UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM
(Mark One)
OR
For the fiscal year ended
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
____________________________________________________________________________________________________________________________________________________________________________________________________________
Exact name of Registrant as specified in its charter)
Diana Shipping Inc.
____________________________________________________________________________________________________________________________________________________________________________________________________________
(Translation of Registrant’s
name into English)
____________________________________________________________________________________________________________________________________________________________________________________________________________
,
,
,
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,
,
,
Tel:
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E-mail:
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Trading
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registered
Securities registered or to be registered pursuant
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as of the close of the period covered by
the annual report.
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as defined in Rule 405 of the Securities Act.
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4
TABLE OF CONTENTS
5
7
7
7
42
68
69
85
93
98
99
100
109
110
111
111
111
Item 16A.
Audit Committee Financial Expert
112
112
112
113
113
113
114
115
115
115
116
119
119
119
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;
●
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
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.
7
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 bullets below 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.
8
●
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 United
Kingdom, the European Union,
the United Nations, or other governmental
authorities, or engage in other
such transactions
or dealings
that would
be violative
of applicable
sanctions laws, 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
has inherent uncertainties
that could
limit the legal protections available to us.
Company Specific Risk Factors
●
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.
●
A cyber-attack could materially disrupt our business.
●
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.
●
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.
●
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.
●
Technological innovation and
quality and
efficiency requirements
from our
customers could
reduce our charter hire income and affect the demand and the value
of our vessels.
●
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.
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.
●
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.
9
●
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.
●
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, outstanding
warrants 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
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
vessels have
in the
past
declined below the
operating costs of
vessels. When we
charter our
vessels pursuant to
short-term time
charters, we
are exposed
to changes
in short-term
charter rates
for dry
bulk carriers
and such
changes
may affect our earnings. 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. We
cannot assure
you that
we will
be able
to successfully
charter our
vessels in
10
the
future
or
renew
existing
charters
at
rates
sufficient
to
allow
us
to
meet
our
obligations
or
pay
any
dividends in the future. 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 2024, the
dry bulk
shipping market
experienced significant
volatility, especially in
the Capesize segment,
with fluctuating demand
and a notable
drop in rates
during the fourth
quarter.
Geopolitical tensions, stricter
environmental
regulations,
including
EU
fuel
rules,
and
disruptions
in
the
Panama
and
Suez
Canals
impacted
market
dynamics.
Infrastructure
projects
and
agricultural
exports
supported
demand,
keeping
freight rates for
Panamax and Ultramax segments relatively
stable, with an exception
towards the end
of
2024.
Freight rate
volatility stemmed
from seasonal
demand shifts,
with recovery
periods driven
by key
commodity
demand,
such
as
China’s
demand
for
coal
and
iron
ore
which
remained
crucial,
while
also
limited fleet
growth provided
partial support.
The introduction
of stricter
environmental
regulations, including
IMO 2030
and EU
fuel mandates,
is expected
to raise
operational costs,
potentially affecting
shipping rates.
The
Russia-Ukraine
war
and
tensions
in
Israel
disrupted
supply
chains
and
shipping
routes,
causing
unpredictable shifts in dry bulk demand. Despite these challenges, the market outlook remains cautiously
optimistic,
though
subject
to
shifts
in
global
trade
patterns,
economic
conditions,
and
geopolitical
developments.
Factors that influence demand for dry bulk vessel capacity include:
●
consumer and industrial products;
●
finished consumer and industrial products;
●
●
finished consumer and industrial products;
●
●
conflicts
between
Russia
and
Ukraine
and
Israel
and
Hamas,
and
fluctuations
in
industrial
and
agricultural production;
●
●
by
sea
for
reasons
including
but
not
limited
to
reductions
in
canal
capacities
and
geopolitical
conflicts and military responses;
●
terrorist attacks;
●
industry bodies, such as safety and environmental regulations and
requirements;
●
11
●
●
●
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:
●
●
●
●
political events;
●
●
●
●
or recycling rates and international scrapping or recycling regulations;
●
●
●
repairs or otherwise not available for hire;
●
●
of vessels or early obsolescence of tonnage; and
●
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
12
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.
Global economic conditions may negatively impact the drybulk shipping
industry.
Economic
growth
is
expected
to
remain
resilient
in
2025
and
2026,
despite
significant
challenges,
as
inflation is
expected to
ease further
compared to
2024. However,
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
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.
Although China
met its
official growth
target of
5% in
2024, the
growth of
China’s
economy is projected to slow
in 2025, as there is a
continuous threat of a Chinese
financial crisis resulting
13
from deteriorating real estate property values, excessive personal and corporate indebtedness and “trade
wars”. An economic slowdown in
China, 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.
In
recent
years,
China
and
the
United
States
have
implemented
certain
increasingly
protective
trade
measures
with
continuing
tensions
that
started
as
tariffs
and
now
include
technology
restrictions
and
additional export controls. Moreover, the impact that the
new U.S. presidential administration will have on
these tensions remains in flux. Geopolitical tensions in 2025
may intensify and impact trade flows, military
conflicts, and dry
bulk transportation
in the
future, and
U.S.-China trade
tensions, including
the introduction
by the U.S.
government of
tariffs affecting certain
goods imported
by China, may
provoke further
retaliatory
trade actions.
Additionally,
new tariffs
have recently
been imposed
by the
U.S. on
imports from
Canada
and Mexico,
among other
countries, on
goods including
steel and
aluminum, and
the U.S.
has also
signaled
that it may
impose “reciprocal” tariffs
on foreign imports in
the coming weeks.
It is unknown
whether and
to
what
extent
such
tariffs
(or
other
new
laws
or
regulations)
will
be
retained,
expanded
or
otherwise
modified by the U.S.,
or the effect that
any such actions
will have on us
or our industry, but such measures
could have an adverse effect on our business, financial condition, and results of operations.
The dry bulk
carrier charter market 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 2024, the BDI ranged
from
a low of
976 to a
high of 2,419
and closed at
1,635 on March
20, 2025. 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
oversupply of vessels, easing
of port congestion, slower
demand growth and
economic and
geopolitical factors.
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.
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
rose 3.4%
and 2.9%
in December 2023
and 2024,
respectively,
compared to the prior year. 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
14
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.
Our operations
expose us
to global
risks, such
as political
instability, terrorist
or other
attacks, war,
international
hostilities
and
economic
sanctions
restrictions
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,
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,
including the current
political instability in the
Middle East (including in
Israel and Gaza), Ukraine, the
South China Sea region
and other geographic
countries and
areas, geopolitical
events, terrorist
or other attacks,
war (or
threatened
war) and international hostilities. The response of the United States and others to terrorist
attacks, as well
as
the
threat
of
future
terrorist
attacks
around
the
world,
continues
to
cause
uncertainty
in
the
world’s
financial
markets
and
may
affect
our
business,
operating
results,
and
financial
condition.
Continuing
conflicts and
recent developments
in Ukraine
and the
Middle East,
and increased
tensions between
the
U.S. and China,
Russia, Iran and
certain terrorist organizations, as
well as the
presence of U.S.
or other
armed forces in various
other regions, may lead
to additional acts of
terrorism and armed conflict
around
the world, which
may contribute to
further economic instability in
the global financial markets.
As a result
of the above, insurers have increased premiums and reduced or restricted coverage for losses caused by
terrorist
acts
generally.
These
uncertainties
could
also
adversely
affect
our
ability
to
obtain
additional
financing
on
terms
acceptable to
us
or
at
all.
Any
of
these
occurrences could
have
a material
adverse
impact on our
operating results,
revenues and
costs. Additionally, events in
other jurisdictions could
impact
global
markets,
including
foreign
exchange
and
securities
markets;
any
resulting
changes
in
currency
exchange rates, tariffs,
treaties and other
regulatory matters could
in turn adversely
impact our business
and operations.
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, in the Black
Sea in connection with
the conflict
between Russia and
Ukraine,
and in
and around
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,
among
others.
Any
of
these
occurrences could have
a material
adverse impact on
our future
performance, results of
operation, cash
flows and financial position.
Beginning in
February of
2022, the
United States,
the United
Kingdom and
the European
Union, among
other countries,
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
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.
15
The United States
has 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 Russia by
U.S.
persons,
among
other
prohibitions
and
export
controls,
and
has
issued
numerous
determinations
authorizing the
imposition of
sanctions on
persons who
operate or
have operated
in the
energy,
metals
and mining, and marine sectors of
the Russian Federation economy, among others. Increased restrictions
on
these
sectors,
or
the
expansion
of
sanctions
to
new
sectors,
may
pose
additional
risks
that
could
adversely affect our business and operations.
Our business could be adversely impacted by trade tariffs,
trade embargoes or other economic sanctions
that limit trading
activities between the United
States or other countries
and 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 ongoing tensions
involving Russia, Iran,
and China and
the current conflicts
between Russia
and Ukraine and in the Middle East.
An increase in
trade protectionism,
the unravelling of
multilateral trade
agreements and
a decrease
in the level
of China’s export
of goods and
import of raw
materials could have a
material adverse
impact
on
our
charterers’
business
and,
in
turn,
could
cause
a
material
adverse
impact
on
our
results of operations, financial condition and cash flows.
Our operations expose
us to the
risk that increased
trade protectionism
may adversely affect
our business.
Recently,
government leaders
have declared
that their
countries may
turn to
trade barriers
to protect
or
revive their domestic industries
in the face of
foreign imports, thereby
depressing the demand
for shipping.
The U.S.
government has
made statements
and taken
actions that
may impact
U.S. and
international trade
policies, including tariffs
affecting certain Chinese
industries. Additionally,
new tariffs may
be imposed by
the Trump
administration on imports
from Canada,
Mexico and
China as
well as
on imports of
steel and
aluminum. It is unknown
whether and to what
extent new tariffs (or
other new laws or
regulations) will be
adopted, or the effect that any such actions would
have on us or our industry. If any new tariffs, legislation
and/or regulations are implemented,
or if existing trade
agreements are renegotiated
or, in particular, if the
U.S. government
takes retaliatory
trade actions
due to
the ongoing
U.S.-China trade
tension, such
changes
could have an adverse effect on our business, results of operations and
financial condition.
Additionally,
the
U.S.
trade
war
with
China
may
escalate
beyond
tariffs
with
a
proposal
by
the
Trump
administration to impose significant fees on any
vessel entering a U.S. port where that
vessel is owned by
a
Chinese
shipping
company
or
by
a
vessel
operator
whose
fleet
includes
one
or
more
Chinese-built
vessels or
that has
newbuilding
orders at
a Chinese
shipyard. The
proposal of
the U.S.
trade representative
(USTR), if
adopted as
proposed, would
require Chinese
shipping company’s-to
pay up
to $1
million per
port
call
and
those
operating
Chinese-built
vessels
to
be
charged
up
to
$1.5
million
per
U.S.
port
call,
depending on the percentage of vessels in their fleet
built at Chinese shipyard or newbuilding orders with
Chinese shipyards.
It is
unknown whether
and to
what extent
these new
port fees
on Chinese
shipping
companies and vessels will be adopted, or the effect that they would
have on us or our industry generally.
Furthermore, the government of China has
implemented economic policies aimed at increasing domestic
consumption of Chinese-made goods. This may have the effect of reducing the supply of goods available
for export
and may,
in turn,
result in
a decrease of
demand for
container shipping. Many
of the
reforms,
particularly
some limited
price reforms
that
result
in the
prices for
certain commodities
being
principally
determined by market forces, are unprecedented or experimental and may be subject to revision, change
or abolition.
Restrictions
on
imports, including
in
the
form
of
tariffs,
could
have
a
major
impact
on
global
trade
and
demand for shipping. Specifically,
increasing trade protectionism in the markets
that our charterers serve
may cause
an increase
in (i)
the cost
of goods
exported from
exporting countries,
(ii) the
length of
time
16
required
to
deliver
goods
from
exporting
countries,
(iii)
the
costs
of
such
delivery
and
(iv)
the
risks
associated with
exporting goods.
These factors
may result
in a
decrease in
the quantity
of goods
to be
shipped, shipping time
schedules, voyage costs and
other associated costs.
Protectionist developments,
or the perception they may occur, may have a material adverse effect on global economic conditions, and
may
significantly
reduce
global
trade,
including
trade
between
the
United
States
and
China.
These
developments
would
also
have
an
adverse
impact
on
our
charterers’
business,
operating
results
and
financial condition which could,
in turn, affect
our charterers’ ability to
make timely charter
hire payments
to us
and impair
our ability
to renew
charters and
grow our
business. Any
of these
developments could
have a material
adverse effect on
our business, results
of operations and
financial condition,
as well as
our
cash flows, including cash available for dividends to our stockholders.
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.
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
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; (vi) the effect such
an
outbreak would have on the
global business environment and
the demand for the goods we
transport; (vii)
governmental
responses;
and
(viii)
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
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, such as the ongoing conflict between Russia and Ukraine and between
Israel and Hamas,
supply
and
demand for
oil
and
gas,
actions
by
the
Organization
of
Petroleum Exporting
Countries
(the
17
"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.
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,
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 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.
18
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.
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.
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, environmental
accidents, bad
weather
and natural disasters
or other disasters
outside our control
and other acts
of God, business
interruptions
caused
by
mechanical
failures,
grounding,
fire,
explosions
and
collisions,
human
error,
war,
terrorism,
piracy, robbery,
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 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
reduce our revenue or increase
our expenses and also
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
or
the
loss
of
any
of
our
vessels
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 not covered by
our insurance, would decrease our
earnings and
available
cash
and
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
19
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.
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 United Kingdom, the European
Union, the United
Nations, or other
governmental authorities, or engage
in other such
transactions or dealings that
would be
violative of
applicable sanctions
laws, it
could lead
to monetary
fines or
penalties and
may adversely affect our reputation and the market for our securities.
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 or
from countries and territories
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, 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 vary
in their application,
and by jurisdiction,
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.,
U.K.
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, U.K.,
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.
20
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 2024 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. Further,
our reputation
and the
market for
our securities
may be
adversely affected
if, for
example, we
enter into
charters
with
individuals
or
entities
who,
pursuant
to
contracts
with
third
parties,
provide
services
to
or
engage in operations associated with countries or territories that
are the subject of certain U.S. sanctions
or embargo laws. Investor perception
of the value of our
common stock may also
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,
or stowaways,
whether inside
or attached to
the hull of
our vessel and
whether with
or without the 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.
Under some jurisdictions, vessels used for
the conveyance of illegal drugs could
result in forfeiture of the
subject vessel to the government of such jurisdiction.
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
21
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 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.
Although
none
of
our
vessels
have
been
requisitioned by
a
government
for
title
or
hire,
a
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
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
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.
22
GDPR broadens the
scope of personal
privacy laws to
protect the rights
of European Union
citizens and
requires organizations to
report 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
applies
to
all
companies
processing and holding the personal
data of data subjects residing
in the EU, regardless of
the company’s
location.
GDPR
became
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;
●
scrap values;
●
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.
In
addition,
as
vessels
grow
older,
they
generally
decline
in
value.
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,
2024,
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
23
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.
Conversely, if vessel
values are
elevated at
a time
when we
wish to acquire
additional
vessels,
the
cost
of
acquisition
may
increase
and
this
could
adversely
affect
our
business,
results
of
operations, cash flow and financial condition.
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 since
the beginning
of 2025, short-term time charter and spot market charter rates for some dry bulk carriers have declined at
or
below
the
operating
costs
of
those
vessels. 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, including navigation,
provision of services, propulsion,
machinery management, power control,
communications and cargo management. We have in
place safety and security measures on our
vessels
and onshore
operations to
protect our
vessels against
cyber-security attacks
and any
disruption to
their
information systems.
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 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.
24
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.
We
do not
maintain cyber-liability
insurance at
this time
to
cover such
losses. Any
significant
interruption
or
failure
of
our
information
systems
or
any
significant
breach
of
security
could
adversely affect
our business
and results
of operations.
We have
taken extensive measures
to enhance
our
security
infrastructure,
reform
network
architecture,
and
implement
rigorous
security
policies,
culminating
in
ISO
27001
certification.
Key
initiatives
include
establishing
security
testing,
business
continuity,
disaster
recovery,
and
incident
response
programs,
as
well
as
developing
a
robust
security
awareness
and
training
program
to
enhance
employee
vigilance
against
cyber
threats.
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 a threat and any potential impact.
As
cyberattacks
become
increasingly
sophisticated,
and
as
tools
and
resources
become
more
readily
available to
malicious third
parties, including
the risk
associated with
the use
of emerging
technologies,
such as
artificial intelligence and
quantum computing for
nefarious purposes, there
can be no
guarantee
that our actions,
security measures
and controls
designed to
prevent, detect
or respond
to intrusion,
to limit
access to data,
to prevent destruction
or alteration
of data or
to limit the
negative impact
from such attacks,
can provide absolute
security against compromise. 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 cyber
threats 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. A
failure to disclosure could result
in the
imposition of
injunctions, fines
and other
penalties by
the
SEC. Complying
with these
obligations
could
cause
us
to
incur
substantial
costs
and
could
increase
negative
publicity
surrounding
any
cybersecurity incident.
During the
year ended
December 31,
2024, 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 on our cybersecurity policies, please see
“Item 16K. Cybersecurity.”
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
25
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.
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
former
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-
26
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,
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.
Almost immediately upon release of the
rules, multiple lawsuits challenging the rules
were filed in federal
court, and the
cases were transferred
to the
Eighth Circuit Court
of Appeals.
On April
4, 2024, the
SEC
voluntarily issued a stay of
the climate-related disclosure rules
pending the completion of
judicial review of
the consolidated
Eighth Circuit
petitions, which
is still
ongoing.
In addition,
on June
28, 2024,
in its
decision
of
the
combined
cases
of
Loper
Bright
Enterprises
v.
Raimondo
, the
Supreme Court of the
United States narrowed its
view of agency
authority by overturning
Chevron deference, which required judges to defer to an agency’s interpretation of relevant laws when its
regulations are subject to a legal challenge. This
decision will raise the burden for administrative
agencies
to prove they have the
authority to create a rule and
will likely create a hurdle
for SEC’s pending climate-
related
disclosure rules.
The
impact
of
the
ongoing litigation
with
respect
to
these
rules,
as
well as
the
change in administration, is uncertain. Costs
of compliance with these new rules
and any further climate-
related disclosure rules that are adopted
in the future may be significant
and may have a material adverse
effect on our future performance, results of operations, cash flows and
financial position.
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.
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.
27
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
short
to
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.
At the expiration of our charters or if
a charter terminates early for any
reason or when we acquire vessels
charter-free, we
will need
to charter
or recharter
our vessels.
If an
excess of
vessels is
available on
the
spot or short-term
market at the
time we are
seeking to
fix new longer-term
charters, we
may have difficulty
entering into
such charters
at all
or at
profitable rates
and for
any term
other than
short term
and, as
a
result,
our
cash
flow may
be
subject to
instability in
the
mid
to
long-term. In
addition, it
would be
more
difficult to
fix relatively older
vessels should there
be an
oversupply of younger
vessels on the
market. A
depressed spot
market may require
us to
enter into short-term
spot charters
based on prevailing
market
rates, which could result in a decrease in our cash flow.
