Seanergy Maritime Holdings Corp. (SHIP) Earnings Call Transcript & Summary

Thank you for standing by, ladies and gentlemen, and welcome to the Seanergy Maritime Conference Call on the fourth quarter and 12 months 2020 financial results. We have with us Mr. Stamatios Tsantanis, Chairman and Chief Executive Officer; and Mr. Stavros Gyftakis, Chief Financial Officer of the company. [Operator Instructions] I must advise you that this conference is being recorded today. Please be reminded that the company publicly released its financial results, which are available to download on the Seanergy website at seanergymaritime.com. If you do not have a copy of the press release, you may contact Capital Link at (212) 661-7566, and they will be happy to send it to you. Before turning the call over to Mr. Tsantanis, we would like to remind you that this conference call contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events and the company's growth strategy and measures to implement such strategy. Words such as expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, competitive factors in the market in which the company operates, risks associated with operations outside the United States, change in rules and regulations applicable to the shipping industry and other risk factors included from time to time in the company's annual report on Form 20-F and other filings with the Securities and Exchange Commission. The company's filings can be obtained free of charge on the SEC's website at www.sec.gov. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Now I will pass the floor to Mr. Tsantanis. Please go ahead, sir.

Hello, everyone, and thank you for joining our call. Today, we'll discuss our results for the fourth quarter and full year period of 2020 and we will provide you with a general update for the major corporate events that have taken place until today. I will start by saying that 2020 was a transformational year for Seanergy, where we managed to achieve a number of successful deals and lay a solid foundation for the future. We have indeed started to reap the benefits of our actions since the beginning of 2021, and we expect synergy to prosper for many years to come. The highlights of the company's achievements for the trailing 12-month period have been the following: We're growing our fleet by more than 40% with one Cape vessel delivered to us in Q3 '20 as well as 3 more Cape vessels agreed to be acquired since the beginning of 2021. Upon deliveries, we'll have 2.5 million deadweight tonnes of cargo-carrying capacity. With a total investment of $83.4 million that has been and it is expected to be funded mostly by cash at hand as well as senior credit facilities from international financial Institutions. Moreover, we have successfully completed the financial restructuring of 175 -- $179 million. And we have reduced our leverage by $71.2 million. In addition, we have raised more than $175 million in public equity offerings with strong institutional demand. These proceeds have been used for our acquisitions and debt reduction as well as strong liquidity arsenal for the future. Our shareholders' equity has grown more than fivefold since December 31, 2019, that was $29.9 million to an adjusted equity in excess of $180 million as of mid-February 2021. Finally, pursuant to our strong ESG commitment, we have been amongst the first companies in our industry to complete our fleet's environmental evaluation for the upcoming new rules. The beginning of 2021, find Seanergy in a great position as the only pure-play Capesize-listed company to take advantage of the beginning of a possible super cycle that is expected to last for many years. Having said all of this, I will now discuss the most important developments for the fourth quarter of 2020 and year-to-date period in 2021, before passing over the call to our CFO, Stavros Gyftakis, who will review our financial results in detail. Following that, I will provide a brief update on Capesize market fundamentals before opening the call for questions. During the fourth quarter of 2020, the Capesize market remained volatile, which mainly had to do with inconsistent iron ore production out of Brazil due to operational issues at Vale. The Baltic Capesize Index was approximately 29% lower than in the same quarter of 2019 and the time chartered equivalent rate we earned during the fourth quarter of 2020 was approximately $16,511, while we generated EBITDA of $8.3 million. Notwithstanding this weakness, global iron ore and steel demand remains strong, and we're currently experiencing the highest first quarter Capesize index since 2014. For the first quarter of 2021, approximately 98% of our fleet operating days have been fixed at a daily rate which exceeds approximately $16,000. Considering that Q1 is usually the weakest period of the year, this figure is double the level seen in the same period of 2020 and 2019. Cash and cash equivalents as of December 31, 2020, stood at $23.7 million compared to $14.6 million as of December 31, 2019, while our adjusted cash position is approximately $68 million after giving effective debt repayments and advances for vessel acquisitions. Shareholders' equity at the end of the fourth quarter of 2020 was $95.7 million compared to $29.9 million at the end of the fourth quarter of 2019, while our adjusted equity to date stands in excess of $180 million. As discussed before, the year 2020 has been transformative for the company as Seanergy solidified its status as a pure-play Capesize owner with a clear path to benefit from the strong dry bulk market fundamentals over the next years. On February 12, 2021, we agreed to acquire a Japanese 2006-built Capesize vessel that will be remained trader ship and is expected to be delivered to us in the second quarter of 2021. On March 18, 2021, we are going to purchase 2 additional Capesize vessels that have also been built in a reputable yard in Japan. The first vessel was built in 2013, has a cargo-carrying capacity of approximately 176,000 deadweight tons and will be renamed Flagship. The vessel is expected to be delivered to the company by the end of April 