Genco Shipping & Trading Ltd (GNK) 2007 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Genco Shipping and Trading Limited fourth quarter and full year 2007 earnings conference call and presentation.

Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.GencoShipping.com. Again, that's www.GencoShipping.com.

To inform everyone, today's conference is being recorded and is now being webcast at the Company's website, www.GencoShipping.com.

We will conduct a question-and-answer session after the opening remarks. Instructions will follow at that time. A replay of the conference will be accessible at any time during the next two weeks through Thursday, February 28, 2008, by dialing 888-203-1112 for U.S. callers and 719-457-0820 for those outside the U.S. To access that replay, please enter the pass code 4694857.

Now at this time, I'm happy to turn the conference over to the Company. Please go ahead, gentlemen.

Good morning. Before we begin our presentation, I note that in this conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements.

For a discussion of factors that could cause results to differ, please see the Company's press release that was issued yesterday. The materials relating to this call are posted on the Company's website and the Company's filings with the Securities and Exchange Commission including, without limitation, the Company's annual report on Form 10K for the year ended December 31, 2006, and the Company's subsequent reports on Form 10Q and Form 8K filed with the SEC.

At this time, I would like to introduce Mr. Gerry Buchanan, the President of Genco Shipping and Trading.

Thank you, and welcome to Genco's fourth quarter and full year of 2007 conference call. With me today is Peter Georgiopoulous, our Chairman, and John Wobensmith, our Chief Financial Officer.

As outlined in slide three of the presentation, I will begin today's call by discussing the highlights of the fourth quarter and full year of 2007, followed by John's review of our financial results for the quarter and 12-month period ended December 31, 2007. Following this, I will discuss the industry's current fundamentals. John, Peter and I will then be happy to take your questions.

2007 was a year of significant success for Genco and we continue to differentiate the Company in three main areas. First, we followed our leadership by continuing to consolidate the industry in a disciplined manner that meets strict accretion and return on capital requirements.

Second, we advanced our commercial position by signing long-term contracts at favorable rates with leading charters, and third, we declared the sizeable and growing dividends to shareholders during a time in which we significantly expanded our modern fleet.

For the year, we recorded net income, which reflects the earnings power of our modern fleet, and our success at taking advantage of the robust dry bulk market in 2007. Net income was $106.8 million or $4.08 basic and $4.06 diluted earnings per share, which John will discuss in more detail later in the call.

For the three months ended December 31, 2007, excluding the $23.5 million gain on the sale of the Genco Commander, we recorded net income of 33.5 million or $1.17 basic and $1.16 diluted earnings per share. Including the sale of the Genco Commander, the Company recorded net income of 56.9 million or $1.99 basic and $1.98 diluted earnings per share.

For the fourth quarter of 2007, we are pleased to have taken advantage of our fleet's earnings power to declare an increased dividend of $0.85, which also represents our new quarterly target dividend for 2008. Including the $0.85 dividend per share for the fourth quarter, we have declared dividends totaling $2.83 per share for 2007 and $6.49 per share on an accumulative basis since going public in July of 2005.

As I mentioned earlier, during the year, we continued to successfully grow the Company through acquisitions, which is directly related to the Company's strong industry relationships and its consolidation expertise. Consistent with our goal of becoming the industry bellwether, we entered into two transactions in 2007 to acquire 15 modern vessels that serve both to expand our world-class fleet by 173% on a tonnage basis, as well as improve the average age of our fleet and diversify to include Capesize vessels, the largest class of dry bulk vessel.

We are pleased to have successfully completed the acquisition of the six dry bulk vessels from companies within the Evalend Shipping Company, S.A., during the fourth quarter for an aggregate purchase price of $336 million. We are also pleased to have taken delivery of the Genco Titus, one of the remaining six vessels from the $1.1 billion Metrostar transaction.

I also highlight four additional accomplishments in the fourth quarter that will be discussed later in the call. We first reached agreements to sell two of our older vessels. Second, we completed the sale of the Genco Commander, realizing a gain for our shareholders of $23.5 million. Third, we acted opportunistically to increase our ownership position in Jinhui Shipping and Transportation, Limited. And finally, we completed the closing of our 225 million follow-on offering to reduce debt and ready the Company for future growth.

Moving to slide six, I will now discuss our continued success in the execution of our chartering strategy. During the year, we signed time charter contracts for 19 vessels at attractive rates, as management continued to take advantage of the robust market environment for the benefit of the Company and its shareholders.

