Diana Shipping Inc (DSX) 2015 Q3 法說會逐字稿

Greetings, and welcome to the Diana Shipping third quarter 2015 conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ed Nebb, Investor Relations adviser for Diana Shipping. Please go ahead, sir.

Thanks, Kevin, and thanks to all of you for joining us today. The members of the Diana Shipping management team who are with us are Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary; and Ms. Maria Dede, Chief Accounting Officer.

Before management begins their remarks, let me briefly remind you of the Safe Harbor notice. Certain statements made during this conference call which are not historical fact are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act.

Forward-looking statements are based on assumptions, expectations, projections, and beliefs as to future events that may not prove to be accurate. For a description of the risks, uncertainties, and other factors that may cause future results to differ from the forward-looking statements, please refer to the Company's filings with the Securities and Exchange Commission.

And now, with that, let me turn the call over to Mr. Simeon Palios, Chairman and CEO of Diana Shipping.

Thank you, Ed. Good morning and thank you for joining us today to discuss the results of Diana Shipping Inc., for the third quarter of 2015.

While conditions in the global dry bulk shipping market remain challenging, we have continued to maintain a solid balance sheet to enable the Company to withstand the rough seas. We also continue to pursue our fleet expansion strategy to position Diana Shipping for future opportunities.

To review our financial results, the Company reported a net loss of $17.4 million and a net loss attributed to common stockholders of $18.8 million for the third quarter of 2015. In the comparable period of 2014, net income was $7.7 million and net income attributable to common stockholders was $6.3 million.

Our time charter revenues were $38.9 million for the 2015 third quarter, compared to $45.1 million a year ago. The change versus the year-ago period was mainly due to decreased time charter rates, partly offset by revenues derived from the increase in our fleet.

Diana Shipping continued to maintain a [faultless] balance sheet, reflecting cash and cash [equivalents] of nearly $243 million. Long-term debt, including the current portion, was $576.6 million, compared to stockholders' equity of approximately $1.24 billion.

Reflecting our strategy of maintaining the Company's financial flexibility, last month we announced term loan facility of up $39.7 million with ING Bank N.V., London Branch. The proceeds will be used to partially finance the acquisition costs of two vessels.

In keeping with our established strategy, we have continued to expand our fleet. Today, we announce that on November 10, we took delivery of a newly-built 190,960 (sic - see press release, "180,960") deadweight capacity dry bulk vessel, the New Orleans. Also, we recently agreed to acquire from an unaffiliated third party the motor vessel Churchill Bulker, a 2011-built Capesize dry bulk vessel of 179,362 tons deadweight. That vessel will be renamed "Seattle"; is expected to be delivered by mid-November 2015.

Including the New Orleans and the Seattle, our fleet will consist of 43 dry bulk vessels. In addition, we have two new-building Newcastlemaxes dry bulk vessels and one new-building Kamsarmax dry bulk vessel expected to be delivered in 2016.

We continue to manage the fleet in a prudent manner that promotes a balance of time charter maturities and produces a predictable revenue stream. Currently, our fixed revenue days are 97% for 2015 and 33% for 2016.

In summary, we will continue to take prudent actions to enhance shareholder value by maintaining strong financial resources, continuing to invest in the growth of our fleet, and managing the business in a responsible manner throughout a challenging dry bulk market cycle.

With that, I will now turn the call over to our President, Stacy Margaronis, for a perspective on industry conditions. He will then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide the financial overview. Thank you.

Thank you, Simeon, and good morning to all.

The third quarter of this year did not start out too badly, [but deteriorated fast], especially towards the end of the quarter. In September alone, the Baltic time charter averages for Capes were down 27.3% and for Panamax was down by 10%.

The Baltic Dry Index started the third quarter at 794, and closed yesterday at 599. The Baltic Panamax Index was at 858 on July 1 and closed at 555 yesterday. The Baltic Cape Index started the quarter at 1,251 and yesterday stood at 946.

Turning to macroeconomic developments, according to sources quoted by Clarksons, China is expected to grow by 6.8% this year and around 6.3% in 2016. This has prompted the Chinese central bank to reduce interest rates by 0.25% six times in a row this year alone.

