certain
financial covenants;
the amount of any cash reserves established by our board of directors;
 
and
restrictions under
 
Marshall Islands
 
law,
 
which generally
 
prohibits the
 
payment of
 
dividends other
than from
 
surplus (retained
 
earnings and
 
the excess
 
of consideration
 
received for
 
the sale
 
of shares
above the par value of the shares) or while a company is insolvent or would be rendered insolvent
by the payment of such a dividend.
The amount of cash we generate from our operations may differ materially
 
from our net income or loss for
the period, which
 
is affected by
 
non-cash items, and
 
our board of
 
directors in its discretion
 
may elect not
to declare
 
any dividends.
 
As a
 
result of
 
these and
 
the other
 
factors mentioned
 
above, we
 
may pay
 
dividends
during
 
periods
 
when
 
we
 
record
 
losses
 
and
 
may
 
not
 
pay
 
dividends
 
during
 
periods
 
when
 
we
 
record
 
net
income.
The Series B Preferred Shares represent perpetual equity
 
interests.
The Series B
 
Preferred Shares represent
 
perpetual equity interests
 
in us and,
 
unlike our indebtedness,
 
will
not give
 
rise to
 
a claim for
 
payment of a
 
principal amount at
 
a particular date.
 
As a
 
result, holders of
 
the
Series
 
B Preferred
 
Shares may
 
be required
 
to
 
bear the
 
financial risks
 
of
 
an investment
 
in the
 
Series B
Preferred Shares for an indefinite period
 
of time. In addition, the Series
 
B Preferred Shares will rank junior
to all our
 
indebtedness and other
 
liabilities, and to
 
any other senior
 
securities we may
 
issue in the
 
future
with respect to assets available to satisfy claims against us.
Our Series
 
B Preferred
 
Shares are
 
subordinate to
 
our indebtedness,
 
and your
 
interests could
 
be
diluted
 
by
 
the
 
issuance
 
of
 
additional
 
preferred
 
shares,
 
including
 
additional
 
Series
 
B
 
Preferred
Shares, and by other transactions.
Our Series B Preferred Shares are subordinated to all of our existing and future indebtedness. Therefore,
our ability to pay dividends on, redeem
 
or pay the liquidation preference on
 
our Series B Preferred Shares
in liquidation or
 
otherwise may be
 
subject to prior
 
payments due to
 
the holders of
 
our indebtedness. Our
existing indebtedness restricts, and our future indebtedness may include restrictions on, our
 
ability to pay
42
dividends on
 
or
 
redeem preferred
 
shares. Our
 
amended and
 
restated
 
articles of
 
incorporation currently
authorize the issuance
 
of up to
 
50,000,000 preferred
 
shares, par value
 
$0.01 per share.
 
Of these preferred
shares, 1,000,000 shares have been
 
designated Series A Participating
 
Preferred Stock, 5,000,000 shares
have been
 
designated Series
 
B Preferred
 
Shares, 10,675
 
are designated
 
as Series
 
C Preferred
 
Shares
and 400 are designated as
 
Series D Preferred Shares. The
 
Series B Preferred Shares are
 
senior in rank
to the
 
Series A
 
Participating Preferred
 
Shares. The
 
issuance of
 
additional Series
 
B Preferred
 
Shares or
other preferred shares
 
on a parity
 
with or senior
 
to the Series B
 
Preferred Shares would
 
dilute the interests
of holders of our
 
Series B Preferred Shares, and any issuance
 
of preferred shares senior to
 
our Series B
Preferred Shares or of additional indebtedness could affect our ability to pay dividends on, redeem or pay
the liquidation preference
 
on our Series
 
B Preferred Shares.
 
The Series B
 
Preferred Shares do
 
not contain
any provisions
 
affording the
 
holders of
 
our Series
 
B Preferred
 
Shares protection
 
in the
 
event of
 
a highly
leveraged or other transaction,
 
including a merger or the
 
sale, lease or conveyance
 
of all or substantially
all our assets
 
or business, which might
 
adversely affect the
 
holders of our Series
 
B Preferred Shares, so
long as the rights of our Series B Preferred Shares are not directly
 
materially and adversely affected.
We may redeem the
 
Series B Preferred
 
Shares, and you
 
may not be
 
able to reinvest
 
the redemption
price you receive in a similar security.
Since February 14, 2019, we
 
may, at our option, redeem Series B Preferred Shares,
 
in whole or in part, at
any time or from time to time. We may have an incentive to redeem Series B Preferred Shares voluntarily
if market conditions allow us
 
to issue other preferred shares
 
or debt securities at a
 
rate that is lower than
the dividend
 
on the
 
Series B
 
Preferred Shares.
 
If we
 
redeem Series
 
B Preferred
 
Shares, then
 
from and
after the
 
redemption date,
 
your dividends
 
will cease
 
to accrue
 
on your
 
Series B
 
Preferred Shares,
 
your
Series B Preferred Shares shall no longer be deemed outstanding and all your rights as a holder of those
shares
 
will
 
terminate,
 
except
 
the
 
right
 
to
 
receive
 
the
 
redemption
 
price
 
plus
 
accumulated
 
and
 
unpaid
dividends, if any,
 
payable upon redemption. If
 
we redeem the
 
Series B Preferred
 
Shares for any
 
reason,
you may not be able to reinvest the redemption price you receive
 
in a similar security.
 
Market interest rates may adversely affect the value of our Series B Preferred
 
Shares.
One of
 
the factors that
 
may influence the
 
price of
 
our Series B
 
Preferred Shares is
 
the dividend yield
 
on
the Series B Preferred Shares
 
(as a percentage of the
 
price of our Series B
 
Preferred Shares) relative to
market
 
interest
 
rates.
 
An
 
increase
 
in
 
market
 
interest
 
rates,
 
which
 
are
 
currently
 
at
 
low
 
levels
 
relative
 
to
historical
 
rates,
 
may
 
lead
 
prospective
 
purchasers
 
of
 
our
 
Series
 
B
 
Preferred
 
Shares
 
to
 
expect
 
a
 
higher
dividend yield, and
 
higher interest rates
 
would likely increase
 
our borrowing costs
 
and potentially decrease
funds available for
 
distribution. Accordingly,
 
higher market
 
interest rates could
 
cause the
 
market price of
our Series B Preferred Shares to decrease.
As a holder of Series B Preferred Shares you have extremely
 
limited voting rights.
Your voting rights as a holder of Series
 
B Preferred Shares are
 
extremely limited. Our common
 
shares are
the only outstanding class or series of our shares carrying full voting rights. Holders of Series B Preferred
Shares have
 
no voting
 
rights other
 
than the
 
ability,
 
subject to
 
certain exceptions,
 
to elect
 
one director
 
if
dividends for six
 
quarterly dividend
 
periods (whether
 
or not consecutive)
 
payable on
 
our Series B
 
Preferred
Shares are in arrears and certain other limited protective voting
 
rights.
Our
 
ability
 
to
 
pay
 
dividends
 
on
 
and
 
to
 
redeem
 
our
 
Series
 
B
 
Preferred
 
Shares
 
is
 
limited
 
by
 
the
requirements of Marshall Islands law.
Marshall Islands
 
law provides that
 
we may
 
pay dividends on
 
and redeem the
 
Series B
 
Preferred Shares
only to the
 
extent that assets
 
are legally available
 
for such purposes.
 
Legally available
 
assets generally
 
are
limited to our surplus, which essentially represents our retained earnings
 
and the excess of consideration
received by us for
 
the sale of shares
 
above the par value
 
of the shares. In
 
addition, under Marshall
 
Islands
43
law we
 
may not
 
pay dividends
 
on or
 
redeem Series
 
B Preferred
 
Shares if
 
we are
 
insolvent or
 
would be
rendered insolvent by the payment of such a dividend or the making
 
of such redemption.
The amount of your
 
liquidation preference is
 
fixed and you will
 
have no right
 
to receive any greater
payment regardless of the circumstances.
The
 
payment
 
due
 
upon
 
a
 
liquidation
 
is
 
fixed
 
at
 
the
 
redemption
 
preference
 
of
 
$25.00
 
per
 
share
 
plus
accumulated and
 
unpaid dividends
 
to
 
the
 
date
 
of
 
liquidation. If,
 
in the
 
case of
 
our
 
liquidation, there
 
are
remaining
 
assets
 
to
 
be distributed
 
after
 
payment
 
of
 
this
 
amount,
 
you
 
will
 
have
 
no right
 
to
 
receive
 
or
 
to
participate in these
 
amounts. Furthermore,
 
if the market
 
price for your
 
Series B Preferred
 
Shares is greater
than
 
the
 
liquidation
 
preference,
 
you
 
will
 
have
 
no
 
right
 
to
 
receive
 
the
 
market
 
price
 
from
 
us
 
upon
 
our
liquidation.
Risks Relating to Our Outstanding Warrants
 
The issuance
 
of our
 
common stock
 
upon the
 
exercise of
 
the Warrants may
 
depress our
 
stock price.
We could issue up
 
to 33,919,605 shares of common
 
stock in connection
 
with the exercise
 
of the Warrants.
The issuances
 
of the
 
shares of
 
common stock
 
upon exercise
 
of the
 
Warrants and the
 
resale of
 
such shares
after their issuance,
 
or the perception that
 
such sales could
 
occur, could
 
result in downward
 
pressure on
our
 
stock
 
price
 
and
 
could
 
impact
 
our
 
ability to
 
raise
 
capital
 
through the
 
sale
 
of
 
additional shares
 
in
 
the
future. See
 
“Item 4. Information
 
on the
 
Company— A.
 
History and
 
development of
 
the Company—
 
Warrant
Distribution" for a more detailed discussion of our Warrants.
Item 4.
 
Information on the Company
A.
 
History and development of the Company
Diana Shipping Inc. is a holding company
 
incorporated under the laws of Liberia in
 
March 1999 as Diana
Shipping
 
Investments
 
Corp.
 
In
 
February
 
2005,
 
the
 
Company’s
 
articles
 
of
 
incorporation
 
were
 
amended.
Under the amended
 
and restated articles
 
of incorporation, the
 
Company was
 
renamed Diana Shipping
 
Inc.
and was re-domiciled from the Republic
 
of Liberia to the Republic of
 
the Marshall Islands.
 
Our executive
offices
 
are located
 
at Pendelis
 
16,
 
175 64
 
Palaio Faliro,
 
Athens, Greece.
 
Our telephone
 
number at
 
this
address is +30-210-947-0100. Our agent and authorized representative in the United States is our wholly
owned
 
subsidiary,
 
Bulk
 
Carriers
 
(USA)
 
LLC,
 
established in
 
September
 
2006,
 
in
 
the
 
State
 
of
 
Delaware,
which is located
 
at 2711 Centerville Road, Suite
 
400, Wilmington, Delaware
 
19808. The SEC
 
maintains an
Internet
 
site
 
that
 
contains
 
reports,
 
proxy
 
and
 
information
 
statements,
 
and
 
other
 
information
 
regarding
issuers that file electronically with
 
the SEC. The address of
 
the SEC's Internet site
 
is http://www.sec.gov.
The address of the Company's Internet site is http://www.dianashippinginc.com.
Recent Developments
 
Vessel acquisitions
In January 2023, we
 
took delivery of
 
DSI Aquarius, a
 
2016 built Ultramax
 
dry bulk vessel of
 
60,309 dwt, for
a purchase price of $24.0 million in
 
cash and 2,033,613 newly issued common shares. The vessel
 
is one
of nine modern Ultramax dry bulk vessels that we entered into an agreement
 
to purchase in August 2022.
In
 
February 2024,
 
we signed
 
shipbuilding contracts
 
for two
 
81,200 dwt
 
methanol dual
 
fuel new-building
Kamsarmax
 
dry
 
bulk
 
vessels,
 
for
 
a
 
purchase
 
price
 
of
 
$46
 
million
 
each,
 
to
 
be
 
built
 
at
 
Tsuneishi
 
Group
(Zhoushan)
 
Shipbuilding Inc.,
 
China.
 
The
 
vessels
 
are
 
expected to
 
be
 
delivered to
 
the
 
Company by
 
the
second half of 2027 and the first half of 2028, respectively.
44
Vessel disposals
In January 2023,
 
we agreed to
 
sell to an
 
unrelated third party
 
the vessel
Aliki
 
for $15.08 million.
 
The vessel
was delivered to her new owners on February 8, 2023.
 
In
 
February 2023,
 
we agreed
 
to
 
sell to
 
OceanPal, a
 
related party,
 
the
 
vessel
Melia
 
for $14.0
 
million, of
which $4.0
 
million was
 
paid in
 
cash and
 
$10.0 million through
 
13,157 of
 
OceanPal Series
 
D Convertible
Preferred Shares. The vessel was delivered to her new owners
 
on February 8, 2023.
In
 
October
 
2023,
 
we
 
agreed to
 
sell
 
to
 
an
 
unrelated third
 
party the
 
vessel
Boston
 
for
 
$18.0 million.
 
The
vessel was delivered to her new owners on December 6, 2023.
 
In January 2024, we agreed to sell to an unrelated third party the vessel
Artemis
 
for the purchase price of
$13.0 million.
 
The vessel was delivered to her new owners on March 5, 2024.
In February 2024, we agreed to sell to an unrelated third party,
 
the vessel
Houston,
for $23.3 million. The
vessel is expected to be delivered to the buyer latest by September 16,
 
2024.
Please
 
read
 
Note
 
6
 
– Advances
 
for
 
vessel
 
acquisitions
 
and
 
Vessels,
 
net of
 
our
 
consolidated
 
financial
statements, included elsewhere in
 
this Annual Report for
 
a full description of
 
the Company’s acquisitions
and sales of vessels as of December 31, 2023.
Other transactions
In February 2023,
 
we signed a
 
Memorandum of Agreement
 
to acquire from
 
an unaffiliated third-party
 
an
Ultramax dry bulk vessel for a purchase price
 
of $27.9 million. On April 28, 2023, the vessel’s ship
 
owning
company
 
was
 
deconsolidated
 
from
 
the
 
Company’s
 
financial
 
statements
 
due
 
to
 
the
 
Company’s
 
loss
 
of
control. Upon the deconsolidation, we retained 25% of the the total partnership
 
interests.
In
 
November
 
2023,
 
we
 
entered
 
into
 
a
 
joint
 
venture
 
agreement,
 
with
 
two
 
unrelated
 
companies
 
to
 
form
Windward
 
Offshore
 
GmbH
 
&
 
Co.
 
KG,
 
or
 
Windward,
 
for
 
the
 
purpose
 
of
 
establishing
 
and
 
operating
 
an
offshore wind
 
vessel company.
 
We
 
agreed to
 
contribute Euro
 
25.0 million,
 
being 45.45%
 
of Windward’s
capital,
 
to
 
construct
 
two
 
CSOVs.
 
In
 
January
 
2024,
 
we
 
committed
 
to
 
increase
 
our
 
contribution
 
to
 
the
partnership to Euro 50.0
 
million, being 45.87% of
 
Windward’s capital in
 
order for the partnership to
 
place
orders for two additional CSOVs.
Dividends
On March 20, 2023,
 
we paid a cash
 
dividend on our common
 
stock of $0.15 per
 
share,
 
or $16 million, to
all shareholders
 
of record
 
as of March
 
13, 2023 and
 
on June 9,
 
2023, we
 
distributed our
 
Series D Preferred
Shares of OceanPal to our shareholders of record as of April
 
24, 2023.
On July
 
10, 2023,
 
we distributed a
 
dividend of
 
$0.15 per
 
share to
 
our shareholders of
 
record as
 
of June
12,
 
2023,
 
and
 
paid
 
$12.4
 
million
 
in
 
cash
 
to
 
shareholders
 
who
 
elected
 
to
 
receive
 
cash
 
and
 
distributed
965,044 newly issued common shares to shareholders who elected
 
to receive shares.
On September
 
8, 2023, we
 
distributed a dividend
 
of $0.15
 
per share to
 
our shareholders of
 
record as
 
of
August 14,
 
2023, and
 
paid $13.0
 
million in
 
cash to
 
shareholders who
 
elected to
 
receive cash
 
and distributed
831,672 newly issued common shares to shareholders who elected
 
to receive shares.
On
 
December 4,
 
2023, we
 
distributed a
 
dividend of
 
$0.15 per
 
share to
 
all
 
shareholders of
 
record as
 
of
November 27, 2023,
 
in the form
 
of common
 
stock and distributed
 
4,831,777 newly
 
issued common
 
shares.
 
45
On March
 
12, 2024,
 
we paid
 
a cash
 
dividend of
 
$0.075 per
 
share, or
 
$9.0 million,
 
to all
 
shareholders of
record as of March 5, 2024.
Please read Note
11
– Capital Stock and Changes in Capital Accounts and Note 17 – Subsequent
 
events
to our consolidated financial statements, included elsewhere in this
 
Annual Report for a full description of
the Company’s dividends distribution as of December 31, 2023.
Loans
In February 2023, we
 
early prepaid $8.1 million of
 
outstanding debt due to the
 
sale of
Melia
to OceanPal
and
Alik
i to an unaffiliated third party.
 
On March
 
14, 2023,
 
we early prepaid
 
$11.8
 
million, being the
 
outstanding balance of
 
our loan
 
with DNB
Bank ASA.
In April
 
2023, both
 
loans held
 
with BNP
 
were refinanced
 
through a
 
new $100
 
million loan
 
facility with
 
Danish
Ship Finance and the outstanding balance of both loans, amounting
 
to $75.2 million was prepaid in full.
On June
 
26, 2023,
 
we prepaid
 
in full
 
both loans
 
held with
 
ABN Bank
 
amounting to
 
$68.7 million,
 
which
were refinanced under
 
a new loan
 
agreement with DNB
 
Bank ASA of
 
$100.0 million,
 
drawn on June
 
27,
2023. As part of
 
the loan agreement,
 
we entered into an
 
interest rate swap
 
with DNB for a
 
notional amount
of $30.0 million, being 30% of the loan amount
 
under which we pay a fixed rate and receive
 
floating under
term SOFR.
On June 27, 2023, we
 
drew down $22.5 million
 
and prepaid in full
 
the outstanding balance of
 
our loan with
Nordea Bank of $20.9 million.
On June 29,
 
2023, we repurchased
 
$5.9 million
 
nominal value of
 
the $125.0 million
 
senior unsecured bond
issued in June 2021 with maturity in June 2026.
A full description of the Company’s loan facilities as
 
of December 31, 2023 is included in
 
Item 5 Operating
and
 
Financial
 
Review
 
and
 
Prospects
 
and
 
Note
 
8
 
of
 
our
 
consolidated
 
financial
 
statements
 
and
 
Notes
thereto, included elsewhere in this Annual Report.
Warrant Distribution
 
On December 14, 2023,
 
we issued warrants to
 
purchase common shares (the “Warrants”)
 
to the holders
of record of Common Stock
 
as of the close of
 
business on December 6, 2023 (the
 
“Record Date”) on the
terms and conditions described in the Warrant Agreement (as defined below and attached as exhibit 2.10
to this
 
annual report). Each
 
holder received one
 
Warrant for
 
every five shares
 
of issued and
 
outstanding
shares of common stock held as of the
 
Record Date (rounded down to the nearest whole number for
 
any
fractional
 
Warrant).
 
Each
 
Warrant
 
entitles
 
the
 
holder
 
to
 
purchase,
 
at
 
the
 
holder’s
 
sole
 
and
 
exclusive
election, at the exercise price,
 
one share of common stock
 
plus, to the extent, described
 
below, the Bonus
Share Fraction. A
 
Bonus Share
 
Fraction entitles
 
a holder to
 
receive an additional
 
0.5 of a
 
share of common
stock for each Warrant exercised (the “Bonus Share Fraction”) without
 
payment of any additional exercise
price. Since the dividend
 
ex-Date on March 4, 2024,
 
the Bonus Share Fraction
 
was adjusted to 0.51292
 
of
a share of common stock for each Warrant exercised.
The right
 
to receive
 
the Bonus
 
Share Fraction
 
will expire
 
at 5:00
 
p.m. New
 
York City time (the
 
“Bonus Share
Expiration Date”) upon
 
the earlier of (i)
 
the date specified
 
by the Registrant
 
upon not less than
 
20 business
days’
 
notice
 
and
 
(ii)
 
the
 
first
 
business
 
day
 
following
 
the
 
last
 
day
 
of
 
the
 
first
 
30
 
consecutive trading
 
day
period
 
in
 
which
 
the
 
daily
 
VWAP
 
of
 
the
 
shares
 
of
 
common
 
stock
 
has
 
been
 
at
 
least
 
equal
 
to
 
the
 
then
46
applicable
 
trigger
 
price
 
for
 
at
 
least
 
20
 
trading
 
days
 
(whether
 
or
 
not
 
consecutive)
 
(the
 
“Bonus
 
Price
Condition”). Any Warrant
 
exercised with an
 
exercise date after
 
the Bonus Share
 
Expiration Date will
 
not be
entitled to any Bonus Share
 
Fraction. The Company will
 
make a public announcement
 
of the Bonus Share
Expiration Date
 
(i) at least
 
20 business
 
days prior
 
to such date,
 
in the
 
case of the
 
Company setting
 
a Bonus
Share Expiration Date
 
and (ii) prior
 
to market
 
open on the
 
Bonus Share Expiration
 
Date in the
 
case of
 
a
Bonus Price Condition.
Unless earlier redeemed, the Warrants will expire
 
and cease to be exercisable at
 
5:00 p.m. New York City
time on December 14, 2026 (the “Expiration Date”).
In connection with the Warrant distribution, we filed a prospectus
 
supplement, dated December 14, 2023,
pursuant
 
to
 
our
 
existing
 
shelf
 
registration
 
statement
 
on
 
Form
 
F-3
 
declared
 
effective
 
on
 
July
 
9,
 
2021,
registering up
 
to 33,919,605
 
shares of
 
common stock to
 
be issued
 
upon exercise
 
of the
 
Warrants under
the Securities Act of 1933, as amended.
The
 
Warrants
 
commenced
 
trading
 
on
 
the
 
New
 
York
 
Stock
 
Exchange
 
under
 
the
 
ticker
 
“DSX
 
WS”
 
on
December 14, 2023.
As of
 
the date
 
of this
 
annual report,
 
out of
 
the 22,613,070
 
Warrants distributed
 
in this
 
transaction, 3,051,471
Warrants have been exercised and 4,597,192 common shares have been issued.
B.
 
Business overview
We specialize
 
in the ownership
 
and bareboat charter-in
 
of dry bulk
 
vessels, determined as one
 
business
segment. Each of our vessels is owned through a separate wholly-owned
 
subsidiary.
 
As of
 
the date
 
of this
 
report, our
 
fleet consisted
 
of 41
 
vessels of
 
which 39
 
in operation,
 
owned and
 
chartered-
in, having
 
a combined carrying
 
capacity of
 
4.4 million dead weight
 
tons, or
 
dwt, and
 
a weighted average
age of 10.4 years and two Kamsarmax vessels under construction.
 
As of December
 
31, 2023,
 
we had a
 
fleet of 40
 
dry bulk
 
carriers, owned and
 
chartered-in, consisting
 
of nine
Ultramax, seven
 
Panamax, six
 
Kamsarmax, five
 
Post-Panamax, nine
 
Capesize and
 
four Newcastlemax
vessels, having
 
a combined
 
carrying capacity
 
of approximately
 
4.5 million
 
dwt and a
 
weighted average
 
age
of 10.5 years.
 
As
 
of
 
December
 
31,
 
2022,
 
we
 
had
 
a
 
fleet
 
of
 
42
 
dry
 
bulk
 
carriers,
 
consisting
 
of
 
eight
 
Ultramax,
 
eight
Panamax, six Kamsarmax, five Post-Panamax, eleven Capesize and four
 
Newcastlemax vessels, having
a combined carrying capacity of approximately 4.9 million dwt and a weighted average age of 10.2 years.
As of
 
December 31,
 
2022, the
 
Company had
 
agreed to
 
acquire a
 
2016 built
 
Ultramax dry
 
bulk vessel
 
of
60,309 dwt, delivered on January 30, 2023.
 
During
 
2023,
 
2022
 
and
 
2021,
 
we
 
had
 
a
 
fleet
 
utilization
 
of
 
99.7%,
 
98.9%
 
and
 
99.1%,
 
respectively,
 
our
vessels achieved daily
 
time charter equivalent
 
rates of
 
$16,713, $22,735 and
 
$15,759, respectively,
 
and
we generated revenues of $262.1 million, $290.0 million and $214.2
 
million, respectively.
We
 
operate
 
our
 
vessels
 
worldwide,
 
in
 
markets
 
that
 
have
 
historically
 
exhibited
 
seasonal
 
variations
 
in
demand and,
 
as a
 
result, in
 
charter hire
 
rates. The
 
dry bulk
 
carrier market
 
is typically
 
stronger in the
 
fall
and winter months in
 
anticipation of increased
 
consumption of coal and
 
other raw materials
 
in the northern
hemisphere during the winter months. In addition, unpredictable weather patterns
 
in these months tend to
disrupt vessel scheduling
 
and supplies of certain
 
commodities. This seasonality
 
has a limited direct
 
impact
on our operating
 
results as we
 
charter our vessels to
 
customers pursuant to medium-term
 
and long-term
time charter agreements.
 
 
 
 
 
 
 
 
 
 
 
47
Management of Our Fleet
The commercial and technical management of our fleet,
 
owned and bareboat chartered-in, as well as the
provision of administrative services
 
relating to the fleet’s
 
operations, are carried out
 
by our wholly-owned
subsidiary, Diana Shipping Services S.A., which we refer to as DSS, and Diana Wilhelmsen Management
Limited, a 50/50 joint
 
venture with Wilhelmsen
 
Ship Management, which
 
we refer to as
 
DWM. In exchange
for
 
providing
 
us
 
with
 
commercial
 
and
 
technical
 
services,
 
personnel
 
and
 
office
 
space,
 
we
 
pay
 
DSS
 
a
commission,
 
which
 
is
 
a
 
percentage
 
of
 
the
 
managed
 
vessels’
 
gross
 
revenues,
 
a
 
fixed
 
monthly
 
fee
 
per
managed vessel and an additional monthly fee for the administrative services provided to Diana Shipping
Inc. Such services may
 
include budgeting, reporting,
 
monitoring of bank accounts,
 
compliance with banks,
payroll
 
services
 
and
 
any
 
other
 
possible
 
service
 
that
 
Diana
 
Shipping
 
Inc.
 
would
 
require
 
to
 
perform
 
its
operations. Similarly, in exchange
 
for providing
 
us with
 
commercial and
 
technical services,
 
we pay
 
to DWM
a commission
 
which is
 
a percentage
 
of the
 
managed vessels’
 
gross revenues
 
and a
 
fixed management
monthly fee
 
for each
 
managed vessel.
 
The amounts
 
deriving from
 
the agreements
 
with DSS
 
are considered
inter-company transactions and, therefore, are eliminated from
 
our consolidated financial statements. The
management fees
 
and commissions
 
deriving from
 
the agreements
 
with DWM
 
are included
 
in our
 
statement
of
 
operations
 
in
 
“Management
 
fees
 
to
 
related
 
party”,
 
“Voyage
 
Expenses”,
 
“Advances
 
for
 
vessel
acquisitions” and “Vessels, net”.
Steamship
 
Shipbroking
 
Enterprises
 
Inc.,
 
or
 
Steamship,
 
a
 
related
 
party
 
controlled
 
by
 
our
 
CEO
 
Mrs.
Semiramis Paliou,
 
provides brokerage services to us, since June 1, 2010. Brokerage fees are included in
“General and
 
Administrative expenses” in
 
our statement of
 
operations. The terms
 
of this relationship
 
are
currently governed by a Brokerage Services Agreement dated February
 
23,
 
2024.
The following table presents certain information
 
concerning the dry bulk carriers in
 
our fleet, as of the date
of this annual report.
Fleet Employment (As of April 3, 2024)
VESSEL
SISTER
SHIPS*
GROSS
RATE (USD
PER DAY)
COM**
CHARTERERS
DELIVERY DATE
TO
CHARTERERS***
REDELIVERY DATE TO
OWNERS****
NOTES
BUILT DWT
9 Ultramax Bulk Carriers
1
DSI Phoenix
A
 
13,250
 
5.00%
ASL Bulk Marine Limited
4/Nov/22
15/Apr/2024 - 4/May/2024
1
2017 60,456
2
DSI Pollux
A
 
14,000
 
4.75%
Cargill Ocean
Transportation
(Singapore) Pte. Ltd.
28/Dec/23
20/Aug/2025 - 20/Oct/2025
2015 60,446
3
DSI Pyxis
A
 
14,250
 
5.00%
ASL Bulk Marine Limited
24/Sep/23
10/Oct/2024 - 10/Dec/2024
2018 60,362
4
DSI Polaris
A
 
13,100
 
5.00%
ASL Bulk Marine Limited
12/Nov/22
12/May/2024 - 12/Jul/2024
2018 60,404
5
DSI Pegasus
A
 
14,000
 
5.00%
Reachy Shipping (SGP)
Pte. Ltd.
7/Dec/22
15/Jul/2024 - 15/Sep/2024
2015 60,508
6
DSI Aquarius
B
 
14,200
 
5.00%
Engelhart CTP Freight
(Switzerland) SA
1/Feb/23
18/Jan/2024
2016 60,309
 
14,500
 
5.00%
Stone Shipping Ltd
18/Jan/24
1/Dec/2024 - 1/Feb/2025
7
DSI Aquila
B
 
12,500
 
5.00%
Western Bulk Carriers
AS
11/Nov/23
10/Nov/2024 - 10/Jan/2025
2015 60,309
8
DSI Altair
B
 
13,800
 
5.00%
Western Bulk Carriers
AS
23/Jun/23
10/Aug/2024 - 10/Oct/2024
2016 60,309
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
48
9
DSI Andromeda
B
 
13,500
 
5.00%
Bunge SA, Geneva
27/Nov/23
20/Feb/2025 - 20/Apr/2025
2, 3
2016 60,309
6 Panamax Bulk Carriers
10
ARTEMIS
 
12,000
 
5.00%
Jera Global Markets Pte.
Ltd.
14/Oct/23
23/Feb/2024
4
2006 76,942
11
LETO
 
14,500
 
4.75%
Cargill International
S.A., Geneva
29/Jan/23
5/Apr/2024 - 30/Apr/2024
1
2010 81,297
12
SELINA
C
 
12,000
 
4.75%
Cargill International
S.A., Geneva
20/May/23
15/Sep/2024 - 15/Nov/2024
2010 75,700
13
MAERA
C
 
12,000
 
4.75%
Cargill International
S.A., Geneva
16/Dec/22
29/Jan/2024
5
2013 75,403
 
13,750
 
5.00%
ST Shipping and
Transport Pte. Ltd.
29/Jan/24
20/Nov/2024 - 20/Jan/2025
14
ISMENE
 
12,650
 
5.00%
Paralos Shipping Pte.,
Ltd.
13/Sep/23
15/Apr/2025 - 30/Jun/2025
2013 77,901
15
CRYSTALIA
D
 
11,250
 
5.00%
Reachy Shipping (SGP)
Pte. Ltd.
6/Sep/23
05/Apr/2024 - 15/Apr/2024
1
2014 77,525
 
13,900
 
5.00%
Louis Dreyfus Company
Freight Asia Pte. Ltd.
-
-
6
16
ATALANDI
D
 
13,250
 
4.75%
Aquavita International
S.A.
15/Feb/23
10/Apr/2024 - 5/May/2024
1
2014 77,529
6 Kamsarmax Bulk Carriers
17
MAIA
E
 
13,500
 
5.00%
ST Shipping and
Transport Pte. Ltd.
23/Sep/23
15/Jun/2024 - 20/Aug/2024
2009 82,193
18
MYRSINI
E
 
15,000
 
5.00%
Salanc Pte. Ltd.
22/Nov/22
20/Apr/2024 - 28/Jun/2024
2010 82,117
19
MEDUSA
E
 
14,250
 
5.00%
ASL Bulk Shipping
Limited
14/May/23
10/Feb/2025 - 15/Apr/2025
2010 82,194
20
MYRTO
E
 
12,650
 
5.00%
Cobelfret S.A.,
Luxemburg
15/Jul/23
1/Nov/2024 - 15/Jan/2025
2013 82,131
21
ASTARTE
 
15,000
 
5.00%
Reachy Shipping (SGP)
Pte. Ltd.
29/Apr/23
1/Aug/2024 - 1/Oct/2024
2013 81,513
22
LEONIDAS P. C.
 
17,000
 
4.75%
Cargill International
S.A., Geneva
17/Mar/23
22/Feb/2024
7
2011 82,165
 
17,000
 
5.00%
Ming Wah International
Shipping Company
Limited
22/Feb/24
20/Aug/2025 - 20/Oct/2025
5 Post-Panamax Bulk Carriers
23
ALCMENE
 
13,000
 
5.00%
SwissMarine Pte. Ltd.,
Singapore
2/Jan/23
23/Mar/2024
2010 93,193
 
16,000
 
5.00%
Triangle Merchant
Maritime Co., Limited
24/Mar/24
13/May/2024-18/May/2024
8
24
AMPHITRITE
F
 
14,250
 
5.00%
Cobelfret S.A.,
Luxembourg
9/Nov/22
13/Jan/2024
2012 98,697
 
15,000
 
13/Jan/24
15/Nov/2024 - 15/Jan/2025
9
25
POLYMNIA
F
 
15,000
 
5.00%
Cobelfret S.A.,
Luxemburg
14/Jan/23
15/Apr/2024 - 31/May/2024
10
2012 98,704
26
ELECTRA
G
 
14,500
 
5.00%
Cobelfret S.A.,
Luxemburg
13/Apr/23
1/Jun/2024 - 1/Aug/2024
2013 87,150
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49
27
PHAIDRA
G
 
12,250
 
4.75%
Aquavita International
S.A.
9/May/23
1/Sep/2024 - 15/Nov/2024
2013 87,146
9 Capesize Bulk Carriers
28
SEMIRIO
H
 
14,150
 
5.00%
Solebay Shipping Cape
Company Limited, Hong
Kong
18/Aug/23
20/Nov/2024 - 30/Jan/2025
2007 174,261
29
HOUSTON
H
 
13,000
 
5.00%
EGPN Bulk Carrier Co.,
Limited
21/Nov/22
1/Jul/2024 - 31/Aug/2024
11
2009 177,729
30
NEW YORK
H
 
16,000
 
5.00%
SwissMarine Pte. Ltd.,
Singapore
11/Jun/23
1/Oct/2024 - 7/Dec/2024
2010 177,773
31
SEATTLE
I
 
17,500
 
5.00%
Solebay Shipping Cape
Company Limited, Hong
Kong
1/Oct/23
15/Jul/2025 - 30/Sep/2025
2011 179,362
32
P.
 
S. PALIOS
I
 
31,000
 
5.00%
Classic Maritime Inc.
11/Jun/22
15/Apr/2024 - 30/Jun/2024
2013 179,134
33
G. P. ZAFIRAKIS
J
 
17,000
 
5.00%
Solebay Shipping Cape
Company Limited, Hong
Kong
12/Jan/23
15/Jun/2024 - 15/Aug/2024
2014 179,492
34
SANTA BARBARA
J
 
21,250
 
5.00%
Smart Gain Shipping
Co., Limited
7/May/23
10/Oct/2024 - 10/Dec/2024
12
2015 179,426
35
NEW ORLEANS
 
20,000
 
5.00%
Kawasaki Kisen Kaisha,
Ltd.
7/Dec/23
15/Aug/2025 - 31/Oct/2025
12, 13
2015 180,960
36
FLORIDA
 
25,900
 
5.00%
Bunge S.A., Geneva
29/Mar/22
29/Jan/2027 - 29/May/2027
3
2022 182,063
4 Newcastlemax Bulk Carriers
37
LOS ANGELES
K
 
17,700
 
5.00%
Nippon Yusen Kabushiki
Kaisha, Tokyo
15/Jan/23
20/May/2024 - 5/Aug/2024
2012 206,104
38
PHILADELPHIA
K
 
26,000
 
5.00%
C Transport Maritime
Ltd., Bermuda
12/Apr/22
04/Feb/2024
2012 206,040
 
22,500
 
5.00%
Nippon Yusen Kabushiki
Kaisha, Tokyo
4/Feb/24
20/Apr/2025 - 20/Jul/2025
39
SAN FRANCISCO
L
 
22,000
 
5.00%
SwissMarine Pte. Ltd.,
Singapore
18/Feb/23
5/Jan/2025 - 5/Mar/2025
2017 208,006
40
NEWPORT NEWS
L
 
20,000
 
5.00%
Nippon Yusen Kabushiki
Kaisha, Tokyo
20/Sep/23
10/Mar/2025 - 10/Jun/2025
2017 208,021
* Each dry bulk carrier is a “sister ship”, or closely similar, to other dry bulk carriers that have the same letter.
** Total
 
commission percentage paid to third parties.
*** In case of newly acquired vessel with time charter attached, this date refers to the expected/actual date of delivery of the vessel to
the Company.
**** Range of redelivery dates, with the actual date of redelivery being at the Charterers’ option, but subject to the terms, conditions,
and exceptions of the particular charterparty.
1Based on latest information.
2The fixture includes the option for redelivery of vessel east of Suez against a gross ballast bonus of US$250,000.
3Bareboat chartered-in for a period of ten years.
4Vessel has been sold and delivered to her new Owners on March 5, 2024.
50
5Charterers will compensate the Owners at a rate of 105% of the Baltic Panamax Index 5 TC average as published by the Baltic
Exchange on a daily basis or the vessel’s present charter party rate, whichever is higher, for the excess period commencing from
December 29, 2023 until the actual redelivery date.
6Vessel will be delivered to the new Charterers during the second quarter of 2024.
7Vessel off hire for 6.83 days.
8Redelivery date based on an estimated time charter trip duration of about 50-55 days.
9The charter rate will be US$12,250 per day for the first 30 days of the charter period.
10The charter rate was US$10,000 per day for the first 30 days of the charter period.
11Vessel
 
has been sold and it is expected to be delivered to her new Owners by latest September 16, 2024.
12Bareboat chartered-in for a period of eight years.
13Vessel off hire for 3.65 days.
Our Customers
Our customers include
 
regional and international
 
companies,
 
mainly with concentrations
 
below 10% of
 
our
gross revenues. During 2023,
 
only one of our
 
charterers accounted for 13%
 
of our revenues.
 
During 2022,
two
 
of
 
our
 
charterers
 
accounted
 
for
 
34%
 
of
 
our
 
revenues,
 
in
 
aggregate,
 
and
 
during
 
2021,
 
one
 
of
 
our
charterers accounted for 10% of our revenues.
 
We charter our
 
dry bulk
 
carriers, owned
 
and bareboat
 
chartered-in, to
 
customers pursuant
 
to time charters.
Under our time charters, the charterer typically
 
pays us a fixed daily charter hire rate and
 
bears all voyage
expenses, including the cost
 
of bunkers (fuel
 
oil) and canal and
 
port charges. We
 
remain responsible for
paying the
 
chartered vessel's
 
operating expenses,
 
including the
 
cost of
 
crewing, insuring,
 
repairing and
maintaining the
 
vessel. In
 
2023, we
 
paid commissions that
 
ranged from
 
4.75% to
 
5.0% of
 
the total
 
daily
charter hire
 
rate of
 
each charter
 
to unaffiliated
 
ship brokers
 
and to
 
in-house brokers
 
associated with
 
the
charterer, depending on the number of brokers involved with arranging the charter.
We strategically monitor developments in the dry bulk shipping industry on a regular basis and, subject to
market
 
demand,
 
seek
 
to
 
adjust
 
the
 
charter
 
hire
 
periods
 
for
 
our
 
vessels
 
according
 
to
 
prevailing
 
market
conditions. In order to take advantage of relatively stable cash flow and high utilization rates,
 
we fix some
of our vessels on long-term time
 
charters. Currently, the
 
majority of our vessels are employed on
 
short to
medium-term time
 
charters, which
 
provides us
 
with flexibility in
 
responding to
 
market developments.
 
We
continuously evaluate our balance of
 
short-
 
and long-term charters and extend
 
or reduce the charter hire
periods of the vessels in our fleet according to the developments in
 
the dry bulk shipping industry.
Charter Hire Rates
Charter hire
 
rates fluctuate
 
by varying
 
degrees among
 
dry bulk
 
carrier size
 
categories. The
 
volume and
pattern of
 
trade in
 
a small
 
number of
 
commodities
 
(major bulks)
 
affect demand
 
for larger
 
vessels. Therefore,
charter rates
 
and vessel
 
values of
 
larger vessels
 
often show
 
greater volatility. Conversely, trade
 
in a
 
greater
number
 
of
 
commodities (minor
 
bulks)
 
drives
 
demand
 
for
 
smaller
 
dry
 
bulk
 
carriers.
 
Accordingly,
 
charter
rates and vessel values for those vessels are usually subject
 
to less volatility.
Charter
 
hire
 
rates
 
paid
 
for
 
dry
 
bulk
 
carriers
 
are
 
primarily
 
a
 
function
 
of
 
the
 
underlying
 
balance
 
between
vessel supply and demand, although at
 
times other factors may play a
 
role. Furthermore, the pattern seen
in
 
charter
 
rates
 
is
 
broadly
 
mirrored
 
across
 
the
 
different
 
charter
 
types
 
and
 
the
 
different
 
dry
 
bulk
 
carrier
categories. In the
 
time charter market,
 
rates vary depending
 
on the length
 
of the charter
 
period and vessel-
specific factors such as age, speed and fuel consumption.
51
In the
 
voyage charter
 
market, rates
 
are, among
 
other things,
 
influenced by
 
cargo size,
 
commodity,
 
port
dues and canal transit fees, as well
 
as commencement and termination
 
regions. In general, a larger
 
cargo
size is quoted
 
at a lower
 
rate per ton
 
than a smaller
 
cargo size.
 
Routes with
 
costly ports or
 
canals generally
command higher rates
 
than routes
 
with low port
 
dues and
 
no canals to
 
transit. Voyages
 
with a
 
load port
within a
 
region that
 
includes ports
 
where vessels
 
usually discharge
 
cargo or
 
a discharge
 
port within
 
a region
with
 
ports
 
where
 
vessels
 
load
 
cargo
 
also
 
are
 
generally
 
quoted
 
at
 
lower
 
rates,
 
because
 
such
 
voyages
generally increase vessel utilization
 
by reducing the unloaded portion
 
(or ballast leg) that is
 
included in the
calculation of the return charter to a loading area.
Within the dry bulk shipping industry, the
 
charter hire rate references, most likely to be monitored, are the
freight rate indices
 
issued by the
 
Baltic Exchange. These
 
references are based
 
on actual charter
 
hire rates
under
 
charters
 
entered
 
into
 
by
 
market
 
participants
 
as
 
well
 
as
 
daily
 
assessments
 
provided
 
to
 
the
 
Baltic
Exchange by a panel
 
of major shipbrokers.
 
The Baltic Panamax
 
Index is the index
 
with the longest
 
history.
The Baltic Capesize Index and Baltic Handymax Index are
 
of more recent origin.
 
The Baltic Dry Index, or BDI, is a daily average of charter rates
 
in 20 shipping routes measured on a time
charter and voyage basis and covering Capesize, Panamax, Supramax, and Handysize dry
 
bulk carriers.
In 2023, the BDI ranged from a low of 530 to a high of 3,346 and
 
closed at 1,714 on April 2, 2024.
The Dry Bulk Shipping Industry
The
 
global
 
dry
 
bulk
 
carrier
 
fleet
 
could
 
be
 
divided
 
into
 
seven
 
categories
 
based
 
on
 
a
 
vessel's
 
carrying
capacity. These categories consist of:
Very
 
Large Ore
 
Carriers
.
 
Very
 
large ore
 
carriers, or
 
VLOCs, have
 
a carrying
 
capacity of
 
more
than 200,000 dwt and are a comparatively new sector of the dry bulk carrier fleet. VLOCs are built
to exploit economies of scale on long-haul iron ore routes.
 
Capesize
.
 
Capesize vessels
 
have a
 
carrying capacity
 
of 110,000
 
-199,999 dwt.
 
Only the
 
largest
ports around the
 
world possess the
 
infrastructure to accommodate
 
vessels of this
 
size. Capesize
vessels are
 
primarily used
 
to transport
 
iron ore
 
or coal
 
and, to
 
a much
 
lesser extent,
 
grains, primarily
on long-haul routes.
 
Post-Panamax
.
 
Post-Panamax vessels
 
have a
 
carrying capacity
 
of 80,000-109,999
 
dwt. These
vessels tend
 
to have
 
a shallower
 
draft and
 
larger beam
 
than a
 
standard Panamax
 
vessel with
 
a
higher
 
cargo
 
capacity.
 
These
 
vessels
 
have
 
been
 
designed
 
specifically
 
for
 
loading
 
high
 
cubic
cargoes from draught restricted ports, although they cannot
 
transit the Panama Canal.
 
Panamax
.
 
Panamax vessels have a carrying capacity of 60,000-79,999 dwt. These vessels carry
coal,
 
iron ore,
 
grains, and,
 
to
 
a
 
lesser extent,
 
minor
 
bulks, including
 
steel products,
 
cement and
fertilizers.
 
Panamax
 
vessels
 
are
 
able
 
to
 
pass
 
through
 
the
 
Panama
 
Canal,
 
making
 
them
 
more
versatile than
 
larger vessels
 
with regard
 
to
 
accessing different
 
trade routes.
 
Most Panamax
 
and
Post-Panamax
 
vessels
 
are
 
“gearless,”
 
and
 
therefore
 
must
 
be
 
served
 
by
 
shore-based
 
cargo
handling equipment. However, there are a small number of geared
 
vessels with onboard cranes, a
feature
 
that
 
enhances
 
trading
 
flexibility
 
and
 
enables
 
operation
 
in
 
ports
 
which
 
have
 
poor
infrastructure in terms of loading and unloading facilities.
52
Ultramax
 
Ultramax
 
is
 
the
 
largest
 
class
 
before
 
Panamax
 
and
 
is
 
the
 
newer
 
form
 
of
 
the
 
smaller
Supramax with a
 
maximum length
 
of
 
200 meters
 
and capacity
 
that ranges
 
from
 
60,000 dwt
 
and
66,000 dwt. This class is considered an upgrade to Supramax class as it offers a better all-around
investment
 
for
 
Charterers
 
and
 
Shipowners
 
due
 
to
 
its
 
higher
 
cargo
 
carrying
 
capacity
 
and
 
better
bunker
 
efficiency.
 
Ultramax
 
class
 
bulk
 
carriers
 
have
 
5
 
cargo
 
holds.
 
are
 
fitted
 
with
 
4
 
cranes
 
and
usually are equipped with grabs allowing
 
them to call more ports with no such
 
facilities giving them
more versatility.
Handymax/Supramax
.
 
Handymax vessels have a carrying
 
capacity of 40,000-59,999 dwt.
 
These
vessels
 
operate
 
in
 
a
 
large
 
number
 
of
 
geographically
 
dispersed
 
global
 
trade
 
routes,
 
carrying
primarily grains and minor
 
bulks. Within the Handymax category
 
there is also a
 
sub-sector known
as Supramax. Supramax
 
bulk carriers are
 
ships between 50,000
 
to 59,999 dwt,
 
normally offering
cargo
 
loading
 
and
 
unloading
 
flexibility
 
with
 
on-board
 
cranes,
 
or
 
“gear,”
 
while
 
at
 
the
 
same
 
time
possessing the cargo carrying capability approaching conventional
 
Panamax bulk carriers.
 
Handysize
.
 
Handysize vessels have
 
a carrying capacity
 
of up
 
to 39,999 dwt.
 
These vessels are
primarily
 
involved
 
in
 
carrying
 
minor
 
bulk
 
cargoes.
 
Increasingly,
 
ships
 
of
 
this
 
type
 
operate
 
within
regional
 
trading
 
routes, and
 
may
 
serve
 
as
 
trans-shipment
 
feeders
 
for
 
larger vessels.
 
Handysize
vessels are well
 
suited for small
 
ports with length
 
and draft restrictions.
 
Their cargo gear
 
enables
them to service ports lacking the infrastructure for cargo loading and unloading.
Other size categories occur in regional trade,
 
such as Kamsarmax, with a maximum length
 
of 229 meters,
the maximum length
 
that can load
 
in the
 
port of Kamsar
 
in the
 
Republic of Guinea.
 
Other terms
 
such as
Seawaymax, Setouchmax, Dunkirkmax, and Newcastlemax also appear
 
in regional trade.
The supply
 
of dry
 
bulk carriers
 
is dependent
 
on the
 
delivery of
 
new vessels
 
and the
 
removal of
 
vessels
from the global fleet,
 
either through scrapping
 
or loss. The level
 
of scrapping activity
 
is generally a function
of scrapping prices
 
in relation to current
 
and prospective charter market
 
conditions, as well as
 
operating,
repair and
 
survey costs.
 
The average
 
age at
 
which a
 
vessel is
 
scrapped was
 
29 years
 
in 2022
 
and 28
 
years
in 2021.
The
 
demand
 
for
 
dry
 
bulk
 
carrier
 
capacity
 
is
 
determined
 
by
 
the
 
underlying
 
demand
 
for
 
commodities
transported in
 
dry bulk carriers,
 
which in turn
 
is influenced by
 
trends in
 
the global
 
economy.
 
Demand for
dry
 
bulk
 
carrier
 
capacity
 
is
 
also
 
affected
 
by
 
the
 
operating
 
efficiency
 
of
 
the
 
global
 
fleet,
 
along
 
with
 
port
congestion, which has been a feature of the market since 2004,
 
absorbing tonnage and therefore leading
to a
 
tighter balance
 
between supply
 
and demand.
 
In evaluating
 
demand factors
 
for dry
 
bulk carrier
 
capacity,
the Company believes that dry
 
bulk carriers can be
 
the most versatile element
 
of the global shipping
 
fleets
in terms of employment alternatives.
 
Vessel Prices
 
Dry bulk
 
vessel values in
 
2023 generally were
 
lower as
 
compared to 2022.
 
Consistent with these
 
trends
were the
 
market values
 
of
 
our
 
dry bulk
 
carriers. As
 
charter rates
 
and vessel
 
values
 
partially decreased
during 2023, there can be
 
no assurance as to how
 
long charter rates and
 
vessel values will remain at
 
their
current levels or whether they will decrease or improve to any significant
 
degree in the near future.
Competition
 
Our business
 
fluctuates in
 
line with
 
the main
 
patterns of
 
trade of
 
the major
 
dry bulk
 
cargoes and
 
varies
according to
 
changes in
 
the supply
 
and demand
 
for these
 
items. We
 
operate in
 
markets that
 
are highly
competitive and
 
based primarily
 
on supply
 
and demand.
 
We compete
 
for charters
 
on the
 
basis of
 
price,
vessel
 
location,
 
size,
 
age
 
and
 
condition
 
of
 
the
 
vessel,
 
as
 
well
 
as
 
on
 
our
 
reputation
 
as
 
an
 
owner
 
and
operator. We
 
compete with other owners of dry bulk carriers
 
in the Panamax, Post-Panamax and smaller
 
53
class
 
sectors and
 
with owners
 
of Capesize
 
and Newcastlemax
 
dry
 
bulk carriers.
 
Ownership of
 
dry
 
bulk
carriers is highly fragmented.
We believe that we possess a number
 
of strengths that provide us
 
with a competitive advantage in
 
the dry
bulk shipping industry:
We own
 
a modern, high
 
quality fleet of
 
dry bulk carriers
.
 
We believe that
 
owning a modern,
 
high
quality fleet
 
reduces operating
 
costs, improves
 
safety and
 
provides us
 
with a
 
competitive advantage
in securing favorable time charters.
 
We maintain the
 
quality of our vessels by
 
carrying out regular
inspections, both while
 
in port and
 
at sea, and
 
adopting a comprehensive
 
maintenance program
 
for
each vessel.
Our fleet
 
includes groups
 
of sister
 
ships.
 
We believe
 
that maintaining
 
a fleet
 
that includes
 
sister
ships enhances the revenue
 
generating potential of our
 
fleet by providing us
 
with operational and
scheduling flexibility.
 
The uniform
 
nature of sister
 
ships also
 
improves our operating
 
efficiency by
allowing our
 
fleet managers
 
to
 
apply the
 
technical knowledge
 
of
 
one vessel
 
to
 
all vessels
 
of the
same series
 
and create
 
economies of
 
scale that
 
enable us
 
to realize
 
cost savings
 
when maintaining,
supplying and crewing our vessels.
We
 
have
 
an
 
experienced
 
management
 
team.
 
Our
 
management
 
team
 
consists
 
of
 
experienced
executives
 
who
 
have,
 
on
 
average,
 
more
 
than
 
30
 
years
 
of
 
operating
 
experience
 
in
 
the
 
shipping
industry and has demonstrated
 
ability in managing
 
the commercial, technical
 
and financial areas of
our business.
We benefit
 
from the
 
experience and
 
reputation of
 
Diana Shipping
 
Services S.A.
 
and the
 
relationship
with
 
Wilhelmsen
 
Ship
 
Management
 
through
 
the
 
Diana
 
Wilhelmsen
 
Management
 
Limited
 
joint
venture.
We
 
benefit from
 
strong relationships
 
with members
 
of the
 
shipping and
 
financial industries.
 
We
have developed strong relationships with major international charterers, shipbuilders and financial
institutions
 
that
 
we
 
believe
 
are
 
the
 
result
 
of
 
the
 
quality
 
of
 
our
 
operations,
 
the
 
strength
 
of
 
our
management team and our reputation for dependability.
We have
 
a strong
 
balance sheet
 
and a
 
relatively low
 
level of
 
indebtedness.
 
We believe
 
that our
strong
 
balance
 
sheet
 
and
 
relatively
 
low
 
level
 
of
 
indebtedness
 
provide
 
us
 
with
 
the
 
flexibility
 
to
increase
 
the
 
amount of
 
funds
 
that
 
we may
 
draw under
 
our
 
loan
 
facilities in
 
connection
 
with
 
any
future acquisitions or otherwise and enable us to use cash flow that would otherwise be dedicated
to debt service for other purposes.
 
Permits and Authorizations
We
 
are
 
required
 
by
 
various
 
governmental
 
and
 
quasi-governmental
 
agencies
 
to
 
obtain
 
certain
 
permits,
licenses and
 
certificates with
 
respect to
 
our vessels.
 
The kinds
 
of permits,
 
licenses and
 
certificates required
depend upon
 
several factors,
 
including the
 
commodity transported,
 
the waters
 
in which
 
the vessel
 
operates
the
 
nationality
 
of
 
the
 
vessel's
 
crew
 
and
 
the
 
age
 
of
 
a
 
vessel.
 
We
 
have
 
been
 
able
 
to
 
obtain
 
all
 
permits,
licenses and
 
certificates currently
 
required to
 
permit our
 
vessels to
 
operate. Additional
 
laws and
 
regulations,
environmental or
 
otherwise, may
 
be adopted
 
which could
 
limit our
 
ability to
 
do business
 
or increase
 
the
cost of us doing business.
Disclosure Pursuant to Section 219 of the Iran Threat Reduction and
 
Syrian Human Rights
Act
Section 219
 
of the U.S.
 
Iran Threat
 
Reduction and Syria
 
Human Rights Act
 
of 2012,
 
or the ITRA,
 
added
new Section
 
13(r) to
 
the U.S.
 
Securities Exchange
 
Act of
 
1934, as
 
amended, or
 
the Exchange
 
Act, requiring
54
each SEC reporting issuer to disclose in its
 
annual and, if applicable, quarterly reports
 
whether it or any of
its affiliates
 
have knowingly
 
engaged in
 
certain activities,
 
transactions or dealings
 
relating to
 
Iran or
 
with
the
 
Government
 
of
 
Iran
 
or
 
certain
 
designated
 
natural
 
persons
 
or
 
entities
 
involved
 
in
 
terrorism
 
or
 
the
proliferation of weapons of mass destruction during the period
 
covered by the report.
 
Pursuant to Section 13(r) of the Exchange Act, we note that none of our vessels made port calls to Iran in
2023 and to the date of this annual report.
 
Environmental and Other Regulations in the Shipping Industry
Government
 
regulation
 
and
 
laws
 
significantly
 
affect
 
the
 
ownership
 
and
 
operation
 
of
 
our
 
fleet.
 
We
 
are
subject to international conventions and treaties,
 
national, state and local laws
 
and regulations in force in
the
 
countries
 
in
 
which
 
our
 
vessels
 
may
 
operate
 
or
 
are
 
registered
 
relating
 
to
 
safety
 
and
 
health
 
and
environmental
 
protection
 
including
 
the
 
storage,
 
handling,
 
emission,
 
transportation
 
and
 
discharge
 
of
hazardous and non-hazardous materials, and the remediation of contamination and liability
 
for damage to
natural
 
resources.
 
Compliance
 
with
 
such
 
laws,
 
regulations
 
and
 
other
 
requirements
 
entails
 
significant
expense, including vessel modifications and implementation of certain
 
operating procedures.
A
 
variety
 
of
 
government
 
and
 
private
 
entities
 
subject
 
our
 
vessels
 
to
 
both
 
scheduled
 
and
 
unscheduled
inspections.
 
These entities
 
include the
 
local port
 
authorities (applicable
 
national authorities
 
such as
 
the
United
 
States
 
Coast
 
Guard (“USCG”),
 
harbor
 
master
 
or
 
equivalent),
 
classification
 
societies,
 
flag
 
state
administrations
 
(countries
 
of
 
registry)
 
and
 
charterers,
 
particularly
 
terminal
 
operators.
 
Certain
 
of
 
these
entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our
vessels. Failure to maintain
 
necessary permits or approvals
 
could require us to
 
incur substantial costs or
result in the temporary suspension of the operation of one or
 
more of our vessels.
Increasing
 
environmental
 
concerns
 
have
 
created
 
a
 
demand
 
for
 
vessels
 
that
 
conform
 
to
 
stricter
environmental
 
standards.
 
We
 
are
 
required
 
to
 
maintain
 
operating
 
standards
 
for
 
all
 
of
 
our
 
vessels
 
that
emphasize
 
operational
 
safety,
 
quality
 
maintenance,
 
continuous
 
training
 
of
 
our
 
officers
 
and
 
crews
 
and
compliance with United States and international regulations. We
 
believe that the operation of
 
our vessels
is in substantial compliance with applicable environmental
 
laws and regulations and that our vessels have
all
 
material
 
permits,
 
licenses,
 
certificates
 
or
 
other
 
authorizations
 
necessary
 
for
 
the
 
conduct
 
of
 
our
operations. However, because such laws and regulations
 
frequently change and may impose increasingly
stricter
 
requirements,
 
we
 
cannot
 
predict
 
the
 
ultimate
 
cost
 
of
 
complying with
 
these
 
requirements,
 
or
 
the
impact of these
 
requirements on the
 
resale value or useful
 
lives of our
 
vessels. In addition,
 
a future serious
marine incident that causes
 
significant adverse environmental impact could result
 
in additional legislation
or regulation that could negatively affect our profitability.
International Maritime Organization
The International Maritime
 
Organization, the United
 
Nations agency for
 
maritime safety and the
 
prevention
of pollution
 
by vessels (the “IMO”),
 
has adopted
 
the International
 
Convention for
 
the Prevention
 
of Pollution
from Ships, 1973, as modified
 
by the Protocol of
 
1978 relating thereto, collectively
 
referred to as MARPOL
73/78 and
 
herein as “MARPOL,”
 
the International
 
Convention for
 
the Safety
 
of Life
 
at Sea
 
of 1974 (“SOLAS
Convention”), and
 
the International
 
Convention on
 
Load Lines
 
of
 
1966 (the
 
“LL
 
Convention”). MARPOL
establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air
emissions, handling and
 
disposal of noxious
 
liquids and the
 
handling of harmful
 
substances in packaged
forms.
 
MARPOL is
 
applicable to
 
drybulk, tanker
 
and LNG carriers,
 
among other
 
vessels, and
 
is broken
into six Annexes, each
 
of which regulates a
 
different source of pollution.
 
Annex I relates to
 
oil leakage or
spilling;
 
Annexes
 
II
 
and
 
III
 
relate
 
to
 
harmful
 
substances
 
carried
 
in
 
bulk
 
in
 
liquid
 
or
 
in
 
packaged
 
form,
respectively; Annexes IV and
 
V relate to sewage
 
and garbage management, respectively; and
 
Annex VI,
lastly,
 
relates to air
 
emissions. Annex VI was
 
separately adopted by
 
the IMO in
 
September of 1997;
 
new
emissions standards, titled IMO-2020, took effect on January 1, 2020.
55
Air Emissions
In
 
September
 
of
 
1997,
 
the
 
IMO
 
adopted
 
Annex
 
VI
 
to
 
MARPOL
 
to
 
address
 
air
 
pollution
 
from
 
vessels.
Effective May 2005, Annex VI sets limits
 
on sulfur oxide and nitrogen oxide
 
emissions from all commercial
vessel exhausts and prohibits
 
“deliberate emissions” of ozone
 
depleting substances (such as halons
 
and
chlorofluorocarbons), emissions
 
of volatile compounds
 
from cargo tanks, and
 
the shipboard incineration
 
of
specific substances.
 
Annex VI
 
also includes
 
a global
 
cap on
 
the sulfur
 
content of
 
fuel oil
 
and allows
 
for
special
 
areas
 
to
 
be
 
established
 
with
 
more
 
stringent
 
controls
 
on
 
sulfur
 
emissions,
 
as
 
explained
below.
 
Emissions of
 
“volatile
 
organic
 
compounds” from
 
certain vessels,
 
and
 
the
 
shipboard
 
incineration
(from incinerators
 
installed after
 
January 1,
 
2000) of
 
certain substances
 
(such as
 
polychlorinated biphenyls,
or
 
“PCBs”)
 
are
 
also
 
prohibited.
 
