Note 7 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 

7.

Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings and

may

become involved in other legal matters arising in the ordinary course of its business. The Company evaluates these legal matters on a case-by-case basis to make a determination as to the impact, if any, on its business, liquidity, results of operations, financial condition or cash flows.

In

November 2015,

the Company filed a voluntary self-disclosure report with OFAC regarding certain apparent violations of U.S. sanctions regulations in the provision of shipping services for

third

party charterers with respect to the transportation of cargo to or from Myanmar (formerly Burma) (the “OFAC Disclosure”). At the time of such apparent violations, the Company had a different senior operational management team. Notwithstanding the fact that the apparent violations took place under a different senior operational management team and although the Company’s new Board of Directors and management have implemented robust remedial measures and significantly enhanced its compliance safeguards, there can be

no

assurance that OFAC will

not

conclude that these past actions warrant the imposition of civil penalties and/or referral for further investigation by the U.S. Department of Justice. The report was provided to OFAC for the agency’s review, consideration and determination regarding what action, if any,

may

be taken in resolution of this matter. The Company will continue to cooperate with the agency regarding this matter and cannot estimate when such review will be concluded. While the ultimate impact of these matters cannot be determined, there can be

no

assurance that the impact will

not

be material to the Company’s financial condition or results of operations

Other Commitments

On

July 28, 2011,

the Company entered into an agreement to charter in a

37,000

dwt newbuilding Japanese vessel that was delivered in

October 2014

for

seven

years with an option for an additional

one

year. The hire rate for the

first

to

seventh

year is

$13,500

per day and

$13,750

per day for the

eighth

year option. On

May 10, 2017,

the Company signed an agreement to cancel this existing time charter contract. The Company agreed to pay a lump sum termination fee of

$1.5

million relating to the cancellation. At the same time, the Company entered into an agreement with the same lessor, effective

April 28, 2017

to charter in a

61,400

dwt,

2013

built Japanese vessel for approximately

four

years (having the same redelivery dates as the aforementioned cancelled charter) with options for

two

additional years. The hire rate for the

first

four

years is

$12,800

per day and the hire rate for the

first

optional year is 

$13,800

per day and

$14,300

per day for the

second

optional year.

On

February 28, 2017,

Ultraco, a wholly-owned subsidiary of the Company, entered into the Greenship Purchase Agreement with Greenship Sellers for the purchase of

nine

Greenship Vessels. The aggregate purchase price for the

nine

Greenship Vessels is

$153.0

million. The allocated purchase price for each Greenship Vessel is

$17.0

million.

The Company took delivery of

six

of the

nine

Greenship Vessels during the

second

quarter and is expected to take delivery of the remaining Greenship Vessels in the

third

quarter of

2017.

As of

June 30, 2017,

the Company paid a deposit of

$20.8

million towards the delivery of the remaining

three

Greenship Vessels. On

July 3, 2017

and

August 4, 2017,

the Company took delivery of the

seventh

and

eighth

Greenship Vessels, respectively, and the remaining Greenship Vessel is expected to be delivered charter free in the

third

quarter of

2017.