During the second week of September, 13 infrastructure projects were approved in China, more than double the total number of projects approved in the previous two months combined. This has been seen by many as an indication of the government's determination to support economic growth amid the concerns of an economic slowdown in the third quarter of this year.

It is also expected by many that investment in the railway sector in China is likely to pick up in the second half of this year, which may support some additional steel demand.

Furthermore, the government has reduced the minimum capital ratio for investors in fixed assets, from 30% to 25%, in an obvious effort to encourage investment.

Even more relevant for the shipment of commodities is the fact that growth of Chinese industrial output slowed, from 6.1% a year ago to 5.7% thus far this year.

Expectations over US growth are 2.3% for this year and 2.8% in 2016.

As for the euro area, GDP is expected to grow by 1.5% this year and 1.6% in 2016.

According to Braemar ACM, there is little appetite for ordering bulk carriers right now. This is enhanced even more by the fact that yards are adjusting their prices to accommodate the extra cost of enforcing the NOx Tier III regulation.

Clarksons reports that bulker contracting so far this year remains historically low, with a total of 152 bulkers of 10.2 million deadweight tons ordered, down 80% year on year in deadweight terms on an annualized basis.

According to Clarksons, Panamax contracting dropped 78% year on year in the first nine months, with only 29 vessels with a combined 2.3 million deadweight reported ordered. During the same period in 2014, 110 Panamaxes joined the fleet and 66 were scrapped. This led to an increase of the Panamax fleet by 3% year on year.

The problem in the dry bulk order book lies with the Handymaxes, where a massive 38.6 million deadweight tons are on order, equivalent to 22% of the existing fleet. Most of these ships, like the Panamaxes, are scheduled for delivery in 2016. From 2017 onwards, deliveries are significantly lower across the board.

The Capesize sector has experienced similar rates of increase in the fleet [in services day] as the Panamaxes have.

On an overall basis, Clarksons projects an increase of the bulk carrier fleet of 2.8% this year and 3.8% for next year. This year's fleet growth will be largely driven by growth in the Handymax sector.

Continuing with supply, according to Clarksons, as of early October this year, the new-building order book for Capes stood at 53.4 million deadweight tons, representing 17.3% of the existing fleet.

As for Panamaxes, there are 27.3 million deadweights on order, which is equivalent to only [13.9%] of the existing fleet. Kamsarmax vessels accounted for over 80% of the overall Panamax order book. This is equivalent to 35% of the existing Kamsarmax fleet.

The good news according to AXIA Capital Markets is that vessel supply is finally coming under control. They point out that since 2007 the dry bulk carrier fleet grew by an average of 9.8% per annum. This rate of growth [fell] to about 5.8% per annum from 2012 onward, which was more or less equal to the average annual growth in demand.

AXIA provides more optimistic supply growth estimates for 2015 and 2016 than Clarksons, by estimating it at 2.3% increase this year and only 2.4% in 2016. For 2017, they estimate growth in supply of about 2.3%.

Turning to demand, according to Clarksons, overall total seaborne dry bulk freight is projected to remain flat in 2015, compared to an average of 7% growth per annum in the preceding five years. Looking ahead, initial projections suggest expansion of 2% in 2016.

Consistent with these Clarksons data, AXIA also notes that demand growth, which was expected by many to remain strong, has now collapsed and the market remains massively oversupplied with relatively modern tonnage.

Let's look at scrapping now. According to Clarksons, so far this year 325 bulkers, or 23.8 million deadweights, have been sold to [grave]. This is the equivalent of 3% of the bulk carrier fleet at the beginning of this year. Estimates for scrapping over the entire year are just under 30 million tons, or about 3.7% of the existing fleet.

The average age of Panamax ships scrapped so far this year was 23.3 years, while for Capes the average age was 20.8 years. On an overall basis, the average age of bulk carrier scrapped was 25.2 years.

Scrapping prices have come down and vary depending on the type of ship. For bulk carriers, they now stand at around $285 per light ton displacement. For container vessels, scrappers are usually willing to take off 20% more per light deadweight ton.