We
 
believe
 
that
 
all
 
our
 
vessels
 
are
 
currently
 
compliant
 
in
 
all
 
material
respects with these regulations.
The Marine Environment Protection Committee, or “MEPC”,
 
adopted amendments to Annex VI regarding
emissions of
 
sulfur oxide,
 
nitrogen oxide,
 
particulate matter
 
and ozone
 
depleting substances,
 
which entered
into force on
 
July 1, 2010.
 
The amended Annex VI
 
seeks to further
 
reduce air pollution by,
 
among other
things, implementing
 
a progressive
 
reduction of
 
the amount
 
of sulfur
 
contained in
 
any fuel
 
oil used
 
on board
ships. On October 27, 2016, at its 70th session, the MEPC agreed to implement
 
a global 0.5% m/m sulfur
oxide emissions limit
 
(reduced from 3.50%)
 
starting from January
 
1, 2020.
 
This limitation can
 
be met by
using
 
low-sulfur compliant fuel
 
oil, alternative
 
fuels,
 
or
 
certain exhaust
 
gas cleaning
 
systems. Ships
 
are
now required
 
to obtain
 
bunker delivery
 
notes and
 
International Air
 
Pollution Prevention (“IAPP”)
 
Certificates
from their
 
flag states
 
that specify
 
sulfur content.
 
Additionally,
 
at MEPC
 
73, amendments
 
to Annex
 
VI to
prohibit the carriage of bunkers above
 
0.5% sulfur on ships were adopted and
 
took effect March 1, 2020,
with the exception of
 
vessels fitted with
 
exhaust gas cleaning
 
equipment (“scrubbers”) which
 
can carry fuel
of
 
higher sulfur
 
content.
 
These regulations
 
subject ocean-going
 
vessels to
 
stringent emissions
 
controls
and may cause us to incur substantial costs.
Sulfur
 
content
 
standards
 
are
 
even
 
stricter
 
within
 
certain
 
“Emission
 
Control
 
Areas,”
 
or (“ECAs”).
 
As
 
of
January 1, 2015,
 
ships operating
 
within an
 
ECA were
 
not permitted
 
to use fuel
 
with sulfur content
 
in excess
of 0.1%
 
m/m. Amended Annex
 
VI establishes procedures
 
for designating new
 
ECAs. Currently,
 
the IMO
has
 
designated
 
four
 
ECAs,
 
including
 
specified
 
portions
 
of
 
the
 
Baltic
 
Sea
 
area,
 
North
 
Sea
 
area,
 
North
American area and United States Caribbean area.
 
Ocean-going vessels in these areas will be
 
subject to
stringent emission controls and
 
may cause us
 
to incur additional
 
costs. Other areas
 
in China are
 
subject
to local
 
regulations that
 
impose stricter
 
emission controls.
 
In December
 
2021, the
 
member states
 
of the
Convention of the
 
Protection of
 
the Mediterranean Sea
 
Against Pollution
 
agreed to support
 
the designation
of a new ECA in the Mediterranean. On December 15, 2022, MEPC 79 adopted the designation of a
 
new
ECA in the Mediterranean,
 
with an effective date of
 
May 1, 2025. In July
 
2023, MEPC 80 announced
 
three
new ECA
 
proposals, including
 
the Canadian
 
Arctic waters
 
and the
 
North-East Atlantic
 
Ocean. If
 
other ECAs
are approved by the IMO,
 
or other new or more
 
stringent requirements relating to emissions from
 
marine
diesel
 
engines
 
or
 
port
 
operations
 
by
 
vessels
 
are
 
adopted
 
by
 
the
 
U.S.
 
Environmental
 
Protection
Agency (“EPA”) or the states where we operate, compliance with these regulations could entail significant
capital expenditures or otherwise increase the costs of our operations.
Amended Annex VI also establishes new
 
tiers of stringent nitrogen oxide emissions
 
standards for marine
diesel engines,
 
depending on
 
their date
 
of installation.
 
At the
 
MEPC meeting
 
held from
 
March to
 
April 2014,
amendments to
 
Annex VI
 
were adopted
 
which address
 
the date
 
on which
 
Tier
 
III Nitrogen
 
Oxide (NOx)
standards in ECAs
 
will go into
 
effect.
 
Under the amendments, Tier
 
III NOx standards
 
apply to ships
 
that
operate in the
 
North American and
 
U.S. Caribbean Sea
 
ECAs designed for
 
the control of
 
NOx produced
by
 
vessels
 
with
 
a
 
marine
 
diesel
 
engine
 
installed
 
and
 
constructed
 
on
 
or
 
after
 
January
 
1,
 
2016.
 
Tier
 
III
requirements could apply
 
to areas that
 
will be
 
designated for Tier
 
III NOx in
 
the future. At
 
MEPC 70
 
and
MEPC 71, the MEPC approved the North
 
Sea and Baltic Sea as ECAs for
 
nitrogen oxide for ships built on
or
 
after
 
January
 
1,
 
2021.
 
For
 
the
 
moment,
 
this
 
regulation
 
relates
 
to
 
new
 
building
 
vessels
 
and
 
has
 
no
56
retroactive
 
application
 
to
 
existing
 
fleet.
 
The EPA
 
promulgated
 
equivalent
 
(and
 
in
 
some
 
senses
 
stricter)
emissions standards in 2010.
 
As a result of these designations or similar future designations, we may be
required to incur additional operating or other
 
costs.
As
 
determined at
 
the
 
MEPC 70,
 
the
 
new Regulation
 
22A of
 
MARPOL Annex
 
VI became effective as
 
of
March 1, 2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil
consumption to an
 
IMO database, with
 
the first year
 
of data collection
 
having commenced on
 
January 1,
2019.
 
The IMO intends to use such data as the first step in its roadmap (through 2023) for developing its
strategy to reduce greenhouse gas emissions from ships, as discussed
 
further below.
As of January
 
1, 2013, MARPOL
 
made mandatory certain
 
measures relating to
 
energy efficiency for
 
ships.
All
 
ships
 
are
 
now
 
required
 
to
 
develop
 
and
 
implement
 
a
 
Ship
 
Energy
 
Efficiency
 
Management
Plans (“SEEMPs”), and new ships must be designed in compliance
 
with minimum energy efficiency levels
per capacity mile
 
as defined by
 
the Energy Efficiency
 
Design Index (“EEDI”).
 
Under these measures, by
2025, all new ships built will be 30% more
 
energy efficient than those built in 2014. Additionally, MEPC 75
adopted amendments to MARPOL Annex VI which brings forward the effective date of the EEDI’s “phase
3” requirements
 
from April
 
1, 2022
 
to January
 
1, 2025
 
for several
 
ship types,
 
including gas
 
carriers, general
cargo ships, and LNG carriers.
Additionally, MEPC 75 introduced draft amendments to Annex
 
VI which impose new regulations
 
to reduce
greenhouse
 
gas
 
emissions
 
from
 
ships.
 
These
 
amendments
 
introduce
 
requirements
 
to
 
assess
 
and
measure the energy
 
efficiency of all ships
 
and set the
 
required attainment values,
 
with the goal
 
of reducing
the
 
carbon
 
intensity
 
of
 
international
 
shipping.
 
The
 
requirements
 
include
 
(1)
 
a
 
technical
 
requirement
 
to
reduce carbon
 
intensity based
 
on a
 
new Energy
 
Efficiency Existing
 
Ship Index
 
(“EEXI”), and
 
(2) operational
carbon intensity
 
reduction requirements,
 
based on
 
a new operational
 
carbon intensity
 
indicator (“CII”).
 
The
attained EEXI is
 
required to be
 
calculated for ships
 
of 400 gross
 
tonnage and above,
 
in accordance with
different values
 
set for
 
ship types
 
and categories.
 
With respect
 
to the
 
CII, the
 
draft amendments
 
would
require ships of 5,000
 
gross tonnage to document and
 
verify their actual annual operational
 
CII achieved
against a determined
 
required annual operational
 
CII.
 
Additionally, MEPC 75 proposed draft
 
amendments
requiring that,
 
on or
 
before January 1,
 
2023, all
 
ships above
 
400 gross tonnage
 
must have
 
an approved
SEEMP
 
on
 
board.
 
For
 
ships
 
above
 
5,000
 
gross
 
tonnage,
 
the
 
SEEMP
 
would
 
need
 
to
 
include
 
certain
mandatory content.
 
MEPC 75
 
also approved draft
 
amendments to MARPOL
 
Annex I to
 
prohibit the use
and carriage for
 
use as fuel
 
of heavy fuel
 
oil (“HFO”) by
 
ships in Arctic
 
waters on and
 
after July 1,
 
2024.
 
The draft amendments introduced at MEPC 75 were adopted at the
 
MEPC 76 session on June 2021 and
entered into force
 
on November 1, 2022,
 
with the requirements for
 
EEXI and CII certification
 
coming into
effect from January 1, 2023. MEPC 77 adopted a non-binding resolution which urges Member States and
ship operators
 
to voluntarily use
 
distillate or other
 
cleaner alternative fuels
 
or methods of
 
propulsion that
are
 
safe
 
for
 
ships
 
and
 
could
 
contribute
 
to
 
the
 
reduction
 
of
 
Black
 
Carbon
 
emissions
 
from
 
ships
 
when
operating
 
in
 
or
 
near the
 
Arctic.
 
MEPC
 
79
 
adopted
 
amendments to
 
MARPOL
 
Annex
 
VI,
 
Appendix
 
IX
 
to
include
 
the
 
attained
 
and
 
required
 
CII
 
values,
 
the
 
CII
 
rating
 
and
 
attained
 
EEXI
 
for
 
existing
 
ships
 
in
 
the
required information to
 
be submitted to
 
the IMO Ship
 
Fuel Oil Consumption
 
Database. In July
 
2023, MEPC
80 announced three new
 
ECA proposals, including
 
the Canadian Arctic
 
waters and the North-East
 
Atlantic
Ocean. The amendments will enter into
 
force on May 1, 2024.
 
In July 2023, MEPC 80
 
approved the plan
for reviewing
 
CII regulations
 
and guidelines,
 
which must
 
be completed
 
at the
 
latest by
 
January 1,
 
2026.
There
 
will
 
be
 
no
 
immediate
 
changes
 
to
 
the
 
CII
 
framework,
 
including
 
correction
 
factors
 
and
 
voyage
adjustments, before the review is completed.
We
 
may
 
incur
 
costs
 
to
 
comply
 
with
 
these
 
revised
 
standards.
 
Additional
 
or
 
new
 
conventions,
 
laws
 
and
regulations may be adopted that could require the
 
installation of expensive emission control systems and
could adversely affect our business, results of operations, cash flows and
 
financial condition.
57
Safety Management System Requirements
The SOLAS
 
Convention was
 
amended to
 
address the
 
safe manning
 
of vessels
 
and emergency
 
training
drills.
 
The Convention of Limitation of Liability for Maritime Claims (the “LLMC”) sets limitations of liability
for
 
a
 
loss
 
of
 
life
 
or
 
personal
 
injury
 
claim
 
or
 
a
 
property
 
claim
 
against
 
ship
 
owners.
 
The ISM
Certification provides validation that
 
both company and
 
ships are operating
 
using a process-based system
approach to manage risks and achieve continual improvement. The ISM code is meant
 
to be a preventive
tool
 
and
 
asks
 
companies
 
to
 
assess
 
all
 
risks
 
and
 
then
 
take
 
measured
 
to
 
safeguard
 
against
 
them.
Responsibilities and authorities are
 
set out for
 
the various entities
 
includes in the
 
ISM process. All
 
of our
vessels as well as our shore-based operations are fully certified
 
under the ISM Code.
Under Chapter
 
IX of
 
the SOLAS
 
Convention, or the
 
International Safety Management
 
Code for
 
the Safe
Operation
 
of
 
Ships
 
and
 
for
 
Pollution
 
Prevention (the “ISM
 
Code”),
 
our
 
operations
 
are
 
also
 
subject
 
to
environmental standards and requirements. The ISM Code requires the party with operational
 
control of a
vessel to develop
 
an extensive
 
safety management
 
system that
 
includes, among
 
other things,
 
the adoption
of a
 
safety and
 
environmental protection policy setting
 
forth instructions and
 
procedures for operating
 
its
vessels safely and describing procedures for
 
responding to emergencies. Through strong leadership and
a
 
disciplined,
 
clearly
 
documented
 
management
 
system,
 
the
 
Company
 
promotes
 
the
 
concept
 
of
 
HSSE
(Health, Safety,
 
Security and
 
Environmental) excellence
 
at all
 
levels in
 
the organisation.
 
This concept
 
is
achieved by
 
consistent measurement
 
and feedback
 
of the
 
Company’s Management
 
System in
 
order to
generate
 
continuous
 
and
 
sustainable
 
improvement
 
in
 
Health,
 
Safety,
 
Security,
 
and
 
Quality
 
and
Environmental
 
(including
 
Energy
 
Efficiency)
 
(HSSQE)
 
management
 
processes. The
 
failure
 
of
 
a
 
vessel
owner or
 
bareboat charterer
 
to comply
 
with the
 
ISM Code
 
may subject
 
such party
 
to increased
 
liability, may
decrease available insurance coverage for the affected vessels and
 
may result in a denial of access to, or
detention in, certain ports.
The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they
operate. This
 
certificate evidences
 
compliance by
 
a vessel’s management
 
with the
 
ISM Code
 
requirements
for a
 
safety management
 
system. No
 
vessel can
 
obtain a
 
safety management
 
certificate unless
 
its manager
has been
 
awarded a document
 
of compliance, issued
 
by each flag
 
state, under the
 
ISM Code. We
 
have
obtained applicable documents of compliance for our offices and safety management certificates for all of
our vessels
 
for which
 
the certificates
 
are required by
 
the IMO.
 
The documents of
 
compliance and safety
management certificate are renewed as required.
Regulation II-1/3-10
 
of
 
the
 
SOLAS Convention
 
governs ship
 
construction and
 
stipulates that
 
ships
 
over
150 meters
 
in length
 
must have
 
adequate strength,
 
integrity and
 
stability to
 
minimize risk
 
of loss
 
or pollution.
Goal-based standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012,
 
with July 1,
2016 set for application to new oil tankers and bulk carriers.
 
The SOLAS Convention regulation II-1/3-10
on goal-based
 
ship construction
 
standards for
 
bulk carriers
 
and oil
 
tankers, which
 
entered into
 
force on
January 1, 2012, requires
 
that all oil tankers
 
and bulk carriers of
 
150 meters in length
 
and above, for which
the building
 
contract is
 
placed on
 
or after
 
July 1,
 
2016, satisfy
 
applicable structural
 
requirements conforming
to
 
the
 
functional
 
requirements
 
of
 
the
 
International
 
Goal-based
 
Ship
 
Construction
 
Standards
 
for
 
Bulk
Carriers and Oil Tankers (“GBS Standards”).
Amendments to
 
the SOLAS Convention
 
Chapter VII
 
apply to
 
vessels transporting dangerous
 
goods and
require those
 
vessels be
 
in
 
compliance with
 
the
 
International Maritime
 
Dangerous Goods
 
Code (“IMDG
Code”). Effective
 
January 1, 2018,
 
the IMDG
 
Code includes (1)
 
updates to the
 
provisions for radioactive
material, reflecting
 
the
 
latest provisions
 
from the
 
International Atomic
 
Energy Agency,
 
(2) new
 
marking,
packing
 
and
 
classification
 
requirements
 
for
 
dangerous
 
goods,
 
and
 
(3)
 
new
 
mandatory
 
training
requirements. Amendments which took effect
 
on January 1, 2020
 
also reflect the latest
 
material from the
UN Recommendations on the Transport of Dangerous
 
Goods, including (1) new provisions
 
regarding IMO
type 9 tank, (2) new abbreviations
 
for segregation groups, and
 
(3) special provisions for carriage
 
of lithium
batteries and of vehicles powered by flammable liquid or
 
gas. Additional amendments came into force on
58
June 1,
 
2022, include
 
(1) addition
 
of a
 
definition of
 
dosage rate,
 
(2) additions
 
to the
 
list of
 
high consequence
dangerous goods, (3)
 
new provisions for medical/clinical
 
waste, (4) addition
 
of various ISO
 
standards for
gas cylinders, (5) a new handling code, and (6) changes to stowage and
 
segregation provisions.
The
 
IMO
 
has
 
also
 
adopted
 
the
 
International
 
Convention
 
on
 
Standards
 
of
 
Training,
 
Certification
 
and
Watchkeeping for Seafarers (“STCW”).
 
As of February
 
2017, all seafarers
 
are required to
 
meet the STCW
standards
 
and
 
be in
 
possession of
 
a
 
valid STCW
 
certificate.
 
Flag
 
states that
 
have
 
ratified SOLAS
 
and
STCW
 
generally
 
employ
 
the
 
classification
 
societies,
 
which
 
have
 
incorporated
 
SOLAS
 
and
 
STCW
requirements into their class rules, to undertake surveys to confirm
 
compliance.
The
 
IMO's
 
Maritime
 
Safety
 
Committee
 
and
 
MEPC,
 
respectively,
 
each
 
adopted
 
relevant
 
parts
 
of
 
the
International Code for Ships Operating in Polar Water
 
(the “Polar Code”). The Polar Code, which entered
into force
 
on January
 
1, 2017,
 
covers design,
 
construction, equipment,
 
operational, training,
 
search and
rescue as well
 
as environmental protection matters
 
relevant to ships
 
operating in the
 
waters surrounding
the two
 
poles. It
 
also includes mandatory
 
measures regarding safety
 
and pollution prevention
 
as well as
recommendatory provisions. The Polar Code applies to new ships constructed after January 1, 2017, and
after
 
January
 
1,
 
2018,
 
ships
 
constructed
 
before
 
January
 
1,
 
2017
 
are
 
required
 
to
 
meet
 
the
 
relevant
requirements by the earlier of their first intermediate or renewal survey.
Furthermore, recent action by the
 
IMO’s Maritime Safety Committee and United
 
States agencies indicates
that cybersecurity regulations for the maritime industry
 
are likely to be further developed in the near future
in an
 
attempt to
 
combat cybersecurity
 
threats. By
 
IMO resolution,
 
administrations are
 
encouraged
 
to ensure
that
 
cyber-risk management
 
systems must
 
be
 
incorporated
 
by
 
ship-owners
 
and
 
managers
 
by
 
their
 
first
annual
 
Document
 
of
 
Compliance audit
 
after
 
January
 
1,
 
2021. In
 
February 2021,
 
the
 
U.S.
 
Coast
 
Guard
published guidance on addressing cyber risks in a vessel’s safety management system. This
 
might cause
companies
 
to
 
create
 
additional
 
procedures
 
for
 
monitoring
 
cybersecurity,
 
which
 
could
 
require
 
additional
expenses and/or capital expenditures.
 
The impact of future regulations is hard to predict at this
 
time.
In June
 
2022, SOLAS
 
also set
 
out new
 
amendments that
 
took effect
 
on January
 
1, 2024,
 
which include
new
 
requirements for:
 
(1)
 
the
 
design for
 
safe
 
mooring operations,
 
(2)
 
the
 
Global
 
Maritime
 
Distress and
Safety System (“GMDSS”),
 
(3) watertight integrity, (4) watertight doors
 
on cargo ships,
 
(5) fault-isolation of
fire detection
 
systems, (6)
 
life-saving appliances, and
 
(7) safety
 
of ships
 
using LNG
 
as fuel.
 
These new
requirements may impact the cost of our operations.
Pollution Control and Liability Requirements
The IMO has negotiated international conventions
 
that impose liability for pollution in
 
international waters
and
 
the
 
territorial
 
waters
 
of
 
the
 
signatories
 
to
 
such
 
conventions.
 
For
 
example,
 
the
 
IMO
 
adopted
 
an
International
 
Convention
 
for
 
the
 
Control
 
and
 
Management
 
of
 
Ships’
 
Ballast
 
Water
 
and
 
Sediments, (the
“BWM Convention”), in 2004. The BWM Convention entered into force on September 8, 2017.
 
The BWM
Convention requires ships to manage their
 
ballast water to remove, render harmless, or
 
avoid the uptake
or discharge of
 
new or invasive
 
aquatic organisms
 
and pathogens
 
within ballast water
 
and sediments.
 
The
BWM
 
Convention’s
 
implementing
 
regulations
 
call
 
for
 
a
 
phased
 
introduction
 
of
 
mandatory
 
ballast
 
water
exchange requirements, to
 
be replaced in
 
time with mandatory
 
concentration limits, and
 
require all ships
to carry a ballast water record book and an international ballast
 
water management certificate.
On December 4, 2013, the IMO
 
Assembly passed a resolution revising the application dates
 
of the BWM
Convention so that
 
the dates are
 
triggered by the
 
entry into force
 
date and not
 
the dates originally
 
in the
BWM
 
Convention.
 
This, in
 
effect,
 
makes
 
all
 
vessels delivered
 
before the
 
entry into
 
force date
 
“existing
vessels” and allows
 
for the installation
 
of ballast water
 
management systems on
 
such vessels at
 
the first
International Oil Pollution Prevention (“IOPP”) renewal survey following entry into force of the convention.
The MEPC adopted updated guidelines for approval of ballast
 
water management systems (G8) at MEPC
70. At MEPC
 
71, the schedule
 
regarding the BWM
 
Convention’s implementation dates
 
was also discussed
59
and amendments were introduced to
 
extend the date existing vessels
 
are subject to certain
 
ballast water
standards. Those changes were adopted
 
at MEPC 72. Ships
 
over 400 gross tons
 
generally must comply
with a
 
“D-1 standard,”
 
requiring the
 
exchange of
 
ballast water
 
only in
 
open seas
 
and away
 
from coastal
waters.
 
The “D-2 standard” specifies
 
the maximum amount of
 
viable organisms allowed to
 
be discharged,
and compliance
 
dates vary
 
depending on
 
the IOPP
 
renewal dates.
 
Depending on
 
the date
 
of the
 
IOPP
renewal survey,
 
existing vessels
 
must comply
 
with the D-2
 
standard on
 
or after
 
September 8,
 
2019. For
most ships, compliance
 
with the D-2 standard will
 
involve installing on-board
 
systems to treat ballast
 
water
and eliminate
 
unwanted organisms.
 
Ballast water
 
management systems,
 
which include
 
systems that
 
make
use
 
of chemical,
 
biocides, organisms
 
or
 
biological mechanisms,
 
or which
 
alter the
 
chemical or
 
physical
characteristics of the
 
ballast water,
 
must be approved
 
in accordance with IMO
 
Guidelines (Regulation D-
3). As of
 
October 13, 2019,
 
MEPC 72’s amendments
 
to the BWM
 
Convention took
 
effect, making the
 
Code
for
 
Approval
 
of
 
Ballast
 
Water
 
Management
 
Systems,
 
which
 
governs
 
assessment
 
of
 
ballast
 
water
management systems, mandatory rather than permissive, and formalized an implementation schedule for
the D-2 standard. Under these amendments,
 
all ships must meet the D-2
 
standard by September 8, 2024.
Costs of compliance with these
 
regulations may be substantial.
 
Additionally, in November 2020, MEPC 75
adopted
 
amendments to
 
the
 
BWM
 
Convention which
 
would require
 
a
 
commissioning test
 
of the
 
ballast
water management system for the initial survey or when performing an additional survey for retrofits. This
analysis
 
will
 
not
 
apply
 
to
 
ships
 
that
 
already
 
have
 
an
 
installed
 
BWM
 
system
 
certified
 
under
 
the
 
BWM
Convention. These amendments have
 
entered into force
 
on June 1,
 
2022. In December
 
2022, MEPC 79
agreed that it
 
should be permitted to
 
use ballast tanks for
 
temporary storage of treated
 
sewage and grey
water.
 
MEPC 79 also
 
established that ships
 
are expected to
 
return to D-2
 
compliance after experiencing
challenging uptake water
 
and bypassing a
 
BWM system should
 
only be used as
 
a last resort. In
 
July 2023,
MEPC 80 approved a plan for a comprehensive
 
review of the BWM Convention. over the next
 
three years
and
 
the
 
corresponding
 
development
 
of
 
a
 
package
 
of
 
amendments
 
to
 
the
 
Convention.
 
MEPC
 
80
 
also
adopted further
 
amendments relating
 
to Appendix
 
II of
 
the BWM
 
Convention concerning
 
the form
 
of the
Ballast Water Record Book, which are expected to
 
enter into force in February 2025.
 
A protocol for ballast
water
 
compliance
 
monitoring
 
devices
 
and
 
unified
 
interpretation
 
of
 
the
 
form
 
of
 
the
 
BWM
 
Convention
certificate were also adopted.
Once
 
mid-ocean
 
exchange
 
ballast
 
water
 
treatment
 
requirements
 
become
 
mandatory
 
under
 
the
 
BWM
Convention, the
 
cost of
 
compliance could
 
increase for
 
ocean carriers
 
and may have
 
a material effect
 
on
our operations. Irrespective of
 
the BWM convention, certain
 
countries such as the U.S.
 
have enforced and
implemented regional requirement related to the system certification,
 
operation and reporting.
The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the
“Bunker
 
Convention”) to
 
impose
 
strict liability
 
on
 
ship
 
owners
 
(including the
 
registered
 
owner,
 
bareboat
charterer, manager
 
or operator) for
 
pollution damage in jurisdictional
 
waters of ratifying states
 
caused by
discharges of
 
bunker fuel.
 
The Bunker
 
Convention requires registered
 
owners of
 
ships over
 
1,000 gross
tons
 
to
 
maintain
 
insurance
 
for
 
pollution
 
damage
 
in
 
an
 
amount
 
equal
 
to
 
the
 
limits
 
of
 
liability
 
under
 
the
applicable
 
national
 
or
 
international
 
limitation
 
regime
 
(but
 
not
 
exceeding
 
the
 
amount
 
calculated
 
in
accordance with the LLMC).
 
With respect to non-ratifying
 
states, liability for spills or
 
releases of oil carried
as fuel
 
in ship’s
 
bunkers typically
 
is determined by
 
the national
 
or other
 
domestic laws
 
in the
 
jurisdiction
where the events or damages occur.
Ships are
 
required to
 
maintain a
 
certificate attesting
 
that they
 
maintain adequate
 
insurance to
 
cover an
incident. In jurisdictions, such
 
as the United
 
States where the
 
Bunker Convention has not
 
been adopted,
various legislative schemes or
 
common law govern, and
 
liability is imposed either
 
on the basis of
 
fault or
on a strict-liability basis.
Anti-Fouling Requirements
In 2001, the IMO adopted the International Convention on the Control of Harmful
 
Anti-fouling Systems on
Ships,
 
or
 
the
 
“Anti-fouling
 
Convention.”
 
The
 
Anti-fouling
 
Convention,
 
which
 
entered
 
into
 
force
 
on
60
September 17,
 
2008,
 
prohibits
 
the
 
use
 
of
 
organotin
 
compound
 
coatings
 
to
 
prevent
 
the
 
attachment
 
of
mollusks and other sea life
 
to the hulls of vessels.
 
Vessels of over 400 gross tons engaged in
 
international
voyages will also be required to undergo an initial survey before
 
the vessel is put into service or before an
International Anti-fouling System Certificate is issued for
 
the first time; and subsequent
 
surveys when the
anti-fouling systems
 
are altered
 
or replaced.
 
Vessels of 24
 
meters in
 
length or
 
more but
 
less than
 
400 gross
tonnage engaged in international voyages will have to carry a Declaration on Anti-fouling Systems signed
by the owner or authorized agent.
We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-fouling
Convention.
Requirements for the Safe and Environmentally Sound Recycling
 
of Ships
In
 
2009
 
the
 
Hong
 
Kong
 
International
 
Convention
 
and
 
MEPC
 
269(68)
 
adopted
 
the
 
guidelines
 
for
 
the
preparation of
 
the Inventory
 
of Hazardous
 
Materials. The
 
Convention concerns
 
all vessels
 
over 500
 
GT
entitled
 
to
 
fly
 
the
 
flag
 
of
 
a
 
Party
 
or
 
operating
 
under
 
its
 
authority,
 
with
 
some
 
exceptions
 
like
 
warships.
According to
 
the Convention
 
the shipowner
 
should control
 
Ship’s Hazardous
 
Materials inherent
 
in ship’s
structure,
 
machinery,
 
equipment
 
and
 
paints,
 
coatings
 
and
 
prohibit
 
the
 
new
 
installations
 
of
 
Hazardous
Materials, by maintaining an Inventory of Hazardous Materials (IHM). It is the Company’s responsibility to
maintain the IHM
 
Part I up
 
to date, during
 
the life of
 
the ship, according
 
to MEPC Guidelines.
 
The ships
are
 
subject
 
to
 
survey
 
(initial,
 
renewal,
 
additional
 
and
 
final)
 
and
 
certification
 
and
 
should
 
keep
 
a
 
valid
International
 
Certificate
 
on
 
Inventory
 
of
 
Hazardous
 
Materials
 
or
 
an
 
International
 
Ready
 
for
 
Recycling
Certificate (in
 
case of
 
recycling), on
 
board. For
 
ships been
 
resulted to
 
contain hazardous
 
materials (like
asbestos),
 
actions
 
for
 
removal
 
should
 
be
 
taken
 
by
 
the
 
shipowner.
 
The
 
ships
 
should
 
only
 
be
 
recycled
according to the regulations. If the ship is detected to be in violation of this Convention, the Party carrying
out an inspection may take
 
steps to warn, detain, dismiss, or
 
exclude the ship from its
 
ports, which might
have an impact in our commercial image and
 
cause high fines to the company. Our fleet already complies
with this
 
regulation, although
 
not yet
 
into force,
 
but the
 
preparation, maintenance and
 
whenever needed
removal have resulted in substantial costs.
Compliance Enforcement
Noncompliance
 
with
 
the
 
ISM
 
Code
 
or
 
other
 
IMO
 
regulations
 
may
 
subject
 
the
 
ship
 
owner
 
or
 
bareboat
charterer to increased liability, may lead to decreases
 
in available insurance coverage
 
for affected vessels
and may
 
result in
 
the denial
 
of access
 
to, or
 
detention in,
 
some ports.
 
The USCG
 
and European
 
Union
authorities have
 
indicated that vessels
 
not in
 
compliance with the
 
ISM Code
 
by applicable
 
deadlines will
be prohibited
 
from trading
 
in U.S.
 
and European
 
Union ports,
 
respectively.
 
As of
 
the date
 
of this
 
report,
each of our vessels
 
is ISM Code certified. The
 
IMO continues to review and
 
introduce new regulations. It
is impossible to
 
predict what additional regulations,
 
if any,
 
may be passed
 
by the IMO
 
and what effect,
 
if
any, such regulations might have on our operations.
U.S. Regulations
The U.S. Oil Pollution
 
Act of 1990 and
 
the Comprehensive Environmental Response, Compensation and
Liability Act
The U.S. Oil Pollution Act
 
of 1990 (“OPA”)
 
established an extensive regulatory and liability regime for
 
the
protection and
 
cleanup of
 
the environment
 
from oil
 
spills. OPA
 
affects all
 
“owners and
 
operators” whose
vessels trade or
 
operate within the U.S., its territories
 
and possessions or whose
 
vessels operate in U.S.
waters, which includes the U.S.’s territorial sea and its 200 nautical mile exclusive economic zone around
the U.S.
 
The U.S.
 
has
 
also
 
enacted
 
the
 
Comprehensive
 
Environmental
 
Response,
 
Compensation
 
and
Liability Act (“CERCLA”), which applies
 
to the discharge of hazardous substances other
 
than oil, except in
limited circumstances, whether on land or at sea.
 
OPA and CERCLA both define “owner and operator” in
61
the case of a vessel as any person owning, operating or chartering by demise,
 
the vessel.
 
Both OPA and
CERCLA impact our operations.
Under OPA,
 
vessel owners
 
and operators
 
are “responsible
 
parties” and
 
are jointly,
 
severally and
 
strictly
liable (unless the
 
spill results solely
 
from the act or
 
omission of a
 
third party, an act of God
 
or an act
 
of war)
for
 
all
 
containment
 
and
 
clean-up
 
costs
 
and
 
other
 
damages
 
arising
 
from
 
discharges
 
or
 
threatened
discharges of oil
 
from their
 
vessels, including bunkers
 
(fuel).
 
OPA
 
defines these other
 
damages broadly
to include:
(i)
 
injury to, destruction or loss of, or loss of use of, natural resources and
 
related assessment costs;
(ii)
 
injury to, or economic losses resulting from, the destruction of
 
real and personal property;
(iii)
 
loss of subsistence use of natural resources that are injured, destroyed
 
or lost;
(iv)
 
net
 
loss of
 
taxes, royalties,
 
rents, fees
 
or net
 
profit revenues
 
resulting from
 
injury,
 
destruction or
loss of real or personal property, or natural resources;
(v)
 
lost profits
 
or impairment
 
of earning
 
capacity due
 
to injury,
 
destruction or
 
loss of
 
real or
 
personal
property or natural resources; and
(vi)
 
net
 
cost
 
of
 
increased or
 
additional
 
public services
 
necessitated by
 
removal
 
activities
 
following a
discharge of oil, such as protection from fire,
 
safety or health hazards, and loss of
 
subsistence use
of natural resources.
OPA
 
contains
 
statutory
 
caps
 
on
 
liability
 
and
 
damages;
 
such
 
caps
 
do
 
not
 
apply
 
to
 
direct
 
cleanup
costs.
 
Effective November
 
12, 2019,
 
the USCG
 
adjusted the
 
limits of
 
OPA
 
liability for
 
non-tank vessels,
edible oil
 
tank vessels,
 
and any
 
oil spill
 
response vessels,
 
to the
 
greater of
 
$1,200 per
 
gross ton
 
or $997,100
(subject to periodic
 
adjustment for
 
inflation). On December
 
23, 2022,
 
the USCG issued
 
a final rule
 
to adjust
the limitation of
 
liability under the OPA.
 
Effective March 23,
 
2022, the new adjusted
 
limits of OPA
 
liability
for non-tank
 
vessels, edible oil
 
tank vessels,
 
and any
 
oil spill
 
response vessels,
 
to the
 
greater of
 
$1,300
per gross
 
ton or
 
$1,076,000 (subject
 
to periodic
 
adjustment for
 
inflation).These limits
 
of liability
 
do not
 
apply
if an incident was proximately caused by the violation of an applicable U.S. federal safety,
 
construction or
operating
 
regulation
 
by
 
a
 
responsible
 
party
 
(or
 
its
 
agent,
 
employee
 
or
 
a
 
person
 
acting
 
pursuant
 
to
 
a
contractual relationship), or a responsible party's gross negligence or willful misconduct. The limitation on
liability similarly does not apply if the responsible
 
party fails or refuses to (i) report the incident as required
by law where the responsible party knows or
 
has reason to know of the incident; (ii)
 
reasonably cooperate
and assist
 
as requested
 
in connection
 
with oil
 
removal activities;
 
or (iii)
 
without sufficient
 
cause, comply
with an order issued under the Federal
 
Water Pollution Act (Section 311 (c), (e)) or the Intervention on the
High Seas Act.
CERCLA contains
 
a similar
 
liability regime
 
whereby owners
 
and operators
 
of vessels
 
are liable
 
for cleanup,
removal and remedial costs, as well as damages for
 
injury to, or destruction or loss of, natural resources,
including
 
the
 
reasonable
 
costs
 
associated
 
with
 
assessing the
 
same,
 
and
 
health
 
assessments
 
or
 
health
effects studies. There is no liability
 
if the discharge of a hazardous
 
substance results solely from the
 
act or
omission of a third party, an act of God
 
or an act of war. Liability under
 
CERCLA is limited to
 
the greater of
$300 per gross ton or $5.0 million for vessels carrying
 
a hazardous substance as cargo and the greater of
$300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible
person liable for the total cost
 
of response and damages) if
 
the release or threat of release
 
of a hazardous
substance
 
resulted
 
from
 
willful
 
misconduct
 
or
 
negligence,
 
or
 
the
 
primary
 
cause
 
of
 
the
 
release
 
was
 
a
violation of applicable safety, construction or operating standards or regulations.
 
The limitation on liability
also does
 
not apply
 
if the
 
responsible person
 
fails or
 
refused to
 
provide all
 
reasonable cooperation
 
and
assistance as requested in connection with response activities where
 
the vessel is subject to OPA.
62
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort
law.
 
OPA
 
and CERCLA both require
 
owners and operators of vessels
 
to establish and maintain
 
with the
USCG evidence of
 
financial responsibility sufficient to
 
meet the maximum
 
amount of liability to
 
which the
particular
 
responsible
 
person
 
may
 
be
 
subject.
 
Vessel
 
owners
 
and
 
operators
 
may
 
satisfy
 
their
 
financial
responsibility obligations by providing a proof of insurance,
 
a surety bond, qualification as a self-insurer or
a
 
guarantee.
 
We comply
 
and
 
plan
 
to
 
comply going
 
forward
 
with
 
the
 
USCG’s
 
financial
 
responsibility
regulations by providing applicable certificates of financial responsibility.
The 2010
Deepwater Horizon
 
oil spill
 
in the
 
Gulf of
 
Mexico resulted
 
in additional
 
regulatory initiatives
 
or
statutes, including higher liability caps under OPA, new regulations regarding offshore oil and
 
gas drilling,
and
 
a
 
pilot
 
inspection
 
program
 
for
 
offshore
 
facilities.
 
However,
 
several
 
of
 
these
 
initiatives
 
and
regulations have
 
been
 
or
 
may
 
be
 
revised.
 
For
 
example,
 
the
 
U.S.
 
Bureau
 
of
 
Safety
 
and
Environmental Enforcement’s
 
(“BSEE”)
 
revised
 
Production
 
Safety
 
Systems
 
Rule
 
(“PSSR”),
 
effective
December 27,
 
2018, modified
 
and relaxed
 
certain environmental
 
and safety
 
protections under
 
the 2016
PSSR.
 
Additionally, the BSEE amended the Well Control Rule, effective July 15,
 
2019, which rolled back
certain
 
reforms
 
regarding
 
the
 
safety
 
of
 
drilling
 
operations,
 
and
 
the
 
former
 
U.S.
 
President
 
Trump
 
had
 
proposed leasing
 
new sections
 
of U.S.
 
waters to
 
oil and
 
gas companies
 
for offshore
 
drilling.
 
In January
2021,
 
U.S.
 
President
 
Biden
 
signed
 
an
 
executive
 
order
 
temporarily
 
blocking
 
new
 
leases
 
for
 
oil
 
and
 
gas
drilling
 
in
 
federal
 
waters.
 
However,
 
attorney
 
generals
 
from
 
13
 
states
 
filed
 
suit
 
in
 
March
 
2021
 
to
 
lift
 
the
executive order,
 
and in
 
June 2021,
 
a federal
 
judge in
 
Louisiana granted
 
a preliminary
 
injunction against
the
 
Biden
 
administration,
 
stating
 
that
 
the
 
power
 
to
 
pause
 
offshore
 
oil
 
and
 
gas
 
leases
 
“lies
 
solely
 
with
Congress.” In August
 
2022, a federal
 
judge in Louisiana
 
sided with Texas
 
Attorney General Ken
 
Paxton,
along with
 
the other
 
12 plaintiff states,
 
by issuing
 
a permanent
 
injunction against
 
the Biden
 
Administration’s
moratorium on oil and gas leasing on federal public lands and offshore waters. After being blocked by the
courts, in
 
September 2023,
 
the Biden
 
administration announced
 
a scaled
 
back offshore
 
oil drilling
 
plan,
including just
 
three oil
 
lease sales in
 
the Gulf
 
of Mexico.
 
With these rapid
 
changes, compliance with
 
any
new
 
requirements
 
of
 
OPA and
 
future
 
legislation
 
or
 
regulations
 
applicable
 
to
 
the
 
operation
 
of
 
our
vessels could impact the cost of our operations and adversely affect our business.
OPA
 
specifically permits individual
 
states to
 
impose their own
 
liability regimes with
 
regard to oil
 
pollution
incidents
 
occurring
 
within
 
their
 
boundaries,
 
provided
 
they
 
accept,
 
at
 
a
 
minimum,
 
the
 
levels
 
of
 
liability
established
 
under
 
OPA
 
and
 
some
 
states
 
have
 
enacted
 
legislation
 
providing
 
for
 
unlimited
 
liability
 
for
 
oil
spills.
 
Many U.S. states that border
 
a navigable waterway have enacted
 
environmental pollution laws that
impose
 
strict liability
 
on a
 
person for
 
removal costs
 
and damages
 
resulting from
 
a
 
discharge
 
of oil
 
or
 
a
release of a
 
hazardous substance.
 
These laws may be
 
more stringent than U.S.
 
federal law.
 
Moreover,
some states have enacted legislation providing for unlimited liability for discharge of pollutants within their
waters,
 
although in
 
some
 
cases, states
 
which have
 
enacted this
 
type
 
of legislation
 
have not
 
yet issued
implementing regulations defining vessel owners’
 
responsibilities under these laws.
 
The Company intends
to comply with all applicable state regulations in the ports where
 
the Company’s vessels call.
We currently maintain pollution
 
liability coverage insurance
 
in the amount
 
of $1 billion per
 
incident for each
of our
 
vessels. If
 
the damages from
 
a catastrophic spill
 
were to
 
exceed our
 
insurance coverage, it
 
could
have an adverse effect on our business and results of operation.
Other United States Environmental Initiatives
The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires
 
the EPA to
promulgate
 
standards
 
applicable
 
to
 
emissions
 
of
 
volatile
 
organic
 
compounds
 
and
 
other
 
air
contaminants.
 
The
 
CAA
 
requires
 
states
 
to
 
adopt
 
State
 
Implementation
 
Plans,
 
or
 
SIPs,
 
some
 
of
 
which
regulate emissions resulting from vessel loading and unloading
 
operations which may affect our vessels.
The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances and ballast water
in U.S.
 
navigable waters
 
unless authorized
 
by a
 
duly-issued permit
 
or exemption,
 
and imposes
 
strict liability
63
in the
 
form of
 
penalties for
 
any unauthorized
 
discharges.
 
The CWA
 
also imposes
 
substantial liability for
the costs of removal, remediation and damages
 
and complements the remedies available
 
under OPA and
CERCLA.
 
In 2015, the EPA
 
expanded the definition of “waters of the United States” (“WOTUS”),
 
thereby
expanding federal authority
 
under the CWA.
 
Following litigation on
 
the revised WOTUS rule,
 
in December
2018, the EPA and Department of the Army proposed a revised,
 
limited definition of WOTUS. In 2019
 
and
2020,
 
the
 
agencies repealed
 
the
 
prior
 
WOTUS Rule
 
and
 
promulgated the
 
Navigable Waters
 
Protection
Rule (“NWPR”)
 
which significantly
 
reduced the
 
scope and
 
oversight of
 
EPA
 
and
 
the
 
Department of
 
the
Army
 
in
 
traditionally
 
non
 
navigable
 
waterways.
 
On
 
August
 
30,
 
2021,
 
a
 
federal
 
district
 
court
 
in
 
Arizona
vacated the NWPR and directed the agencies
 
to replace the rule. On December 7,
 
2021, the EPA and the
Department of
 
the Army
 
proposed a
 
rule that
 
would reinstate
 
the pre-2015
 
definition. .
 
In January
 
2023,
the revised WOTUS rule was codified in place
 
of the vacated NWPR. On May 25, 2023,
 
the United States
Supreme Court ruled in the case Sackett v. EPA
 
that only wetlands and permanent bodies of water with a
"continuous surface
 
connection" to
 
"traditional interstate
 
navigable waters"
 
are covered
 
by the
 
CWA, further
narrowing the application of the WOTUS rule. On August 2023, the EPA
 
and the Department of the Army
issued the final
 
WOTUS rule, effective
 
September 8, 2023,
 
that largely reinstated
 
the pre-2015 definition
and applied the
Sackett
ruling.
 
The EPA and the
 
USCG have
 
also enacted
 
rules relating
 
to ballast
 
water discharge,
 
compliance with
 
which
requires the
 
installation of
 
equipment on
 
our vessels
 
to treat
 
ballast water
 
before it
 
is discharged
 
or the
implementation of other port
 
facility disposal arrangements or
 
procedures at potentially substantial costs,
and/or otherwise restrict our
 
vessels from entering U.S.
 
Waters.
 
The EPA will regulate these ballast water
discharges and other discharges incidental to the normal operation
 
of certain vessels within United States
waters pursuant to the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December
4,
 
2018
 
and
 
replaces
 
the
 
2013
 
Vessel
 
General
 
Permit
 
(“VGP”)
 
program
 
(which
 
authorizes
 
discharges
incidental to operations
 
of commercial
 
vessels and
 
contains numeric
 
ballast water
 
discharge limits
 
for most
vessels
 
to
 
reduce
 
the
 
risk
 
of
 
invasive
 
species
 
in
 
U.S.
 
waters,
 
stringent
 
requirements
 
for
 
exhaust
 
gas
scrubbers, and
 
requirements for
 
the use
 
of environmentally
 
acceptable lubricants)
 
and current
 
Coast Guard
ballast
 
water
 
management
 
regulations
 
adopted
 
under
 
the
 
U.S.
 
National
 
Invasive
 
Species
 
Act
 
(“NISA”),
such
 
as
 
mid-ocean
 
ballast
 
exchange
 
programs
 
and
 
installation
 
of
 
approved
 
USCG
 
technology
 
for
 
all
vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters.
 
VIDA establishes
a new framework
 
for the regulation
 
of vessel incidental
 
discharges under Clean
 
Water Act (CWA), requires
the
 
EPA
 
to
 
develop
 
performance
 
standards
 
for
 
those
 
discharges
 
within
 
two
 
years
 
of
 
enactment,
 
and
requires the
 
U.S. Coast
 
Guard to develop
 
implementation, compliance,
 
and enforcement
 
regulations within
two years
 
of EPA’s
 
promulgation of
 
standards.
 
Under VIDA,
 
all provisions
 
of the
 
2013 VGP
 
and USCG
regulations regarding
 
ballast water
 
treatment remain
 
in force
 
and effect
 
until the
 
EPA and U.S.
 
Coast Guard
regulations
 
are
 
finalized.
 
Non-military,
 
non-recreational
 
vessels
 
greater
 
than
 
79
 
feet
 
in
 
length
 
must
continue to comply with the requirements of the VGP, including submission of a Notice of Intent (“NOI”) or
retention of a
 
PARI form and submission
 
of annual
 
reports. We have submitted
 
NOIs for our
 
vessels where
required.
 
Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation
of ballast water
 
treatment equipment
 
on our
 
vessels or
 
the implementation
 
of other
 
port facility
 
disposal
procedures at potentially substantial cost or may otherwise restrict
 
our vessels from entering U.S. waters.
European Union Regulations
In
 
October
 
2009,
 
the
 
European
 
Union
 
amended
 
a
 
directive
 
to
 
impose
 
criminal
 
sanctions
 
for
 
illicit
 
ship-
source discharges of polluting substances, including minor discharges,
 
if committed with intent, recklessly
or with serious negligence and the discharges individually or in the aggregate result in deterioration of the
quality
 
of
 
water.
 
Aiding
 
and
 
abetting
 
the
 
discharge
 
of
 
a
 
polluting
 
substance
 
may
 
also
 
lead
 
to
 
criminal
penalties. The
 
directive applies
 
to all
 
types of
 
vessels, irrespective
 
of their
 
flag, but certain
 
exceptions apply
to warships or where human safety
 
or that of the ship is
 
in danger. Criminal liability for pollution may result
in
 
substantial
 
penalties
 
or
 
fines
 
and
 
increased
 
civil
 
liability
 
claims.
 
Regulation
 
(EU)
 
2015/757
 
of
 
the
European Parliament
 
and of
 
the Council
 
of 29
 
April 2015
 
(amending EU
 
Directive 2009/16/EC)
 
governs
the monitoring, reporting
 
and verification of
 
carbon dioxide emissions
 
from maritime transport,
 
and, subject
64
to some exclusions,
 
requires companies with
 
ships over 5,000
 
gross tonnage to
 
monitor and report
 
carbon
dioxide emissions annually, which may cause us to incur additional expenses.
The European Union has adopted
 
several regulations and directives requiring, among
 
other things, more
frequent inspections
 
of high-risk ships,
 
as determined
 
by type, age,
 
and flag as
 
well as the
 
number of
 
times
the ship has been detained. The European
 
Union also adopted and extended a
 
ban on substandard ships
and enacted
 
a minimum
 
ban period
 
and a
 
definitive ban
 
for repeated
 
offenses. The
 
regulation also
 
provided
the
 
European
 
Union
 
with
 
greater
 
authority
 
and
 
control
 
over
 
classification
 
societies,
 
by
 
imposing
 
more
requirements on classification societies and providing for fines or penalty payments for
 
organizations that
failed to comply. Furthermore,
 
the EU has implemented
 
regulations requiring
 
vessels to use
 
reduced sulfur
content
 
fuel
 
for
 
their
 
main
 
and
 
auxiliary
 
engines.
 
The
 
EU
 
Directive
 
2005/33/EC
 
(amending
 
Directive
1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine
fuels. In
 
addition, the EU imposed
 
a 0.1% maximum
 
sulfur requirement for
 
fuel used
 
by ships
 
at berth in
the
 
Baltic,
 
the
 
North
 
Sea
 
and
 
the
 
English
 
Channel
 
(the
 
so
 
called
 
“SOx-Emission
 
Control
 
Area”).
 
As
 
of
January 2020, EU member states must also ensure that ships in all EU
 
waters, except the SOx-Emission
Control Area, use fuels with a 0.5% maximum sulfur content.
On September
 
15, 2020,
 
the European
 
Parliament voted
 
to include
 
greenhouse gas
 
emissions from
 
the
maritime sector in the European Union’s carbon
 
market, the EU Emissions Trading System (“EU ETS”)
 
as
part of its “Fit-for-55”
 
legislation to reduce
 
net greenhouse gas
 
emissions by at
 
least 55% by 2030.
 
On July
14, 2021, the European Parliament
 
formally proposed its plan,
 
which would involve gradually
 
including the
maritime sector from
 
2023 and phasing the
 
sector in over three-year
 
period. This will
 
require shipowners
to buy
 
permits to cover
 
these emissions.
 
The Environment Council
 
adopted a general
 
approach on the
proposal
 
in
 
June
 
2022.
 
On
 
December
 
18,
 
2022,
 
the
 
Environmental
 
Council
 
and
 
European
 
Parliament
agreed to include
 
maritime shipping emissions within
 
the scope of
 
the EU ETS
 
on a gradual
 
introduction
of
 
obligations
 
for
 
shipping
 
companies
 
to
 
surrender
 
allowances
 
equivalent
 
to
 
a
 
portion
 
of
 
their
 
carbon
emissions: 40% for
 
verified emissions
 
from 2024,
 
70% for 2025
 
and 100% for
 
2026. Most large
 
vessels will
be included
 
in the
 
scope of
 
the EU
 
ETS from the
 
start. Big
 
offshore vessels
 
of 5,000
 
gross tonnage and
above will
 
be included
 
in the
 
'MRV'
 
on the
 
monitoring, reporting
 
and verification
 
of CO2
 
emissions from
maritime transport
 
regulation from
 
2025
 
and in
 
the
 
EU
 
ETS
 
from
 
2027. General
 
cargo vessels
 
and off-
shore vessels
 
between 400-5,000
 
gross tonnage
 
will be
 
included in
 
the
 
MRV
 
regulation from
 
2025 and
their inclusion in
 
EU ETS will
 
be reviewed
 
in 2026. Furthermore,
 
starting from January
 
1, 2026, the
 
ETS
regulations
 
will
 
expand
 
to
 
include
 
emissions
 
of
 
two
 
additional
 
greenhouse
 
gases:
 
nitrous
 
oxide
 
and
methane.
 
Compliance
 
with the
 
Maritime
 
EU
 
ETS
 
will
 
result
 
in
 
additional compliance
 
and
 
administration
costs
 
to
 
properly
 
incorporate
 
the
 
provisions
 
of
 
the
 
Directive
 
into
 
our
 
business
 
routines.
 
Additional
 
EU
regulations
 
which
 
are
 
part
 
of
 
the
 
EU’s
 
"Fit-for-55,"
 
could
 
also
 
affect
 
our
 
financial
 
position
 
in
 
terms
 
of
compliance and administration costs when they take effect.
EU Ship Recycling Regulation
The Regulation
 
is mostly
 
aligned with
 
the
 
Hong Kong
 
Convention on
 
Ship Recycling,
 
mentioned earlier
and aims quick
 
ratification of the
 
Convention. However, it sets
 
some additional requirements
 
and has been
into force since 2015 for new ships
 
and 2020 for existing ships. It concerns
 
vessels over 500 GT flying the
flag of a
 
member state or
 
vessels flying
 
the flag
 
of a 3
rd
 
party calling
 
at port or
 
anchorage of
 
member states.
Our
 
fleet
 
fully
 
complies
 
with
 
this
 
regulation.
 
Our
 
fleet’s
 
Inventories
 
of
 
Hazardous Materials
 
preparation,
certification and continuous maintenance have resulted in a
 
significant cost to the Company.
International Labour Organization
The International Labour Organization (the “ILO”) is
 
a specialized agency of the UN
 
that has adopted the
Maritime Labor Convention
 
2006 (“MLC 2006”). A
 
Maritime Labor Certificate
 
and a Declaration
 
of Maritime
Labor Compliance
 
is required
 
to ensure
 
compliance with
 
the MLC
 
2006 for
 
all ships
 
that are
 
500 gross
tonnage
 
or
 
over
 
and
 
are
 
either
 
engaged
 
in
 
international
 
voyages
 
or
 
flying
 
the
 
flag
 
of
 
a
 
Member
 
and
65
operating
 
from
 
a
 
port,
 
or
 
between
 
ports,
 
in
 
another
 
country. All
 
of
 
our
 
vessels
 
are
 
certified
 
under
 
the
Maritime Labor Convention 2006 (“MLC 2006”)
Greenhouse Gas Regulation
Currently,
 
the
 
emissions
 
of
 
greenhouse
 
gases
 
from
 
international
 
shipping
 
are
 
not
 
subject
 
to
 
the
 
Kyoto
Protocol to
 
the United
 
Nations Framework
 
Convention on
 
Climate Change,
 
which entered
 
into force
 
in 2005
and pursuant
 
to which
 
adopting countries have
 
been required to
 
implement national programs
 
to reduce
greenhouse gas emissions with targets extended through 2020.
 
International negotiations are continuing
with respect to a successor to the Kyoto Protocol, and
 
restrictions on shipping emissions may be included
in
 
any
 
new
 
treaty.
 
In
 
December 2009,
 
more
 
than
 
27
 
nations,
 
including the
 
U.S.
 
and
 
China,
 
signed
 
the
Copenhagen Accord,
 
which includes
 
a non-binding
 
commitment
 
to reduce
 
greenhouse gas
 
emissions.
 
The
2015 United Nations Climate Change Conference in Paris resulted
 
in the Paris Agreement, which entered
into force on
 
November 4, 2016
 
and does not
 
directly limit greenhouse
 
gas emissions
 
from ships. The
 
U.S.
initially
 
entered
 
into
 
the
 
agreement,
 
but
 
on
 
June
 
1,
 
2017,
 
the
 
former
 
U.S. President
 
Trump
 
announced
that the United States intends
 
to withdraw from the
 
Paris Agreement, and the
 
withdrawal became effective
on November 4, 2020.
 
On January 20, 2021, U.S.
 
President Biden signed an
 
executive order to rejoin
 
the
Paris Agreement,
 
which the U.S. officially rejoined on February 19, 2021.
At
 
MEPC
 
70
 
and
 
MEPC
 
71,
 
a
 
draft
 
outline
 
of
 
the
 
structure
 
of
 
the
 
initial
 
strategy
 
for
 
developing
 
a
comprehensive
 
IMO
 
strategy
 
on
 
reduction
 
of
 
greenhouse
 
gas
 
emissions
 
from
 
ships
 
was
 
approved.
 
In
accordance with this roadmap, in April 2018, nations at
 
the MEPC 72 adopted an initial strategy to reduce
greenhouse
 
gas
 
emissions
 
from
 
ships.
 
The
 
initial
 
strategy
 
identifies
 
“levels
 
of
 
ambition”
 
to
 
reducing
greenhouse
 
gas
 
emissions,
 
including
 
(1)
 
decreasing
 
the
 
carbon
 
intensity
 
from
 
ships
 
through
implementation of
 
further phases
 
of the
 
EEDI for
 
new ships;
 
(2) reducing
 
carbon dioxide
 
emissions per
transport
 
work,
 
as
 
an
 
average
 
across
 
international shipping,
 
by
 
at
 
least
 
40%
 
by
 
2030,
 
pursuing
 
efforts
towards 70%
 
by 2050,
 
compared to 2008
 
emission levels; and
 
(3) reducing the
 
total annual
 
greenhouse
emissions by
 
at least
 
50% by
 
2050 compared
 
to 2008
 
while pursuing
 
efforts
 
towards phasing
 
them out
entirely.
 
The initial strategy
 
notes that technological
 
innovation, alternative
 
fuels and/or energy
 
sources for
international shipping will be integral to achieve
 
the overall ambition.
 
These regulations could cause us to
incur additional
 
substantial expenses.
 
At MEPC
 
77, the
 
Member States
 
agreed to
 
initiate the
 
revision of
the Initial
 
IMO Strategy
 
on Reduction
 
of GHG
 
emissions from
 
ships, recognizing
 
the need
 
to strengthen
the ambition
 
during the
 
revision process.
 
In July
 
2023, MEPC
 
80 adopted
 
a revised
 
strategy, which includes
an enhanced
 
common ambition to
 
reach net-zero
 
greenhouse gas emissions
 
from international shipping
around or close to 2050, a
 
commitment to ensure an uptake of
 
alternative zero and near-zero greenhouse
gas fuels
 
by 2030,
 
as well
 
as i).
 
reducing the
 
total annual
 
greenhouse gas
 
emissions from
 
international
shipping by at
 
least 20%, striving for
 
30%, by 2030,
 
compared to 2008;
 
and ii). reducing
 
the total annual
greenhouse gas
 
emissions from
 
international shipping
 
by at
 
least 70%,
 
striving for
 
80%, by
 
2040, compared
to 2008.
The EU made
 
a unilateral
 
commitment to
 
reduce overall
 
greenhouse gas
 
emissions from
 
its member
 
states
from 20% of 1990 levels
 
by 2020. The EU also committed
 
to reduce its emissions
 
by 20% under the
 
Kyoto
Protocol’s
 
second
 
period
 
from
 
2013
 
to
 
2020.
 
Starting
 
in
 
January
 
2018,
 
large
 
ships
 
over
 
5,000
 
gross
tonnage calling at EU ports
 
are required to collect
 
and publish data on
 
carbon dioxide emissions
 
and other
information.
 
Under
 
the
 
European
 
Climate
 
Law,
 
the
 
EU
 
committed
 
to
 
reduce
 
its
 
net
 
greenhouse
 
gas
emissions by
 
at least
 
55% by
 
2030 through
 
its “Fit-for-55”
 
legislation package.
 
As part
 
of this
 
initiative,
regulations relating to
 
the inclusion of
 
greenhouse gas
 
emissions from the
 
maritime sector in
 
the European
Union’s carbon market are also forthcoming.
Any passage
 
of climate
 
control legislation
 
or other
 
regulatory initiatives
 
by the
 
IMO, the EU,
 
the U.S. or
other countries
 
where we
 
operate, or
 
any treaty
 
adopted at
 
the international
 
level to
 
succeed the
 
Kyoto
Protocol
 
or
 
Paris
 
Agreement,
 
that
 
restricts
 
emissions
 
of
 
greenhouse
 
gases
 
could
 
require
 
us
 
to
 
make
significant financial expenditures which we cannot
 
predict with certainty at this time.
 
Even in the absence
66
of climate control
 
legislation, our business
 
may be indirectly
 
affected to the
 
extent that climate
 
change may
result in sea level changes or certain weather events.
Vessel Security Regulations
Since
 
the
 
terrorist
 
attacks
 
of
 
September
 
11,
 
2001
 
in
 
the
 
United
 
States,
 
there
 
have
 
been
 
a
 
variety
 
of
initiatives intended
 
to enhance
 
vessel security
 
such as
 
the U.S.
 
Maritime Transportation
 
Security Act
 
of
2002 (“MTSA”). To
 
implement certain
 
portions of
 
the MTSA,
 
the
 
USCG issued
 
regulations requiring
 
the
implementation
 
of
 
certain
 
security
 
requirements
 
aboard
 
vessels
 
operating
 
in
 
waters
 
subject
 
to
 
the
jurisdiction of the
 
United States and
 
at certain ports
 
and facilities, some
 
of which are
 
regulated by the
 
EPA.
Similarly, Chapter XI-2
 
of the
 
SOLAS Convention
 
imposes detailed
 
security obligations
 
on vessels
 
and port
authorities and
 
mandates compliance
 
with the
 
International Ship
 
and Port
 
Facility Security
 
Code (“the ISPS
Code”). The ISPS Code is designed to enhance
 
the security of ports and ships against
 
terrorism. To trade
internationally,
 
a vessel
 
must attain
 
an International Ship
 
Security Certificate (“ISSC”) from
 
a recognized
security organization approved
 
by the vessel’s flag
 
state. Ships operating
 
without a valid
 
certificate may be
detained, expelled
 
from, or
 
refused entry
 
at port
 
until they
 
obtain an
 
ISSC.
 