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.
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.
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;
28
●
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.
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. Any such
hidden defects or
problems may be expensive
to repair and
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.
The market prices
of secondhand and
newbuilt vessels
also tend
to fluctuate
with changes in
charter rates and,
if we sell
the vessels, the
sales prices may
be less than
their carrying
values at that time.
In general, the costs to maintain a vessel in
good operating condition increase with the age of the vessel.
As
of
the
date
of
this
annual
report,
our
fleet
consists
of
39
vessels
of
which
37
vessels,
owned
and
chartered-in, are in operation,
having a combined carrying
capacity of 4.1 million dead
weight tons, or dwt,
and a weighted average age of
11.4 years and
two vessels are under construction. As our
fleet ages, we
will
incur
increased
costs.
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
29
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. As a
result, regulations and
standards could have
a material adverse
effect on our business,
financial condition,
results of operations, cash flows and ability to pay dividends.
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, work stoppages
or other labor disturbances
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.
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. Furthermore, it
is possible that
parties with whom we
have charter contracts may
be impacted
by events in Russia and Ukraine and in the Middle East, including in the Red Sea area,
and any resulting
sanctions.
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.
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.
30
Technological
innovation
and
quality
and
efficiency
requirements
from
our
customers
could
reduce our charter hire income and affect the demand 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
vessels,
competition
from
the
current
eco
vessels
and
any
more
technologically
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. In these circumstances, we may
also be
forced to
charter our
vessels to
less creditworthy
charterers, either
because top
tier charters
will not
charter
older
and
less
technologically
advanced
vessels
or
will
only
charter
such
vessels
at
lower
contracted
charter
rates
than
we
are
able
to
obtain
from
these
less
creditworthy,
second
tier
charterers.
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 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.
Developments in technology could also affect global
trade flows and supply chains causing disruptions in
the
demand
for
our
vessels.
Decreasing
the
cost
of
labor
through
automation
and
digitization
and
increasing
the
consumers
power
to
demand
goods,
technology
is
changing
the
business
models
and
production of
goods in many
industries. Consequently,
supply chains are
being pulled closer
to the end-
customer
and
are
required
to
be
more
responsive
to
changing
demand
patterns.
As
a
result,
fewer
intermediate and raw inputs are
traded, which could lead to
a decrease in shipping activity.
If automation
and digitization become more
commercially viable and/or production
becomes more regional or
local, total
dry-bulk
volumes would
decrease,
which would
adversely affect
demand for
our services.
Supply chain
disruptions
caused
by
geopolitical
events,
rising
tariff
barriers
and
environmental
concerns
may
also
accelerate these trends.
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.
Additionally, our insurers may
refuse to pay
particular claims
and
our insurance may
be voidable by
the insurers if
we take, or
fail to take,
certain action, such
as failing to
maintain certification of our vessels with applicable maritime regulatory organizations. 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. In
addition, we
do not presently
carry loss-of-hire
insurance, which
covers
31
the
loss
of
revenue
during
extended
vessel
off-hire
periods,
such
as
those
that
might
occur
during
an
unscheduled drydocking due to damage to the vessel from a major accident. Accordingly, any vessel that
is off hire
for an extended period
of time, due to
an accident or
otherwise, could have a material
adverse
effect on our business, results of operations and financial condition.
We are exposed to U.S. dollar and foreign currency fluctuations and devaluations that could harm
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
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
2024, 2023, and
2022, approximately
11%, 13% and 34%,
respectively, of our revenues
were derived
from
one,
one
and
two
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
commissioning service operation
vessel 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 vessels. Our joint venture partners
may have interests that are different from ours which may result in conflicting views as to the operation of
the vessels owned by
the joint ventures or
the conduct of the
business of the joint
ventures. We may
not
be able
to resolve
such conflicts
in our
favor and
such conflicts
or differing
views could
have a
material
adverse effect on our interest in these joint ventures.
32
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.
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..
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.
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,
suppliers
and
integrating newly acquired assets and operations into existing infrastructure. If we
are unable to grow our
33
financial and operating
systems or to
recruit suitable employees,
should we decide
to expand our
fleet, our
financial performance may be
adversely affected, among other
things. 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 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 2024
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 2024
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.
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”.
34
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
Ta
xation
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.
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
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
fourth 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
35
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.
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;
36
●
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;
●
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 strategic
alliances, 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 annual report; and
●
general state of the securities markets,
and general market and
economic conditions.
37
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.
We are a
“foreign private issuer” under the
NYSE rules, and as such we
are entitled to exemption
from certain NYSE
corporate governance standards,
and you may
not have the
same protections
afforded to
shareholders of
companies that
are subject
to all
of the
NYSE corporate
governance
requirements.
We are a “foreign private issuer” under the
securities laws of the United States
and the rules of the NYSE.
Under the securities laws of
the United States, “foreign private
issuers” are subject to different
disclosure
requirements than U.S. domiciled
registrants, as well
as different financial
reporting requirements. Under
the NYSE rules, a “foreign private
issuer” is subject to less stringent corporate
governance requirements.
Subject to
certain exceptions,
the
rules of
the
NYSE permit
a “foreign
private issuer”
to follow
its home
country practice in lieu of the listing requirements of the NYSE.
Accordingly, you may
not have
the same
protections afforded
to shareholders
of companies
that are
subject
to all of the
NYSE corporate governance requirements. For a
list of the practices followed
by us in lieu
of
NYSE’s corporate
governance rules, we
refer you to
the section of
this annual report
entitled "Corporate
Governance" under Item 16G.
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.
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
38
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 24,719,462 shares, or approximately 20.3% 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, 2024, 125,203,405
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.
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.
39
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 an Amended and Restated
Stockholders Rights Agreement, dated February
2,
2024, 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. See “Item 10.
Additional Information-
B. Memorandum and Articles of Association-Stockholders Rights
Agreement.”
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.
40
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
dividends on
or
redeem preferred
shares. Our
amended and
restated
articles of
incorporation currently
41
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
42
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
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.
As
of
December 31,
2024, we
have
issued 9.8
million shares
of common
stock
and we
could issue
up
to 26.5
million additional 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
Joint Venture Agreements
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.
43
On March 12, 2025,
we entered into a
joint venture agreement with
Ecogas Holding AS,
pursuant to which
we agreed to contribute $18.5 million, being 80.0%
interests of two LPG newbuilding
vessels with delivery
in 2027 and with the option for two more.
Tender offer
In
December 2024,
we
announced
the
commencement of
a
tender
offer
to
purchase
up
to
15,000,000
shares,
or
about
12.0%,
of
our
outstanding
common
stock
using
funds
available
from
cash
and
cash
equivalents
at
a
price
of
$2.00
per
share.
The
tender
offer
was
settled
on
January
7,
2025
and
we
purchased a total of 11,442,645 shares of common stock for an aggregate amount of $22.9 million.
Stockholders’ Rights Agreement
On
February 2,
2024,
we
entered
into
an
Amended
and
Restated Stockholders
Rights
Agreement (the
“Rights Agreement”)
with Computershare
Trust Company, N.A., as Rights
Agent, to amend
and restate
the
Stockholders Rights Agreement, dated January 15, 2016 which, among other things,
amends the original
rights agreement to extend the expiration date of the Rights Agreement
to February 1, 2034.
Equity Distribution Agreement
On September 9,
2024, we
entered into Amendment
No. 2 to
the Equity Distribution
Agreement dated
April
23, 2021, and amended July 9, 2021, between Maxim and the Company.
Dividends
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.
On June 18, 2024, we paid a cash dividend of $0.075 per share, or $9.4 million,
to shareholders of record
as of June 12, 2024.
On August
30, 2024,
we paid
a cash
dividend of
$0.075 per
share, or
$9.4 million,
to shareholders
of record
as of August 15, 2024.
On December
18, 2024,
we paid
a cash
dividend of
$0.01 per
share, or
$1.3 million,
to shareholders
of
record as of December 11, 2024.
On February 25, 2025, we declared a cash dividend of $0.01 per
share, or $1.1 million, payable on March
21, 2025 to shareholders of record as of March 12, 2025.
Loans
In
July
2024,
we
completed
the
pricing
of
a
$150
million
private
placement
of
senior
unsecured
bonds
maturing in July
2029 and callable
beginning three years
after issuance. The
bond offering was priced
with
a U.S. dollar fixed-rate coupon of
8.75%. Interest is payable semi-annually in arrears in
July and January
of each year.
In November 2024, we completed a $25
million tap issue under our senior
unsecured bond
issue priced at 102.00% of par value. The bond is trading on the Oslo Børs.
On July
25, 2024,
we refinanced
the outstanding
balance of
two loan
facilities with
Nordea Bank
amounting
to $167.3 million and
originally maturing in
October 2027 and June
2028 with a facility
of the same amount
and maturity extended to July 2030.
44
On October 18,
2024, we refinanced the
outstanding balance of a
loan facility with Danish
Ship Finance,
amounting to
$80.2 million,
originally maturing
in April
2028, with a
facility of
the same amount
and maturity
extended to April 2031.
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,
subject
to
adjustments,
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,
also subject
to adjustments.
Since the
dividend ex-Date
on March
12, 2025, each
Warrant entitles the
holder to purchase 1.09653
shares of common stock
plus the Bonus
Share Fraction adjusted to 0.54827 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
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 a 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
shelf
registration
statement on
Form
F-3
declared
effective
on
July
9,
2021
expired
and
the
Warrant
distribution
is
now
being
offered
pursuant
to
our
existing
shelf
registration
statement on Form F-3 declared effective on September 9, 2024.
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, 6,397,117
Warrants have been exercised and 9,844,781 common shares have been issued.
Appointment of new Co-Chief Financial Officer
Effective January
17, 2025,
we appointed
Ms. Maria
Dede as
the Company’s
Co-Chief Financial
Officer
(Operations Finance). Mr. Ioannis Zafirakis, the
Company’s current Chief Financial
Officer, will continue to
serve in the Co-Chief Financial Officer (Strategic Finance) position with
Ms. Dede.
45
Vessels under construction
In February
2024, we
signed an
agreement
with an
unaffiliated third
party, for the
construction of
two 81,200
dwt methanol
dual fuel
new-building
Kamsarmax dry
bulk vessels
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.
Vessel acquisitions
In
August
2022,
we
entered
into
a
master
agreement
with
an
unaffiliated
third
party,
to
acquire
nine
Ultramax vessels for
an aggregate purchase
price of $330
million, of which
$220 million payable
in cash
and
$110
million
through
an
aggregate
of
18,487,393
newly
issued
common
shares,
issuable
on
the
delivery
of
each
vessel.
In
addition
to
the
master
agreement,
we
also
entered
into
nine
separate
memoranda of agreement for the acquisition of each vessel and issued nine warrants to the seller, for the
issuance of the shares, exercisable on the delivery date of each vessel. We took delivery of eight vessels
in December 2022 and the ninth vessel in January 2023.
In
March
2022,
we
took
delivery
of
Florida,
a
Japanese
new-building
Capesize
dry
bulk
vessel
of
approximately 181,500 dwt,
which we agreed
to acquire from an
unaffiliated third party in
December 2020.
In February
2022, we
took delivery
of Leonidas
P.C. (ex Magnolia), a
2011 built Kamsarmax
dry bulk
vessel
of 82,165 dwt, which we agreed to acquire from an unaffiliated third party in July
2021.
Vessel disposals
In February 2025, we agreed to sell to an unrelated third party, the vessel Alcmene, for $11.9
million. The
vessel was delivered to her new owners on March 13, 2025.
In February 2024, we agreed to sell to an unrelated third party,
the vessel Houston, for $23.3 million. The
vessel was delivered to her new owners on September 4, 2024.
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 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 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
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 June 2022, we
sold to OceanPal Inc.,
or OceanPal, a related party
company, the
vessel Baltimore, for
a sale price of $22.0 million before commissions, of which $4.4 million was paid in cash and
$17.6 million
through
25,000
Series
D
Convertible
Preferred
shares.
The
vessel
was
delivered
to
OceanPal
on
September 20, 2022.
46
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 39
vessels of
which 37
in operation,
owned and
chartered-
in, having
a combined carrying
capacity of
4.1 million dead weight
tons, or
dwt, and
a weighted average
age of
11.4 years.
We also
have two
Kamsarmax vessels under
construction with expected
deliveries in
2027 and 2028.
As of December
31, 2024,
we had a
fleet of 38
dry bulk
carriers, owned and
chartered-in, consisting
of nine
Ultramax,
six
Panamax,
six
Kamsarmax,
five
Post-Panamax,
eight
Capesize
and
four
Newcastlemax
vessels, having
a combined
carrying capacity
of approximately
4.2 million
dwt and a
weighted average
age
of 11.3 years.
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
2024,
2023
and
2022,
we
had
a
fleet
utilization
of
99.7%,
99.7%
and
98.9%,
respectively,
our
vessels achieved daily
time charter equivalent
rates of
$15,267, $16,713 and
$22,735, respectively,
and
we generated revenues of $228.2 million, $262.1 million and $290.0
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.
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
47
management fees
and commissions
deriving from
the agreements
with DWM
are included
in our
statement
of income in “Management fees to a related party” and “Voyage Expenses”.
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
income.
The
terms
of
this
relationship
are
currently governed by a Brokerage Services Agreement dated
February 25, 2025.
The following table presents certain information
concerning the dry bulk carriers in
our fleet, as of the date
of this annual report.
48
Fleet Employment (As of March 19, 2025)
VESSEL
SISTE
R
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
16,500
5.00%
Bulk Trading SA
6-May-24
1/Aug/2025 - 30/Sep/2025
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
13,100
5.00%
Stone Shipping Ltd
8-Nov-24
20/Feb/2026 - 20/Apr/2026
2018 60,362
4
DSI Polaris
A
15,400
5.00%
Stone Shipping Ltd
20-Jul-24
1/Jun/2025 - 15/Aug/2025
2018 60,404
5
DSI Pegasus
A
15,250
4.75%
Cargill Ocean Transportation
(Singapore) Pte. Ltd
5-Sep-24
1/Jun/2025 - 1/Aug/2025
2015 60,508
6
DSI Aquarius
B
13,300
5.00%
Bunge SA, Geneva
6-Dec-24
6/Oct/2025 - 21/Dec/2025
2016 60,309
7
DSI Aquila
B
12,500
5.00%
Western Bulk Carriers AS
11-Nov-23
21-Jan-25
2015 60,309
12,250
5.00%
21-Jan-25
23/Jun/2025 - 8/Aug/2025
1
8
DSI Altair
B
15,750
5.00%
Propel Shipping Pte. Ltd.
28-Sep-24
1/Nov/2025 - 31/Dec/2025
2016 60,309
9
DSI Andromeda
B
13,500
5.00%
Bunge SA, Geneva
27-Nov-23
28-Mar-25
2,3
2016 60,309
6 Panamax Bulk Carriers
10
LETO
16,000
5.00%
ASL Bulk Shipping Limited
3-May-24
9-Mar-25
4
2010 81,297
11
SELINA
C
10,500
5.00%
Raffles Shipping International Pte.
Ltd.
17-Oct-24
10-Apr-25
3
2010 75,700
12
MAERA
C
8,400
5.00%
China Resource Chartering Limited
15-Dec-24
20/Sep/2025-20/Nov/2025
2013 75,403
13
ISMENE
12,650
5.00%
Paralos Shipping Pte., Ltd.
13-Sep-23
15/Apr/2025 - 30/Jun/2025
2013 77,901
14
CRYSTALIA
D
13,900
5.00%
Louis Dreyfus Company Freight
Asia Pte. Ltd.
4-May-24
4/Feb/2026 - 4/Jun/2026
2014 77,525
15
ATALANDI
D
14,600
4.75%
Cargill International SA, Geveva
20-Jul-24
1/Jun/2025 - 31/Jul/2025
2014 77,529
6 Kamsarmax Bulk Carriers
16
MAIA
E
11,600
5.00%
Paralos Shipping Pte. Ltd.
9-Dec-24
1/Nov/2025 - 31/Dec/2025
2009 82,193
17
MYRSINI
E
17,100
5.00%
Cobelfret S.A. Luxembourg
25-Jun-24
9-Feb-25
5
2010 82,117
13,000
4.75%
Cargill International SA, Geneva
26-Feb-25
1/Jan/2026 - 28/Feb/2026
18
MEDUSA
E
14,250
5.00%
ASL Bulk Shipping Limited
14-May-23
21-Feb-25
6
2010 82,194
13,000
4.75%
Cargill International SA, Geneva
16-Mar-25
15/May/2026 - 15/Jul/2026
19
MYRTO
E
12,000
5.00%
Nippon Yusen Kabushiki Kaisha,
Tokyo
23-Dec-24
1/Mar/2026 - 15/May/2026
2013 82,131
20
ASTARTE
14,000
5.00%
Paralos Shipping Pte. Ltd.
19-Aug-24
15/Jul/2025 - 15/Sep/2025
2013 81,513
21
LEONIDAS P. C.
17,000
5.00%
Ming Wah International Shipping
Company Limited
22-Feb-24
20/Aug/2025 - 20/Oct/2025
2011 82,165
5 Post-Panamax Bulk Carriers
22
ALCMENE
6,000
5.00%
Lestari Shipping Pte Ltd
28-Dec-24
16-Jan-25
49
2010 93,193
2,000
5.00%
Pan Ocean Co., Ltd.
16-Jan-25
8-Mar-25
7
23
AMPHITRITE
F
15,000
5.00%
Cobelfret S.A., Luxembourg
13-Jan-24
8-Jan-25
8
2012 98,697
12,100
5.00%
8-Jan-25
1/Jan/2026 - 15/Mar/2026
9
24
POLYMNIA
F
17,500
5.00%
Reachy Shipping (SGP) Pte. Ltd.
8-Jun-24
1/Aug/2025 - 30/Sept/2025
2012 98,704
25
ELECTRA
G
14,000
4.75%
Aquavita International S.A.
3-Jun-24
15/Oct/2025 - 31/Dec/2025
2013 87,150
26
PHAIDRA
G
12,000
4.75%
Aquavita International S.A.
12-Oct-24
1/May/2025 - 15/Jul/2025
2013 87,146
8 Capesize Bulk Carriers
27
SEMIRIO
H
14,150
5.00%
Solebay Shipping Cape Company
Limited, Hong Kong
18-Aug-23
11-Feb-25
2007 174,261
16,650
5.00%
11-Feb-25
15/Feb/2026 - 15/Apr/2026
28
NEW YORK
H
16,000
5.00%
STX Green Logis Ltd
30-Nov-24
11-Jan-25
2010 177,773
17,600
5.00%
SwissMarine Pte. Ltd., Singapore
11-Jan-25
15/Jan/2026 - 30/Mar/2026
10,11
29
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
30
P.