In additional to already signing four of our newly acquired vessels on time charters, we are also pleased to have signed the existing vessels to charters at significantly higher rates than their previous charter levels. As a result of our considerable success in this important area, approximately 80% of our current fleet's available days are secured on contracts for 2008.

With the combination of having significant time charter coverage for 2008 and having two vessels with profit-sharing agreements, we are in a strong position to provide shareholders with a high degree of earnings visibility, while maintaining the ability to benefit from future rate increases.

After the sale of the Genco Trader, as well as the delivery of the remaining five of 15 dry bulk vessels that we agreed to acquire in the third quarter, Genco will own a fleet of 32 dry bulk vessels, consisting of nine Capesize, six Panamax, three Supramax, six Handymax and eight Handysize vessels, with an average age of approximately seven years, well below the industry average of approximately 16 years.

On slide eight, we detailed the remaining vessels to take delivery from our acquisitions in 2007. We expect to take delivery of the five remaining Capesize new buildings between the first quarter of 2008 and the third quarter of 2009. This expansion will grow our fleet to a total of approximately 2,700,000 dead weight, as well as an increase or exposure to the largest class of dry bulk vessel, which we believe enhances our position to benefit from the strong demand for iron ore and coal from China and other developing countries.

At this time, I'd like to turn the call over to John.

Thank you, Gerry. I will begin my remarks by directing you to slide 10, which presents our fourth quarter and 12-months ended December 31, 2007 financial results. For the fourth quarter and 12-month period ended December 31, 2007, we recorded revenues of $65.7 million and $185.4 million respectively. This compares with revenues for the fourth quarter and 12-month period ended December 31, 2006 of $35.7 million and $133.2 million respectively. The increase was due to the operations of a larger fleet.

Operating income for the fourth quarter and 12-month period was $65.2 million and $131.1 million respectively. This compares with operating income for the fourth quarter and 12-month period ended December 31, 2006, of $18.5 million and $70.3 million respectively. The increase in operating income is attributable to higher revenues and gains from sales of vessels which was partially offset by higher vessel operating expenses, as well as higher general and administrative expenses.

Interest expense for the fourth quarter of 2007 was $8.8 million and $26.5 million for the 12-month period ended December 31, 2007, which compares to $3.2 million for the fourth quarter of 2006 and $10 million for the full year of 2006.

Net income was $56.9 million or $1.99 basic and $1.98 diluted earnings per share for the fourth quarter of 2007 and $106.8 million or $4.08 basic and $4.06 diluted earnings per share for the 12-month period ended December 31, 2007. Excluding the $23.5 million gain on the sale of the Genco Commander, net income totaled $33.5 million or $1.17 basic and $1.16 diluted earnings per share for the three months ended December 31, 2007.

Included in net income for the 12 months ended December 31, 2007 is a $27 million gain on the sale of the Genco Commander and the Genco Glory and a $3.6 million one-time, non-cash deferred financing charge as a result of the retirement of our previous credit facilities.

Before moving on to Slide 11, I would like to highlight two numbers in our fleet section from yesterday's press release due to an error by the newswire that we use. The Genco Marine and the Genco Muse charter rates should read $24,000 per day and $58,000 a day, respectively.

Moving to slide 11, you will see that we continue to maintain a strong balance sheet, as we successfully expanded our fleet and distributed sizeable dividends. Our cash position was $71.5 million as of December 31, 2007, and our debt-to-capital ratio was 60%. Our total assets as of December 31, 2007, were $1.7 billion, consisting primarily of our current fleet, deposits on vessels to be acquired, Jinhui common stock and cash.

Our EBITDA for the three-month period ended December 31, 2007 was $72.2 million. Excluding the gain on the sale of the Genco Commander, our EBITDA margin represents 74% of revenues.

Moving to slide 12, our utilization rate was 98.6% for the fourth quarter of 2007 and 98.7% for the period ended December 31, 2007. Our time charter equivalent rate for the fourth quarter of 2007 increased 52.4% to $31,140 versus $20,435 recorded in the fourth quarter of 2006. The increase in TCE rates was due to higher charter rates achieved in the fourth quarter of 2007 versus the fourth quarter of 2006 for five of the Handysize vessels, four of the Panamax vessels and three of the Handymax vessels in our current fleet.

Furthermore, higher TCE rates were achieved in the fourth quarter of 2007 versus the same period last year due to the operation of four Capesize vessels that were part of the Metrostar acquisition. For the full year of 2007, TCE rates obtained by the Company increased 20.5% to $24,650 per day.