The various
 
requirements, some
of
 
which
 
are
 
found
 
in
 
the
 
SOLAS
 
Convention, include,
 
for
 
example,
 
on-board
 
installation
 
of
 
automatic
identification systems to provide
 
a means for the
 
automatic transmission of safety-related
 
information from
among
 
similarly
 
equipped
 
ships
 
and
 
shore
 
stations,
 
including
 
information
 
on
 
a
 
ship’s
 
identity,
 
position,
course, speed
 
and navigational
 
status; on-board installation
 
of ship
 
security alert
 
systems, which
 
do not
sound on the vessel but only alert the authorities on shore; the development of vessel
 
security plans; ship
identification
 
number
 
to
 
be
 
permanently
 
marked
 
on
 
a
 
vessel’s
 
hull;
 
a
 
continuous
 
synopsis
 
record
 
kept
onboard showing a vessel's history including
 
the name of the ship, the state
 
whose flag the ship is entitled
to fly, the date on which the ship was registered
 
with that state, the ship's
 
identification number, the port at
which
 
the
 
ship
 
is
 
registered
 
and
 
the
 
name
 
of
 
the
 
registered
 
owner(s)
 
and
 
their
 
registered
 
address;
and compliance with flag state security certification requirements.
The USCG regulations, intended to align with
 
international maritime security standards, exempt non-U.S.
vessels
 
from
 
MTSA
 
vessel
 
security
 
measures,
 
provided
 
such
 
vessels
 
have
 
on
 
board
 
a
 
valid
 
ISSC
 
that
attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code.
Future security
 
measures could
 
have a
 
significant financial
 
impact on
 
us.
 
We intend
 
to comply
 
with the
various security measures addressed by MTSA, the
 
SOLAS Convention and the ISPS Code.
 
The cost of
vessel security
 
measures has
 
also been
 
affected by
 
the escalation
 
in the
 
frequency of
 
acts of
 
piracy against
ships, notably off the coast of Somalia, including
 
the Gulf of Aden and Arabian Sea
 
area.
 
Substantial loss
of
 
revenue
 
and
 
other
 
costs
 
may
 
be
 
incurred
 
as
 
a
 
result
 
of
 
detention
 
of
 
a
 
vessel
 
or
 
additional
 
security
measures, and
 
the risk
 
of uninsured
 
losses could
 
significantly affect
 
our business.
 
Costs are
 
incurred in
taking
 
additional
 
security
 
measures
 
in
 
accordance
 
with
 
Best
 
Management
 
Practices
 
to
 
Deter
 
Piracy,
notably those contained in the BMP5 industry standard.
Inspection by Flag administration and Classification Societies
The flag represents the nationality of the ship, showing that it’s under the control of the registered country
and must comply with international and maritime law of it. The flag is required to
 
take measures to ensure
safety at sea
 
and should verify that
 
ships under its
 
authority,
 
conform relevant international standards, in
regard to construction, design, equipment and manning of ships,
 
through on board physical inspections.
The hull and machinery of every commercial
 
vessel must be classed by a classification society
 
authorized
by
 
its
 
country
 
of
 
registry.
 
The
 
classification
 
society
 
certifies
 
that
 
a
 
vessel
 
is
 
safe
 
and
 
seaworthy
 
in
accordance with the
 
applicable rules and regulations
 
of the country
 
of registry of the
 
vessel and SOLAS.
Most
 
insurance
 
underwriters
 
make
 
it
 
a
 
condition
 
for
 
insurance
 
coverage
 
and
 
lending
 
that
 
a
 
vessel
 
be
certified
 
“in
 
class”
 
by
 
a
 
classification
 
society
 
which
 
is
 
a
 
member
 
of
 
the
 
International
 
Association
 
of
Classification Societies, the IACS.
 
The IACS has adopted harmonized Common Structural Rules, or “the
67
Rules”, which
 
apply to
 
oil tankers
 
and bulk
 
carriers contracted
 
for construction
 
on or after
 
July 1,
 
2015.
 
The
Rules attempt to create a level of consistency between IACS Societies.
 
All of our vessels are certified as
being “in
 
class” by
 
all the
 
applicable Classification Societies
 
(e.g., American
 
Bureau of
 
Shipping, Lloyd's
Register of Shipping).
A vessel must undergo annual surveys,
 
intermediate surveys, drydockings and special surveys. In
 
lieu of
a special survey,
 
a vessel’s machinery may be
 
on a continuous survey cycle, under
 
which the machinery
would
 
be
 
surveyed
 
periodically
 
over
 
a
 
five-year
 
period.
 
Every
 
vessel
 
should
 
have
 
a
 
minimum
 
of
 
two
examinations of
 
the outside
 
of a
 
vessel's bottom
 
and related
 
items during
 
each five-year
 
special survey
period. One such examination is to
 
be carried out in conjunction with the
 
Special Periodical Survey.
 
In all
cases, the
 
interval between
 
any two
 
such examinations
 
is not
 
to exceed
 
36 months.
 
In all
 
cases, the
 
interval
between any two such examinations is not to exceed 36 months. If any vessel does not maintain its class
and/or fails any
 
annual survey, intermediate survey, drydocking
 
or special survey, the
 
vessel will be
 
unable
to
 
carry cargo
 
between ports
 
and
 
will be
 
unemployable and
 
uninsurable which
 
could
 
cause
 
us to
 
be
 
in
violation of certain covenants in our loan agreements.
 
Any such inability to carry cargo or be employed,
 
or
any such
 
violation of
 
covenants, could
 
have a
 
material adverse
 
impact on
 
our financial
 
condition and
 
results
of operations.
Risk of Loss and Liability Insurance
General
The operation
 
of any cargo
 
vessel includes
 
risks such
 
as mechanical
 
failure, physical damage,
 
collision,
property
 
loss,
 
cargo
 
loss
 
or
 
damage
 
and
 
business
 
interruption due
 
to
 
political
 
circumstances
 
in
 
foreign
countries, piracy incidents, hostilities and
 
labor strikes. In
 
addition, there is
 
always an inherent
 
possibility
of
 
marine
 
disaster,
 
including
 
oil
 
spills
 
and
 
other
 
environmental
 
mishaps,
 
and
 
the
 
liabilities
 
arising
 
from
owning
 
and
 
operating
 
vessels
 
in
 
international
 
trade.
 
OPA,
 
which
 
imposes
 
virtually
 
unlimited
 
liability
upon shipowners,
 
operators
 
and bareboat
 
charterers
 
of any
 
vessel
 
trading
 
in
 
the
 
exclusive
 
economic
zone of the
 
United States
 
for certain
 
oil pollution
 
accidents in
 
the United
 
States, has
 
made liability
 
insurance
more
 
expensive
 
for shipowners
 
and
 
operators
 
trading
 
in
 
the United
 
States
 
market. We
 
carry
 
insurance
coverage as customary in
 
the shipping industry. However, not all risks can be
 
insured, specific claims
 
may
be rejected, and we might not be always
 
able to obtain adequate insurance coverage at
 
reasonable rates.
While we maintain hull and machinery insurance, war
 
risks insurance, protection and indemnity cover and
freight, demurrage and
 
defense cover for
 
our operating fleet
 
in amounts that
 
we believe to
 
be prudent to
cover
 
normal risks
 
in
 
our
 
operations, we
 
may
 
not
 
be
 
able to
 
achieve
 
or maintain
 
this
 
level of
 
coverage
throughout
 
a
 
vessel's
 
useful life.
 
Furthermore, while
 
we
 
believe
 
that
 
our
 
present
 
insurance
 
coverage is
adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be
 
paid,
or that we will always be able to obtain adequate insurance coverage
 
at reasonable rates.
Hull & Machinery and War Risks Insurance
We maintain marine hull and machinery
 
and war risks insurance, which cover,
 
among other marine risks,
the risk
 
of actual
 
or constructive
 
total loss,
 
for all
 
of our
 
vessels. Our
 
vessels are
 
each covered
 
up to
 
at
least
 
fair
 
market
 
value
 
with
 
deductibles
 
ranging
 
to
 
a
 
maximum
 
of
 
$100,000
 
per
 
vessel
 
per
 
incident
 
for
Panamax, Kamsarmax and
 
Post-Panamax vessels
 
and $150,000 per
 
vessel per incident
 
for Capesize and
Newcastlemax vessels.
Protection and Indemnity Insurance
Protection and indemnity
 
insurance is provided
 
by mutual protection
 
and indemnity associations,
 
or “P&I
Associations,” and covers our third-party liabilities in connection with our shipping activities. This includes
third-party liability
 
and other
 
related expenses of
 
injury or
 
death of
 
crew, passengers and
 
other third
 
parties,
68
loss
 
or
 
damage
 
to
 
cargo,
 
claims
 
arising
 
from
 
collisions with
 
other
 
vessels,
 
damage
 
to
 
other
 
third-party
property,
 
pollution
 
arising
 
from
 
oil
 
or
 
other
 
substances,
 
and
 
salvage,
 
towing
 
and
 
other
 
related
 
costs,
including
 
wreck
 
removal.
 
Protection
 
and
 
indemnity
 
insurance
 
is
 
a
 
form
 
of
 
mutual
 
indemnity
 
insurance,
extended by protection and indemnity mutual associations, or “clubs.”
Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident.
The 13
 
P&I Associations
 
that comprise
 
the International
 
Group insure
 
approximately 90%
 
of the world’s
commercial
 
tonnage
 
and
 
have
 
entered
 
into
 
a
 
pooling
 
agreement
 
to
 
reinsure
 
each association’s
liabilities. The
 
International
 
Group’s
 
website
 
states
 
that
 
the
 
Pool
 
provides
 
a
 
mechanism
 
for
 
sharing
 
all
claims in
 
excess of
 
US$10 million up
 
to, currently,
 
approximately US$8.2 billion.
 
As a
 
member of
 
a P&I
Association,
 
which
 
is
 
a
 
member
 
of
 
the
 
International
 
Group,
 
we
 
are
 
subject
 
to
 
calls
 
payable
 
to
 
the
associations based on our
 
claim records as
 
well as the claim
 
records of all
 
other members of
 
the individual
associations
 
and
 
members
 
of
 
the shipping
 
pool
 
of
 
P&I
 
Associations
 
comprising
 
the
 
International
Group.
 
Our
 
vessels
 
may
 
be
 
subject
 
to
 
supplemental
 
calls
 
which
 
are
 
based
 
on
 
estimates
 
of
 
premium
income and anticipated and paid claims. Such
 
estimates are adjusted each year by
 
the Board of Directors
of the
 
P&I Association
 
until the
 
closing of
 
the relevant
 
policy year, which
 
generally occurs
 
within three
 
years
from the
 
end of the
 
policy year.
 
Supplemental calls, if
 
any,
 
are expensed when
 
they are
 
announced and
according to the period they relate to.
 
C.
 
Organizational structure
Diana Shipping Inc. is the sole owner of all of the issued and outstanding shares of the subsidiaries listed
in Exhibit 8.1 to this annual report.
D.
 
Property, plants and equipment
Since October 8, 2010, DSS owns
 
the land and the building where
 
we have our principal corporate offices
in Athens, Greece.
 
In addition, in
 
December 2014,
 
DSS acquired
 
a plot of
 
land jointly with
 
two other
 
related
entities from unrelated
 
individuals and in
 
November 2021 acquired
 
an additional part
 
of this land owned
 
by
one of our related parties. On July 6, 2023, the
 
Company purchased the remaining 1/3 from Alpha Sigma
Shipping Corp, a related party company, for the purchase price
 
of $1.2 million and became its sole
 
owner.
In 2024, we purchased two additional
 
plots of land from unrelated third parties
 
for an aggregate amount of
approximately $1.9 million.
 
All plots
 
of land
 
are in the
 
same area as
 
our principal offices.
 
Other than
 
this
interest
 
in
 
real
 
property,
 
our
 
only
 
material
 
properties
 
are
 
the
 
vessels
 
in
 
our
 
fleet,
 
owned
 
and
 
bareboat
chartered-in.
 
Item 4A.
 
Unresolved Staff Comments
None.
Item 5.
 
Operating and Financial Review and Prospects
The
 
following
 
management's
 
discussion
 
and
 
analysis
 
should
 
be
 
read
 
in
 
conjunction
 
with
 
our
 
historical
consolidated financial statements
 
and their notes included
 
elsewhere in this
 
annual report. This
 
discussion
contains forward-looking
 
statements that
 
reflect our
 
current views
 
with respect
 
to future
 
events and
 
financial
performance.
 
Our
 
actual
 
results
 
may
 
differ
 
materially
 
from
 
those
 
anticipated
 
in
 
these
 
forward-looking
statements as a result of certain
 
factors, such as those set forth
 
in the section entitled “Risk Factors”
 
and
elsewhere in this annual report.
A.
Operating results
69
Factors Affecting Our Results of Operations
We believe that our results of operations are affected by the following factors:
(1)
 
Average number of
 
vessels is the
 
number of vessels
 
that constituted our fleet
 
for the relevant
period, as
 
measured by
 
the sum
 
of the
 
number of
 
days each
 
vessel was
 
a part
 
of our
 
fleet during
the period divided by the number of calendar days in the period.
 
(2)
 
Ownership days are 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.
 
(3)
 
Available days are
 
the number of our
 
ownership days less the
 
aggregate number of days
 
that
our vessels are off-hire
 
due to scheduled repairs or
 
repairs under guarantee, vessel upgrades
or special surveys and the aggregate amount of time that we spend positioning our vessels for
such events.
 
The shipping
 
industry uses
 
available days
 
to measure
 
the number
 
of days
 
in a
period during which vessels should be capable of generating
 
revenues.
 
(4)
 
Operating days are
 
the number of
 
available days in
 
a period less
 
the aggregate number
 
of days
that
 
our
 
vessels
 
are
 
off-hire
 
due
 
to
 
any
 
reason,
 
including
 
unforeseen
 
circumstances.
 
The
shipping industry
 
uses operating
 
days to
 
measure the
 
aggregate number
 
of days
 
in a
 
period
during which vessels actually generate revenues.
 
(5)
 
We calculate
 
fleet utilization
 
by dividing
 
the number
 
of our
 
operating days
 
during a
 
period by
the number of our available 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
 
amount
 
of
 
days
 
that
 
its
 
vessels
 
are
 
off-hire
 
for
 
reasons
 
other
 
than
 
scheduled
 
repairs
 
or
repairs
 
under
 
guarantee,
 
vessel
 
upgrades,
 
special
 
surveys
 
or
 
vessel
 
positioning
 
for
 
such
events.
 
(6)
 
Time
 
charter
 
equivalent
 
rates,
 
or
 
TCE
 
rates,
 
are
 
defined
 
as
 
our
 
time
 
charter
 
revenues
 
less
voyage expenses
 
during a
 
period divided
 
by the
 
number of
 
our available
 
days during
 
the period,
which
 
is
 
consistent
 
with
 
industry
 
standards.
 
Voyage
 
expenses
 
include
 
port
 
charges,
 
bunker
(fuel)
 
expenses,
 
canal
 
charges
 
and
 
commissions.
 
TCE
 
rate
 
is
 
a
 
non-GAAP
 
measure,
 
and
management
 
believes
 
it
 
is
 
useful
 
to
 
investors
 
because
 
it
 
is
 
a
 
standard
 
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
 
charter
 
hire
rates
 
for
 
vessels
 
on
 
voyage
 
charters
 
are
 
generally
 
not
 
expressed
 
in
 
per
 
day
 
amounts
 
while
charter hire rates for vessels on time charters are generally expressed
 
in such amounts.
(7)
 
Daily
 
vessel
 
operating
 
expenses,
 
which
 
include
 
crew
 
wages
 
and
 
related
 
costs,
 
the
 
cost
 
of
insurance, expenses relating to repairs and maintenance, the costs
 
of spares and consumable
stores,
 
tonnage
 
taxes
 
and
 
other
 
miscellaneous
 
expenses,
 
are
 
calculated
 
by
 
dividing
 
vessel
operating expenses by ownership days for the relevant period.
The following table reflects such factors for the periods indicated:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
70
As of and for the
Year Ended December 31,
2023
2022
2021
Fleet Data:
Average number of vessels (1)
41.1
35.4
36.6
Number of vessels at year-end
40.0
42.0
33.0
Weighted average age of vessels at year-end (in
 
years)
 
10.5
10.2
10.4
Ownership days (2)
 
14,986
12,924
13,359
Available days (3)
 
14,867
12,449
13,239
Operating days (4)
 
14,824
12,306
13,116
Fleet utilization (5)
 
99.7%
98.9%
99.1%
Average Daily Results:
Time charter equivalent (TCE) rate (6)
 
$
16,713
$
22,735
$
15,759
Daily vessel operating expenses (7)
 
5,704
5,574
5,596
The following table reflects the calculation of our TCE rates for
 
the periods presented:
Year Ended December 31,
2023
2022
2021
(in thousands of U.S. dollars, except for TCE rates, which
are expressed in U.S. dollars, and available days)
Time charter revenues
 
$
262,098
$
289,972
$
214,203
Less: voyage expenses
 
(13,621)
(6,942)
(5,570)
Time charter equivalent revenues
 
$
248,477
$
283,030
$
208,633
Available days
 
14,867
12,449
13,239
Time charter equivalent (TCE) rate
 
$
16,713
$
22,735
$
15,759
Time Charter Revenues
Our revenues are driven primarily by
 
the number of vessels in our
 
fleet, the number of days during which
our vessels operate and
 
the amount of daily
 
charter hire rates that
 
our vessels earn under
 
charters, which,
in turn, are affected by a number of factors, including:
the duration of our charters;
our decisions relating to vessel acquisitions and disposals;
the amount of time that we spend positioning our vessels;
the amount of time that our vessels spend in drydock undergoing
 
repairs;
maintenance and upgrade work;
the age, condition and specifications of our vessels;
levels of supply and demand in the dry bulk shipping industry.
Vessels
 
operating on time
 
charters for a
 
certain period of
 
time provide more
 
predictable cash flows
 
over
that
 
period
 
of
 
time
 
but
 
can
 
yield
 
lower
 
profit
 
margins than
 
vessels
 
operating in
 
the
 
spot
 
charter market
71
during periods characterized by favorable market conditions. Vessels operating in the spot charter market
generate
 
revenues
 
that
 
are
 
less
 
predictable
 
but
 
may
 
enable
 
their
 
owners
 
to
 
capture
 
increased
 
profit
margins during
 
periods of
 
improvements in
 
charter rates
 
although their owners
 
would be
 
exposed to the
risk of
 
declining charter rates,
 
which may have
 
a materially adverse
 
impact on financial
 
performance. As
we employ vessels
 
on period charters,
 
future spot charter
 
rates may be
 
higher or lower
 
than the rates
 
at
which
 
we
 
have
 
employed
 
our
 
vessels
 
on
 
period
 
charters.
 
Our
 
time
 
charter
 
agreements
 
subject
 
us
 
to
counterparty risk.
 
In depressed
 
market conditions,
 
charterers may
 
seek to
 
renegotiate the
 
terms of
 
their
existing charter parties or
 
avoid their obligations under
 
those contracts. Should
 
a counterparty fail to
 
honor
their obligations
 
under agreements
 
with us,
 
we could
 
sustain significant
 
losses which
 
could have
 
a material
adverse effect on
 
our business,
 
financial condition,
 
results of
 
operations and
 
cash flows. Revenues
 
derived
from
 
time
 
charter
 
agreements
 
in
 
2023
 
decreased
 
compared
 
to
 
previous
 
years,
 
due
 
to
 
the
 
significant
decrease in
 
charter rates,
 
despite the
 
increase in
 
the size
 
of our
 
fleet, evident
 
in the
 
increase of
 
the average
number of vessels.
 
In 2024, the average
 
number of vessels will
 
decrease, as currently our
 
fleet consists of
41 vessels of which 39 vessels in operation, owned and chartered-in, and two under construction,
 
and we
have agreed to sell one of our vessels. As a result, although we have observed
 
that the time charter rates
have increased
 
since the
 
beginning of
 
2024, we
 
expect our
 
revenues in
 
2024 to
 
decrease compared
 
to
2023.
 
Voyage Expenses
We incur
 
voyage expenses
 
that mainly
 
include commissions
 
because all
 
of our
 
vessels are
 
employed
 
under
time charters that require the
 
charterer to bear voyage expenses
 
such as bunkers (fuel oil), port
 
and canal
charges. Although the charterer bears the cost
 
of bunkers, we also have bunker gain or
 
loss deriving from
the price differences of bunkers. When a vessel is delivered to a charterer,
 
bunkers are purchased by the
charterer and sold back
 
to us on the
 
redelivery of the vessel.
 
Bunker gain, or loss,
 
results
 
when a vessel
is redelivered by her charterer and delivered to the next charterer
 
at different bunker prices, or quantities.
We
 
currently pay
 
commissions ranging
 
from
 
4.75% to
 
5.00% of
 
the
 
total
 
daily charter
 
hire rate
 
of
 
each
charter
 
to
 
unaffiliated
 
ship
 
brokers,
 
in-house
 
brokers
 
associated
 
with
 
the
 
charterers,
 
depending
 
on
 
the
number of brokers
 
involved with arranging the
 
charter. In
 
addition, we pay
 
a commission to
 
DWM and to
DSS for those vessels
 
for which they provide
 
commercial management
 
services. The commissions
 
paid to
DSS are
 
eliminated from
 
our consolidated
 
financial statements
 
as intercompany
 
transactions. For
 
2024,
we expect
 
our voyage
 
expenses to
 
decrease compared
 
to 2023,
 
due to
 
the expected
 
decrease in
 
revenues.
The effect of
 
bunker prices cannot be determined,
 
as a gain or
 
loss from bunkers results mainly
 
from the
difference in
 
the value
 
of bunkers
 
paid by
 
the Company
 
when the
 
vessel is
 
redelivered to
 
the Company
from the
 
charterer under
 
the vessel’s
 
previous time
 
charter agreement
 
and the
 
value of
 
bunkers sold
 
by
the Company when the vessel is delivered to a new charterer.
Vessel Operating Expenses
Vessel operating expenses include
 
crew wages and
 
related costs,
 
the cost of
 
insurance, expenses
 
relating
to repairs and
 
maintenance, the cost
 
of spares and
 
consumable stores, tonnage
 
taxes, environmental
 
plan
costs
 
and
 
HSQ
 
and
 
vetting.
 
Our
 
vessel
 
operating
 
expenses
 
generally
 
represent
 
fixed
 
costs.
 
Vessel
operating expenses
 
have increased
 
since 2021
 
due to
 
the increase
 
in ownership
 
days. For
 
2024, we
 
expect
our operating expenses to decrease compared to 2023, as a result of the average decrease of the size of
the fleet compared to 2023.
Vessel Depreciation
 
The cost of our
 
vessels is depreciated
 
on a straight-line
 
basis over the estimated
 
useful life of each
 
vessel.
Depreciation is based
 
on the
 
cost of the
 
vessel less
 
its estimated salvage
 
value. We
 
estimate the useful
life of
 
our dry
 
bulk vessels
 
to be
 
25 years from
 
the date
 
of initial
 
delivery from
 
the shipyard,
 
which we
 
believe
is common in the
 
dry bulk shipping industry.
 
Furthermore, we estimate the salvage
 
values of our vessels
72
based on historical average prices
 
of the cost of
 
the light-weight ton of
 
vessels being scrapped. Effective
July 1, 2023, the Company
 
changed its estimated
 
scrap rate of its
 
vessels from $250 per
 
lightweight ton to
$400 per lightweight
 
ton, calculated
 
based on the
 
average demolition
 
prices in
 
different markets, during
 
the
last 15 years. During 2022, we
 
took delivery of ten vessels and
 
sold one and in 2023,
 
we took delivery of
one vessel and
 
sold three. Following
 
these transactions vessel
 
depreciation has increased
 
since 2021.
 
For
2024, we expect depreciation
 
expense to decrease due to
 
the increase of the
 
scrap rate in 2023
 
and the
decrease in the number of vessels in our fleet
 
as in 2024 we have sold one vessel and
 
we have agreed to
sell another one.
General and Administrative Expenses
We incur general
 
and administrative
 
expenses which
 
include our
 
onshore related
 
expenses such
 
as payroll
expenses
 
of
 
employees,
 
executive
 
officers,
 
directors
 
and
 
consultants,
 
compensation
 
cost
 
of
 
restricted
stock
 
awarded
 
to
 
senior
 
management
 
and
 
non-executive
 
directors,
 
traveling,
 
promotional
 
and
 
other
expenses of
 
the public
 
company,
 
such as
 
legal and
 
professional expenses and
 
other general expenses.
During the
 
last three
 
years, our
 
general and
 
administrative expenses
 
are increasing,
 
especially in
 
2023,
mainly due to payroll costs
 
and donations.
 
For 2024, we expect our
 
general and administrative expenses
to increase, due to anticipated increases in payroll and other office expenses. General and administrative
expenses are not
 
affected by the
 
size of the
 
fleet. However, they are affected
 
by the exchange
 
rate of Euro
to US Dollars,
 
as about half of our administrative expenses are in Euro.
 
Interest and Finance Costs
We incur
 
interest expense and
 
financing costs
 
in connection with
 
vessel-specific debt,
 
senior unsecured
bond and finance liabilities. As of December 31, 2023 our aggregate debt amounted
 
to $517.0 million and
our finance
 
liabilities amounted
 
to $133.3
 
million. During
 
2023, we
 
replaced LIBOR,
 
being the
 
reference
rate to calculate interest expense in our loan facilities having a floating rate, with term SOFR through loan
refinancings and one loan modification. Interest rates, which have been increasing since the
 
beginning of
2022, continued
 
to increase
 
in 2023
 
and in
 
combination with
 
the increased
 
average debt
 
outstanding in
2023, interest costs
 
increased significantly. For 2024,
 
we expect
 
interest and finance
 
costs to remain
 
at the
same levels with 2023, as we do not expect interest rates to increase,
 
while debt outstanding is expected
to decrease.
 
We manage
 
our exposure
 
in interest
 
rates, by
 
maintaining a
 
mix of
 
financing under
 
agreements with
 
floating
and fixed
 
interest rates. More
 
specifically,
 
during 2022, we
 
refinanced part of
 
our loans
 
having a floating
interest rate,
 
with sale
 
and leaseback
 
transactions
 
with fixed
 
rates. Also,
 
in 2023,
 
we entered
 
into an
 
interest
rate swap
 
for 30%
 
of our
 
$100 million
 
loan facility
 
with DNB,
 
dated June
 
26, 2023,
 
under which
 
we pay
fixed
 
interest and
 
receive floating.
 
Through these
 
agreements and
 
our
 
bond, also
 
bearing fixed
 
interest
rate, we
 
manage part
 
of our
 
exposure in
 
interest rates
 
caused by
 
the remaining
 
agreements which
 
bear
floating interest rates.
Lack of Historical Operating Data for Vessels before Their Acquisition
Although vessels are generally acquired free of charter, we have acquired (and may in the future acquire)
some vessels with time charters. It is rare
 
in the shipping industry for the last charterer
 
of the vessel in the
hands of the seller to continue as the first charterer
 
of the vessel in the hands of the buyer. In most cases,
when a
 
vessel is
 
under time
 
charter and
 
the buyer
 
wishes to
 
assume that
 
charter,
 
the vessel
 
cannot be
acquired without the charterer’s
 
consent and the buyer entering into
 
a separate direct agreement (called
 
a
“novation agreement”) with the
 
charterer to assume the
 
charter. The
 
purchase of a
 
vessel itself does not
transfer
 
the
 
charter
 
because
 
it
 
is
 
a
 
separate
 
service
 
agreement
 
between
 
the
 
vessel
 
owner
 
and
 
the
charterer.
73
Where we identify any intangible assets or liabilities associated with the acquisition
 
of a vessel, we record
all
 
identified assets
 
or
 
liabilities at
 
fair
 
value.
 
Fair value
 
is
 
determined by
 
reference to
 
market
 
data. We
value any
 
asset or
 
liability arising
 
from the
 
market value
 
of the
 
time charters
 
assumed when
 
a vessel
 
is
acquired. The amount to be recorded as an asset or liability at the
 
date of vessel delivery is based on the
difference
 
between
 
the
 
current
 
fair
 
market
 
value
 
of
 
the
 
charter
 
and
 
the
 
net
 
present
 
value
 
of
 
future
contractual cash
 
flows.
 
When the
 
present value
 
of the
 
time charter
 
assumed is
 
greater than the
 
current
fair market
 
value of
 
such charter, the
 
difference is
 
recorded as
 
prepaid charter
 
revenue.
 
When the
 
opposite
situation occurs,
 
any difference,
 
capped to
 
the vessel’s
 
fair value
 
on a
 
charter-free basis, is
 
recorded as
deferred revenue.
 
Such assets and
 
liabilities, respectively, are amortized
 
as a reduction of,
 
or an increase
in, revenue over the period of the time charter assumed.
When we
 
purchase a
 
vessel and
 
assume or
 
renegotiate a
 
related time
 
charter,
 
among others,
 
we must
take the following steps before the vessel will be ready to commence
 
operations:
obtain the charterer’s consent to us as the new owner;
obtain the charterer’s consent to a new technical
 
manager;
in some cases, obtain the charterer’s consent to
 
a new flag for the vessel;
arrange for a
 
new crew for the
 
vessel, and where the
 
vessel is on charter,
 
in some cases, the
crew must be approved by the charterer;
replace all hired equipment on board, such as gas cylinders
 
and communication equipment;
negotiate
 
and
 
enter
 
into
 
new
 
insurance
 
contracts
 
for
 
the
 
vessel
 
through
 
our
 
own
 
insurance
brokers;
register the vessel under a
 
flag state and perform
 
the related inspections in order
 
to obtain new
trading certificates from the flag state;
implement a new planned maintenance program for the vessel; and
ensure that the new
 
technical manager obtains new certificates for
 
compliance with the safety
and vessel security regulations of the flag state.
When we charter
 
a vessel
 
pursuant to a
 
long-term time
 
charter agreement
 
with varying rates,
 
we recognize
revenue on a straight-line basis, equal to the average revenue during
 
the term of the charter.
 
The following
 
discussion is
 
intended to
 
help you
 
understand how
 
acquisitions of
 
vessels affect
 
our business
and results of operations.
Our business is mainly comprised of the following elements:
employment and operation of our vessels; and
management of
 
the financial,
 
general and
 
administrative elements
 
involved in
 
the conduct
 
of
our business and ownership of our vessels.
The employment and operation of our vessels mainly require the
 
following components:
vessel maintenance and repair;
74
crew selection and training;
vessel spares and stores supply;
contingency response planning;
onboard safety procedures auditing;
accounting;
vessel insurance arrangement;
vessel chartering;
vessel security training and security response plans (ISPS);
obtaining of
 
ISM certification
 
and audit
 
for each
 
vessel within
 
the six
 
months of
 
taking over
 
a
vessel;
vessel hiring management;
vessel surveying; and
vessel performance monitoring.
The management of
 
financial, general and
 
administrative elements
 
involved in the
 
conduct of our
 
business
and ownership of our vessels mainly requires the following
 
components:
management of our
 
financial resources, including
 
banking relationships, i.e.,
 
administration of
bank loans and bank accounts;
management of our accounting system and records and financial
 
reporting;
administration of the legal and regulatory requirements affecting our business
 
and assets; and
management of the relationships with our service providers and customers.
The principal factors
 
that affect our profitability, cash
 
flows and shareholders’
 
return on investment
 
include:
rates and periods of charter hire;
levels of vessel operating expenses;
depreciation expenses;
financing costs;
 
the effects of COVID-19;
the war in the Ukraine;
 
inflation, and
 
75
fluctuations in foreign exchange rates.
Results of Operations
Year ended December 31, 2023 compared to the year ended December 31, 2022
Time charter
 
revenues.
 
Time
 
charter revenues
 
decreased by
 
$27.9 million,
 
or 9.6%,
 
to $262.1
 
million in
2023, compared to $290.0 million
 
in 2022. The
 
decrease in time charter
 
revenues was due to
 
decreased
average
 
time
 
charter
 
rates,
 
which
 
decreased
 
our
 
TCE
 
rate
 
to
 
$16,713
 
in
 
2023
 
from
 
$22,735
 
in
 
2022,
representing a 26%
 
decrease. This decrease
 
was partly offset
 
by increased operating
 
days during 2023,
as
 
compared
 
to
 
last
 
year.
 
Operating
 
days
 
in
 
2023
 
were
 
14,824
 
compared
 
to
 
12,306
 
in
 
2022,
 
mainly
resulting from the acquisition of eight Ultramax
 
vessels in the fourth quarter of
 
2022 and one more in first
quarter of 2023.
Voyage
 
expenses.
 
Voyage
 
expenses
 
increased
 
by
 
$6.7
 
million,
 
or
 
97%,
 
to
 
$13.6
 
million
 
in
 
2023
 
as
compared to $6.9 in 2022.
 
This increase was mainly due to
 
the decreased gain on bunkers amounting to
$0.5 million
 
in 2023
 
compared to
 
$8.1 million
 
in 2022.
 
The gain
 
on bunkers
 
was mainly
 
due to
 
the difference
in the
 
price of
 
bunkers paid
 
by the
 
Company to
 
the charterers
 
on the
 
redelivery of
 
the vessels
 
from the
charterers under the previous
 
charter party agreement and the
 
price of bunkers paid
 
by charterers to the
Company on the
 
delivery of the
 
same vessels to
 
their charterers under
 
new charter party
 
agreements. This
decrease was partially counterbalanced due to decreased commissions, which is the main part of voyage
expenses, and which in 2023 decreased to $13.3 million compared
 
to $14.4 million in 2022.
 
Vessel operating expenses.
Vessel operating expenses
 
increased by
 
$13.5 million,
 
or 19%,
 
to $85.5
 
million
in
 
2023
 
compared
 
to
 
$72.0
 
million
 
in
 
2022.
 
The
 
increase
 
in
 
operating
 
expenses
 
is
 
attributable
 
to
 
the
increase in
 
ownership days in
 
2023, as
 
a result
 
of the
 
acquisition of
 
eight Ultramax
 
vessels in
 
the fourth
quarter of 2022
 
and one more
 
in first quarter
 
of 2023.
 
Operating expenses
 
also increased due
 
to increased
crew
 
costs, insurances,
 
spares
 
and
 
other consumables.
 
Total
 
daily operating
 
expenses
 
were $5,704
 
in
2023 compared to $5,574 in 2022.
 
Depreciation
 
and
 
amortization
 
of
 
deferred
 
charges. Depreciation
 
and
 
amortization
 
of
 
deferred
 
charges
increased
 
by $6.5 million,
 
or 15%,
 
to $49.8
 
million
 
in 2023,
 
compared
 
to $43.3
 
million
 
in 2022.
 
This increase
was due
 
to the
 
acquisition of
 
nine vessels,
 
as noted
 
above. This
 
increase was
 
partially offset
 
due to
 
the
fact that,
 
effective July 1,
 
2023, the
 
Company changed
 
its estimated
 
scrap rate
 
of its
 
vessels from
 
$250
per lightweight ton to $400 and the sale of vessel
Boston
in the fourth quarter of 2023. A further decrease
incurred due to decreased amortization of deferred cost as a result of the drydock cost incurred for seven
vessels having drydock surveys in 2023 and twelve in 2022.
General and
 
administrative expenses
. General and admini
strati
ve expenses
 
increased by
 
$3.6 million,
 
or
12%,
 
to
 
$33.0
 
million
 
in
 
2023
 
compared
 
to
 
$29.4
 
million
 
in
 
2022.
 
The
 
increase
 
was
 
mainly
 
due
 
to
 
the
increased payroll
 
costs and
 
travelling expenses.
 
A further
 
increase by
 
$0.6 million
 
was attributed
 
to donations.
Management fees to related party.
 
Management fees to a related party increased
 
by $0.8 million, or 160%
to $1.3 million in 2023 compared
 
to $0.5 million in 2022. The increase
 
was attributable to increased average
number of vessels managed
 
by DWM in 2023 compared to 2022, due to the acquisition of three Ultramax
vessels
 
in
 
the
 
fourth
 
quarter
 
of
 
2022
 
and
 
one
 
more
 
in
 
first
 
quarter
 
of
 
2023,
 
whose management
 
was
assigned to DWM.
 
Gain
 
on
 
sale
 
of
 
vessels.
 
Gain
 
on
 
sale
 
of
 
vessels
 
increased
 
by
 
$2.4
 
million,
 
or
 
83%,
 
to
 
$5.3
 
million
 
which
resulted
 
from
 
the
 
sale
 
of
 
vessels
Aliki,
 
Melia
 
and
 
Boston
in
 
2023
 
compared
 
to
 
$2.9 million
 
in
 
2022
 
which
resulted from the sale of
Baltimore
 
in 2022.
76
Insurance recoveries
. Insurance recoveries amounted to null balance in 2023,
 
compared to $1.8
 
million in
2022
 
which
 
consisted
 
of amounts
 
received from
 
our insurers
 
for claims
 
covered under
 
the insurance
 
policies
during 2022.
 
Interest expense
 
and finance
 
costs.
 
Interest expense
 
and finance
 
costs increased
 
by $21.9
 
or 80% to
$49.3
 
million
 
in 2023
 
compared
 
to $27.4
 
million
 
in 2022.
 
The increase
 
was primarily
 
attributable to
 
increased
average outstanding
 
balance of
 
debt and
 
finance liabilities
 
in 2023,
 
resulting from
 
the refinances
 
performed.
A
 
further
 
increase
 
was
 
also
 
derived
 
from
 
increased
 
average
 
interest
 
rates
 
resulting
 
from
 
our
 
loan
agreements, having
 
a variable
 
interest rate.
 
In 2023,
 
the weighted
 
average interest
 
rate of
 
our secured
 
loan
agreements was 7.3% compared to 3.8% in 2022.
Interest and other income
. Interest and other income increased by $5.5 million, or 204%, to $8.2 million
 
in
2023 compared
 
to $2.7
 
million in
 
2022. The
 
increase is
 
mainly attributable
 
to increased
 
deposit rates
 
in
2023 compared to 2022.
 
Loss on extinguishment
 
of debt.
In 2023, loss on
 
extinguishment of debt increased
 
by $0.3, or 75%
 
to $0.7
million and consisted of the prepayment in full of six loan agreements refinanced by other banks. In 2022,
loss on extinguishment
 
of debt amounted
 
to $0.4 million
 
and consisted of
 
financing costs written
 
off as a
result of the early prepayment of
 
the outstanding balances of loans attributed
 
to one vessel sold and three
vessels refinanced in sale and leaseback transactions in 2022.
 
Loss on
 
derivatives
. Loss on
 
derivates
 
amounted
to $0.4 million
 
in 2023
 
and represents the
 
fair value of
an interest
 
rate swap
 
dated July
 
6, 2023
 
in which
 
the Company
 
entered into
 
with DNB.
 
The notional
 
amount
of the agreement is $30 million and the Company pays a fixed rate of 4.268% and receives floating under
term SOFR.
Gain on
 
related party
 
Investments.
Gain on
 
related party
 
Investments amounted
 
to $1.5
 
million in
 
2023,
compared to $0.6 million
 
in 2022. On October 17,
 
2023, the Company realized
 
a gain of $1.7 million
 
which
derived from the
 
conversion of 9,793
 
of the
 
10,000 Series C
 
Preferred shares of
 
OceanPal to 3,649,474
common shares of OceanPal, having a fair
 
value of $9.2 million, based on the closing
 
price of OceanPal’s
common
 
shares
 
on
 
the
 
date
 
of
 
conversion.
 
This
 
gain
 
was
 
the
 
difference
 
between
 
the
 
book
 
value
 
of
OceanPal’s Series
 
C Preferred
 
shares and
 
the fair
 
value of
 
the converted
 
common shares
 
and was
 
partially
offset by an unrealized
 
loss of $1.0
 
million, resulting from
 
the measurement
 
of OceanPal’s common
 
shares
at fair value on
 
December 31, 2023,
 
based on the
 
closing price of the
 
shares on that
 
date. Additionally, the
Company distributed to
 
its shareholders as
 
a noncash dividend,
 
its 13,157 Series
 
D Preferred Shares
 
of
OceanPal,
 
which
 
resulted
 
in
 
gain
 
of
 
$0.8
 
million.
 
The
 
gain
 
of
 
$0.6
 
million
 
in
 
2022
 
represents
 
the
 
gain
recognized upon the
 
distribution of 25,000
 
Convertible Series D
 
Preferred Shares of
 
OceanPal Inc.
 
as a
noncash dividend to
 
the Company's shareholders,
 
being the difference
 
between the carrying
 
value and the
fair value of the Series D Preferred Shares on the date of the dividend
 
declaration.
Gain on deconsolidation of
 
subsidiary.
Gain on deconsolidation of
 
subsidiary amounted to
 
$0.8 million in
2023 and represents the gain from the Company’s 25% interest in Bergen Ultra measured at fair
 
value on
the date of its deconsolidation from the Company’s financial statements.
Unrealized gain on equity
 
securities.
Unrealized gain on equity
 
securities amounted to $2.8
 
million in 2023
and resulted from the measurement of equity securities,
 
having a book value of $17.9 million, at fair value
of $20.7 million on December 31, 2023, determined through Level
 
1 of the fair value hierarchy.
Unrealized gain on
 
warrants.
Unrealized
gain on warrants
 
amounted $1.6 million
 
in 2023, which
 
resulted
from the fair value adjustment
 
as of December 31, 2023
 
of the value of the
 
22,613,070 warrants issued on
December 14, 2023.
77
Gain/(loss) from equity method
 
investments.
In 2023, loss
 
from equity method
 
investments,
 
amounted to
$0.3 million,
 
compared to
 
a gain
 
of $0.9
 
million in
 
2022
 
The loss
 
in 2023
 
is attributed
 
to a
 
loss of
 
$0.7
million from
 
our 45.45%
 
interest in
 
Windward, which
 
was partly
 
offset by
 
a gain
 
of $0.2
 
million from
 
our
50% interest in DWM,
 
and a gain of
 
$0.2 million from
 
our 25% interest
 
in Bergen. The
 
gain in the prior
 
year
derived from our 50% interest in DWM.
Year ended December 31, 2022 compared to the year ended December 31, 2021
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021,
please refer to “Item 5. Operating and Financial
 
Review and Prospects” in our Annual Report
 
on Form 20-
F,
 
for the year ended December 31, 2022 filed with the SEC on March 27,
 
2023.
B.
 
Liquidity and Capital Resources
We
 
finance
 
our
 
capital
 
requirements
 
with
 
cash
 
flow
 
from
 
operations,
 
equity
 
contributions
 
from
shareholders, long-term bank
 
debt, finance liabilities and
 
senior unsecured bonds.
 
Our main uses of
 
funds
have been capital expenditures for the acquisition and construction of new vessels, expenditures
 
incurred
in
 
connection
 
with
 
ensuring
 
that
 
our
 
vessels
 
comply
 
with
 
international
 
and
 
regulatory
 
standards,
repayments of bank loans, repurchase of our common stock and payment
 
of dividends.
 
As
 
of
 
December
 
31,
 
2023
 
and
 
2022,
 
working
 
capital,
 
which
 
is
 
current
 
assets
 
minus
 
current
 
liabilities,
including the current
 
portion of long-term
 
debt and finance
 
liabilities, amounted to
 
$97.1 million and
 
$9.0
million, respectively. The increase in working capital
 
is mainly due to increased
 
cash and cash equivalents
and our investment in equity securities amounting to $20.7 million,
 
which did not exist in the prior year.
 
In
addition, the
 
Company’s current
 
portion of
 
long-term debt
 
decreased compared
 
to last
 
year as
 
in 2022,
current
 
portion of
 
long-term debt
 
included a
 
balloon of
 
$43.8 million
 
under
 
one
 
of
 
our
 
loan
 
agreements
which was refinanced in 2023.
Cash and
 
cash equivalents,
 
including restricted
 
cash, was
 
$121.6 million
 
as of
 
December 31,
 
2023 and
$97.4
 
million
 
as
 
of
 
December
 
31,
 
2022.
 
Restricted
 
cash
 
mainly
 
consists
 
of
 
the
 
minimum
 
liquidity
requirements under
 
our loan
 
facilities. As
 
of December
 
31, 2023
 
and 2022,
 
restricted cash
 
amounted to
$20.0 million and $21.0 million, respectively. We consider highly liquid investments such
 
as time deposits,
certificates of deposit
 
and their equivalents
 
with an original
 
maturity of up
 
to about three
 
months to be
 
cash
equivalents. Time deposits
 
with maturity above
 
three months are
 
removed from cash
 
and cash equivalents
and are separately presented
 
as time deposits. As
 
of December 31, 2023,
 
the time deposits above
 
three
months amounted to
 
$40.0 million,
 
compared to $46.5
 
million as
 
of December 31,
 
2022. Cash and
 
cash
equivalents are primarily held in U.S. dollars.
Net Cash Provided by Operating Activities
Net cash provided by operating
 
activities decreased by $88.5 million,
 
or 56%.
 
In 2023, net cash
 
provided
by
 
operating
 
activities
 
was
 
$70.4 million
 
compared
 
to
 
net
 
cash
 
provided
 
by
 
operating
 
activities
 
of
$158.9 million in
 
2022. This
 
decrease in
 
cash from
 
operating activities
 
was mainly
 
attributable to
 
decreased
revenues
 
as
 
a
 
result
 
of
 
decreased
 
average
 
time
 
charter
 
rates
 
compared
 
to
 
2022.
 
Cash
 
provided
 
by
operating
 
activities
 
was
 
also
 
affected
 
by
 
our
 
investment
 
in
 
equity
 
securities
 
acquired
 
in
 
2023
 
for
 
$17.9
million. This decrease was
 
partly offset by decreased
 
dry-docking costs incurred
 
for seven vessels in
 
2023
compared to twelve vessels in 2022.
 
Net Cash Used in Investing Activities
Net cash
 
provided by investing
 
activities was $24.9
 
million for
 
2023, which consists
 
of $29.7 million
 
paid
for vessel acquisitions and improvements due to new regulations; $36.6 million of proceeds from the
 
sale
of three
 
vessels in
 
2023; $10.5
 
million paid to
 
acquire investments in
 
Windward and
 
Cohen; $1.0 million
78
cash divested from deconsolidation
 
of Bergen Ultra;
 
decreased investment by $6.5
 
million in time deposits
with
 
maturity
 
above
 
three months;$25.2
 
million
 
proceeds
 
from
 
convertible
 
loan
 
with
 
limited
 
partnership;
$0.2 million paid to acquire other assets; and $2.0 million relating
 
to the acquisition of equipment.
Net cash used in investing activities was $273.1 million for 2022, which consists of $230.3 million paid for
vessel acquisitions
 
and improvements
 
due to
 
new regulations;
 
$4.4 million
 
of proceeds
 
from the
 
sale of
one vessel in 2022; $46.5 million investment in
 
time deposits with maturity above three months; and $0.7
million relating to the acquisition of equipment.
Net Cash Provided by Financing Activities
Net cash used in
 
financing activities was $71.1 million for
 
2023, which consists of $57.7
 
million proceeds
from issuance of long term debt and finance liabilities; $79.8 million of indebtedness and finance liabilities
that we repaid; $5.8 million and $41.4 million of
 
cash dividends paid on our preferred and common stock,
respectively; and $1.8 million of finance costs paid in relation
 
to new loan agreements.
Net
 
cash
 
provided
 
by
 
financing
 
activities
 
was
 
$84.9
 
million
 
for
 
2022,
 
which
 
consists
 
of
 
$275.1
 
million
proceeds from
 
issuance of
 
long term
 
debt and
 
finance liabilities;
 
$102.8 million
 
of indebtedness
 
and finance
liabilities that
 
we repaid;
 
$5.8 million
 
and $79.8
 
million of
 
cash dividends
 
paid on
 
our preferred
 
and common
stock, respectively; $3.8
 
million paid for
 
repurchase of common
 
stock; $5.3 million
 
proceeds from issuance
of common
 
stock; and
 
$3.3 million
 
of finance
 
costs paid
 
in relation
 
to new
 
loan agreements
 
and finance
liabilities.
For a detailed
 
discussion of
 
cash flows
 
for the
 
year ended
 
December 31,
 
2022
 
compared to
 
the year
 
ended
December 31, 2021
 
please see “Item 5. Operating and Financial Review and Prospects - B. Liquidity and
Capital Resources”
 
included in
 
our
 
2022 Annual
 
Report filed
 
on Form
 
20-F with
 
the SEC
 
on
 
March 27,
2023.
Capital Expenditures
We make capital expenditures in connection with vessel acquisitions and constructions, which we finance
with
 
cash
 
from
 
operations,
 
debt
 
under
 
loan
 
facilities
 
at
 
terms
 
acceptable
 
to
 
us,
 
sale
 
and
 
leaseback
agreements and with funds from equity issuances.
 
As of
 
the date
 
of this
 
annual report,
 
we have
 
entered into
 
two agreements
 
for the
 
construction of
 
two 81,200
dwt methanol
 
dual fuel
 
new-building Kamsarmax dry
 
bulk vessels, for
 
$46 million each.
 
The vessels
 
are
expected to be delivered
 
to the Company by
 
the second half
 
of 2027 and
 
the first half of
 
2028 respectively.
On February 15, 2024,
 
we paid an aggregate
 
amount of $16.1
 
million, representing 17.5%
 
of the purchase
price of
 
both vessels.
 
Additionally,
 
we have
 
committed to
 
contribute Euro
 
50 million
 
to Windward
 
for the
construction of four CSOVs, with deliveries scheduled to
 
occur between the third quarter of 2025
 
and the
fourth quarter
 
of 2026.
 
As of
 
the date
 
of this
 
report, we
 
have paid
 
an aggregate
 
of Euro
 
24.3 million,
 
or
$26.1 million.
 
We also
 
expect to
 
incur capital
 
expenditures
 
when our
 
vessels undergo
 
surveys. This
 
process
of recertification may
 
require us
 
to reposition these
 
vessels from a
 
discharging port to
 
shipyard facilities,
which will reduce our operating days during the period. We may also incur capital expenditures for vessel
improvements to meet new regulations. In the next twelve
 
months, we will require capital to fund ongoing
operations, debt
 
service, the
 
payment of
 
our preferred
 
dividends and
 
the payment
 
of our
 
bareboat charters.
 
As of the date of this annual report,
 
we have contracted revenues covering around 71% of our ownership
days in 2024, in time charter agreements
 
having an average time charter
 
rate in excess of our break-even
rate as of
 
December 31, 2023,
 
and we have
 
also fixed around
 
12% of our
 
ownerships days in
 
2025. We
believe that contracted and
 
anticipated revenues will
 
result in internally generated
 
cash flows and together
with available cash and
 
cash equivalents,
 
which as of December
 
31, 2023 amounted to
 
$101.6 million and
having additional investments
 
in time
 
deposits of $40.0
 
million which mature
 
in 2024, will
 
be sufficient to
79
fund
 
such
 
capital
 
requirements.
 
Should
 
time
 
charter
 
rates
 
remain
 
at
 
current
 
levels
 
as
 
our
 
time
 
charter
agreements are due for renewal
 
during the year, we believe that we will be able to have
 
sufficient funds to
cover our
 
capital expenditures
 
in the
 
long-term. We
 
may also
 
incur additional
 
debt to
 
finance part
 
of the
construction cost of our methanol vessels on order.
Long-term Debt and Finance Liabilities
As of
 
December 31,
 
2023, we
 
had $517.0
 
million of
 
long term
 
debt outstanding
 
under our
 
facilities and
Bond, under the agreements described below.
Secured Term Loans
On January 4,
 
2017, we
 
drew down
 
$57.24 million,
 
under a
 
secured loan
 
agreement with
 
the Export-Import
Bank
 
of
 
China,
 
dated
 
January
 
7,
 
2016,
 
to
 
finance
 
part
 
of
 
the
 
construction
 
cost
 
of
San
 
Francisco
 
and
Newport News
, both
 
delivered on January
 
4, 2017. The
 
loan is payable
 
in equal quarterly
 
instalments of
about $1.0 million each,
 
the last of
 
which is payable by
 
January 4, 2032. On
 
July 19, 2023, we
 
amended
the terms of
 
the loan
 
to replace
 
LIBOR with
 
term SOFR
 
and the
 
margin was
 
increased from
 
2.3% to
 
2.45%.
On September 30, 2022, we entered into a $200 million loan agreement to finance
 
the acquisition price of
9 Ultramax vessels.
 
The Company drew
 
down $197.2 million under
 
the loan, in
 
tranches for each
 
vessel
on their
 
delivery to
 
the Company
 
but prepaid
 
$21.9 million
 
in December
 
2022 due
 
to a
 
vessel sale
 
and
leaseback transaction.
 
The loan
 
is repayable
 
in equal
 
quarterly instalments
 
of an
 
aggregate amount
 
of $3.7
million, and a balloon of $100.9
 
million payable together with the last
 
instalment on October 11, 2027. The
loan bears interest at term SOFR plus a margin of 2.25%.
On
 
April
 
12,
 
2023,
 
we
 
entered
 
into
 
a
 
$100
 
million
 
term
 
loan
 
facility
 
with
 
Danish
 
Ship
 
Finance
 
A/S
 
to
refinance an
 
aggregate of
 
$75.2 million
 
outstanding balance
 
under existing
 
loans with
 
BNP Paribas
 
and
working
 
capital.
 
The
 
loan is
 
repayable
 
in
 
twenty equal
 
consecutive
 
quarterly instalments
 
of
 
$3.3 million
each and
 
a balloon
 
of $34
 
million payable together
 
with the
 
last instalment
 
on April
 
19, 2028,
 
and bears
interest at term SOFR plus a margin of 2.2%.
On
 
June
 
20, 2023,
 
the
 
Company
 
entered into
 
a $22.5
 
million loan
 
agreement with
 
Nordea to
 
refinance
$20.9
 
million
 
outstanding
 
balance
 
of
 
an
 
existing
 
loan.
 
The
 
new
 
loan
 
is
 
repayable
 
in
 
equal
 
quarterly
instalments of
 
about $1.1
 
million and
 
bears interest
 
at term
 
SOFR plus
 
a margin
 
of 2.25%.
 
The loan
 
matures
on June 27, 2028.
On June
 
26, 2023,
 
we entered
 
into a
 
$100 million
 
loan agreement
 
with DNB
 
Bank ASA,
 
or DNB,
 
to refinance
an aggregate
 
of $68.7
 
million outstanding
 
balance under
 
existing loans
 
with ABN
 
AMRO Bank
 
N.V,
 
and
for
 
working
 
capital
 
purposes.
 
The
 
loan
 
is
 
repayable
 
in
 
equal
 
quarterly
 
instalments
 
of
 
$3.8
 
million
 
until
December
 
27,
 
2029,
 
and
 
bears
 
term
 
SOFR
 
plus
 
a
 
margin
 
of
 
2.2%,
 
subject
 
to
 
sustainability
 
margin
adjustment. Additionally,
 
the loan
 
is subject to
 
a margin
 
reset, according to
 
which the
 
borrowers and the
lenders will enter
 
into discussions to
 
agree on a
 
new margin. Unless
 
the parties agree
 
on a new
 
margin,
the loan will be mandatorily
 
repayable on June 27, 2027.
 
As part of the loan
 
agreement, on July 6, 2023,
we
 
entered
 
into
 
an
 
interest
 
rate
 
swap
 
with
 
DNB
 
for
 
a
 
notional
 
amount
 
of
 
$30
 
million
 
and
 
quarterly
amortization of
 
$1.2 million.
 
Under the
 
interest rate
 
swap, we
 
pay a
 
fixed rate
 
of 4.268%
 
and receive
 
floating
under term
 
SOFR. The swap
 
has a
 
termination date
 
on December 27,
 
2029, and
 
a mandatory break
 
on
June 27, 2027, which is the margin reset date of
 
the loan, according to which the swap will be terminated
if the loan is prepaid. As of December 31, 2023, the
 
interest rate swap was a liability having a fair value
 
of
$0.4 million.
Under
 
the
 
secured
 
term
 
loans
 
outstanding
 
as
 
of
 
December
 
31,
 
2023,
 
33
 
vessels
 
of
 
our
 
fleet
 
were
mortgaged with
 
first preferred
 
or priority
 
ship mortgages.
 
Additional securities
 
required by
 
the banks
 
include
first priority assignment of all earnings, insurances,
 
first assignment of time charter contracts with
 
duration
80
that
 
exceeds
 
a
 
certain
 
period,
 
pledge
 
over
 
the
 
shares
 
of
 
the
 
borrowers,
 
manager’s
 
undertaking
 
and
subordination and requisition compensation and either a corporate guarantee by Diana Shipping Inc. (the
“Guarantor”) or a
 
guarantee by
 
the ship owning
 
companies (where applicable),
 
financial covenants,
 
as well
as operating
 
account assignments.
 
The lenders
 
may
 
also require
 
additional security
 
in the
 
future in
 
the
event
 
the
 
borrowers
 
breach
 
certain
 
covenants
 
under
 
the
 
loan
 
agreements.
 
The
 
secured
 
term
 
loans
generally
 
include
 
restrictions
 
as
 
to
 
changes
 
in
 
management
 
and
 
ownership
 
of
 
the
 
vessels,
 
additional
indebtedness, as
 
well as
 
minimum requirements
 
regarding hull
 
cover ratio
 
and minimum
 
liquidity per
 
vessel
owned
 
by
 
the
 
borrowers,
 
or
 
the
 
Guarantor,
 
maintained
 
in
 
the
 
bank
 
accounts
 
of
 
the
 
borrowers,
 
or
 
the
Guarantor.
 
Furthermore, the secured
 
term loans contain
 
cross default provisions and
 
additionally we are
not permitted to pay any dividends following the occurrence of an
 
event of default.
 
As of December 31, 2022 and
 
2023, and the date of this
 
annual report, we were in compliance with
 
all of
our loan covenants.
Senior Unsecured Bond due 2026
On June 22, 2021,
 
the Company issued a
 
$125 million senior
 
unsecured bond maturing in
 
June 2026. The
bond ranks ahead of subordinated capital and ranks the
 
same with all other senior unsecured obligations
of
 
the
 
Company
 
other
 
than
 
obligations
 
which
 
are
 
mandatorily
 
preferred
 
by
 
law.
 
Entities
 
affiliated
 
with
executive officers and
 
directors of the
 
Company purchased an
 
aggregate of $21
 
million principal amount
of
 
the
 
bond. The
 
bond bears
 
interest at
 
a US
 
Dollar fixed-rate
 
coupon of
 
8.375%
 
and
 
is payable
 
semi-
annually in
 
arrears in
 
June and
 
December of
 
each year.
 
The bond
 
is callable
 
in whole
 
or in
 
part in
 
June
2024 at a price
 
equal to 103.35%
 
of nominal value;
 
between June 2025
 
to December 2025
 
at a price
 
equal
to 101.675%
 
of nominal
 
value and
 
after December
 
2025 at
 
a price
 
equal to
 
100% of
 
nominal value.
 
On
June
 
29,
 
2023,
 
we
 
repurchased
 
$5.9
 
million
 
nominal
 
value
 
of
 
the
 
bond
 
and
 
recognized
 
a
 
loss
 
of
 
$0.2
million. The bond includes financial and other covenants and is trading at
 
Oslo Stock Exchange under the
ticker symbol “DIASH02”.
 
Finance Liabilities
On March 29, 2022, we entered into a $50 million sale and leaseback agreement with an unaffiliated third
party,
 
for a
 
period of ten
 
years, under which
 
we pay
 
hire, monthly in
 
advance and we
 
have the option
 
to
repurchase the vessel after the
 
end of the third year of
 
the charter period, or each
 
year thereafter, until the
termination
 
of the
 
lease, at
 
specific prices,
 
subject to
 
irrevocable and
 
written notice
 
to
 
the
 
owner.
 
If not
repurchased earlier, we have the obligation to repurchase the vessel
 
for $16.4 million, on the expiration of
the lease on the tenth year.
 
On August 17, 2022,
 
we entered into two
 
sale and leaseback agreements with two
 
unaffiliated Japanese
third parties, for
 
an aggregate amount
 
of $66.4 million,
 
for a period
 
of eight years,
 
each,
 
under which we
pay hire, monthly in advance,
 
and we have the option to purchase the vessels at the end of the third year
of
 
each
 
vessel's
 
bareboat
 
charter
 
period,
 
or
 
each
 
year
 
thereafter,
 
until
 
the
 
termination
 
of
 
the
 
lease,
 
at
specific prices, subject to irrevocable
 
and written notice to the
 
owner. If
 
not repurchased earlier,
 
we have
the
 
obligation to
 
repurchase the
 
vessels for
 
$13.0
 
million, each,
 
on the
 
expiration of
 
each
 
lease on
 
the
eighth year.
On
 
December
 
6,
 
2022,
 
we
 
entered
 
into
 
a
 
sale
 
and
 
leaseback
 
agreement
 
for
 
$29.9
 
million
 
with
 
an
unaffiliated third party, for
 
a period of
 
ten years,
 
under which
 
we pay
 
hire, monthly
 
in advance,
 
and we
 
have
the
 
option
 
to
 
repurchase
 
the
 
vessel
 
after
 
the
 
end
 
of
 
the
 
third
 
year
 
of
 
the
 
charter
 
period,
 
or
 
each
 
year
thereafter, until the
 
termination of the lease, at specific
 
prices, subject to irrevocable and written
 
notice to
the owner.
 
If not repurchased earlier,
 
we have the obligation to repurchase the
 
vessel for $8.1 million, on
the expiration of the lease on the tenth year.
81
Commitments and Contingencies
On March 30,
 
2023, we entered
 
into a corporate
 
guarantee with Nordea
 
under which we
 
guaranteed the
performance by
 
Bergen Ultra,
 
an
 
equity method
 
investee
 
owning one
 
dry
 
bulk
 
carrier,
 
of
 
its
 
obligations
under a loan
 
agreement with
 
the bank maturing
 
on March 30,
 
2028. The Company
 
considers the likelihood
of
 
having
 
to
 
make
 
any
 
payments under
 
the
 
guarantee to
 
be
 
remote,
 
as the
 
loan
 
is
 
also
 
secured by
 
an
account pledge by Bergen,
 
first preferred mortgage on
 
the vessel, a first priority
 
general assignment of the
earnings, insurances
 
and requisition
 
compensation of
 
the vessel,
 
a charter
 
party assignment,
 
a partnership
interests
 
security
 
deed,
 
and
 
a
 
manager’s
 
undertaking.
 