S. PALIOS
I
27,150
5.00%
Bohai Shipping (HEBEI) Co., Ltd
7-May-24
1/Nov/2025 - 31/Dec/2025
2013 179,134
31
G. P. ZAFIRAKIS
J
26,800
5.00%
Nippon Yusen Kabushiki Kaisha,
Tokyo
16-Sep-24
16/Aug/2026 - 16/Nov/2026
2014 179,492
32
SANTA BARBARA
J
22,000
5.00%
Mitsui O.S.K. Lines, Ltd.
27-Dec-24
20/Oct/2025 - 20/Dec/2025
12
2015 179,426
33
NEW ORLEANS
20,000
5.00%
Kawasaki Kisen Kaisha, Ltd.
7-Dec-23
15/Aug/2025 - 31/Oct/2025
12
2015 180,960
34
FLORIDA
25,900
5.00%
Bunge S.A., Geneva
29-Mar-22
29/Jan/2027 - 29/May/2027
2
2022 182,063
4 Newcastlemax Bulk Carriers
35
LOS ANGELES
K
28,700
5.00%
Nippon Yusen Kabushiki Kaisha,
Tokyo
20-Jul-24
1/Oct/2025 - 15/Dec/2025
2012 206,104
36
PHILADELPHIA
K
22,500
5.00%
Nippon Yusen Kabushiki Kaisha,
Tokyo
4-Feb-24
20/Apr/2025 - 20/Jul/2025
2012 206,040
37
SAN FRANCISCO
L
22,000
5.00%
SwissMarine Pte. Ltd., Singapore
18-Feb-23
1-Mar-25
2017 208,006
26,000
5.00%
1-Mar-25
25/Oct/2026 - 25/Dec/2026
38
NEWPORT NEWS
L
20,000
5.00%
Nippon Yusen Kabushiki Kaisha,
Tokyo
20-Sep-23
15/Mar/2025 - 10/Jun/2025
3
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.
1Charterers will compensate the Owners at a rate
of 115% of the average Baltic Tess 58 Supramax Index as published by the Baltic Exchange on a daily
basis or double the vessel’s present charter party rate, whichever
is higher, for the excess period commencing from January 10, 2025 until
the actual
redelivery date.
2Bareboat chartered-in for a period of ten years.
3Based on latest information.
4Currently without an active charterparty.
5Vessel on scheduled drydocking from February 9, 2025 until February
26, 2025.
6Vessel on scheduled drydocking from February 21, 2025 until March
16, 2025.
7Vessel has been sold and it is delivered to her new Owners on
March 13, 2025.
8The charter rate was US$12,250 per day for
the first thirty (30) days of the charter period.
50
9The charter rate will be US$8,750 per day for
the first fifty (50) days of the charter period.
10The charter rate will be US$6,300 per
day for the first trip of the charter period.
11Vessel currently off hire for drydocking.
12Bareboat chartered-in for a period of eight years.
Our Customers
Our customers include
regional and international
companies,
mainly with concentrations
below 10% of
our
gross revenues. During 2024,
only one of our
charterers accounted for 11% of our
revenues.
During 2023,
one of our
charterers accounted
for 13% of
our revenues and
during 2022,
two of our
charterers accounted
for 34% of our revenues,
in aggregate.
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
2024, 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.
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.
51
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 2024, the BDI ranged from a low of 976 to a high of 2,419 and closed
at 1,635 on March 20, 2025.
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.
●
Ultramax
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.
52
●
Handysize
.
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
age
range
at
which
a
vessel
is
scrapped
is
between
20
and
32
years,
depending on among others, the vessel type, the freight
market conditions and regulatory requirements.
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
2024 generally were
lower as
compared to 2023.
Consistent with these
trends
were the market
values of our
dry bulk carriers.
As charter rates
and vessel
values decreased during
2024,
and
continued to
decrease in
early 2025,
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
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.
53
●
Our fleet
includes groups
of sister
ships.
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.
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.
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
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
2024 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
54
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.
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,
55
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,
Mediterranean Sea
area,
North Sea area, North American area and United States Caribbean
area. The Mediterranean
Sea became
an ECA
on May
1, 2024,
and compliance obligations
will begin
May 1,
2025. 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 July
2023, MEPC
80 announced
three new
ECA proposals,
including the
Canadian Arctic
waters and
the North-
East
Atlantic
Ocean,
which were
adopted
in
draft
amendments
to
Annex
IV
that
will
enter
into
force
in
March 2026. 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 established
new tiers of stringent nitrogen oxide emissions
standards for marine
diesel engines, depending
on their date
of installation. Tier III
NOx standards were
designed for the
control
of NOx
produced by
vessels and
apply to
ships that
operate in
the North
American and
U.S. Caribbean
Sea
ECAs
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
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,
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 used such data as
part of its initial 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
56
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,
in 2022,
MEPC 75
amended to
Annex VI
to 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.
All
ships
above
400
gross
tonnage
must
also
have
an
approved SEEMP on board.
For ships above 5,000
gross tonnage, the SEEMP needs
to include certain
mandatory content.
That same year,
MEPC amended 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. In
July 2021,
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. The Mediterranean Sea became an ECA on
May 1, 2024,
and compliance obligations will begin
May 1, 2025. MEPC 79 also revised
the EEDI calculation guidelines
to
include
a
CO2
conversion
factor
for
ethane,
a
reference
to
the
updated
ITCC
guidelines,
and
a
clarification that
in case of
a ship with
multiple load line
certificates, the maximum
certified summer draft
should be used when
determining the deadweight.
These amendments entered
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. This
review commenced at
MEPC 82 in
Fall 2024 and
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.
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
57
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
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
newest
edition
of
the
IMDG
Code
took
effect
on
January
1,
2024,
although
the
changes
are
largely
incremental.
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
58
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 are 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
maintains
guidelines for
approval
of ballast
water
management systems
(G8).
At
MEPC 72
amendments
were
adopted
to
extend
the
date
existing
vessels
are
subject
to
certain
ballast
water
standards. 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. These standards have been in force since 2019, and for most ships, compliance
with the D-2
standard involved
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).
Since September
8, 2024, all ships
have been required
to meet the D-2
standard.
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
59
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.
In
March 2024,
MEPC 81
adopted amendments
to
the
BWM Convention
concerning the
use of
Ballast Water Record
Books in
electronic form,
which are
expected to
enter into
force
in October 2025. Pursuant to the ongoing review, in Fall 2024, MEPC 82 approved the 2024 Guidance on
ballast water
record keeping
and reporting
and the
2024 Guidance
for Administrations
on the
type approval
process for ballast water management systems to support harmonized
evaluation by Administrations.
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
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.
In November 2020, MEPC
75 approved draft amendments
to the Anti-fouling Convention to
prohibit anti-
fouling
systems
containing
cybutryne,
which
would
apply
to
ships
from
January
1,
2023,
or,
for
ships
already bearing such an
anti-fouling system, at the
next scheduled renewal of the
system after that date,
but no later
than 60 months
following the last
application to the
ship of such
a system. In
addition, the IAFS
Certificate has been
updated to address
compliance options for
anti-fouling systems to
address cybutryne.
Ships which are affected by this ban on cybutryne must
receive an updated IAFS Certificate no later than
60
two years after
the entry
into force of
these amendments.
Ships which
are not
affected (i.e. with
anti-fouling
systems which do not contain cybutryne)
must receive an updated IAFS Certificate
at the next Anti-fouling
application to
the vessel.
These amendments
were formally
adopted at
MEPC 76
in June
2021 and
entered
into force on January 1, 2023.
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
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
the case of a vessel as any person owning, operating or chartering by demise, the
vessel.
Both OPA and
CERCLA impact our operations.
61
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)
(ii)
(iii)
(iv)
loss of real or personal property, or natural resources;
(v)
property or natural resources; and
(vi)
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.
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
62
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
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, in August
2023, the
BSEE released
a final
Well Control
Rule which
strengthens testing
and performance requirements, and may affect offshore drilling operations.
In January 2021, the
Biden Administration issued an executive
order temporarily blocking new leases
for
oil
and
gas
drilling in
federal
waters,
but
ultimately,
the
order
was rendered
ineffective
by
a
permanent
injunction issued
by a
Louisiana court.
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.
In December 2024,
the Biden Administration
also gave approval
for the sales
of oil and
gas
leases in Alaska. On January 6, 2025, the Biden Administration announced a ban on
new offshore oil and
gas drilling in more than 625 million acres of U.S. waters on the Atlantic and Pacific coasts and in Alaska,
but Louisiana-led states and
fossil fuel groups are
challenging the ban. On
January 21, 2025, the
Trump
Administration issued
an executive
order revoking
this ban,
although this
order is
being challenged
in court.
Additionally,
the Trump
Administration has
proposed leasing
new sections
of U.S.
waters to
oil and
gas
companies for offshore drilling.
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.
63
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
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 with 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.
On September
24, 2024,
the EPA finalized
its rule
on Vessel
Incidental
Discharge
Standards
of
Performance,
which
means
that
the
USCG
must
now
develop
corresponding regulations regarding ballast water within two years of
that date.
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
64
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
to some
exclusions, requires
companies with
ships over
5,000 gross
tonnages 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
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.
65
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
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.
However,
in
January
2025,
President Trump
signed an
executive order
to begin
the
withdrawal of
the United
States from
the Paris
Agreement.
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.
In March
2024, MEPC 81
further developed the
goal based marine
fuel standard regulating
the
phased reduction of marine fuel’s GHG intensity as part of its mid-term measures. In Fall 2024, MEPC 82
made further progress
on the development
of these mid-term
measures, and the
Committee is expected
to approve amendments at MEPC 83 (Spring 2025) for adoption in
October 2025.
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
66
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, the
European Union’s
carbon market,
EU ETS,
has been
extended to
cover CO2
emissions from
all large
ships
entering EU ports starting January 2024.
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
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.
67
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
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.
68
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 “PI
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,
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
PI 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 PI
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
PI
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
PI 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, DSS owns three
additional plots, one partly acquired in 2021 and
partly in
2023 from two related parties and
two acquired in 2024 from unrelated
third parties. All plots of land are in
the same area as our principal offices and were acquired for corporate use.
Other than this interest in real
property, our only material properties are the vessels in our fleet.
Item 4A.
Unresolved Staff Comments
None.
69
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
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.
70
(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:
As of and for the
Year Ended December 31,
2024
2023
2022
Fleet Data:
Average number of vessels (1)
38.9
41.1
35.4
Number of vessels at year-end
38.0
40.0
42.0
Weighted average age of vessels at year-end (in
years)
11.3
10.5
10.2
Ownership days (2)
14,219
14,986
12,924
Available days (3)
14,057
14,867
12,449
Operating days (4)
14,009
14,824
12,306
Fleet utilization (5)
99.7%
99.7%
98.9%
Average Daily Results:
Time charter equivalent (TCE) rate (6)
$
15,267
$
16,713
$
22,735
Daily vessel operating expenses (7)
5,808
5,704
5,574
The following table reflects the calculation of our TCE rates for
the periods presented:
Year Ended December 31,
2024
2023
2022
(in thousands of U.S. dollars, except for TCE rates, which
are expressed in U.S. dollars, and available days)
Time charter revenues
$
228,209
$
262,098
$
289,972
Less: voyage expenses
(13,607)
(13,621)
(6,942)
Time charter equivalent revenues
$
214,602
$
248,477
$
283,030
Available days
14,057
14,867
12,449
Time charter equivalent (TCE) rate
$
15,267
$
16,713
$
22,735
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;
71
●
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
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
2024
decreased
compared
to
previous
years
due
to
the
decrease
in
charter
rates
during the
year
and
the
decrease in
the
size
of
our
fleet
following vessel
sales
described
elsewhere in this annual report.
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 usually
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.
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 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
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.
72
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.
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, 2024 our aggregate debt amounted
to $522.6 million and
our finance
liabilities amounted
to $123.9
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.
Interest rates,
which have
been increasing
since the
beginning of
2022, started
to decrease
from the
third quarter
of 2024.
We manage our exposure to interest
rates by maintaining a mix
of floating and fixed
interest rate financing
agreements. Floating
rate agreements
include secured
loan facilities
and fixed
rate agreements
include
leases and our senior unsecured
bond. 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.
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.
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;
73
●
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;
●
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;
74
●
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 war in the Ukraine;
●
inflation, and
●
fluctuations in foreign exchange rates.
Results of Operations
Year ended December 31, 2024 compared to the year ended December 31, 2023
Time
charter revenues.
2024, compared to $262.1 million
in 2023. The
decrease in time charter
revenues was due to
decreased
average time
charter rates
achieved during
the year, reflected
in our
TCE rate
of $15,267
in 2024
compared
to $16,713 in 2023,
representing a 9% decrease.
A further decrease was due
to the decrease in the
size
of our fleet resulting from the disposal
of two vessels during 2024, which
decreased operating days during
2024, as compared to last year. Operating days in 2024 were 14,009 compared to 14,824 in 2023.
Voyage
expenses.
compared
to
2023.
Although
commissions,
included
in
voyage
expenses,
decreased
in
2024
to
$11.6
million compared to $13.3
million in 2023, this
decrease was offset by
increased port expenses
and loss in
bunkers amounting
to $0.7
million in
2024 compared
to a
gain of
$0.5 million
in 2023.
The gain/loss
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
75
of bunkers paid
by charterers to
the Company on
the delivery of
the same vessels
to their charterers
under
new charter party agreements.
Vessel operating expenses.
Vessel operating expenses decreased by $2.9 million, or 3%, to $82.6 million
in 2024
compared to $85.5
million in
2023. The decrease
in operating expenses
is mainly attributable
to
the decrease
in ownership
days in
2024, due
to the
sale of
vessels discussed
above. Daily
vessel operating
expenses were $5,808
in 2024 and
increased by 2%
compared to $5,704
in 2023. Therefore,
the decrease
in operating expenses due to the decreased number of vessels during the year was offset by increases in
vessel supplies and taxes.
Depreciation
and
amortization
of
deferred
charges.
Depreciation
and
amortization
of
deferred
charges
decreased
by $5.1
million,
or 10%,
to $44.7
million
in 2024,
compared
to $49.8
million
in 2023.
This decrease
was
due
to
the
sale
of
two
vessels,
as
noted
above.
The
decrease
was
partly
offset
by
increased
amortization of deferred cost as a result of the drydock cost incurred
in 2024 as compared to 2023.
General and
administrative expenses
. General and admini
strati
ve expenses
increased by
$0.4 million,
or
1%, to $33.4
million in 2024
compared to $33.0
million in 2023.
The increase was
mainly due to
increased
payroll and taxes and was partly offset by decreased transfer agent expenses and legal fees.
Management fees to
a related party.
2024 and
2023 due
to the
fact that
the number
of vessels
managed by
DWM in
2024 remained
the same
with 2023.
Gain
on
sale
of
vessels.
resulted
from
the
sale
of
vessels
Artemis
and
Houston
in
2024
compared
to
$5.3
million
in
2023
which
resulted from the sale of vessels
Aliki, Melia and Boston
in 2023.
Interest expense and
finance costs.
to $47.5
million
in 2024
compared
to $49.3
million
in 2023.
The decrease
derived from
a decreased
average
outstanding
balance
of
debt
and
finance
liabilities
in
2024
and
was
partly
offset
by
increased
average
interest rates compared to 2023.
Interest and
other income
. Interest
and other
income increased
by $0.2
million, or
2%, to
$8.4 million in
2024 compared to $8.2 million in 2023. The increase
is mainly attributable to an increased amount
of time
deposits booked during
2024 and was
partly offset by
decreased deposit
rates achieved
in 2024 compared
to 2023.
Loss on
extinguishment of
debt.
In 2024,
loss on
extinguishment of
debt increased
by $2.8
million, or
400%
to $3.5 million and consisted of the prepayment of the 8.375% Senior Unsecured bond at a price equal to
103.35% of nominal value, with the proceeds from the new bond.
In 2023, loss on extinguishment of debt
amounted to
$0.7 million
and consisted
of the
prepayment in
full of
six loan
agreements refinanced
by other
banks.
Gain/(loss) on derivatives
. In 2024,
gain on derivates amounted
to $0.3 million, as
compared to a loss
of
$0.4 million
in 2023.
Gain/(loss) on
derivative instruments
represents the
fair value
of an
interest rate
swap
dated July
6, 2023
we entered into
with DNB for
a notional
amount of
$30 million under
which we pay
a
fixed rate of 4.268% and receive floating under term SOFR.
Gain/(loss) on
related party
Investments.
Loss on
related party
investments amounted
to $3.9
million in
2024 and
resulted from
the measurement
of OceanPal’s
common shares
at fair
value on
December 31,
2024, based
on the
closing price
of the
shares on
that date. This
compares to
a gain
of $1.5
million in
2023,
which
consists
of
a
gain
of
$1.7
million
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
76
on the
closing price
of OceanPal’s
common shares
on the
date of
conversion; a
gain of
$0.8 million
resulting
from the distribution of 13,157 Series D Preferred Shares of OceanPal to our shareholders as a non cash
dividend; and 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.
Gain on deconsolidation of
subsidiary.
Gain on deconsolidation of
subsidiary amounted to
$0.8 million in
2023 and
represented 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. No
such gain exists in 2024.
Gain/(loss) on equity securities.
Loss on equity securities amounted to $0.4
million in 2024, as compared
to a
gain of
$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.
The Company
sold all
securities during
the first
quarter of
2024 and
recorded a
realized loss of $0.4 million.
Gain on warrants.
Gain on warrants
amounted to $0.7
million in 2024,
compared to $1.6
million in 2023,
which resulted
from the
fair value
adjustment of
the outstanding
warrants as
of December
31, 2024
and
2023, respectively.
Loss from equity method investments.
Loss from equity method investments,
amounted to $0.1 million in
2024, compared to $0.3 million
in 2023. In 2024, the loss was
attributable to a loss of
$0.5 million from our
45.87%
interest
in Windward
which was
partly
offset
by
a
gain
of
$0.3 million
from
our
25% interest
in
Bergen and a gain of $0.1 million
from our 50% interest in DWM. In 2023,
the loss 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.
Year ended December 31, 2023 compared to the year ended December 31, 2022
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022,
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, 2023 filed with the SEC on April
5, 2024.
B.
Liquidity and Capital Resources
Historically, we finance our short-term and long-term
capital requirements with cash
from operations, cash
at
banks,
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.
Our
short-term
liquidity
requirements
include
capital
expenditures
in
connection
with
our
investment
in
Windward,
expenditures
relating
to
drydocking
of
vessels
to
comply
with
international
and
regulatory
standards, repayments
of
bank
loans, repurchase
of
our
common stock,
payment
of
dividends and
our
bareboat
charters.
Our
primary
sources
of
short-term
liquidity
include
cash
generated
from
operating
activities and the sale of a vessel, available cash balances and proceeds from the
exercise of warrants, if
any.
Our
long-term
liquidity
requirements
include
funding
our
newbuilding
vessel
installments,
interest
and
principal payments
on outstanding
debt,
payment of
dividends,
expenditures for
vessel efficiency
upgrades
and
drydock
costs.
Sources
of
funding
for
our
long-term
liquidity
requirements
include
cash
flows
from
operations, bank borrowings, issuance of debt and equity securities, and
vessel sales.