For the fourth quarter of 2007, our daily vessel operating expenses were $3,824 per day versus $3,415 per day for the fourth quarter of 2006. Daily vessel operating expenses for the full year of 2007 were $3,716 per day versus $3,285 per day for the year-earlier period. The increase is due to higher crew and lube expenses.

We believe daily vessel operating expenses are a best measure for comparative purposes over a 12-month period in order to take into account all the expenses that each vessel in our fleet will incur over a full year of operation. Based on estimates provided by our technical managers and management's expectations, we expect our 2008 daily vessel operating expense budget to be $4,700 per vessel per day on a weighted basis across the fleet. As previously announced, the increased budget reflects the anticipated increased cost for crewing and lubes, as well as the operation of our Capesize vessels.

On slide 13, we present a pro forma balance sheet that reflects the Company's payment of its fourth quarter 2007 dividend of $0.85 per share, the anticipated drawdown of $109.65 million for the payment of 85% of the purchase price for the Genco Constantine, the drawdown of $41.85 million for the payment of 90% of the purchase price for the Genco Champion, and the anticipated repayment of debt in the amount of $43 million connected to the anticipated sale of the Genco Trader, for a net sale price of $43.1 million. As you can see, our pro forma cash position for the quarter is $46.8 million.

As of December 31, 2007, our pro forma liquidity totaled $379,279,000 and our pro forma net debt to total capital ratio was 63%. It should be noted that while the pro forma balance sheet includes 77 million in debt associated with the purchases of Jinhui common stock, it does not include the approximately $148 million of proceeds based on yesterday's close of 53.5 Kroner.

Turning to slide 14 of the presentation, we outline our payment schedule for the remaining five of our newly acquired vessels to be delivered. I would like to note that the deposit payments have already been made in the amount of $115.8 million. The remaining balance will be made upon the delivery of each vessel. As a result, we expect to make final payments totaling $109.65 million for the delivery of the Genco Constantine, due to be delivered on or about February 22, 2008.

Before moving on to our dividend policy, I will now briefly discuss our anticipated break-even levels detailed on slide 15 that are based on an average number of 28.27 vessels for the year. As we mentioned a moment ago, based on estimates provided by our technical managers and management's expectations, we expect a 2008 daily vessel operating expense budget to be $4,700 per vessel per day on a weighted basis.

Furthermore, we expect our daily free cash flow break-even to be $11,809 per day per vessel, and our daily net income break-even rate to be $18,056 per vessel per day. This takes into account the completion of the acquisition of the six vessels from Evalend, the anticipated delivery of the Genco Constantine on or about February 22, 2008, the anticipated delivery of the Genco Hadrian within the fourth quarter of 2008, and the anticipated sale of the Genco Trader within the first quarter of 2008. As we have done in the past, we plan to provide updated break-even levels on a quarterly basis.

Next, I will discuss our dividend policy and the Board's decision to increase our quarterly divided and target rate for the 2008, which is highlighted on slide 16. As Gerry stated earlier, we increased our quarterly divided for the fourth quarter of 2007 and our 2008 quarterly dividend target rate for the year to $0.85 per share, which reflects both the Company's significant earnings power and its objective to consistently grow the dividend over the long term.

Based on our closing price yesterday of $55.09, plus the cumulative dividends of $5.64 per share that we have paid to date, we have provided shareholders who invested in our IPO in July of 2005 a total return of approximately 189%. Our dividend policy, which is determined by our Board of Directors, and is calculated based on free cash flow, less cash reserves for fleet maintenance, renewal and growth, as well as debt amortization, provides important benefits to shareholders.

Since our IPO in July of 2005, we have continued to grow our dividend while expanding our fleet. This success is a testimony to the sizeable cash flows we generate and retain, due to our disciplined acquisition strategy, as well as the ongoing support we receive from the banking and capital markets. As part of this support during 2007, we entered into a favorable 10-year term $1.4 billion revolving credit facility, led by DnB Nor Bank. Also, we completed an approximate $225 million equity offering that we used to pay down debt and prepare the Company for future growth.

Building on our past success consolidating the industry, we intend to continue to seek growth opportunities that meet our strict earnings and cash flow accretion criteria, as well as our return on capital hurdles. We also intend to look for opportunities under our new share repurchase program, which our Board authorized yesterday to create additional shareholder value.

Before I turn the call back over to Gerry to discuss the industry fundamentals, I will now provide an update on our ownership position in Jinhui Shipping and Transportation Limited, a dry bulk shipping owner and operator focused on the Supramax segment of dry bulk shipping.