It is worth noting that, in two years, just under 100 million deadweight worth of dry bulk carriers will be 20 years or older. This could become a rather large pool of potential scrapping candidates. If about 50% of these ships head for the scrap yards, then the encouraging fleet growth figures mentioned above as forecasts of AXIA Capital could be realized.

Turning to steel now. According to Gibsons, the World Steel Association expects the global steel demand to shrink by 1.7% this year, compared to 2014, and then grow by an anemic 0.7% in 2016. They point to Russia and Brazil as two countries experiencing a severe contraction in the demand for steel.

Gibsons also reports that world steel production contracted in August this year by 3.1%, to 132.2 million tonnes. In spite of lower raw material prices, with demand flat most steel mills are reporting losses and in some cases reducing capacity utilization.

According to Commodore Research, the last eight months have seen Chinese crude steel production fall year on year by a total of approximately 4.5 million tonnes, while crude steel production outside of China has fallen by a total of approximately 10.9 million tonnes over the same period.

China is also the world's largest consumer of steel. banchero costa reports that at the time when steel consumption is slowing in China, India's steel consumption continues to pick up pace. Steel consumption in India is forecast to rise 7% this year and by a further 8% in 2016. This is not an insignificant statistic in view of the fact that India is the third largest consumer of steel, after China and the United States.

As for iron ore, according to Clarksons, global iron ore freight is expected to grow at only 1% in 2015, compared to more than 12% in 2014. For 2016, iron ore shipments are expected to grow by the same percentage as this year.

According to Commodore Research, as of the end of October, approximately 84.5 million metric tons of iron ore was stockpiled at Chinese ports. Even though this is about 30% lower than the record levels we saw a few quarters ago, it is still significant in size, especially if we take into account the issues surrounding the steel market referred to elsewhere in this brief report.

Brazilian and Australian iron ore exports are expected, according to Clarksons, to displace exports from other smaller exporting nations. Shipments are currently expected to increase by 4% in the case of Brazil and by 5% for Australia on a year-on-year basis. Their combined share of total seaborne iron ore exports will likely exceed 85% this year.

Coal, now. According to Howe Robinson, the four major commodities companies that dominate the global coal trade -- BHP Billiton, Rio Tinto, Anglo American, and Glencore -- have accelerated an unprecedented series of capital spending cuts in view of the steadily worsening market.

According to Clarksons, the collapse in seaborne coal trade this year has been accelerated by easing Indian imports in recent months. The forecast for seaborne coal trade has been revised down this year, to a 4% decline in 2015 compared to 2014. If this materializes, it would be the first annual decline in coal shipments in almost three decades.

According again to Clarksons, both thermal and coking coal are expected to grow by 2% in 2016. In the case of thermal coal, Clarksons predicts that in 2016 Indian imports will increase by 5% year on year, after increasing by only 3% in 2015 compared to 2014. As for Chinese coking coal imports, these are expected by Clarksons to increase 1% year on year in 2016, after dropping by a massive 27% this year.

On the grain freight, now. According to Clarksons, in the 2015-16 crop year global combined wheat and coarse grain freight is projected to drop 3%, to a total of 317 million metrics tons. The decline in global seaborne grain freight is expected to be partly driven by a 13% drop in imports to the Middle East. This will be largely due to Iran's introduction of tariffs in order to protect domestic output.

Let's look at what's happening with predictions and the future. According to Gibsons Shipping, if one takes into account the available information on future steel output in China and the rumors and comments about cutting output, one could reach the conclusions that there could be a short-term upward movement in the Cape market [only] between now and the end of the year.

Some of these rumors have the chairman of China Iron and Steel Association raising the prospects of Chinese steel output falling by 20% from here on. Therefore, Gibsons continues, that fundamentally the cargo flows into China will not be sufficiently strong and expanding to drive rates up in the medium term.

We agree with [Kearney's] consultants in their assessment of the supply-demand situation over the next year, or so. They claim that there will be no rapid turnaround in iron ore shipments any time soon and, as such, the path towards sounder freight market follows the supply side and the need to adjust the fleet to the market to negative to low growth in shipments of iron ore and coal.