77
As
of
December
31,
2024
and
2023,
working
capital,
which
is
current
assets
minus
current
liabilities,
including the current
portion of long-term
debt and finance
liabilities, amounted to
$126.4 million and
$97.1
million,
respectively.
The
increase
in
working
capital
was
mainly
due
to
increased
cash
and
cash
equivalents and time deposits, as a result of the liquidation of our investment in equity securities acquired
in 2023 amounting
to $20.7 million;
proceeds from
our $175 million
bond issued
in July 2024
which prepaid
the then outstanding $119 million bond and proceeds of $24.2
million from the exercise of warrants
during
2024. This increase
was partly offset
by increased drydock
costs incurred during 2024,
increased capital
expenditures for the acquisition of investments and decreased revenues as a result of the significant drop
of
the
charter
rates
during
2024
compared
to
2023.
The
increase
in
working
capital
in
2024
was
also
affected
by
decreased
current
portion
of
long-term
debt
compared
to
last
year,
as
a
result
of
loan
refinancings
during
2024,
under
which
we
extended
the
relevant
repayment
schedules
and
decreased
annual amortization. We believe that
our working capital is sufficient
to cover our short-term
requirements.
Cash and
cash equivalents, including
restricted cash,
are primarily held
in U.S.
dollars and
amounted to
$143.7 million
as
of
December 31,
2024
and $121.6
million as
of
December 31,
2023. Restricted
cash
represents minimum
liquidity requirements
under our
loan facilities
and as
of December
31, 2024
and 2023,
amounted
to
$19
million
and
$20
million,
respectively.
Also,
as
of
December
31,
2024
and
2023,
time
deposits with maturities
above three
months amounted
to $63.5 million
and $40.0
million, respectively. Our
cash and cash equivalents, restricted cash and time deposits represent our unused sources of
liquidity to
meet our short-
and long-term obligations.
During 2024 and 2023, our sources and uses of cash were as
follows:
Net Cash Provided by Operating Activities
Net cash
provided by operating
activities increased by
$13.1 million,
or 19%.
In 2024, net
cash provided
by
operating
activities
was
$83.5 million
compared
to
net
cash
provided
by
operating
activities
of
$70.4 million in 2023. This increase was mainly
attributable to the proceeds from sale of
our investment in
equity securities
that
we acquired
in 2023,
and was
partly offset
by decreased
revenues, as
a result
of
decreased
average
time
charter
rates
compared
to 2023
and
increased
dry-docking
costs
incurred
in
2024.
Net Cash Used in Investing Activities
Net cash
used in
investing activities
was $39.8
million for
2024, which
consists of
$20.5 million
paid for
vessels under
construction and
improvements; $35.2 million
of proceeds
from the
sale of
two vessels
in
2024; $27.2 million
paid to acquire
investments in
Windward; increased investment
by $23.5 million
in time
deposits
with
maturity
above
three
months;
and
$3.7
million
relating
to
the
acquisition
of
property
and
equipment.
Net cash
provided by investing
activities was $24.9
million for
2023, which consists
of $29.7 million
paid
for vessel acquisitions
and improvements;
$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
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 Provided by Financing Activities
Net cash used in financing activities was $21.7
million for 2024, which consists of $117.2 million proceeds
from issuance of
long term
debt; $123.0
million of indebtedness
and finance
liabilities that we
repaid; $24.2
million proceeds from issuance of common stock; $5.8 million and $29.0 million
of cash dividends paid on
78
our preferred and
common stock,
respectively; and
$5.3 million
of finance
costs paid in
relation to new
loan
agreements.
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.
For a detailed
discussion of
cash flows
for the
year ended
December 31,
2023
compared to
the year
ended
December 31, 2022
please see “Item 5. Operating and Financial Review and Prospects - B. Liquidity and
Capital Resources” included in our 2023 Annual Report filed on Form 20-F
with the SEC on April 5, 2024.
Commitments for Capital Expenditures
In January 2025, we paid $22.9 million for the purchase of 11,442,645 shares of common stock, pursuant
to
a
tender
offer
we
commenced
on
December
2,
2024.
As
of
the
date
of
this
annual
report,
we
have
commitments
of
$73.6
million
for
the
construction
of
two
81,200
dwt
methanol
dual
fuel
new-building
Kamsarmax dry bulk vessels,
expected to be delivered in the third quarter of
2027 and the first quarter of
2028. In February
and March 2025,
we paid €7.6
million, or $8.0
million, under our
€50 million commitment
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,
thus
reducing our
remaining commitment
as
of the
date of
this
report
to
€7.6
million,
expected
to
be
paid
in
the
following
months.
We
also
expect
to
incur
capital
expenditures for vessel efficiency upgrades amounting to $3.0 million,
scheduled to take place until 2027.
We also 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.
We expect
to finance
part of
the construction
cost of
our methanol
vessels on
order with
new bank
debt
and our remaining
capital expenditures
from cash from
operations and cash
at banks. As
of the date
of this
annual report, we have contracted revenues covering around 70% of our ownership days in
2025, in time
charter agreements having
an average time
charter rate on
or around our
break-even rate as
of December
31, 2024,
and we
have fixed
around 10%
of our
ownerships days
in 2026.
Our revenues
for the
unfixed
days in 2025 and 2026 will be affected by the developments in the dry bulk market and we cannot assure
you that we will be able to successfully renew existing charters at rates sufficient to allow us to meet all of
our obligations.
However, as
of the date
of this annual
report, we believe
that contracted and
anticipated
revenues
will
result
in
internally
generated
cash
flows
and
together
with
available
cash
and
cash
equivalents
and
time
deposits
maturing
in
2025,
will
be
sufficient
to
fund
our
short
term
and
long-term
capital requirements.
Debt instruments and guarantees
As of December
31, 2024,
we had $522.6
million of
long-term debt
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
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.
79
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 in tranches,
with each tranche drawn on the
delivery
of
each
vessel
to
us.
In
December
2022,
we
prepaid
$21.9
million
due
to
a
vessel
sale
and
leaseback transaction. On June 20, 2023, we
entered into a $22.5 million loan agreement with
Nordea to
refinance $20.9 million outstanding
balance of an
existing loan. On
July 25, 2024,
we refinanced the
two
agreements with
Nordea with
a new
$167.3 loan
agreement, drawn
on July
25, 2024.
The loan
is repayable
in equal quarterly instalments of $4.5 million and a balloon instalment of $64.8 million payable on July 25,
2030.
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. On October 18, 2024, we refinanced the outstanding
balance of the loan with a new loan
which is
repayable in
equal quarterly
instalments of
$2.5 million
each and
a balloon
of $14.3
million payable
together with the last instalment on April 18, 2031.
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. 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, 2024, the
interest rate swap was a liability having a fair value
of
$0.2 million.
Under
the
secured
term
loans
outstanding
as
of
December
31,
2024,
27
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
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. All of our secured term
loans bear interest in Term SOFR plus a margin.
As of December 31, 2023 and
2024, and the date of this
annual report, we were in compliance with
all of
our loan covenants.
Senior Unsecured Bond:
On June 22, 2021,
we issued a $125
million senior unsecured bond maturing
in June 2026. On
June 29,
2023, we repurchased $5.9 million nominal
value of the bond and recognized
a loss of $0.2 million and on
July 2,
2024 we
prepaid the
outstanding balance at
a price
equal to
103.35% of
nominal value,
with the
proceeds from a new
bond and recognized
a loss of $3.5
million. On July 2,
2024, we issued
the new bond
amounting to
$150 million
nominal value,
issued at
par value,
and on
November 8,
2024, we
issued an
80
additional amount of
$25 million nominal
value, at 102.00%
of par value.
The new bond
has a US
Dollar
fixed-rate coupon of 8.75% payable
semi-annually in arrears in January
and July of each
year. The
bond
is callable in whole
or in part in July
2027 at a price equal
to 103.50% of nominal
value; in January 2028
at
a price
equal to 102.625%
of nominal
value; in
July 2028
at a
price equal to
101.75% and after
January
2029 at
a price
equal to
100.00% of
nominal value.
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.
The bond
includes financial and
other covenants
and is
trading on
the
Oslo Stock Exchange under the ticker symbol “DIASH03”.
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.
Guarantees
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. We consider 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,
2024,
the
loan
had
an
outstanding
balance of $13.5 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
81
on charter
hire rates available
to fix
our vessels 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 2024,
the BDI
ranged from a low
of 976 to a
high of 2,419 and
closed at 1,635 on
March 20, 2025. 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
70% of
our fleet
ownership days
in 2025
in time
charter agreements
having an
average
time charter rate on or
around our break-even rate. Nevertheless, our revenues and
results of operations
in 2025
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
impairment indicators
are identified
and 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, 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
2024 to
calculate undiscounted
projected net
operating cash
flow was
$13,053 for
Panamax,
Kamsarmax
and
Post-Panamax
vessels,
$16,626
for
Ultramax
vessels
and
$16,315
for
our
Capesize
and
Newcastlmax
vessels,
compared
to
$12,775,
16,608
and
$16,115,
respectively
in
2023.
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 a vessel plus unamortized deferred costs and its fair value would be recognized in
our accounts as impairment loss,
if the undiscounted cash
flows were lower compared to carrying
value of
that vessel.
Although no impairment loss
was identified or recorded
in 2024, according to
our assessment,
82
the carrying value plus unamortized deferred cost of vessels for which impairment indicators
existed as of
December 31, 2024, was $361.4 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.
These
vessels
would
be
impaired
in
accordance with the
related US GAAP
guidance for impairment
recognition, if the
undiscounted cash
flows
were lower
compared to
their carrying
value. Based
on: (i)
the carrying
value plus
unamortized deferred
cost of
each of
our vessels as
of December 31,
2024 and
2023 and (ii)
what we
believe the charter-free
market value of each
of our vessels was
as of December 31,
2024 and 2023, the
aggregate carrying value
of 12 and
12 of the
vessels in our
fleet as of
December 31, 2024
and 2023, respectively,
exceeded their
aggregate charter-free market value
by approximately $22 million
and $49 million,
respectively,
as noted
in the table below. This represents the approximate amount
by which we believe we
would have to reduce
our net income if we sold all
of such vessels at December 31, 2024 and
2023, 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
12 vessels
would be
sold at
a price
that reflects
our estimate
of their
charter-free market
values as of December 31, 2024 and 2023, respectively.
83
Vessel
Dwt
Year Built
Carrying Value plus unamortized
deferred cost
(in millions of US dollars)
2024
2023
1
Alcmene
93,193
2010
2
Amphitrite
98,697
2012
3
Artemis
76,942
2006
4
Astarte
81,513
2013
5
Atalandi
77,529
2014
6
Crystalia
77,525
2014
7
Electra
87,150
2013
8
G.P.
Zafirakis
179,492
2014
9
Houston
177,729
2009
10
Ismene
77,901
2013
11
Leto
81,297
2010
12
Los Angeles
206,104
2012
13
Maera
75,403
2013
14
Maia
82,193
2009
15
Medusa
82,194
2010
16
Myrsini
82,117
2010
17
Myrto
82,131
2013
18
New Orleans
180,960
2015
19
New York
177,773
2010
20
Newport News
208,021
2017
21
P.S.
Palios
179,134
2013
*
*
22
Phaidra
87,146
2013
23
Philadelphia
206,040
2012
24
Polymnia
98,704
2012
25
San Francisco
208,006
2017
26
Santa Barbara
179,426
2015
*
*
27
Seattle
179,362
2011
28
Selina
75,700
2010
29
Semirio
174,261
2007
30
LEONIDAS P.C.
82,165
2011
*
*
31
Florida
182,063
2022
32
DSI Pyxis
60,362
2018
*
*
33
DSI Pollux
60,446
2015
*
*
34
DSI Phoenix
60,456
2017
*
*
35
DSI Polaris
60,404
2018
*
*
36
DSI Andromeda
60,309
2016
*
*
37
DSI Aquila
60,309
2015
*
*
38
DSI Pegasus
60,508
2015
*
*
39
DSI Altair
60,309
2016
*
*
40
DSI Aquarius
60,309
2016
*
*
Total
4,481,283
_______________________________
*
Indicates dry bulk
vessels for which
we believe, as
of December 31,
2024 and 2023,
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 $22 million and $49 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 14%
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
$16,626
$12,513
Panamax/Kamsarmax/Post-Panamax
$13,053
Capesize/Newcastlemax
$16,315
$12,018
85
It should be
noted that as
of December 31,
2024, 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
$16,737
-
$18,297
-
$18,081
-
Panamax/Kamsarmax/Post-
Panamax
$14,813
-
$16,245
-
$16,239
-
Capesize/Newcastlemax
$23,750
-
$19,637
-
$19,451
-
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
50
Class III Director and Chief Executive Officer
Simeon Palios
83
Class I Director and Chairman
Anastasios Margaronis
69
Class I Director and President
Ioannis Zafirakis
53
Class I Director, Co-Chief Financial Officer, Chief
Strategy Officer, Treasurer and Secretary
Konstantinos Psaltis
86
Class II Director
Kyriacos Riris
75
Class II Director
Apostolos Kontoyannis
76
Class III Director
Konstantinos Fotiadis
74
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
52
Co-Chief Financial Officer
Margarita Veniou
46
Chief Corporate Development, Governance
Communications Officer
Maria Christina Tsemani
46
Chief People Officer
The term of our
Class I directors expires
in 2027, the
term of our Class
II directors expires in
2025, and the
term of our Class III directors expires in 2026.
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.
86
Biographical information with respect to each of our directors and executive
officers is set forth below.
Semiramis
Paliou
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.
(NASDAQ: OP)
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
PI
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.)
(NASDAQ: PSHG).
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
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.)
(NASDAQ: PSHG) and
as Chief Executive
Officer until October 2020.
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.
87
Anastasios C. Margaronis
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.) (NASDAQ:
PSHG).
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
as a Director and Secretary
of Diana Shipping Inc.
since February 2005. He
has
also
been
the
Co-Chief
Financial
Officer
since
January
2025,
having
previously
served
as
the
Company’s Chief
Financial
Officer from
February 2020
(Interim Chief
Financial
Officer until
February 2021).
In addition,
he has
held the
role of
Treasurer since
February 2020
and is
also the
Company’s Chief
Strategy
Officer.
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 has
served as the Chief Strategy Officer and Co-Chief Financial Officer
of Diana
Shipping Services
S.A. since
January 2025.
Prior to
this,
he was
the company’s
Chief Financial
Officer
from
March
2020
(Interim
Financial
Officer
until
February
2021)
and
continues
to
hold
the
positions
of
Director
and Treasurer.
Also,
he has
served as
a
Director of
OceanPal Inc.
(NASDAQ: OP)
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.) (NASDAQ:
PSHG),
where
he
held
various
executive
positions
such
as
Chief
Operating
Officer
and
Chief
Strategy
Officer.
Mr.
Zafirakis,
currently
also
acts
as
Director,
President,
Secretary
and
Treasurer,
for
Sea
Transportation Inc.
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
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.
(NASDAQ: OP)
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
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
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
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
as an independent
Director and
as the Chairman
of the Audit
Committee of
Performance Shipping
Inc. (ex.
Diana Containerships
Inc.) (NASDAQ:
PSHG) from
the completion
of Performance
Shipping Inc.
(ex. Diana
89
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
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
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
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
comprises
of
residential
and
commercial
properties in Shanghai.
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
Ms. Dede served as the Company’s Chief Accounting Officer starting in September 2005. In addition, Ms.
Dede has served
as the Co-Chief
Financial Officer of
Diana Shipping Services S.A.
since January 2025,
having previously served as the
company’s Finance Manager and Chief
Accounting Officer.
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
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.
(NASDAQ: OP) 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.
From
January
2010
to
February
2020,
Ms.
Veniou
also
held
the
position
of
Corporate
Planning
90
Governance Officer of Performance Shipping Inc. (ex. Diana Containerships
Inc.) (NASDAQ: PSHG).
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. In 2024, she completed the
"Leadership Communication
with
Impact"
program
at
INSEAD
Business
School.
Additionally,
she
has
completed
the
“Sustainability
Leadership
and
Corporate
Responsibility”
program
at
London
Business
School
and
has
obtained
the
Certification in
Shipping Derivatives
from 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
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 human
resources across
multinational companies
and
institutional
organizations.
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
a 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
in Applied
Statistics from the University of Oxford, UK.
B.
Compensation
Aggregate executive
compensation (including
amounts paid
to Steamship)
for 2024
was $6.2
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
2024,
fees
for
2024
amounted
to
$4.1
million
and
we
also
paid
commissions
for
vessel
sales
and
purchases
amounting to
$0.5
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 2024, fees
and expenses of our non-executive directors amounted to $0.6
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
20,000,000
shares.
Currently, 9,144,759 shares remain reserved for issuance under the Plan.
91
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
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
2024
and
as
of
the
date
of
this
annual
report,
our
board
of
directors
awarded
an
aggregate
of
2,300,000 shares and
2,000,000 shares, respectively,
of restricted common
stock, awarded to
executive
and non-executive directors.
All restricted shares
vest ratably over
three years and are
subject to forfeiture
until they vest. 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
2024,
compensation costs
relating
to
the
aggregate
amount
of
restricted
stock
awards
amounted to
$10.0 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 comprised of Mr. Apostolos Kontoyannis
(Chairman) and
Ms.
Semiramis
Paliou
(member).
The
Sustainability
Committee,
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
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,
2024,
2023
and
2022.
Year Ended December 31,
2024
2023
2022
Shoreside
11
7
11
2
113
Seafaring
864
906
907
Total
981
1,018
1,020
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)
24,719,462
20.3%
par value $0.01
Anastasios Margaronis (2)
10,505,922
8.8%
Sea Trade Holdings Inc. (3)
14,682,781
12.7%
F.
Laeisz GmbH (4)
6.305.426
5.4%
All other officers and directors as a group (5)
12,573,796
10.8%
* Based on 115,767,861 common shares outstanding as of March 20, 2025.
(1)
Mrs. Semiramis Paliou indirectly may be deemed to beneficially own 20.3% 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 5,802,034
shares
of
common
stock
issuable
to
Semiramis Paliou
upon
exercise
of
3,527,501
warrants
distributed on December 14, 2023. As of December 31, 2022, 2023 and 2024, Mrs. Semiramis
Paliou
owned
indirectly
16.0%,
20.3%
and
18.4%,
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 ESX Investments
Inc. as the result
of
his ability to
control the vote
and disposition of
such entities. These
shares include 2,948,820
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
January
29,
2025,
adjusting the percentage figure based
on the common shares issued
and outstanding as of the
date of this report.
(4)
This
information
is
derived
from
a
Schedule
13G
filed
with
the
SEC
on
October
18,
2024,
adjusting the percentage figure based
on the common shares issued
and outstanding as of the
date of this report.
(5)
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.
Simeon
Palios
may
be
deemed
to
beneficially
own
5,533,206
shares,
or
4.7%
of
our
outstanding
common
stock,
beneficially owned
through Taracan
Investments S.A.
and Limon
Compania Financiera
S.A.;
Mr.