As
 
of
 
December
 
31,
 
2023,
 
the
 
loan
 
had
 
an
outstanding balance of $14.8 million.
 
C.
 
Research and development, patents and licenses
We
 
incur from
 
time to
 
time expenditures
 
relating to
 
inspections for
 
acquiring new
 
vessels that
 
meet our
standards. Such expenditures are insignificant and they are expensed
 
as they incur.
D.
 
Trend information
Demand for dry
 
bulk vessel services is
 
influenced by global financial conditions.
 
Global financial markets
and economic
 
conditions have
 
been, and
 
continue
 
to be,
 
volatile. Our
 
results of
 
operations depend
 
primarily
on charter hire
 
rates that we
 
are able to
 
realize, and the
 
demand for dry
 
bulk vessel services.
 
The Baltic
Dry Index, or the BDI, has long been viewed as the main benchmark to monitor the movements of the dry
bulk vessel
 
charter market
 
and the
 
performance of the
 
entire dry
 
bulk shipping market.
 
In 2023,
 
the BDI
ranged from a low
 
of 530 to a
 
high of 3,346 and
 
closed at 1,714 on
 
April 2, 2024. Although
 
there can be no
assurance that the dry bulk charter market will not
 
decline further,
 
as of the date of this annual report,
 
we
have fixed
 
about 62%
 
of our
 
fleet ownership
 
days in
 
2024 at
 
rates above
 
our break-even
 
rate. Nevertheless,
our
 
revenues
 
and
 
results
 
of
 
operations
 
in
 
2024 will
 
be
 
subject
 
to
 
demand
 
for
 
our
 
services,
 
the
 
level
 
of
inflation, market disruptions and interest rates. Demand for our dry bulk oceangoing vessels is dependent
upon economic growth in the world’s economies, seasonal and regional
 
changes in demand and changes
to the
 
capacity of
 
the global
 
dry bulk
 
fleet and
 
the sources
 
and supply
 
for dry
 
bulk cargo
 
transported by
sea.
 
Continued
 
adverse
 
economic,
 
political
 
or
 
social
 
conditions
 
or
 
other
 
developments
 
could
 
further
negatively impact charter rates
 
and therefore have a
 
material adverse effect
 
on our business
 
and results
of operations.
E.
 
Critical Accounting Estimates
The
 
discussion
 
and
 
analysis
 
of
 
our
 
financial
 
condition
 
and
 
results
 
of
 
operations
 
are
 
based
 
upon
 
our
consolidated
 
financial
 
statements,
 
which
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
U.S.
 
GAAP.
 
The
preparation
 
of
 
those
 
financial
 
statements
 
requires
 
us
 
to
 
make
 
estimates
 
and
 
judgments
 
that
 
affect
 
the
reported
 
amounts of
 
assets
 
and liabilities,
 
revenues and
 
expenses and
 
related disclosure
 
of
 
contingent
assets and liabilities at the date of our financial statements. Actual
 
results may differ from these estimates
under different assumptions and conditions.
Impairment of Vessels
Long-lived assets
 
are
 
reviewed for
 
impairment whenever
 
events
 
or
 
changes in
 
circumstances (such
 
as
market conditions,
 
obsolesce or
 
damage to the
 
asset, potential sales
 
and other
 
business plans)
 
indicate
that the
 
carrying amount
 
of an asset
 
may not be
 
recoverable. When
 
the estimate
 
of undiscounted
 
projected
net operating cash
 
flows, excluding interest
 
charges, expected
 
to be generated
 
by the use
 
of an asset
 
over
its remaining
 
useful life
 
and its
 
eventual disposition
 
is less
 
than its
 
carrying amount,
 
the Company
 
evaluates
the asset for impairment loss. Measurement of the impairment
 
loss is based on the fair value of the asset,
determined mainly by third party valuations.
 
82
For
 
vessels, we
 
calculate undiscounted
 
projected net
 
operating cash
 
flows by
 
considering the
 
historical
and
 
estimated
 
vessels’ performance
 
and
 
utilization
 
with
 
the
 
significant
 
assumption
 
being
 
future
 
charter
rates for
 
the unfixed
 
days, using
 
the most
 
recent 10-year
 
average of
 
historical 1
 
year time
 
charter rates
available for
 
each type
 
of
 
vessel over
 
the
 
remaining estimated
 
life
 
of
 
each vessel,
 
net
 
of
 
commissions.
Historical
 
ten-year
 
blended
 
average
 
one-year
 
time
 
charter
 
rates
 
are
 
in
 
line
 
with
 
the
 
Company’s
 
overall
chartering strategy,
 
they reflect the
 
full operating history
 
of vessels of
 
the same type
 
and particulars with
the Company’s
 
operating fleet
 
and they
 
cover at
 
least a
 
full business
 
cycle, where
 
applicable. When the
10-year average of historical 1 year time charter rates is
 
not available for a type of vessels, the Company
uses
 
the
 
average
 
of
 
historical
 
1
 
year
 
time
 
charter
 
rates
 
of
 
the
 
available
 
period.
 
The
 
historical
 
ten-year
average rate
 
used in
 
2023 to
 
calculate undiscounted
 
projected net
 
operating cash
 
flow was
 
$12,775 for
Panamax,
 
Kamsarmax
 
and
 
Post-Panamax
 
vessels,
 
$16,608
 
for
 
Ultramax
 
vessels
 
and
 
$16,115
 
for
 
our
Capesize
 
and
 
Newcastlmax
 
vessels,
 
compared
 
to
 
$12,431,
 
16,876
 
and
 
$16,128,
 
respectively
 
in
 
2022.
Other assumptions
 
used in
 
developing estimates
 
of future
 
undiscounted cash
 
flow are
 
the charter
 
rates
calculated for
 
the fixed
 
days using
 
the fixed
 
charter rate
 
of each
 
vessel from
 
existing time
 
charters, the
expected outflows
 
for scheduled
 
vessels’ maintenance;
 
vessel operating
 
expenses; fleet
 
utilization, and
the vessels’ residual
 
value if sold
 
for scrap. Assumptions
 
are in line
 
with our
 
historical performance
 
and our
expectations for future
 
fleet utilization under
 
our current fleet
 
deployment strategy. The difference between
the carrying amount of the vessel plus unamortized deferred costs
 
and their fair value is recognized in the
Company's accounts as impairment loss. Although no impairment loss was
 
identified or recorded in 2023,
according
 
to
 
our
 
assessment,
 
the
 
carrying
 
value
 
plus
 
unamortized
 
deferred
 
cost
 
of
 
vessels
 
for
 
which
impairment indicators existed as of December 31, 2023, was $378.2
 
million.
Historically,
 
the
 
market
 
values
 
of
 
vessels
 
have
 
experienced
 
volatility,
 
which
 
from
 
time
 
to
 
time
 
may
 
be
substantial.
 
As a result, the
 
charter-free market value of certain
 
of our vessels may
 
have declined below
those
 
vessels’
 
carrying
 
value
 
plus
 
unamortized
 
deferred
 
cost,
 
even
 
though
 
we
 
would
 
not
 
impair
 
those
vessels’
 
carrying
 
value
 
under
 
our
 
accounting
 
impairment
 
policy.
 
Based
 
on:
 
(i)
 
the
 
carrying
 
value
 
plus
unamortized deferred
 
cost
 
of
 
each of
 
our vessels
 
as of
 
December 31,
 
2023 and
 
2022 and
 
(ii)
 
what we
believe the charter-free market value of each of
 
our vessels was as of December 31,
 
2023 and 2022, the
aggregate
 
carrying
 
value
 
of
 
12
 
and
 
17
 
of
 
the
 
vessels
 
in
 
our
 
fleet
 
as
 
of
 
December
 
31,
 
2023
 
and
 
2022,
respectively,
 
exceeded their
 
aggregate charter-free
 
market value
 
by
 
approximately $49
 
million and
 
$83
million, respectively,
 
as noted
 
in the
 
table below.
 
This aggregate
 
difference represents
 
the
 
approximate
analysis of the amount by which we believe we would have to reduce our net income or increase our loss
if we sold
 
all of such
 
vessels at
 
December 31,
 
2023 and
 
2022, on a
 
charter-free basis,
 
on industry
 
standard
terms, in
 
cash transactions, and
 
to a
 
willing buyer where
 
we were not
 
under any compulsion
 
to sell,
 
and
where the buyer was
 
not under any compulsion
 
to buy. For purposes of this
 
calculation, we have assumed
that these 12 and 17 vessels
 
would be sold at a price
 
that reflects our estimate of
 
their charter-free market
values as of December 31, 2023 and 2022, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83
Vessel
Dwt
Year Built
Carrying Value plus unamortized
deferred cost
 
(in millions of US dollars)
2023
2022
1
Alcmene
93,193
2010
 
9.6
 
10.1
2
Aliki
180,235
2005
 
-
 
 
13.0
3
Amphitrite
98,697
2012
 
14.0
 
14.7
4
Artemis
76,942
2006
 
11.0
 
11.9
5
Astarte
81,513
2013
 
18.0
 
19.1
6
Atalandi
77,529
2014
 
15.7
 
16.4
7
Boston
177,828
2007
 
-
 
18.2
*
8
Crystalia
77,525
2014
 
15.4
 
16.1
9
Electra
87,150
2013
 
14.1
 
14.9
10
G.P.
 
Zafirakis
179,492
2014
 
22.1
 
23.0
11
Houston
177,729
2009
 
18.4
 
19.4
12
Ismene
77,901
2013
 
11.7
 
10.6
13
Leto
81,297
2010
 
12.9
 
13.7
14
Los Angeles
206,104
2012
 
23.5
 
24.8
15
Maera
75,403
2013
 
11.7
 
12.3
16
Maia
82,193
2009
 
12.4
 
13.4
17
Medusa
82,194
2010
 
12.4
 
13.1
18
Melia
76,225
2005
 
-
 
10.8
19
Myrsini
82,117
2010
 
14.2
 
15.1
20
Myrto
82,131
2013
 
17.8
 
18.9
21
New Orleans
180,960
2015
 
31.6
 
33.1
*
22
New York
177,773
2010
 
14.0
 
14.5
23
Newport News
208,021
2017
 
40.5
 
42.4
*
24
P.S.
 
Palios
179,134
2013
 
35.3
*
 
37.4
*
25
Phaidra
87,146
2013
 
13.5
 
13.0
26
Philadelphia
206,040
2012
 
24.2
 
25.5
27
Polymnia
98,704
2012
 
14.2
 
15.0
28
San Francisco
208,006
2017
 
40.6
 
42.5
*
29
Santa Barbara
179,426
2015
 
34.8
*
 
36.4
*
30
Seattle
179,362
2011
 
21.3
 
22.6
31
Selina
75,700
2010
 
9.1
 
9.3
32
Semirio
174,261
2007
 
16.1
 
17.6
*
33
LEONIDAS P.C.
82,165
2011
 
20.8
*
 
21.7
*
34
Florida
182,063
2022
 
57.0
 
59.1
*
35
DSI Pyxis
60,362
2018
 
35.6
*
 
36.1
*
36
DSI Pollux
60,446
2015
 
29.9
*
 
31.4
*
37
DSI Phoenix
60,456
2017
 
32.7
*
 
34.3
*
38
DSI Polaris
60,404
2018
 
36.2
*
 
36.9
*
39
DSI Andromeda
60,309
2016
 
31.8
*
 
33.3
*
40
DSI Aquila
60,309
2015
 
29.9
*
 
31.5
*
41
DSI Pegasus
60,508
2015
 
28.8
*
 
30.3
*
42
DSI Altair
60,309
2016
 
31.3
*
 
32.5
*
43
DSI Aquarius
60,309
2016
 
31.0
*
 
-
Total
 
4,915,571
 
915
 
 
966
 
_______________________________
*
Indicates dry bulk
 
vessels for which
 
we believe, as
 
of December 31,
 
2023 and 2022,
 
the charter-free
 
market value
was lower than the vessel’s
 
carrying value plus unamortized deferred
 
cost. We believe that the
 
aggregate carrying
value
 
plus
 
unamortized
 
deferred
 
cost
 
of
 
these
 
vessels
 
exceeded
 
their
 
aggregate
 
charter-free
 
market
 
value
 
by
approximately $49 million and $83 million, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
84
Our
 
estimates
 
of
 
charter-free
 
market
 
value
 
assume
 
that
 
our
 
vessels
 
were
 
all
 
in
 
good
 
and
 
seaworthy
condition without need for repair and if inspected would be certified in class without notations of any kind.
Our estimates are based on information available from various industry
 
sources, including:
 
reports
 
by industry
 
analysts and
 
data
 
providers that
 
focus
 
on our
 
industry and
 
related dynamics
affecting vessel values;
 
news and industry reports of similar vessel sales;
 
offers that we may have received from potential purchasers of our vessels; and
 
vessel
 
sale
 
prices
 
and
 
values
 
of
 
which
 
we
 
are
 
aware
 
through
 
both
 
formal
 
and
 
informal
communications
 
with
 
shipowners,
 
shipbrokers,
 
industry
 
analysts
 
and
 
various
 
other
 
shipping
industry participants and observers.
As
 
we
 
obtain information
 
from
 
various industry
 
and
 
other
 
sources, our
 
estimates
 
of charter-free
 
market
value are
 
inherently uncertain.
 
In addition,
 
vessel values
 
are highly
 
volatile; as
 
such, our
 
estimates may
not be
 
indicative of the
 
current or
 
future charter-free market
 
value of
 
our vessels or
 
prices that
 
we could
achieve if we
 
were to sell them.
 
We also refer
 
you to the
 
risk factor in “Item
 
3. Key Information—D. Risk
Factors” entitled
 
The market
 
values of
 
our vessels
 
could decline,
 
which could
 
limit the
 
amount of
 
funds
that we
 
can borrow
 
and could
 
trigger breaches
 
of certain
 
financial covenants
 
contained in
 
our loan
 
facilities,
which could adversely
 
affect our operating results,
 
and we may
 
incur a loss
 
if we sell
 
vessels following a
decline
 
in
 
their
 
market
 
values
 
and
 
the
 
discussion
 
under
 
the
 
heading
 
"Item
 
4.
 
Information
 
on
 
the
Company—B. Business Overview–Vessel Prices.”
Our impairment test
 
exercise is sensitive
 
to variances in
 
the time charter
 
rates. Our current
 
analysis, which
also
 
involved
 
a
 
sensitivity
 
analysis
 
by
 
assigning
 
possible
 
alternative
 
values
 
to
 
this
 
significant
 
input,
indicated that
 
time charter
 
rates would
 
need to
 
be reduced
 
by
11
% to
 
result in
 
impairment of
 
individual
long-lived assets
 
with indication
 
of impairment.
 
However, there can
 
be no
 
assurance as
 
to how
 
long charter
rates and vessel values will remain at their current levels.
 
If charter rates decrease and remain depressed
for
 
some
 
time,
 
it
 
could
 
adversely
 
affect
 
our
 
revenue
 
and
 
profitability
 
and
 
future
 
assessments
 
of
 
vessel
impairment.
A comparison of the average estimated daily time charter equivalent rate used in our impairment analysis
with the average “break-even rate” for each major class of vessels is presented
 
below:
 
Average estimated daily time
charter equivalent rate used
Average break-even
 
rate
Ultramax
$16,608
$12,195
Panamax/Kamsarmax/Post-Panamax
$12,775
 
$9,314
Capesize/Newcastlemax
$16,115
$11,721
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85
It should be
 
noted that as
 
of December 31,
 
2023, twelve of
 
our vessels, having
 
indication of impairment,
would be affected by a
 
reduction in time charter
 
rates below the average break-even
 
rate. Additionally, the
use of the 1-year,
 
3-year and 5-year average blended rates
 
would not have any effect
 
on the Company’s
impairment analysis and as such on the Company’s results of operations:
Vessel type
1-year
(period)
Impairment
charge
(in USD
million)
3-year
(period)
Impairment
charge
(in USD
million)
5-year
(period)
Impairment
charge
(in USD
million)
Ultramax
$15,131
-
$20,740
-
$17,191
-
Panamax/Kamsarmax/Post-
Panamax
$13,536
-
$18,618
-
$15,652
-
Capesize/Newcastlemax
$15,623
-
$19,900
-
$17,974
-
Item 6.
 
Directors, Senior Management and Employees
A.
 
Directors and Senior Management
Set forth
 
below are
 
the names,
 
ages and
 
positions of
 
our directors
 
and executive
 
officers. Our
 
Board of
Directors
 
consists
 
of
 
eleven
 
members
 
and
 
is
 
elected
 
annually
 
on
 
a
 
staggered basis,
 
and
 
each
 
director
elected holds office for
 
a three-year term
 
and until his
 
or her successor
 
is elected and
 
has qualified, except
in the
 
event of
 
such director’s
 
death, resignation,
 
removal or
 
the earlier
 
termination of
 
his or
 
her term
 
of
office. Officers are
 
appointed from time to time by
 
our board of directors and
 
hold office until a
 
successor
is appointed or their employment is terminated.
Name
 
Age
 
Position
Semiramis Paliou
 
49
 
Class III Director and Chief Executive Officer
 
Simeon Palios
 
82
 
Class I Director and Chairman
Anastasios Margaronis
 
68
 
Class I Director and President
Ioannis Zafirakis
 
52
 
Class I Director, Chief Financial Officer, Chief
Strategy Officer, Treasurer and Secretary
Konstantinos Psaltis
 
85
 
Class II Director
Kyriacos Riris
 
74
 
Class II Director
Apostolos Kontoyannis
 
75
 
Class III Director
Konstantinos Fotiadis
 
 
73
 
Class III Director
Eleftherios Papatrifon
 
54
Class II Director
Simon Frank Peter Morecroft
65
Class II Director
Jane Sih Ho Chao
48
Class I Director
Maria Dede
51
Chief Accounting Officer
Margarita Veniou
45
Chief Corporate Development, Governance &
Communications Officer
Maria Christina Tsemani
45
Chief People Officer
The term of our
 
Class I directors expires
 
in 2024, the term
 
of our Class
 
II directors expires in
 
2025, and the
term of our Class III directors expires in 2026.
 
Mr. Eleftherios Papatrifon served as
 
Chief Operating Officer
 
of the Company
 
until February 2023,
 
when he
was appointed as
 
Class II Director
 
and member of
 
the Executive Committee
 
on February
 
22, 2023
 
to serve
until the next scheduled election for Class II directors.
86
Ms. Jane Chao
 
was appointed
 
as a Class
 
I Director on
 
February 22, 2023
 
to serve until
 
the next scheduled
election for Class I directors.
The business address of
 
each officer and
 
director is the address
 
of our principal executive
 
offices, which
are located at Pendelis 16, 175 64 Palaio Faliro, Athens, Greece.
Biographical information with respect to each of our directors and executive
 
officers is set forth below.
Semiramis
 
Paliou
 
has
 
served
 
as
 
a
 
Director
 
of
 
Diana
 
Shipping
 
Inc.
 
since
 
March
 
2015,
 
and
 
as
 
the
Company’s
 
Chief
 
Executive
 
Officer,
 
Chairperson
 
of
 
the
 
Executive
 
Committee
 
and
 
member
 
of
 
the
Sustainability
 
Committee
 
since
 
March
 
2021.
 
Ms.
 
Paliou
 
has
 
been
 
the
 
Chief
 
Executive
 
Officer
 
of
 
Diana
Shipping Services S.A.
 
since March 2021. She
 
also serves as
 
a Director of
 
OceanPal Inc. since
 
April 2021
and as the Chairperson of the Board
 
of Directors and of the Executive Committee of
 
OceanPal Inc. since
November 2021. Ms. Paliou is
 
the Chairperson of the Hellenic Marine
 
Environment Protection Association
(HELMEPA),
 
a
 
position she
 
has
 
held
 
since June
 
2020,
 
while she
 
joined its
 
board of
 
directors in
 
March
2018. As of July 2023, she serves as
 
Chairperson of INTERMEPA. She
 
is also a member of the board
 
of
directors
 
of
 
the
 
UK
 
P&I
 
Club
 
since
 
November
 
2020,
 
member
 
of
 
the
 
Union
 
of
 
Greek
 
Shipowners
 
since
February 2022 and
 
member of the
 
Global Maritime Forum
 
since April 2022.
 
She is Vice-Chairperson
 
of the
Greek committee of Det
 
Norske Veritas, a member of the
 
Greek committee of Nippon
 
Kaiji Kyokai, Bureau
Veritas, American Bureau of Shipping and Hellenic War Risks
Ms. Paliou
 
has over
 
20 years
 
of experience
 
in shipping
 
operations, technical
 
management and
 
crewing.
She began her
 
career at Lloyd’s
 
Register of Shipping
 
where she worked
 
as a trainee
 
ship surveyor from
1996
 
to
 
1998.
 
She
 
was
 
then
 
employed
 
by
 
Diana
 
Shipping
 
Agencies
 
S.A.
 
From
 
2007
 
to
 
2010
 
she
 
was
employed as a
 
Director and President of
 
Alpha Sigma Shipping Corp.
 
From February 2010 to
 
November
2015, she
 
was the
 
Head of the
 
Operations, Technical
 
and Crew
 
department of
 
Diana Shipping Services
S.A. From
 
November 2015
 
to October
 
2016, she
 
served as
 
Vice-President of
 
the same
 
company.
 
From
November 2016
 
to
 
the
 
end of
 
July 2018,
 
she served
 
as Managing
 
Director
 
and Head
 
of the
 
Technical,
Operations, Crew and
 
Supply department of Unitized
 
Ocean Transport
 
Limited. From November 2018
 
to
February
 
2020,
 
she
 
worked
 
as
 
Chief
 
Operating
 
Officer
 
of
 
Performance
 
Shipping
 
Inc.
 
(ex.
 
Diana
Containerships Inc.).
 
From October
 
2019 until
 
February 2021,
 
Ms. Paliou
 
served as
 
Deputy Chief
 
Executive
Officer
 
of
 
Diana
 
Shipping
 
Inc.
 
She
 
also
 
served
 
as
 
member
 
of
 
the
 
Executive
 
Committee
 
and
 
the
 
Chief
Operating Officer of the Company from August 2018 until February 2021.
 
Ms. Paliou
 
obtained her
 
BSc in
 
Mechanical Engineering
 
from Imperial
 
College, London
 
and her
 
MSc
 
in
Naval
 
Architecture
 
from
 
University
 
College,
 
London.
 
She
 
completed
 
courses
 
in
 
“Finance
 
for
 
Senior
Executives”,
 
in
 
“Authentic
 
Leader
 
Development”
 
and
 
a
 
certificate
 
program
 
on
 
“Sustainable
 
Business
Strategy” all at
 
Harvard Business
 
School. Ms. Paliou
 
is also the
 
daughter of Simeon
 
Palios, the Company’s
Chairman.
Simeon
 
P.
 
Palios
 
has
 
served
 
as
 
the
 
Chairman
 
of
 
the
 
Board
 
of
 
Directors
 
of
 
Diana
 
Shipping
 
Inc.
 
since
February
 
2005
 
and
 
a
 
Director
 
of
 
the
 
Company
 
since
 
March
 
1999.
 
He
 
served
 
as
 
the
 
Company’s
 
Chief
Executive Officer
 
from February
 
2005 until
 
February 2021.
 
Mr. Palios also
 
serves as
 
the President
 
of Diana
Shipping Services
 
S.A. which
 
was formed
 
in 1986.
 
Mr. Palios has
 
experience in
 
the shipping
 
industry since
1969 and expertise in technical and
 
operational issues. He has served as
 
an ensign in the Greek Navy for
the
 
inspection
 
of
 
passenger boats
 
on
 
behalf of
 
Ministry
 
of Merchant
 
Marine and
 
is
 
qualified as
 
a
 
naval
architect
 
and marine
 
engineer.
 
Mr.
 
Palios
 
was
 
the
 
founder
 
of
 
Diana
 
Shipping Agencies
 
S.A.,
 
where
 
he
served as Managing Director until November 2004, having the overall responsibility for its activities. From
January 13,
 
2010 until
 
February 28,
 
2022, Mr. Palios
 
also served
 
as the
 
Chairman of
 
the Board
 
of Directors
of Performance Shipping Inc. (ex. Diana Containerships Inc.) and as Chief
 
Executive Officer until October
2020.
87
Mr.
 
Palios is
 
a member
 
of
 
various leading
 
classification societies
 
worldwide and
 
he is
 
a member
 
of
 
the
board
 
of
 
directors
 
of
 
the
 
United
 
Kingdom
 
Freight
 
Demurrage
 
and
 
Defense
 
Association
 
Limited.
 
Since
October 7, 2015, Mr.
 
Palios has served as
 
President of the Association “Friends
 
of Biomedical Research
Foundation,
 
Academy
 
of
 
Athens”.
 
He
 
holds
 
a
 
bachelor's
 
degree
 
in
 
Marine
 
Engineering
 
from
 
Durham
University.
Anastasios C. Margaronis
 
has served as President
 
and a Director of Diana
 
Shipping Inc. since February
2005.
 
He
 
is
 
also
 
member
 
of
 
the
 
Executive
 
Committee
 
of
 
the
 
Company.
 
Mr.
 
Margaronis
 
is
 
the
 
Deputy
President
 
of
 
Diana
 
Shipping
 
Services
 
S.A.,
 
where
 
he
 
also
 
serves
 
as
 
a
 
Director
 
and
 
Secretary.
 
Mr.
Margaronis has experience
 
in the shipping
 
industry,
 
including in ship
 
finance and insurance,
 
since 1980.
Prior to February 21,
 
2005, Mr.
 
Margaronis was employed by Diana
 
Shipping Agencies S.A. in
 
1979 and
performed on our behalf
 
the services he
 
now performs as President.
 
He joined Diana Shipping Agencies
S.A. in
 
1979 and has
 
been responsible for
 
overseeing our vessels’
 
insurance matters, including
 
hull and
machinery,
 
protection and indemnity and war
 
risks insurances. From January
 
2010 to February 2020,
 
he
served as Director and President of Performance Shipping
 
Inc. (ex. Diana Containerships Inc.).
In
 
addition,
 
Mr.
 
Margaronis
 
is
 
a
 
member
 
of
 
the
 
Greek
 
National
 
Committee
 
of
 
the
 
American
 
Bureau
 
of
Shipping. He
 
has also
 
been on
 
the Members’
 
Committee of
 
the Britannia
 
Steam Ship
 
Insurance Association
Limited
 
since
 
October
 
2022.
 
From
 
October
 
2005
 
to
 
October
 
2019,
 
he
 
was
 
a
 
member
 
of
 
the
 
board
 
of
directors of the United Kingdom Mutual Steam Ship Assurance Association
 
(Europe) Limited.
 
He
 
holds
 
a
 
bachelor's
 
degree
 
in
 
Economics
 
from
 
the
 
University
 
of
 
Warwick
 
and
 
a
 
master's
 
of
 
science
degree in Maritime Law from the Wales Institute of Science and Technology.
Ioannis Zafirakis
has served
as a Director and
 
Secretary of Diana
 
Shipping Inc. since February
 
2005 and
Chief Financial Officer (Interim Chief
 
Financial Officer until February 2021) and
 
Treasurer since February
2020
 
and
 
he
 
is
 
also
 
the
 
Chief
 
Strategy
 
Officer
 
of
 
the
 
Company.
 
Mr.
 
Zafirakis
 
is
 
also
 
member
 
of
 
the
Executive Committee
 
of the
 
Company.
 
Mr.
 
Zafirakis has
 
held various
 
executive positions
 
such as
 
Chief
Operating
 
Officer,
 
Executive
 
Vice-President
 
and
 
Vice-President.
 
In
 
addition,
 
Mr.
 
Zafirakis
 
is
 
the
 
Chief
Financial Officer of
 
Diana Shipping Services S.A., where
 
he also serves as
 
Director and Treasurer.
 
Also,
he
 
has
 
served
 
as
 
a
 
Director
 
of
 
OceanPal
 
Inc.
 
since
 
April
 
2021.
 
He
 
has
 
also
 
served
 
as
 
the
 
President,
Secretary and
 
Interim Chief Financial
 
Officer of
 
OceanPal Inc.
 
from November 2021
 
to April
 
2023. He
 
is
also member of the Executive Committee of OceanPal Inc.
 
From June 1997 to
 
February 2005, Mr.
 
Zafirakis was employed by
 
Diana Shipping Agencies S.A., where
he held
 
a number
 
of positions in
 
finance and
 
accounting. From January
 
2010 to
 
February 2020,
 
he also
served as Director and Secretary of Performance Shipping Inc. (ex. Diana Containerships Inc.), where he
held various executive positions such as Chief Operating Officer and Chief Strategy
 
Officer.
 
Mr. Zafirakis is
 
a member
 
of the
 
Business Advisory
 
Committee of
 
the Shipping
 
Programs of
 
ALBA Graduate
Business School at
 
The American College of
 
Greece. In 2024,
 
Mr.
 
Zafirakis attended and completed
 
the
Advanced
 
Management
 
Programme
 
at
 
INSEAD
 
Business
 
School
 
in
 
Singapore.
 
Mr.
 
Zafirakis
 
has
 
also
obtained
 
a
 
certificate
 
in
 
“Blockchain
 
Economics:
 
An
 
Introduction
 
to
 
Cryptocurrencies”
 
from
 
Panteion
University of
 
Social and
 
Political Sciences
 
in Greece.
 
He holds
 
a bachelor's
 
degree in
 
Business Studies
from City University Business School in London and a master's degree in International Transport from the
University of Wales in Cardiff.
Eleftherios (Lefteris) A. Papatrifon
 
has served as a Director and a member of the Executive Committee
of Diana
 
Shipping Inc.
 
since February
 
2023. Prior
 
to this
 
appointment, he
 
served as
 
Chief Operating
 
Officer
of the Company from March 2021 to February
 
2023. Mr. Papatrifon also serves as a Director of OceanPal
Inc.
 
and
 
a
 
member
 
of
 
its
 
Executive
 
Committee,
 
positions
 
he
 
has
 
held
 
since
 
November
 
2021.
 
From
November 2021 to January 2023, he served as Chief Executive
 
Officer of OceanPal Inc.
 
88
Prior to joining Diana Shipping Inc., he was Chief Executive Officer, Co-Founder and Director of Quintana
Shipping Ltd,
 
a provider
 
of dry
 
bulk shipping
 
services, from
 
2010 until
 
the company’s
 
successful sale
 
of
assets and consequent liquidation in
 
2017. Previously,
 
for a period of
 
approximately six years, he served
as
 
the
 
Chief
 
Financial
 
Officer
 
and
 
Director
 
of
 
Excel
 
Maritime
 
Carriers Ltd.
 
Prior
 
to
 
that,
 
Mr. Papatrifon
served for
 
approximately 15 years
 
in a number
 
of corporate
 
finance and
 
asset management
 
positions, both
in the USA and in Greece.
 
Mr. Papatrifon holds undergraduate (BBA) and
 
graduate (MBA) degrees
 
from Baruch College
 
(CUNY). He
is also a member of the CFA Institute and a CFA charterholder.
Konstantinos Psaltis
 
has served as a
 
Director of Diana Shipping
 
Inc. since March 2005,
 
the Chairman of
its Nominating
 
Committee since
 
May 2015
 
and a
 
member of its
 
Compensation Committee
 
since May
 
2017.
Mr.
 
Psaltis
 
serves
 
also
 
as
 
President
 
of
 
Ormos
 
Compania
 
Naviera
 
S.A.,
 
a
 
company
 
that
 
specializes
 
in
operating and managing multipurpose
 
container vessels, where from
 
1981 to 2006, he held
 
the position of
Managing Director. Prior to joining Ormos Compania Naviera S.A.,
 
Mr. Psaltis simultaneously served as a
technical
 
manager
 
in
 
the
 
textile
 
manufacturing
 
industry
 
and
 
as
 
a
 
shareholder
 
of
 
shipping
 
companies
managed by M.J. Lemos. From 1961 to 1964, he served as ensign in
 
the Royal Hellenic Navy.
 
He holds a
 
degree in Mechanical Engineering from
 
Technische
 
Hochschule Reutlingen & Wuppertal and
a bachelor's degree in Business Administration from Tubingen University in Germany.
Kyriacos Riris
 
has served
 
as a
 
Director of
 
Diana Shipping
 
Inc. since
 
March 2015
 
and a
 
member of
 
its
Nominating Committee since May 2015. From May 2022, he is also the Chairman of the Audit Committee
of the Company.
 
Commencing in 1998,
 
Mr. Riris served in a series
 
of positions in PricewaterhouseCoopers
 
(PwC), Greece,
including Senior
 
Partner, Managing
 
Partner of
 
the Audit
 
and the
 
Advisory/Consulting
 
Lines of
 
Service. From
2009 to 2014, Mr.
 
Riris served as Chairman of the Board of Directors of PricewaterhouseCoopers (PwC),
Greece. Prior to its
 
merger with PwC, Mr.
 
Riris was employed at
 
Grant Thornton, Greece, where
 
in 1984
he
 
became
 
a
 
Partner.
 
From
 
1976
 
to
 
1982,
 
Mr.
 
Riris
 
was
 
employed
 
at
 
Arthur
 
Young,
 
Greece.
 
Since
November
 
2018,
 
Mr.
 
Riris
 
has
 
served
 
as
 
Chairman
 
of
 
Titan
 
Cement
 
International
 
S.A.,
 
a
 
Belgian
corporation, while he
 
is currently the
 
Vice Chairman of
 
the Board and
 
the Chairman of
 
the Audit and
 
the
Risk Committee of the Group.
Mr.
 
Riris
 
holds
 
a
 
degree
 
from
 
Birmingham
 
Polytechnic
 
(presently
 
Birmingham
 
City
 
University)
 
and
completed his professional qualifications with the Association of Certified Chartered
 
Accountants (ACCA)
in the UK in 1975, becoming a Fellow of the Association of Certified Accountants
 
in 1985.
Apostolos Kontoyannis
 
is a Director, the Chairperson
 
of the Compensation
 
Committee and a
 
member of
the Audit Committee of Diana
 
Shipping Inc., positions he has
 
held since March 2005. Since
 
March 2021,
Mr. Kontoyannis also serves as the Chairperson of the Sustainability Committee of the Company.
 
Mr.
 
Kontoyannis has
 
over
 
40
 
years
 
of
 
experience
 
in
 
shipping
 
finance
 
and
 
currently
 
serves
 
as
 
financial
consultant to various shipping companies. He was employed by Chase Manhattan Bank N.A. in Frankfurt
(Corporate
 
Bank),
 
London
 
(Head
 
of
 
Shipping
 
Finance
 
South
 
Western
 
European
 
Region)
 
and
 
Piraeus
(Manager, Ship Finance Group) from 1975 to 1987.
 
Mr.
 
Kontoyannis holds a bachelor's
 
degree in Finance and
 
Marketing and a
 
master's degree in
 
Business
Administration and Finance from Boston University.
Konstantinos Fotiadis
 
has served as
 
a Director of Diana
 
Shipping Inc. since 2017.
 
Mr. Fotiadis
 
served
as an independent
 
Director and
 
as the Chairman
 
of the Audit
 
Committee of
 
Performance Shipping
 
Inc. (ex.
89
Diana Containerships
 
Inc.) from
 
the completion
 
of Performance
 
Shipping Inc.
 
(ex. Diana
 
Containerships
Inc.)’s private offering until
 
February 2011. From 1990 until 1994,
 
Mr. Fotiadis served as the
 
President and
Managing Director
 
of Reckitt
 
& Colman
 
(Greece), part
 
of the
 
British multinational
 
Reckitt &
 
Colman plc,
manufacturers of household,
 
cosmetics and health care
 
products. From 1981
 
until its acquisition
 
in 1989
by
 
Reckitt
 
&
 
Colman
 
plc,
 
Mr.
 
Fotiadis
 
was
 
a
 
General
 
Manager
 
at
 
Dr.
 
Michalis
 
S.A.,
 
a
 
Greek
 
company
manufacturing and marketing
 
cosmetics and health
 
care products. From
 
1978 until 1981,
 
Mr. Fotiadis held
positions with Esso Chemicals Ltd. and Avrassoglou S.A. Mr. Fotiadis has also been active as a business
consultant and real estate developer.
Mr.
 
Fotiadis
 
holds
 
a
 
degree
 
in
 
Economics
 
from
 
Technische
 
Universitaet
 
Berlin
 
and
 
in
 
Business
Administration from Freie Universitaet Berlin.
Simon Morecroft
 
has served as
 
a Director of
 
Diana Shipping Inc.
 
since May 2022.
 
He also serves
 
as a
Director of Enarxis Ltd,
 
a shipping consultancy
 
company. Mr. Morecroft spent his career in the shipbroking
industry
 
as
 
a
 
Sale
 
and
 
Purchase
 
broker.
 
He
 
joined
 
Braemar
 
Shipbrokers
 
Ltd
 
(now
 
Braemar
 
ACM
Shipbroking) in 1983 becoming
 
a director in 1986
 
and remained on the
 
board until his
 
retirement in August
2021.
 
During
 
this
 
time
 
Braemar
 
grew
 
from
 
a
 
boutique
 
broking
 
operation
 
into
 
one
 
of
 
the
 
world’s
 
most
successful fully integrated shipbroking companies with a listing on
 
the London Stock Exchange.
Mr. Morecroft graduated from Oxford University in 1980 with a Masters in PPE.
 
Jane Chao
 
has served
 
as a
 
Director of
 
Diana Shipping
 
Inc. since
 
February 2023.
 
She also
 
serves as
 
a
director of
 
Wah
 
Kwong Shipping
 
Holdings Limited,
 
a position
 
she has
 
held since
 
2008. Ms.
 
Chao is
 
the
managing director of Wah Kwong China Investment which includes residential and commercial properties
as well as
 
hospitality businesses in
 
Shanghai and Wuxi.
 
Ms. Chao has
 
founded her own
 
art consultancy
company Galerie Huit
 
and lifestyle gallery
 
Maison Huit in
 
2009 and recently,
 
the non-profit Chao-Lee
 
Art
Foundation in 2022.
 
Ms.
 
Chao
 
has
 
also
 
served
 
as
 
a
 
Council
 
Member
 
for
 
Changing
 
Young
 
Lives
 
Foundation
 
helping
underprivileged children in Hong Kong and China from 2014 to
 
2020.
Maria Dede
 
is the
 
Chief Accounting
 
Officer of
 
Diana Shipping
 
Inc., a
 
position she
 
has held
 
since September
2005. Since Mach 2020,
 
she also serves as
 
the Finance Manager and Chief
 
Accounting Officer of Diana
Shipping Services
 
S.A. In
 
2000, Ms.
 
Dede joined
 
the Athens
 
branch of
 
Arthur Andersen,
 
which merged
with Ernst
 
and Young
 
(Hellas) in
 
2002, where
 
she served
 
as an
 
external auditor
 
of shipping
 
companies
until 2005. From
 
1996 to 2000
 
Ms. Dede was
 
employed by Venus
 
Enterprises S.A., a
 
ship-management
company, where she held a number of positions primarily in accounting and supplies.
Ms. Dede holds a Bachelor’s
 
degree in Maritime Studies
 
from the University of Piraeus,
 
a Master’s degree
in Business
 
Administration from the
 
ALBA Graduate Business
 
School and a
 
Master’s degree in
 
Auditing
and Accounting from the Greek Institute of Chartered Accountants.
Margarita
 
Veniou
 
has
 
served
 
as
 
the
 
Chief
 
Corporate
 
Development,
 
Governance
 
&
 
Communications
Officer of Diana
 
Shipping Inc. since July
 
2022. From September 2004
 
until June 2022, she
 
served in the
Corporate
 
Planning
 
&
 
Governance
 
Department
 
of
 
Diana
 
Shipping
 
Inc.,
 
holding
 
various
 
positions
 
as
Associate,
 
Officer
 
and
 
Manager.
 
Ms.
 
Veniou
 
is
 
also
 
the
 
Corporate
 
Development,
 
Governance
 
&
Communications Manager of Diana Shipping Services S.A., a position she has held since 2022, and from
2004 to
 
2022 she
 
held various
 
other positions
 
at Diana
 
Shipping Services
 
S.A. In
 
addition, since
 
November
2021, Ms. Veniou has served
 
as the Chief
 
Corporate Development &
 
Governance Officer of
 
OceanPal Inc.
and she has also served
 
as the company’s Board Secretary
 
since April 2023. She is
 
the General Manager
of Steamship Shipbroking Enterprises Inc., a position she has held
 
since April 2014.
 
90
From
 
January
 
2010
 
to
 
February
 
2020,
 
Ms.
 
Veniou
 
also
 
held
 
the
 
position
 
of
 
Corporate
 
Planning
 
&
Governance Officer of Performance Shipping Inc. (ex. Diana Containerships
 
Inc.).
Ms. Veniou
 
holds a bachelor's
 
degree in Maritime
 
Studies and a
 
master's degree in Maritime
 
Economics
&
 
Policy
 
from
 
the
 
University
 
of
 
Piraeus,
 
Greece.
 
She
 
completed
 
the
 
Sustainability
 
Leadership
 
and
Corporate
 
Responsibility
 
course
 
at
 
the
 
London
 
Business
 
School
 
and
 
has
 
obtained
 
the
 
Certification
 
in
Shipping Derivatives
 
from the Athens
 
University of Economics
 
and Business.
 
Ms. Veniou is also
 
a member
of WISTA Hellas and ISO 14001 certified by Lloyd’s Register.
Maria-Christina
 
Tsemani
 
has
 
served
 
as
 
the
 
Company’s
 
Chief
 
People
 
Officer
 
since
 
July
 
2022.
 
Ms.
Tsemani
 
also
 
serves
 
as
 
HR
 
Manager
 
of
 
Diana
 
Shipping
 
Services
 
S.A.,
 
a
 
position
 
she
 
has
 
held
 
since
October 2020.
 
Ms. Tsemani has over
 
20 years
 
of experience
 
in HR
 
positions with
 
multinational companies
 
and institutional
bodies. Before joining
 
Diana Shipping, Ms.
 
Tsemani was People Acquisition and
 
Development Manager of
Vodafone
 
Greece. During
 
her
 
career
 
in
 
Vodafone
 
from
 
2008 to
 
2020, she
 
held
 
various
 
other
 
positions,
including Senior HR
 
Business Partner and
 
Organizational Effectiveness and
 
Reward Manager. From 2004
to 2008, Ms. Tsemani
 
worked as a Senior HR
 
Consultant in PricewaterhouseCoopers (PwC). From 2001
to 2004, she served as Project Manager in the European Commission,
 
based in Luxembourg.
 
Ms.
 
Tsemani
 
holds
 
a bachelor’s
 
degree in
 
Mathematical Sciences
 
and
 
a master’s
 
of
 
science
 
degree in
Applied Statistics from the University of Oxford, UK.
 
B.
 
Compensation
Aggregate executive
 
compensation (including
 
amounts paid
 
to Steamship)
 
for 2023
 
was $6.6
 
million. Since
June 1, 2010, Steamship, a related party,
 
as described in "Item 7. Major Shareholders and
 
Related Party
Transactions—B. Related
 
Party Transactions"
 
has provided
 
to us
 
brokerage services.
 
Under the
 
Brokerage
Services
 
Agreements
 
in
 
effect
 
during
 
2023,
 
fees
 
for
 
2023
 
amounted
 
to
 
$3.9
 
million
 
and
 
we
 
also
 
paid
commissions
 
for
 
vessel
 
sales
 
and
 
purchases
 
amounting to
 
$0.9
 
million.
 
We
 
consider
 
fees
 
under
 
these
agreements to be part of our executive compensation due to
 
the affiliation with Steamship.
 
Non-employee directors
 
receive
 
annual compensation
 
in
 
the
 
amount
 
of
 
$52,000 plus
 
reimbursement of
out-of-pocket expenses. In addition, each director serving as chairman of a committee receives additional
annual compensation of
 
$26,000, plus reimbursement
 
for out-of-pocket
 
expenses with
 
the exception of
 
the
chairman of
 
the audit
 
and compensation committee
 
who receive
 
annual compensation of
 
$40,000. Each
director
 
serving
 
as
 
member
 
of
 
a
 
committee
 
receives
 
additional
 
annual
 
compensation
 
of
 
$13,000,
 
plus
reimbursement for out-of-pocket expenses
 
with the exception
 
of the member
 
of the audit
 
committee who
receives annual compensation of $26,000, plus reimbursement for
 
out-of-pocket expenses. In 2023, fees
and expenses of our non-executive directors amounted to $0.5
 
million.
We do not have a retirement plan for our officers or directors.
 
Equity Incentive Plan
In November 2014, our board of directors approved, and the Company adopted the 2014
 
Equity Incentive
Plan for 5,000,000
 
shares of common
 
stock, amended on
 
May 31, 2018
 
to increase the
 
shares of common
stock to
 
13,000,000 and
 
further amended
 
on January
 
8, 2021,
 
referred to
 
as “the
 
Plan”, to
 
increase the
number
 
of
 
shares
 
of
 
common
 
stock
 
available
 
for
 
the
 
issuance
 
of
 
equity
 
awards
 
by
 
20
 
million
 
shares.
Currently, 11,144,759
 
shares remain reserved for issuance under the Plan.
 
Under the Plan, the Company’s
 
employees, officers and directors
 
are entitled to receive
 
options to acquire
the
 
Company’s
 
common
 
stock.
 
The
 
Plan
 
is
 
administered
 
by
 
the
 
Compensation
 
Committee
 
of
 
the
 
91
Company’s Board of Directors, or such other committee of the Board
 
as may be designated by the Board.
Under
 
the
 
terms
 
of
 
the
 
Plan,
 
the
 
Company’s
 
Board
 
of
 
Directors
 
is
 
able
 
to
 
grant
 
(a)
 
non-qualified stock
options, (b) stock appreciation rights,
 
(c) restricted stock, (d)
 
restricted stock units, (e)
 
unrestricted stock,
(f) other equity-based or equity-related awards, (g)
 
dividend equivalents and (h) cash awards. No options
or stock appreciation
 
rights can be
 
exercisable subsequent to the
 
tenth anniversary of
 
the date on
 
which
such
 
Award
 
was
 
granted.
 
Under
 
the
 
Plan,
 
the
 
Administrator
 
may
 
waive
 
or
 
modify
 
the
 
application
 
of
forfeiture of awards
 
of restricted stock
 
and performance
 
shares in connection
 
with cessation of
 
service with
the Company.
 
No Awards
 
may be
 
granted under
 
the Plan
 
following the
 
tenth anniversary
 
of the
 
date on
which the Plan was adopted by the Board (i.e.,
 
January 8, 2031).
During 2023 and as of the
 
date of this annual report, our
 
board of directors awarded
 
an aggregate amount
of 1,750,000
 
shares and
 
2,300,000 shares,
 
respectively of
 
restricted common
 
stock, of
 
which 1,487,500
shares and 1,955,000
 
shares, respectively were
 
awarded to senior
 
management, and 262,500
 
shares and
345,000 shares, respectively,
 
were awarded to non-employee
 
directors. All restricted shares
 
vest ratably
over
 
three
 
years,
 
The
 
restricted
 
shares
 
are
 
subject
 
to
 
forfeiture
 
until
 
they
 
become
 
vested.
 
Unless
 
they
forfeit, grantees
 
have the
 
right to
 
vote, to
 
receive and
 
retain all
 
dividends paid
 
and to
 
exercise all
 
other
rights, powers and privileges of a holder of shares.
 
In 2023, compensation
 
costs relating
 
to the aggregate
 
amount of
 
restricted stock
 
awards amounted
 
to $9.9
million.
C.
 
Board Practices
We
 
have
 
established
 
an
 
Audit
 
Committee,
 
comprised
 
of
 
two
 
board
 
members,
 
which
 
is
 
responsible
 
for
reviewing
 
our
 
accounting
 
controls,
 
recommending
 
to
 
the
 
board
 
of
 
directors
 
the
 
engagement
 
of
 
our
independent
 
auditors, and
 
pre-approving audit
 
and
 
audit-related
 
services and
 
fees.
 
Each member
 
has
been determined by our board of directors to be “independent” under the rules of the NYSE and
 
the rules
and
 
regulations
 
of
 
the
 
SEC.
 
As
 
directed
 
by
 
its
 
written
 
charter,
 
the
 
Audit
 
Committee
 
is
 
responsible
 
for
appointing, and overseeing the work of the
 
independent auditors, including reviewing and approving their
engagement
 
letter
 
and
 
all
 
fees
 
paid
 
to
 
our
 
auditors,
 
reviewing
 
the
 
adequacy
 
and
 
effectiveness
 
of
 
the
Company's accounting and internal control
 
procedures and reading and discussing
 
with management and
the independent
 
auditors the
 
annual audited
 
financial statements.
 
The members
 
of the
 
Audit Committee
are
 
Mr. Kyriacos
 
Riris
 
(chairman
 
and
 
financial
 
expert)
 
and
 
Mr. Apostolos
 
Kontoyannis
 
(member
 
and
financial expert).
We
 
have established
 
a Compensation
 
Committee comprised
 
of two
 
members, which,
 
as directed
 
by its
written charter, is responsible
 
for setting the
 
compensation of
 
executive officers of
 
the Company, reviewing
the Company’s incentive
 
and equity-based
 
compensation plans,
 
and reviewing
 
and approving
 
employment
and severance
 
agreements. The
 
members of
 
the Compensation
 
Committee are
 
Mr. Apostolos Kontoyannis
(chairman) and Mr. Konstantinos Psaltis (member).
We have established
 
a Nominating
 
Committee comprised
 
of two
 
members, which,
 
as directed
 
by its
 
written
charter,
 
is responsible
 
for identifying,
 
evaluating and
 
making recommendations
 
to the
 
board of
 
directors
concerning individuals for selections as
 
director nominees for the
 
next annual meeting of
 
stockholders or
to
 
otherwise
 
fill
 
board
 
of
 
director
 
vacancies.
 
The
 
members
 
of
 
the
 
Nominating
 
Committee
 
are
Mr. Konstantinos Psaltis (chairman) and Mr. Kyriacos Riris (member).
We
 
have established
 
a Sustainability
 
Committee as
 
of February
 
18, 2021,
 
comprised of
 
Ms. Semiramis
Paliou (member)
 
and Mr.
 
Apostolos Kontoyannis (Chairman)
 
which, as
 
directed by
 
its written charter,
 
is
responsible for
 
Identifying, evaluating
 
and making
 
recommendations to
 
the Board
 
with respect
 
to significant
policies
 
and
 
performance
 
on
 
matters
 
relating
 
to
 
sustainability,
 
including
 
environmental
 
risks
 
and
opportunities, social responsibility and impact and the health and
 
safety of all of our stakeholders.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
92
We
 
have
 
established
 
an
 
Executive
 
Committee
 
comprised
 
of
 
the
 
four
 
directors,
 
Ms.
 
Semiramis
 
Paliou
(Chairperson), Mr.
 
Anastasios Margaronis (member), Mr.
 
Ioannis Zafirakis (member), and Mr.
 
Eleftherios
Papatrifon
 
(member).
 
The
 
Executive
 
Committee has,
 
to
 
the
 
extent
 
permitted
 
by
 
law,
 
the
 
powers of
 
the
Board of Directors in the management of the business and affairs of the Company.
We
 
also
 
maintain
 
directors’
 
and
 
officers’
 
insurance,
 
pursuant
 
to
 
which
 
we
 
provide
 
insurance
 
coverage
against certain
 
liabilities to
 
which our
 
directors and
 
officers may be
 
subject, including
 
liability incurred
 
under
U.S.
 
securities law.
 
Our executive
 
directors have
 
employment
 
agreements, which,
 
if terminated
 
without
cause, entitle them to continue receiving their basic salary
 
through the date of the agreement’s expiration.
Clawback Policy
In December 2023,
 
our Board
 
of Directors
 
adopted a policy
 
regarding the
 
recovery of erroneously
 
awarded
compensation (“Clawback Policy”) in accordance with the applicable rules of
 
NYSE and Section 10D and
Rule 10D-1 of the Securities Exchange Act of 1934, as amended. In the event we are required to prepare
an accounting restatement due to
 
material noncompliance with any
 
financial reporting requirements under
U.S. securities
 
laws or
 
otherwise erroneous
 
data or
 
if we
 
determine there
 
has been
 
a significant
 
misconduct
that causes material financial, operational
 
or reputational harm, we shall
 
be entitled to recover a portion
 
or
all of
 
any incentive-based
 
compensation, if
 
any,
 
provided to
 
certain executives
 
who, during
 
a three-year
period
 
preceding
 
the
 
date
 
on
 
which
 
an
 
accounting
 
restatement
 
is
 
required,
 
received
 
incentive
compensation
 
based
 
on
 
the
 
erroneous
 
financial
 
data
 
that
 
exceeds
 
the
 
amount
 
of
 
incentive-based
compensation the executive would have received based on
 
the restatement.
Our
 
Clawback
 
Policy
 
shall
 
be
 
administered
 
by
 
our
 
Compensation Committee
 
who
 
has
 
the
 
authority,
 
in
accordance with
 
the applicable
 
laws, rules
 
and regulations,
 
to interpret
 
and make
 
determinations
 
necessary
for the administration of the
 
Clawback Policy,
 
and may forego recovery in
 
certain instances, including if it
determines that recovery would be impracticable.
 
D.
 
Employees
We crew our vessels
 
primarily with Greek officers and Filipino officers
 
and seamen and may also employ
seamen from Poland,
 
Romania and
 
Ukraine. DSS
 
and DWM are
 
responsible for identifying
 
the appropriate
officers
 
and
 
seamen
 
mainly
 
through
 
crewing
 
agencies.
 
The
 
crewing
 
agencies
 
handle
 
each
 
seaman's
training, travel
 
and payroll.
 
The management
 
companies ensure
 
that all
 
our seamen
 
have the
 
qualifications
and licenses required to comply
 
with international regulations and shipping conventions. Additionally,
 
our
seafaring
 
employees
 
perform
 
most
 
commissioning
 
work
 
and
 
supervise
 
work
 
at
 
shipyards
 
and
 
drydock
facilities. We
 
typically man
 
our vessels
 
with more crew
 
members than
 
are required by
 
the country of
 
the
vessel's flag in order to allow for the performance of routine maintenance
 
duties.
The
 
following
 
table
 
presents
 
the
 
number
 
of
 
shoreside
 
personnel
 
employed
 
by
 
DSS
 
and
 
the
 
number
 
of
seafaring
 
personnel
 
employed
 
by
 
our
 
vessel-owning
 
subsidiaries
 
as
 
of
 
December
 
31,
 
2023,
 
2022
 
and
2021.
 
 
Year Ended December 31,
 
2023
2022
2021
Shoreside
 
11
2
113
111
Seafaring
 
906
907
708
Total
 
1,018
1,020
819
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
93
E.
 
Share Ownership
With respect to
 
the total amount
 
of common shares,
 
Series B Preferred
 
Shares, Series C
 
Preferred Shares
and Series D Preferred Shares owned by our officers and directors, individually
 
and as a group, see “Item
7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”
F.
Disclosure of Registrant's Action to Recover Erroneously Awarded
Compensation
Not applicable.
Item 7.
 
Major Shareholders and Related Party Transactions
 
A.
 
Major Shareholders
The following table
 
sets forth information
 
regarding ownership
 
of our common
 
stock of which
 
we are aware
as of the
 
date of this
 
annual report, for (i) beneficial
 
owners of five
 
percent or more of
 
our common stock
and
 
(ii) our
 
officers
 
and
 
directors,
 
individually
 
and
 
as
 
a
 
group.
 
All
 
of
 
our
 
shareholders,
 
including
 
the
shareholders listed in this table, are entitled to one vote for each share
 
of common stock held.
Title of Class
Identity of Person or Group
 
Number of
Shares Owned
 
Percent of
Class
*
 
Common Stock,
 
 
Semiramis Paliou (1)
 
23,750,097
 
19.8%
par value $0.01
Anastasios Margaronis (2)
12,114,535
10.1%
Sea Trade Holdings Inc. (3)
19,165,545
16.0%
 
 
All other officers and directors as a group (4)
 
12,316,914
 
10.3%
* Based on 119,962,917 common shares outstanding as of April 1, 2024.
 
(1)
 
Mrs. Semiramis Paliou indirectly may be deemed to beneficially own 19.8% beneficially owned
through Tuscany Shipping Corp., or Tuscany,
 
and through 4 Sweet Dreams S.A., as the result
of her ability to
 
control the vote and
 
disposition of such entities.
 
The shares include 5,427,977
shares
 
of
 
common
 
stock
 
issuable
 
to
 
Semiramis Paliou
 
upon
 
exercise
 
of
 
3,527,501
 
warrants
distributed on December 14, 2023. As of December 31, 2021, 2022 and 2023, Mrs. Semiramis
Paliou
 
owned
 
indirectly
 
17.8%,
 
18.9%
 
and
 
20.3%,
 
respectively,
 
of
 
our
 
outstanding
 
common
stock. Additionally,
 
Mrs. Paliou
 
owns, through
 
Tuscany,
 
10,675 shares
 
of Series
 
C Preferred
Stock, par value $0.01 per share, and 400
 
shares of Series D Preferred Stock,
 
par value $0.01
per share. The
 
Series C Preferred Stock
 
vote with our common
 
shares and each share
 
of the
Series C Preferred Stock entitle the holder thereof to 1,000 votes on all matters submitted to a
vote of
 
the common
 
stockholders of
 
the Company.
 
Each share
 
of Series
 
D Preferred
 
Stock
shall entitle
 
the holder
 
thereof to
 
two hundred
 
thousand (200,000)
 
votes on
 
all matters
 
submitted
to a
 
vote of
 
the stockholders
 
of the
 
Company, provided however, that, notwithstanding
 
any other
provision of the
 
Series D Preferred Stock
 
statement of designation, to
 
the extent that
 
the total
number of votes one
 
or more holders of
 
Series D Preferred Stock is
 
entitled to vote (including
any voting
 
power of
 
such holders
 
derived from
 
Series D
 
Preferred Stock,
 
shares of
 
Common
Stock or any other
 
voting security of
 
the Company issued
 
and outstanding
 
as of the date
 
hereof
or that
 
may be
 
issued in
 
the future)
 
on any
 
matter submitted
 
to a
 
vote of
 
stockholders of
 
the
Company would exceed 36.0% of the total
 
number of votes eligible to be cast
 
on such matter,
the total
 
number of votes
 
that holders
 
of Series D
 
Preferred Stock may
 
exercise derived from
the Series D Preferred Stock together with Common Shares and any
 
other voting securities of
94
the Company beneficially
 
owned by such
 
holder, shall
 
be reduced to
 
36% of the
 
total number
of votes that may be cast on such matter submitted to a vote of
 
stockholders.
(2)
 
Mr. Anastasios
 
Margaronis,
 
our
 
President
 
and
 
a
 
member
 
of
 
our
 
board
 
of
 
directors
 
may
 
be
deemed to
 
beneficially own
 
Anamar Investments
 
Inc. and
 
Coronis Investments
 
Inc. as
 
the result
of his ability to control the vote and disposition of such entities, for an aggregate of 12,114,535
shares.
 
These
 
shares
 
include
 
2,758,710
 
shares
 
of
 
common
 
stock
 
issuable
 
to
 
Anastasios
Margaronis upon exercise of 1,792,814 warrants distributed on December
 
14, 2023.
 
(3)
 
This information
 
is derived
 
from a
 
Schedule 13G/A
 
filed with
 
the SEC
 
on February
 
12, 2024,
adjusting the percentage figure based
 
on the common shares issued
 
and outstanding as of the
date of
 
this report.
 
The shares
 
include 4,422,817
 
shares of
 
common stock
 
issuable to
 
Sea Trade
Holdings Inc. upon the exercise of 2,948,545 warrants distributed on December
 
14, 2023.
(4)
 
Ms. Semiramis
 
Paliou
 
and
 
Mr. Anastasios
 
Margaronis
 
are
 
our
 
only
 
directors
 
or
 
officers
 
that
beneficially own
 
5% or
 
more of
 
our outstanding
 
common stock.
 
Mr.
 
Ioannis Zafirakis
 
may be
deemed
 
to
 
beneficially
 
own
 
3,089,992
 
shares,
 
or
 
2.6%
 
of
 
our
 
outstanding
 
common
 
stock,
beneficially
 
owned
 
through
 
Abra
 
Marinvest
 
Inc.;
 
and
 
Mr.
 
Simeon
 
Palios
 
may
 
be
 
deemed
 
to
beneficially
 
own
 
5,017,536
 
shares,
 
or
 
4.2%
 
of
 
our
 
outstanding
 
common
 
stock,
 
beneficially
owned
 
through
 
Taracan
 
Investments
 
S.A.
 
and
 
Limon
 
Compania
 
Financiera
 
S.A.
 
All
 
other
officers and directors each own less than 1% of our outstanding common
 
stock.
 
As of April 1, 2024,
 
we had 83 shareholders of record, 65
 
of which were located in the
 
United States and
held an
 
aggregate of
 
105,578,632 of
 
our common
 
shares, representing
 
88.01% of
 
our outstanding
 
common
shares. However,
 
one of
 
the U.S.
 
shareholders of
 
record is
 
CEDE &
 
CO., a
 
nominee of
 
The Depository
Trust Company,
 
which held 104,663,529
 
of our
 
common shares as
 
of that
 
date. Accordingly,
 
we believe
that the
 
shares held
 
by CEDE
 
& CO.
 
include common
 
shares beneficially
 
owned by
 
both holders
 
in the
United States
 
and non-U.S.
 
beneficial owners.
 