We also agree with the outlook that has been put forward by AXIA Capital, who believe that even though demand growth will outpace supply growth over the next two years, given the existing oversupply of tonnage rates will remain at depressed levels until the excess supply is absorbed and hopefully demand growth accelerates.

The gap between the pace of fleet expansion and fairly limited dry bulk freight growth is likely to exert continued pressure in the markets in the coming year, making the outlook appear rather difficult.

As for future Capesize earnings, Clarksons Platou Securities are forecasting around [$12,000] a day for 2016 and $17,500 a day in 2017.

In several conference calls and presentations, the Diana Shipping team have been criticized for being too pessimistic. Furthermore, we have repeatedly explained in some detail why, even with steadily growing demand for seaborne freight, it will be difficult for the surplus tonnage to be absorbed in the short and medium term.

[Exactly as we have] explained earlier on, demand growth did not stay at the levels seen during the last two years. Therefore, it did not come to any of us as a surprise that rates have more or less collapsed over the last few months, together with the rate of demand growth.

Now that at long last new-building ordering has subsided and scrapping has picked up in earnest, we see the light at the end of an unfortunately rather long tunnel. There is reason for hope in the long run, provided nothing happens in the interim to disrupt the beneficial effects of the forces now at work to make the dry bulk shipping markets a profitable industry in which to invest.

As for our investment strategy, as we have said in the past, it has not changed, and we continue with the acquisition of young, good-quality tonnage, thus preparing the Diana fleet to take advantage of the better days which will eventually come. At that time, the patient and resilient investors will be rewarded, with most of their returns occurring over a relatively short period of time.

I will now pass the call over to our CFO, Andreas Michalopoulos, who will provide you with the financial highlights of the third quarter and first nine months of this year. Thank you.

Thank you and good morning. I am pleased to be discussing today with you Diana's operational results for the third quarter and nine months ended September 30, 2015.

For the third quarter 2015, net loss amounted to $17.4 million. Net loss attributed to common stockholders amounted to $18.8 million. And loss per common share was $0.24.

Time charter revenues decreased to $38.9 million, compared to $45.1 million for the third quarter of 2014. The decrease was due to the decreased average time charter rates that we achieved for our vessels during the quarter and was partly offset by revenues derived from the addition to our fleet of the vessels: G. P. Zafirakis, delivered in August 2014; Santa Barbara, delivered in January 2015; and Medusa, delivered in June 2015.

Ownership days were 3,772 for the third quarter of 2015, compared to 3,537 for the same period.

And charter equivalent rate was $9,688, compared to $12,295 for the same quarter of 2014.

Voyage expenses were $3.1 million for the quarter, compared to $2.6 million for the same quarter of 2014. The increase in voyage expenses was due to a $1.1 million loss from bunkers resulting from the redelivery of vessels, compared to $0.4 million for the same quarter of 2014.

Vessel operating expenses amounted to $21.6 million, compared to $22 million for the third quarter of 2014, and decreased by 2%. The decrease was due to decreased stores, spares, repairs, and environmental costs. This decrease was partly offset by increased costs due to a 7% increase in ownership days resulting from the enlargement of the fleet.

Daily operating expenses were $5,719 for the third quarter of 2015, compared to $6,219 for the same quarter of 2014, representing a decrease of 8%. Daily operating expenses decreased in all expense categories, except from taxes.

Depreciation and amortization of deferred charges amounted to $19.3 million.

General and administrative expenses decreased to $6 million, compared to $6.2 million for the third quarter 2014. This decrease was mainly attributable to the change in the exchange rate of euro to US dollar.

Management fees to related parties were $0.1 million for the quarter and were the fees paid to Diana Wilhelmsen Management Limited, (inaudible) the management of three vessels during the quarter from Diana Shipping Services SA.

Interest and finance costs amounted to $4.8 million, compared to $2.2 million in 2014. This increase was attributable to increased average debt, mainly due to the issuance of senior unsecured notes in the second quarter, and average interest rates during the quarter compared to the same quarter of 2014.