Ioannis
Zafirakis
may
be
deemed
to
beneficially
own
2,437,232
shares,
or
2.1%
of
our
outstanding common
stock, beneficially
owned through
Abra Marinvest
Inc.; and Mr. Eleftherios
Papatrifon may
be deemed
to beneficially
own 1,292,717
shares, or
1.1% of
our outstanding
common
stock.
All
other
officers
and
directors
each
own
less
than
1%
of
our
outstanding
common stock.
As of
March 20,
2025, we
had 78
shareholders of record,
64 of
which were located
in the
United States
and
held
an
aggregate
of
102,793,930
of
our
common
shares,
representing
82.1%
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 101,729,866
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
We own 500,000
of OceanPal’s
Series B
Preferred Shares,
207 shares
of OceanPal’s
Series C
Convertible
Preferred Shares and 3,649,474 common shares, being 49% of
OceanPal’s common stock.
95
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
they are 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
are
convertible
into
common stock
at the
Company’s option,
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.
Dividend
income from the OceanPal preferred shares during 2024 amounted to $16,560.
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, only one
of the
six vessels identified in the agreement remains unsold.
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
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
96
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
controlled
by
our
CEO
Ms.
Semiramis
Paliou,
provides
to
us
brokerage
services for
an annual
fee pursuant
to a
Brokerage Services
Agreement.
In 2024,
brokerage fees
amounted
to $4.1 million
and we paid
an additional
amount of
$0.5 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 25, 2025 due to expire on December 31, 2025.
Altair Travel Agency S.A.
Altair Travel Agency S.A., or Altair,
an affiliated entity that is controlled by our CEO Ms. Semiramis Paliou
provides us with travel related services. Travel related expenses in 2024, amounted
to $2.6 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
2024
amounted
to
$1.3
million,
commissions on revenues amounted to $0.4 million.
Bond acquisition
Officers and directors of
the Company and/or
entities affiliated with them
purchased an aggregate
of $47.3
million principal amount of
the $150.0 million
senior unsecured bond
issued on July
2, 2024, on
the date
of issuance.
Bergen Ultra
Bergen Ultra,
or Bergen,
is a
limited partnership
which owns
a dry
bulk carrier.
One of
our subsidiaries,
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
97
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 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.
We have also
entered into
an administrative
service
agreement
under
which
DSS
provides
administrative
services
to
Bergen.
In
2024,
income
from
administrative
fees
amounted
to
$15,000
and
we
received
$116,395
as
payment
for
the
guarantee
commission.
Windward Offshore GmbH
Windward
Offshore
GmbH
Co.
KG,
or
Windward,
is
a
limited
partnership operating
an
offshore
wind
vessel
company
based
in
Germany.
One
of
our
subsidiaries,
Diana
Energize
Inc.,
or
Diana
Energize,
entered
into
a
novated
agreement
to
contribute
capital
for
Windward’s
construction
of
four
CSOVs,
ultimately
contributing
45.87%
of
Windward’s
capital.
As
of
December
31,
2024,
the
investment
in
Windward amounted
to $36.6
million consisting
of advances
to fund
the construction
of the
vessels,
working
capital and our portion in Windward’s results.
Diana Mariners Inc.
In
2023,
we
acquired
through
one
of
our
subsidiaries,
Cebu
Shipping
Company
Inc.,
or
Cebu,
24%
of
Cohen
Global
Maritime
Inc.,
or
Cohen,
a
company organized
in
the
Republic of
the
Philippines for
the
purpose of providing manning services to our vessels.
Cohen was renamed Diana Mariners Inc., or Diana
Mariners, in August 2024. As of December 31,
2024, our investment in Diana Mariners amounted to $0.4
million and there
was an amount
of $0.1 million
due from Diana
Mariners. As of
December 31, 2024,
Diana
Mariners did not have any operations.
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
fourth
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 occurs
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” since March 23, 2005.
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 July 2,
2024,
our
8.75%
Senior
Unsecured
Bond
due
2029
commenced
trading
on
the
Oslo
Stock
Exchange,
under the symbol "DIASH03."
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,
2024,
approximately
6.1%
of
the
Company’s
shipping
income
was
attributable to the transportation of cargoes either to or from a U.S. port. Accordingly, approximately 3.1%
of
the
Company’s
shipping
income
would
be
treated
as
derived
from
U.S. sources
for
the
year
ended
December 31, 2024. 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 $0.3 million for the year ended December 31, 2024.
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
2024
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
2024 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 2024 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 2024 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 2024 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 2024
taxable year and intends to take this position on its 2024 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
2024
taxable
year
and
in
the
absence
of
exemption
under Section 883
of the Code,
the Company would
be subject to
$0.3 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 term SOFR plus a margin.
Increases in interest rates could
110
affect
our
results
of
operations.
An
increase
of
1%
in
the
interest
rates
of
our
loan
facilities
bearing
a
variable interest rate during 2024, could have increased our interest
cost by $3.8 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 million 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, 2024, 2023
and 2022, 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 2024 and
around 29% in 2023) and about
half of our general and administrative
expenses
(around 46% in 2024 and around
44% in 2023) 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
2024
and
2023,
these
non-US
dollar
expenses
represented
17%
and
15%,
respectively
of
our
revenues
and
therefore,
we
are
not
engaged
in
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
Officers,
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 Officers
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, 2024 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,
Deloitte
Certified
Public 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” under applicable NYSE and SEC standards.
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,
, 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,
Deloitte
Certified
Public
Accountants
S.A.,
have
billed
us
for
audit
services
provided
in
2024
and
Ernst
and
Young
(Hellas), Certified
Auditors Accountants
S.A., have
billed us
for
audit services
provided in
2023. Audit
fees in
2024 and
2023 amounted
to €
360,000 and
€ 383,250,
or
approximately $388,000 and $416,000, respectively, and relate to compensation for professional services
rendered
for
the
audits
of
our
consolidated
financial
statements
and
in
connection
with
the
review
of
regulatory filings.
113
b) Audit-Related Fees
Audit related fees during 2024
amounted to € 51,301, as compared
to € 22,050 in 2023 and
relate to audit
services provided in connection with the Company’s filings with the SEC.
c) Tax Fees
During
2023,
we
paid
fees
amounting
to
$11,025,
for
the
calculation
of
Earnings
and
Profits
of
the
Company. The
services were provided by Ernst Young
LLP,
an affiliate of our principal accountants for
2023.
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 2024,
we did
not repurchase
any shares
of common
stock and
as of
December 31,
2024 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.
On
December
2,
2024,
the
Company
commenced
a
tender
offer
to
purchase
up
to
15,000,000 shares of its
outstanding common stock, at
$2.00 per share, using
funds available from cash
and
cash
equivalents.
The
tender
offer
was
settled
on
January
7,
2025
and
we
purchased
a
total
of
11,442,645 shares of common stock for an aggregate amount of $22.9 million.
Item 16F.
Change in Registrant’s Certifying Accountant
On May
21, 2024,
the Audit
Committee of
the Board
of Directors
approved and
signed the
engagement
letter
appointing
Deloitte
Certified
Public
Accountants
S.A.
(“Deloitte”)
as
the
Company’s
independent
registered public accounting firm for the year ending December 31, 2024. The Company's annual general
114
meeting of
shareholders held
on May
21, 2024
approved such
appointment. The
audit committee
approved
the engagement of Deloitte following the expiration of the engagement
letter with the Company's previous
independent registered
public accounting
firm, Ernst
Young (Hellas) Certified Auditors
Accountants S.A..
The reports of
Ernst Young
(Hellas) Certified Auditors
Accountants S.A. on
the financial statements
of
the
Company
as
of
December
31,
2023
and
2022
did
not
contain
an
adverse
opinion
or
disclaimer
of
opinion
and
were
not
qualified
or
modified
as
to
uncertainty,
audit
scope
or
accounting
principles.
In
connection with
the audits
of the
Company’s financial
statements for
each of
the two
fiscal years
ended
December 31, 2023 and
2022 there were no
disagreements with Ernst
Young (Hellas) Certified Auditors
Accountants S.A.
on any
matters of
accounting principles or
practices, financial statement
disclosure, or
auditing scope or procedures which,
if not resolved to the
satisfaction of Ernst
Young
(Hellas) Certified
Auditors Accountants
S.A. ,
would have
caused Ernst
Young (Hellas)
Certified Auditors
Accountants S.A.
to make reference to the
matter of such disagreements
in their reports. In
connection with the audits
of the
Company's financial statements
for each of the
two fiscal years ended
December 31, 2023 and
2022 none
of the events described in paragraphs (A) through (D) of Item 16F(a)(1)(v)
of Form 20-F occurred.
In connection with the audits of the Company’s financial statements
for each of the two fiscal years ended
December 31, 2023
and 2022 neither
the Company nor
anyone on its
behalf consulted with
Deloitte on the
application of accounting principles
to a specified transaction, either
completed or proposed; or
the type of
audit opinion that might
be rendered on the
Company’s financial statements
or any matter that
would have
been
the
subject of
a
disagreement, as
that
term
is
defined in
Item
16F(a)(1)(iv) of
Form
20-F and
the
related
instructions
to
Item
16F
of
Form
20-F,
or
a
reportable
event,
as
that
term
is
defined
in
Item
16F(a)(1)(v).
The
Company
has
provided Ernst
Young
(Hellas)
Certified Auditors
Accountants S.A.
with
a
copy
of
these disclosures prior to
the filing hereof and
has requested that Ernst Young
furnish to the Company
a letter
addressed to
the Securities
and Exchange
Commission stating
whether Ernst
Young
(Hellas)
Certified Auditors Accountants S.A. agrees with the statements
made by the Company in this report.
Ernst
Young (Hellas) Certified
Auditors Accountants
S.A.’s letter
is attached
as Exhibit
16.1 to
this Annual
Report on Form 20-
F.
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.
115
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.
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, we have
governing
the
purchase,
sale,
and
other
dispositions
of
the
registrant’s
securities
by
directors,
senior
management, and employees
that are reasonable
designed to promote
compliance with applicable
insider
trading laws, rules and regulations, and
NYSE listing standards for fiscal
year ending December 31, 2024.
Our insider trading policies and procedures are filed as Exhibit
11.2 to this annual report.
116
Item 16K. Cybersecurity
Risk management and strategy
We have
security measures
environment and
our business.
Cybersecurity risk
management is
integrated into
our broader
enterprise
risk management
(ERM) framework
to protect
shareholder value
and ensure
business continuity.
Cyber
risks are assessed
alongside operational,
financial, and compliance
risks. By integrating
cybersecurity into
our broader risk management strategy, we aim to reduce exposure
to cyber incidents, safeguard sensitive
data, and maintain
investor confidence
in our
long-term resilience
and operational
stability. Since 2023, the
Company
has maintained
ISO
27001
certification,
demonstrating ongoing
compliance
with
the
rigorous
requirements of
this internationally
recognized standard.
The Company's
Chief Information
Security Officer
(CISO) regularly conducts internal reviews and enhancements to
ensure that our cyber risk management
framework remains
aligned with
ISO 27001
and integrated
into our
broader enterprise
risk management
strategy, considering financial, operational, and compliance impacts.
Additionally,
we
have
established structured
processes
for
third-party
risk
management.
During
vendor
onboarding and
ongoing monitoring,
information security
assessments are
conducted, including
security
questionnaires, contractual
requirements for
NDAs and
DPAs, and cybersecurity
liability clauses
to mitigate
supply chain risks.
Cybersecurity training
is carried
out on
a company-wide
basis to
all employees
and seafarers.
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
2024.
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 2025,
the security
team has
planned a
comprehensive
collaboration with
a
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.
In addition to
awareness initiatives, we will
continue to acquire
relevant tools to
support the
identification of
As
part
of
our
continuous
efforts
to
enhance
threat
detection
and
incident
response,
we
will
leverage
Security Operations
Center (SOC)
services through
a trusted
external provider. This
partnership will
enable
proactive
security
monitoring,
threat
intelligence,
and
rapid
incident
response,
further
reinforcing
our
cybersecurity resilience across both shore-based operations.
Additionally,
we
will
implement
a
disaster
recovery
site
to
the
cloud
for
critical
applications,
ensuring
business continuity and operational resilience in the event of
disruptions.
117
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,
strengthening the quality and integrity
of company’s informational assets. The
Data Management Platform
was
integrated
with
our
core
systems
and
implementation
of
key
reports
was
initiated
within
2024,
delivering several
new Financial
Reports that
will enable
better,
faster and
more accurate
monitoring of
Company activities
and improve decision
making and
productivity.
This transition is
further strengthened
with the digital upskilling of relevant personnel, enabling the proper and secure use of information assets.
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, who has
11 years of specialized information security experience.
This
experience
includes
serving
as
Cyber
Security
Officer
at
Diana
Shipping
Services,
Information
Security
Officer
at
Viva
Wallet,
Senior
IT
Auditor
at
First
Data
Corporation
focusing
on
EMEA
region
security
audits,
and
IT
Auditor/Security
Consultant
at
Deloitte's
Enterprise
Risk
Services.
The
Cyber
Security
Officer
holds
CISA
and
CDPSE
certifications
from
ISACA,
completed
Information
Security
Management
Systems
(ISMS)
Auditor/Lead
Auditor
Training
in
accordance
with
ISO
27001:2013,
and
possesses an MSc in Digital Systems Security from the University
of Piraeus.
The Cyber
Security Officer
is
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.
Our management
team plays
a vital
role in
assessing and
managing the
Company's material
risks from
cybersecurity threats. The Cyber Security Officer leads our cybersecurity program, reporting to the Digital
Transformation
Officer,
who
in
turn
reports
to
the
Chief
Executive
Officer
on
matters
of
strategic
importance.
Additionally,
the
Cyber
Security
Officer
holds
biweekly
meetings
with
the
CEO
to
discuss
emerging threats, ongoing security initiatives, and strategic cybersecurity
priorities.
The
Cyber
Security Officer
reports to
the
management team
on
a
semi-annual
basis,
presenting major
cybersecurity incidents
and key
performance indicators
related to
the
company's cybersecurity
posture.
Additionally,
the Cyber
Security Officer
reports to
the audit
committee on
a semi-annual
basis regarding
progress
on
critical
cybersecurity
initiatives,
results
of
the
company's
cybersecurity
maturity
level
assessments, and updates on the implementation of our cybersecurity
strategy.
The
.
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.
118
As of
the date
of this
annual report,
we have
not identifed
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.”
119
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
1.5
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
120
4.6
4.7:
(26)
4.8:
(26)
4.9:
**
4.10:
(26)
4.
11
:
4.12:
**
4.13:
**
8.1
11.1
**
11.2
**
12.1
**
12.2
**
13.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant
**
13.2
Certification of Principal Financial Officer
pursuant to 18 U.S.C. Section 1350,
as adopted pursuant
**
15.1
**
15.2
**
16.1
**
97.1
101
The following materials
from the Company's
Annual Report on
Form 20-F for
the fiscal year
ended
December 31, 2024,
formatted in eXtensible
Business Reporting Language
(XBRL): (i) Consolidated
Balance Sheets as of December 31, 2024 and 2023; (ii) Consolidated Statements of Income for the
years ended December 31,
2024, 2023 and
2022; (iii) Consolidated
Statements of Comprehensive
Income for
the years
ended December
31, 2024,
2023 and
2022; (iv)
Consolidated Statements
of
Stockholders'
Equity
for
the
years
ended
December
31,
2024,
2023
and
2022;
(v)
Consolidated
Statements
of
Cash
Flows
for
the
years
ended
December
31,
2024,
2023
and
2022;
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,
and incorporated
by
reference herein.
(2)
Filed as
Exhibit 99.3
to the
Company's Form
6-K filed
on November
15, 2023,
and incorporated
by
reference herein.
(3)
Filed
as
Exhibit
3.3
to
the
Company's
Form
8-A
filed
on
February
13,
2014,
and
incorporated
by
reference herein.
(4)
Filed as Exhibit 3.1 to the Company's Form 8-A12B/A filed on January 15, 2016, and incorporated by
reference herein.
(5)
Filed as Exhibit 4.1 to the Company's Form 6-K filed on May 28, 2015, and
incorporated by reference
herein.
(6)
Filed as Exhibit 4.2 to the Company's Form 6-K filed on May 28, 2015, and
incorporated by reference
herein.
(7)
Filed as Exhibit 4.1 to the Company's Form 8-A12B/A filed on February 2, 2024,
and incorporated by
reference herein.
(8)
Filed as an Exhibit to
the Company's Registration
Statement (File No. 123052)
on March 1, 2005, and
incorporated by reference herein.
(9)
Filed as
an Exhibit
to the
Company's Amended
Registration Statement
(File No.
123052) on
March
15, 2005, and incorporated by reference herein.
121
(10)
Filed as
Exhibit 1.1
to the
Company's Form
6-K filed
on September
9, 2024,
and incorporated
by
reference herein.
(11)
Filed
as
an
Exhibit
to
the
Company's
Annual
Report filed
on
Form
20-F
on
March
27,
2014,
and
incorporated by reference herein.
(12)
Reserved.
(13)
Filed
as
an
Exhibit
to
the
Company's
Annual
Report filed
on
Form
20-F
on
March
28,
2016,
and
incorporated by reference herein.
(14)
Reserved.
(15)
Reserved.
(16)
Filed as Exhibit 4.1 to the Company's Form 8-A12B filed on
February 13, 2014, and incorporated by
reference herein.
(17)
Reserved.
(18)
Filed
as
an
Exhibit
to
the
Company’s
Form
6-K
filed
on
February
6,
2019,
and
incorporated
by
reference herein.
(19)
Reserved.
(20)
Reserved.
(21)
Filed as an
Exhibit to the
Company’s Form 6-K
filed on April
23, 2021, and
incorporated by reference
herein.
(22)
Filed
as
an
Exhibit to
the
Company’s
Form
6-K filed
on
September
8,
2023,
and
incorporated by
reference herein.
(23)
Filed as an Exhibit to
the Company’s Form 6-K filed
on July 31, 2021, and
incorporated by reference
herein.
(24)
Filed
as
an
Exhibit to
the
Company’s
Annual
Report filed
on
Form
20-F
on
March
12,
2021,
and
incorporated by reference herein.
(25)
Filed
as
an
Exhibit
to
the
Company’s
Annual
Report
filed
on
Form
20-F
on
April
5,
2024,
and
incorporated by reference herein.
(26)
Filed as
an Exhibit
to the
Company’s Annual
Report filed
on Form
20-F
on March
27, 2023,
and
incorporated by reference herein.
(27)
Filed as
an Exhibit
to the
Company’s
Form 6-K
filed
on December
14, 2023,
and incorporated
by
reference herein.
122
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/ Maria Dede
Maria Dede
Co-Chief Financial Officer
Dated: March 21, 2025
F-1
DIANA SHIPPING INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm: Deloitte
Certified Public
Accountants S.A. (PCAOB ID No.
)
............................................................................