We
 
are not
 
aware of
 
any arrangements
 
the operation
 
of
which may at a subsequent date result in our change of control.
Holders
 
of
 
the
 
Series
 
B
 
Preferred
 
Shares
 
generally
 
have
 
no
 
voting
 
rights
 
except
 
(1)
 
in
 
respect
 
of
amendments to the Articles of
 
Incorporation which would adversely alter
 
the preferences, powers or rights
of
 
the
 
Series
 
B
 
Preferred
 
Shares
 
or
 
(2)
 
in
 
the
 
event
 
that
 
we
 
propose
 
to
 
issue
 
any
 
parity
 
stock
 
if
 
the
cumulative dividends payable
 
on outstanding Preferred
 
Stock are in
 
arrears or any
 
senior stock.
 
However,
if and whenever
 
dividends payable
 
on the
 
Series B
 
Preferred Shares
 
are in
 
arrears for
 
six or
 
more quarterly
periods, whether or not consecutive, holders
 
of Series B Preferred Shares (voting together
 
as a class with
all
 
other
 
classes
 
or
 
series
 
of
 
parity
 
stock
 
upon
 
which
 
like
 
voting
 
rights
 
have
 
been
 
conferred
 
and
 
are
exercisable) will
 
be entitled to
 
elect one additional
 
director to serve
 
on our
 
board of directors
 
until such time
as all accumulated and unpaid dividends on the Series B Preferred
 
Shares have been paid in full.
B.
 
Related Party Transactions
OceanPal Inc.,
 
or OceanPal
Since November 2021,
 
we own 500,000
 
of OceanPal’s Series B
 
Preferred Shares. As
 
of October 17,
 
2023
we own
 
207 shares
 
of OceanPal’s
 
Series C
 
Convertible Preferred
 
Shares issued
 
to us
 
in the
 
OceanPal
spin-off.
 
Series B Preferred Shares entitle the holder
 
to 2,000 votes on all matters submitted to vote
 
of the
stockholders of the
 
Company,
 
provided however,
 
that the total
 
number of votes
 
shall not exceed
 
34% of
the total
 
number of
 
votes, provided
 
further, that the
 
total number
 
of votes
 
entitled to
 
vote, including
 
common
stock or any other voting security, would not exceed 49% of the total number of votes.
 
Series
 
C
 
Preferred
 
Shares
 
do
 
not
 
have
 
voting
 
rights
 
unless
 
related
 
to
 
amendments
 
of
 
the
 
Articles
 
of
Incorporation that adversely alter
 
the preference, powers or
 
rights of the
 
Series C Preferred
 
Shares or to
95
issue Parity
 
Stock or
 
create or
 
issue Senior
 
Stock. Series
 
C Preferred
 
Shares have
 
become convertible
into common stock
 
at the Company’s
 
option since the first
 
anniversary of the issue
 
date, at a
 
conversion
price
 
equal
 
to
 
the
 
lesser
 
of
 
$6.5
 
and
 
the
 
10-trading day
 
trailing
 
VWAP
 
of
 
OceanPal’s
 
common
 
shares,
subject
 
to
 
adjustments.
 
Additionally,
 
Series
 
C
 
Preferred
 
Shares
 
have
 
a
 
cumulative
 
preferred
 
dividend
accruing
 
at
 
the
 
rate
 
of
 
8%
 
per
 
annum,
 
payable
 
in
 
cash
 
or,
 
at
 
OceanPal’s
 
election,
 
in
 
kind
 
and
 
has
 
a
liquidation preference equal to the stated value of $10,000.
 
On September
 
20, 2022,
 
we acquired
 
25,000 Series
 
D Preferred
 
Shares, par
 
value $0.01
 
per share,
 
as
part
 
of
 
the
 
consideration
 
provided
 
to
 
us
 
for
 
the
 
acquisition
 
of
Baltimore
,
 
which
 
was
 
sold
 
to
 
OceanPal,
pursuant to a Memorandum of
 
Agreement dated June 13,
 
2022, for $22.0 million.
 
On December 15, 2022,
we
 
distributed
 
the
 
Series
 
D
 
Preferred
 
Shares
 
as
 
non-cash
 
dividend
 
to
 
our
 
shareholders
 
of
 
record
 
on
November 28, 2022.
 
On
 
February
 
8,
 
2023,
 
we
 
acquired
 
13,157
 
of
 
OceanPal’s
 
Series
 
D
 
Preferred
 
Shares
 
as
 
part
 
of
 
the
consideration
 
provided
 
to
 
us
 
for
 
the
 
acquisition
 
of
Melia
,
 
which
 
was
 
sold
 
to
 
OceanPal,
 
pursuant
 
to
 
a
Memorandum of Agreement
 
dated February 1,
 
2023, for $14.0
 
million. On June
 
9, 2023, we
 
distributed the
Series D Preferred Shares as a non-cash dividend to our shareholders
 
of record on April 24, 2023.
Dividend income from the OceanPal preferred shares during 2023 amounted
 
to $0.8 million.
OceanPal Inc. Non-Competition Agreement
We have entered into a non-competition agreement with OceanPal Inc. ("OceanPal"), dated November 2,
2021, pursuant to which we
 
granted to OceanPal (i) a
 
right of first refusal over any
 
opportunity available to
us
 
(or
 
any
 
of
 
our
 
subsidiaries)
 
to
 
acquire
 
or
 
charter-in
 
any
 
dry
 
bulk
 
vessel
 
that
 
is
 
larger
 
than
 
70,000
deadweight
 
tons
 
and
 
that
 
was
 
built
 
prior
 
to
 
2006
 
and
 
(ii)
 
a
 
right
 
of
 
first
 
refusal
 
over
 
any
 
employment
opportunity for
 
a dry bulk
 
vessel pursuant
 
to a spot
 
market charter
 
presented or
 
available to
 
us with respect
to
 
any
 
vessel
 
owned
 
or
 
chartered
 
in,
 
directly
 
or
 
indirectly,
 
by
 
us.
 
The
 
non-competition
 
agreement
 
also
prohibits
 
us
 
and
 
OceanPal
 
from
 
soliciting
 
each
 
other's
 
employees.
 
The
 
terms
 
of
 
the
 
non-competition
agreement provide that it
 
will terminate on the
 
date that (i) our
 
ownership of OceanPal’s equity
 
securities
represents less than
 
10% of total
 
outstanding voting power
 
and (ii)
 
we and
 
OceanPal share no
 
common
executive officers.
OceanPal Inc. Right of First Refusal
On November
 
2, 2021
 
we entered
 
into a
 
right of
 
first refusal
 
agreement with
 
OceanPal Inc.
 
pursuant to
which we granted OceanPal
 
Inc. a right of
 
first refusal over six
 
drybulk carriers owned
 
by us, as of
 
the date
of the agreement, and identified in the agreement. Pursuant to this right of first refusal,
 
OceanPal Inc. has
the right, but not the obligation, to purchase one or all of the six identified vessels from us
 
when and if we
make a determination
 
to sell one
 
or more of
 
the vessels at
 
a price equal
 
to the fair
 
market value of
 
each
vessel at
 
the time
 
of sale,
 
as determined
 
by the
 
average of
 
two independent
 
shipbroker valuations
 
from
brokers mutually
 
agreeable to
 
us and
 
OceanPal Inc.
 
If OceanPal
 
Inc. does
 
not exercise
 
its right
 
to purchase
a vessel, we have the
 
right to sell the vessel
 
to any third party for
 
a period of three months
 
from the date
notified OceanPal Inc.
 
of our
 
intent to
 
sell the
 
vessel. As
 
of the
 
date of
 
the annual
 
report, OceanPal has
acquired two of the six vessels and three vessels were sold to third
 
parties.
Series D Preferred Stock
In June 2021, we
 
issued 400 shares of
 
its newly-designated Series
 
D Preferred Stock,
 
par value $0.01
 
per
share,
 
to
 
Tuscany
 
Shipping
 
Corp.,
 
an
 
entity
 
controlled
 
by
 
its
 
Chief
 
Executive
 
Officer,
 
Mrs.
 
Semiramis
Paliou, for
 
an aggregate
 
purchase price
 
of
 
$360,000. The
 
Series D
 
Preferred Stock
 
has no
 
dividend or
liquidation rights.
 
Each share of
 
Series D Preferred
 
Stock shall entitle
 
the holder thereof
 
to two hundred
thousand (200,000) votes on all
 
matters submitted to a vote of
 
the stockholders of the Company, provided
 
96
however, that, notwithstanding
 
any other provision of
 
Series D Preferred Stock
 
statement of designation,
to the extent that
 
the total number of votes
 
one or more holders
 
of Series D Preferred Stock
 
is entitled to
vote (including
 
any voting
 
power of
 
such holders
 
derived from
 
Series D
 
Preferred Stock,
 
shares of
 
Common
Stock or
 
any other
 
voting security
 
of the
 
Company issued
 
and outstanding
 
as of
 
the date
 
hereof or
 
that
may
 
be
 
issued
 
in
 
the
 
future)
 
on
 
any matter
 
submitted to
 
a
 
vote
 
of
 
stockholders of
 
the
 
Company
 
would
exceed 36.0% of
 
the total number
 
of votes eligible
 
to be cast
 
on such matter, the total
 
number of votes
 
that
holders of Series D Preferred Stock
 
may exercise derived from the Series
 
D Preferred Stock together with
Common Shares and any other voting securities of the Company beneficially owned by such holder, shall
be reduced
 
to 36%
 
of the
 
total number
 
of votes
 
that may
 
be cast
 
on such
 
matter submitted
 
to a
 
vote of
stockholders. The Series D Preferred Stock is
 
transferable only to the holder’s immediate
 
family members
and to affiliated
 
persons. The issuance of
 
shares of Series
 
D Preferred Stock to
 
Tuscany Shipping Corp.
was approved by an
 
independent committee of the Board
 
of Directors of the
 
Company, which
 
received a
fairness opinion from an independent third party that the transaction was fair
 
from a financial point of view
to the Company.
Series C Preferred Stock
In January 2019, we issued 10,675
 
shares of newly-designated Series C
 
Preferred Stock, par value $0.01
per share, to an
 
affiliate of our Chairman, Mr.
 
Simeon Palios.
 
In September 2020, the Series
 
C Preferred
Shares
 
were
 
transferred
 
from
 
an
 
affiliate
 
of
 
Mr.
 
Simeon
 
Palios
 
to
 
an
 
affiliate
 
of
 
the
 
Company’s
 
Chief
Executive Officer,
 
Mrs. Semiramis Paliou. The
 
Series C Preferred Stock
 
vote with the common
 
shares of
the Company, and each share entitles the holder thereof to 1,000 votes on all matters submitted to a vote
of the stockholders
 
of the Company. The
 
Series C
 
Preferred Stock
 
has no dividend
 
or liquidation
 
rights and
cannot be transferred without the consent of the
 
Company except to the holder’s affiliates and immediate
family members.
 
The issuance
 
of shares
 
of Series
 
C Preferred
 
Stock was
 
approved by
 
an independent
committee of the
 
Board of Directors,
 
which received
 
a fairness opinion
 
from an independent
 
third party that
the transaction was fair from a financial point of view to the Issuer.
 
Steamship Shipbroking Enterprises Inc.
Steamship, an affiliated
 
entity that
 
was controlled by
 
our Chairman of
 
the Board, Mr.
 
Simeon Palios until
January 15, 2023 and our CEO Ms. Semiramis
 
Paliou thereafter, provides to us brokerage services for an
annual fee pursuant
 
to a
 
Brokerage Services
 
Agreement. In
 
2023, brokerage
 
fees amounted
 
to $3.9
 
million
and we paid
 
an additional amount
 
of $0.9 million
 
for commissions on the
 
sale and purchases
 
of vessels.
The terms of this relationship are currently governed by a Brokerage Services Agreement dated February
23, 2024 due to expire on December 31, 2024.
Altair Travel Agency S.A.
Altair
 
Travel
 
Agency
 
S.A.,
 
or
 
Altair,
 
an
 
affiliated
 
entity
 
that
 
is
 
controlled
 
by
 
our
 
Chairman
 
of
 
the
 
Board,
Mr. Simeon Palios and CEO Ms. Semiramis Paliou provides us with travel related services. Travel related
expenses in 2023, amounted to $2.5 million.
 
Diana Wilhelmsen Management Limited
Diana Wilhelmsen
 
Management Limited,
 
or DWM,
 
is a
 
50/50 joint
 
venture which
 
provides management
services
 
to
 
certain
 
vessels
 
in
 
our
 
fleet
 
for
 
a
 
fixed
 
monthly
 
fee
 
and
 
commercial
 
services
 
charged
 
as
 
a
percentage
 
of
 
the
 
vessels’
 
gross
 
revenues.
 
Management
 
fees
 
in
 
2023
 
amounted
 
to
 
$1.3
 
million,
commissions on revenues amounted to $0.4 million.
Bergen Ultra
Bergen Ultra,
 
or Bergen,
 
is a
 
limited partnership
 
which owns
 
a dry
 
bulk carrier.
 
One of
 
our subsidiaries,
97
Diana
 
General
 
Partner
 
Inc.,
 
owns
 
3%
 
of
 
the
 
partnership
 
and
 
acts
 
as
 
the
 
General
 
Partner
 
and
 
another
subsidiary, Komi Shipping
 
Company Inc.,
 
owns 22%
 
of the
 
partnership.
 
The remaining
 
partnership interests
are owned by unaffiliated parties. On March 30, 2023, we entered into a
 
corporate guarantee with Nordea
to
 
secure
 
Bergen’s
 
obligations
 
under
 
a
 
$15.4
 
million
 
loan
 
facility.
 
We
 
have
 
also
 
entered
 
into
 
an
administrative
 
service
 
agreement
 
under
 
which
 
DSS
 
provides
 
administrative
 
services
 
to
 
Bergen
 
for
 
an
annual fee of $15 and a
 
commission agreement under which the Company is paid
 
a commission of 0.8%
per
 
annum,
 
on
 
the
 
outstanding
 
balance
 
of
 
the
 
loan,
 
as
 
compensation
 
for
 
the
 
guarantee
 
it
 
provided
 
to
Nordea. During 2023, income from administrative fees amounted to $10,192 and we received $61,267 as
payment for the guarantee commission.
Real Estate Acquisition
 
In July 2023 we purchased the remaining 1/3 interest in a
 
parcel of land that the Company did not already
own from Alpha Sigma Shipping Corp, a related party company, for the purchase price of $1.2 million and
became the sole owner of the parcel.
 
Please see Item 4.(D), Property, plants and equipment.
C.
 
Interests of Experts and Counsel
 
Not Applicable.
98
Item 8.
 
Financial information
A.
 
Consolidated statements and other financial information
See “Item 18. Financial Statements.”
Legal Proceedings
We have not been involved in any legal proceedings which may have, or have
 
had, a significant effect on
our business, financial position,
 
results of operations
 
or liquidity, nor are we aware of
 
any proceedings that
are pending or
 
threatened which may
 
have a significant
 
effect on our
 
business, financial position, results
of
 
operations
 
or
 
liquidity.
 
From time
 
to
 
time,
 
we may
 
be
 
subject to
 
legal proceedings
 
and
 
claims in
 
the
ordinary course of business,
 
principally personal injury
 
and property casualty
 
claims. We expect that
 
these
claims
 
would be
 
covered by
 
insurance, subject
 
to
 
customary deductibles.
 
Those claims,
 
even if
 
lacking
merit, could result in the expenditure of significant financial and
 
managerial resources.
 
Dividend Policy
Our board
 
of directors reviews
 
and amends our
 
dividend policy from
 
time to
 
time in
 
light of
 
our business
plans
 
and
 
other
 
factors. In
 
order
 
to
 
position
 
us
 
to
 
take
 
advantage
 
of
 
market
 
opportunities
 
in
 
a
 
then-
deteriorating
 
market,
 
our
 
board
 
of
 
directors,
 
beginning
 
with
 
the
 
fourth
 
quarter
 
of
 
2008,
 
suspended
 
our
common stock dividend. As a result of improving
 
market conditions in 2021, our board of directors
 
elected
to declare quarterly dividends
 
with respect to the
 
third quarter of 2021
 
and for each quarter
 
thereafter, until
the
 
first
 
quarter
 
of
 
2024
 
and
 
two
 
special
 
noncash
 
dividends,
 
as
 
described
 
in
 
Item
 
4A.
 
History
 
and
development of the Company.
 
The declaration and payment
 
of dividends will
 
always be subject to the
 
discretion of our board
 
of directors.
The
 
timing
 
and
 
amount
 
of
 
any
 
dividends
 
declared
 
will
 
depend
 
on,
 
among
 
other
 
things,
 
our
 
earnings,
financial condition and
 
cash requirements and
 
availability, our ability to obtain
 
debt and equity
 
financing on
acceptable terms as contemplated by our growth strategy and provisions of Marshall
 
Islands law affecting
the payment of dividends. In addition, other external factors,
 
such as our lenders imposing restrictions on
our
 
ability
 
to
 
pay
 
dividends
 
under
 
the
 
terms
 
of
 
our
 
loan
 
facilities,
 
may
 
limit
 
our
 
ability
 
to
 
pay
dividends.
 
Further,
 
under the
 
terms of
 
our loan
 
agreements, we
 
may not
 
be permitted
 
to pay
 
dividends
that would result in an event of default or if an event of default has
 
occurred and is continuing.
Marshall
 
Islands
 
law
 
generally
 
prohibits
 
the
 
payment
 
of
 
dividends
 
other
 
than
 
from
 
surplus
 
or
 
when
 
a
company is insolvent or if the payment
 
of the dividend would render
 
the company insolvent. Also, our loan
facilities and Bond prohibit the payment of dividends should an
 
event of default arise.
 
We believe
 
that, under
 
current law,
 
any dividends
 
that we
 
have paid
 
and may
 
pay in
 
the future
 
from earnings
and profits constitute
 
“qualified dividend
 
income” and as
 
such are generally
 
subject to a
 
20% United States
federal income tax rate with
 
respect to non-corporate United States shareholders. Distributions
 
in excess
of our earnings
 
and profits will
 
be treated first
 
as a non-taxable
 
return of capital
 
to the extent
 
of a United
States
 
shareholder’s tax
 
basis in
 
its
 
common stock
 
on a
 
dollar-for-dollar basis
 
and thereafter
 
as capital
gain.
 
Please
 
see
 
the
 
section
 
of
 
this
 
annual
 
report
 
entitled
 
“Taxation”
 
under
 
Item
 
10.E
 
for
 
additional
information relating to the tax treatment of our dividend payments.
Cumulative dividends on our Series
 
B Preferred Shares are payable
 
on each January 15, April
 
15, July 15
and October
 
15, when, as
 
and if
 
declared by our
 
board of
 
directors or any
 
authorized committee thereof
out
 
of
 
legally
 
available funds
 
for
 
such
 
purpose.
 
The
 
dividend
 
rate
 
for
 
our
 
Series
 
B
 
Preferred
 
Shares
 
is
8.875% per
 
annum per
 
$25.00 of
 
liquidation preference
 
per share
 
(equal to
 
$2.21875 per
 
annum per
 
share)
and is not subject to adjustment. Since February 14, 2019, we may redeem, in whole or from
 
time to time
99
in part, the Series B Preferred Shares at
 
a redemption price of $25.00 per share plus an
 
amount equal to
all accumulated and unpaid dividends thereon to the date of redemption,
 
whether or not declared.
Marshall Islands
 
law provides that
 
we may
 
pay dividends on
 
and redeem the
 
Series B
 
Preferred Shares
only to the
 
extent that assets
 
are legally available
 
for such purposes.
 
Legally available
 
assets generally
 
are
limited to our surplus, which essentially represents our retained earnings
 
and the excess of consideration
received by us for
 
the sale of shares
 
above the par value
 
of the shares. In
 
addition, under Marshall
 
Islands
law we
 
may not
 
pay dividends
 
on or
 
redeem Series
 
B Preferred
 
Shares if
 
we are
 
insolvent or
 
would be
rendered insolvent by the payment of such a dividend or the making
 
of such redemption.
B.
 
Significant Changes
There have
 
been no
 
significant changes
 
since the
 
date of
 
the
 
annual consolidated
 
financial statements
included in
 
this annual
 
report, other
 
than those
 
described in
 
Note 17
 
“Subsequent events”
 
of our
 
annual
consolidated financial statements.
Item 9.
 
The Offer and Listing
A.
 
Offer and Listing Details
The
 
trading market
 
for
 
shares of
 
our
 
common stock
 
is the
 
NYSE, on
 
which our
 
shares trade
 
under the
symbol “DSX”.
 
Our Series
 
B Preferred
 
Stock has
 
traded on
 
the NYSE
 
under the
 
symbol “DSXPRB”
 
since February
 
21,
2014.
 
Our Warrants to Purchase Common Stock, expiring on or about December 14, 2026, have
 
traded on the
NYSE under the symbol “DSX WS” since December 14, 2023.
B.
 
Plan of distribution
Not Applicable.
C.
 
Markets
Our common shares have traded on the NYSE since March 23, 2005 under the
 
symbol “DSX,” our Series
B Preferred Stock has traded on the NYSE
 
under the symbol "DSXPRB" since
 
February 21, 2014 and our
Warrants have
 
traded on
 
the NYSE
 
under the
 
symbol “DSX
 
WS” since
 
December 14,
 
2023. Since
 
February
1, 2022, our 8.375% Senior Unsecured Bond due 2026 commenced trading
 
on the Oslo Stock Exchange,
under the symbol "DIASH02."
D.
 
Selling Shareholders
Not Applicable.
E.
 
Dilution
Not Applicable.
F.
Expenses of the Issue
Not Applicable.
100
Item 10.
 
Additional Information
A.
 
Share capital
Not Applicable.
B.
 
Memorandum and articles of association
Our current amended and restated articles of incorporation are filed as exhibit 1.1 hereto, and our current
amended and restated
 
bylaws are filed
 
as exhibit 1.2
 
hereto. The information contained
 
in these exhibits
is incorporated by reference herein.
Information
 
regarding
 
the
 
rights,
 
preferences
 
and
 
restrictions
 
attaching
 
to
 
each
 
class
 
of
 
our
 
shares
 
is
described
 
in
 
Exhibit 2.8
 
to
 
this
 
annual
 
report
 
titled
 
“Description
 
of
 
Securities
 
Registered
 
Pursuant
 
to
Section 12 of the Securities Exchange Act of 1934.”
 
Stockholders Rights Agreement
On
 
February 2,
 
2024, we
 
entered
 
into
 
an
 
Amended and
 
Restated Stockholders
 
Rights
 
Agreement with
Computershare
 
Trust
 
Company,
 
N.A.,
 
as
 
Rights
 
Agent,
 
to
 
amend
 
and
 
restate
 
the
 
Stockholders
 
Rights
Agreement, dated January 15, 2016.
Under the Amended
 
and Restated
 
Stockholders Rights
 
Agreement, we
 
declared a
 
dividend payable
 
of one
preferred
 
stock
 
purchase
 
right,
 
or
 
Right,
 
for
 
each
 
share
 
of
 
common
 
stock
 
outstanding
 
at
 
the
 
close
 
of
business
 
on
 
January 26,
 
2016.
 
Each Right
 
entitles the
 
registered
 
holder to
 
purchase from
 
us
 
one one-
thousandth of a share of Series
 
A participating preferred stock, par value $0.01
 
per share, at an exercise
price of $25.00 per share. The
 
Rights will separate from the common stock and
 
become exercisable only
if a person or
 
group acquires beneficial
 
ownership of 15% or
 
more of our common
 
stock (including through
entry
 
into
 
certain
 
derivative
 
positions)
 
in
 
a
 
transaction
 
not
 
approved
 
by
 
our
 
Board
 
of
 
Directors.
 
In
 
that
situation, each holder of a Right (other than the
 
acquiring person, whose Rights will become void and will
not be exercisable)
 
will have the
 
right to purchase,
 
upon payment
 
of the exercise
 
price, a number
 
of shares
of our
 
common stock having
 
a then-current market
 
value equal to
 
twice the
 
exercise price. In
 
addition, if
the Company
 
is acquired
 
in a
 
merger or
 
other business
 
combination after
 
an acquiring
 
person acquires
15% or more
 
of our common
 
stock, each holder
 
of the Right
 
will thereafter
 
have the right
 
to purchase, upon
payment of the
 
exercise price, a
 
number of shares
 
of common stock
 
of the acquiring
 
person having a
 
then-
current market value equal
 
to twice the exercise price.
 
The acquiring person
 
will not be entitled
 
to exercise
these Rights.
 
Under the Amended and Restated Stockholders Rights Agreement's terms, it will expire on
February 1, 2034. A copy of the
 
Amended and Restated Stockholders Rights Agreement and a summary
of its
 
terms are
 
contained in
 
the Form
 
8-A12B filed
 
with the
 
SEC on
 
January 15,
 
2016, with
 
file number
001-32458, as amended on February 2, 2024.
C.
 
Material contracts
Attached as exhibits
 
to this annual
 
report are the
 
contracts we consider
 
to be both
 
material and not
 
entered
into in the ordinary
 
course of business,
 
which (i) are
 
to be performed
 
in whole or
 
in part on
 
or after the
 
filing
date
 
of this
 
annual report
 
or (ii)
 
were entered
 
into not
 
more than
 
two years
 
before the
 
filing date
 
of this
annual report.
 
Other than these agreements, we have no material
 
contracts, other than contracts entered
into in
 
the ordinary
 
course of
 
business, to
 
which the
 
Company or
 
any member
 
of the
 
group is
 
a party.
 
A
description of these is
 
included in our description
 
of our agreements generally:
 
we refer you to Item
 
5.B for
a discussion of our loan facilities.
101
D.
 
Exchange Controls
Under
 
Marshall
 
Islands,
 
Panamanian,
 
Cypriot
 
and
 
Greek
 
law,
 
there
 
are
 
currently
 
no
 
restrictions on
 
the
export or import of
 
capital, including foreign exchange controls or restrictions
 
that affect the remittance
 
of
dividends, interest or other payments to non-resident holders of our securities.
E.
 
Taxation
In the
 
opinion of
 
Seward & Kissel
 
LLP,
 
the following is
 
a discussion of
 
the material
 
Marshall Islands and
U.S. federal
 
income
 
tax
 
considerations
 
of
 
the
 
ownership
 
and
 
disposition
 
by
 
a
 
U.S. Holder
 
and
 
a
 
Non-
U.S. Holder,
 
each as defined
 
below,
 
of the
 
common stock. This
 
discussion does not
 
purport to deal
 
with
the
 
tax
 
consequences
 
of
 
owning
 
common
 
stock
 
to
 
all
 
categories
 
of
 
investors,
 
some
 
of
 
which,
 
such
 
as
dealers in
 
securities or
 
commodities, financial
 
institutions, insurance
 
companies, tax-exempt
 
organizations,
U.S. expatriates, persons liable for the alternative minimum
 
tax, persons who hold common
 
stock as part
of
 
a
 
straddle,
 
hedge,
 
conversion
 
transaction
 
or
 
integrated
 
investment,
 
U.S. Holders
 
whose
 
functional
currency is not the United States dollar, persons required to recognize income for U.S. federal income tax
purposes
 
no
 
later
 
than
 
when
 
such
 
income
 
is
 
reported
 
on
 
an
 
“applicable
 
financial
 
statement,”
 
investors
subject to the “base erosion and
 
anti-avoidance” tax
 
and investors that own, actually or
 
under applicable
constructive ownership
 
rules, 10%
 
or more
 
of the
 
Company’s common
 
stock, may
 
be subject
 
to special
rules.
 
This
 
discussion
 
deals
 
only
 
with
 
holders
 
who
 
hold
 
the
 
common
 
stock
 
as
 
a
 
capital
 
asset.
 
You
 
are
encouraged to consult your own
 
tax advisors concerning the
 
overall tax consequences arising
 
in your own
particular situation under U.S. federal, state, local or foreign law of the
 
ownership of common stock.
Marshall Islands Tax Considerations
 
The Company is incorporated in the Marshall Islands. Under current Marshall
 
Islands law, the company is
not subject to
 
tax on income
 
or capital gains,
 
and no Marshall
 
Islands withholding tax
 
will be imposed
 
upon
payments of dividends by us to our shareholders.
 
United States Federal Income Taxation
 
The
 
following
 
discussion
 
is
 
based
 
upon
 
the
 
provisions
 
of
 
the
 
U.S.
 
Internal
 
Revenue
 
Code
 
of
 
1986,
 
as
amended
 
(the
 
“Code”),
 
existing
 
and
 
proposed
 
U.S.
 
Treasury
 
Department
 
regulations,
 
(the
 
“Treasury
Regulations”),
 
administrative
 
rulings,
 
pronouncements
 
and
 
judicial
 
decisions,
 
all
 
as
 
of
 
the
 
date
 
of
 
this
Annual Report.
 
This discussion assumes that we do not have an office or other fixed place of business
 
in
the United States. Unless the context otherwise
 
requires, the reference to Company below
 
shall be meant
to refer to both the Company and its vessel-owning and operating
 
subsidiaries.
 
Taxation of the Company’s Shipping Income
In General
 
The Company anticipates that it will derive substantially
 
all of its gross income from the use and operation
of
 
vessels
 
in
 
international
 
commerce
 
and
 
that
 
this
 
income
 
will
 
principally
 
consist
 
of
 
freights
 
from
 
the
transportation
 
of
 
cargoes,
 
hire
 
or
 
lease
 
from
 
time
 
or
 
voyage
 
charters
 
and
 
the
 
performance
 
of
 
services
directly related thereto, which the Company refers to as “Shipping
 
Income.”
 
Shipping Income that is attributable
 
to transportation that begins or
 
ends, but that does not
 
both begin and
end,
 
in
 
the
 
United
 
States
 
will
 
be
 
considered
 
to
 
be
 
50%
 
derived
 
from
 
sources
 
within
 
the
 
United
 
States.
Shipping
 
Income
 
attributable
 
to
 
transportation
 
that
 
both
 
begins
 
and
 
ends
 
in
 
the
 
United
 
States
 
will
 
be
considered to be
 
100% derived from
 
sources within the
 
United States. The
 
Company is not
 
permitted by
law
 
to
 
engage in
 
transportation that
 
gives rise
 
to
 
100% U.S. source
 
Shipping Income.
 
Shipping Income
attributable to
 
transportation exclusively
 
between non-U.S. ports
 
will be
 
considered to
 
be
 
100% derived
102
from sources outside the United States. Shipping Income
 
derived from sources outside the United States
will not be subject to U.S. federal income tax.
 
Based upon the
 
Company’s anticipated
 
shipping operations,
 
the Company’s vessels
 
will operate
 
in various
parts of the world, including to or from U.S. ports. Unless exempt from U.S. federal income taxation
 
under
Section 883
 
of
 
the
 
Code,
 
the
 
Company
 
will
 
be
 
subject
 
to
 
U.S. federal
 
income
 
taxation,
 
in
 
the
 
manner
discussed below,
 
to the extent
 
its Shipping Income
 
is considered derived
 
from sources within
 
the United
States.
 
In
 
the
 
year
 
ended
 
December
 
31,
 
2023,
 
approximately
 
2.4%
 
of
 
the
 
Company’s
 
shipping
 
income
 
was
attributable to the transportation of cargoes either to or from a U.S. port. Accordingly, approximately 1.2%
of
 
the
 
Company’s
 
shipping
 
income
 
would
 
be
 
treated
 
as
 
derived
 
from
 
U.S. sources
 
for
 
the
 
year
 
ended
December 31, 2023. In
 
the absence of
 
exemption from U.S. federal income
 
tax under Section 883 of
 
the
Code, the Company
 
would have been
 
subject to a
 
4% tax on its
 
gross U.S. source
 
Shipping Income, equal
to $0.1 for the year ended December 31, 2023.
 
Application of Exemption under Section 883 of the Code
 
Under the relevant provisions of Section 883 of the Code and the final Treasury Regulations promulgated
thereunder,
 
a
 
foreign
 
corporation
 
will
 
be
 
exempt
 
from
 
U.S. federal
 
income
 
taxation
 
on
 
its
 
U.S. source
Shipping Income if:
(1)
 
It is organized in a qualified foreign country which, as defined, is one
 
that grants an equivalent
exemption from
 
tax to
 
corporations organized
 
in the
 
United States
 
in respect
 
of the
 
Shipping
Income for which exemption
 
is being claimed under
 
Section 883 of
 
the Code, or the
 
“Country of
Organization Requirement”; and
(2)
 
It can satisfy any one of the following two stock ownership requirements:
 
more
 
than
 
50%
 
of
 
its
 
stock,
 
in
 
terms
 
of
 
value,
 
is
 
beneficially
 
owned
 
by
 
qualified
shareholders
 
which,
 
as
 
defined,
 
includes
 
individuals
 
who
 
are
 
residents
 
of
 
a
 
qualified
foreign country, or the “50% Ownership Test”;
 
or
 
its stock is
 
“primarily and regularly” traded
 
on an established securities
 
market located
in the United States or a qualified foreign country, or the “Publicly Traded Test”.
The U.S. Treasury Department has recognized the Marshall Islands,
 
Panama and Cyprus the countries
 
of
incorporation of
 
each of
 
the Company
 
and its
 
subsidiaries
 
that earns
 
Shipping Income,
 
as a
 
qualified foreign
country.
 
Accordingly,
 
the
 
Company
 
and
 
each
 
of
 
the
 
subsidiaries
 
satisfy
 
the
 
Country
 
of
 
Organization
Requirement.
 
 
For
 
the
 
2023
 
taxable
 
year,
 
the
 
Company
 
believes
 
that
 
it
 
is
 
unlikely
 
that
 
the
 
50%
 
Ownership
 
Test
 
was
satisfied.
 
Therefore,
 
the
 
eligibility
 
of
 
the
 
Company
 
and
 
each
 
subsidiary
 
to
 
qualify
 
for
 
exemption
 
under
Section 883
 
of the
 
Code is
 
wholly dependent
 
upon the
 
Company’s
 
ability
 
to
 
satisfy the
 
Publicly Traded
Test.
 
 
Under
 
the
 
Treasury
 
Regulations,
 
stock
 
of
 
a
 
foreign
 
corporation
 
is
 
considered
 
“primarily
 
traded”
 
on
 
an
established
 
securities market
 
in
 
a
 
country
 
if
 
the
 
number
 
of
 
shares of
 
each
 
class
 
of
 
stock
 
that
 
is traded
during the taxable year on
 
all established securities markets in
 
that country exceeds the number
 
of shares
in
 
each
 
such
 
class that
 
is traded
 
during that
 
year
 
on
 
established securities
 
markets in
 
any
 
other single
country.
 
The Company’s
 
common stock
 
was “primarily
 
traded” on
 
the NYSE
 
during the
 
2023 taxable
 
year.
 
Under the Treasury Regulations, the Company’s common
 
stock will be considered to
 
be “regularly traded”
on the NYSE
 
if: (1) more than
 
50% of its
 
common stock, by voting
 
power and total
 
value, is listed
 
on the
103
NYSE, referred
 
to as
 
the “Listing
 
Threshold”, (2) its
 
common stock
 
is traded
 
on the
 
NYSE, other
 
than in
minimal
 
quantities, on
 
at
 
least
 
60 days
 
during
 
the
 
taxable
 
year
 
(or
 
one-sixth of
 
the
 
days
 
during
 
a
 
short
taxable year),
 
which is
 
referred to
 
as the
 
“Trading Frequency
 
Test”; and (3) the
 
aggregate number
 
of shares
of its common stock traded on the NYSE during
 
the taxable year is at least 10% of
 
the average number of
shares of its common stock outstanding
 
during such taxable year (as appropriately
 
adjusted in the case of
a short taxable year), which is
 
referred to as the “Trading Volume Test”.
 
The Trading Frequency Test and
Trading Volume Test are deemed
 
to be
 
satisfied under
 
the Treasury
 
Regulations if
 
the Company’s
 
common
stock is regularly quoted by dealers making a market in the common
 
stock.
The Company believes
 
that its
 
common stock has
 
satisfied the Listing
 
Threshold, as well
 
as the Trading
Frequency Test
 
and Trading Volume Tests,
 
during the 2023 taxable year.
 
Notwithstanding the foregoing, the Treasury
 
Regulations provide, in pertinent part,
 
that stock of a
 
foreign
corporation
 
will
 
not
 
be
 
considered
 
to
 
be
 
“regularly
 
traded”
 
on
 
an
 
established
 
securities
 
market
 
for
 
any
taxable year during which 50%
 
or more of such stock
 
is owned, actually or constructively under specified
stock
 
attribution
 
rules,
 
on
 
more
 
than
 
half
 
the
 
days
 
during
 
the
 
taxable
 
year
 
by
 
persons,
 
or
 
“5%
Shareholders”,
 
who
 
each
 
own
 
5%
 
or
 
more
 
of
 
the
 
value
 
of
 
such
 
stock,
 
or
 
the
 
“5%
 
Override
 
Rule.”
 
For
purposes
 
of
 
determining
 
the
 
persons
 
who
 
are
 
5%
 
Shareholders,
 
a
 
foreign
 
corporation
 
may
 
rely
 
on
Schedules 13D and 13G filings with the SEC.
Based on Schedules 13D and 13G filings, during the 2023 taxable year,
 
less than 50% of the Company’s
common stock was owned by 5% Shareholders. Therefore, the
 
Company believes that it is not subject to
the 5% Override Rule
 
and thus has satisfied
 
the Publicly Traded Test for the 2023 taxable
 
year.
 
However,
there
 
can
 
be
 
no assurance
 
that the
 
Company will
 
continue
 
to
 
satisfy the
 
Publicly Traded
 
Test
 
in
 
future
taxable
 
years. For
 
example,
 
the
 
Company
 
could
 
be
 
subject
 
to
 
the
 
5%
 
Override
 
Rule
 
if
 
another
 
5%
Shareholder in
 
combination with
 
the Company’s
 
existing 5%
 
Shareholders were
 
to own
 
50% or
 
more of
the Company’s
 
common stock.
 
In such a
 
case, the Company
 
would be subject
 
to the 5%
 
Override Rule
unless
 
it
 
could
 
establish that,
 
among the
 
shares of
 
the
 
common
 
stock owned
 
by
 
the
 
5%
 
Shareholders,
sufficient shares are
 
owned by
 
qualified shareholders,
 
for purposes
 
of Section
 
883 of
 
the Code,
 
to preclude
non-qualified shareholders from owning 50% or more of the Company’s common stock for more than half
the
 
number of
 
days during
 
the
 
taxable year.
 
The requirements
 
of establishing
 
this exception
 
to the
 
5%
Override Rule are onerous and there is no assurance the
 
Company will be able to satisfy them.
Based
 
on
 
the
 
foregoing,
 
the
 
Company
 
believes
 
that
 
it
 
satisfied
 
the
 
Publicly
 
Traded
 
Test
 
and
 
therefore
believes that it was exempt from U.S. federal income tax
 
under Section 883 of the Code, during the 2023
taxable year and intends to take this position on its 2023 U.S. federal
 
income tax returns.
 
Taxation in Absence of Exemption Under Section 883 of the Code
 
To
 
the
 
extent the
 
benefits of
 
Section
 
883
 
of
 
the
 
Code
 
are
 
unavailable with
 
respect
 
to
 
any
 
item
 
of
 
U.S.
source Shipping Income, the Company and each of its subsidiaries
 
would be subject to a 4% tax imposed
on such income
 
by Section 887 of
 
the Code on
 
a gross basis, without
 
the benefit of
 
deductions, which is
referred to as
 
the “4%
 
Gross Basis Tax Regime”. Since
 
under the sourcing
 
rules described
 
above, no
 
more
than 50%
 
of the
 
Company’s Shipping
 
Income would
 
be treated
 
as being
 
derived from
 
U.S. sources,
 
the
maximum effective
 
rate of
 
U.S. federal
 
income tax
 
on the
 
Company’s Shipping
 
Income would
 
never exceed
2% under the 4% Gross Basis Tax Regime.
Based
 
on
 
its
 
U.S.
 
source Shipping
 
Income
 
for
 
the
 
2023
 
taxable
 
year
 
and
 
in
 
the
 
absence
 
of
 
exemption
under Section 883
 
of the Code,
 
the Company would
 
be subject to
 
$0.1 of U.S.
 
federal income tax
 
under
the 4% Gross Basis Tax Regime.
The 4%
 
Gross Basis
 
Tax Regime would not apply
 
to U.S. source
 
Shipping Income
 
to the extent
 
considered
to be
 
“effectively connected”
 
with the
 
conduct of
 
a U.S.
 
trade or
 
business.
 
In the
 
absence of
 
exemption
104
under Section
 
883 of
 
the Code,
 
such “effectively
 
connected” U.S.
 
source Shipping
 
Income, net
 
of applicable
deductions, would be
 
subject to U.S.
 
federal income tax
 
currently imposed at
 
a rate of
 
21%.
 
In addition,
earnings
 
“effectively
 
connected”
 
with
 
the
 
conduct
 
of
 
such
 
U.S.
 
trade
 
or
 
business,
 
as
 
determined
 
after
allowance for certain adjustments, and certain
 
interest paid or deemed paid attributable to
 
the conduct of
the U.S. trade or
 
business may be
 
subject to U.S.
 
federal branch profits
 
tax imposed at
 
a rate of 30%.
 
The
Company’s U.S. source Shipping Income would be considered “effectively connected” with the conduct of
a U.S. trade or business only if: (1) the
 
Company has, or is considered to have, a fixed place
 
or business
in the United States involved in the earning
 
of Shipping Income; and (2) substantially
 
all of the Company’s
U.S. source Shipping Income
 
is attributable to regularly
 
scheduled transportation, such
 
as the operation
 
of
a vessel that followed
 
a published schedule with
 
repeated sailings at regular
 
intervals between the same
points for voyages that begin or
 
end in the United States, or,
 
in the case of income from
 
the chartering of
a vessel,
 
is attributable
 
to a
 
fixed place
 
of business
 
in the
 
United States.
 
We
 
do not
 
intend to
 
have, or
permit
 
circumstances that
 
would result
 
in
 
having a
 
vessel
 
operating to
 
the
 
United
 
States on
 
a regularly
scheduled basis.
 
Based on the foregoing and on
 
the expected mode of our shipping
 
operations and other
activities, we believe that
 
none of our
 
U.S. source Shipping Income
 
will be effectively
 
connected with the
conduct of a U.S. trade or business.
Gain on Sale of Vessels
 
Regardless of whether we
 
qualify for exemption under
 
Section 883 of the Code,
 
we will not be
 
subject to
U.S.
 
federal
 
income
 
taxation
 
with
 
respect
 
to
 
gain
 
realized
 
on
 
a
 
sale
 
of
 
a
 
vessel,
 
provided
 
the
 
sale
 
is
considered to
 
occur outside
 
of the
 
United States
 
under U.S.
 
federal income
 
tax principles.
 
In general,
 
a
sale of a
 
vessel will
 
be considered
 
to occur
 
outside of
 
the United States
 
for this
 
purpose if
 
title to the
 
vessel,
and risk of
 
loss with respect
 
to the vessel,
 
pass to the
 
buyer outside of
 
the United States.
 
It is expected
that any sale of a vessel by us will be considered to occur outside of
 
the United States.
 
United States Taxation of U.S. Holders
 
The
 
following
 
is
 
a
 
discussion
 
of
 
the
 
material
 
U.S.
 
federal
 
income
 
tax
 
considerations
 
relevant
 
to
 
an
investment decision
 
by a
 
U.S. Holder, as
 
defined below, with
 
respect to
 
our common
 
stock. This discussion
does
 
not
 
purport
 
to
 
deal
 
with
 
the
 
tax
 
consequences
 
of
 
owning
 
our
 
common
 
stock
 
to
 
all
 
categories
 
of
investors,
 
some
 
of
 
which may
 
be
 
subject to
 
special rules. You
 
are
 
encouraged to
 
consult your
 
own tax
advisors
 
concerning
 
the
 
overall
 
tax
 
consequences
 
arising
 
in
 
your
 
own
 
particular
 
situation
 
under
 
U.S.
federal, state, local or foreign law of the ownership of our common stock.
 
As used
 
herein, the
 
term “U.S.
 
Holder” means
 
a beneficial
 
owner of our
 
common stock
 
that (i)
 
is a
 
U.S.
citizen or resident, a U.S.
 
corporation or other U.S. entity taxable
 
as a corporation, an estate,
 
the income
of which
 
is subject to
 
U.S. federal income
 
taxation regardless of
 
its source, or
 
a trust if
 
(a) 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 (b) it
 
has an election
in
 
place
 
to
 
be
 
treated
 
as
 
a
 
United
 
States
 
person;
 
and
 
(ii)
 
owns
 
the
 
common
 
stock
 
as
 
a
 
capital
 
asset,
generally, for investment purposes.
 
If
 
a partnership
 
holds our
 
common stock,
 
the
 
tax treatment
 
of
 
a partner
 
will generally
 
depend upon
 
the
status of the partner and
 
upon the activities of the
 
partnership. If you are a partner
 
in a partnership holding
our common stock, you are encouraged to consult your own
 
tax advisor on this issue.
 
Distributions
 
Subject to
 
the discussion of
 
passive foreign investment
 
companies below,
 
any distributions made
 
by the
Company with respect to its common
 
stock to a U.S. Holder will
 
generally constitute dividends, which
 
may
be
 
taxable
 
as
 
ordinary
 
income
 
or
 
“qualified
 
dividend
 
income”
 
as
 
described
 
in
 
more
 
detail
 
below,
 
to
 
the
extent of
 
the Company’s
 
current or
 
accumulated earnings
 
and profits,
 
as determined
 
under U.S.
 
federal
105
income tax principles. Distributions in excess of the Company’s earnings
 
and profits will be treated first as
a non-taxable return of capital
 
to the extent of the U.S. Holder’s
 
tax basis in his common stock
 
on a dollar-
for-dollar basis
 
and thereafter
 
as capital
 
gain. Because
 
the Company
 
is not
 
a U.S.
 
corporation,
 
U.S. Holders
that are corporations will generally not
 
be entitled to claim a dividends-received deduction with respect
 
to
any distributions they receive from the Company.
Dividends paid to a
 
U.S. Holder which is
 
an individual, trust, or
 
estate, referred to herein
 
as a “U.S. Non-
Corporate
 
Holder,”
 
will
 
generally
 
be
 
treated
 
as
 
“qualified dividend
 
income”
 
that
 
is
 
taxable
 
to
 
Holders
 
at
preferential U.S.
 
federal income
 
tax rates,
 
provided that
 
(1) the common
 
stock is
 
readily tradable
 
on an
established securities
 
market in
 
the United
 
States (such
 
as the
 
NYSE on
 
which the
 
common stock
 
is listed);
(2) the Company
 
is not
 
a PFIC
 
for the
 
taxable year
 
during which the
 
dividend is
 
paid or
 
the immediately
preceding taxable year (which the Company does
 
not believe it is, has
 
been or will be); (3) the
 
U.S. Non-
Corporate Holder
 
has owned
 
the common
 
stock for
 
more than
 
60 days in
 
the 121-day
 
period beginning
60 days before
 
the date
 
on which
 
the common
 
stock becomes
 
ex-dividend; and
 
(4) the
 
U.S. Non-Corporate
Holder is not
 
under an obligation
 
(whether pursuant to
 
a short sale
 
or otherwise) to
 
make payments with
respect to positions in
 
substantially similar or related property.
 
There is no assurance that
 
any dividends
paid on our common stock
 
will be eligible for
 
these preferential rates in
 
the hands of a U.S.
 
Non-Corporate
Holder. Any dividends paid by the Company which
 
are not eligible for these
 
preferential rates will be taxed
as
 
ordinary
 
income
 
to
 
a
 
U.S.
 
Non-Corporate
 
Holder.
 
Special
 
rules
 
may
 
apply
 
to
 
any
 
“extraordinary
dividend,” generally, a dividend paid
 
by us in an amount which is equal to or in
 
excess of ten percent of a
U.S. Holder’s adjusted tax basis, or fair market
 
value in certain circumstances, in a
 
share of our common
stock.
 
If
 
we
 
pay
 
an
 
“extraordinary dividend”
 
on
 
our
 
common stock
 
that
 
is
 
treated
 
as “qualified
 
dividend
income,” then
 
any loss
 
derived by
 
a U.S. Individual
 
Holder from
 
the
 
sale or
 
exchange of
 
such common
stock will be treated as long-term capital loss to the extent of such dividend.
Sale, Exchange or other Disposition of Common Stock
 
Subject to the
 
discussion of the
 
PFIC rules below,
 
a U.S. Holder
 
generally will recognize
 
taxable gain or
loss upon
 
a sale,
 
exchange or
 
other disposition
 
of the
 
Company’s common
 
stock in
 
an amount
 
equal to
the
 
difference
 
between
 
the
 
amount
 
realized
 
by
 
the
 
U.S.
 
Holder
 
from
 
such
 
sale,
 
exchange
 
or
 
other
disposition and
 
the U.S.
 
Holder’s tax
 
basis in
 
such stock. Such
 
gain or
 
loss will
 
be treated
 
as long-term
capital gain or loss if the U.S. Holder’s holding period in the common stock is greater than one year
 
at the
time of the sale,
 
exchange or other disposition. Long-term capital
 
gain of a U.S.
 
Non-Corporate Holder is
taxable
 
at
 
preferential U.S.
 
Federal income
 
tax
 
rates.
 
A
 
U.S.
 
Holder’s ability
 
to
 
deduct capital
 
losses
 
is
subject to certain limitations.
PFIC Status and Significant Tax Consequences
 
Special
 
U.S.
 
federal
 
income
 
tax
 
rules
 
apply
 
to
 
a
 
U.S.
 
Holder
 
that
 
holds
 
stock
 
in
 
a
 
foreign
 
corporation
classified as a passive foreign investment company,
 
or a “PFIC”, for U.S. federal income tax purposes. In
general, the
 
Company will
 
be treated
 
as a
 
PFIC with
 
respect to
 
a U.S.
 
Holder if,
 
for any
 
taxable year
 
in
which such Holder held the Company’s common stock, either:
 
at least 75% of the Company’s gross income for such taxable year consists of passive
income (e.g., dividends, interest, capital gains and rents derived other
 
than in the
active conduct of a rental business), or
 
at least 50% of the average value of the assets held by the corporation
 
during such
taxable year produce, or are held for the production of, such passive
 
income.
 
For purposes of determining whether
 
the Company is a PFIC, the
 
Company will be treated as earning
 
and
owning its proportionate
 
share of the income and
 
assets, respectively, of any of its subsidiary
 
corporations
in which it owns at least 25% of the
 
value of the subsidiary’s stock. Income earned, or deemed earned,
 
by
106
the
 
Company
 
in
 
connection
 
with
 
the
 
performance
 
of
 
services
 
would
 
not
 
constitute
 
passive
 
income. By
contrast, rental
 
income would
 
generally constitute
 
passive income
 
unless the
 
Company is
 
treated under
specific rules as deriving its rental income in the active conduct of
 
a trade or business.
 
Based on the Company’s
 
current operations and future projections, the
 
Company does not believe that it
is,
 
nor
 
does
 
it
 
expect
 
to
 
become,
 
a
 
PFIC
 
with
 
respect
 
to
 
any
 
taxable
 
year. Although
 
there
 
is
 
no
 
legal
authority directly
 
on point,
 
the Company’s
 
belief is
 
based principally on
 
the position
 
that, for
 
purposes of
determining
 
whether
 
the
 
Company
 
is
 
a
 
PFIC,
 
the
 
gross
 
income
 
the
 
Company
 
derives
 
or
 
is
 
deemed
 
to
derive from
 
the
 
time
 
chartering and
 
voyage chartering
 
activities of
 
its
 
wholly-owned subsidiaries
 
should
constitute services income,
 
rather than rental
 
income. Correspondingly, the
 
Company believes that
 
such
income
 
does
 
not
 
constitute
 
passive
 
income,
 
and
 
the
 
assets
 
that
 
the
 
Company
 
or
 
its
 
wholly-owned
subsidiaries own and operate in connection with the production of such income, in particular,
 
the vessels,
do
 
not
 
constitute
 
assets
 
that
 
produce
 
or
 
are
 
held
 
for
 
the
 
production
 
of
 
passive
 
income
 
for
 
purposes of
determining whether the
 
Company is
 
a PFIC.
 
The Company
 
believes there
 
is substantial
 
legal authority
supporting its position consisting
 
of case law and
 
Internal Revenue Service, or
 
the “IRS”, pronouncements
concerning
 
the
 
characterization
 
of
 
income
 
derived
 
from
 
time
 
charters
 
and
 
voyage
 
charters
 
as
 
services
income for
 
other tax
 
purposes. However, there
 
is also
 
authority which characterizes
 
time charter
 
income
as rental
 
income rather
 
than services
 
income for
 
other tax
 
purposes.
 
It should
 
be noted
 
that in
 
the absence
of any
 
legal authority specifically
 
relating to
 
the statutory
 
provisions governing PFICs,
 
the IRS
 
or a
 
court
could
 
disagree
 
with
 
this
 
position. In
 
addition,
 
although
 
the
 
Company
 
intends
 
to
 
conduct
 
its
 
affairs
 
in
 
a
manner to
 
avoid being classified
 
as a
 
PFIC with respect
 
to any taxable
 
year, there
 
can be no
 
assurance
that the nature of its operations will not change in the future.
 
As discussed more fully below,
 
if the Company were to
 
be treated as a PFIC for
 
any taxable year,
 
a U.S.
Holder
 
would
 
be
 
subject
 
to
 
different
 
U.S.
 
federal
 
income taxation
 
rules
 
depending on
 
whether the
 
U.S.
Holder makes an
 
election to treat
 
the Company as
 
a “Qualified Electing Fund,”
 
which election is referred
to as
 
a “QEF
 
Election.” As
 
discussed below,
 
as an
 
alternative to
 
making a
 
QEF Election,
 
a U.S.
 
Holder
should be
 
able to
 
make a
 
“mark-to-market” election with
 
respect to
 
the common
 
stock, which
 
election is
referred to
 
as a
 
“Mark-to-Market Election”.
 
If the
 
Company were
 
to be
 
treated as
 
a PFIC,
 
a U.S.
 
Holder
would be
 
required to
 
file with
 
respect to
 
taxable years
 
ending on
 
or after
 
December 31,
 
2013 IRS
 
Form
8621 to report certain information regarding the Company.
 
Taxation of U.S. Holders Making a Timely QEF Election
 
If a U.S. Holder makes a
 
timely QEF Election, which U.S. Holder
 
is referred to as an “Electing
 
Holder”, the
Electing
 
Holder
 
must
 
report
 
each
 
year
 
for
 
U.S.
 
federal
 
income
 
tax
 
purposes
 
his
 
pro
 
rata
 
share
 
of
 
the
Company’s ordinary earnings and
 
net capital gain, if
 
any, for the Company’s taxable year that ends
 
with or
within the taxable year of the
 
Electing Holder, regardless of
 
whether or not distributions were received by
the Electing Holder from the Company.
 
The Electing Holder’s adjusted tax basis in the common stock will
be
 
increased
 
to
 
reflect
 
amounts
 
included
 
in
 
the
 
Electing
 
Holder’s income.
 
Distributions received
 
by
 
an
Electing Holder that had been previously taxed will result in a corresponding reduction in
 
the adjusted tax
basis in
 
the common
 
stock and
 
will not
 
be taxed
 
again once
 
distributed. An Electing
 
Holder would
 
generally
recognize capital gain or loss on the sale, exchange or other disposition
 
of the common stock.
Taxation of U.S. Holders Making a Mark-to-Market Election
 
Alternatively,
 
if the
 
Company were
 
to be
 
treated as
 
a PFIC
 
for any
 
taxable year
 
and, as
 
anticipated, the
common stock is treated
 
as “marketable stock,” a
 
U.S. Holder would be
 
allowed to make a
 
Mark-to-Market
Election with respect to the Company’s
 
common stock. If that election is made, the
 
U.S. Holder generally
would include as
 
ordinary income
 
in each
 
taxable year the
 
excess, if
 
any,
 
of the
 
fair market
 
value of
 
the
common
 
stock
 
at
 
the
 
end
 
of
 
the
 
taxable
 
year
 
over
 
such
 
Holder’s
 
adjusted
 
tax
 
basis
 
in
 
the
 
common
stock. The U.S. Holder
 
would also be
 
permitted an
 
ordinary loss in
 
respect of
 
the excess, if
 
any, of the U.S.
Holder’s adjusted tax basis in the
 
common stock over its fair
 
market value at the end
 
of the taxable year,
107
but only
 
to the
 
extent of
 
the net
 
amount previously
 
included in
 
income as
 
a result
 
of the
 
Mark-to-Market
Election. A U.S. Holder’s tax
 
basis in his
 
common stock would
 
be adjusted to
 
reflect any such
 
income or
loss
 
amount. Gain
 
realized
 
on
 
the
 
sale,
 
exchange
 
or
 
other
 
disposition
 
of
 
the
 
common
 
stock
 
would
 
be
treated as
 
ordinary income,
 
and any
 
loss realized
 
on the
 
sale, exchange
 
or other
 
disposition of
 
the common
stock would
 
be treated
 
as ordinary
 
loss to
 
the extent
 
that such
 
loss does
 
not exceed
 
the net
 
mark-to-market
gains previously included by the U.S. Holder.
 
Taxation of U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election
 
Finally,
 
if the
 
Company were
 
to be
 
treated as
 
a PFIC
 
for any
 
taxable year,
 
a U.S.
 
Holder who
 
does not
make
 
either a
 
QEF
 
Election or
 
a Mark-to-Market
 
Election for
 
that
 
year,
 
whom
 
is
 
referred to
 
as a
 
“Non-
Electing Holder”, would be subject to special U.S.
 
federal income tax rules with respect to
 
(1) any excess
distribution (i.e., the portion of any
 
distributions received by the Non-Electing
 
Holder on the common stock
in a
 
taxable year
 
in excess
 
of 125%
 
of the
 
average annual
 
distributions received
 
by the
 
Non-Electing Holder
in
 
the
 
three
 
(3)
 
preceding
 
taxable
 
years,
 
or,
 
if
 
shorter,
 
the Non-Electing Holder’s
 
holding
 
period
 
for
 
the
common
 
stock),
 
and
 
(2) any
 
gain
 
realized
 
on
 
the
 
sale,
 
exchange
 
or
 
other
 
disposition
 
of
 
the
 
common
stock. Under these special rules:
 
the excess distribution
 
or gain
 
would be
 
allocated ratably
 
over the Non-Electing
 
Holder’s
aggregate holding period for the common stock;
 
the
 
amount
 
allocated
 
to
 
the
 
current
 
taxable
 
year
 
and
 
any
 
taxable
 
years
 
before
 
the
Company became a PFIC would be taxed as ordinary income;
 
and
 
the amount allocated
 
to each
 
of the other
 
taxable years would
 
be subject to
 
tax at
 
the
highest
 
rate
 
of
 
tax
 
in
 
effect
 
for
 
the
 
applicable class
 
of
 
taxpayer
 
for
 
that
 
year,
 
and
 
an
interest charge
 
for the
 
deemed tax
 
deferral benefit
 
would be
 
imposed with
 
respect to
the resulting tax attributable to each such other taxable year.
 
These penalties would not
 
apply to a pension
 
or profit sharing trust
 
or other tax-exempt organization that
did not borrow
 
funds or otherwise
 
utilize leverage in
 
connection with its
 
acquisition of
 
the common stock.
 
If
a Non-Electing Holder who is an individual dies while
 
owning the common stock, such Holder’s successor
generally would not receive a step-up in tax basis with respect
 
to such stock.
 
U.S. Federal Income Taxation of “Non-U.S. Holders”
 
A beneficial owner of
 
our common stock that is
 
not a U.S. Holder (other
 
than a partnership) is referred
 
to
herein as a “Non-U.S. Holder.”
 
Dividends on Common Stock
 
Non-U.S.
 
Holders
 
generally
 
will
 
not
 
be
 
subject
 
to
 
U.S.
 
federal
 
income
 
or
 
withholding
 
tax
 
on
 
dividends
received from us
 
with respect to
 
our common stock,
 
unless that income
 
is effectively
 
connected with the
Non-U.S. Holder’s conduct of a trade
 
or business in the United States.
 
If the Non-U.S. Holder is entitled
 
to
the benefits of
 
a U.S. income
 
tax treaty with
 
respect to those
 
dividends, that income
 
is taxable in
 
the United
States only if
 
attributable to a permanent
 
establishment maintained by the Non-U.S.
 
Holder in the United
States.
 
Sale, Exchange or Other Disposition of Common Stock
 
Non-U.S.
 
Holders
 
generally
 
will
 
not
 
be
 
subject
 
to
 
U.S.
 
federal
 
income
 
or
 
withholding
 
tax
 
on
 
any
 
gain
realized upon the sale, exchange or other disposition of our common
 
stock, unless:
 
the
 
gain
 
is
 
effectively
 
connected
 
with
 
the
 
Non-U.S.
 
Holder’s
 
conduct
 
of
 
a
 
trade
 
or
business in the United States. If
 
the Non-U.S. Holder is entitled to
 
the benefits of a U.S.
 
108
income tax treaty with respect to that gain, the gain is taxable in
 
the United States only
if attributable
 
to a
 
permanent establishment maintained
 
by the
 
Non-U.S. Holder
 
in the
United States; or
 
the Non-U.S. Holder is an individual who is present
 
in the United States for 183 days or
more during the taxable year of disposition and other conditions
 
are met.
If the
 
Non-U.S. Holder
 
is engaged
 
in a
 
U.S. trade
 
or business
 
for U.S.
 
federal income
 
tax purposes,
 
the
income
 
from
 
our
 
common
 
stock,
 
including
 
dividends
 
and
 
the
 
gain
 
from
 
the
 
sale,
 
exchange
 
or
 
other
disposition
 
of
 
the
 
common
 
stock,
 
that
 
is
 
effectively
 
connected
 
with
 
the
 
conduct
 
of
 
that
 
U.S.
 
trade
 
or
business
 
will
 
generally
 
be
 
subject
 
to
 
U.S.
 
federal
 
income
 
tax
 
in
 
the
 
same
 
manner
 
as
 
discussed
 
in
 
the
previous section relating
 
to the taxation
 
of U.S. Holders.
 