2021. The second vessel was built in 2010 at a reputable shipyard in Japan, has a cargo-carrying capacity of approximately 182,000 deadweight tons and will be renamed Patriotship. The vessel is expected to be delivered to the company by the end of May 2021. The special survey and ballast water treatment system installation for all 3 vessels were completed recently by their current owners. And therefore, we do not anticipate in carrying significant capital expenditure for these vessels, at least for the next 2 years. Moreover, the Patriotship is fitted with an exhaust gas scrubber system. The aggregate purchase price of the 3 vessels is approximately $72 million, and we expect to fund this amount with cash at hand. The company is also in discussions with leading financial institutions to finance part of the acquisition cost at competitive financing terms. Following the delivery, the size of the company's fleet will increase to 14 Capesize vessels with an aggregate cargo-carrying capacity of approximately 2.5 million deadweight tons. Including the acquisition of the Goodship in 2020, our fleet will increase by 40% from 10 to 14 vessels in the last 12 months. This will improve our ability to generate strong cash flows in a rising market environment. Vessel values are also on an upward trajectory, and this is already reflected in the market value of one fleet. Please note that this is still far below the historical averages and is expected to rise even further. Additionally, 7 of our 14 vessels will be fitted with scrubbers, which we believe is balanced approach in dealing with IMO 2020. Moving on to our senior loans. I'm pleased to announce that we have now fully finalized agreements with our lenders that we have mentioned in our last earnings call. On February 8, 2021, we finalized the maturity extension of our Unicredit loan facility, which has now been extended to December 2022 from December 2020. On February 12, 2021, we agreed to the relaxation of value maintenance provisions and the amendment of certain financial covenants on our loan with Amsterdam Trading Bank. The total amount currently outstanding under these 2 facilities is approximately $46.6 million and is secured by 3 of our vessels. The total senior indebtedness of Seanergy currently stands at $131 million. The government ruling facilities on December 30, 2020, the company recent agreement with Jelco Delta concerning $27.2 million of maturities falling due in 2020. As part of the agreement, $6.5 million of principal under one of the Jelco loans was repaid immediately, while all other maturities were extended to December 2024. To be clear, the extension of maturities to 2024 applies to all Jelco loans and convertible notes, which currently amounts to $43.6 million. Seanergy and Jelco also agreed to the settlement of all and paid interest through December 31, 2020, and other things payable to Jelco in an aggregate amount of approximately $5.6 million through a private placement of units consistent with our equity offering of August 2020, the issuance closed on January 8, 2021. In addition, Jelco agreed to the reduction of the applicable interest rate across the facilities to a fixed rate of 5.5%. I'm pleased that our lenders place their confidence in our company during a very challenging year, and they expect that the comprehensive restructuring of $175 million of our indebtedness since the start of 2020 has put Seanergy on a sustainable long-term trajectory. On February 19, 2021, we completed a registered direct offering of 44 million common shares to institutional investors that expressed strong interest to participate. The aggregate gross proceeds were approximately $75 million. The proceeds from this transaction facilitated $33.6 million in additional of debt repayments as well as the acquisition of 3 high-quality Japanese vessels within 2021. Subsequently to the registered direct offering, we decided to prepay in full, the $21.6 million that was outstanding under the first interest loan facility. The maturity of the loan was originally scheduled for 2023, and the average applicable coupon was approximately 10%. In addition, in February 2021, a total of $12 million has been applied against the full repayment of 2 junior unsecured loans. The prepayments of the facility just mentioned are expected to save more than $2 million in annual interest payments for the company. As of today, the company has 155.1 million common shares issued in outstanding. Looking beyond IMO 2020, Seanergy was among the first companies to announce the completion of the evaluation of the energy efficiency for existing ship index of our fleet in preparation for the upcoming Greenhouse Gas Emission regulations. This was conducted with the DNV reclassification society, and we expect that our vessels will remain compliant with applicable regulatory requirements until 2030 with no material cost for the company. At this moment, the full effect of the EEXI on the global dry bulk market is hard to quantify, same as the compliance requirements will vary from vessel to vessel and will need to be assessed on an individual basis. However, it should be noted that Capesize vessels are generally larger than other direct cargo vessels, and we estimate that the large part of the global fleet will be required to slow down in order to meet the regulations. Therefore, on a size adjusted basis, we expect that the effective supply of ships we will use in the next years. To summarize, over the last 15 months, we have managed to successfully navigate Seanergy through the challenging operating environment for 2020, implementing a number of strategic initiatives with positive transformative effect on our company. We strengthened our equity base, reduced our debt and enhanced our liquidity, while at the same time, we're increasing our fleet by 40%. Seanergy is to date in what we believe to be an optimal financial position to capitalize on improving market conditions with a goal of creating substantial value for our investors. And with this message, I would like now to pass the call to our CFO, Stavros, who is going to discuss our financial results.