Interest and other income amounted to $0.8 million compared to $0.9 million and was decreased due to the decrease in the income earned from Diana Containerships as a result of the amended loan agreement.

Loss from equity investments amounted to $2.4 million, compared to income of $12.5 million for the same quarter of 2014.

For the nine months ended September 30, 2015, net loss amounted to $42.2 million. Net loss attributed to common stockholders amounted to $46.5 million. And loss per share was $0.59.

Time charter revenues decreased to $119.4 million, compared to $129.4 million for 2014. The decrease was attributable to decreased average time charter rates and increase of [hired] days and was partly offset by increased revenues due to the enlargement of the fleet.

Ownership days for the nine months ended September 30, 2015, were 11,030, compared to 10,234 for the same period of 2014.

Fleet utilization was 99.1%, compared to 99.4% for 2014.

And the daily time charter equivalent rate was $9,939, compared to $12,079 for the nine months ended September 30, 2014.

Voyage expenses were $12.1 million for 2015 and include $6.2 million of loss from bunkers for the redelivery of our vessels during the period.

Vessel operating expenses amounted to $64.7 million, compared to $64.6 million for 2014. There was an increase in operating expenses due to the 8% increase in ownership days resulting from the enlargement of the fleet, but this increase was partly offset by decreased crew costs, stores, and spares.

Daily operating expenses were $5,865 for 2015, compared to $6,311 for 2014, representing a 7% decrease. Daily operating expenses decreased due to the decreased average crew costs, insurances, stores, and spares.

Depreciation and amortization of deferred charges amounted to $56.5 million for 2015.

General and administrative expenses amounted to $17.9 million, compared to $18.7 million in 2014. The decrease was mainly attributable to the change in the exchange rate of the euro to US dollar and was partly offset mainly by increased legal fees and Board of Director fees.

Interest and finance costs amounted to $10.7 million, compared to $6.3 million in 2014. This increase was mainly attributable to increased average debt and average interest rates during the nine months ended September 30, 2015, compared to the same period of 2014.

Interest and other income amounted to $2.6 million, compared to $2.7 million for the nine months ended September 30, 2014.

Loss from investment in Diana Containerships, Inc., amounted to $2.9 million, compared to income of $12.4 million for the same period of 2014.

Thank you for your attention. We would now be pleased to respond to your questions, and I will turn the call to the Operator, who will instruct you as to the procedure for asking questions. Thank you.

(Operator Instructions) Amit Mehrotra, Deutsche Bank.

Ioannis, you've talked a lot in the past about the psychology of the market, characterized it before as getting weaker but not at the level that you and the rest of the management team need to be convinced that a recovery is on the way. It certainly seems that the sentiment has taken another leg down here in the last few months. So, I'd like to get your latest view on where you see it today?

And then, also, just related to that, if you can also talk about what you're seeing with respect to assets available for sale? There's been some chatter in the market recently that there's a big owner of vessels that's dropping a number of vessels on the market. And just wanted to see if that's consistent with what you've seen and what that tells you about where we are in terms of the psychology of the market?

I think that we are in the right direction and things are moving towards the way we have described it should go. The sentiment is going further and further down, and moves like the one you've described prove that point.

What we keep saying is that people should realize that it has to take some time where you have people not believing that there is an end -- a light at the end of the tunnel. What we know based on past history and based on the cyclicality of our industry is that there is a light at the end of the tunnel, but we cannot see it.

The people that they will keep working in that tunnel and they will be still alive, they will reach that point.

Have you seen, though, just tangibly an increase in the number of vessels that owners are looking to sell, even in a distressed market, to raise liquidity? Have you seen that recently?

Yes, indeed. There are a number of vessels that are potential candidates, both on the Panamaxes and on the Capes and for the Kamsarmaxes. And as we are going along, more candidates are coming into the market. The potential buyers are very few. And of course, as we are going along, that process will accelerate.

Okay. That's great. One last question for Andreas, just a financial question. Andreas, can you just give us the remaining new-building payments that are not included in the third quarter net debt balance? Last time I checked, I think it was around $132 million-$133 million. If you can just update us on that, that would be great.