F-2
Report of Independent Registered Public Accounting Firm on
Internal Controls Over
Financial Reporting: Deloitte Certified Public Accountants S.A.
(PCAOB ID No.1163)
.......
F-4
Report of Independent Registered Public Accounting Firm: Ernst
Young (Hellas)
Certified Auditors Accountants S.A. (PCAOB ID No.
)
...................................................
F-6
Consolidated Balance Sheets as of December 31, 2024 and 2023
................................
...
F-7
Consolidated Statements of Income for the years ended December
31, 2024, 2023 and
2022 ................................................................
................................
................................
..
F-8
Consolidated Statements of Comprehensive Income for the years
ended December 31,
2024, 2023 and 2022
................................
................................
................................
.........
F-8
Consolidated Statements of Stockholders' Equity for the years
ended December 31,
2024, 2023 and 2022
................................
................................
................................
.........
F-9
Consolidated Statements of Cash Flows for the years ended December
31, 2024, 2023
and 2022 ................................
................................
................................
...........................
F-
11
Notes to Consolidated Financial Statements................................
................................
......
F-13
F-2
Report of Independent Registered
Public Accounting Firm
To the Shareholders
and the Board of Directors of
Diana Shipping Inc.
Opinion on the Financial Statements
We have audited the accompanying
consolidated balance sheet of Diana Shipping Inc.
and subsidiaries (the “Company”)
as of December 31, 2024, the related consolidated
statement of income,
comprehensive income, stockholders’
equity,
and cash flows, for the year ended December
31, 2024, and the related notes (collectively
referred to as the “financial
statements”).
In our opinion, the financial statements
present fairly,
in all material respects, the financial position of the
Company as of December 31, 2024, and the results of its operations
and its cash flows for the year ended
December 31,
2024, in conformity with accounting principles
generally accepted in the United States
of America.
We have also 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, 2024, based on criteria
established in Internal Control
— Integrated Framework
(2013) issued by the Committee of Sponsoring
Organizations of
the Treadway
Commission and our report dated March
21, 2025, expressed an unqualified opinion on the Company’s
internal control over financial
reporting.
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 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 the financial statements
are free of material
misstatement, whether due to
error or fraud. Our audit 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 audit 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 audit
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 critical audit matters does not alter
in any way our opinion on
the 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 disclosures to which it relates.
F-3
Impairment of long-lived assets–
Future Charter Rates for vessels with impairment indicators
– Refer to Note 2 of the
consolidated financial statements.
Critical Audit Matter Description
The Company’s evaluation
of vessels held for use by the Company
for impairment involves
an initial assessment of each
vessel to determine whether events or
changes in circumstances indicate
that the carrying amount of the vessel may
not
be recoverable. As at December
31, 2024, 12 out of 38 vessels held for use had impairment
indicators.
If impairment indicators exist,
the Company compares undiscounted
projected net operating cash
flows to the carrying
value of the respective vessel with impairment
indicators to determine
if the vessel is required to be impaired.
When the
Company’s estimate
of undiscounted projected net
operating cash flows, excluding
interest charges, expected
to be
generated by the use and eventual
disposition of the vessel is less than its carrying amount,
the Company records an
impairment loss equal to the difference
between the vessel’s
carrying value and fair market
value.
The Company makes various assumptions
and judgments to determine the undiscounted
projected net operating
cash
flows expected to be generated
over the remaining useful life
of the vessel, including estimates and assumptions related
to the future charter rates. Future
charter rates are the most
significant and subjective assumption that the
Company
uses for its impairment analysis. For periods
of time where the vessels are not fixed
under time charter contracts, the
Company estimates the future
daily time charter equivalent rate
(the “future charter rate”)
for the vessels’ unfixed days
based on the most recent 10-year
average of historical 1 year
time charter rates available
for each type of vessel, as such
averages take
into account the volatility and cyclicalit
y
of the market.
We identified future charter
rates on vessels with impairment
indicators used in the undiscounted
projected net
operating cash flows as a critical audit matter
because of the complex judgements made
by management to estimate
them and the significant impact they have
on the undiscounted projected net
cash flows expected to be generated
over
the remaining useful life of the vessel.
This required a high degree of auditor judgment
and an increased extent of effort
when performing audit procedures
to
evaluate the reasonableness of
management’s future charter
rates.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the future charter rates on vessels with impairment
indicators utilized in the
undiscounted projected net operating cash flows included the following,
among others:
•
We tested the effectiveness of controls over management’s review of the impairment
analysis, including the
future charter rates used within the undiscounted projected net operating cash flows.
•
We evaluated the reasonableness of the Company’s estimate of future charter rates through
the performance of
the following procedures:
1.
Evaluating the Company’s methodology for estimating the future charter rates utilized
in the
undiscounted projected net operating cash flows by comparing them
to 1) the Company’s historical rates,
2) historical rate information of similar size vessels published by a third-party broker and
3) other external
market sources, including reports on prospective market outlook.
2.
Evaluating management’s ability to accurately forecast future charter rates by comparing
actual results to
management’s historical forecasts.
/s/
March 21, 2025
We have served as the Company’s
auditor since 2024.
F-4
Report of Independent Registered
Public Accounting Firm
To the Shareholders
and the Board of Directors of
Diana Shipping Inc.
Opinion on Internal Control
over Financial Reporting
We have audited the internal
control over financial reporting
of Diana Shipping Inc. and subsidiaries (the “Company”) as
of December 31, 2024, based on criteria established
in Internal Control - Integrated
Framework (2013) issued by the
Committee of Sponsoring Organizations
of the Treadway
Commission (COSO).
In our opinion, the Company maintained,
in all material respects, effective
internal control over financial reporting
as of December 31, 2024, based on criteria
established in Internal Control
- Integrated Framework
(2013) issued by COSO.
We have also audited,
in accordance with the standards
of the Public Company Accounting
Oversight Board (United
States) (PCAOB), the consolidated
financial statements as of and for
the year ended December 31, 2024, of the Company
and our report dated March 21, 2025, expressed
an unqualified opinion on those financial statements.
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.
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
F-5
inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures
may
deteriorate.
/s/ Deloitte Certified Public Accountants
S.A.
Athens, Greece
March 21, 2025
F-6
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
sheet of Diana
Shipping Inc. (the
Company) as
of
December 31,
2023, the
related
consolidated statements
of income,
comprehensive income, stockholders'
equity and
cash
flows
for
each of
the two
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 the
results of
its operations
and its
cash flows
for each
of the
two years
in the
period ended
December 31, 2023, in conformity with U.S. generally accepted accounting principles.
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.
/s/
We have served as the Company’s auditor from 2004 to 2023.
April 4, 2024
F-7
DIANA SHIPPING INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and 2023
(Expressed in thousands of U.S. Dollars – except
for share and per share data)
2024
2023
ASSETS
Current Assets
Cash and cash equivalents (Note 2 (e))
$
$
Time deposits (Note 2 (e))
Accounts receivable, trade (Note 2 (f))
Due from related parties (Note 4)
Inventories (Note 2 (g))
Prepaid expenses and other assets
Investments in equity securities (Note 5(b))
Fair value of derivatives
Total Current Assets
Fixed Assets:
Advances for vessels under construction (Note 6)
Vessels, net (Note 6)
Property and equipment, net (Note 7)
Total fixed assets
Other Noncurrent Assets
Restricted cash, non-current (Notes 2(e) and 8)
Due from related parties, non-current (Note 4)
Equity method investments (Note 4)
Investments in a related party (Notes 2(aa) and
5(a))
Other non-current assets
Deferred costs
Total Non-current Assets
Total Assets
$
$
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Long-term debt, current, net of deferred financing
costs (Note 8)
$
$
Finance liabilities, current (Note 9)
Accounts payable
Due to related parties (Note 3)
Accrued liabilities
Deferred revenue
Fair value of derivatives
Total Current Liabilities
Non-current Liabilities
Long-term debt, net of current portion and deferred
financing costs (Note 8)
Finance liabilities, net of current portion (Note 9)
Fair value of derivatives (Note 2 (dd))
Warrant liability (Note 11(e))
Other non-current liabilities
Total Noncurrent Liabilities
Commitments and contingencies (Note 10)
-
-
Stockholders' Equity
Preferred stock (Note 11)
Common stock, $
11)
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
(
635,896
)
(
613,869
)
Total Stockholders' Equity
$
$
The accompanying notes are an integral part of
these consolidated financial statements.
F-8
DIANA SHIPPING INC.
CONSOLIDATED STATEMENTS
OF INCOME
For the years ended December 31, 2024, 2023 and 2022
(Expressed in thousands of U.S. Dollars – except for share and per share data)
2024
2023
2022
REVENUES:
Time charter revenues
$
$
$
OPERATING EXPENSES
Voyage expenses
Vessel operating expenses
Depreciation and amortization of deferred charges
General and administrative expenses
Management fees to a related party (Note 4(a))
Gain on sale of vessels (Note 6)
(
5,799
)
(
5,323
)
(
2,850
)
Insurance recoveries
(
1,789
)
Other operating income
(
422
)
(
1,464
)
(
265
)
Operating income, total
$
$
$
OTHER INCOME/(EXPENSE)
Interest expense and finance costs (Note 13)
(
47,468
)
(
49,331
)
(
27,419
)
Interest and other income
Gain/(loss) on derivative instruments (Note 8)
(
439
)
Loss on extinguishment of debt (Note 8)
(
3,475
)
(
748
)
(
435
)
Gain on deconsolidation of subsidiary
Gain/(loss) on related party investments (Note 5(a))
(
3,905
)
Gain/(loss) on equity securities (Note 5(b))
(
400
)
Gain on warrants (Note 11(e))
Gain/(loss) from equity method investments (Note 4)
(
146
)
(
262
)
Total other expenses, net
$
(
46,032
)
$
(
35,868
)
$
(
23,634
)
Net income
$
$
$
Dividends on series B preferred shares (Notes 11(b) and 14)
(
5,769
)
(
5,769
)
(
5,769
)
Net income attributable to common stockholders
$
$
$
Earnings per common share, basic
$
$
$
Earnings per common share, diluted
$
$
$
Weighted average number of common shares outstanding,
basic
Weighted average number of common shares outstanding,
diluted
The accompanying notes are an integral part of these consolidated financial statements.
DIANA SHIPPING INC.
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME
For the years ended December 31, 2024 and 2023 and 2022
(Expressed in thousands of U.S. Dollars)
2024
2023
2022
Net income
$
$
$
Other comprehensive income - Defined benefit plan
Comprehensive income
$
$
$
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, 2024, 2023
and 2022
(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
Accumulated
Deficit
Total
Equity
# of Shares
Par
Value
# of
Shares
Par
Value
# of
Shares
Par
Value
# of Shares
Par
Value
BALANCE,
December
31, 2021
$
$
-
$
-
$
$
$
$
(
590,286
)
$
Net income
-
-
-
-
-
-
-
-
-
-
Issuance of restricted
stock and
compensation cost
(Note 11(i))
-
-
-
-
-
-
-
-
Stock repurchased and
retired
(Note 11(e))
-
-
-
-
-
-
(
820,000
)
(
8
)
(
3,791
)
-
-
(
3,799
)
Issuance of common
stock
(Note 11(e))
-
-
-
-
-
-
-
-
Issuance of common
stock for vessel
acquisitions
(Note
11(e))
-
-
-
-
-
-
-
-
Dividends on series B
preferred stock
($
(Note 11(d))
-
-
-
-
-
-
-
-
-
-
(
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
)
Other comprehensive
income
-
-
-
-
-
-
-
-
-
-
BALANCE,
December
31, 2022
$
$
-
$
-
$
$
$
$
(
574,993
)
$
Net income
-
-
-
-
-
-
-
-
-
-
Issuance of restricted
stock and
compensation cost
(Note 11(i))
-
-
-
-
-
-
-
-
Issuance of common
stock
(Note 11(f))
-
-
-
-
-
-
-
-
Issuance of common
stock for vessel
acquisitions
(Note 6,
11(e))
-
-
-
-
-
-
-
-
F-10
Dividends on series B
preferred stock
($
(Note 11(b))
-
-
-
-
-
-
-
-
-
-
(
5,769
)
(
5,769
)
Dividends on common
stock ($
(Note 11(f))
-
-
-
-
-
-
-
-
-
-
(
64,276
)
(
64,276
)
Dividends in kind
(Note 11(g))
-
-
-
-
-
-
-
-
-
-
(
10,761
)
(
10,761
)
Warrants
(Note 11(h))
-
-
-
-
-
-
-
-
-
-
(
7,914
)
(
7,914
)
Other comprehensive
income
-
-
-
-
-
-
-
-
-
-
BALANCE,
December
31, 2023
$
$
-
$
-
$
$
$
$
(
613,869
)
$
Net income
-
-
-
-
-
-
-
-
-
-
Issuance of Restricted
Stock and
Compensation Cost
(Note 11(i))
-
-
-
-
-
-
-
-
Issuance of Common
Stock (Note 11(e))
-
-
-
-
-
-
-
-
Dividends on series B
preferred stock
($
(Note 11(b))
-
-
-
-
-
-
-
-
-
-
(
5,769
)
(
5,769
)
Dividends on common
stock ($
share) (Notes 11(f))
-
-
-
-
-
-
-
-
-
-
(
29,004
)
(
29,004
)
Other Comprehensive
Income
-
-
-
-
-
-
-
-
-
-
BALANCE,
December
31, 2024
$
$
-
$
-
$
$
$
$
(
635,896
)
$
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, 2024, 2023 and 2022
(Expressed in thousands of U.S. Dollars)
2024
2023
2022
Net income
$
$
$
Adjustments to reconcile net
income to cash provided
by operating
activities
Depreciation and amortization of deferred charges
Amortization of debt issuance costs (Note 13)
Compensation cost on restricted stock (Note 11(g))
Provision for credit loss
Dividend income (Note 5(a))
(
3
)
(
100
)
Pension and other postretirement benefits
(Gain)/loss on derivative instruments (Note 8)
(
274
)
-
Gain on sale of vessels (Notes 6)
(
5,799
)
(
5,323
)
(
2,850
)
(Gain)/loss on related party investments (Note 5)
(
1,502
)
(
589
)
Loss on extinguishment of debt
Gain on deconsolidation of subsidiary
(
844
)
-
(Gain)/loss from equity method investments (Note 4)
(
894
)
(Gain)/loss on equity securities (Note 5(b))
(
2,813
)
-
Gain on warrants (Note 11(e))
(
719
)
(
1,583
)
-
(Increase) / Decrease
Accounts receivable, trade
(
695
)
(
3,427
)
Due from related parties
(
252
)
Inventories
(
511
)
Prepaid expenses and other assets
(
1,950
)
(
1,265
)
Other non-current assets
(
16
)
Investments in equity securities
(
17,916
)
-
Increase / (Decrease)
Accounts payable, trade and other
(
673
)
(
1,761
)
Due to related parties
(
569
)
(
57
)
(
72
)
Accrued liabilities
(
520
)
Deferred revenue
(
4,195
)
Other non-current liabilities
(
158
)
(
218
)
Drydock cost
(
8,044
)
(
5,646
)
(
16,368
)
Net Cash Provided by Operating Activities
$
$
$
Payments for vessels under construction and
vessel improvements
(Note 6)
(
20,516
)
(
29,732
)
(
230,302
)
Proceeds from sale of vessels, net of expenses (Note 6)
Payments to acquire investments (Note 4)
(
27,203
)
(
10,595
)
Time deposits (Note 2 (e))
(
23,500
)
(
46,500
)
Payments to acquire other assets
(
216
)
Cash divested from deconsolidation
(
771
)
-
Proceeds from convertible loan with limited partnership
Payments to acquire property, furniture and fixtures (Note 7)
(
3,718
)
(
2,006
)
(
667
)
Net Cash Provided by/(Used) in Investing Activities
$
(
39,783
)
$
$
(
273,097
)
Proceeds
from
issuance
of
long-term
debt
and
finance
liabilities
(Note 8)
Proceeds from
issuance of
common stock,
net of
expenses (Note
11(e))
Payments for issuance of common stock (Note 11(e))
(
79
)
-
Payments of dividends, preferred stock (Note 11(b))
(
5,769
)
(
5,769
)
(
5,769
)
Payments of dividends, common stock (Note 11(f))
(
29,004
)
(
41,427
)
(
79,812
)
Payments for repurchase of common stock
-
-
(
3,799
)
Payments of financing costs (Notes 8 and 9)
(
5,238
)
(
1,724
)
(
3,302
)
Repayments of long-term debt
and finance liabilities (Notes
8 and 9)
(
123,007
)
(
79,842
)
(
102,839
)
Net Cash Provided by/(Used) in Financing Activities
$
(
21,673
)
$
(
71,145
)
$
Cash,
Cash
Equivalents
and
Restricted
Cash,
Year
Increase/(Decrease)
(
29,360
)
F-12
Cash, Cash Equivalents and Restricted Cash, Beginning
Balance
Cash, Cash Equivalents and Restricted Cash, Ending Balance
$
$
$
RECONCILIATION OF CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
Cash and cash equivalents
$
$
Restricted cash, non-current
Cash, Cash Equivalents and Restricted Cash, Total
$
$
$
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash acquisition of assets
$
$
Non-cash debt assumed
-
Non-cash finance liability
-
Stock issued in noncash financing activities
Non-cash investments acquired
-
Noncash dividend
-
Transfer to Investments
-
Interest paid, net of amounts capitalized
$
$
The accompanying notes are an integral part of these consolidated financial statements.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(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
,
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
%
owned
joint
venture
(Note
4(a)).
The
fees
paid
to
DSS
are
eliminated
upon
consolidation.
2.
Significant Accounting Policies and Recent Accounting Pronouncements
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 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.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-14
Transactions
involving
other
currencies
during
the
year
are
converted
into
U.S.
dollars
using
the
exchange rates in effect at
the 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 income/(loss).
e)
Cash,
Cash Equivalents,
Time
Deposits and
Restricted Cash:
The Company
considers highly
liquid investments such as
time deposits, certificates of
deposit and their equivalents
with an original
maturity
of
up
to
three
months
to
be
cash
equivalents.
Time
deposits
with
maturity
above
three
months are
separately presented
as time
deposits. As
of December
31, 2024
and 2023,
time deposits
(with
maturity above
three
months)
amounted to
$
,
respectively.
During
2024
and 2023, the Company
placed new time deposits
exceeding three months of
$
,
respectively,
and
during
the
same
periods,
deposits
of
$
cash consists
mainly of
cash deposits
required to
be maintained
at all
times under
the Company’s
loan facilities
(Note
8) as
compensating cash
balances and
are not
pledged. As
of December
31,
2024 and 2023, accrued
interest income amounted to
$
, 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,
2024 and 2023 there
was
not recognize interest income on trade receivables as all balances are
settled within a year.
g)
Inventories:
Inventories consist of lubricants and victualing 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
capitalizable
expenditures
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 incurred during
the assets' construction period,
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:
carrying amount or fair value less cost to sell when the respective held for sale criteria are met. The
asset is
not depreciated
while it
is classified
as 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.