Thank you, Stamatios. Good morning, everyone, and a warm welcome to our Fourth Quarter 2020 Earnings Call. I hope that you and your families continue to be safe and healthy. Before we get into the discussion of the historical financials, I can only echo Stamatios' reviews concerning the future of our company. We have done a tremendous job over the last 15 months to navigate Seanergy through a certain environment of 2020 and are now in the best possible financial position to take advantage of the promising uptick in our market. The fourth quarter of 2020 was marked by increased volatility and day rates were slightly lower than what most industry participants had expected. Net operating revenues, defined as revenues after deducting all bogus expense and commissions were equal to $16.7 million, a 13% reduction from $19.2 million in the fourth quarter of 2019. This reduction follows a 28% decrease in the daily time charter equivalent rate that was partially offset by increased fleet operating days after the delivery of the Goodship and the absence of expensive dry bulking carbon installation as was the case in the fourth quarter of 2019. The percentage reduction in our daily time charter equivalent is roughly in line with the 29% decrease in the BCI Index over the same period. On a sequential basis, our net operating revenue in the fourth quarter was 5.7% higher than in the third quarter of 2020 due to a 2% increase in daily time charter equivalent and a 3% increase in operating base. We are glad that our fleet's commercial performance stabilized at healthy revenues during the second half of the year after the strong negative shock of the COVID-19 crisis. We are also glad to report that when taking into account the comprehensive financial restructuring that has taken place within the past months and the lower cost breakeven rate that we expect to achieve over the next years, our fleet time charter equivalent would cover comfortably all cash expenses, including debt amortization, while generating free cash flow. Going forward, our strategic choice to keep a large part of our fleet employed on index linked contracts is likely to bear fruit during a rising market environment, such as the one we are experiencing right now. Our EBITDA for the fourth quarter was equal to $8.3 million, down by 30% from $11.9 million in the fourth quarter of 2019. The large decrease reflects the lower earnings environment of the quarter. Given the larger size of our fleet and the improved market conditions, I'm very optimistic about our ability to drive EBITDA considerably higher in the coming years. Our recurring financial expenses interest and finance costs stood at $6.7 million in the fourth quarter of 2020 compared to $5.6 million in the same period of 2019. This headline interest figure includes both significant non-GAAP interest expenses related to the accounting treatment of our convertible notes and a few large onetime expenses related to a recent expense financial restructuring. When focusing on fuel and gas interest expenses both are equal to $4.1 million in the fourth quarter of 2020 and to $3.1 million after excluding the one-off restructuring expenses. These were in line with the $3 million cash interest expense recorded in the fourth quarter of 2019. Now on a positive note, we experienced a significant decrease in interest expense related to our senior facility. So the sole source of the overall rising expenses in the fourth quarter was the junior loans and convertible notes. Now that, A, the applicable interest rate has been reduced to 5.5%; and B, $18.5 million of these loans have been repaid, we would expect to see significant interest savings in this area. Our net loss for the quarter ended December 31, 2020, was equal to $2.3 million compared to net income of $3.1 million in the same quarter of 2019. The loss in the current period includes onetime charges of $1.6 million in connection with the financial restructuring of the company. Having put this important transaction behind us during this transformational year, the financial results of the company are expected to improve considerably. Moving on to discuss the full year results. Net operating revenue was equal to $44.8 million compared to $49.9 million in the corresponding period of 2019. Our full year daily TCE for 2020 was $11,950 compared to $14,694 in 2019. It should be noted that during both years, the dry bulk market was subject to extremely unusual black swan events. We are satisfied to see our fleet TCE stabilizing at much healthier levels during the second half of the year. As an indication of the amount of uncertainty and volatility in the market, the time charter equivalent achieved over the first 6 months of 2020 amounted to about $7,000 per day. Daily operating expenses increased by 10% in total during the full year period of 2020, mainly due to issues related to the operation of scrubber equipment for the first time, and the associated lending cost as well as the impact of the COVID-19 outbreak. The port restrictions due to lockdowns imposed by local government had a material impact on vessel OpEx because as explained in more detail in our last earnings call, the cost and timing of crew changes were considerably higher. Having said that, we are pleased to report that daily operating expenses seem to have fixed in the third quarter of 2020 and are now finally on a downward trajectory. Going to our general and administrative expenses, we saw a 10% increase year-over-year, which captures the increased expenses related to the administration of our company as a public entity through the challenging operating environment of 2020. Looking into 2021 on the bulk of the larger fleet size of 14 vessels, we are lucky to see a meaningful improvement on the progressive G&A as opposed to operating 10 vessels for the larger part of this year. Given our budget, the daily per vessel cost savings and G&A expenses could be up to $400 per day. EBITDA in the 12-month period of 2020 was equal to $19.9 million as compared to $23.8 million in the same period of 2019, a decrease of 17%. Net loss was $18.4 million with a $19.6 million net losses of the first half weighing heavily on the bottom line of the entire period since the second half of the year tend now