In addition, in
 
the case of
 
a corporate Non-U.S.
Holder, such Holder’s
 
earnings and
 
profits that
 
are attributable
 
to the effectively
 
connected income,
 
subject
to certain adjustments, may be subject to an additional U.S. federal branch profits tax at a rate of 30%, or
at a lower rate as may be specified by an applicable U.S. income
 
tax treaty.
Backup Withholding and Information Reporting
In general, dividend
 
payments, or other
 
taxable distributions, made
 
within the United States
 
to a holder will
be subject to U.S.
 
federal information reporting requirements. Such payments will
 
also be subject to
 
U.S.
federal “backup withholding” if paid to a non-corporate U.S. holder who:
 
fails to provide an accurate taxpayer identification number;
 
is notified by the IRS that he has failed to report all interest or dividends
 
required to be
shown on his U.S. federal income tax returns; or
 
in certain circumstances, fails to comply with applicable certification
 
requirements.
 
Non-U.S.
 
Holders
 
may
 
be
 
required
 
to
 
establish
 
their
 
exemption
 
from
 
information
 
reporting
 
and
 
backup
withholding by certifying their status on an applicable IRS Form
 
W-8.
If a holder sells
 
his common stock to
 
or through a U.S.
 
office of a broker,
 
the payment of the
 
proceeds is
subject to
 
both backup
 
withholding and
 
information reporting
 
unless the
 
holder establishes
 
an exemption. If
a holder sells
 
his common
 
stock through a
 
non-U.S. office of
 
a non-U.S. broker
 
and the sales
 
proceeds are
paid to the holder
 
outside the United States, then information
 
reporting and backup withholding generally
will not
 
apply to
 
that payment. However,
 
information reporting requirements,
 
but not
 
backup withholding,
will apply to
 
a payment of
 
sales proceeds, including
 
a payment made
 
to a holder
 
outside the United
 
States,
if the holder
 
sells his common
 
stock through a
 
non-U.S. office of
 
a broker that
 
is a U.S.
 
person or has
 
some
other contacts with the United States.
 
Backup
 
withholding
 
is
 
not
 
an
 
additional
 
tax. Rather,
 
a
 
taxpayer
 
generally
 
may
 
obtain
 
a
 
refund
 
of
 
any
amounts
 
withheld
 
under
 
backup
 
withholding
 
rules
 
that
 
exceed
 
the
 
taxpayer’s
 
U.S.
 
federal
 
income
 
tax
liability by filing a refund claim with the IRS.
U.S. Holders who
 
are individuals (and
 
to the extent
 
specified in applicable
 
Treasury Regulations, certain
U.S. entities) who
 
hold “specified foreign financial
 
assets” (as defined
 
in Section 6038D of
 
the Code) are
required to
 
file
 
IRS Form
 
8938 with
 
information relating
 
to
 
the
 
asset for
 
each taxable
 
year
 
in
 
which the
aggregate value of all such assets
 
exceeds $75,000 at any time during
 
the taxable year or $50,000
 
on the
last
 
day
 
of
 
the
 
taxable
 
year
 
(or
 
such
 
higher
 
dollar
 
amount
 
as
 
prescribed
 
by
 
applicable
 
Treasury
Regulations).
 
Specified foreign
 
financial assets
 
would include,
 
among other
 
assets, our
 
common stock,
unless the
 
common stock
 
is held
 
through an
 
account maintained
 
with a
 
U.S. financial
 
institution. Substantial
penalties
 
apply
 
to
 
any
 
failure
 
to
 
timely
 
file
 
IRS
 
Form
 
8938,
 
unless
 
the
 
failure
 
is
 
shown
 
to
 
be
 
due
 
to
reasonable cause
 
and not
 
due to
 
willful neglect.
 
Additionally, in the
 
event a
 
U.S. Holder
 
who is
 
an individual
(and to
 
the
 
extent specified
 
in applicable
 
Treasury
 
regulations, a
 
U.S. entity)
 
that is
 
required to
 
file IRS
 
109
Form
 
8938
 
does
 
not
 
file
 
such
 
form,
 
the
 
statute
 
of
 
limitations
 
on
 
the
 
assessment
 
and
 
collection of
 
U.S.
federal income
 
taxes of
 
such holder
 
for the
 
related tax
 
year may
 
not close
 
until three
 
(3) years
 
after the
date that the required information is filed.
Changes in Global Tax Laws
 
Long-standing
 
international
 
tax
 
initiatives
 
that
 
determine
 
each
 
country’s
 
jurisdiction
 
to
 
tax
 
cross-border
international trade and profits are evolving
 
as a result of, among
 
other things, initiatives such as the
 
Anti-
Tax
 
Avoidance
 
Directives,
 
as
 
well
 
as
 
the
 
Base
 
Erosion
 
and
 
Profit
 
Shifting
 
reporting
 
requirements,
mandated
 
and/or
 
recommended
 
by
 
the
 
EU,
 
G8,
 
G20
 
and
 
Organization
 
for
 
Economic
 
Cooperation
 
and
Development, including the imposition of a minimum global
 
effective tax rate for multinational businesses
regardless of the jurisdiction of operation
 
and where profits are generated (Pillar
 
Two). As these and other
tax laws and
 
related regulations change (including
 
changes in the
 
interpretation, approach and guidance
of tax
 
authorities), our
 
financial results
 
could be
 
materially impacted.
 
Given the
 
unpredictability of
 
these
possible changes and their potential
 
interdependency, it
 
is difficult to
 
assess whether the overall effect
 
of
such potential tax changes would be cumulatively positive or negative for our earnings and cash flow,
 
but
such changes could adversely affect our financial results.
On December 12, 2022, the European Union member states agreed to implement the OECD’s
 
Pillar Two
global corporate
 
minimum tax
 
rate of
 
15% on
 
companies with
 
revenues of
 
at least
 
€750 million effective
from 2024. Various countries have either
 
adopted implementing legislation
 
or are in the
 
process of drafting
such
 
legislation. Any
 
new
 
tax
 
law
 
in
 
a
 
jurisdiction
 
where
 
we
 
conduct
 
business
 
or
 
pay tax
 
could
 
have
 
a
negative effect on our company.
F.
Dividends and paying agents
Not Applicable.
G.
 
Statement by experts
Not Applicable.
H.
 
Documents on display
We file reports
 
and other information with
 
the SEC. These materials,
 
including this annual report
 
and the
accompanying exhibits are available from the SEC’s website http://www.sec.gov.
 
I.
 
Subsidiary information
Not Applicable.
J.
 
Annual Report to Security Holders
We intend to submit any annual report provided to security holders in electronic
 
format as an exhibit to a
current report on Form 6-K.
 
Item 11.
 
Quantitative and Qualitative Disclosures about Market Risk
Interest Rates
We
 
are
 
exposed to
 
market risks
 
associated with
 
changes
 
in
 
interest rates
 
relating to
 
our
 
loan facilities,
according to which we were paying
 
interest at LIBOR plus a margin
 
until June 30, 2023 and since
 
then we
110
pay term
 
SOFR plus
 
a margin.
 
Increases in
 
interest rates
 
could affect
 
our results
 
of operations.
 
An increase
of
 
1% in
 
the
 
interest rates
 
of our
 
loan facilities
 
bearing
 
a variable
 
interest rate
 
during 2023,
 
could have
increased our interest cost from $29.6 million to $33.6 million.
 
We
 
will
 
continue
 
to
 
have
 
debt
 
outstanding,
 
which
 
could
 
impact
 
our
 
results
 
of
 
operations
 
and
 
financial
condition. We manage our exposure in interest rates, by maintaining
 
a mix of financing under agreements
with floating and
 
fixed interest rates.
 
More specifically, during 2022, we refinanced
 
part of our loans
 
having
a floating interest
 
rate, with sale
 
and leaseback
 
transactions with fixed
 
rates. Also, in
 
2023, we entered
 
into
an interest rate swap for 30% of our
 
$100 million loan facility with DNB,
 
dated June 26, 2023, under
 
which
we
 
pay fixed
 
interest and
 
receive floating.
 
Through these
 
agreements and
 
our
 
bond, also
 
bearing fixed
interest rate, we manage
 
part of our exposure
 
in interest rates
 
caused by the remaining
 
agreements which
bear floating interest rates.
As of December
 
31, 2023, 2022
 
and 2021, and
 
as of the
 
date of this
 
annual report, we
 
did not and
 
have
not designated any financial instruments as accounting hedging
 
instruments.
 
 
Currency and Exchange Rates
We generate all of our
 
revenues in U.S. dollars
 
but currently incur less
 
than half of our
 
operating expenses
(around 29% in 2023 and
 
around 32% in 2022) and
 
about half of our general
 
and administrative expenses
(around 44% in 2023 and around
 
45% in 2022) in currencies other
 
than the U.S. dollar, primarily the Euro.
For
 
accounting
 
purposes,
 
including
 
throughout
 
this
 
annual
 
report,
 
expenses
 
incurred
 
in
 
Euros
 
are
converted
 
into
 
U.S.
 
dollars
 
at
 
the
 
exchange rate
 
prevailing on
 
the
 
date
 
of
 
each transaction.
 
Because a
significant portion of our
 
expenses are incurred in currencies
 
other than the U.S.
 
dollar, our expenses may
from time to
 
time increase relative
 
to our revenues
 
as a result
 
of fluctuations in
 
exchange rates, particularly
between
 
the
 
U.S.
 
dollar
 
and
 
the
 
Euro,
 
which
 
could
 
affect
 
our
 
results
 
of
 
operations
 
in
 
future
 
periods.
Currently,
 
we
 
do
 
not
 
consider
 
the
 
risk
 
from
 
exchange
 
rate
 
fluctuations
 
to
 
be
 
material
 
for
 
our
 
results
 
of
operations,
 
as
 
during
 
2023
 
and
 
2022,
 
these
 
non-US
 
dollar
 
expenses
 
represented
 
15%
 
and
 
12%,
respectively
 
of
 
our
 
revenues
 
and
 
therefore,
 
we
 
are
 
not
 
engaged
 
in
 
extensive
 
derivative
 
instruments
 
to
hedge a considerable part of those expenses.
 
 
While we
 
historically have
 
not mitigated
 
the risk
 
associated with
 
exchange rate
 
fluctuations through
 
the use
of financial
 
derivatives, we
 
may determine
 
to employ
 
such instruments
 
from time
 
to time
 
in the
 
future in
order to
 
minimize this
 
risk. Our
 
use of
 
financial derivatives
 
would involve
 
certain risks,
 
including the
 
risk
that losses on a hedged position could exceed
 
the nominal amount invested in the instrument
 
and the risk
that
 
the
 
counterparty
 
to
 
the
 
derivative
 
transaction
 
may
 
be
 
unable
 
or
 
unwilling
 
to
 
satisfy
 
its
 
contractual
obligations, which could have an adverse effect on our results.
 
Item 12.
 
Description of Securities Other than Equity Securities
Not Applicable.
 
111
PART II
Item 13.
 
Defaults, Dividend Arrearages and Delinquencies
None.
Item 14.
 
Material Modifications to the Rights of Security Holders and
 
Use
of Proceeds
None.
Item 15.
 
Controls and Procedures
a) Disclosure Controls and Procedures
 
Management,
 
including
 
our
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
 
Officer,
 
has
 
conducted
 
an
evaluation of
 
the effectiveness
 
of our
 
disclosure controls and
 
procedures (as
 
defined in
 
Rules 13a-15(e)
and 15d-15(e) under the
 
Exchange Act) as of
 
the end of the
 
period covered by this
 
annual report. Based
upon
 
that
 
evaluation,
 
our
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
 
Officer
 
have
 
concluded
 
that
 
our
disclosure controls and procedures are
 
effective to ensure that information required
 
to be disclosed by the
Company in the reports that it
 
files or submits to the SEC
 
under the Exchange Act is
 
recorded, processed,
summarized and reported within the time periods specified in SEC rules
 
and forms.
b) Management’s Annual Report on Internal Control over Financial Reporting
Management
 
is
 
responsible
 
for
 
establishing
 
and
 
maintaining
 
adequate
 
internal
 
control
 
over
 
financial
reporting, as such term
 
is defined in Rule 13a-15(f)
 
of the Exchange Act. The
 
Company’s internal control
over
 
financial reporting
 
is a
 
process designed
 
under the
 
supervision of
 
the
 
Company’s
 
Chief
 
Executive
Officer
 
and
 
Chief
 
Financial Officer
 
to
 
provide reasonable
 
assurance
 
regarding
 
the
 
reliability
 
of
 
financial
reporting
 
and
 
the
 
preparation
 
of
 
the
 
Company’s
 
financial
 
statements
 
for
 
external
 
reporting
 
purposes
 
in
accordance with U.S. GAAP.
 
A company’s internal control over financial
 
reporting includes those policies
and
 
procedures that
 
(i)
 
pertain to
 
the
 
maintenance of
 
records that,
 
in
 
reasonable detail,
 
accurately and
fairly
 
reflect
 
the
 
transactions
 
and
 
dispositions
 
of
 
the
 
assets
 
of
 
the
 
company;
 
(ii)
 
provide
 
reasonable
assurance that transactions are
 
recorded as necessary to permit
 
the preparation of financial statements
 
in
accordance with U.S.
 
GAAP,
 
and that receipts
 
and expenditures of
 
the company are
 
being made only
 
in
accordance with authorizations of
 
management and directors of the
 
company; and (iii) provide reasonable
assurance regarding prevention
 
or timely detection
 
of unauthorized acquisition,
 
use, or disposition
 
of the
company’s assets that could have a material effect on the financial statements.
Management has
 
conducted an
 
assessment of
 
the effectiveness
 
of the
 
Company’s internal
 
control over
financial reporting based on the framework established in Internal Control – Integrated Framework issued
by the
 
Committee of
 
Sponsoring Organizations of
 
the Treadway
 
Commission (2013
 
Framework). Based
on
 
this
 
assessment,
 
management
 
has
 
determined
 
that
 
the
 
Company’s
 
internal
 
control
 
over
 
financial
reporting as of December 31, 2023 is effective.
The registered
 
public accounting firm
 
that audited
 
the financial
 
statements included
 
in this
 
annual report
containing
 
the
 
disclosure
 
required
 
by
 
this
 
Item
 
15
 
has
 
issued
 
an
 
attestation
 
report
 
on
 
management's
assessment of our internal control over financial reporting.
 
112
c)
 
Attestation Report of Independent Registered Public
 
Accounting Firm
 
The attestation report
 
on the Company’s
 
internal control over
 
financial reporting issued
 
by the registered
public accounting firm
 
that audited the
 
Company’s consolidated financial
 
statements, Ernst Young (Hellas)
Certified Auditors
 
Accountants S.A., appears
 
on page F-4
 
of the
 
financial statements filed
 
as part of
 
this
annual report.
d) Changes in Internal Control over Financial Reporting
None.
Inherent Limitations on Effectiveness of Controls
Our management, including
 
our Chief
 
Executive Officer
 
and our
 
Chief Financial Officer,
 
does not expect
that our disclosure
 
controls or our
 
internal control over
 
financial reporting will
 
prevent or detect
 
all error and
all fraud. A
 
control system, no matter
 
how well designed
 
and operated, can
 
provide only reasonable,
 
not
absolute,
 
assurance
 
that
 
the
 
control
 
system’s
 
objectives
 
will
 
be
 
met.
 
Further,
 
because
 
of
 
the
 
inherent
limitations
 
in
 
all
 
control
 
systems,
 
no
 
evaluation
 
of
 
controls
 
can
 
provide
 
absolute
 
assurance
 
that
misstatements due to
 
error or fraud
 
will not occur
 
or that all
 
control issues and
 
instances of fraud,
 
if any,
within the Company have been detected. These inherent limitations include the realities that judgments in
decision-making can
 
be faulty
 
and that
 
breakdowns can
 
occur because
 
of simple
 
error or
 
mistake. Controls
can also be
 
circumvented by the
 
individual acts of
 
some persons, by
 
collusion of two
 
or more people,
 
or
by management override of the controls. The
 
design of any system of controls
 
is based in part on
 
certain
assumptions
 
about
 
the
 
likelihood
 
of
 
future
 
events,
 
and
 
there
 
can
 
be
 
no
 
assurance
 
that
 
any
 
design
 
will
succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of
controls effectiveness
 
to future periods
 
are subject to
 
risks. Over time,
 
controls may become
 
inadequate
because of changes in conditions
 
or deterioration in the degree of
 
compliance with policies or procedures.
Item 16A. Audit Committee Financial Expert
Our Board of Directors has determined that both the members of our
 
Audit Committee, Mr. Kyriacos Riris
and
 
Mr.
 
Apostolos
 
Kontoyannis,
 
qualify
 
as
 
“Audit
 
Committee
 
financial
 
experts”
 
and
 
that
 
they
 
are
 
both
considered to be “independent” according to SEC rules.
Item 16B. Code of Ethics
 
We have
 
adopted a code of
 
ethics that applies to
 
officers, directors, employees
 
and agents. Our
 
code of
ethics is posted on our website,
 
http://www.dianashippinginc.com
, under “About Us—Code of Ethics” and
is filed
 
as Exhibit
 
11.1
 
to this
 
Annual Report.
 
Copies of
 
our code
 
of ethics
 
are available
 
in print,
 
free of
charge, upon
 
request to
 
Diana Shipping
 
Inc., Pendelis
 
16, 175
 
64 Palaio
 
Faliro, Athens,
 
Greece. We intend
to
 
satisfy
 
any
 
disclosure requirements
 
regarding
 
any
 
amendment to,
 
or waiver
 
from,
 
a
 
provision of
 
this
code of ethics by posting such information on our website.
Item 16C. Principal Accountant Fees and Services
a) Audit Fees
Our principal
 
accountants,
Ernst and Young
 
(Hellas), Certified Auditors
 
Accountants S.A., have
 
billed us
for audit
 
services. Audit fees
 
in 2023 and
 
2022 amounted to
 
€ 383,250 and
 
€ 383,250, or
 
approximately
$416,000 and
 
$437,000, respectively,
 
and relate to
 
audit services
 
provided in
 
connection with
 
timely AS
4105
 
reviews,
 
the
 
audit
 
of
 
our
 
consolidated
 
financial
 
statements
 
and
 
the
 
audit
 
of
 
internal
 
control
 
over
financial reporting.
 
113
b) Audit-Related Fees
Audit related fees during 2023
 
amounted to € 22,050, as compared
 
to € 71,288 in 2022 and
 
relate to audit
services provided in connection with the Company’s filings with the SEC.
 
c) Tax Fees
During
 
2023
 
and
 
2022,
 
we
 
received
 
services
 
for
 
which
 
fees
 
amounted
 
to
 
$11,025
 
and
 
$10,500,
respectively, for the calculation of Earnings and Profits of the Company.
d) All Other Fees
None.
e) Audit Committee’s Pre-Approval Policies and Procedures
 
Our
 
Audit
 
Committee
 
is
 
responsible
 
for
 
the
 
appointment,
 
replacement,
 
compensation,
 
evaluation
 
and
oversight of the work
 
of our independent auditors. As
 
part of this responsibility,
 
the Audit Committee pre-
approves the audit
 
and non-audit services performed
 
by the independent auditors
 
in order to
 
assure that
they
 
do not
 
impair the
 
auditor’s independence
 
from the
 
Company.
 
The Audit
 
Committee has
 
adopted a
policy
 
which
 
sets
 
forth
 
the
 
procedures
 
and
 
the
 
conditions
 
pursuant
 
to
 
which
 
services
 
proposed
 
to
 
be
performed by the independent auditors may be pre-approved.
f) Audit Work Performed by Other than Principal Accountant if Greater than
 
50%
Not applicable.
Item 16D. Exemptions from the Listing Standards for Audit
 
Committees
Our Audit Committee
 
consists of
 
two independent
 
members of our
 
Board of
 
Directors. Otherwise,
 
our Audit
Committee
 
conforms
 
to
 
each
 
other
 
requirement
 
applicable
 
to
 
audit
 
committees
 
as
 
required
 
by
 
the
applicable listing standards of the NYSE.
Item
 
16E.
 
Purchases
 
of
 
Equity
 
Securities
 
by
 
the
 
Issuer
 
and
 
Affiliated
Purchasers
On May 23, 2014, we announced that our
 
Board of Directors authorized a share repurchase
 
plan for up to
$100 million of the Company’s common shares. The
 
plan does not have an expiration date. During 2023,
we did
 
not repurchase
 
any shares
 
of common
 
stock and
 
as of
 
December 31,
 
2023 and
 
the date
 
of this
report, there
 
is an
 
outstanding value
 
of about
 
$66.3 million
 
of common
 
shares that
 
can be
 
repurchased
under the plan.
 
Item 16F.
 
Change in Registrant’s Certifying Accountant
Not applicable.
114
Item 16G.
 
Corporate Governance
Overview
Pursuant to an exception for foreign private issuers,
 
we, as a Marshall Islands company,
 
are not required
to
 
comply with
 
the
 
corporate governance
 
practices followed
 
by U.S.
 
companies under
 
the
 
NYSE listing
standards.
 
We believe that our established practices in
 
the area of corporate governance are in
 
line with
the spirit
 
of the
 
NYSE standards
 
and provide
 
adequate protection to
 
our shareholders.
 
In fact,
 
we have
voluntarily adopted
 
NYSE required
 
practices, such
 
as (a)
 
having a
 
majority of
 
independent directors,
 
(b)
establishing audit,
 
compensation, sustainability
 
and nominating
 
committees and
 
(c)
 
adopting a
 
Code of
Ethics.
 
The significant differences between our corporate governance practices and the NYSE standards
are set forth below.
 
Executive Sessions
The
 
NYSE
 
requires
 
that
 
non-management
 
directors
 
meet
 
regularly
 
in
 
executive
 
sessions
 
without
management.
 
The NYSE also
 
requires that all
 
independent directors
 
meet in an
 
executive session
 
at least
once a year.
 
As permitted under Marshall Islands law and our bylaws, our non-management directors do
not
 
regularly
 
hold
 
executive
 
sessions
 
without
 
management
 
and
 
we
 
do
 
not
 
expect
 
them
 
to
 
do
 
so
 
in
 
the
future.
Audit Committee
The NYSE requires,
 
among other things,
 
that a company
 
have an audit
 
committee with a
 
minimum of three
members.
 
Our Audit
 
Committee consists
 
of two
 
independent members
 
of our
 
Board of
 
Directors. Our
 
Audit
Committee
 
conforms
 
to
 
every
 
other
 
requirement
 
applicable
 
to
 
audit
 
committees
 
set
 
forth
 
in
 
the
 
listing
standards of the NYSE.
Shareholder Approval of Equity Compensation Plans
The NYSE requires listed
 
companies to obtain prior
 
shareholder approval to adopt
 
or materially revise any
equity compensation
 
plan. As
 
permitted under
 
Marshall Islands
 
law and
 
our amended
 
and restated
 
bylaws,
we
 
do
 
not
 
need prior
 
shareholder approval
 
to
 
adopt
 
or revise
 
equity compensation
 
plans, including
 
our
equity incentive plan.
Corporate Governance Guidelines
 
The NYSE
 
requires companies
 
to adopt
 
and disclose
 
corporate governance
 
guidelines.
 
The guidelines
must address,
 
among other
 
things: director
 
qualification standards,
 
director responsibilities,
 
director access
to
 
management
 
and
 
independent
 
advisers,
 
director
 
compensation,
 
director
 
orientation
 
and
 
continuing
education, management succession
 
and an annual
 
performance evaluation.
 
We are not required to
 
adopt
such guidelines under Marshall Islands law and we have not adopted
 
such guidelines.
 
Share Issuances
 
In lieu of obtaining shareholder
 
approval prior to the
 
issuance of designated securities,
 
we will comply with
provisions
 
of
 
the
 
Marshall
 
Islands
 
Business
 
Corporations
 
Act,
 
which
 
allows
 
the
 
Board
 
of
 
Directors
 
to
approve share issuances. Additionally,
 
the NYSE restricts the issuance of super voting
 
stock such as our
Series
 
C
 
Preferred
 
Shares.
 
However,
 
pursuant
 
to
 
313.00
 
of
 
Section
 
3
 
of
 
the
 
NYSE
 
Listed
 
Company
Manual, the
 
NYSE will accept
 
any action or
 
issuance relating to
 
the voting
 
rights structure of
 
a non-U.S.
company
 
that
 
is
 
in
 
compliance
 
with
 
the
 
NYSE’s
 
requirements
 
for
 
domestic
 
companies
 
or
 
that
 
is
 
not
prohibited by
 
the company's
 
home country
 
law.
 
We
 
are not
 
subject to
 
such restrictions
 
under our
 
home
country, Marshall Islands, law.
115
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I.
 
Disclosure Regarding
 
Foreign Jurisdictions
 
that Prevent
 
Inspections
Not applicable.
Item 16J. Insider Trading Policies
 
Pursuant to applicable
 
SEC transition guidance,
 
the disclosure required
 
by Item 16J
 
will be applicable
 
to
us beginning in the fiscal year ending December 31, 2024.
Item 16K. Cybersecurity
 
Risk management and strategy
We have
 
security measures in
 
place to mitigate
 
the risk of
 
cybersecurity threats affecting
 
our technology
environment
 
and
 
our
 
business.
 
In
 
2023,
 
the
 
Company
 
successfully
 
achieved
 
ISO
 
27001
 
certification,
demonstrating that our
 
Information Security
 
Management System
 
(ISMS) meets the
 
rigorous requirements
of
 
this
 
internationally recognized
 
standard.
 
The
 
Company's
 
security
 
team
 
regularly
 
conducts
 
significant
internal
 
changes,
 
and
 
the
 
underlying
 
controls
 
of
 
our
 
cyber
 
risk
 
management
 
program
 
are
 
now
 
formally
aligned with ISO 27001.
 
Cybersecurity training is carried out on a company-wide
 
basis to all employees and seafarers while online
performance cybersecurity
 
is delivered
 
to our crew
 
monthly. To
 
help build
 
cultural awareness
 
of these
 
risks
within the Company, additional phishing campaigns have been
 
implemented within the organization
 
which
have
 
motivated
 
the
 
staff
 
to
 
react,
 
helping
 
to
 
enhance
 
awareness
 
of
 
these
 
risks
 
and
 
mitigate
 
their
occurrence.
 
The
 
security
 
team
 
have
 
further
 
enhanced
 
our
 
processes
 
and
 
increased
 
our
 
defenses
 
by
implementing
 
a
 
cybersecurity
 
testing
 
program,
 
carried
 
out
 
on
 
a
 
yearly
 
basis
 
by
 
external
 
consultants.
Penetration testing was also carried out
 
in parallel during 2023. A
 
centralized monitoring system, powered
by
 
Microsoft's
 
cloud-based
 
Security
 
Information
 
and
 
Event
 
Management
 
(SIEM)
 
solution,
 
is
 
in
 
place
throughout
 
the
 
year.
 
This
 
system
 
aggregates
 
security
 
data
 
from
 
various
 
sources,
 
uses
 
built-in
 
artificial
intelligence to
 
detect and
 
investigate threats,
 
and enables
 
our security
 
team to
 
respond to
 
incidents rapidly.
We
 
have
 
also
 
created
 
a
 
comprehensive
 
Business
 
Continuity
 
and
 
Disaster
 
Recovery
 
plan
 
to
 
ensure
business resilience and minimize potential disruptions.
 
For the
 
year 2024,
 
the security
 
team has
 
planned a
 
comprehensive
 
collaboration with
 
a third-party
 
company
to enhance our cybersecurity awareness and training initiatives. This partnership includes the
 
design and
implementation
 
of
 
a
 
multi-faceted
 
approach
 
to
 
staff
 
training,
 
encompassing
 
synchronous
 
and
asynchronous
 
security
 
awareness
 
sessions,
 
custom-tailored
 
phishing
 
campaigns
 
and
 
the
 
creation
 
of
informative cybersecurity awareness
 
newsletters to keep
 
our staff
 
up to date
 
on the latest
 
best practices
and emerging risks. Furthermore, the
 
collaboration will focus on the
 
customization and digitalization of our
vessels' cybersecurity awareness program, ensuring that our seafarers
 
maintain a robust security posture
while at sea.] We will continue to acquire relevant tools to support the identification
 
of third-party risks and
further
 
strengthen our
 
defense. In
 
parallel to
 
these
 
security
 
measures, our
 
Company has
 
established a
Data Management Platform over Microsoft Azure
 
Technologies, to act as a centralized and secure source
of
 
truth
 
for
 
our
 
operations.
 
The
 
Data
 
Management
 
Platform
 
was
 
integrated
 
with
 
our
 
core
 
systems
 
and
implementation of key reports
 
was initiated. The goal
 
for 2024 is to build
 
Financial and Operational
 
reports
116
that will
 
enable better,
 
faster and
 
more accurate
 
monitoring of
 
Company activities
 
and improve
 
decision
making
 
and
 
productivity.
 
To
 
further
 
support
 
this
 
transition,
 
relevant
 
personnel
 
will
 
be
 
digitally
 
upskilled,
while
 
being
 
provided
 
with
 
the
 
necessary
 
tools
 
to
 
help
 
them
 
make
 
better
 
decisions,
 
ensuring
 
greater
productivity
 
and
 
enhancing vessel
 
efficiency.
 
We
 
are
 
committed to
 
enhance
 
and
 
enrich
 
our
 
operational
excellence through our external
 
3rd parties’ inspections and
 
audits (PSC-Vetting
 
inspections Audits). We
openly
 
share
 
our
 
results
 
and
 
“lessons
 
learnt”
 
within
 
the
 
industry
 
and
 
organizations,
 
we
 
compare
 
and
benchmark our performance and we continuously improve our safety
 
footprint.
Governance
Our board of directors considers cybersecurity risk as part of its risk oversight function and has delegated
the
 
day-to-day
 
oversight of
 
cybersecurity
 
and
 
other
 
technology
 
risks
 
to
 
the
 
Cyber
 
Security Officer.
 
The
Cyber Security Officer
 
is responsible for
 
assessing and managing cybersecurity
 
threats and for
 
reporting
cybersecurity
 
updates,
 
including
 
updates
 
on
 
monitoring
 
strategies
 
and
 
efforts
 
to
 
prevent
 
cybersecurity
threats, to the board of directors on a quarterly basis or more often
 
as needed.
The
 
audit
 
committee receives
 
regular reports
 
from
 
management
 
on
 
our cybersecurity
 
risks.
 
In
 
addition,
management updates the audit committee, as
 
necessary, regarding
 
any material cybersecurity incidents,
as
 
well
 
as
 
any
 
incidents
 
with
 
lesser
 
impact
 
potential.
 
The
 
audit
 
committee
 
reviews
 
the
 
Company's
cybersecurity
 
risks
 
and
 
assess’
 
the
 
steps
 
that
 
management
 
has
 
taken
 
to
 
protect
 
against
 
threats
 
to
 
the
Company's information systems and security.
Our
 
board
 
of
 
directors
 
oversees
 
the
 
Company’s
 
cybersecurity
 
risk
 
exposures
 
and
 
the
 
steps
 
taken
 
by
management to
 
monitor and
 
mitigate cybersecurity
 
risks. The
 
board of
 
directors ensures
 
allocation and
prioritization of resources and
 
overall strategic direction for
 
cybersecurity and ensures alignment with
 
the
Company’s overall strategy.
Cybersecurity Threats
During the year ended December 31, 2023 and until the date of this annual report, we did not identify any
cybersecurity threats that
 
have materially affected
 
or are reasonably likely
 
to materially affect our
 
business
strategy, results of operations,
 
or financial condition.
 
For more
 
information about
 
the cybersecurity
 
risks we
face, please see Item 3.
 
Key Information — D. Risk Factors
 
— “A cyber-attack could materially
 
disrupt our
business.”
 
 
 
117
PART III
Item 17.
 
Financial Statements
See Item 18.
Item 18.
 
Financial Statements
The financial statements
 
required by this
 
Item 18 are
 
filed as a
 
part of this
 
annual report beginning
 
on page
F-1.
 
Item 19.
 
Exhibits
Exhibit
Number
 
Description
1.1
 
1.2
 
1.3
1.4
2.1
 
2.2
 
2.3
 
2.4
 
2.5
 
2.6
2.7
 
2.8
**
2.9
2.10
4.1
 
4.2
 
4.3
 
4.4
 
4.5
 
4.6
 
4.7
 
118
4.8
 
4.9
4.10
 
4.11
 
4.12
 
4.13
 
4.14
 
4.15
 
4.16
 
4.17
 
4.18
 
4.19
 
4.20
 
4.21
 
4.22
 
4.23
 
4.24
 
4.25
 
4.26
 
4.27
 
4.28
 
4.29
4.30
 
4.31
4.32
 
4.33
 
4.34
 
4.35
 
119
4.36
 
4.37
 
4.38
4.39
4.40
4.41
4.42
 
4.43
4.44
4.45:
(26)
4.46:
(26)
4.47:
(26)
4.48:
(26)
4.49:
**
4.50:
**
4.51:
**
4.52:
**
4.53:
**
8.1
11.1
12.1
**
12.2
**
13.1
**
13.2
**
15.1
**
97.1
**.
101
 
The following materials
 
from the Company's
 
Annual Report on
 
Form 20-F for
 
the fiscal year
 
ended
December 31, 2023,
 
formatted in eXtensible
 
Business Reporting Language
 
(XBRL): (i) Consolidated
Balance Sheets as of December 31, 2023 and 2022;
 
(ii) Consolidated Statements of Income for the
years ended December 31,
 
2023, 2022 and
 
2021; (iii) Consolidated
 
Statements of Comprehensive
Income for
 
the years
 
ended December
 
31, 2023,
 
2022 and
 
2021; (iv)
 
Consolidated Statements
 
of
Stockholders'
 
Equity
 
for
 
the
 
years
 
ended
 
December
 
31,
 
2023,
 
2022
 
and
 
2021;
 
(v)
 
Consolidated
Statements
 
of
 
Cash
 
Flows
 
for
 
the
 
years
 
ended
 
December
 
31,
 
2023,
 
2022
 
and
 
2021;
 
and
 
(v)
 
the
Notes to Consolidated Financial Statements
104
 
Cover Page Interactive Data File (formatted as Inline XBRL
 
and contained in Exhibit 101)
 
**
 
Filed herewith.
(1)
Filed as Exhibit 99.2 to the Company's Form 6-K filed on November 15, 2023
.
(2)
Filed as Exhibit 99.3 to the Company's Form 6-K filed on November 15, 2023.
(3)
 
Filed as Exhibit 3.3 to the Company's Form 8-A filed on February 13,
 
2014.
(4)
 
Filed as Exhibit 3.1 to the Company's Form 8-A12B/A filed on January
 
15, 2016.
(5)
 
Filed as Exhibit 4.1 to the Company's Form 6-K filed on May 28, 2015.
(6)
 
Filed as Exhibit 4.2 to the Company's Form 6-K filed on May 28, 2015.
(7)
 
Filed as Exhibit 4.1 to the Company's Form 8-A12B/A filed on February
 
2, 2024.
(8)
 
Filed as an Exhibit to the Company's Registration Statement (File
 
No. 123052) on March 1, 2005.
(9)
 
Filed as
 
an Exhibit
 
to the
 
Company's Amended
 
Registration Statement
 
(File No.
 
123052) on
 
March
15, 2005.
(10)
 
Reserved.
120
(11)
 
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F
 
on March 27, 2014.
 
(12)
 
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F
 
on March 25, 2015.
 
(13)
 
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F
 
on March 28, 2016.
 
(14)
 
Filed as an Exhibit to the Company's Annual Report filed on Form 20-F
 
on April 20, 2012.
 
(15)
 
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on February 17,
 
2017.
(16)
 
Filed as Exhibit 4.1 to the Company's Form 8-A12B filed on February
 
13, 2014.
(17)
 
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on March 31, 2011.
(18)
 
Filed as an Exhibit to the Company’s Form 6-K filed on February 6, 2019.
(19)
 
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on March 16, 2018.
(20)
 
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on March 12, 2019.
(21)
 
Filed as an Exhibit to the Company’s Form 6-K filed on April 23, 2021.
(22)
 
Filed as an Exhibit to the Company’s Form 6-K filed
on September 8, 2023
.
(23)
 
Filed as an Exhibit to the Company’s Form 6-K filed on July 31, 2021.
(24)
 
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on March 12, 2021.
(25)
 
Filed as an Exhibit to the Company’s Form F-3 filed on June 4, 2021.
(26)
 
Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on
 
March 27, 2023.
(27)
 
Filed as an Exhibit to the Company’s Form 6-K filed on December 14, 2023.
121
SIGNATURES
The registrant hereby certifies that it meets all of the requirements
 
for filing on Form 20-F and has duly
caused and authorized the undersigned to sign this annual report on its
 
behalf.
DIANA SHIPPING INC.
/s/ Ioannis Zafirakis
 
Ioannis Zafirakis
Chief Financial Officer
 
Dated: April 4, 2024
 
F-1
DIANA SHIPPING INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB
 
ID:
1457
)
 
..................
 
F-2
Report of Independent Registered Public Accounting Firm
 
................................
 
................
 
F-4
Consolidated Balance Sheets as of December 31, 2023 and 2022
 
................................
 
...
 
F-6
Consolidated Statements of Income for the years ended December
 
31, 2023, 2022 and
2021 ................................................................
 
................................
 
................................
 
..
 
F-7
Consolidated Statements of Comprehensive Income for the years
 
ended December 31,
2023, 2022 and 2021
 
................................
 
................................
 
................................
 
.........
 
F-8
Consolidated Statements of Stockholders' Equity for the years
 
ended December 31,
2023, 2022 and 2021
 
................................
 
................................
 
................................
 
.........
 
F-9
Consolidated Statements of Cash Flows for the years ended December
 
31, 2023, 2022
and 2021 ................................
 
................................
 
................................
 
...........................
 
F-
11
Notes to Consolidated Financial Statements................................
 
................................
 
......
 
F-13
 
 
 
F-2
Report of Independent Registered Public Accounting Firm
To
 
the Stockholders and the Board of Directors of Diana
 
Shipping Inc.
Opinion on the Financial Statements
We have
 
audited the
 
accompanying consolidated balance
 
sheets of
 
Diana Shipping
 
Inc. (the
 
Company)
as
 
of
 
December
 
31,
 
2023
 
and
 
2022,
 
the
 
related
 
consolidated
 
statements
 
of
 
income,
 
comprehensive
income, stockholders' equity and cash
 
flows for each of the three years
 
in the period ended December
 
31,
2023,
 
and
 
the
 
related
 
notes (collectively
 
referred
 
to
 
as
 
the
 
“consolidated
 
financial
 
statements”).
 
In
 
our
opinion, the consolidated financial statements present fairly,
 
in all material respects, the financial position
of the Company
 
at December 31,
 
2023 and 2022,
 
and the results
 
of its operations
 
and its cash
 
flows for
each of
 
the three
 
years in
 
the period
 
ended December
 
31, 2023, in
 
conformity with
 
U.S. generally
 
accepted
accounting principles.
We
 
also
 
have
 
audited,
 
in
 
accordance
 
with
 
the
 
standards
 
of
 
the
 
Public
 
Company
 
Accounting Oversight
Board (United
 
States) (PCAOB), the
 
Company's internal control
 
over financial
 
reporting as
 
of December
31, 2023, based on criteria
 
established in Internal Control-Integrated
 
Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (2013
 
framework) and our report dated April
 
4,
2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial
 
statements are
 
the responsibility of
 
the Company's
 
management. Our responsibility
 
is to
express an
 
opinion on
 
the Company’s
 
financial statements
 
based on
 
our audits.
 
We are
 
a public
 
accounting
firm
 
registered
 
with
 
the
 
PCAOB
 
and
 
are
 
required
 
to
 
be
 
independent
 
with
 
respect
 
to
 
the
 
Company
 
in
accordance with the U.S. federal securities laws and the
 
applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted
 
our audits in
 
accordance with the
 
standards of the
 
PCAOB. Those standards
 
require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
 
statements are
free of material misstatement, whether
 
due to error or fraud.
 
Our audits included performing
 
procedures to
assess the
 
risks of
 
material misstatement
 
of the
 
financial statements, whether
 
due to
 
error or
 
fraud, and
performing procedures that respond to those risks. Such
 
procedures included examining, on a test basis,
evidence
 
regarding
 
the
 
amounts
 
and
 
disclosures
 
in
 
the
 
financial
 
statements.
 
Our
 
audits
 
also
 
included
evaluating
 
the
 
accounting
 
principles
 
used
 
and
 
significant
 
estimates
 
made
 
by
 
management,
 
as
 
well
 
as
evaluating
 
the
 
overall
 
presentation
 
of
 
the
 
financial
 
statements.
 
We
 
believe
 
that
 
our
 
audits
 
provide
 
a
reasonable basis for our opinion.
Critical Audit Matter
The
 
critical
 
audit
 
matter
 
communicated
 
below
 
is
 
a
 
matter
 
arising
 
from
 
the
 
current
 
period
 
audit
 
of
 
the
financial statements that was
 
communicated or required to
 
be communicated to the
 
audit committee and
that: (1) relates
 
to accounts or
 
disclosures that are
 
material to the
 
financial statements and
 
(2) involved our
especially challenging,
 
subjective
 
or complex
 
judgments. The
 
communication of
 
the
 
critical audit
 
matter
does not alter in any
 
way our opinion on the consolidated financial statements, taken
 
as a whole, and we
are not, by communicating the critical audit
 
matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosure to which it relates.
 
F-3
Recoverability assessment of vessels held and used
Description
of the
matter
At
 
December
 
31,
 
2023,
 
the
 
carrying
 
value
 
of
 
the
 
Company’s
 
vessels
 
plus
unamortized deferred costs was $
915,470 thousands. As discussed in Note 2
 
(l) to
the
 
consolidated
 
financial
 
statements,
 
the
 
Company
 
evaluates
 
its
 
vessels
 
for
impairment whenever events or
 
changes in circumstances
 
indicate that the carrying
value
 
of
 
a
 
vessel
 
plus
 
unamortized
 
deferred
 
costs
 
may
 
not
 
be
 
recoverable
 
in
accordance with the
 
guidance in ASC 360
 
– Property,
 
Plant and Equipment (“ASC
360”).
 
If
 
indicators
 
of
 
impairment
 
exist,
 
management
 
analyzes
 
the
 
future
undiscounted
 
net
 
operating
 
cash
 
flows
 
expected
 
to
 
be
 
generated
 
throughout
 
the
remaining
 
useful
 
life
 
of
 
each
 
vessel
 
and
 
compares
 
it
 
to
 
the
 
carrying
 
value
 
of
 
the
vessel
 
plus
 
unamortized
 
deferred
 
costs.
 
Where
 
a
 
vessel’s
 
carrying
 
value
 
plus
unamortized
 
deferred
 
costs
 
exceeds
 
the
 
undiscounted
 
net
 
operating
 
cash
 
flows,
management will recognize an
 
impairment loss equal to
 
the excess of
 
the carrying
value plus unamortized deferred costs over the fair value of the
 
vessel.
 
Auditing
 
management’s
 
recoverability
 
assessment
 
was
 
complex
 
given
 
the
judgement
 
and
 
estimation
 
uncertainty
 
involved
 
in
 
determining
 
the
 
future
 
charter
rates
 
for
 
non-contracted
 
revenue
 
days
 
used
 
in
 
forecasting
 
undiscounted
 
net
operating cash
 
flows. These
 
rates are
 
subjective as
 
they involve
 
the development
and use of
 
assumptions about the dry-bulk
 
shipping market through the
 
end of the
useful
 
lives
 
of
 
the
 
vessels. This
 
assumption is
 
forward
 
looking and
 
subject
 
to
 
the
inherent unpredictability of future global economic and market
 
conditions.
 
How we
addressed
the matter
in our audit
We obtained
 
an understanding
 
of the
 
Company’s impairment
 
process, evaluated
 
the
design, and
 
tested the
 
operating effectiveness of
 
the controls
 
over the
 
Company’s
recoverability assessment of vessels held
 
and used, including the
 
determination of
future charter rates for non-contracted revenue days.
We
 
evaluated
 
management’s
 
recoverability
 
assessment
 
by
 
comparing
 
the
methodology and
 
model used
 
for each
 
vessel against
 
the
 
accounting guidance
 
in
ASC 360.
 
To
 
test management’s
 
undiscounted net
 
operating cash
 
flow forecasts,
our procedures
 
included, among
 
others, comparing the
 
future vessel
 
charter rates
for non-contracted
 
revenue days
 
with external
 
data such
 
as available
 
market data
from various analysts and recent economic
 
and industry changes, and internal data
such as historical charter
 
rates for the vessels.
 
In addition, we performed
 
sensitivity
analyses to assess the impact of changes to future charter rates for non-contracted
revenue
 
days
 
in
 
the
 
determination
 
of
 
the
 
future
 
undiscounted
 
net
 
operating
 
cash
flows.
 
We
 
tested
 
the
 
completeness
 
and
 
accuracy
 
of
 
the
 
data
 
used
 
within
 
the
forecasts.
 
We assessed the adequacy
 
of the Company’s disclosures
 
in Note 2 (l)
 
to
the consolidated financial statements.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
We have served as the Company’s auditor since 2004.
Athens, Greece
 
April 4, 2024
 
F-4
Report of Independent Registered Public Accounting Firm
To
 
the Stockholders and the Board of Directors of Diana
 
Shipping Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Diana
 
Shipping Inc.’s internal control over
 
financial reporting as of December
 
31, 2023,
based
 
on
 
criteria
 
established
 
in
 
Internal
 
Control—Integrated
 
Framework
 
issued
 
by
 
the
 
Committee
 
of
Sponsoring
 
Organizations
 
of
 
the
 
Treadway
 
Commission
 
(2013
 
framework)
 
(the
 
COSO
 
criteria).
 
In
 
our
opinion, Diana Shipping Inc.
 
(the Company) maintained, in
 
all material respects, effective
 
internal control
over financial reporting as of December 31, 2023, based on the COSO
 
criteria.
We
 
also
 
have
 
audited,
 
in
 
accordance
 
with
 
the
 
standards
 
of
 
the
 
Public
 
Company
 
Accounting Oversight
Board
 
(United States)
 
(PCAOB), the
 
consolidated balance
 
sheets of
 
the
 
Company as
 
of
 
December 31,
2023
 
and
 
2022,
 
the
 
related
 
consolidated
 
statements
 
of
 
income,
 
comprehensive
 
income,
 
stockholders’
equity and cash flows for each of the three years in
 
the period ended December 31, 2023, and the related
notes and our report dated April 4, 2024 expressed an unqualified opinion
 
thereon.
Basis for Opinion
The
 
Company’s
 
management
 
is
 
responsible
 
for
 
maintaining
 
effective
 
internal
 
control
 
over
 
financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in
the
 
accompanying
 
Management’s
 
Annual
 
Report
 
on
 
Internal
 
Control
 
over
 
Financial
 
Reporting.
 
Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on
our audit. We are a public accounting firm registered with the PCAOB and are required to be
 
independent
with respect to the
 
Company in accordance with the
 
U.S. federal securities laws and
 
the applicable rules
and regulations of the Securities and Exchange Commission and
 
the PCAOB.
We conducted our audit in
 
accordance with the standards
 
of the PCAOB. Those
 
standards require that we
plan and
 
perform the
 
audit to
 
obtain reasonable
 
assurance about
 
whether effective
 
internal control
 
over
financial reporting was maintained in all material respects.
Our audit
 
included obtaining
 
an understanding
 
of internal
 
control over
 
financial reporting,
 
assessing the
risk
 
that
 
a
 
material
 
weakness
 
exists,
 
testing
 
and
 
evaluating
 
the
 
design
 
and
 
operating
 
effectiveness
 
of
internal
 
control
 
based
 
on
 
the
 
assessed
 
risk,
 
and
 
performing
 
such
 
other
 
procedures
 
as
 
we
 
considered
necessary in the circumstances. We believe that our audit provides a reasonable
 
basis for our opinion.
 
 
F-5
Definition and Limitations of Internal Control Over Financial
 
Reporting
A
 
company’s
 
internal
 
control
 
over
 
financial
 
reporting
 
is
 
a
 
process
 
designed
 
to
 
provide
 
reasonable
assurance
 
regarding
 
the
 
reliability
 
of
 
financial
 
reporting
 
and
 
the
 
preparation
 
of
 
financial
 
statements
 
for
external
 
purposes
 
in
 
accordance
 
with
 
generally
 
accepted
 
accounting
 
principles.
 
A
 
company’s
 
internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records
 
that, in
 
reasonable detail,
 
accurately and
 
fairly reflect
 
the transactions
 
and dispositions
 
of the
assets of the company; (2) provide reasonable
 
assurance that transactions are recorded as necessary to
permit
 
preparation of
 
financial
 
statements
 
in
 
accordance with
 
generally accepted
 
accounting principles,
and that receipts and expenditures
 
of the company are
 
being made only in
 
accordance with authorizations
of management and
 
directors of the
 
company; and (3)
 
provide reasonable
 
assurance regarding prevention
or timely detection of
 
unauthorized acquisition,
 
use, or disposition
 
of the company’s assets
 
that could have
a material effect on the financial statements.
Because
 
of
 
its
 
inherent
 
limitations,
 
internal
 
control
 
over
 
financial
 
reporting
 
may
 
not
 
prevent
 
or
 
detect
misstatements. Also, projections of any evaluation
 
of effectiveness to future periods are subject
 
to the risk
that controls may become inadequate because of changes
 
in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece
April 4, 2024
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-6
DIANA SHIPPING INC.
 
CONSOLIDATED BALANCE SHEETS
December 31, 2023 and 2022
(Expressed in thousands of U.S. Dollars – except
 
for share and per share data)
2023
2022
ASSETS
Current Assets
Cash and cash equivalents (Note 2(e))
$
101,592
$
76,428
Time deposits (Note 2(e))
40,000
46,500
Accounts receivable, trade (Note 2(f))
5,870
6,126
Due from related parties (Note 4)
149
216
Inventories (Note 2(g))
5,056
4,545
Prepaid expenses and other assets
8,696
6,749
Investments in equity securities (Note 5(b))
20,729
-
Fair value of derivatives
129
-
Total Current Assets
182,221
140,564
Fixed Assets:
Advances for vessel acquisitions (Note 6)
-
24,123
Vessels, net (Note 6)
900,192
949,616
Property and equipment, net (Note 7)
24,282
22,963
Total fixed assets
924,474
996,702
Other Noncurrent Assets
Restricted cash, non-current (Note 8)
20,000
21,000
Due from related parties, non-current (Note 4)
319
-
Equity method investments (Note 4)
15,769
506
Investments in related party (Note 5(a))
8,318
7,744
Other non-current assets
31
101
Deferred costs
15,278
16,302
Total Non-current Assets
984,189
1,042,355
Total Assets
$
1,166,410
$
1,182,919
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt, net of deferred
 
financing costs (Note 8)
$
49,512
$
91,495
Current portion of finance liabilities, net of deferred
 
financing costs (Note 9)
9,221
8,802
Accounts payable
9,663
11,242
Due to related parties (Note 3)
759
136
Accrued liabilities
12,416
12,134
Deferred revenue
3,563
7,758
Total Current Liabilities
85,134
131,567
Non-current Liabilities
Long-term debt, net of current portion and deferred
 
financing costs (Note 8)
461,131
431,016
Finance liabilities, net of current portion and deferred
 
financing costs (Note 9)
122,908
132,129
Fair value of derivatives
568
-
Warrant liability (Note 11(g))
6,332
-
Other non-current liabilities
1,316
879
Total Noncurrent Liabilities
592,255
564,024
Commitments and contingencies (Note 10)
-
-
Stockholders' Equity
Preferred stock (Note 11)
26
26
Common stock, $
0.01
 
par value;
1,000,000,000
 
and
200,000,000
 
shares authorized and
113,065,725
 
and
102,653,619
 
issued and outstanding on December 31, 2023
 
and 2022,
respectively (Note 11)
1,131
1,027
Additional paid in capital
1,101,425
1,061,015
Accumulated other comprehensive income
308
253
Accumulated deficit
(613,869)
(574,993)
Total Stockholders' Equity
489,021
487,328
 
Total Liabilities and Stockholders' Equity
$
1,166,410
$
1,182,919
The accompanying notes are an integral part of
 
these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-7
DIANA SHIPPING INC.
CONSOLIDATED STATEMENTS
 
OF INCOME
For the years ended December 31, 2023, 2022 and 2021
(Expressed in thousands of U.S. Dollars – except for share and per share data)
2023
2022
2021
REVENUES:
Time charter revenues
$
262,098
$
289,972
$
214,203
OPERATING EXPENSES
Voyage expenses (Note 12)
13,621
6,942
5,570
Vessel operating expenses
85,486
72,033
74,756
Depreciation and amortization of deferred charges
 
49,785
43,326
40,492
General and administrative expenses
32,968
29,367
29,192
Management fees to a related party (Note 4(a))
1,313
511
1,432
Gain on sale of vessels (Note 6)
(5,323)
(2,850)
(1,360)
Insurance recoveries
-
(1,789)
-
Other operating (income)/loss
(1,464)
(265)
603
Operating income, total
$
85,712
$
142,697
$
63,518
OTHER INCOME / (EXPENSES):
Interest expense and finance costs (Note 13)
(49,331)
(27,419)
(20,239)
Interest and other income
8,170
2,737
176
Loss on derivative instruments (Note 8)
(439)
-
-
Loss on extinguishment of debt (Note 8)
(748)
(435)
(980)
Gain on spin-off of OceanPal Inc.
-
-
15,252
Gain on deconsolidation of subsidiary (Note 4(b))
844
-
-
Gain on related party investments (Note 5(a))
1,502
589
-
Unrealized gain on equity securities (Note 5(b))
2,813
-
-
Unrealized gain on warrants (Note 11 (g))
1,583
-
-
Gain/(loss) from equity method investments (Note 4)
(262)
894
(333)
Total other expenses, net
$
(35,868)
$
(23,634)
$
(6,124)
Net income
$
49,844
$
119,063
$
57,394
Dividends on series B preferred shares (Notes 11(b) and
14)
(5,769)
(5,769)
(5,769)
Net income attributable to common stockholders
$
44,075
$
113,294
$
51,625
Earnings per common share, basic
 
(Note 14)
$
0.44
$
1.42
$
0.64
Earnings per common share, diluted
 
(Note 14)
$
0.42
$
1.36
$
0.61
Weighted average number of common shares
outstanding, basic
 
(Note 14)
100,166,629
80,061,040
81,121,781
Weighted average number of common shares
outstanding, diluted
 
(Note 14)
101,877,142
83,318,901
84,856,840
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-8
DIANA SHIPPING INC.
CONSOLIDATED STATEMENTS
 
OF COMPREHENSIVE INCOME
For the years ended December 31, 2023, 2022 and 2021
(Expressed in thousands of U.S. Dollars)
2023
2022
2021
Net income
$
49,844
$
119,063
$
57,394
Other comprehensive income - Defined benefit plan
55
182
2
Comprehensive income
$
49,899
$
119,245
$
57,396
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-9
DIANA SHIPPING INC.
 
CONSOLIDATED STATEMENTS
 
OF STOCKHOLDERS’ EQUITY
For the years ended December 31, 2023, 2022
 
and 2021
(Expressed in thousands of U.S. Dollars – except
 
for share data)
Preferred Stock
Series B
Preferred Stock
Series C
Preferred Stock
Series D
Common Stock
Additional
Paid-in
Capital
Other
Comprehe
nsive
Income
Accumulat
ed Deficit
Total
 
Equity
# of Shares
Par
Valu
e
# of
Shares
Par
Valu
e
# of
Shares
Par
Valu
e
# of Shares
Par
Value
BALANCE,
December 31, 2020
2,600,000
$
26
10,675
$
-
-
$
-
89,275,002
$
893
$
1,020,164
$
69
$
(592,582)
$
428,570
Net income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57,394
57,394
Issuance of Series
D Preferred Stock
(Note 11(d))
-
-
-
-
400
-
-
-
254
-
-
254
Issuance of
restricted stock and
compensation cost
(Note 11(h))
-
-
-
-
-
-
8,260,000
83
7,359
-
-
7,442
Stock repurchased
and retired (Note
11(e))
-
-
-
-
-
-
(12,862,744)
(129)
(45,240)
-
-
(45,369)
Dividends on series
B preferred stock
(Note 11(b))
-
-
-
-
-
-
-
-
-
-
(5,769)
(5,769)
Dividends on
common stock
(Note 11(f))
-
-
-
-
-
-
-
-
-
-
(8,820)
(8,820)
OceanPal Inc.
spinoff (Note 11(g))
-
-
-
-
-
-
-
-
-
-
(40,509)
(40,509)
Other
comprehensive
income
-
-
-
-
-
-
-
-
-
2
-
2
BALANCE,
December 31, 2021
2,600,000
$
26
10,675
$
-
400
$
-
84,672,258
$
847
$
982,537
$
71
$
(590,286)
$
393,195
Net income
-
-
-
-
-
-
-
-
-
-
119,063
119,063
Issuance of
restricted stock and
compensation cost
(Note 11(h))
-
-
-
-
-
-
1,470,000
15
9,267
-
-
9,282
Stock repurchased
and retired (Note
11(e))
-
-
-
-
-
-
(820,000)
(8)
(3,791)
-
-
(3,799)
Issuance of
common stock
 
(Note 11(e))
-
-
-
-
-
-
877,581
9
5,313
-
-
5,322
Issuance of
common stock for
vessel acquisitions
 
(Notes 6 and 11(e))
-
-
-
-
-
-
16,453,780
164
67,689
-
-
67,853
Dividends on series
B preferred stock
 
(Note 11(b))
-
-
-
-
-
-
-
-
-
-
(5,769)
(5,769)
Dividends on
common stock
(Note 11(f))
-
-
-
-
-
-
-
-
-
-
(79,812)
(79,812)
Dividends in kind
 
(Note 11(g))
-
-
-
-
-
-
-
-
-
-
(18,189)
(18,189)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-10
Other
comprehensive
income
-
-
-
-
-
-
-
-
-
182
-
182
BALANCE,
December 31, 2022
2,600,000
$
26
10,675
$
-
400
$
-
102,653,619
$
1,027
$
1,061,015
$
253
$
(574,993)
$
487,328
Net income
-
-
-
-
-
-
-
-
-
-
49,844
49,844
Issuance of
restricted stock and
compensation cost
(Note 11(h))
-
-
-
-
-
-
1,750,000
18
9,920
-
-
9,938
Issuance of
common stock
(Note 11(e))
-
-
-
-
-
-
6,628,493
66
22,780
-
-
22,846
Issuance of
common stock for
vessel acquisitions
(Notes 6 and 11(e))
-
-
-
-
-
-
2,033,613
20
7,710
-
-
7,730
Dividends on series
B preferred stock
(Note 11(b))
-
-
-
-
-
-
-
-
-
-
(5,769)
(5,769)
Dividends on
common stock
(Note 11(f))
-
-
-
-
-
-
-
-
-
-
(64,276)
(64,276)
Warrants (Note
11(g))
-
-
-
-
-
-
-
-
-
-
(7,914)
(7,914)
Dividends in kind
(Note 11(g))
-
-
-
-
-
-
-
-
-
-
(10,761)
(10,761)
Other
comprehensive
income
-
-
-
-
-
-
-
-
-
55
-
55
BALANCE,
December 31, 2023
2,600,000
$
26
10,675
$
-
400
$
-
113,065,725
$
1,131
$
1,101,425
$
308
$
(613,869)
$
489,021
The accompanying notes are an integral part of
 
these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-
11
DIANA SHIPPING INC.
 