Basically, I can tell you in detail what remains to be paid for the vessels that are to be built. It's $132,462,000.

Okay. Very good.

Fotis Giannakoulis, Morgan Stanley.

I want to ask you about this light at the end of the tunnel that Ioannis mentioned about. What makes you believe that this is a cyclical downturn and there is going to be a light at the end of the tunnel, compared to a structural problem that might exist in the underlying businesses of the dry bulk sector?

In other words, I want to ask you, do you think that the problem is shipping, or the problem might be the steel industry and the coal industry? And what it will take in order for the market to recover?

Well, first of all, Fotis, you have to bear in mind that we are in an industry where supply and demand plays a huge part. And the dry cargo industry, in contrast with the container industry, is a mature industry. So, we have been watching the numbers very carefully since 1947.

And the cyclicality is always there. And whenever the market is down, we are trying to find new words to describe the market: This time is different from the previous. But I can assure you it is not. It's exactly the same. It's supply and demand. And it will never change.

There is a light at the end of the tunnel. The problem is, as we said all along, we don't know when we will reach this light at the end of the tunnel. But rest assured that one day we will see the light at the end of the tunnel.

Fotis, the fact that people start talking like you about structural changes and things are different, et cetera, is a good starting point for the right forces to take effect and the market to turn. It goes with the [high quality] that we were saying earlier.

Absolutely, and I appreciate that. What I want to ask is that you mentioned earlier that the fleet growth is going to continue growing by around 2% the next couple of years. And I'm trying to understand your view on the timing of the recovery.

Can you tell us what is your demand growth prospects and where this demand is going to come from? Where do you see the iron ore imports and the steel demand in China going? And is this a one- or two-year cycle? Or, is this a longer -- it's going to take longer time until we'll see rates becoming profitable again?

Fotis, I think that you know us long enough to understand that we don't give predictions about rates of demand growth or even supply where the numbers are more precise and published and certain. What we do is that we quote what analysts say.

And as regards demand, where you focused now your questioning on, we always take the view that demand is more or less what it is at the time that we make a presentation or a conference call.

Up to now, as you know, we were assuming when we were giving out our analysis was that demand would remain strong. And we warned that things would be rather grim if the rate of demand growth was not that that people predicted and which people assumed would remain for the next few years.

So, what happened now, as we said earlier, was that demand unfortunately did not grow as fast as people were expecting and as fast as we were seeing up to about two or three quarters ago. And now, we adjust our views for the supply and demand balance based on the demand that we have now.

If demand grows at a faster rate than we are seeing now and which Clarksons are predicting, then the recovery will come sooner. If it remains as it is now, scrapping will be higher; new-building ordering will be at the minimum, if not disappear completely; and it will take a little bit longer, because we will need longer for the market to absorb the tonnage which is surplus tonnage today.

So, it's not a matter of what we think is going to happen in the future and how fast the recovery will come; it's a matter of what assumptions we make about the growth in demand, what assumptions we make for scrapping, and what assumptions we make about the new-building orders. And I think that we tried to explain rather clearly in this short presentation as to what assumptions we feel are reasonable as regards supply, as regards scrapping, and new-building orders.

What we really have no idea at all is what demand is going to do. So, we have to assume that demand growth remains as it is today.

But if I may add, what people keep forgetting and we keep saying that what you should worry and what we should worry about is the imbalance between supply and demand. And there are many scenarios that they can decrease this imbalance that we have today and many scenarios that can keep the imbalance the same and many scenarios that can increase this imbalance, either at lower levels or at higher levels.

You should not expect us to give you these type of scenarios, predict [these types], but we can explain. We can even explain a situation where there is a big drop in the demand and a further drop, bigger drop, of the supply where it's going to create an imbalance at lower levels but higher charter rates.

One last question about your investment strategy. I remember in the past that you have mentioned that you keep your acquisition pace steady, but at some point you will always want to have cash. You have a very, very large cash reserves; I think over $240 million.

With these reserves and the way that the market is developing and your cash flow is developing, how much of this cash is available for acquisitions? And has the pace of your acquisitions changed at all? Or, it's the same as previously?