to be profitable. As we go to our balance sheet as of December 31, 2020, we ended the quarter with $23.7 million in cash and cash equivalents and short-term tax deposits. Shareholders' equity was equal to $95.7 million, up from $29.9 million at the end of 2019. Since the start of 2020 and as of the balance sheet date, senior secured debt was reduced by approximately $29 million from $183 million down to $154 million or $14 million per vessel as of the end of the year. When considering the important transactions that took place in the first 3 months of 2021, our total senior secured debt as of today is approximately $130 million. Given the increase in fleet size to 14 vessels, pro forma secured debt outstanding per vessel is roughly $29.2 million. Now as a reference, the generic market price for 10-year keeps is quoted by Clarksons is about $27 million, while a 15-year-old vessel price released at about $17 million. Based on the market value for fleet alone and excluding any cash holdings, the loan-to-value ratio as of today is close to 50%. These levels are considered not only sustainable, but actually on the very conservative side. Moving on, I'd like to focus on some of the important transactions that have taken place in the past months. Firstly, I would like to start with amicable [indiscernible] of our junior loans. As you will remember, that this was the most pressing matter in the last update for the third quarter. On December 30, 2020, we entered into definitive documentation with Jelco, our sole junior creditor. Pursuant to this agreement, $27.2 million of maturities falling during 2020 were extended to December 2024. Additionally, all interest accrued up to that date and other fees payable to Jelco were settled through a private placement of units. All other loan and loan maturities were extended to December 2024. the interest rate on this instrument was reduced to a fixed rate of 5.5%. The amortization schedule of the facilities was also altered and not revised for a minimum repayment of $8 million in 2022 and 2023. And the cash mechanism was also introduced on the daily TCE and [indiscernible] fleet. Following the completion of our public offering this February, a total of $12 million was prepaid against Jelco facilities. Moving on to the Unicredit and Amsterdam Trade Bank agreement. On February 8, 2021, when entered into supplemental agreement with the facility with Unicredit as executed by 2 of our Capesize vessels, as mentioned by Stamatios earlier. The following were agreed: the maturity date of facility was extended from December 29, 2020 to December 29, 2022. The quarterly installments were reduced from $1.55 million to $1.2 million, certain financial covenants and the value maintenance provisions were canceled. Subsequently, on February 12, 2021, we entered in a supplemental agreement to the facility with Amsterdam Trade Bank that is secured by one of our Capesize vessels. Pursuant to the supplemental agreement, the value maintenance provision and certain financial covenants were amended or entirely canceled. The supplemental agreement became effective on February 16, 2021. A few words about our recent registered direct offering. On February 19, 2021, the company completed a registered direct offering of 44.15 million of its common shares to set an unaffiliated institutional investors for aggregate close proceeds of approximately $75 million. The equity offering was priced at market as this is defined by NASDAQ at $1.70 per share offered. This is in stark contrast to the terms of our previous offerings due to both the pricing being in line with the trade and performance of the stock in a solid valuation environment and due to the fact that no warrants or other equity tickets were offered. As a result, this transaction was accretive and the proceeds were used to facilitate the prepayment of loan facilities and the acquisition of 3 high-quality vessels during what we think to be a good time just as dry bulk market starts gaining steam. Following the conclusion of the offering on March 5, the company fully prepaid the credit facility with EnTrust Global secured by first priority mortgage on the Lordship. The outstanding balance for the facility was $21.6 million and the expiry date was June 2023. The average applicable coupon was approximately 10%. The prepayment amount was funded fully with cash on hand. Following the prepayment and assuming no refinancing of the vessel, the interest saving for the company are expected to be $1.3 million for the remainder of 2021 and $1.8 million on average per year for 2022, '23. Additionally, annual repayments will be reduced by approximately $2.5 million on average for the 2 years to come. Furthermore, in February 2021, a total of $12 million prepayment has been applied against the full repayment of 2 junior loans pursuant to the mandatory prepayment of those facilities following the closing of the $75 million registered direct offering. The applicable interest rate of these loans was 5.5%, resulting in expected annual interest savings of approximately $660,000 per year. The increase in equity capital and the extension of short-term maturities has been instrumental in improving the balance sheet of the company and in allowing us the flexibility to pursue value-accretive opportunities in what looks like a rising market. Furthermore, I am pleased to see that the improvement in our balance sheet was opened -- has opened up the door for us to access debt capital at more competitive terms that are likely to lower our overall cost of capital for the next years, while contributing to profitability and cash generation capacity through lower interest expenses. To conclude my remarks and as mentioned also in our previous updates, our aim was to make it, to take over the opportunity to establish a long equity run rate, whereby even if market conditions fail to improve as expected, the company would still be able to be self-sustainable. We are proud to report that we were indeed able to do so during an extremely challenging time and that today, our company is in the strongest financial position that it has ever been. This concludes my review. I will now turn the call back to Stamatios, who will discuss the market and industry fundamentals. Stamatios?