Following the announcement of our initial position in the company in May of 2007, our current position in Jinhui is 16,335,100 shares, representing 19.4% of the outstanding shares in both -- of Jinhui's capital stock as of December 31, 2007. The total debt level related to the Company's purchase of Jinhui's capital stock is currently $77 million, and the carrying value is approximately $148 million, based on yesterday's close of 53.5 Kroner. Genco may purchase additional shares of Jinhui's capital stock or dispose of any and all of Jinhui's capital stock that Genco holds, whether through open-market transactions, privately negotiated transactions, or otherwise.

I will now turn the call back to Gerry.

Thanks, John. I will now take this opportunity to spend a few moments discussing the industry fundamentals. Our start was slightly (inaudible) which points to the dry bulk end of this. Represented on this slide are the overall Baltic Dry Index, the Baltic Capesize Index and the Baltic Panamax Index. As can be seen when looking at 2007 as a whole, the rate environment has displayed a significant increase since the beginning of the year, reaching record levels of over 10,000 points through October, followed by some softening towards the end of the year in January of 2008. Even with the recent volatility, the Index is still moving approximately 42% over the corresponding level last year.

Moving on to slide 19, we will discuss the drivers behind the overall strong rate environment, as well as the main reasons behind the recent softening in freight rates, which we believe is temporary. As indicated on the graph at the bottom left, Chinese fuel production grew to 486 million tons for the year ending December 31, 2007, while 384 million tons of iron ore were imported into China for the same period. For the 12-month period, Chinese fuel production grew by 15% and iron ore imports grew by 18% year-over-year.

As previously mentioned, what we believe to be temporary volatility evidenced over the last two months of 2007 and the beginning of 2008 was caused primarily by the following factors. First, shipment disruptions reported both in Brazil and Australia reduced available cargoes in both the iron ore and coal sides. Specifically, the iron ore port of [Etakwai] stopped operations due to repairs caused by an accident in December, and resulted in an approximate nearly shipment loss of 60,000 tons of iron ore.

At the same time, flooding in Australia created coal supply disruptions and the cancellation of cargo, while poor weather and snowstorms delayed fuel production in China amid coal and power shortages. And lastly, the uncertainty over the conclusion of the iron ore price negotiations resulted in a slowdown of paying charter activity during December of 2007 and January of 2008.

In a moment, I will provide an update on each of these events, but first of all, highlight the strong demand that we continue to see from China. China's continued demand for steel, as evidenced by increasing steel prices, led to a 26% increase in iron ore imports for the fourth quarter of 2007 over the same period last year, with an uncharacteristic reliance on Indian exports, as opposed to Brazilian. The Indian government is said to be considering high export taxes on iron ore in order to maintain output for domestic demand. And the Brazilian iron ore port is scheduled to return to operation. We expect both of these events to increase activity from Brazil, thereby creating longer ton miles.

Looking at the graph on the bottom right-hand side, we can see the dry bulk order book by quarter through 2012. A fairly defined order book over the next two years provides good visibility over the medium-term charter market. Furthermore, albeit a 7% increase in the dry bulk fleet for 2007, as well as an easing in port congestion, freight rate shows significant strain through the year, with a DDI closing the year at 71% higher than at the same point in December of 2006.

Firm freight rates through the fourth quarter helped maintain scrapping levels at a minimum, with only 18 dry bulk vessels reported to be scrapped for 2007.

On slide 20, we detailed the long-term dry bulk demand fundamentals, which we believe remain strong for the following reasons. Increases in China's GDP continue at strong rates, reaching an annual growth rate of 11.2% for the fourth quarter and estimated to have grown 11.4% for the entire year of 2007. India's GDP is forecasted to grow by 8.7% year-over-year for the fiscal year ending March 31st, 2008. And world GDP for 2006 came in at 5.4%, while growth is forecast at 4.7% for 2007. A major driver of this growth is the Asian economies.

Finally, if we look at the graph on this slide, we can see that China has overtaken Europe and Japan as the largest importer of major bulks, accounting for approximately 21% of the world's imports. When looking at the same data from 1998, Chinese imports accounted for only 6% of the world trade. As China continues to rely on long-haul trade routes from Brazil and Australia for its iron ore needs, ton-mile demand is expected to continue to grow.