Our pace is the same. We have explained that our intention is to spend $20 million to [$15] million of cash every two to three months for the next year and a half. And that's it. The maths are easy. We are talking about $80 million to $100 million of new investments from fresh cash, from existing cash.

Thank you, Ioannis. That's very clear. Appreciate your answers.

(Operator Instructions) Magnus Fyhr, GMP Securities.

Sorry. My questions have been answered. Thanks for the presentation.

(Operator Instructions) Spiro Dounis, UBS.

Just one quick one from me. I guess in the past you've not been shy about, I guess, investing in Diana Containerships. Just as you look at the market, (inaudible) opportunities there in the past, and for a period that did actually work out in your favor. Just sort of wondering as you look at all your opportunities out there, obviously vessel purchases still top of the list. But just wondering in terms of investing more in DCIX or share buybacks, how you're looking at those two options right now?

We have not discussed and, of course, decided on whether or on how we want to proceed as regards to your questions. Of course, these are matters that are of an interest to us, and we have to see what we can do to enhance or to put in better position our investment in Diana Containers and at the same time the share buyback program that you referred to.

We evaluate always and we see how we proceed. But for now, there has been no discussion about that.

Okay. Fair enough.

Amit Mehrotra, Deutsche Bank.

I just have a follow-up regarding some of your comments about the supply and demand and how it's not different at all this time versus what you've seen in past cycles. And I guess I agree with it, just based on the fact that the market cannot remain uneconomical forever. And clearly, the market is severely uneconomical today.

And just based on your decades of experience, can you just offer some insight on past cycles, in terms of how long can the market remain this level of uneconomical before you see a more profound reaction in the supply? And basically, I'm just asking you how long can owners endure the current level of pain before they have to make a decision here on, basically, cashing out of the market?

For example, the first response you're going to get to that question has to do with the interest rates. For example, how expensive is the financing cost? And at the moment, everyone is telling you, of course, that the financing cost is very low, the interest rates are low, and the banks are nursing various problems that exist. And therefore, there is a bigger endurance of an uneconomical market, as you describe this. And certainly a higher interest rate environment will move things faster.

But at the same time, what is very important, together with various macro factors that exist around this period, it has to do with the psychology, as well, if people are still prepared to burn more and more money thinking that the recovery is imminent. From the moment they will see that the recovery is not imminent, then you will have laid-up vessels, you will have scrapping, and you will have certainly no new-building orders.

And in the past, we have seen periods of a bad market of seven years. We have seen two years. We have seen 10 years. But the question is, together with the macro environment, you have to put there the anticipation and the psychology as regards to when they think the market is going to turn.

Just to give you a quantum of the interest rate, in the 1980s, for example, the dollar interest rate was 23%, almost 24% yearly. So, that compared with the present interest rates has a different bearing altogether. So, that will have a bearing in the nursing of the ships by the banks.

But let us not somehow blur the whole situation of the forces, try and bring the balance with these -- I will call them -- small parameters affecting the forces to bring the different equilibrium.

All right. Okay. That's good. One last question from me, and it relates to the net debt of the Company. Obviously, you're very conservative relative to the book capitalization. But I'd like to get your perspective on where you think the Company's net leverage is relative to the value of the assets? Because, I think we've seen, basically, the values come down quite significantly. And so, I would imagine the LTV of the Company has increased pretty materially over the last year, year and a half.

So, can you just talk about where you think Diana Shipping's LTV is today? And based on my math, it's about close to 50%. And could we see a pause in your acquisition strategy until maybe you give a little more comfort that we're not going to see another big leg down in asset values relative to your LTV?

The numbers are more or less correct. What I can say only is that, indeed, the market values have dropped significantly. The only comment that we can make though is that we have absolutely no issues with our covenants, with our bank covenants. So, although your numbers are pretty correct and we feel comfortable with those, I don't think we need to comment further.

Okay. Very good.

We have reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comment.

Thank you, again, for your interest in and support of Diana Shipping. We look forward to speak with you in the months ahead. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.