Thanks, Stavros. I will start a discussion about our industry outlook by stating that after years of marketing balances, we're now entering into a possible super cycle. Since the beginning of 2021, we are seeing the strongest start of the year for the Capesize market since 2014. This is driven by healthy demand for our key raw materials, but most importantly, by the most balanced vessel supply in decades. As regards to the fourth quarter of 2020, the Capesize market was affected by operational inefficiencies in Brazilian iron ore mines. The market remained volatile and Capesize daily rates during Q4 2020 range from a low of about $10,000 a day to a high of about $35,000 a day. Despite the volatility, global demand for steel-making raw materials remained strong throughout this period. This mix of favorable fundamentals led to considerable recent spike in the Capesize market in January, while BCI earnings so far in the first quarter have averaged more than $16,500 a day. As stated before, this is the highest start of the year since 2014. Having in mind that Q1 is traditionally the weakest quarter for Cape vessels we expect to see a much stronger market in the rest of the year. We are particularly happy to see this optimistic sentiment reflected also in the time chartered rates. Indicatively, 1-year time chartered levels for standard Capesize vessel are currently around $22,500 per day, which is a big leap from $10,000 to $12,000 1 year ago. Cape asset values have risen as well by more than 30% since the end of 2020. Looking at market fundamentals over the next 2 years, dry bulk demand growth is expected to average by more than 2.5% in 2021 and 2022. In terms of iron ore and Capesize demand, we expect Vale in Brazil to continue steadily ramping up its production in the next 3 years in order to reach its long-term target of about 400 million tonnes per year. This compares favorably to current levels of about 320 million tonnes, and the turn mile effect be quite significant. The environmental regulations imposed on steel-making for lowering carbon emissions should continue to drive demand for higher-quality iron ore from Brazil. Moreover, the trillions of dollars of global stimuli are expected to drive infrastructure demand and fast iron ore demand for many years. We are particularly optimistic regarding investment supply as the upcoming environmental regulations will have a twofold positive effect in the market. First, the immediate reduction of emissions that will be enforced in 2023 will lead to the speed reduction of the global fleet by approximately 10% to 15%. And this will result to an effective reduction of available tonnage capacity, which will be even greater adjusted for larger ships. In addition, the uncertainty surrounding the global shipping emissions universe after 2030 has led to the lowest newbuilding order book in decades. The 2 factors I just mentioned are expected to create conditions of a severe vessel supply squeeze. This can potentially drive day rates and the asset values to super cycle levels. As mentioned earlier, in our corporate developments, Seanergy has been strategically positioning for the moment. We have fixed the majority of our vessels or index link charters that will allow us to benefit directly from the rise in market, and we have acquired high-quality tonnage in order to gain the maximum amount of operating leverage of a strong market. With that note, I would now like to turn the call over to the operator and open the floor for any questions you may have. Operator, you have the call.