CONSOLIDATED STATEMENTS
 
OF CASH FLOWS
For the years ended December 31, 2023, 2022 and 2021
(Expressed in thousands of U.S. Dollars)
2023
2022
2021
 
Cash Flows from Operating Activities:
 
Net income
$
49,844
$
119,063
$
57,394
Adjustments
 
to
 
reconcile
 
net
 
income
 
to
 
cash
 
provided
 
by
operating activities
Depreciation and amortization of deferred charges
49,785
43,326
40,492
Amortization of debt issuance costs (Note 13)
2,620
2,286
1,865
Compensation cost on restricted stock (Note 11(h))
9,938
9,282
7,442
Provision for credit loss
-
133
300
Dividend income (Note 5(a))
(3)
(100)
(69)
Pension and other postretirement benefits
55
182
2
Loss on derivative instruments (Note 8)
439
-
-
Gain on sale of vessels (Notes 6)
(5,323)
(2,850)
(1,360)
Gain on related parties investments (Note 5(a))
(1,502)
(589)
-
Loss on extinguishment of debt (Note 8)
748
435
980
Gain on OceanPal spinoff
 
-
-
(15,252)
Gain on deconsolidation of subsidiary (Note 4 (b))
(844)
-
-
Gain / (Loss) from equity method investments (Note 4)
262
(894)
333
Unrealized gain on equity securities (Note 5(b))
(2,813)
-
-
Unrealized gain on warrants (Note 11(g))
(1,583)
-
-
(Increase) / Decrease
Accounts receivable, trade
256
(3,427)
1,568
Due from related parties
(252)
736
(56)
Inventories
(511)
1,768
(1,581)
Prepaid expenses and other assets
(1,950)
(1,265)
1,759
Other non-current assets
70
(16)
(1,177)
Investments in equity securities
(17,916)
Increase / (Decrease)
 
Accounts payable, trade and other
(1,761)
1,465
1,219
Due to related parties
(57)
(72)
154
Accrued liabilities
282
3,956
(2,610)
Deferred revenue
 
(4,195)
2,026
2,890
Other non-current liabilities
437
(218)
(57)
Drydock cost
(5,646)
(16,368)
(4,531)
Net Cash Provided by Operating Activities
$
70,380
$
158,859
$
89,705
 
Cash Flows from Investing Activities:
 
Payments to
 
acquire vessels and
 
vessel improvements
 
(Notes
6 and 4(b))
(29,732)
(230,302)
(17,393)
Proceeds from sale of vessels, net of expenses (Note 6)
36,560
4,372
33,731
Payments to acquire investments (Note 4)
(10,595)
-
-
Time deposits
6,500
(46,500)
-
Payments to joint ventures
-
-
(375)
Payments to acquire other assets (Note 4(b))
(216)
-
-
Cash divested from deconsolidation (Note 4(b))
(771)
-
(1,000)
Proceeds
 
from
 
convertible
 
loan
 
with
 
limited
 
partnership
 
(Note
4(b))
25,189
-
-
Payments to acquire property, furniture and fixtures (Note 7)
(2,006)
(667)
(1,600)
Net Cash Provided By/(Used in) Investing Activities
$
24,929
$
(273,097)
$
13,363
 
Cash Flows from Financing Activities:
 
Proceeds from issuance of long-term debt and finance liabilities
(Notes 8 and 9)
57,696
275,133
101,279
Proceeds from issuance of common stock (Note 11(e))
-
5,266
-
Payments for issuance of common stock (Note 11(e))
(79)
-
-
Proceeds from issuance of preferred stock, net of expenses
-
-
254
Payments of dividends, preferred stock (Note 11(b))
(5,769)
(5,769)
(5,769)
Payments of dividends, common stock (Note 11(f))
(41,427)
(79,812)
(8,820)
Payments for repurchase of common stock
-
(3,799)
(45,369)
Payments of financing costs (Notes 8 and 9)
(1,724)
(3,302)
(7,594)
Repayments
 
of
 
long-term
 
debt
 
and
 
finance
 
liabilities
 
(Notes 8
and 9)
(79,842)
(102,839)
(93,170)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-12
Net Cash Provided by/(Used In) Financing Activities
$
(71,145)
$
84,878
$
(59,189)
Cash,
 
Cash
 
Equivalents
 
and
 
Restricted
 
Cash,
 
Period
Increase/(Decrease)
24,164
(29,360)
43,879
Cash, Cash Equivalents and Restricted Cash, Beginning
Balance
97,428
126,788
82,909
Cash, Cash Equivalents and Restricted Cash, Ending
Balance
$
121,592
$
97,428
$
126,788
RECONCILIATION OF CASH, CASH EQUIVALENTS
 
AND RESTRICTED CASH
Cash and cash equivalents
$
101,592
$
76,428
110,288
Restricted cash, non-current
20,000
21,000
16,500
Cash, Cash Equivalents and Restricted Cash, Total
$
121,592
$
97,428
$
126,788
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash acquisition of assets (Note 6)
$
7,809
$
136,038
-
Non-cash debt assumed
-
20,571
-
Non-cash Finance Liability
-
47,782
-
Stock issued in noncash financing activities (Note 6)
7,809
67,909
-
Non-cash investments acquired (Notes 6 and 5(a))
10,000
-
-
Noncash dividend (Note 11(f) and 11(g))
41,521
-
-
Transfer to Investments
-
1,370
441
Interest paid
$
46,473
$
21,306
19,608
The accompanying notes are an integral part of these consolidated financial statements.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-13
1.
 
Basis of Presentation and General Information
 
The accompanying consolidated financial statements include the accounts
 
of Diana Shipping Inc., or DSI,
and
 
its
 
wholly owned
 
subsidiaries (collectively,
 
the
 
“Company”). DSI
 
was formed
 
on
March 8, 1999
,
 
as
Diana
 
Shipping
 
Investment
 
Corp.,
 
under
 
the
 
laws
 
of
 
the
 
Republic
 
of
 
Liberia.
 
In
 
February
 
2005,
 
the
Company’s
 
articles
 
of
 
incorporation
 
were
 
amended.
 
Under
 
the
 
amended
 
articles
 
of
 
incorporation,
 
the
Company
 
was
 
renamed
 
Diana
 
Shipping
 
Inc.
 
and
 
was
 
re-domiciled
 
from
 
the
 
Republic
 
of
 
Liberia
 
to
 
the
Republic of the Marshall Islands.
The Company
 
is engaged
 
in the ocean
 
transportation of
 
dry bulk
 
cargoes worldwide
 
through the ownership
and
 
bareboat charter
 
in of
 
dry bulk
 
carrier vessels.
 
The Company
 
operates its
 
own fleet
 
through Diana
Shipping Services
 
S.A. (or
 
“DSS”), a
 
wholly owned
 
subsidiary and
 
through Diana
 
Wilhelmsen Management
Limited,
 
or
 
DWM,
 
a
50
%
 
owned
 
joint
 
venture
 
(Note
 
4(a)).
 
The
 
fees
 
paid
 
to
 
DSS
 
are
 
eliminated
 
in
consolidation.
 
2.
 
Significant Accounting Policies
a)
 
Principles
 
of
 
Consolidation
:
 
The
 
accompanying
 
consolidated
 
financial
 
statements
 
have
 
been
prepared in
 
accordance with
 
U.S. generally
 
accepted accounting
 
principles and
 
include the
 
accounts of
Diana Shipping Inc.
 
and its wholly
 
owned subsidiaries. All
 
intercompany balances and transactions
 
have
been
 
eliminated
 
upon
 
consolidation.
 
Under
 
Accounting
 
Standards
 
Codification
 
(“ASC”)
 
810
“Consolidation”, the
 
Company consolidates entities
 
in which
 
it has
 
a controlling
 
financial interest,
 
by first
considering if
 
an entity
 
meets the
 
definition of
 
a variable
 
interest entity
 
("VIE") for
 
which the
 
Company is
deemed to be the primary beneficiary under
 
the VIE model, or if the Company controls
 
an entity through a
majority
 
of
 
voting
 
interest
 
based
 
on
 
the
 
voting
 
interest
 
model.
 
The
 
Company
 
evaluates
 
financial
instruments, service contracts, and
 
other arrangements to determine
 
if any variable interests
 
relating to an
entity exist. For
 
entities in which
 
the Company
 
has a variable
 
interest, the Company
 
determines if
 
the entity
is a
 
VIE by
 
considering whether
 
the entity’s
 
equity investment
 
at risk
 
is sufficient
 
to finance
 
its activities
without additional
 
subordinated financial
 
support and
 
whether the
 
entity’s at-risk
 
equity holders
 
have the
characteristics of a controlling financial interest. In performing the analysis of whether the Company is the
primary beneficiary
 
of a
 
VIE, the
 
Company considers
 
whether it
 
individually has
 
the
 
power to
 
direct the
activities of
 
the VIE
 
that most
 
significantly affect
 
the entity’s
 
performance and
 
also has
 
the obligation
 
to
absorb losses
 
or the right
 
to receive
 
benefits of the
 
VIE that could
 
potentially be significant
 
to the
 
VIE. If
the Company holds
 
a variable interest
 
in an entity
 
that previously was
 
not a VIE,
 
it reconsiders whether
 
the
entity has become a VIE.
 
b)
 
Use
 
of
 
Estimates:
The preparation
 
of
 
consolidated financial
 
statements
 
in
 
conformity with
 
U.S.
generally accepted accounting principles
 
requires management to make estimates
 
and assumptions that
affect the
 
reported amounts
 
of assets
 
and liabilities
 
and disclosure
 
of contingent
 
assets and
 
liabilities at
the
 
date
 
of
 
the
 
consolidated financial
 
statements
 
and the
 
reported
 
amounts of
 
revenues
 
and
 
expenses
during the reporting period.
 
Actual results could differ from those estimates.
c)
 
Other Comprehensive Income / (Loss):
The Company separately presents certain transactions,
which are recorded directly as components
 
of stockholders’ equity. Other Comprehensive Income / (Loss)
is presented in a separate statement.
 
d)
 
Foreign Currency
 
Translation:
The functional
 
currency of
 
the Company
 
is the
 
U.S. dollar
 
because
the Company’s
 
vessels operate
 
in international
 
shipping markets,
 
and therefore
 
primarily transact
 
business
in U.S. dollars. The Company’s accounting records are
 
maintained in U.S. dollars. Transactions
 
involving
other currencies during
 
the year are
 
converted into U.S.
 
dollars using the
 
exchange rates in
 
effect at the
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-14
time of
 
the transactions.
 
At the balance
 
sheet dates,
 
monetary assets
 
and liabilities
 
which are denominated
in
 
other
 
currencies
 
are
 
translated
 
into
 
U.S.
 
dollars
 
at
 
the
 
year-end
 
exchange
 
rates.
 
Resulting
 
gains
 
or
losses
 
are
 
included
 
in
 
other
 
operating
 
(income)/loss
 
in
 
the
 
accompanying
 
consolidated
 
statements
 
of
operations.
 
e)
 
Cash, Cash Equivalents and Time
 
Deposits:
The Company considers highly liquid investments
such as time deposits, certificates of deposit
 
and their equivalents with an original maturity of
 
up to about
three months to
 
be cash equivalents. Time
 
deposits with maturity above
 
three months are removed
 
from
cash and cash
 
equivalents and are
 
separately presented
 
as time deposits.
 
Restricted cash consists
 
mainly
of cash deposits required to be maintained at all times under the Company’s loan facilities (Note 8). As of
December 31, 2023 and
 
2022, accrued interest income
 
amounted to $
1,206
 
and $
578
, respectively and is
included in prepaid expenses and other assets in the accompanying
 
consolidated balance sheets.
f)
 
Accounts Receivable, Trade:
The amount shown as accounts receivable, trade, at each
 
balance
sheet
 
date,
 
includes
 
receivables
 
from
 
charterers
 
for
 
hire
 
from
 
lease
 
agreements,
 
net
 
of
 
provisions
 
for
doubtful accounts, if any.
 
At each balance
 
sheet date, all potentially
 
uncollectible accounts are
 
assessed
individually for
 
purposes of determining
 
the appropriate
 
provision for doubtful
 
accounts. As
 
of December
31, 2023
 
and 2022
 
there was
no
 
provision for
 
doubtful accounts.
 
The Company
 
does not
 
recognize interest
income on trade receivables as all balances are settled within a year.
g)
 
Inventories:
Inventories
 
consist
 
of
 
lubricants
 
and
 
victualling
 
which
 
are
 
stated,
 
on
 
a
 
consistent
basis, at the lower of cost or net
 
realizable value. Net realizable value is
 
the estimated selling prices in the
ordinary course of business,
 
less reasonably predictable
 
costs of completion, disposal,
 
and transportation.
When
 
evidence
 
exists
 
that
 
the
 
net
 
realizable
 
value
 
of
 
inventory
 
is
 
lower
 
than
 
its
 
cost,
 
the
 
difference
 
is
recognized as a loss in earnings in the period in which it occurs.
 
Cost is determined by the first in, first out
method. Amounts removed from inventory are also determined by the
 
first in first out method. Inventories
may also consist of bunkers,
 
when on the balance sheet date,
 
a vessel is without employment. Bunkers,
 
if
any,
 
are also stated at
 
the lower of cost
 
or net realizable value and
 
cost is determined by
 
the first in, first
out method.
 
h)
 
Vessel
 
Cost
:
 
Vessels
 
are
 
stated
 
at
 
cost
 
which
 
consists
 
of
 
the
 
contract
 
price
 
and
 
any
 
material
expenses
 
incurred
 
upon
 
acquisition
 
or
 
during
 
construction.
 
Expenditures
 
for
 
conversions
 
and
 
major
improvements are also capitalized when they appreciably extend the life, increase
 
the earning capacity or
improve
 
the
 
efficiency
 
or
 
safety
 
of
 
the
 
vessels;
 
otherwise,
 
these
 
amounts
 
are
 
charged
 
to
 
expense
 
as
incurred. Interest cost
 
incurred during the
 
assets' construction periods that
 
theoretically could have
 
been
avoided if expenditure
 
for the assets
 
had not
 
been made is
 
also capitalized.
 
The capitalization
 
rate, applied
on accumulated
 
expenditures
 
for the
 
vessel, is
 
based on
 
interest rates
 
applicable to
 
outstanding borrowings
of the period.
i)
 
Vessels held for sale:
 
The Company classifies assets as being held for sale when the respective
criteria are met. Long-lived assets
 
or disposal groups classified as
 
held for sale are measured
 
at the lower
of their
 
carrying amount or
 
fair value
 
less cost
 
to sell.
 
These assets
 
are not
 
depreciated once they
 
meet
the criteria to be held for sale. The fair value less cost to sell of an asset held for sale is assessed at each
reporting period it remains classified as held
 
for sale. When the plan to sell an asset
 
changes, the asset is
reclassified as held and used,
 
measured at the lower of
 
its carrying amount before
 
it was recorded as held
for sale, adjusted for depreciation, and the asset’s fair value at the date of the
 
decision not to sell.
 
j)
 
Sale and
 
leaseback:
 
In accordance
 
with ASC
 
842-40 in
 
a sale-leaseback
 
transaction where
 
the
sale of an asset and leaseback
 
of the same asset by
 
the seller is involved, the
 
Company, as seller-lessee,
should firstly determine whether the transfer of an asset shall be accounted for as a
 
sale under ASC 606.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-15
 
For a
 
sale to
 
have occurred,
 
the control
 
of the
 
asset would
 
need to
 
be transferred
 
to the
 
buyer and
 
the
buyer
 
would
 
need
 
to
 
obtain
 
substantially
 
all
 
the
 
benefits
 
from
 
the
 
use
 
of
 
the
 
asset.
 
As
 
per
 
the
aforementioned guidance, sale and leaseback transactions, which include an obligation for the Company,
as seller-lessee, to repurchase the
 
asset, or other situations where the
 
leaseback would be classified as a
finance lease, are determined
 
to be failed sales under ASC
 
842-40. Consequently, the Company does not
derecognize the asset from
 
its balance sheet and accounts for
 
any amounts received under the
 
sale and
leaseback agreement as a financing arrangement.
 
k)
 
Property and equipment:
 
The Company owns the land
 
and building where its offices are located.
The Company also owns part of a plot acquired for
 
office use (Note 7).
 
Land is stated at cost and it is
 
not
subject
 
to
 
depreciation.
 
The
 
building
 
has
 
an
 
estimated
 
useful
 
life
 
of
55 years
 
with
no
 
residual
 
value.
Furniture,
 
office
 
equipment
 
and
 
vehicles
 
have
 
a
 
useful
 
life
 
of
5 years
,
 
except
 
for
 
a
 
car
 
owned
 
by
 
the
Company, which has a useful life of
10 years
. Computer software and hardware have a useful
 
life of
three
years
. Depreciation is calculated on a straight-line basis.
l)
 
Impairment
 
of
 
Long-Lived
 
Assets:
Long-lived
 
assets
 
are
 
reviewed
 
for
 
impairment
 
whenever
events
 
or
 
changes
 
in
 
circumstances
 
(such
 
as
 
market
 
conditions,
 
obsolesce
 
or
 
damage
 
to
 
the
 
asset,
potential
 
sales
 
and
 
other
 
business
 
plans)
 
indicate
 
that
 
the
 
carrying
 
amount
 
of
 
an
 
asset
 
may
 
not
 
be
recoverable.
 
When
 
the
 
estimate
 
of
 
undiscounted projected
 
net
 
operating
 
cash
 
flows,
 
excluding interest
charges, expected
 
to be
 
generated by
 
the use
 
of an
 
asset over
 
its remaining
 
useful life
 
and its
 
eventual
disposition
 
is
 
less
 
than
 
its
 
carrying
 
amount,
 
the
 
Company
 
evaluates
 
the
 
asset
 
for
 
impairment
 
loss.
Measurement of
 
the impairment
 
loss is
 
based on
 
the fair
 
value of
 
the asset,
 
determined mainly
 
by third
party valuations.
 
For vessels, the Company calculates undiscounted projected net operating cash flows by considering the
historical and
 
estimated vessels’ performance
 
and utilization with
 
the significant assumption
 
being future
charter rates for the unfixed days, using
 
the most recent
10
-year average of historical 1 year time charter
rates available
 
for each
 
type of
 
vessel over
 
the remaining
 
estimated life
 
of each
 
vessel, net
 
of commissions.
Historical
 
ten-year
 
blended
 
average
 
one-year
 
time
 
charter
 
rates
 
are
 
in
 
line
 
with
 
the
 
Company’s
 
overall
chartering strategy,
 
they reflect the
 
full operating history
 
of vessels of
 
the same type
 
and particulars with
the Company’s
 
operating fleet
 
and they
 
cover at
 
least a
 
full business
 
cycle, where
 
applicable. When the
10
-year average of historical 1 year time charter rates is
 
not available for a type of vessels, the Company
uses the average of historical 1 year time charter rates
 
of the available period. Other assumptions used in
developing estimates of
 
future undiscounted cash
 
flow are charter rates
 
calculated for the
 
fixed days using
the
 
fixed
 
charter
 
rate
 
of
 
each
 
vessel
 
from
 
existing
 
time
 
charters,
 
the
 
expected
 
outflows
 
for
 
scheduled
vessels’ maintenance; vessel
 
operating expenses; fleet
 
utilization, and the
 
vessels’ residual value
 
if sold
for scrap.
 
Assumptions are
 
in line
 
with the
 
Company’s historical
 
performance and
 
its expectations
 
for future
fleet
 
utilization
 
under
 
its
 
current
 
fleet
 
deployment
 
strategy.
 
This
 
calculation
 
is
 
then
 
compared
 
with
 
the
vessels’ net book
 
value plus unamortized deferred
 
costs. The difference
 
between the carrying amount
 
of
the vessel plus
 
unamortized deferred costs
 
and their fair
 
value is recognized
 
in the Company's
 
accounts
as impairment loss.
The Company’s impairment assessment did not result in the
recognition of impairment
 
on any vessel and
therefore
no
 
impairment loss was identified or recorded in 2023, 2022
 
and 2021.
For property
 
and equipment,
 
the Company
 
determines undiscounted
 
projected net
 
operating cash
 
flows
by
 
considering
 
an
 
estimated
 
monthly
 
rent
 
the
 
Company
 
would
 
have
 
to
 
pay
 
in
 
order
 
to
 
lease
 
a
 
similar
property, during the useful
 
life of the
 
building. No
 
impairment loss
 
was identified or
 
recorded for
 
2023,
 
2022
and 2021 and
 
the Company has
 
not identified any
 
other facts or
 
circumstances that
 
would require
 
the write
down of the value of its land or building in the near future.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-16
m)
 
Vessel Depreciation:
Depreciation is computed using the straight-line method over the estimated
useful life
 
of the
 
vessels, after
 
considering the
 
estimated salvage
 
(scrap) value.
 
Each vessel’s
 
salvage
value is equal
 
to the product
 
of its lightweight tonnage
 
and estimated scrap
 
rate. Management estimates
the useful life of
 
the Company’s vessels to
 
be
25 years
 
from the date of
 
initial delivery from the
 
shipyard.
Second-hand vessels are depreciated from the date of their acquisition through their remaining estimated
useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its
remaining
 
useful
 
life
 
is
 
adjusted
 
at
 
the
 
date
 
such
 
regulations
 
are
 
adopted.
Effective July 1, 2023, the
Company changed its estimated scrap rate of its vessels from $250 per lightweight ton to $400 per
lightweight ton, calculated based on the average demolition prices in different markets, during the last 15
years.
 
For the
 
period from
 
July 1,
 
2023 to
 
December 31,
 
2023, this
 
increase in
 
vessels’ salvage
 
values
resulted
 
in
 
decreased
 
depreciation expense,
 
increased
 
operating
 
income
 
and
 
increased
 
net
 
income
 
by
$
3,773
 
and increased earnings per share, basic and diluted, by $
0.04
.
n)
 
Deferred
 
Costs
:
 
The
 
Company
 
follows
 
the
 
deferral
 
method
 
of
 
accounting
 
for
 
dry-docking
 
and
special survey
 
costs whereby
 
actual costs
 
incurred are
 
deferred and
 
amortized on
 
a straight-line
 
basis over
the period
 
through the date
 
the next
 
survey is
 
scheduled to
 
become due. Unamortized
 
deferred costs of
vessels that are sold or impaired are written off and included in
 
the calculation of the resulting gain or loss
in the year of the vessel’s sale (Note 6) or impairment.
o)
 
Financing Costs
: Fees paid for obtaining finance liabilities, fees paid to lenders for obtaining new
loans,
 
new bonds, or refinancing existing ones
 
accounted as loan modification,
 
are deferred and recorded
as
 
a contra
 
to
 
debt. Other
 
fees
 
paid for
 
obtaining loan
 
facilities not
 
used at
 
the
 
balance sheet
 
date
 
are
deferred. Fees relating
 
to drawn loan
 
facilities are amortized
 
to interest and
 
finance costs over
 
the life of
the
 
related
 
debt
 
using
 
the
 
effective
 
interest method
 
and
 
fees
 
incurred for
 
loan
 
facilities
 
not
 
used at
 
the
balance
 
sheet
 
date
 
are
 
amortized
 
using
 
the
 
straight-line
 
method
 
according
 
to
 
their
 
availability
 
terms.
Unamortized fees relating to
 
loans or bonds repaid
 
or repurchased or
 
refinanced as debt
 
extinguishment
are
 
written
 
off
 
in
 
the
 
period
 
the
 
repayment,
 
prepayment,
 
repurchase
 
or
 
extinguishment
 
is
 
made
 
and
included in the determination of
 
gain/loss on debt extinguishment.
 
Loan commitment fees are
 
expensed
 
in
the period
 
incurred, unless
 
they relate
 
to loans
 
obtained to
 
finance vessels
 
under construction,
 
in which
case, they are capitalized to the vessels’ cost.
p)
 
Concentration of
 
Credit
 
Risk
:
 
Financial instruments,
 
which potentially
 
subject
 
the
 
Company to
significant
 
concentrations
 
of
 
credit
 
risk,
 
consist
 
principally
 
of
 
cash
 
and
 
trade
 
accounts
 
receivable.
 
The
Company
 
places
 
its
 
temporary
 
cash
 
investments,
 
consisting
 
mostly
 
of
 
deposits,
 
with
 
various
 
qualified
financial
 
institutions
 
and
 
performs
 
periodic
 
evaluations
 
of
 
the
 
relative
 
credit
 
standing
 
of
 
those
 
financial
institutions that
 
are considered
 
in the
 
Company’s investment
 
strategy.
 
The Company
 
limits its
 
credit risk
with accounts receivable
 
by performing ongoing credit
 
evaluations of its customers’
 
financial condition and
generally
 
does
 
not
 
require
 
collateral
 
for
 
its
 
accounts
 
receivable
 
and
 
does
 
not
 
have
 
any
 
agreements
 
to
mitigate credit risk.
 
q)
 
Accounting
 
for
 
Revenues
 
and
 
Expenses:
Revenues
 
are
 
generated
 
from
 
time
 
charter
agreements which contain
 
a lease as
 
they meet the
 
criteria of a
 
lease under ASC
 
842. Agreements with
the
 
same
 
charterer
 
are
 
accounted
 
for
 
as
 
separate
 
agreements
 
according
 
to
 
their
 
specific
 
terms
 
and
conditions. All
 
agreements contain
 
a minimum
 
non-cancellable
 
period and
 
an extension
 
period at
 
the option
of the
 
charterer. Each
 
lease
 
term is
 
assessed at
 
the inception
 
of that
 
lease. Under
 
a time
 
charter agreement,
the charterer pays a daily hire
 
for the use of the vessel and
 
reimburses the owner for hold
 
cleanings, extra
insurance premiums for navigating in
 
restricted areas and damages caused
 
by the charterers. Revenues
from time charter
 
agreements providing
 
for varying annual
 
rates are accounted
 
for as operating
 
leases and
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-17
thus recognized
 
on a
 
straight-line basis
 
over the
 
non-cancellable rental
 
periods of
 
such agreements,
 
as
service is performed.
 
The charterer
 
pays to third
 
parties port, canal
 
and bunkers
 
consumed during
 
the term
of the
 
time charter
 
agreement, unless
 
they are
 
for the
 
account of
 
the owner,
 
in which
 
case, they
 
are included
in
 
voyage
 
expenses. Voyage
 
expenses
 
also
 
include commissions
 
on
 
time
 
charter
 
revenue
 
(paid to
 
the
charterers,
 
the
 
brokers
 
and
 
the
 
managers)
 
and
 
gain
 
or
 
loss
 
from
 
bunkers
 
resulting
 
mainly
 
from
 
the
difference in
 
the value
 
of bunkers
 
paid by
 
the Company
 
when the
 
vessel is
 
redelivered to
 
the Company
from the
 
charterer under
 
the vessel’s
 
previous time
 
charter agreement
 
and the
 
value of
 
bunkers sold
 
by
the Company when the vessel is delivered to a new charterer (Note 12). Under a time charter agreement,
the owner pays
 
for the operation
 
and the
 
maintenance of the
 
vessel, including
 
crew, insurance, spares and
repairs, which are recognized in operating expenses.
 
The Company, as lessor, has elected not to allocate
the
 
consideration
 
in
 
the
 
agreement
 
to
 
the
 
separate
 
lease
 
and
 
non-lease
 
components
 
(operation
 
and
maintenance of the
 
vessel) as their
 
timing and pattern
 
of transfer to
 
the charterer,
 
as the lessee,
 
are the
same
 
and the
 
lease component,
 
if accounted
 
for separately,
 
would be
 
classified as
 
an operating
 
lease.
Additionally,
 
the
 
lease
 
component
 
is
 
considered
 
the
 
predominant
 
component,
 
as
 
the
 
Company
 
has
assessed that
 
more
 
value is
 
ascribed to
 
the
 
vessel rather
 
than
 
to the
 
services provided
 
under the
 
time
charter contracts.
 
In time
 
charter agreements
 
apart from
 
the agreed
 
hire rate,
 
the Company
 
may be
 
entitled
to an
 
additional income,
 
such as
 
ballast bonus.
 
Ballast bonus
 
is paid
 
by charterers
 
for repositioning
 
the
vessel. The
 
Company analyzes
 
terms of
 
each contract
 
to assess
 
whether income
 
from ballast
 
bonus is
accounted together
 
with the
 
lease component
 
over the
 
duration of
 
the charter
 
or as
 
service component
under
 
ASC 606.
 
Deferred
 
revenue
 
includes cash
 
received
 
prior
 
to
 
the
 
balance sheet
 
date
 
for
 
which all
criteria to recognize as revenue have not been met.
r)
 
Repairs and Maintenance:
 
All repair and maintenance expenses
 
including underwater inspection
expenses are expensed in the year incurred. Such costs are included in vessel operating expenses in the
accompanying consolidated statements of operations.
s)
 
Earnings / (loss)
 
per Common Share:
 
Basic earnings /
 
(loss) per common
 
share are computed
by
 
dividing
 
net
 
income
 
/
 
(loss)
 
available
 
to
 
common
 
stockholders
 
by
 
the
 
weighted
 
average
 
number
 
of
common
 
shares
 
outstanding
 
during
 
the
 
year.
 
Shares
 
issuable
 
at
 
little
 
or
 
no
 
cash
 
consideration
 
upon
satisfaction
 
of
 
certain
 
conditions,
 
are
 
considered
 
outstanding
 
and
 
included
 
in
 
the
 
computation
 
of
 
basic
earnings/(loss) per share
 
as of the date
 
that all necessary
 
conditions have been
 
satisfied. Diluted earnings
per common
 
share, reflects the
 
potential dilution that
 
could occur
 
if securities or
 
other contracts to
 
issue
common stock were exercised.
 
t)
 
Segmental Reporting:
The Company
 
engages in
 
the operation
 
of dry-bulk
 
vessels which
 
has been
identified
 
as
 
one
 
reportable
 
segment.
 
The
 
operation
 
of
 
the
 
vessels
 
is
 
the
 
main
 
source
 
of
 
revenue
generation, the services
 
provided by the
 
vessels are similar
 
and they all
 
operate
 
under the same
 
economic
environment.
 
Additionally, the vessels
 
do not
 
operate in
 
specific geographic
 
areas, as
 
they trade
 
worldwide;
they do
 
not trade in
 
specific trade routes,
 
as their trading
 
(route and cargo)
 
is dictated by
 
the charterers;
and the Company does not evaluate the operating
 
results for each type of dry bulk vessels
 
(i.e. Panamax,
Capesize etc.)
 
for the
 
purpose of
 
making decisions
 
about allocating
 
resources and
 
assessing performance.
u)
 
Fair Value Measurements
: The Company classifies and discloses its assets and liabilities
 
carried
at fair value in
 
one of the
 
following categories: Level
 
1: Quoted market
 
prices in active
 
markets for identical
assets or liabilities;
 
Level 2: Observable
 
market-based inputs or
 
unobservable inputs that
 
are corroborated
by market data; Level 3: Unobservable inputs that are not corroborated
 
by market data.
 
v)
 
Share
 
Based Payments:
 
The
 
Company issues
 
restricted share
 
awards which
 
are
 
measured
 
at
their grant date fair value and are not subsequently re-measured.
 
That cost is recognized over the period
during which an employee is required to provide service in
 
exchange for the award—the requisite service
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-18
period (usually
 
the vesting
 
period). No
 
compensation cost
 
is recognized
 
for equity
 
instruments for
 
which
employees
 
do
 
not
 
render
 
the
 
requisite
 
service
 
unless
 
the
 
board
 
of
 
directors
 
determines
 
otherwise.
Forfeitures of
 
awards are
 
accounted for
 
when and
 
if they
 
occur.
 
If an
 
equity award
 
is modified
 
after the
grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair
value of the modified award over the fair value of the original award immediately
 
before the modification.
 
w)
 
Equity method
 
investments:
 
Investments in
 
common stock
 
in entities
 
over which
 
the Company
exercises
 
significant
 
influence but
 
does
 
not
 
exercise control
 
are
 
accounted for
 
by
 
the
 
equity method
 
of
accounting.
 
Under
 
this
 
method,
 
the
 
Company
 
records
 
such
 
an
 
investment
 
at
 
cost
 
(or
 
fair
 
value
 
if
 
a
consequence of deconsolidation)
 
and adjusts the carrying
 
amount for its share
 
of the earnings or
 
losses of
the entity subsequent to the
 
date of investment and reports the
 
recognized earnings or losses in
 
income.
Dividends received, if any,
 
reduce the carrying amount
 
of the investment and
 
are recorded as receivable
on
 
dividend
 
declaration.
 
When
 
the
 
carrying
 
value
 
of
 
an
 
equity
 
method
 
investment
 
is
 
reduced
 
to
 
zero
because of losses,
 
the Company does
 
not provide for
 
additional losses unless
 
it is
 
committed to provide
further
 
financial
 
support
 
to
 
the
 
investee.
 
The
 
Company
 
also
 
evaluates
 
whether
 
a
 
loss
 
in
 
value
 
of
 
an
investment that is other than a temporary decline should be recognized. Evidence of a loss in value might
include absence of an
 
ability to recover
 
the carrying amount of
 
the investment or inability
 
of the investee to
sustain an earnings
 
capacity that would
 
justify the carrying
 
amount of the
 
investment. For equity
 
method
investments
 
that
 
the
 
Company
 
has
 
elected
 
to
 
account
 
for
 
using
 
the
 
fair
 
value
 
option,
 
all
 
subsequent
changes in fair value are included in gain/loss on related party investments.
x)
 
Going concern:
Management evaluates, at each
 
reporting period, whether
 
there are conditions or
events that raise substantial doubt about the Company's ability to continue as a going concern within one
year from the date the financial statements are issued.
y)
 
Shares
 
repurchased
 
and
 
retired:
The
 
Company’s
 
shares
 
repurchased
 
for
 
retirement,
 
are
immediately cancelled and the Company’s share capital is accordingly reduced. Any excess of
 
the cost of
the shares
 
over their
 
par value is
 
allocated in additional
 
paid-in capital,
 
in accordance
 
with ASC 505-30-
30, Treasury Stock.
 
z)
 
Financial Instruments,
 
credit losses
: At each
 
reporting date, the
 
Company evaluates its
 
financial
assets individually for credit
 
losses and presents such
 
assets in the
 
net amount expected to
 
be collected
on such financial asset. When financial assets present similar risk characteristics, these are evaluated on
a
 
collective
 
basis.
 
When
 
developing
 
an
 
estimate
 
of
 
expected
 
credit
 
losses,
 
the
 
Company
 
considers
available information
 
relevant to assessing
 
the collectability
 
of cash
 
flows such
 
as internal
 
information, past
events,
 
current
 
conditions
 
and
 
reasonable
 
and
 
supportable
 
forecasts.
 
As
 
of
 
December
 
31,
 
2021,
 
the
Company
 
assessed
 
the
 
financial
 
condition
 
of
 
DWM,
 
changed
 
its
 
estimate
 
on
 
the
 
recoverability
 
of
 
its
receivable due
 
from DWM
 
relating to
 
the fine
 
paid by
 
the Company
 
on behalf
 
of DWM
 
(Notes 4(a))
 
and
determined
 
that
 
part
 
of
 
the
 
amount
 
may
 
not
 
be
 
recoverable.
 
As
 
a
 
result,
 
the
 
Company
 
recorded
 
as
 
of
December 31, 2021, an allowance for
 
credit losses amounting to $
300
, based on probability of default
 
as
there
 
was
 
no
 
previous
 
loss
 
record.
 
The
 
allowance
 
for
 
credit
 
losses
 
was
 
included
 
in
 
other
 
operating
(income)/loss in the 2021 accompanying
 
consolidated statements of income.
 
The allowance was reversed
in 2022 as
 
the full amount
 
was recovered and its
 
reversal is included
 
in other operating
 
(income)/loss” in
the
 
2022
 
accompanying
 
consolidated
 
statements
 
of
 
operations.
No
 
credit
 
losses
 
were
 
identified
 
and
recorded in 2023 and 2022.
 
aa)
 
Financial
 
Instruments,
 
Investments-Equity
 
Securities,
 
Recognition
 
and
 
Measurement
:
 
The
Company
 
initially
 
recognizes
 
equity
 
securities
 
at
 
the
 
transaction
 
price.
 
Equity
 
Investments
 
with
 
readily
determinable fair values are subsequently measured at fair value through net
 
income. Unrealized holding
gains
 
and
 
losses
 
for
 
these
 
securities
 
are
 
recorded
 
in
 
earnings.
 
According
 
to
 
ASC
 
321-10-35-2,
 
the
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-19
 
Company has
 
elected to
 
measure equity
 
securities without
 
a readily
 
determinable fair
 
value, that
 
do not
qualify for
 
the practical
 
expedient in
 
ASC 820
Fair Value Measurement
to estimate
 
fair value
 
using the
 
NAV
per share (or
 
its equivalent),
 
at its cost
 
minus impairment,
 
if any. If the Company
 
identifies observable
 
price
changes in orderly
 
transactions for
 
the identical or
 
a similar investment
 
of the same
 
issuer, it shall measure
equity securities at fair value as
 
of the date that the observable transaction occurred.
 
The Company shall
continue to
 
apply this
 
measurement until
 
the investment
 
does not
 
qualify to
 
be measured
 
in accordance
with
 
this
 
paragraph.
 
At
 
each
 
reporting
 
period,
 
the
 
Company
 
reassesses
 
whether
 
an
 
equity
 
investment
without a readily determinable fair value qualifies to
 
be measured in accordance with this paragraph. The
Company may
 
subsequently elect to
 
measure equity
 
securities at fair
 
value and
 
the election to
 
measure
securities at
 
fair value
 
shall be
 
irrevocable. Any
 
resulting gains
 
or losses on
 
the securities
 
for which
 
that
election is
 
made shall
 
be recorded
 
in earnings
 
at the
 
time
 
of the
 
election. At
 
each reporting
 
period, the
Company also evaluates indicators such
 
as the investee’s performance and
 
its ability to continue as
 
going
concern
 
and
 
market
 
conditions,
 
to
 
determine
 
whether
 
an
 
investment
 
is
 
impaired
 
in
 
which
 
case,
 
the
Company will estimate the fair value of the investment to determine
 
the amount of the impairment loss.
ab)
 
Non-monetary transactions
 
and spinoffs:
Non-monetary transactions
 
are recorded
 
based on
 
the
fair values of
 
the assets (or
 
services) involved unless the
 
fair value of
 
neither the asset received,
 
nor the
asset relinquished is determinable
 
within reasonable limits. Also, under
 
ASC 845-10-30-10 Nonmonetary
Transactions, Overall,
 
Initial Measurement,
 
Nonreciprocal
 
Transfers with
 
Owners and
 
ASC 505-60
 
Spinoffs
and Reverse Spinoffs,
 
if the pro-rata
 
spinoff of a
 
consolidated subsidiary or equity
 
method investee does
not meet the definition of a business under ASC 805, the nonreciprocal transfer of nonmonetary assets is
accounted for at fair value, if the fair value of the nonmonetary asset distributed is objectively measurable
and
 
would
 
be
 
clearly
 
realizable
 
to
 
the
 
distributing
 
entity
 
in
 
an
 
outright
 
sale
 
at
 
or
 
near
 
the
 
time
 
of
 
the
distribution, and
 
the spinor
 
recognizes a
 
gain or
 
loss for
 
the difference
 
between the
 
fair value
 
and book
value of the
 
spinee. A transaction
 
is considered pro
 
rata if
 
each owner receives
 
an ownership interest
 
in
the transferee in proportion to
 
its existing ownership interest in
 
the transferor (even if the transferor
 
retains
an ownership interest
 
in the transferee).
 
In accordance with
 
ASC 805 Business
 
Combinations: Clarifying
the Definition of a
 
Business, if substantially all of
 
the fair value of
 
the gross assets distributed
 
in a spinoff
are concentrated in
 
a single identifiable
 
asset or group
 
of similar identifiable
 
assets, then the
 
spinoff of a
consolidated
 
subsidiary
 
does
 
not
 
meet
 
the
 
definition
 
of
 
a
 
business.
 
Other
 
nonreciprocal
 
transfers
 
of
nonmonetary assets
 
to owners
 
are accounted
 
for at
 
fair value
 
if the
 
fair value
 
of the
 
nonmonetary asset
distributed is objectively measurable and would be clearly
 
realizable to the distributing entity in an outright
sale at or near the time of the distribution.
ac)
 
Contracts in
 
entity’s equity:
 
Under ASC
 
815-40 contracts that
 
require settlement
 
in shares
 
are
considered equity
 
instruments, unless
 
an event
 
that
 
is not
 
in the
 
entity’s
 
control would
 
require net
 
cash
settlement.
 
Additionally,
 
the
 
entity
 
should
 
have
 
sufficient
 
authorized
 
and
 
unissued
 
shares,
 
the
 
contract
contains an explicit
 
share limit, there
 
is no requirement
 
to net cash
 
settle the contract
 
in the event
 
the entity
fails
 
to make
 
timely filings with
 
the
 
Securities and
 
Exchange Commission
 
(SEC) and
 
there are
 
no cash
settled top-off
 
or make-whole provisions.
 
The Company follows
 
the provision of
 
ASC 480 “Distinguishing
Liabilities from
 
Equity” and
 
ASC 815
 
“Derivatives and
 
Hedging” to
 
determine the
 
classification of
 
certain
freestanding financial instruments as permanent equity, temporary equity or liability.
 
The Company, when
assessing the accounting of the warrants and
 
the pre-funded warrants, takes into consideration ASC 480
to determine whether the warrants and the pre-funded warrants should be classified
 
as permanent equity
instead of temporary equity
 
or liability. The Company further analyses
 
the key features of
 
the warrants and
the pre-funded warrants and examines whether these fall
 
under the definition of a derivative
 
according to
ASC 815 applicable guidance or whether certain of these features affect the classification. In cases when
derivative accounting is deemed inappropriate, no bifurcation of
 
these features is performed.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-20
ad)
 
Guarantees:
Guarantees
 
issued
 
by
 
the
 
Company,
 
excluding
 
those
 
that
 
guarantee
 
its
 
own
performance, are recognized at fair
 
value at the time the
 
guarantees are issued, or upon deconsolidation
of
 
a
 
subsidiary.
 
A
 
liability
 
for
 
the
 
fair
 
value
 
of
 
the
 
obligation
 
undertaken
 
in
 
issuing
 
the
 
guarantee
 
is
recognized. If it becomes probable that
 
the Company will have to perform
 
under a guarantee (Note 10(c)),
the Company
 
will recognize an
 
additional liability if
 
the amount
 
of the
 
loss can
 
be reasonably
 
estimated.
The
 
recognition
 
of
 
fair
 
value is
 
not
 
required for
 
certain
 
guarantees such
 
as
 
the
 
parent's guarantee
 
of
 
a
subsidiary's debt
 
to a
 
third party.
 
For those
 
guarantees excluded
 
from the
 
above guidance
 
requiring the
fair value recognition provision of the liability, financial statement disclosures of such items are made.
3.
 
Transactions with related parties
a)
 
Altair Travel Agency S.A. (“Altair”):
 
The Company uses the
 
services of an affiliated
 
travel agent,
Altair,
 
which is
 
controlled by
 
the Company’s
 
Chairman of
 
the Board
 
Mr.
 
Palios and
 
the Company’s
 
CEO
Mrs. Semiramis
 
Paliou. Travel
 
expenses for
 
2023, 2022
 
and 2021
 
amounted to
 
$
2,525
, $
2,644
 
and $
2,210
,
respectively,
 
and
 
are
 
mainly
 
included
 
in
 
vessel
 
operating
 
expenses
 
and
 
general
 
and
 
administrative
expenses in the accompanying consolidated
 
financial statements. As of December
 
31, 2023 and 2022, an
amount of $
62
 
and $
136
, respectively,
 
was payable to Altair
 
and is included in
 
“Due to related parties”
 
in
the accompanying consolidated balance sheets.
 
b)
 
Steamship Shipbroking Enterprises Inc. or
 
Steamship:
 
Steamship is a company controlled by
the Company’s
 
CEO Mrs.
 
Semiramis Paliou
 
and provides
 
brokerage services
 
to DSI
 
for a
 
fixed monthly
fee plus commission on
 
the sale of vessels, pursuant
 
to a Brokerage Services
 
Agreement. For 2023, 2022
and 2021
 
brokerage fees
 
amounted to
 
$
3,900
, $
3,309
 
and $
3,309
, respectively, and
 
are included
 
in general
and
 
administrative expenses
 
in
 
the
 
accompanying consolidated
 
statements of
 
income.
 
For
 
2023, 2022,
and 2021, commissions to Steamship amounted to $
906
, $
1,219
 
and $
712
, respectively and are included
in gain on the sale of vessels,
 
vessel cost and equity method investments.
 
As of December 31, 2023 and
2022, an amount of $
697
 
and $
0
, respectively, was due to Steamship.
 
 
4.
 
Equity Method Investments
a)
 
Diana Wilhelmsen Management Limited, or DWM:
 
DWM is a joint venture between
 
Diana Ship
Management Inc., a
 
wholly owned subsidiary
 
of DSI, and
 
Wilhelmsen Ship Management
 
Holding AS, an
unaffiliated third party,
 
each holding
50
% of DWM. As of December 31, 2023 and 2022, the investment in
DWM
 
amounted to
 
$
734
 
and
 
$
506
 
and
 
is
 
included
 
in
 
equity
 
method
 
investments
 
in
 
the
 
accompanying
consolidated balance
 
sheets. In
 
2023 and
 
2022, the
 
investment in
 
DWM resulted
 
in a
 
gain of
 
$
228
, and
$
894
, respectively, and in
 
2021, resulted
 
in a
 
loss of
 
$
333
, included
 
in loss
 
from equity
 
method investments
in the accompanying consolidated statements of income.
From October
 
8, 2019
 
until May 24,
 
2021, DSS outsourced
 
the management of
 
certain vessels to
 
DWM
for
 
which
 
DSS
 
was
 
paying
 
a
 
fixed
 
monthly
 
fee
 
per
 
vessel
 
and
 
a
 
percentage
 
of
 
those
 
vessels’
 
gross
revenues.
 
On
 
May
 
24,
 
2021,
 
the
 
management
 
of
 
the
 
same
 
vessels
 
was
 
transferred
 
to
 
DWM
 
directly,
whereas the vessel
 
owning companies of
 
these vessels entered
 
into new management
 
agreements with
DWM under
 
which they pay
 
a fixed monthly
 
fee and
 
a percentage of
 
their gross revenues.
 
Management
fees
 
to
 
DWM
 
in
 
2023,
 
2022
 
and
 
2021
 
amounted
 
to
 
$
1,313
,
 
$
511
 
and
 
$
1,432
,
 
respectively,
 
and
 
are
separately presented as management fees to related party in the accompanying consolidated statements
of income. Additionally, in
 
2023 and 2022,
 
the Company paid
 
to DWM management
 
fees amounting
 
to $
19
and
 
$
272
,
 
respectively,
 
included
 
in
 
advances
 
for
 
vessel
 
acquisitions
 
and
 
vessels,
 
net,
 
relating
 
to
 
the
management of
 
four Ultramax vessels
 
the Company
 
assigned to DWM
 
with new
 
management agreements
and incurred
 
during the
 
predelivery period
 
of the
 
vessels. Commissions
 
for 2023,
 
2022 and
 
2021 amounted
to $
390
, $
162
 
and $
200
, respectively,
 
and are
 
included in
 
voyage expenses
 
(Note 12).
 
As of
 
December
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-21
 
 
 
 
 
 
31, 2023
 
and 2022, there
 
was an amount
 
of $
25
 
and $
216
 
due from
 
DWM, included in
 
due from related
parties in the accompanying consolidated balance sheets.
 
b)
 
Bergen Ultra
 
LP, or Bergen:
 
Bergen is
 
a limited
 
partnership which
 
was established
 
for the
 
purpose
of acquiring,
 
owning, chartering
 
and/or operating
 
a vessel.
 
Bergen was
 
a wholly
 
owned subsidiary
 
of Diana,
which
 
on
 
February
 
14,
 
2023,
 
signed
 
a
 
Memorandum
 
of
 
Agreement
 
to
 
acquire
 
for
 
$
27,900
,
 
from
 
an
unrelated third-party an Ultramax
 
dry bulk vessel, delivered
 
on April 10, 2023.
 
On March 30, 2023,
 
Bergen
entered into a loan agreement with Nordea for a $
15,400
 
loan to finance part of the purchase price of the
vessel.
 
On
 
the
 
same
 
date,
 
the
 
Company
 
entered
 
into
 
a
 
corporate
 
guarantee
 
with
 
Nordea
 
to
 
secure
Bergen’s
 
obligations
 
under
 
the
 
loan.
 
On
 
April
 
28,
 
2023,
 
the
 
Company
 
entered
 
into
 
(i)
 
an
 
investment
agreement with an unrelated
 
third party to acquire
75
% of the limited
 
partnership interests, for
 
$
11,025
; (ii)
an amended limited partnership agreement under which the
 
Company acts as the General Partner of
 
the
partnership through its wholly owned subsidiary Diana General Partner Inc.; (iii)
 
an administrative service
agreement under
 
which DSS
 
provides administrative
 
services to
 
Bergen for
 
an annual
 
fee of
 
$
15
; (iv)
 
a
commission
 
agreement
 
under
 
which
 
the
 
Company
 
is
 
paid
 
a
 
commission
 
of
0.8
%
 
per
 
annum,
 
on
 
the
outstanding
 
balance
 
of
 
the
 
loan,
 
as
 
compensation
 
for
 
the
 
guarantee
 
it
 
provided
 
to
 
Nordea
 
and
 
(v)
 
a
convertible loan agreement
 
for $
27,900
 
plus other expenses,
 
with Bergen under
 
which Bergen would
 
have
to repay all expenditures made by the Company for the acquisition of the vessel. Pursuant to the terms of
the
 
convertible
 
loan,
 
on
 
April
 
28,
 
2023,
 
the
 
Company
 
received
 
from
 
Bergen
 
$
25,189
 
in
 
cash
 
while
 
an
amount
 
of
 
$
3,675
 
was
 
converted
 
into
 
partnership
 
interests
 
in
 
Bergen,
 
representing
25
%
 
of
 
the
 
total
partnership interests.
Upon the provisions of
 
the amended partnership
 
agreement, the general
 
partner irrevocably delegated
 
the
authority
 
to
 
Bergen’s
 
board
 
of
 
directors
 
to
 
have
 
the
 
power
 
to
 
oversee
 
and
 
direct
 
the
 
operations,
management and policies of Bergen. The Company evaluated
 
its variable interests in Bergen under ASC
810 and
 
concluded that
 
Bergen is
 
a VIE
 
and that
 
the Company
 
does not
 
individually have
 
the power
 
to
direct the
 
activities of the
 
VIE that most
 
significantly affect the
 
partnership’s performance. From
 
April 28,
2023
 
the
 
Company no
 
longer retains
 
the
 
power
 
to
 
control the
 
board
 
of directors.
 
As
 
of
 
the
 
same
 
date,
Bergen has been considered as an affiliate entity and not as a controlled subsidiary of the Company.
 
The
Company
 
accounted
 
for
 
the
 
deconsolidation
 
of
 
Bergen
 
in
 
accordance
 
with
 
ASC
 
610
 
and
 
the
 
retained
noncontrolling interest
 
of
25
% was
 
accounted for
 
under the
 
equity method
 
due to
 
the Company’s
 
significant
influence over Bergen.
On the
 
date of
 
deconsolidation,
 
the Company
 
measured the
 
fair value
 
of the
 
retained noncontrolling
 
interest
at
 
$
4,519
 
through Level
 
2 inputs
 
of the
 
fair
 
value hierarchy.
 
The Company
 
in order
 
to
 
calculate the
 
fair
value of its
25
% interest in accordance with ASC 610,
 
took into consideration the fair value of the
 
distinct
assets and liabilities
 
of Bergen on the date
 
of the deconsolidation.
 
This resulted in gain
 
on deconsolidation
amounting to
 
$
844
, separately
 
presented in
 
the accompanying
 
2023 consolidated
 
statement of
 
income,
being the
 
difference between the
 
fair value of
 
the retained noncontrolling
 
interest plus the
 
carrying value
the liabilities assumed by Bergen and the carrying value of
 
the assets derecognized.
For 2023,
 
the investment
 
in Bergen
 
resulted in
 
gain of
 
$
181
 
and is
 
included in
 
loss from
 
equity method
investments in the 2023 accompanying consolidated statement of income.
 
As of December 31, 2023, the
investment
 
in
 
Bergen
 
amounted
 
to
 
$
4,700
 
and
 
is
 
included
 
in
 
equity
 
method
 
investments
 
in
 
the
accompanying
 
2023
 
consolidated
 
balance
 
sheet.
 
Also,
 
for
 
2023,
 
income
 
from
 
management
 
fees
 
from
Bergen amounted to $
10
, included in time charter revenues and income from the commission paid on the
loan
 
guarantee
 
amounted
 
to
 
$
28
,
 
included
 
in
 
interest
 
and
 
other
 
income
 
in
 
the
 
2023
 
accompanying
consolidated
 
statement
 
of
 
income.
 
As
 
of
 
December
 
31,
 
2023,
 
there
 
was
 
an
 
amount
 
of
 
$
443
 
due
 
from
Bergen included in due from related parties, current and non-current.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-22
c)
 
Windward Offshore
 
GmbH,
 
or Windward:
 
On November
 
7, 2023,
 
the Company
 
through its
 
wholly
owned subsidiary Diana
 
Energize Inc., or Diana
 
Energize, entered into a
 
joint venture agreement, with
two
unrelated companies
 
to form Windward
 
Offshore GmbH &
 
Co. KG or
 
Windward, based
 
in Germany, for the
purpose of
 
establishing and
 
operating an
 
offshore wind
 
vessel company
 
with the
 
aim of
 
becoming a
 
leading
provider
 
of
 
service
 
vessels
 
to
 
the
 
growing
 
offshore
 
wind
 
industry
 
and
 
acquire
 
certain
 
vessels.
 
Diana
Energize agreed to
 
contribute
25,000,000
 
Euro, being
45.45
% of the limited
 
partnership’s capital and as
 
of
December
 
31,
 
2023,
 
the
 
investment
 
amounted
 
to
 
$
10,063
 
mainly
 
consisting
 
of
 
advances
 
to
 
fund
 
the
construction of
two
 
vessels and working capital.
 
For 2023, the
 
investment in Windward resulted
 
in a loss
of $
671
 
and is
 
included in
 
loss from
 
equity method
 
investments in
 
the 2023
 
accompanying consolidated
statement of income.
d)
 
Cohen Global Maritime
 
Inc., or Cohen:
 
On September 12, 2023,
 
the Company through
 
its wholly
owned subsidiary Cebu Shipping Company Inc., or Cebu, acquired
24
% of Cohen, a company
 
organized
in
 
the
 
Republic
 
of
 
the
 
Philippines
 
for
 
the
 
purpose
 
of
 
engaging
 
in
 
the
 
manning
 
agency
 
business.
 
As
 
of
December 31, 2023, the Company’s investment in Cohen amounted to $
272
, consisting of advances paid
to acquire the license required to engage in the manning agency
 
business.
 
5.
 
Investments in related parties and other
a)
 
OceanPal Inc., or
 
OceanPal:
 
As of December
 
31, 2023 and
 
2022, the Company
 
was the holder
of
500,000
 
Series B Preferred
 
Shares and
207
 
and
10,000
, respectively, of Series C Convertible
 
Preferred
Shares of OceanPal.
 
Series
 
B
 
preferred
 
shares
 
entitle
 
the
 
holder
 
to
2,000
 
votes
 
on
 
all
 
matters
 
submitted
 
to
 
vote
 
of
 
the
stockholders of the
 
Company,
 
provided however,
 
that the total
 
number of votes
 
shall not exceed
34
% of
the total
 
number of
 
votes, provided
 
further, that the
 
total number
 
of votes
 
entitled to
 
vote, including
 
common
stock or any other voting security,
 
would not exceed
49
% of the total number of votes. Series B Preferred
Shares have no dividend or distribution rights.
Series C preferred shares do not have voting rights unless related to amendments of the Articles of
Incorporation that adversely alter the preference, powers or rights of the Series C Preferred Shares or to
issue Parity Stock or create or issue Senior Stock.
 
Series C preferred
 
shares have a
 
liquidation preference
equal
 
to
 
the
 
stated
 
value
 
of
 
$
1,000
 
and
 
are
 
convertible
 
into
 
common
 
stock
 
at
 
the
 
Company’s
 
option
commencing upon the first anniversary of the issue date, at a conversion price equal to the lesser of
 
$
6.5
and the
 
10-trading day
 
trailing VWAP
 
of OceanPal’s
 
common shares,
 
subject to
 
adjustments. Dividends
on
 
each
 
share
 
of
 
Series
 
C
 
Preferred
 
Shares
 
are
 
cumulative
 
and
 
accrue
 
at
 
the
 
rate
 
of
8
%
 
per
 
annum.
Dividends are payable in cash or, at OceanPal’s election, in kind.
On October 17,
 
2023, the Company
 
converted
9,793
 
of the
10,000
 
Series C Preferred
 
shares of OceanPal
to
3,649,474
 
common shares, having a
 
fair value of
 
$
9,160
 
determined through Level
 
1 inputs of
 
the fair
value hierarchy, based on
 
the closing
 
price of
 
OceanPal’s common shares
 
on the
 
date of
 
conversion.
 
Upon
conversion the
 
Company realized
 
a gain
 
of $
1,742
,
 
being the
 
difference between
 
the
 
book value
 
of the
9,793
 
Series C Preferred shares and the
 
fair value of the common shares
 
acquired and is included in gain
on
 
related
 
party
 
investments,
 
separately
 
presented
 
in
 
the
 
accompanying
 
consolidated
 
statements
 
of
income. Following
 
the conversion,
 
the Company is
 
the beneficial
 
owner of
49
% of the
 
outstanding common
stock of
 
OceanPal and
 
since the
 
shares are
 
listed at
 
NASDAQ, the
 
Company elected
 
to account
 
for its
common stock ownership in OceanPal at fair value.
 
As
 
of
 
December
 
31,
 
2023,
 
the
 
Company’s
 
investment
 
in
 
the
 
common
 
stock
 
of
 
OceanPal
 
amounted
 
to
$
8,138
, being the
 
fair value of
 
OceanPal’s common shares
 
on that date,
 
determined through
 
Level 1 inputs
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-23
 
of the
 
fair value
 
hierarchy, and the
 
Company recorded
 
an unrealized
 
loss on
 
investment of
 
$
1,022
, included
in gain on
 
related party investments, separately presented
 
in the accompanying consolidated
 
statements
of income.
As the
 
Company applied
 
the fair
 
value option
 
to its
 
investment in
 
the common
 
shares of
 
OceanPal that
would otherwise be accounted for under the
 
equity method of accounting, it also applied
 
fair value to all of
its financial
 
interests in
 
OceanPal, being
 
the
Series B
 
preferred shares
 
and Series
 
C preferred
 
shares which
until then, the Company applied
 
the guidance for equity securities
 
without readily determinable fair
 
values.
As of December 31,
 
2023 and 2022, the
 
Company’s investment in Series
 
B preferred shares and
 
Series C
preferred
 
shares,
 
amounted
 
to
 
$
180
 
and
 
$
7,744
,
 
respectively,
 
including
 
$
3
 
and
 
$
169
,
 
respectively,
dividends
 
receivable on
 
the
 
Series
 
C
 
preferred shares,
 
and
 
are
 
separately presented
 
in
 
investments in
related parties in
 
the accompanying consolidated
 
balance sheets. As
 
of December 31,
 
2023, the Company
recorded a gain of $
21
, presented in gain on
 
related party Investments, being the difference
 
between the
book
 
value
 
of
 
the
 
investments
 
and
 
the
 
fair
 
value
 
determined
 
through
 
Level
 
3
 
inputs
 
of
 
the
 
fair
 
value
hierarchy,
 
by using
 
the income
 
approach, taking into
 
account the
 
present value of
 
the future
 
cash flows,
the holder of shares would expect to receive from holding the equity instrument.
On
 
September
 
20,
 
2022,
 
the
 
Company
 
acquired
25,000
 
OceanPal
 
Cumulative
 
Convertible
 
Series
 
D
Preferred Shares, par value $
0.01
 
per share, as part of the
 
consideration provided to the Company
 
for the
sale of
 
Baltimore to OceanPal, pursuant
 
to a Memorandum
 
of Agreement dated
 
June 13, 2022
 
(Note 6).
Similarly,
 
on February
 
8, 2023,
 
the Company
 
acquired
13,157
 
shares of
 
OceanPal Series
 
D Cumulative
Convertible Preferred
 
Shares,
 
as part
 
of the
 
consideration provided
 
to the
 
Company for
 
sale of
 
Melia to
OceanPal, pursuant to a Memorandum of Agreement dated February
 
1, 2023 (Note 6).
Series D preferred shares
 
were convertible into
 
common stock at
 
the holder’s option,
 
at a conversion
 
price
equal to
 
the 10-trading
 
day trailing
 
VWAP of OceanPal’s
 
common shares,
 
provided however
 
that the
 
holder
would not beneficially
 
own greater than
49
% of OceanPal’s
 
outstanding shares of common
 
stock. Series
D preferred
 
shares have
 
no voting
 
rights; dividends
 
were cumulative,
 
accruing at
 
the rate
 
of
7
% per
 
annum,
payable in cash or,
 
at OceanPal’s election, in PIK shares (Series D Preferred shares issued to
 
the holder
in lieu of cash dividends); and they had a liquidation preference equal
 
$
1,000
 
per share.
 
On the date of issuance,
 
the Company measured its investments
 
on Series D preferred shares
 
at their fair
value and elected to subsequently
 
measure such investments in accordance
 
with paragraph ASC 321-10-
35-2 (Note 2(aa)). The
 
fair value of
 
Series D Preferred
 
Shares was determined
 
by taking into
 
consideration
a third-party valuation which was based on the income approach, taking into account the present value of
the future cash flows the Company expects to receive from
 
holding the equity instrument.
 
On
 
December
 
15,
 
2022,
 
the
 
Company
 
distributed
 
the
25,000
 
Series
 
D
 
Preferred
 
Shares
 
as
 
non-cash
dividend to its shareholders of record on November 28, 2022. The shareholders had the option to receive
Series
 
D
 
Preferred
 
Shares
 
or
 
common
 
shares
 
of
 
OceanPal
 
at
 
the
 
conversion
 
rate
 
determined
 
before
distribution
 
according
 
to
 
the
 
terms
 
of
 
the
 
designation
 
statement.
 
The
 
Company
 
accounted
 
for
 
the
transaction as
 
a nonreciprocal
 
transfer with
 
its owners
 
in accordance
 
with ASC
 
845 and
 
measured their
fair
 
value
 
on
 
the
 
date
 
of
 
declaration
 
at
 
$
18,189
.
 
The
 
fair
 
value
 
of
 
the
 
Series
 
D
 
Preferred
 
Shares
 
was
determined by using the income approach, taking into account the
 
present value of the future cash flows,
the holder
 
of shares
 
would expect
 
to receive
 
from holding
 
the equity
 
instrument. This
 
resulted in
 
gain of
$
589
, being
 
the difference
 
between the
 
fair value
 
and the
 
carrying value
 
of the
 
investment and
 
is separately
presented as Gain on related party investments in the accompanying
 
consolidated statements of income.
On June 9, 2023, the Company distributed the
13,157
 
Series D Preferred Shares as a non-cash dividend
to
 
its
 
shareholders
 
of
 
record
 
on
 
April
 
24,
 
2023.
 