If the
plan to sell the
asset changes, the asset is
reclassified as held and used,
measured at the lower of
its carrying amount
before it was
classified as held
for sale,
adjusted for any
depreciation expense
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-15
that would have been
recognized had the asset
been continuously classified as
held and used
its fair value at the date of the subsequent decision not to sell.
j)
Sale
and
leaseback:
Company,
as seller-lessee, determines
whether the transfer
of the
asset is
a sale
under ASC 606.
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.
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.
In these
cases, the
Company does
not derecognize
the asset from its balance sheet and accounts for any amounts
received as financial liability.
k)
Property and equipment:
The Company also owns other plots
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
value. Furniture, office equipment and vehicles have a useful life of
, except for a car owned
by the Company, which has a
useful life of
. Computer software
and hardware have
a useful
life of
. 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,
obsolescence
or
damage
to
the
asset,
potential sales and
other business plans)
indicate that the
carrying amount of
an asset may
not be
recoverable. When impairment
indicators are identified and
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
-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
-year
average
of
historical
1
year
time
charter
rates
is
not
available for a type
of vessel, 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
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-16
For
the
building,
the
Company
determines
undiscounted
projected
net
operating
cash
flows
by
considering the
estimated monthly rent
the Company would
have to
pay in order
to lease
a similar
building for a period equal to its remaining useful life.
for 2024, 2023 and
2022 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.
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
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.
resulted
in
increased
salvage
values,
decreased
depreciation
expense
and
increased
operating
income. Additionally, for
the period
from July
1, 2023
to December
31, 2023,
net income
and earnings
per share, basic and diluted, increased by $
, respectively.
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, refinancing or amending existing loans,
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.
The time charter contracts
are considered
operating leases because
(i) the vessel
is an
identifiable asset (ii)
the owner
of the
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-17
vessel does not have substantive substitution
rights and (iii) the charterer has
the right to control the
use of the
vessel during the term
of the contract and
derives the economic benefits
from such use.
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
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:
expenses are expensed in the year incurred. Such costs are included in
vessel operating expenses
in the accompanying consolidated statements of income.
s)
Earnings / (loss) per Common Share:
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 reports financial
information and evaluates its
operations and
operating
results
by
revenue
and
operating
expenses.
As
a
result,
the
Company’s
management,
including its
Chief Executive
Officer,
who is
the chief
operating decision
maker,
reviews operating
results solely by revenue and operating
results of the fleet, and
thus, the Company has determined
that it operates
under one
reportable segment,
that of operating
dry bulk
vessels. The
chief operating
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-18
decision maker
for
each
type
of
charter
or
vessel
but
is
instead
regularly
provided
with
only
the
consolidated
expenses
as
noted
on
the
face
of
the
consolidated
statements
of
income.
The
CODM
assesses
performance
for
the
vessel
operations
segment and
decides
how
to
allocate
resources
based
on
consolidated net
income. 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.
In
November
2023,
the
FASB
issued
ASU
2023-07,
which
requires
the
disclosure
of
significant
segment
expenses
that
are
part
of
an
entity’s
segment
measure
of
profit
or
loss
and
regularly
provided to
the chief
operating decision
maker.
In addition,
it adds
or makes
clarifications to
other
segment-related
disclosures,
such
as
clarifying
that
the
disclosure
requirements
in
ASC
280
are
required
for
entities
with
a
single
reportable
segment
and
that
an
entity
may
disclose
multiple
measures
of
segment
profit
and
loss.
ASU
2023-07
is
effective
for
fiscal
years
beginning
after
December 15, 2023 and
interim periods beginning
after December 15, 2024.
The Company adopted
ASU 2023-07 as of January 1, 2024 and its adoption has limited impact on the
Company’s financial
disclosures and there was no impact to financial position or results
of operations.
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:
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 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:
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
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-19
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 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.
aa)
Financial Instruments, Investments-Equity
Securities, Recognition and
Measurement
: Equity
investments
with
readily
determinable
fair
values
are
recognized
at
the
transaction
price
and
subsequently
measured
at
fair
value
through
net
income.
According
to
ASC
321-10-35-2,
the
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 impairment
loss.
bb)
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 will require net cash
settlement.
Additional
conditions
necessary
for
equity
classification
include
settlement
to
be
permitted in
unregistered shares,
the entity
to have
sufficient authorized
and unissued
shares, the
contract to contain an explicit share
limit, there should be no requirement
for net cash settlement 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,
when assessing the
accounting
of
warrants
and
pre-funded
warrants, takes
into
consideration
ASC
480
to
determine
whether the warrants
and pre-funded warrants should be
classified as permanent
equity instead of
temporary equity
or
liability.
The Company
further analyses
the key
features of
warrants and
pre-
funded warrants
and examines
whether these
fall under
the definition
of a
derivative according
to
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-20
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.
cc)
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
the
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.
dd)
Derivative instruments:
Derivative instruments
are recorded
in the
balance sheet
as either
an asset
or liability measured at its fair value
with changes in the instruments' fair value recognized as
either
a
component
in
other
comprehensive
income
if
specific
hedge
accounting
criteria
are
met
in
accordance
with
guidance
relating
to
“Derivatives
and
Hedging”
or
in
earnings
if
hedging
criteria
are not met.
New Accounting Pronouncements
In November
2024, the
FASB
issued
ASU 2024-03, “Income
Statement
-
Reporting
Comprehensive
Income
-
Expense
Disaggregation
Disclosures
(Subtopic 220-40):
Disaggregation
of
Income
Statement
Expenses”.
The
standard
is
intended
to
require
more
detailed
disclosure
about
specified
categories
of
expenses (including employee compensation, depreciation,
and amortization) included in certain expense
captions presented on
the face
of the
income statement. This
ASU is effective
for fiscal
years beginning
after December
15,
2026, and
for
interim
periods
within
fiscal
years
beginning
after December
15,
2027. Early
adoption
is
permitted.
The
amendments may be
applied
either
prospectively
to
financial
statements issued
for reporting
periods after
the effective
date of
this ASU
or retrospectively
to all
prior
periods presented
in the
financial statements.
The Company
is currently
assessing the
impact this
standard
will have on its consolidated financial statements.
3.
Transactions with related parties
a)
Altair Travel Agency S.A. (“Altair”):
Altair, which is controlled by the Company’s CEO Mrs. Semiramis Paliou. Travel expenses for 2024, 2023
and
2022
amounted
to
$
,
$
,
respectively,
and
are
mainly
included
in
vessel
operating expenses and general and administrative expenses in the accompanying consolidated financial
statements. As of
December 31, 2024
and 2023, an
amount of $
, 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:
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 2024, 2023
and 2022
brokerage fees
amounted to
$
, $
, respectively, and
are included
in general
and
administrative expenses
in
the
accompanying consolidated
statements of
income.
For
2024, 2023,
and 2022,
commissions related to
Steamship amounted to
$
, $
, respectively
and are
included in gain
on the sale
of vessels,
vessel cost and
equity method investments.
As of December
31,
2024 and 2023,
an amount of
$
, respectively, was due to Steamship
included in “Due
to related
parties” in the accompanying consolidated balance sheets.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-21
c)
Bond
issuance:
purchased an
aggregate of
$
July 2, 2024 (Note 8).
4.
Equity Method Investments
a)
Diana Wilhelmsen Management Limited, or DWM:
Management Inc., a
wholly owned subsidiary
of DSI, and
Wilhelmsen Ship Management
Holding AS, an
unaffiliated third party,
each holding
% of DWM. As of December 31, 2024 and 2023, the investment in
DWM
amounted to
$
consolidated balance sheets.
In 2024, 2023
and 2022, the
investment in DWM
resulted in a
gain of $
,
$
, respectively, included in gain/(loss) from equity method investments in the accompanying
consolidated statements of income.
DWM performs the
technical and commercial
management of
monthly fee separately presented as management fees to a
related party and a percentage of their gross
revenues included in voyage expenses. Management fees to
DWM in 2024, 2023 and 2022 amounted to
$
,
$
,
respectively.
Voyage
expenses
(commissions)
incurred
by
DWM
under
the
management agreements during 2024,
2023 and 2022, amounted
to $
, $
, respectively.
As of December 31, 2024 and 2023, there was an amount of $
from related parties in the accompanying consolidated balance
sheets.
b)
Bergen Ultra
LP, or Bergen:
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
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 $
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
% of
the limited
partnership interests;
(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;
(iv)
a
commission
agreement
under
which
the
Company
is
paid
a
commission
on
the
outstanding
balance
of
the
loan,
as
compensation
for
the
guarantee
it
provided
to
Nordea and (v)
a convertible loan 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
$
converted into partnership interests in Bergen, representing
% of the total partnership interests.
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. On
the same date,
Bergen was considered
an affiliate
entity and
not a controlled subsidiary of the Company. The Company accounted for the deconsolidation
of Bergen in
accordance
with
ASC
610
and
the
retained
noncontrolling
interest
was
accounted
for
under
the
equity
method due to the Company’s significant influence over Bergen.
On
the
date
of
deconsolidation,
the
fair
value
of
the
Company’s
interest
amounted
to
$
calculated through
Level 2
inputs of
the fair
value hierarchy
in accordance
with ASC
610, by
taking into
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-22
consideration the
fair value
of the
distinct assets
and liabilities
of Bergen
on the
date of
the deconsolidation.
This resulted in a gain on
deconsolidation amounting to $
, separately presented in the accompanying
consolidated statement
of income,
being the
difference between
the fair
value of
the retained
noncontrolling
interest plus
the carrying
value of
the liabilities assumed
by Bergen
and the
carrying value
of the
assets
derecognized.
As
of
December
31,
2024
and
2023,
the
investment
in
Bergen
amounted
to
$
,
respectively,
and
is
included
in
equity
method
investments
in
the
accompanying
consolidated
balance
sheets. In 2024 and 2023, the investment in Bergen
resulted in a gain of $
, respectively and
is included in gain/(loss) from equity
method investments in the accompanying
consolidated statements
of
income. Also, in 2024
and 2023, income from
management fees from Bergen amounted
to $
,
respectively,
included
in
time
charter
revenues
and
income
from
the
commission
paid
on
the
loan
guarantee
amounted
to
$
,
included
in
interest
and
other
income
in
the
accompanying
consolidated statements
of income. As
of December 31,
2024 and 2023,
there was an
amount of $
$
, respectively, due from Bergen included in due from related parties, current and non-current.
c)
Windward Offshore
GmbH,
or Windward:
owned subsidiary Diana
Energize Inc., or Diana
Energize, entered into a
joint venture agreement, with
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
% of
the limited
partnership’s capital
for the
construction of two CSOVs, and
in January 2024 agreed to
increase its contribution to
% of the limited partnership’s capital pursuant to
a novated agreement in order for the
partnership to
place orders for two
additional CSOVs. As of
December 31, 2024 and 2023,
the investment in Windward
amounted to
$
,
respectively,
consisting
of
advances to
fund
the
construction of
the
vessels and working capital. In 2024 and 2023,
the investment in Windward resulted in a
loss of $
$
,
respectively,
included
in
gain/(loss)
from
equity
method
investments
in
the
accompanying
consolidated statements of income.
d)
Diana Mariners
Inc., or
Diana Mariners:
owned subsidiary Cebu Shipping
Company Inc., or Cebu, acquired
% of Cohen Global Maritime Inc., or
Cohen,
a
company
organized
in
the
Republic
of
the
Philippines
for
the
purpose
of
providing
manning
agency services.
In August 2024, Cohen was renamed Diana Mariners and will act as the manning agent
of
the
Company’s
vessels.
As
of
December
31,
2024
and
2023,
the
Company’s
investment
in
Diana
Mariners amounted to
$
, respectively and
there was an
amount of $
, respectively,
due from Diana Mariners included
in due from related
parties. As of December 31,
2024, Diana Mariners
did not have any operations.
5.
Investments in a related party and other
a)
OceanPal Inc., or
OceanPal:
of
%
of OceanPal’s
common
stock.
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.
Series
B
preferred
shares
entitle
the
holder
to
stockholders of the
Company,
provided however,
that the total
number of votes
shall not exceed
% of
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-23
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
% of the total number of votes. Series B Preferred
Shares have no dividend or distribution rights.
equal
to
the
stated
value
of
$
commencing upon the first anniversary of the issue date, at a conversion price equal to the lesser
of $
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
%
per
annum.
Dividends are payable in cash or, at OceanPal’s election, in kind.
On October 17,
2023, the Company
converted
to
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 $
,
being the
difference between
the
book value
of the
gain/(loss)
on
related
party
investments,
separately
presented
in
the
accompanying
consolidated
statements
of
income.
Following
the
conversion,
the
Company
is
the
beneficial
owner
of
%
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,
2024
and
2023,
the
Company’s
investment
in
the
common
stock
of
OceanPal
amounted to $
, respectively,
being the fair value of OceanPal’s
common shares on that
date, determined through Level 1
inputs of the fair
value hierarchy.
In 2024 and 2023,
unrealized loss on
investment
amounted
to
$
,
respectively,
resulting
from
such
valuation,
included
in
gain/(loss)
on
related
party
investments,
separately
presented
in
the
accompanying
consolidated
statements of income.
As of
December 31,
2024 and
2023, the
Company’s investment
in the
Series B
preferred shares
and Series
C preferred shares,
amounted to $
, respectively, including $
, respectively, dividends
receivable
on
the
Series
C
preferred
shares,
and
are
included
in
investments
in
a
related
party
in
the
accompanying consolidated balance sheets.
In 2023
and 2022, the
Company distributed
as non-cash dividends
to its shareholders (Note 11).
The Series D Preferred Shares were offered as non-
cash consideration
for the
sale of
the vessels
Melia (in
2023) (Note
6) and
Baltimore (in
2022) to
OceanPal.
The Company
accounted for
the transactions
as a
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
$
and $
, respectively.
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. In 2023 and 2022,
the transactions
resulted in a gain
of $
, respectively,
being the difference
between the fair
value and the
carrying value of the
investments, separately
presented as gain/(loss)
on related party
investments in
the related accompanying
consolidated statements
of income.
In
2024,
2023
and
2022,
dividend
income
from
the
Series
C
and
Series
D
OceanPal
preferred
shares
amounted to $
, $
, respectively, included in interest and
other income in the
accompanying
consolidated statements of income.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-24
b)
Investment
in
equity
securities:
listed in the NYSE which as of December
31, 2023 had a fair value of $
. The equity securities were
initially recorded at
cost amounting
to $
Level 1
of the
fair value
hierarchy. The securities
were considered
marketable securities
that were
available
to
be
converted
into
cash
to
fund
current
operations
and
were
classified
in
current
assets
in
the
accompanying consolidated
balance sheet.
The Company
sold all
securities during
the first
quarter of
2024
and in
2024 and
2023, recorded
a realized
loss of
$
, respectively,
presented in gain/(loss) on equity securities in the accompanying
consolidated statements of income.
6.
Advances for vessels under construction and Vessels, net
It is in
the Company’s normal
course of business
from time to
time to acquire
and sell vessels.
Accordingly,
in 2024 and 2023, the Company entered into the below transactions.
Vessels under construction
On
February
8,
2024,
the
Company
signed
an
agreement
with
an
unaffiliated
third
party,
for
the
construction of
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. As
of December
31, 2024,
advances for
vessels under construction amounted to $
, including $
Vessel Acquisitions
On January 30,
2023, the Company
took delivery of
the Ultramax dry
bulk vessel
Aquarius
cash and
. The value of the shares
issued 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.
On
February 14,
2023, the
Company,
through
a wholly
owned
subsidiary,
acquired from
an unaffiliated
third-party
the
Ultramax
dry
bulk
vessel
DSI
Drammen.
On
April
28,
2023,
this
subsidiary
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
was
included
in
both
vessel
acquisitions
and
vessel
disposals in the related year.
Vessel Disposals
In
2023,
the
Company sold
to
unrelated third
parties
the
vessels
Aliki
Boston,
and to
OceanPal, a
related party company,
the vessel
Melia
$
.
In 2024, the Company sold to unrelated third parties the vessels
Artemis
Houston
aggregate gain of $
.
The
amount
reflected
in Vessels,
net
in
the
accompanying consolidated
balance sheets
is analyzed
as
follows:
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-25
Vessel Cost
Accumulated
Depreciation
Net Book
Value
Balance, December 31, 2022
$
$
(
191,512
)
$
- Additions for vessel acquisitions and improvements
-
- Vessel disposals
(
60,655
)
(
38,967
)
(
27,908
)
-
(
27,908
)
- Depreciation for the year
-
(
44,231
)
(
44,231
)
Balance, December 31, 2023
$
$
(
214,055
)
$
- Additions for vessel improvements
-
- Vessel disposals
(
46,001
)
(
29,152
)
- Depreciation for the year
-
(
38,586
)
(
38,586
)
Balance, December 31, 2024
$
$
(
235,792
)
$
7.
Property and Equipment, net
The Company
owns the
land and
building of
its principal
corporate offices
in Athens,
Greece and
three
plots of which two were acquired in 2024 from unaffiliated third parties and one in 2023 from Alpha Sigma
Shipping Corp, a
related party company,
all acquired for
corporate purposes.
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, 2022
$
$
(
5,973
)
$
- Additions in property and equipment
-
- Depreciation for the year
-
(
687
)
(
687
)
Balance, December 31, 2023
$
$
(
6,660
)
$
- Additions in property and equipment
-
- Depreciation for the year
-
(
825
)
(
825
)
Balance, December 31, 2024
$
$
(
7,485
)
$
8.
Long-term debt
The
amount of
long-term debt
shown in
the
accompanying consolidated
balance sheets
is
analyzed as
follows:
2024
2023
Senior unsecured bond
Secured long-term debt
Total long-term
debt
$
$
Less: Deferred financing costs
(
7,973
)
(
6,314
)
Long-term debt, net of deferred financing costs
$
$
Less: Current long-term debt, net of deferred financing
costs,
current
(
45,230
)
(
49,512
)
Long-term debt, excluding current maturities
$
$
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-26
8.375% Senior Unsecured Bond
:
On
, the
Company issued a
$
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
$
the bond. On June 29, 2023, the Company repurchased $
recognized an
amount of
$
reacquisition price
of $
deferred financing
fees of
$
. In
June 2024,
the bond
became callable,
and on
July 2,
2024,it was
prepaid
at a price equal to
% of nominal value, with the proceeds from the new bond discussed below. The
Company
applied
the
debt
modification
guidance
for
the
part
of
the
transaction
refinanced
by
existing
investors
amounting
to
$
.
An
amount
of
$
deferred fees were deferred
over the term of
the new bond and
an amount of $
on
debt
extinguishment. The
bond included
financial and
other
covenants and
was trading
on the
Oslo
Stock Exchange under the ticker symbol “DIASH02”.
8.75% Senior Unsecured Bond
:
On July 2, 2024, the Company
issued $
senior unsecured
bond maturing
in July
2029 having
a US Dollar
fixed-rate coupon
of
% payable
semi-
annually in arrears in January and
July of each year.