[Operator Instructions] Our first question for today is from Tate Sullivan from Maxim Group.

Just circling back on a couple of your comments during the prepared remarks, did you say earlier that the fixed rate in the current quarter is around $16,000 versus current rates of $22,500? Or is that only on a portion of your ships? Or did I hear that correctly, please?

Well, the rate that we have fixed our ships for about 98% of our fleet days for Q1, it's going to be a bit more than $15,000 a day. Which is fully in line with the BCI. I mean the BCI, the Baltic Capesize Index since the beginning of the year has been around $16,500, $16,600. So we're totally in line with the BCI for Q1.

Great. And you've provided plenty of comments on your interest costs going forward after the restructurings. Can you...

Before we go into that, the other comment about $22,000 was about the 1-year time charter rate. So having in mind that Q1 at $16,000, that's about twice as much as the first quarter of 2020 and 2019. So it's usually the weakest quarter of the year. 1-year going forward times at a rate, that's about $22,000 a day. So yes, we are below the 1-year time charter rate, but we are now completing the historically lowest quarter over year.

Understood. And just looking at your cash interest expense table breakdown, too, versus what you may report in 2021, did you -- and I understand excluding the restructuring expenses as well. But is there a dollar range that you may be able to reduce your interest expense? Or any comment for potential GAAP interest expense for '21 or just too many moving parts right now?

This is Stavros. I mean there are still some moving parts. Of course, as you know, I mean, we are acquiring some new ships. I mean, we intend to get some debt on those. I mean intend to approach leverage going forward on a very conservative basis. So we intend to -- not to leverage those vessels above 50%. But I mean assuming conservative assumptions on our leverage going forward, interest expense per quarter should not be more than $2.6 million, $2.7 million or so.

Great. And you mentioned that, Stavros, you have the targeted combined capital ratio and you gave -- I think you mentioned the current debt around $130 million today. Are you targeting certain capital ratios or leverage ratios in general going forward, please?

Yes. We are targeting a leverage ratio of 55% to 60% overall. I mean, that's our target. Today, we are maybe slightly below those levels considering that we want to finance the ships that we get because, I mean, we want to end up a certain -- with a certain safety liquidity caution. So assuming that we leverage the new acquisitions at around 50% to 55%, we should end up at 55% to 60% overall leverage as a company. Which is still, I mean, on the conservative side.