The
 
Company
 
accounted
 
for
 
the
 
transaction
 
as
 
a
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-24
nonreciprocal
 
transfer
 
with
 
its
 
owners
 
in
 
accordance
 
with
 
ASC
 
845
 
and
 
measured
 
the
 
fair
 
value
 
of
 
the
preferred shares
 
on the
 
date of
 
declaration at
 
$
10,761
. The
 
fair value
 
of the
 
Series D
 
Preferred Shares
was determined
 
by using
 
the income
 
approach, taking
 
into account
 
the present
 
value of
 
the future
 
cash
flows, the holder
 
of shares would
 
expect to receive
 
from holding
 
the equity
 
instrument. This
 
resulted in gain
of
 
$
761
,
 
being
 
the
 
difference
 
between
 
the
 
fair
 
value
 
and
 
the
 
carrying
 
value
 
of
 
the
 
investment
 
and
 
is
separately
 
presented
 
as
 
gain
 
on
 
related
 
party
 
investment
 
in
 
the
 
2023
 
accompanying
 
consolidated
statement of income.
For 2023,
 
2022 and
 
2021, dividend
 
income from
 
the Series
 
C and
 
Series D
 
OceanPal preferred
 
shares
amounted to $
801
, $
917
 
and $
69
, respectively, included in interest and
 
other income in the
 
accompanying
consolidated statements of income.
b)
 
Investment in
 
equity securities:
 
During 2023,
 
the Company
 
acquired equity
 
securities of
 
an entity
listed in the NYSE which as of December
 
31, 2023 had a fair value of $
20,729
. The equity securities were
initially recorded
 
at cost
 
amounting to
 
$
17,916
 
and measured
 
subsequently at
 
fair value,
 
since their
 
fair
values were
 
readily determinable,
 
determined through
 
Level 1
 
of the
 
fair value
 
hierarchy.
 
The securities
are considered
 
marketable securities
 
that are
 
available to
 
be converted
 
into cash
 
to fund
 
current operations
and classified in current
 
assets in the accompanying
 
2023 consolidated balance
 
sheet. Unrealized gain
 
on
the investment amounted to $
2,813
 
and is separately presented in unrealized gain
 
on equity securities in
the accompanying consolidated statements of income.
6.
 
Advances for vessel acquisitions and Vessels, net
 
Vessel Acquisitions
On July
 
15, 2021
 
the Company
 
agreed to
 
acquire from
 
an unaffiliated
 
third party, the
 
2011 built Kamsarmax
dry
 
bulk
 
vessel
Leonidas
 
P.C.
,
 
for
 
a
 
purchase
 
price
 
of
 
$
22,000
,
 
delivered
 
on
 
February
 
16,
 
2022.
 
The
Company incurred $
927
 
of additional predelivery expenses.
On December 3,
 
2021, the Company
 
agreed to acquire from
 
an unaffiliated third
 
party,
 
the Capesize dry
bulk vessel
Florida,
 
for a purchase price of $
59,275
, delivered on March 29, 2022. The Company incurred
$
1,504
 
of additional predelivery expenses.
On August 10,
 
2022, the Company
 
entered into a
 
master agreement with
 
Sea Trade Holdings Inc.
 
(or “Sea
Trade”),
 
an unaffiliated
 
third party,
 
to acquire
 
nine Ultramax
 
vessels for
 
an aggregate
 
purchase price
 
of
$
330,000
, of
 
which $
220,000
 
would be
 
paid in
 
cash and
 
$
110,000
 
through an
 
aggregate of
18,487,393
newly issued
 
common shares
 
of the
 
Company, issuable on
 
the delivery
 
of each
 
vessel. In
 
the fourth
 
quarter
of 2022,
 
the Company
 
took delivery
 
of
eight
 
vessels for
 
$
195,810
 
in cash
 
and
16,453,780
 
newly issued
common shares having a
 
fair value of $
67,909
 
(Notes 11
 
and 16). The Company also
 
incurred $
4,364
 
of
additional predelivery expenses.
 
On January
 
30, 2023,
 
the Company
 
took delivery
 
of the
 
ninth vessel
 
for $
23,955
 
in cash
 
and
2,033,613
newly issued common shares, having
 
a fair value of
 
$
7,809
. Part of the
 
purchase price of the vessel
 
and
additional
 
predelivery
 
expenses
 
were
 
already
 
paid
 
in
 
2022
 
and
 
presented as
 
of
 
December 31,
 
2022
 
in
advances for vessel
 
acquisitions in the
 
accompanying consolidated
 
balance sheet.
 
The Company incurred
$
555
 
of additional predelivery expenses.
The value
 
of the
 
shares issued
 
in 2022
 
and in
 
2023, was
 
determined through
 
Level 1
 
inputs of
 
the fair
 
value
hierarchy based on the closing price of the
 
Company’s common stock on the date of issuance which
 
was
the date of delivery of each vessel.
 
 
 
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-25
On February 14, 2023, the Company signed a Memorandum of Agreement to acquire from an unaffiliated
third-party an
 
Ultramax dry
 
bulk vessel
 
for a
 
purchase price
 
of $
27,900
. On
 
April 28,
 
2023, the
 
vessel’s
ship owning company
 
was deconsolidated
 
from the Company’s
 
financial statements due
 
to the Company’s
loss of control
 
described in
 
note 4(b) and
 
the net book
 
value of
 
the vessel amounting
 
to $
27,908
 
is included
in both vessel acquisitions and vessel disposals.
 
Vessel Disposals
On June
 
13, 2022,
 
the Company
 
sold to
 
OceanPal, the
 
vessel
Baltimore
, for
 
a sale
 
price of
 
$
22,000
 
of
which $
4,400
 
in cash
 
and $
17,600
 
in
25,000
 
newly issued
 
OceanPal Series
 
D Preferred
 
Shares
 
(Note
5(a)). On the date of the agreement, the vessel was classified as held for sale according to the provisions
of
 
ASC
 
360,
 
as
 
all
 
criteria
 
required
 
for
 
this
 
classification
 
were
 
met,
 
at
 
carrying
 
value
 
of
 
$
16,722
 
and
unamortized deferred costs of $
41
, measured at the lower of
 
carrying value and fair value
 
(sale price) less
costs to sell. The vessel was delivered to OceanPal on
 
September 20, 2022 and the sale resulted in gain
amounting to $
2,850
, included in gain on sale of vessels in the accompanying consolidated statements of
income.
On
 
January
 
23,
 
2023,
 
the
 
Company
 
sold
 
to
 
an
 
unrelated
 
third
 
party
 
the
 
vessel
Aliki
 
for
 
a
 
sale
 
price
 
of
$
15,080
 
and
 
on February
 
1,
 
2023, the
 
Company,
 
sold to
 
OceanPal the
 
vessel
Melia
 
for a
 
sale
 
price of
$
14,000
, of
 
which $
4,000
 
in cash
 
and $
10,000
 
in
13,157
 
newly issued
 
OceanPal Series
 
D Preferred
 
Shares
(Note 5(a)).
 
On the
 
date of the
 
agreements, the vessels,
 
having an
 
aggregate carrying value
 
of $
23,198
and unamortized deferred
 
costs of $
405
 
were classified as
 
held for sale,
 
measured at carrying
 
value which
was
 
the
 
lower
 
of
 
their
 
carrying
 
value
 
and
 
fair
 
value
 
(sale
 
price)
 
less
 
costs
 
to
 
sell.
 
Both
 
vessels
 
were
delivered to their new owners on
 
February 8, 2023. The sale of the
 
vessels resulted in gain amounting to
$
4,995
, included in gain on sale of vessels in the accompanying consolidated
 
statements of income.
On October
 
5, 2023,
 
the Company
 
sold to
 
an unrelated
 
third party
 
the vessel
 
Boston for
 
a sale
 
price of
$
17,998
. The vessel was delivered to the buyer on
 
December 6, 2023 and the sale of the vessel resulted
in gain
 
of $
328
, included
 
in gain
 
on sale
 
of vessels
 
in the
 
accompanying
 
consolidated statements
 
of income.
The amounts reflected in Vessels, net in
 
the accompanying consolidated balance sheets are analyzed as
follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vessel Cost
Accumulated
Depreciation
Net Book
Value
Balance, December 31, 2021
$
810,429
$
(166,979)
$
643,450
- Additions for vessel acquisitions and improvements
358,504
-
358,504
- Additions for improvements reclassified from other non-
current assets
1,370
-
1,370
- Vessel disposals
(29,175)
12,453
(16,722)
- Depreciation for the year
-
(36,986)
(36,986)
Balance, December 31, 2022
$
1,141,128
$
(191,512)
$
949,616
- Additions for vessel acquisitions and improvements
61,682
-
61,682
- Vessel disposals
(60,655)
21,688
(38,967)
- Vessel disposal due to deconsolidation
 
of subsidiary (Note
4(b))
(27,908)
-
(27,908)
- Depreciation for the year
-
(44,231)
(44,231)
Balance, December 31, 2023
$
1,114,247
$
(214,055)
$
900,192
 
 
 
 
 
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-26
Additions for vessel
 
improvements mainly
 
relate to the
 
implementation of ballast
 
water treatment and
 
other
works necessary
 
for the vessels
 
to comply with
 
new regulations
 
and be able
 
to navigate to
 
additional ports.
As of
 
December 31,
 
2022, an
 
amount of
 
$
1,370
 
was reclassified
 
to Vessels,
 
net from
 
other non-current
assets
 
and
 
related
 
to
 
ballast
 
water
 
treatment
 
equipment
 
paid
 
in
 
a
 
previous
 
period
 
but
 
delivered on
 
the
vessels during the year ended December 31, 2022.
7.
 
Property and Equipment, net
The Company owns the land and building of its principal corporate offices in Athens, Greece and a plot of
a
 
land
 
of
 
which on
 
July 6,
 
2023,
 
DSS purchased
 
1/3
 
from
 
Alpha Sigma
 
Shipping
 
Corp,
 
a related
 
party
company,
 
for
 
the
 
purchase
 
price
 
of
 
$
1,208
 
and
 
became
 
its
 
sole
 
owner.
 
Other
 
assets
 
consist
 
of
 
office
furniture and equipment,
 
computer software and
 
hardware and vehicles.
 
The amount
 
reflected in “Property
and equipment, net” is analyzed as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and
Equipment
Accumulated
Depreciation
Net Book
Value
Balance, December 31, 2021
$
28,269
$
(5,427)
$
22,842
- Additions in property and equipment
667
-
 
667
- Depreciation for the year
-
(546)
 
(546)
Balance, December 31, 2022
$
28,936
$
(5,973)
$
22,963
- Additions in property and equipment
2,006
-
2,006
- Depreciation for the year
-
(687)
(687)
Balance, December 31, 2023
$
30,942
$
(6,660)
$
24,282
8.
 
Long-term debt
The
 
amount of
 
long-term debt
 
shown in
 
the
 
accompanying consolidated
 
balance sheets
 
is
 
analyzed as
follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023
2022
Senior unsecured bond
119,100
125,000
Secured long-term debt
397,857
405,120
Total long-term
 
debt
$
516,957
$
530,120
Less: Deferred financing costs
 
(6,314)
(7,609)
Long-term debt, net of deferred financing costs
$
510,643
$
522,511
Less: Current long-term debt, net of deferred financing
 
costs,
current
(49,512)
(91,495)
Long-term debt, excluding current maturities
$
461,131
$
431,016
 
Senior Unsecured Bond
:
 
On
June 22, 2021
, the
 
Company issued a
 
$
125,000
 
senior unsecured bond
 
maturing in
 
June 2026. The
bond ranks ahead of subordinated capital and ranks the
 
same with all other senior unsecured obligations
of
 
the
 
Company
 
other
 
than
 
obligations
 
which
 
are
 
mandatorily
 
preferred
 
by
 
law.
 
Entities
 
affiliated
 
with
executive officers
 
and directors of
 
the Company purchased
 
an aggregate of
 
$
21,000
 
principal amount of
the bond.
 
The bond
 
bears interest
 
at a
 
US Dollar
 
fixed-rate coupon
 
of
8.375
% and
 
is payable
 
semi-annually
in arrears in June
 
and December of each
 
year. The
 
bond is callable in
 
whole or in part
 
in June 2024 at
 
a
price
 
equal
 
to
103.35
%
 
of
 
nominal
 
value;
 
between
 
June
 
2025
 
to
 
December
 
2025
 
at
 
a
 
price
 
equal
 
to
101.675
% of nominal value and after December 2025 at a price
 
equal to
100
% of nominal value. On June
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-27
 
29,
 
2023,
 
the
 
Company repurchased
 
$
5,900
 
nominal value
 
of
 
the
 
bond
 
for
 
$
5,851
.
 
In
 
this
 
respect, the
Company
 
recognized
 
an
 
amount
 
of
 
$
159
 
as
 
loss
 
on
 
debt
 
extinguishment,
 
representing
 
the
 
difference
between the
 
reacquisition price of
 
$
5,851
 
and the
 
net carrying
 
amount of the
 
debt being
 
extinguished of
$
5,900
 
less deferred
 
financing fees
 
of $
208
. The
 
bond includes
 
financial and
 
other covenants
 
and is
 
trading
at Oslo Stock Exchange under the ticker symbol “DIASH02”.
 
Secured Term Loans:
Under the
 
secured term
 
loans outstanding
 
as of
 
December 31,
 
2023,
33
 
vessels of
 
the Company’s
 
fleet
are
 
mortgaged
 
with
 
first
 
preferred
 
or
 
priority
 
ship
 
mortgages,
 
having
 
an
 
aggregate
 
carrying
 
value
 
of
$
699,014
.
 
Additional
 
securities
 
required
 
by
 
the
 
banks
 
include
 
first
 
priority
 
assignment
 
of
 
all
 
earnings,
insurances, first assignment of time charter
 
contracts that exceed a certain
 
period, pledge over the shares
of
 
the
 
borrowers,
 
manager’s
 
undertaking
 
and
 
subordination
 
and
 
requisition
 
compensation
 
and
 
either
 
a
corporate
 
guarantee
 
by
 
DSI
 
(the
 
“Guarantor”)
 
or
 
a
 
guarantee
 
by
 
the
 
ship
 
owning
 
companies
 
(where
applicable), financial covenants, as well as operating account assignments. The lenders may also require
additional
 
security
 
in
 
the
 
future
 
in
 
the
 
event
 
the
 
borrowers
 
breach
 
certain
 
covenants
 
under
 
the
 
loan
agreements.
 
The
 
secured
 
term
 
loans
 
generally
 
include
 
restrictions
 
as
 
to
 
changes
 
in
 
management
 
and
ownership of the vessels, additional indebtedness, as well as minimum requirements regarding hull cover
ratio and minimum liquidity
 
per vessel owned by the
 
borrowers, or the Guarantor,
 
maintained in the bank
accounts of the borrowers, or the Guarantor.
 
As of December 31, 2023 and 2022, minimum cash
 
deposits required to be maintained at all times under
the Company’s
 
loan facilities,
 
amounted to
 
$
20,000
 
and $
21,000
, respectively
 
and are
 
included in
 
restricted
cash, non-current in
 
the accompanying consolidated
 
balance sheets. Furthermore,
 
the secured term
 
loans
contain
 
cross
 
default
 
provisions
 
and
 
additionally
 
the
 
Company
 
is
 
not
 
permitted
 
to
 
pay
 
any
 
dividends
following the occurrence
 
of an event
 
of default. In
 
2023 and 2022
 
, the weighted
 
average interest rate
 
of
the secured term loans was
7.3
% and
3.8
%, respectively.
As of December
 
31, 2023 and
 
2022, the Company
 
had the following
 
agreements with banks,
 
either as a
borrower or as a guarantor, to guarantee the loans of its subsidiaries:
BNP Paribas (“BNP”):
 
On December 19, 2014, the Company
 
drew down $
53,500
 
under a secured loan
agreement, to
 
finance part of
 
the acquisition cost
 
of the
G. P.
 
Zafirakis
 
and the
P.
 
S. Palios
maturing on
November 30, 2021
. The agreement was refinanced on June 29,
 
2020, to extend the maturity to
May 19,
2024
. The loan was repayable in equal semi-annual instalments of approximately $
1,574
 
and a balloon of
$
23,596
 
payable together
 
with the
 
last instalment.
 
The refinanced
 
loan bore
 
interest at
 
LIBOR plus
 
a margin
of
2.5
%.
 
On July 16, 2018, the Company drew down $
75,000
 
under a secured loan agreement with BNP. The loan
was
 
repayable
 
in
 
consecutive
 
quarterly
 
instalments
 
of
 
$
1,562.5
 
and
 
a
 
balloon
 
instalment
 
of
 
$
43,750
payable together with the last instalment on
July 17, 2023
. The loan bore interest at LIBOR plus a margin
of
2.3
%.
 
In
 
April 2023,
 
both loans
 
were refinanced
 
through a
 
new loan
 
facility with
 
Danish Ship
 
Finance and
 
the
outstanding balance of both loans, amounting to
 
$
75,193
 
was prepaid in full and the Company
 
recorded a
loss on debt extinguishment amounting to $
107
.
Nordea Bank AB,
 
London Branch (“Nordea”):
 
On March
 
19, 2015, the
 
Company drew down
 
$
93,080
under a secured
 
loan agreement,
 
maturing on
March 19, 2021
. The loan agreement
 
was amended on
 
May
7, 2020,
 
and supplemented
 
on July
 
29, 2021,
 
with an
 
additional borrowing
 
of $
460
. In
 
July 2022
 
and in
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-28
 
February 2023, the Company prepaid an amount of $
4,786
 
and $
8,134
, respectively, following the sale of
vessels. On June 20, 2023,
 
the Company entered into a
 
new loan agreement with Nordea
 
to refinance the
outstanding
 
balance of
 
the
 
existing
 
loan
 
amounting to
 
$
20,934
.
 
On
 
June
 
27,
 
2023,
 
the
 
Company
 
drew
down
 
$
22,500
 
and
 
prepaid
 
in
 
full
 
the
 
outstanding
 
balance
 
of
 
$
20,934
 
and
 
recorded
 
a
 
loss
 
on
 
debt
extinguishment
 
amounting to
 
$
220
.
 
The
 
new
 
loan
 
is
 
repayable
 
in
twenty
 
equal
quarterly
 
instalments of
$
1,125
 
and bears interest at term SOFR plus a margin of
2.25
%. The loan matures on
June 27, 2028
.
On September
 
30, 2022,
 
the Company
 
entered into
 
a $
200
 
million loan
 
agreement to
 
finance the
 
acquisition
price of
 
9 Ultramax
 
vessels. The
 
Company drew
 
down $
197,236
 
under the
 
loan, in
 
tranches for
 
each vessel
on their
 
delivery to
 
the Company
 
but prepaid
 
$
21,937
 
in December
 
2022 due
 
to a
 
vessel sale
 
and leaseback
transaction. The loan is repayable in equal
quarterly
 
instalments of an aggregate amount of
 
$
3,719
, and a
balloon of $
100,912
 
payable together with
 
the last instalment
 
on
October 11, 2027
. The loan
 
bears interest
at term
 
SOFR plus
 
a margin
 
of
2.25
%. Loan
 
fees amounted
 
to $
2,069
 
presented as
 
contra to
 
debt and
commitment fees amounted to $
191
, included in interest expense and finance costs in the accompanying
2022 consolidated statement of income.
 
ABN AMRO Bank N.V., or ABN:
 
On May 22, 2020, the Company signed a term loan facility with ABN, in
the
 
amount
 
of
 
$
52,885
 
to
 
combine
 
two
 
loans
 
outstanding
 
with
 
ABN.
 
Tranche
 
A
 
was
 
repayable
 
in
consecutive
quarterly
 
instalments of $
800
 
each and a balloon instalment of
 
$
9,000
 
payable together with
the last instalment on
June 28, 2024
. The tranche bore
 
interest at LIBOR plus
 
a margin of
2.25
%. Tranche
B was repayable in equal consecutive
quarterly
 
instalments of about $
994
 
each and a balloon of $
13,391
payable together with
 
the last
 
instalment on
June 28, 2024
, and
 
bore interest at
 
LIBOR plus a
 
margin of
2.4
%.
 
On May 20,
 
2021, the Company, drew
 
down $
91,000
 
under a secured
 
sustainability linked
 
loan facility with
ABN AMRO Bank N.V,
 
dated May 14, 2021, which was used
 
to refinance existing loans. In August 2022,
the Company prepaid
 
$
30,791
 
due to vessel
 
sale and leaseback
 
transactions and since
 
then, the loan
 
was
repayable
 
in
quarterly
 
instalments
 
of
 
$
1,980
 
and
 
a
 
balloon
 
of
 
$
13,553
 
payable
 
together
 
with
 
the
 
last
instalment, on
May 20, 2026
. The loan
 
bore interest at
 
LIBOR plus a margin
 
of
2.15
% per annum,
 
which
could
 
be
 
adjusted
 
annually
 
by
 
maximum
10
 
basis
 
points
 
upwards
 
or
 
downwards,
 
subject
 
to
 
the
performance under certain sustainability KPIs.
On June 26,
 
2023, the Company prepaid
 
in full both
 
loans amounting to $
68,677
, which were refinanced
under
 
a
 
new
 
loan
 
agreement
 
with
 
DNB
 
Bank
 
ASA
 
and
 
the
 
Company
 
recorded
 
a
 
loss
 
on
 
debt
extinguishment amounting to $
237
.
Export-Import Bank of China:
 
On January 4,
 
2017, the Company drew
 
down $
57,240
 
under a secured
loan
 
agreement,
 
which
 
is
 
repayable
 
in
 
equal
quarterly
 
instalments
 
of
 
$
954
,
 
each,
 
until
 
its
 
maturity
 
on
January 4, 2032
 
and bears interest at term SOFR plus a margin of
2.45
%.
DNB Bank
 
ASA or
 
DNB:
 
On March
 
14, 2019,
 
the Company
 
drew down
 
$
19,000
 
under a
 
secured loan
agreement,
 
which
 
is
 
repayable
 
in
 
consecutive
quarterly
 
instalments
 
of
 
$
477.3
 
and
 
a
 
balloon
 
of
 
$
9,454
payable together
 
with the
 
last instalment
 
on
March 14, 2024
. The
 
loan bore
 
interest at
 
LIBOR plus
 
a margin
of
2.4
%. On March 14, 2023,
 
the outstanding balance of
 
the loan amounting to $
11,841
 
was prepaid in full
and the Company recorded a loss on debt extinguishment amounting
 
to $
25
.
On June 26,
 
2023, the Company
 
entered into a
 
$
100,000
 
loan agreement which was
 
drawn on June
 
27,
2023,
 
to
 
refinance
 
the
 
outstanding
 
balance
 
of
 
the
 
ABN
 
loans
 
mentioned
 
above
 
and
 
for
 
working
 
capital
purposes. The loan is repayable
 
in
26
 
equal
quarterly
 
instalments of $
3,846
 
until
December 27, 2029
, and
bears term SOFR plus
 
a margin of
2.2
%, subject to sustainability
 
margin adjustment. Additionally, the loan
 
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-29
is subject to
 
a margin reset,
 
according to which
 
the borrowers and
 
the lenders will
 
enter into discussions
to agree
 
on a
 
new margin.
 
Unless the
 
parties agree
 
on a
 
new margin,
 
the loan
 
will be
 
mandatorily repayable
on June 27,
 
2027. As part
 
of the loan
 
agreement, on July
 
6, 2023, the
 
Company entered into
 
an interest
rate
 
swap
 
with
 
DNB
 
for
 
a
 
notional
 
amount
 
of
 
$
30,000
,
 
being
30
%
 
of
 
the
 
loan
 
amount
 
and
 
quarterly
amortization
 
of
 
$
1,154
.
 
Under
 
the
 
interest
 
rate
 
swap,
 
the
 
Company
 
pays
 
a
 
fixed
 
rate
 
of
4.268
%
 
and
receives floating under
 
term SOFR, has
 
a trade date
 
on June 27,
 
2023, and termination
 
date on December
27, 2029, and also has a mandatory break on June 27, 2027, the margin reset date of
 
the loan, according
to which the swap will be terminated
 
if the loan is prepaid. As of
 
December 31, 2023, the fair value of the
interest
 
rate
 
swap
 
amounted
 
to
 
$
439
 
and
 
is
 
separately
 
presented
 
in
 
current
 
assets
 
and
 
non-current
liabilities,
 
amounting
 
to
 
$
129
 
and
 
$
568
 
respectively,
 
in
 
the
 
2023
 
accompanying
 
consolidated
 
balance
sheet. Loss
 
from the
 
interest rate
 
swap amounted
 
to $
439
 
and is
 
separately presented
 
as loss
 
on derivative
instruments in the 2023 consolidated statement of income.
Danish Ship
 
Finance A/S
 
or Danish:
 
On April
 
12,
 
2023, the
 
Company signed
 
a term
 
loan facility
 
with
Danish, for
 
$
100,000
 
to refinance
 
the outstanding
 
balance of
 
the Company’s
 
loans with
 
DNB Bank
 
ASA
and
 
BNP,
 
mentioned
 
above
 
and
 
working
 
capital.
 
On
 
April
 
18
 
and
 
19,
 
2023,
 
the
 
Company
 
drew
 
down
$
100,000
 
which
 
is
 
repayable
 
in
twenty
 
equal
 
consecutive
quarterly
 
instalments
 
of
 
$
3,301
 
each
 
and
 
a
balloon of $
33,972
 
payable together with the last instalment
 
on April 19, 2028, and
 
bears interest at term
SOFR plus a margin of
2.2
%.
 
As of December 31, 2023 and 2022, the Company was in compliance
 
with all of its loan covenants.
As of December 31, 2023, the maturities of
 
the Company’s bond and debt facilities throughout their term,
are shown in the table below and do not include the related
 
debt issuance costs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period
Principal Repayment
Year 1
$
51,783
Year 2
51,783
Year 3
170,883
Year 4
152,696
Year 5
62,026
Year 6 and
 
thereafter
27,786
Total
$
516,957
9.
 
Finance Liabilities
The amount
 
of finance
 
liabilities shown
 
in the
 
accompanying consolidated
 
balance sheet
 
is analyzed
 
as
follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2023
December 31, 2022
Finance liabilities
133,337
142,370
Less: Deferred financing costs
 
(1,208)
(1,439)
Finance liabilities, net of deferred financing costs
$
132,129
$
140,931
Less: Current finance liabilities, net of deferred financing
 
costs,
current
(9,221)
(8,802)
Finance liabilities, excluding current maturities
$
122,908
$
132,129
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-30
On March 29, 2022, the Company sold
Florida
 
to an unrelated third party for $
50,000
 
(Note 6) and leased
back the
 
vessel under
 
a bareboat
 
agreement, for
 
a period
 
of
ten years
, under
 
which the
 
Company pays
hire, monthly
 
in advance.
 
Under the
 
bareboat charter,
 
the Company
 
has the
 
option to
 
repurchase the
 
vessel
after
 
the
 
end of
 
the third
 
year
 
of the
 
charter period,
 
or each
 
year thereafter,
 
until the
 
termination of
 
the
lease, at specific prices, subject to
 
irrevocable and written notice to the
 
owner. If
 
not repurchased earlier,
the Company has
 
the obligation to repurchase
 
the vessel for $
16,350
, on the expiration
 
of the lease
 
on the
tenth year.
 
On August 17, 2022, the
 
Company entered into
two
 
sale and leaseback agreements with two
 
unaffiliated
Japanese
 
third
 
parties
 
for
New
 
Orleans
 
and
Santa
 
Barbara,
for
 
an
 
aggregate
 
amount
 
of
 
$
66,400
.
 
The
vessels were delivered
 
to their buyers
 
on September 8,
 
2022 and September 12,
 
2022, respectively and
the Company
 
chartered in
 
both vessels
 
under bareboat
 
charter parties for
 
a period
 
of
eight years
, each,
and has purchase options beginning at the end of the
 
third year of each vessel's bareboat charter period,
or
 
each
 
year
 
thereafter,
 
until
 
the
 
termination
 
of
 
the
 
lease,
 
at
 
specific
 
prices,
 
subject
 
to
 
irrevocable
 
and
written notice to the
 
owner.
 
If not repurchased earlier,
 
the Company has the
 
obligation to repurchase the
vessels for $
13,000
, each, on the expiration of each lease on the eighth year.
On December 6, 2022, the Company
 
sold
DSI Andromeda
 
to an unrelated third party for $
29,850
 
(Note 6)
and
 
leased
 
back
 
the
 
vessel
 
under
 
a
 
bareboat
 
agreement,
 
for
 
a
 
period
 
of
ten years
,
 
under
 
which
 
the
Company
 
pays
 
hire,
 
monthly
 
in
 
advance.
 
Under
 
the
 
bareboat
 
charter,
 
the
 
Company
 
has
 
the
 
option
 
to
repurchase the vessel after the
 
end of the third year of
 
the charter period, or each
 
year thereafter, until the
termination
 
of the
 
lease, at
 
specific prices,
 
subject to
 
irrevocable and
 
written notice
 
to
 
the
 
owner.
 
If not
repurchased earlier, the Company
 
has the
 
obligation to repurchase
 
the vessel for
 
$
8,050
, on the
 
expiration
of the lease on the tenth year.
Under the bareboat charter parties, the Company is responsible for the operation and maintenance of the
vessels and the
 
owner of the
 
vessels shall not
 
retain any control,
 
possession, or command of
 
the vessel
during the charter period.
The Company determined
 
that, under ACS
 
842-40 Sale and
 
Leaseback Transactions, the
 
transactions are
failed
 
sales
 
and
 
consequently the
 
assets
 
were not
 
derecognized from
 
the
 
financial
 
statements
 
and
 
the
proceeds from the sale of
 
the vessels were accounted
 
for as financial liabilities. As
 
of December 31, 2023,
the weighted average remaining
 
lease term of
 
the above lease
 
agreements was
7.70
 
years, the average
interest
 
rate
 
was
4.83
%
 
and
 
the
 
sublease
 
income
 
during
 
2023
 
was
 
$
34,560
,
 
included
 
in
 
time
 
charter
revenues.
As of
 
December 31,
 
2023, and
 
throughout
 
the term
 
of the
 
leases,
 
the Company
 
has annual
 
finance liabilities
as shown in the table below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period
Principal Repayment
Year 1
$
9,437
Year 2
9,808
Year 3
10,224
Year 4
10,661
Year 5
11,151
Year 6 and
 
thereafter
82,056
Total
$
133,337
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-31
10.
 
Commitments and Contingencies
a)
 
Various
 
claims, suits,
 
and complaints,
 
including those
 
involving government
 
regulations and
 
product
liability, arise in
 
the ordinary
 
course of
 
the shipping
 
business. In
 
addition, losses
 
may arise
 
from disputes
with
 
charterers,
 
agents,
 
insurance
 
and
 
other
 
claims
 
with
 
suppliers
 
relating
 
to
 
the
 
operations
 
of
 
the
Company’s
 
vessels.
 
The
 
Company
 
accrues
 
for
 
the
 
cost
 
of
 
environmental
 
and
 
other
 
liabilities
 
when
management becomes
 
aware that
 
a liability
 
is probable
 
and is
 
able to
 
reasonably estimate
 
the probable
exposure. The Company’s vessels are
 
covered for pollution in the
 
amount of $
1
 
billion per vessel per
incident, by the
 
P&I Association in
 
which the Company’s
 
vessels are entered.
 
In 2022, the
 
Company
recorded a
 
gain of
 
$
1,789
 
from insurance
 
recoveries received
 
from its
 
insurers for
 
claims covered
 
under
its insurance
 
policies, which
 
is separately
 
presented as
 
insurance recoveries
 
in the
 
accompanying 2022
consolidated statement of operations.
b)
 
Pursuant to the sale and lease
 
back agreements signed between the Company
 
and its counterparties,
the Company
 
has purchase
 
obligations to
 
repurchase the
 
vessels
Florida, Santa
 
Barbara, New
 
Orleans
and
 
DSI Andromeda
upon expiration of their lease contracts, as described
 
in Note 9.
c)
 
On March
 
30, 2023,
 
the Company
 
entered into
 
a
 
corporate guarantee
 
with Nordea
 
under which
 
the
Company guarantees
 
the performance
 
by Bergen
 
of all
 
of its
 
obligations
 
under the
 
loan until
 
the maturity
of the loan
 
on March 30, 2028
 
(Note 4 (b)). The
 
Company considers the likelihood of
 
having to make
any payments under the guarantee to be remote, as the loan is also secured by an account pledge by
Bergen,
 
first
 
preferred
 
mortgage
 
on
 
the
 
vessel,
 
a
 
first
 
priority
 
general
 
assignment
 
of
 
the
 
earnings,
insurances
 
and
 
requisition
 
compensation
 
of
 
the
 
vessel,
 
a
 
charter
 
party
 
assignment,
 
a
 
partnership
interests
 
security
 
deed,
 
and
 
a
 
manager’s
 
undertaking.
 
Accordingly,
 
as
 
of
 
December
 
31,
 
2023,
 
the
Company
 
did
 
not
 
record
 
a
 
provision for
 
losses
 
under
 
the
 
guarantee
 
of
 
Bergen’s
 
loan
 
amounting to
$
14,778
 
on that date.
d)
 
As
 
of
 
December
 
31,
 
2023,
 
the
 
Company’s
 
vessels,
 
owned
 
and
 
chartered-in, were
 
fixed
 
under
 
time
charter
 
agreements,
 
considered
 
operating
 
leases.
 
The
 
minimum
 
contractual
 
gross
 
charter
 
revenue
expected to
 
be generated
 
from fixed
 
and non-cancelable
 
time charter
 
contracts existing
 
as of
 
December
31, 2023 and until their expiration was as follows:
 
 
 
 
 
 
 
 
 
 
 
 
Period
Amount
Year 1
$
127,297
Year 2
24,629
Year 3
9,454
Year 4
725
 
Total
$
162,105
 
11.
 
Capital Stock and Changes in Capital Accounts
a)
 
Preferred stock
:
 
As of December 31, 2023, and 2022, the
 
Company’s authorized preferred stock
consists of
50,000,000
 
shares and
25,000,000
 
shares, respectively
 
(all in registered
 
form), par value
 
$
0.01
per share,
 
of which
1,000,000
 
shares are
 
designated as
 
Series A
 
Participating Preferred
 
Shares,
5,000,000
shares are designated as
 
Series B Preferred Shares,
10,675
 
shares are designated as
 
Series C Preferred
Shares and
400
 
shares are designated
 
as Series
 
D Preferred Shares.
 
As of December
 
31, 2023 and
 
2022,
the Company had
zero
 
Series A Participating Preferred Shares issued and outstanding.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-32
 
 
 
 
 
 
 
b)
 
Series
 
B
 
Preferred
 
Stock:
 
As
 
of
 
December
 
31,
 
2023,
 
and
 
2022,
 
the
 
Company
 
had
2,600,000
Series B Preferred
 
Shares issued and
 
outstanding with
 
par value $
0.01
 
per share, at
 
$
25.00
 
per share and
with liquidation preference
 
at $
25.00
 
per share.
Holders of Series B Preferred Shares have no voting rights
other than the ability, subject to certain exceptions, to elect one director if dividends for six quarterly
dividend periods (whether or not consecutive) are in arrears and certain other limited protective voting
rights.
 
Also, holders of Series B Preferred
 
Shares rank prior to the holders
 
of common shares with respect
to dividends,
 
distributions and
 
payments upon
 
liquidation and
 
are subordinated
 
to all
 
of the
 
existing and
future indebtedness.
Dividends on the Series
 
B Preferred Shares
 
are cumulative from
 
the date of original
 
issue and are
 
payable
on the 15th
 
day of January, April, July
 
and October of
 
each year at
 
the dividend rate
 
of
8.875
% per annum,
or
 
$
2.21875
 
per
 
share
 
per
 
annum.
 
In
 
2023,
 
2022
 
and
 
2021,
 
dividends
 
on
 
Series
 
B
 
Preferred
 
Shares
amounted
 
to
 
$
5,769
,
 
$
5,769
 
and
 
$
5,769
,
 
respectively.
 
Since
 
February
 
14,
 
2019,
 
the
 
Company
 
may
redeem, in whole or in part, the Series B Preferred Shares at a redemption price of $
25.00
 
per share plus
an amount equal
 
to all accumulated
 
and unpaid dividends thereon
 
to the date
 
of redemption, whether
 
or
not declared.
 
c)
 
Series C Preferred Stock
: As of December 31, 2023, and 2022,
 
the Company had
10,675
 
shares
of Series C Preferred Stock, issued and
 
outstanding, with par value $
0.01
 
per share, owned by an affiliate
of its Chief
 
Executive Officer, Mrs. Semiramis
 
Paliou.
The Series C Preferred Stock votes with the common
shares of the Company, and each share entitles the holder thereof to 1,000 votes on all matters submitted
to a vote of the shareholders of the Company.
 
The Series C Preferred
 
Stock has no dividend or
 
liquidation
rights and cannot be
 
transferred without the consent
 
of the Company except to
 
the holder’s affiliates and
immediate family members.
d)
 
Series D Preferred Stock
: As of December 31, 2023, and 2022, the Company had
400
 
shares of
Series D Preferred Stock, issued and outstanding,
 
with par value $
0.01
 
per share, owned by an affiliate of
its Chief
 
Executive Officer,
 
Mrs. Semiramis
 
Paliou.
 
The Series
 
D Preferred Stock
 
is not
 
redeemable and
has
no
 
dividend or
 
liquidation rights.
The Series D Preferred Stock vote with the common shares of the
Company, and each share of the Series D Preferred Stock entitles the holder thereof to up to 200,000
votes,
 
on
 
all
 
matters
 
submitted
 
to
 
a
 
vote
 
of
 
the
 
stockholders
 
of
 
the
 
Company, provided
 
however, that,
notwithstanding any
 
other provision
 
of the Series
 
D Preferred
 
Stock
 
statement of
 
designation, to
 
the extent
that the total number
 
of votes one or
 
more holders of Series
 
D Preferred Stock
 
is entitled to vote
 
(including
any voting power of such holders derived from Series D Preferred
 
Stock, shares of Common Stock or any
other voting security of the
 
Company issued and outstanding as of
 
the date hereof or that
 
may be issued
in the
 
future) on any
 
matter submitted to
 
a vote
 
of stockholders of
 
the Company would
 
exceed
36.0
% of
the total number
 
of votes eligible
 
to be cast on
 
such matter, the total
 
number of votes
 
that holders of
 
Series
D Preferred Stock may exercise derived
 
from the Series D Preferred Stock
 
together with Common Shares
and any
 
other voting
 
securities of
 
the
 
Company beneficially
 
owned by
 
such holder,
 
shall be
 
reduced to
36
% of the total number of votes that may be cast on such matter submitted
 
to a vote of stockholders.
e)
 
Issuance and Repurchase of Common Shares:
In February 2021, the Company repurchased
 
in
a tender
 
offer
6,000,000
 
shares at
 
the price
 
of $
2.50
 
per share.
 
In
August 2021,
 
the Company
 
repurchased,
in another
 
tender offer,
3,333,333
 
shares, at
 
a price
 
of $
4.50
 
per share
 
and in
 
December 2021,
 
repurchased
3,529,411
 
shares at a
 
price of
 
$
4.25
 
per share.
 
The aggregate
 
cost of
 
the share repurchases
 
was $
45,369
,
including
 
expenses.
 
In
 
2022,
 
the
 
Company
 
issued
 
under
 
its
 
ATM
 
program
877,581
 
shares
 
of
 
common
stock,
 
at
 
an
 
average
 
price
 
of
 
$
6.27
 
per
 
share
 
and
 
received
 
net
 
proceeds
 
of
 
$
5,322
.
 
During
 
2022,
 
the
Company
 
repurchased
 
under
 
its
 
share
 
repurchase
 
program
820,000
 
shares
 
of
 
common
 
stock,
 
at
 
an
average price of $
4.56
 
per share, for an aggregate
 
cost of $
3,799
, including expenses. In addition, in
 
the
fourth
 
quarter
 
of
 
2022,
 
the
 
Company
 
issued
16,453,780
 
common
 
shares
 
to
 
Sea
 
Trade
 
(Note
 
6),
 
upon
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-33
 
exercise by Sea Trade of the
 
eight out of nine warrants mentioned in (i) below,
 
for the acquisition of eight
vessels,
 
at
 
an
 
average
 
price
 
of
 
$
4.13
.
 
On
 
January
 
30,
 
2023,
 
the
 
Company
 
issued
2,033,613
 
common
shares, at
 
$
3.84
, to
 
Sea Trade
 
upon exercise
 
by Sea
 
Trade
 
of a
 
warrant it
 
held for
 
the acquisition
 
of a
vessel
 
(Note
 
6).
 
The
 
Company did
no
t
 
receive
 
any
 
proceeds
 
from
 
the
 
exercise
 
of
 
the
 
warrants by
 
Sea
Trade and the exercise price of the shares issued was included in the price of the vessels
 
acquired.
f)
 
Dividend on Common Stock:
On March 21,
 
2022, the Company paid
 
a dividend on its
 
common
stock of
 
$
0.20
 
per share,
 
to its
 
shareholders of
 
record as
 
of March
 
9, 2022.
 
On June
 
17, 2022,
 
the Company
paid a dividend on its common stock of
 
$
0.25
 
per share, to its shareholders of record as
 
of June 6, 2022.
On
 
August
 
19,
 
2022,
 
the
 
Company
 
paid
 
a
 
dividend
 
on
 
its
 
common
 
stock
 
of
 
$
0.275
 
per
 
share,
 
to
 
its
shareholders of record as of August 8, 2022. On December 15, 2022,
 
the Company paid a dividend on its
common stock of $
0.175
 
per share, to its shareholders
 
of record as of November
 
28, 2022. During 2022,
the Company paid total cash dividends on common stock amounting
 
to $
79,812
.
On March
 
20, 2023, the
 
Company paid
 
a dividend of
 
$
0.15
 
per share, or
 
$
15,965
, to
 
its shareholders of
record as of March 13, 2023. On July 10, 2023, the Company distributed a dividend of $
0.15
 
per share to
all shareholders of record as
 
of June 12, 2023, and
 
paid $
12,424
 
in cash to its shareholders
 
who elected
to receive cash
 
and distributed
965,044
 
newly issued common shares
 
to its shareholders
 
who elected to
receive
 
shares.
 
On
 
September
 
8,
 
2023,
 
the
 
Company
 
distributed
 
a
 
dividend
 
of
 
$
0.15
 
per
 
share
 
to
 
all
shareholders of record as
 
of August 14, 2023, and
 
paid $
13,041
 
in cash to its shareholders
 
who elected to
receive
 
cash
 
and
 
distributed
831,672
 
newly
 
issued
 
common
 
shares
 
to
 
its
 
shareholders
 
who
 
elected
 
to
receive
 
shares.
 
On
 
December
 
4,
 
2023,
 
the
 
Company
 
distributed
 
a
 
dividend
 
of
 
$
0.15
 
per
 
share
 
to
 
all
shareholders of record
 
as of November
 
27, 2023 in
 
the form of
 
common stock and
 
distributed
4,831,777
newly issued common shares.
g)
 
Dividend in Kind:
On November 29, 2021, the
 
Company distributed to its shareholders of record
on November 3,
 
2021, the common stock
 
of OceanPal, acquired in
 
a spin-off, amounting
 
to $
40,509
. On
December 15, 2022,
 
the Company distributed
 
the Company’s investment
 
in the Series
 
D Preferred Shares
of OceanPal in the form of a stock dividend amounting to $
18,189
, or $
0.18
 
per share, to its shareholders
of record as of November
 
28, 2022. On June
 
9, 2023, the Company
 
distributed the Company’s investment
in the
 
Series D
 
Preferred Shares
 
of OceanPal
 
in the
 
form of
 
a stock
 
dividend amounting
 
to $
10,761
, or
$
0.10
 
per share, to its shareholders of record as of April 24, 2023
 
(Notes 5(a)).
 
On
 
December 14,
 
2023, the
 
Company distributed
22,613,070
 
warrants to
 
its
 
shareholders of
 
record
 
on
December 6, 2023. Holders
 
received
 
one warrant for every
 
five shares of issued
 
and outstanding shares
of common stock held as of
 
the record date (rounded down to
 
the nearest whole number for any fractional
warrant. Each
 
Warrant
 
entitle the
 
Holder to
 
purchase, at
 
the Holder’s
 
sole and
 
exclusive election, at
 
the
exercise price of $
4
 
per warrant,
one
 
share of common stock plus a
 
bonus share fraction. A bonus share
fraction entitles
 
a Holder
 
to receive
 
an additional
half
 
of a
 
share of
 
common stock
 
for each
 
warrant exercised
without payment of any additional exercise price. If all warrants were exercised as of December
 
31, 2023,
the Company would
 
have issued
33,919,605
 
common shares
 
with a
 
fair value of
 
$
100,741
 
and would have
received
 
$
90,452
 
of
 
proceeds.
 
The
 
warrants
 
were
 
measured
 
on
 
the
 
date
 
of
 
distribution
 
at
 
fair
 
value,
determined through level
 
1 account hierarchy, being the opening
 
price of the warrants
 
on the NYSE
 
on the
date of distribution as they are listed
 
under the ticker DSX_W. The value of the warrants was
 
measured at
$
7,914
, or $
0.35
 
per warrant and
 
was recorded as
 
liability under the
 
terms of ASC
 
480. As of
 
December
31, 2023, the
 
warrant liability was remeasured
 
at fair value and
 
recorded at $
6,332
, resulting in
 
a gain of
$
1,583
 
separately presented
 
in the
 
2023 consolidated
 
statement of
 
income as
 
unrealized gain
 
on warrants.
As of December 31, 2023,
no
 
warrants had been exercised.
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-34
h)
 
Incentive
 
Plan:
As
 
of
 
December
 
31,
 
2023,
13,444,759
 
shares
 
remained
 
reserved
 
for
 
issuance
according to the Company’s incentive plan.
Restricted stock in 2023, 2022 and 2021 is analyzed as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Shares
Weighted Average
Grant Date Price
Outstanding as of December 31, 2020
2,423,012
$
2.95
Granted
8,260,000
 
2.85
Vested
(1,168,363)
 
3.20
Outstanding as of December 31, 2021
9,514,649
$
2.83
Granted
1,470,000
 
4.15
Vested
(3,118,060)
 
2.86
Outstanding as of December 31, 2022
7,866,589
$
3.07
Granted
1,750,000
4.54
Vested
(2,822,753)
3.05
Outstanding as of December 31, 2023
6,793,836
$
3.45
The
 
fair
 
value
 
of
 
the
 
restricted
 
shares
 
has
 
been
 
determined
 
with
 
reference
 
to
 
the
 
closing
 
price
 
of
 
the
Company’s
 
stock
 
on
 
the
 
date
 
such
 
awards
 
were
 
approved
 
by
 
the
 
Company’s
 
board
 
of
 
directors.
 
The
aggregate
 
compensation
 
cost
 
is
 
recognized
 
ratably
 
in
 
the
 
consolidated
 
statement
 
of
 
income
 
over
 
the
respective vesting periods. In 2023, 2022 and 2021,
 
compensation cost amounted to $
9,938
, $
9,282
 
and
$
7,442
,
 
respectively,
 
and
 
is
 
included
 
in
 
general
 
and
 
administrative
 
expenses
 
in
 
the
 
accompanying
consolidated statements of income.
As of
 
December 31,
 
2023 and
 
2022, the
 
total unrecognized cost
 
relating to
 
restricted share
 
awards was
$
14,880
 
and $
16,873
, respectively. As of
 
December 31,
 
2023, the weighted-average
 
period over
 
which the
total compensation cost related to
 
non-vested awards not yet
 
recognized is expected to be
 
recognized is
1.95
 
years.
i)
 
Warrants:
On
 
August
 
11,
 
2022, the
 
Company
 
issued
nine
 
warrants
 
to
 
Sea
 
Trade
 
(Note
 
6)
 
that
permitted the holder to purchase from the Company
18,487,393
, at $
0.01
 
per share, each exercisable on
the delivery of each vessel from Sea Trade to the Company.
 
The warrants would expire and no longer be
exercisable upon
 
the earlier
 
of the
 
termination date
 
of each
 
memorandum of
 
agreement and
 
the date
 
before
the delivery date of a vessel if
 
a registration statement had not been declared effective.
 
The holder of the
warrants would not be
 
considered a shareholder prior to
 
the issuance of the
 
shares. As of December
 
31,
2022, there was only
one
 
warrant not exercised by Sea Trade, which was exercised
 
on January 30, 2023,
upon delivery of the ninth Ultramax vessel (Note 6). The
 
Company did
no
t receive any proceeds from the
exercise of
 
the warrants
 
by Sea Trade
 
and the
 
exercise price
 
of the
 
shares issued
 
was included
 
in the
 
price
of the vessels acquired.
12.
 
Voyage expenses
The amounts in the accompanying consolidated statements of income
 
are analyzed as follows:
 
 
 
 
 
 
 
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-35
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023
2022
2021
Commissions
$
13,331
$
14,412
$
10,794
Gain from bunkers
(474)
(8,100)
(5,955)
Port expenses and other
764
630
731
Total
 
$
13,621
$
6,942
$
5,570
13.
 
Interest and Finance Costs
The amounts in the accompanying consolidated statements of income
 
are analyzed as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023
2022
2021
Interest expense, debt
$
39,617
$
21,983
$
18,067
Finance liabilities interest expense
6,786
2,735
-
Amortization of debt and finance liabilities issuance
 
costs
2,620
2,286
1,865
Loan and other expenses
308
415
307
Interest expense and finance costs
$
49,331
$
27,419
$
20,239
 
14.
 
Earnings per Share
All common
 
shares issued
 
(including the
 
restricted shares
 
issued under
 
the Company’s
 
incentive plans)
are
 
the
 
Company’s
 
common
 
stock
 
and
 
have
 
equal
 
rights
 
to
 
vote
 
and
 
participate
 
in
 
dividends.
 
The
calculation of basic earnings per share does not treat the non-vested shares (not considered participating
securities) as outstanding until the time/service-based
 
vesting restriction has lapsed.
The dilutive effect on
unexercised
 
warrants (Note
 
11(g))
 
that
 
are
 
in-the-money,
 
is
 
computed using
 
the
 
treasury stock
 
method
which assumes that the proceeds upon exercise of these warrants are
 
used to purchase common shares
at the average market price for the period. Incremental shares are
 
the number of shares assumed issued
under the
 
treasury stock
 
method weighted
 
for the
 
periods the
 
non-vested shares
 
were outstanding.
 
In 2023,
2022
 
and
 
2021,
 
there
 
were
1,710,513
,
3,257,861
,
 
and
3,735,059
 
incremental
 
shares,
 
respectively,
included in the denominator of the diluted earnings per share calculation.
 
 
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-36
Net income attributable
 
to common stockholders
 
is adjusted by the
 
dividends on Series B
 
Preferred Stock.
Net income attributable to common
 
stockholders is further adjusted by
 
the unrealized gain on
 
warrants as
of December 31, 2023 to calculate the diluted earnings per share.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2023
2022
2021
Net income
$
49,844
$
119,063
$
57,394
Dividends on series B preferred shares
(5,769)
(5,769)
(5,769)
Net income attributable to common stockholders
$
44,075
$
113,294
$
51,625
Weighted average number of common shares, basic
100,166,629
80,061,040
81,121,781
Earnings per share, basic
$
0.44
$
1.42
$
0.64
Net income
$
49,844
$
119,063
$
57,394
Dividends on series B preferred shares
(5,769)
(5,769)
(5,769)
Unrealized gain on warrants
(1,583)
-
-
Adjusted net income attributable to common
stockholders
$
42,492
$
113,294
$
51,625
Weighted average number of common shares, basic
100,166,629
80,061,040
81,121,781
Incremental shares
 
1,710,513
3,257,861
3,735,059
Weighted average number of common shares, diluted
 
101,877,142
83,318,901
84,856,840
Earnings per share, diluted
$
0.42
$
1.36
$
0.61
15.
 
Income Taxes
Under
 
the
 
laws
 
of
 
the
 
countries
 
of
 
the
 
companies’
 
incorporation
 
and
 
/
 
or
 
vessels’
 
registration,
 
the
companies are
 
not subject
 
to tax
 
on international
 
shipping income;
 
however, they are
 
subject to
 
registration
and tonnage
 
taxes, which
 
are included
 
in vessel
 
operating expenses
 
in the
 
accompanying consolidated
statements of operations.
The vessel-owning
 
companies with
 
vessels that
 
have called
 
on the
 
United States
 
are obliged
 
to file
 
tax
returns with the Internal Revenue Service. However, pursuant to the Internal Revenue Code of the United
States, U.S.
 
source income from
 
the international operations
 
of ships
 
is generally exempt
 
from U.S.
 
tax.
The applicable tax is
50
% of
4
% of U.S.-related gross transportation
 
income unless an exemption
 
applies.
The Company and each
 
of its subsidiaries expects it
 
qualifies for this statutory
 
tax exemption for the 2023,
2022 and
 
2021 taxable years,
 
and the
 
Company takes this
 
position for
 
United States federal
 
income tax
return reporting purposes.
 
16.
 
Financial Instruments and Fair Value Disclosures
Interest rate risk and concentration of credit risk
Financial instruments,
 
which potentially
 
subject the
 
Company to
 
significant concentrations
 
of credit
 
risk,
consist
 
principally
 
of
 
cash
 
and
 
trade
 
accounts
 
receivable.
 
The
 
ability
 
and
 
willingness
 
of
 
each
 
of
 
the
Company’s counterparties to perform their
 
obligations under a contract depend upon a
 
number of factors
that are
 
beyond the
 
Company’s control
 
and may
 
include, among
 
other things,
 
general economic
 
conditions,
the
 
state
 
of
 
the
 
capital
 
markets,
 
the
 
condition
 
of
 
the
 
shipping
 
industry
 
and
 
charter
 
hire
 
rates. The
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-37
Company’s credit risk with financial institutions is limited as it has temporary cash investments, consisting
mostly of deposits, placed with various qualified financial institutions and performs periodic evaluations of
the relative credit
 
standing of those financial
 
institutions. The Company limits
 
its credit risk
 
with accounts
receivable by performing ongoing
 
credit evaluations of its
 
customers’ financial condition and by
 
receiving
payments
 
of
 
hire
 
in
 
advance.
 
The
 
Company,
 
generally,
 
does
 
not
 
require
 
collateral
 
for
 
its
 
accounts
receivable and does not have any agreements to mitigate credit risk.
 
In 2023,
 
2022 and
 
2021, charterers
 
that individually
 
accounted for
10
% or
 
more of
 
the Company’s
 
time
charter revenues were as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charterer
2023
2022
2021
Cargill International SA
13%
19%
10%
Koch Shipping PTE LTD.
 
Singapore
*
15%
*
*Less than 10%
 
The Company is exposed to interest rate fluctuations
 
associated with its variable rate borrowings. On July
6, 2023, the
 
company entered
 
into an interest
 
rate swap
 
with DNB
 
(Notes 8 and
 
13) to manage
 
part of
 
such
exposure.
Fair value of assets and liabilities
The
 
carrying
 
values
 
of
 
financial
 
assets
 
reflected
 
in
 
the
 
accompanying
 
consolidated
 
balance
 
sheet
approximate their
 
respective fair
 
values due
 
to the
 
short-term nature
 
of these
 
financial instruments.
 
The
fair value of long-term bank loans with variable interest
 
rates approximates the recorded values, generally
due to their variable interest rates.
 
Fair value measurements disclosed
 
As of December 31, 2023, the Bond having a fixed interest
 
rate and a carrying value of $
119,100
 
(Note 8)
had a fair value of $
118,505
 
determined through the Level 1 input of the fair value hierarchy as defined in
FASB guidance for Fair Value Measurements.
On
 
September
 
20,
 
2022,
 
the
 
Company
 
acquired
25,000
 
Series
 
D
 
Preferred
 
Shares
 
of
 
OceanPal
 
at
$
17,600
, determined by
 
taking into consideration
 
a third-party valuation
 
which was based
 
on the
 
income
approach, taking into account the
 
present value of the future
 
cash flows the Company expects to
 
receive
from holding the equity instrument.
On December 15,
 
2022, the Company
 
distributed the
 
Series D Preferred
 
Shares as non-cash
 
dividend and
measured their fair value on
 
the date of declaration at
 
$
18,189
. Their fair value
 
was determined by using
the income approach, taking into
 
account the present value of the
 
future cash flows, the holder
 
of shares
would expect to receive from holding the equity instrument which
 
resulted in gain of $
589
.
On February
 
8, 2023, the
 
Company acquired
13,157
 
shares of
 
OceanPal Series
 
D Preferred
 
Shares, as
part of
 
the consideration provided
 
to the
 
Company for sale
 
of Melia to
 
OceanPal, at
 
$
10,000
, taking
 
into
consideration a
 
third-party valuation
 
which was
 
based on
 
the
 
income approach,
 
taking into
 
account the
present value of the future cash
 
flows the Company expects to
 
receive from holding the equity instrument.
On
 
June
 
9,
 
2023, the
 
Company distributed
 
the
 
Series
 
D
 
Preferred
 
Shares as
 
a
 
non-cash
 
dividend and
measured their
 
fair value
 
on the
 
date of
 
declaration at
 
$
10,761
. The
 
fair value
 
was determined
 
by using
 
 
 
 
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-38
the income approach, taking into
 
account the present value of the
 
future cash flows, the holder
 
of shares
would expect to receive from holding the equity instrument which
 
resulted in gain of $
761
.
Other Fair value measurements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description (in thousands of US Dollars)
December 31,
2022
Quoted Prices
in Active
Markets
(Level 1)
Non-recurring fair value measurements
Long-lived assets held for use
$
67,909
$
67,909
Total
 
non-recurring fair value measurements
67,909
67,909
December 31,
2023
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Other
Observable
Inputs (Level 3)
Assets
Recurring fair value measurements
Investments in equity securities
$
20,729
20,729
$
$
Investments in related party
8,315
8,138
177
Interest rate swap, asset
129
129
Total
 
recurring fair value measurements
$
29,173
$
28,867
$
129
$
177
Non-recurring fair value measurements
Equity method investments
$
4,519
$
$
4,519
$
Long-lived assets held for use
7,809
7,809
-
Total
 
non-recurring fair value measurements
$
12,328
$
7,809
$
4,519
-
Liabilities
Recurring fair value measurements
Interest rate swap, liability
568
568
Warrant liability
6,332
6,332
Total
 
recurring fair value measurements
6,900
6,332
568
-
 
 
 
17.
 
Subsequent Events
a)
Exercise of
 
warrants:
Since January
 
4, 2024 and
 
until April
 
1, 2024, holders
 
of warrants
 
exercised
3,051,471
 
warrants under which
4,597,192
 
shares of common
 
stock were issued
 
and the proceeds
from the exercise of warrants amounted to $
12,206
.
b)
 
Series
 
B
 
Preferred
 
Stock
 
Dividends
:
 
On
 
January
 
15,
 
2024,
 
the
 
Company
 
paid
 
a
 
quarterly
dividend
 
on
 
its
 
series
 
B
 
preferred
 
stock,
 
amounting
 
to
 
$
0.5546875
 
per
 
share,
 
or
 
$
1,442
,
 
to
 
its
stockholders of record as of January 12, 2024.
c)
Acquisition
 
of
 
property:
On
 
January
 
18,
 
2024,
 
the
 
Company
 
acquired
 
from
 
unaffiliated
 
third
parties a plot of
 
land for the purchase price of
 
Euro
310,000
 
to be utilized for
 
corporate purposes.
On March 6, 2024, the Company acquired
 
from unaffiliated third parties another plot
 
of land for the
purchase price of Euro
1,300,000
.
 
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023
(Expressed in thousands of U.S. Dollars – except share, per share
 
data, unless otherwise stated)
F-39
 
 
 
d)
 
Sale of Vessel Artemis:
 
On January 19, 2024, the Company, through a wholly owned subsidiary,
entered into an agreement with an unrelated third party to sell
 
the vessel Artemis for the sale price
of $
12,990
. The vessel was delivered to the new owners on March 5, 2024.
e)
Commissioning Service
 
Operation Vessels (CSOVs):
On January
 
24, 2024,
 
Diana Energize
 
Inc.
increased
 
its
 
equity
 
commitment
 
to
 
Euro
50
 
million,
 
being
 
approximately
45.87
%
 
of
 
the
 
limited
partnership’s capital (Note 4 (c)).
f)
Methanol
 
Dual
 
Fuel
 
New-Building Kamsarmax
 
Dry
 
Bulk
 
Vessels:
On
 
February
 
8,
 
2024,
 
the
Company signed an agreement to
 
order through Marubeni Corporation
 
or its guaranteed nominee,
an
 
unaffiliated
 
third
 
party,
two
 
81,200
 
dwt methanol
 
dual
 
fuel
 
new-building Kamsarmax
 
dry
 
bulk
vessels, for
 
a purchase
 
price of
 
$
46,000
 
each, built
 
at Tsuneishi
 
Group (Zhoushan)
 
Shipbuilding
Inc., China. The vessels are expected
 
to be delivered to the
 
Company by the second half of 2027
and the first
 
half of 2028
 
respectively. On February 15,
 
2024, the Company
 
paid the first
 
instalment,
amounted $
8,050
 
for each vessel, representing the
17.5
% of the contract price.
 
g)
 
Sale of
 
Vessel Houston:
 
On February
 
22, 2024,
 
the Company, through
 
a wholly
 
owned subsidiary,
entered into an agreement
 
with an unrelated third
 
party to sell the
 
vessel Houston for the
 
sale price
of $
23,300
,
with delivery to the new owners latest by September 16, 2024.
h)
 
Common Stock Dividend:
 
On February 23,
 
2024, the Company
 
declared a cash
 
dividend on its
common stock of
 
$
0.075
 
per share, based
 
on the
 
Company’s results of
 
operations during
 
the fourth
quarter
 
ended
 
December
 
31,
 
2023.
 
The
 
cash
 
dividend
 
was
 
paid
 
on
 
March
 
12,
 
2024,
 
to
 
all
shareholders of record as of March 5, 2024.