The bond is callable in whole or
in part in July 2027
at a
price equal
to
% of
nominal value;
in January
2028 at
a price
equal to
% of
nominal
value; in
July 2028
at a
price equal
to
% and
after January
2029 at
a price
equal to
%
of
nominal value.
On November
8, 2024,
the Company
issued the
remaining $
bond issue, at
% of
par value. 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.
The
bond
includes
financial
and
other
covenants
and
is
trading
on
the
Oslo
Stock
Exchange under the ticker symbol “DIASH03”.
Secured Term Loans:
Under the
secured term
loans outstanding
as of
December 31,
2024,
are
mortgaged
with
first
preferred
or
priority
ship
mortgages,
having
an
aggregate
carrying
value
of
$
.
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,
2024 and 2023 minimum
cash deposits required to
be maintained at all
times under
the Company’s
loan facilities,
amounted to
$
, 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
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-27
following the occurrence
of an event
of default. All
of the Company’s
secured term loans
bear interest at
SOFR plus a margin. In 2024 and 2023, the weighted
average interest rate of the secured term
loans was
% and
%, respectively.
As of December
31, 2024 and
2023, the Company
had the following
agreements with banks,
either as a
borrower or as a guarantor, to guarantee the loans of its subsidiaries:
Nordea Bank
AB, London
Branch (“Nordea”):
$
$
2022 prepaid
$
quarterly instalments of an aggregate amount of $
, and a balloon of $
the last instalment on
.
On June 27, 2023, the Company drew down $
the
outstanding
balance
of
an
existing
loan
amounting
to
$
extinguishment amounting to $
. The loan, maturing
on
instalments of $
.
On
July
25,
2024,
the
Company
entered
into
a
$
refinance
the
outstanding
balance
of
the
two
loans
mentioned
above.
The
loan
is
repayable
in
equal
quarterly instalments of $
.
Export-Import Bank of China:
loan
agreement,
which
is
repayable
in
equal
quarterly
instalments
of
$
,
each,
until
its
maturity
on
.
DNB Bank
ASA or DNB:
loan agreement which was drawn on June 27, 2023, to refinance the outstanding balance of another loan
and
for
working
capital
purposes.
The
loan
is
repayable
in
equal
quarterly
instalments
of
$
. The loan is subject to a margin reset
and unless the parties agree on a new margin,
the loan will
be mandatorily repayable
on June 27,
2027. On
July 6, 2023,
the Company entered
into an
interest rate swap with DNB for a notional amount for the
% of the loan amount. Under the interest rate
swap, the Company pays
a fixed rate and
receives floating under term
SOFR.
The swap has a
termination
date on December 27,
2029, and a mandatory
break on June 27,
2027, according to which the
swap will
be terminated if the loan is prepaid. As of December 31,
2024 and 2023, the fair value of the interest rate
swap amounted
to
$
, respectively,
and is
separately presented
in current
assets/liabilities
and non-current liabilities. In 2024 and 2023, the Company recognized a gain of $
,
respectively, from
the swap valuation separately presented as gain/(loss) on derivative instruments in the
accompanying consolidated statements
of income.
Danish Ship
Finance A/S
or Danish:
Danish, for
$
On
April
18
and
19,
2023,
the
Company
drew
down
$
instalments of $
2028. On
October 18,
2024, the
Company refinanced
the outstanding
balance of
this loan
with a
loan which
is repayable in equal quarterly instalments of $
the last instalment on
.
As of December 31, 2024 and 2023, the Company was in compliance
with all of its loan covenants.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-28
As of December 31, 2024, the maturities of
the Company’s bond and debt facilities throughout their term,
are shown in the table below and do not include related debt issuance
costs.
Period
Principal Repayment
Year 1
$
Year 2
Year 3
Year 4
Year 5
Year 6 and
thereafter
Total
$
9.
Finance Liabilities
On March 29, 2022, the Company
sold
Florida
the buyer for
a period of
, under which
the Company pays
a fixed monthly
hire. The Company
has
the option to
repurchase the vessel
at specific prices, after
the end of
the third year
of the charter period
and for
each year
thereafter,
and the
obligation to
purchase the
vessel on
the expiration
of the
lease on
the tenth year.
On August 17, 2022, the
Company entered into
third parties for
New Orleans
Santa Barbara
. 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
, each, under which the Company pays
fixed monthly hire. Under
the bareboat charter, the
Company has the
option to repurchase
the vessel at
specific prices, after
the end
of the
third year
of the
charter period
and for
each year
thereafter, and the
obligation to
purchase the
vessel
on the expiration of the lease on the eighth year.
On December 6, 2022, the Company
sold
DSI Andromeda
vessel under
a bareboat
agreement, for
a period
of
, under
which the
Company pays
fixed monthly
hire. The Company
has the
option to
repurchase the vessel
at specific prices,
after the end
of the
third year
of
the
charter
period
and
for
each
year
thereafter,
and
the
obligation
to
purchase
the
vessel
on
the
expiration of the lease on the tenth year.
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, 2024
and
2023,
finance
liability
amounted
to
$
,
respectively,
included
in
finance
liabilities,
current and $
December 31, 2024, the
weighted average remaining lease
term of the above lease
agreements was
years, the
average interest rate
was
% and
the sublease
income during the
years ended
December
31, 2024 was $
, included in time charter revenues.
As of
December 31,
2024, and
throughout
the term
of the
leases,
the Company
has annual
finance liabilities
as shown in the table below:
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-29
Period
Principal Repayment
Year 1
$
Year 2
Year 3
Year 4
Year 5
Year 6 and
thereafter
Total
$
10.
Commitments and Contingencies
a)
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 $
incident, by the
PI Association in
which the Company’s
vessels are entered.
In 2022, the
Company
recorded a
gain of
$
its insurance
policies, which
is separately
presented as
insurance recoveries
in the
accompanying 2022
consolidated statement of income.
b)
the
Company
has
purchase
obligations
amounting
to
$
,
at
the
end
of
the
lease
agreements
described in Note 9.
c)
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,
2024,
the
Company
did
not
record
a
provision for
losses
under
the
guarantee
of
Bergen’s
loan
amounting to
$
d)
follows:
Period
Amount
Year 1
$
Year 2
Year 3
Year 4
Total
$
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-30
e)
As
of
December
31,
2024,
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, 2024 and until their expiration was as follows:
Period
Amount
Year 1
$
Year 2
Year 3
$
11.
Capital Stock and Changes in Capital Accounts
a)
Preferred stock
:
consists of
designated as
Series B
Preferred Shares,
Company had
b)
Series
B
Preferred
Stock:
Series B Preferred
Shares issued and
outstanding with
par value $
with liquidation preference
at $
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
% per annum,
or
$
amounted
to
$
,
$
,
respectively.
Since
February
14,
2019,
the
Company
may
redeem, in whole or in part, the Series B Preferred Shares at a redemption price of $
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,
2024,
and
2023,
the
Company
had
shares of Series C Preferred Stock, issued and outstanding, with par value $
affiliate of its Chief Executive Officer, Mrs. Semiramis Paliou.
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, 2024, and 2023, the Company had
Series D Preferred Stock, issued and outstanding,
with par value $
its Chief
Executive Officer,
Mrs. Semiramis
Paliou.
The Series
D Preferred Stock
is not
redeemable and
has
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-31
votes,
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
% 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
% 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
2022, the
Company repurchased
under its
share repurchase program
an
aggregate
cost
of
$
,
including
expenses.
Also,
the
Company
issued
under
its
ATM
program
$
, and
, for the acquisition of
vessels, upon exercise of warrants issued to the vessels’ sellers.
In
2023,
the
Company
issued
,
for
the
acquisition
of
one
vessel, upon
exercise of
a warrant
issued to
the vessel’s
sellers (Note
6). The
Company did
t receive
any proceeds from the exercise of the warrants
in 2022 and 2023, and the value of
the shares issued was
included in vessels, net.
On December 2,
2024, the Company commenced
a tender offer
to purchase up
to
its outstanding common stock,
at $
(Note 17).
f)
Dividend on Common Stock:
On March 21,
2022, the Company paid
a dividend on its
common
stock of
$
paid a dividend on its common stock of
$
On
August
19,
2022,
the
Company
paid
a
dividend
on
its
common
stock
of
$
shareholders of record as of August 8, 2022. On December 15, 2022, the Company paid a
dividend on its
common stock of $
the Company paid total cash dividends on common stock amounting
to $
.
On March
20, 2023, the
Company paid
a dividend of
$
, to
its shareholders of
record as of March 13, 2023. On July 10, 2023, the Company distributed a dividend of $
all shareholders of record as
of June 12, 2023, and
paid $
to receive cash
and distributed
receive
shares.
On
September
8,
2023,
the
Company
distributed
a
dividend
of
$
shareholders of record as
of August 14, 2023, and
paid $
receive
cash
and
distributed
receive
shares.
On
December
4,
2023,
the
Company
distributed
a
dividend
of
$
shareholders of record
as of November
27, 2023 in
the form of
common stock and
distributed
newly issued common shares.
On March
12, 2024,
the Company
paid a
cash dividend
on its
common stock
of $
to shareholders of record
as of March 5,
2024. On June 18,
2024, the Company paid a
cash dividend on
its common
stock of
$
, to
shareholders of
record as
of June
12, 2024.
On August
30,
2024,
the
Company
paid
a
cash
dividend
on
its
common
stock
of
$
,
to
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-32
shareholders of record as of
August 15, 2024. On
December 18, 2024, the
Company paid a cash
dividend
on its common stock of $
, to shareholders of record as of December 11, 2024.
g)
Dividend in Kind
:
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 $
, or $
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 $
, or $
h)
Warrants:
On December 14, 2023, the Company distributed
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
entitles the holder
to purchase, at
the holder’s sole and
exclusive election, at the exercise price of
$
fraction. A bonus share fraction entitles a holder to receive
an additional part of a share of common stock
for each
warrant exercised
without payment
of any
additional exercise
price. In
2023,
exercised.
In
2024,
the
Company
issued
,
net
of
expenses, or $
dividend to
the Company’s
shareholders. The
Company received $
the
exercise of
warrants. If
all
warrants were
exercised as
of
December 31,
2024, the
Company would
have issued
$
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. As
of December 31, 2024
and 2023,
the
warrant liability,
measured at
fair value,
amounted to
$
, respectively.
During the
years
ended December 31, 2024 and 2023, gain from warrants amounted to $
, respectively and
is separately presented in the consolidated statements
of income.
i)
Incentive
Plan:
As
of
December
31,
2024,
according to the Company’s incentive plan.
Restricted stock in 2024, 2023 and 2022 is analyzed as follows:
Number of Shares
Weighted Average
Grant Date Price
Outstanding as of December 31, 2021
$
Granted
Vested
(
3,118,060
)
Outstanding as of December 31, 2022
$
Granted
Vested
(
2,822,753
)
Outstanding as of December 31, 2023
$
Granted
Vested
(
2,996,334
)
Outstanding as of December 31, 2024
$
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
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-33
aggregate
compensation
cost
is
recognized
ratably
in
the
consolidated
statement
of
income
over
the
respective vesting periods. In
2024, 2023 and 2022,
compensation cost amounted
to $
, $
$
,
respectively,
and
is
included
in
general
and
administrative
expenses
in
the
accompanying
consolidated statements of income.
As of
December 31,
2024 and
2023, the
total unrecognized cost
relating to
restricted share
awards was
$
, respectively. As of
December 31,
2024, the weighted-average
period over
which the
total compensation cost related to
non-vested awards not yet
recognized is expected to be
recognized is
12.
Voyage expenses
The amounts in the accompanying consolidated statements of income
are analyzed as follows:
2024
2023
2022
Commissions
$
$
$
Loss/(gain) from bunkers
(
474
)
(
8,100
)
Port expenses and other
Total
$
$
$
13.
Interest and Finance Costs
The amounts in the accompanying consolidated statements of income
are analyzed as follows:
2024
2023
2022
Interest expense, debt
$
$
$
Finance liabilities interest expense
Amortization of debt and finance liabilities issuance costs
Loan and other expenses
Interest expense and finance costs
$
$
$
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 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
2024, 2023,
and 2022,
there were
,
of
the
diluted
earnings
per
share
calculation.
Securities
that
could
potentially
dilute
basic
earnings
per
share in the future but
were not included in the computation of
diluted earnings per share—because their
inclusion would have
been anti-dilutive—consist of
any incremental shares
from unexercised warrants
that
were
out
of
the
money
during
the
reporting
period
and
any
incremental shares
resulting
from
the
non-
vested
restricted
share
awards.
During
the
years
ended
December
31,
2024
and
2023,
the
number
of
common shares that could potentially be
issued in connection with unexercised warrants that
were out of
the
money
for
a
portion
of
the
respective
period
was
,
and
nil
,
respectively.
There
were
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-34
outstanding securities
during the
year ended
December 31,
2022 that
could potentially
dilute basic
earnings
per share.
During the
years ended
December 31,
2024, 2023
and 2022,
the number
of common
shares
that
could
potentially
be
issued
in
connection
with
non-vested
restricted
share
awards
was
,
nil
, respectively.
Net income attributable to common stockholders is adjusted
by the dividends on Series B Preferred Stock
and the gain on warrants to calculate the diluted earnings per share.
2024
2023
2022
Net income
$
$
$
Dividends on series B preferred shares
(
5,769
)
(
5,769
)
(
5,769
)
Net income attributable to common stockholders
$
$
$
Weighted average number of common shares, basic
Earnings per share, basic
$
$
$
Net income
$
$
$
Dividends on series B preferred shares
(
5,769
)
(
5,769
)
(
5,769
)
Gain on warrants
(
719
)
(
1,583
)
Adjusted net income attributable to common
stockholders
$
$
$
Weighted average number of common shares, basic
Incremental shares
Weighted average number of common shares, diluted
Earnings per share, diluted
$
$
$
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 income.
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
% of
% 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 2024,
2023 and
2022 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
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-35
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
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
2024,
2023 and
2022 charterers
that
individually accounted
for
% or
more
of
the
Company’s time
charter revenues were as follows:
Charterer
2024
2023
2022
Cargill International SA
*
Koch Shipping PTE LTD.
Singapore
*
*
Nippon Yusen Kaisha
*
*
*Less than 10%
The Company
is exposed
to interest
rate fluctuations
associated with
its variable
rate of
borrowings. On
July 6,
2023, the company
entered into an
interest rate swap
with DNB (Note
8) to
manage part of
such
exposure. Additionally, in 2022 and
2023, the Company refinanced part of its variable rate debt with fixed
rate financial liabilities (Note 9).
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.
Cash
and cash equivalents
and restricted cash
are considered Level 1 items
as they represent
liquid assets with
short-term maturities. 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, 2024, the Bond having a fixed interest
rate and a carrying value of $
had a fair value of $
FASB guidance for Fair Value Measurements.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-36
Other Fair value measurements
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
$
$
$
$
Investments in related party
Interest rate swap, asset
Total
recurring fair value measurements
$
$
$
$
Non-recurring fair value measurements
Equity method investments(1)
$
$
$
Long-lived assets held for use(2)
Total
non-recurring fair value measurements
$
$
$
Liabilities
Recurring fair value measurements
Warrant liability
$
$
$
Interest rate swap, liability
Total
recurring fair value measurements
$
$
$
December 31,
2024
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 related party
$
$
$
-
$
Total
recurring fair value measurements
$
$
$
$
Liabilities
Recurring fair value measurements
Warrant liability
$
$
$
-
Interest rate swap, liability
Total
recurring fair value measurements
$
$
$
(1)
On
April 28,
2023, the
Company
estimated that
the
fair
value of
its
%
interest in
Bergen was
$
,
determined
through
the
Level
2
inputs
of
the
fair
value
hierarchy,
as
defined
in
FASB
guidance for Fair
Value Measurements, and recorded a
gain of $
, 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
(Note 3(e)).
(2)
Sea Trade, acquired for
$
issued
common
stock
(Note
6).
The
fair
value
of
the
common
shares
issued
to
Sea
Trade
was
determined based
on the
closing price
of the
Company’s shares
on the
date
of delivery
of each
vessel, which was also the date of issuance of such shares.
DIANA SHIPPING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024
(Expressed in thousands of U.S. Dollars – except share, per share
data, unless otherwise stated)
F-37
17.
Subsequent Events
a)
Repurchase
of
common
stock
:
On
January
7,
2025,
the
tender
offer
which
had
commenced
in
December 2024 (Note 11)
was settled and the
Company purchased a total
of
common stock for an aggregate amount of $
.
b)
Exercise of
warrants
:
From January
1, 2025
until March
21, 2025,
the Company
issued
of common stock, resulting to $
c)
: On January 15, 2025, the Company paid a quarterly
dividend
on its series B preferred stock, amounting to $
, to its stockholders of
record as of January 14, 2025.
d)
entered into an
agreement with an
unrelated third party to
sell the vessel
Alcmene. The vessel
was
delivered to the new owners on March 13, 2025. The Company expects to have a gain from the sale
of the vessel.
e)
award of
directors, pursuant to
the Company’s amended plan,
as annual bonus.
The fair value of
the restricted
shares based
on the
closing price
on the
date of
the Board
of Directors’
approval was
$
. The
cost of these awards
will be recognized
ratably over the restricted
shares vesting period which
will be
.
f)
common stock
of $
quarter
ended
December
31,
2024.
The
cash
dividend
will
be
paid
on
March
21,
2025,
to
all
shareholders of record as of March 12, 2025.
g)
Diana Gas
Inc., entered
into a
joint venture
agreement with
Ecogas Holding AS,
pursuant to
which
we
agreed to
contribute $
%
interests of
delivery in 2027 and with the option for
TABLE OF CONTENTS
Part IItem 1. Identity Of Directors, Senior Management and AdvisersItem 2. Offer Statistics and Expected TimetableItem 3. Key InformationItem 4. Information on The CompanyItem 4A. Unresolved Staff CommentsItem 5. Operating and Financial Review and ProspectsItem 6. Directors, Senior Management and EmployeesItem 7. Major Shareholders and Related Party TransactionsItem 8. Financial InformationItem 9. The Offer and ListingItem 10. Additional InformationItem 11. Quantitative and Qualitative Disclosures About Market RiskItem 12. Description Of Securities Other Than Equity SecuritiesPart IIItem 13. Defaults, Dividend Arrearages and DelinquenciesItem 14. Material Modifications To The Rights Of Security Holders and UseItem 15. Controls and ProceduresItem 16A. Audit Committee Financial ExpertItem 16B. Code Of EthicsItem 16C. Principal Accountant Fees and ServicesItem 16D. Exemptions From The Listing Standards For Audit CommitteesItem 16E. Purchases Of Equity Securities By The Issuer and AffiliatedItem 16F. Change in Registrant S Certifying AccountantItem 16G. Corporate GovernanceItem 16H. Mine Safety DisclosureItem 16I. Disclosure Regarding Foreign Jurisdictions That Prevent InspectionsItem 16J. Insider Trading PoliciesItem 16K. CybersecurityPart IIIItem 17. Financial StatementsItem 18. Financial StatementsItem 19. Exhibits