And last for me on the topic of securing of the financing behind the ship acquisition, the 2 additional ship acquisitions. Are you seeing similar rates to your other ships into your current financing? Has that changed since you restructured some of your debt? Can you comment on what you're seeing from lenders?

Since the restructuring and since the last equity raising, the fact that the company and the leverage of the company has reduced a lot and our ratios have improved a lot. Seanergy has become a much more bankable company. So the interest that we see from potential lenders are in the region of 3%, 3.5% plus LIBOR, so considerably lower than our existing implied interest rate. So I mean, we will announce any financing arrangements pretty soon. I mean, we are in discussion with some of our existing lenders, some new lenders, but expect the cost to be below 4%.

Okay. Well, thank you for all those comments, and thank you for the comments about the market and the build activity as well.

Our next question for today is from Poe Fratt from NOBLE Capital Markets.

I have several. So if we could just start off by one. Rates have been very volatile. Stamatios, do you think there's a super cycle coming up, so you want to stay a little bit open. But one thing that's bit you in the past, just the rates had fallen out of bed when there are things that just seem to happen to the industry. So can you highlight how you're trying to lock in or take advantage of what is a very strong first quarter and strong year? And create a little more visibility on the cash flow front?

That's an excellent question. We have, especially in Q3 and Q4 of 2020, we try to be as consistent with the time charter equivalent rate as we could. The same thing we're doing now in Q1. So as you can see, we have a very high considerance between Q4 and Q1. And we have already started to look into some fixed rates that we believe on a targeted basis, they will deliver about $17,000, $18,000 a day fixed for Q2 and Q3. This is what we're trying to. So we're doing a short-term locking of our fleet, when we see the opportunity with the FSA market. Like you very well said, we anticipate that the market is going to go much, much higher in the coming quarters. But trying to have the visibility for the next 2 or 3 quarters as much as we can. And about the volatility -- excessive volatility, we are going to fix some of the ships that could be fixed at this rate. So a portion of our fleet for 2015 will be fixed and has been fixed pretty much at an average of about $17,000, $18,000 a day. We have now, of course, a bunch of deliveries coming up in the next couple of months. Then we will continue doing short-term fixing as well. But the way that we think that the market is going to move from Q2 and Q3 onwards, we think we're going to see substantially higher margin.

Great. And can you just clarify, with the scrubber investment reimbursement, I thought your TCE rates should be above the indexes by anywhere from $1,500 to $2,500 just because of the structure of the TCE reimbursement. Can you just clarify whether that's the case or what's going on there?

Yes. That's also a very good question. On some of the ships that we have the scrubbers, we did make a premium above the market. So we get the reimbursement and we get that premium. Some of our Capes, however, are now 180,000 deadweight tonnes, they are smaller, 170,000 deadweight tonnes. So these ships -- these particular ships have a small discount thus to the index. So one is averaging the other. So the smaller ships are getting a small discount, which is about 5% to 9% compared to the index because they are a bit smaller ships. And the scrubber build ships are making a premium. So that pretty much averages the whole thing, and we're growing at around the Baltic Capesize Index.

And then including the Goodship, all the acquisitions don't have any debt right now. So you have 4, maybe call it, $90 million of acquisitions that were unencumbered that you could lever up to that 50% target. Are there other Capes within the fleet that are also unencumbered at this point in time?

Well, right now, from the existing can deliver ships that we have on the fleet, the Goodship and the Lordship are basically debt-free. These are the 2 ships that we have debt-free. We have 2 -- 3 more deliveries coming up. So we are in discussions like Stavros mentioned before with some renowned financial institutions, to get competitive leverage of about 50%. And this is what we expect to happen in the next couple of months. We're also looking into some additional partners agreement that will entail finance and commercial joint ventures as well, like the ones that we have already. But that's in the pipeline, and we cannot announce anything yet because we have a lot of things going on and I don't want to kickstart anything right now.

Great. And Stamatios, I think in your prepared remarks, you might have said how much pro forma cash is right now. But if you didn't, could you clarify how much cash you have after all the refinancings, the early repayments and net of the acquisitions, accounting for the acquisitions that are in process?

Pro forma for the repayments, prepayments and the advance we have paid for the ships that we have announced already, the cash is about $68 million. So it's a very sizable and significant cash amount for the company.

Yes. That's what I thought I heard $68 million, but does that include the -- any deposits on the current pending acquisitions? Or how clean is that number? What else should we adjust for to get your current cash level?

Yes. Yes, that includes -- that includes deposits for all the 3 ships that we have announced already. So that includes all the deposits. That includes the repayments made. So yes, that includes that, of course.

Okay. And then when do you think you're going to file your 20-S? And when can we get a full cash flow statement for 2020?

We expect the 20-S to be filed on the 31st of March, which is next week. So next Wednesday, we will be filing the 20-S, and we might have some additional corporate developments post the corporate developments by that time.

Okay. And then you recently filed an S-1. And I expected it to take longer, but it looks like it was effective March 12?

Yes. Yes.

What -- my understanding is that Jelco has the option to convert $3 million of debt into shares at a pretty attractive valuation level. That is what they have 45 days to do that after the effective data of S-1. What do you think is going to happen? Have they told you anything about whether they're going to convert to $3 million into equity? Or can you just discuss that? If you know anything about that?

To be honest, we don't have any guidance yet. We don't know what their plans are. So they might or they might not. So that's beyond our control. It's an optional item that we granted to Jelco when our stock price was at $0.50. Now, of course, it might look differently, but we don't know what they're going to do because that's your option to exercise if they want or not.

Okay. And then you said you have a 155.1 million shares out. How many of the warrants are still -- the Class-E warrants are still outstanding?

Yes. It's very -- it's about -- if I remember, was around 8 million -- 8 million warrants still outstanding, which have not been exercised yet. So that's about it. It's a small amount from the acquisitions.

Okay. Great. And then you -- with the acquisition, you have 1 additional scrubber. So you have 7 scrubbers of a fleet of 14 pro forma. Do you anticipate putting -- installing additional scrubbers? Or do you think that's -- it sounds like you implied that having half the fleet scrubbed is a good way to look at it from a standpoint of creating a little bit of flexibility on both sides of the equation.

Not really, Poe. The dry docks was done already. All we are doing already right now in China does not entail any scrubber fitting from our end. If we come to an agreement with charterers -- of long-term future charterers to install scrubbers on additional ships, we might consider doing so. One of these new acquisitions we just announced happened without a scrubber and happened without a scrubber is that we feel comfortable with the equipment and everything associated with the scrubber. So we proceeded on that basis. Generally, we take a very careful approach in the scrubber, and we try to be as balanced as possible.

And then Stavros, can you give us your current amortization. After everything is done and before the financing on the new vessels, how much debt is actually -- how much amortization is due in 2021? And then if you give us '22, that'd be helpful.

Yes. We have currently around $136 million of debt outstanding and as a rule of thumb, you can assume that around 10% without amortizing annually. So it's around $14 million that's amortizing annually. Now on top of that, I mean we have values that may come up from time to time now. As you may remember, since the recent restructuring, I mean, we have a clean 2-year runway. So basically, you can assume that around 10% of our debt is being repaid annually.

Yes. And you already satisfied the $12 million of prepayment for Jelco this year. And then there's another $12 million that you might have to prepay if cash is sufficient next year.

No, no, no. The prepayment that we did to Jelco, the $12 million, that was a mandatory repayment event treated by the equity offering. Now our repayment obligation to Jelco for next year is $8 million at the end of the year, at the end of 2022. I'm sorry, we don't have anything else in 2021. So we have $8 million to Jelco at the end of '22 and another $8 million at the end of '23.

There are no further questions. I will now hand back to the speakers for closing comments.

Thank you, Jodie. As we mentioned in our earnings release, we're very confident that 2021 was going to be a very, very positive year. And we took all the successful actions in 2020 and 2021 so far in order for the company to prosper for many, many years to come. We're very optimistic about the market. We have now a great fleet and we look forward to announcing more and more positive corporate developments that will create significant value for all the shareholders of the company. On that note, thank you very much for listening to our call and look forward again to -- for any of your comments if you want by e-mail or any other form of communication.

Thank you very much, sir. Ladies and gentlemen, that does conclude the call for today. Thank you all for joining. You may now disconnect.