What will drive the market going forward? With (inaudible) iron-ore terminal scheduled to return to operation by February, 2008, we expect to see increased ton miles as a result of more cargoes coming out of Brazil. Preliminary indications that communication between the Chinese steel mills and the iron ore supply houses commence, are evident by a recent agreement on a multi-year contract between BaoSteel and BHP. Although iron ore prices have not yet been set, we expect that anticipated conclusion of the iron ore negotiations will stimulate both sport and paying-charter activity.

While recent weather-related shutdowns in Chinese steel mills have created some steel production holdup, they also indicate the lack of adequate infrastructure within the country. Increased fixed-asset investment, especially towards the end of 2007, point to the country's efforts to improve their infrastructure platform going forward. Furthermore, the fact that Chinese companies have been actively investing in Brazilian and Australian mining companies, in order to access mining rights to the much-needed iron ore, is a good indication of bullish, long-term fundamentals.

India's economic growth in serving the dry bulk industry by adding further pressure to the coal trades in two ways. Firstly, its increased steel production is forcing the country to become a major importer of coking coal. Secondly, its increased energy demand will result in higher thermal and coal imports. A last positive factor on the demand side is the fact that China's increased consumption of coal and supply shortfalls bode well for China becoming a long-term net importer of coal.

On the supply side of things, although the dry bulk order book has increased to 58% of the existing fleet, it is questionable whether it will be delivered in its entirety. It's important to note that 23% of the Capesize orders scheduled to deliver in 2009 and 33% of the Capesize orders for 2010 are signed at Greenfield yards. Moreover, anecdotal evidence that constraints such as financing for shipyards and smaller owners, as well as machinery and equipment shortages, could pose additional deterrents in delivering the current order book in its entirety.

Lastly, over 30% of the world's fleet is 20 years or older. As we have indicated on past calls, unlike tankers, bulk carrier scrapping is not mandated. It is more of an economical equation and the cost of repair to comply with the requirements of a fifth or sixth special survey. However, charters do become more selective in less robust markets, and many of them will not take vessels which are in excess of 20 years for the long-term paying charters. Therefore, we believe that scrapping will become an increasing factor in the future.

This concludes our presentation, and we will now be happy to take your questions.

Thank you, everyone. (OPERATOR INSTRUCTIONS). And we will go first today to Doug Mavrinac with Jeffries & Company.

Great, thank you. Good morning and congratulations on a simply fantastic quarter.

Thanks, Doug.

Just had a few questions for you all. First, Gerry, in your comments, you talked about why the recent weakness in -- what the recent weakness in charter rates was attributable to, but we've seen a significant rebound in chartering activity in recent days. Is there something specific that you guys point to as far as why we've seen the switch turn on? Or is there just an overall view that these factors that caused the weakness are temporary, and that there's growing confidence that demand will rebound in the coming months?

I think, Doug, that's exactly it. I think there's a growing confidence that it was all temporary and that we're now starting to rebound and move back up the scale again, yes.

Yes, Doug, keep in mind there's been a press release been put out by that port in Brazil that it should be up and going by February 19th, February 20th. So I think people see that coming on. And what's interesting is you're now seeing a lot more activity as far as inquiring to time charter long term for vessels anywhere from one to even 10 years again.

Okay. And that's what I was going to ask, John, is that I see that you guys have, I guess, by our count, seven vessels on time charts that expire in the next couple of months. Would you describe the interest level in those vessels as having accelerated over the past several days?

Yes, definitely.

Okay. Okay. And also, you mentioned the Brazilian cargoes and the port getting back online in mid-February. So I would take it that the demand increase that we've seen isn't necessarily because of those 50 postponed cargoes yet, and that could potentially still be on the -- around the corner.

Yes, I mean, I'm sure that they've started booking some of those cargoes already. They obviously have that date.

Right.

But, look, I think if you kind of look at what's going on, China is obviously going to have to start importing a lot more coal because of their issues. We're seeing a lot more coal movement in general from the U.S. Gulf going into Europe and you're seeing a lot more coal imports going into India.

And on the iron ore front, we believe that Brazil, the Chinese route is going to continue to add the ton miles once the terminal comes back on, but just in general, particularly if the Indians are successful in putting higher export taxes on their iron ore, it's just going to be more competitive for the Chinese to import from Brazil.

Okay, great. And actually, that touches on one of my final two questions. What changes have you all seen in trading patterns as a result of the Chinese basically saying that they're going to quit exporting coal because of their shortages right now? And when do you expect there to be a return to normalcy as far as Australian loadings and South African loadings?

I don't think we're seeing big changes in trading patterns, to be honest with you. It's the same routes that their ships are trading and that we see in the market in general.

Yes, and on the Australian side, Doug, I think that could take a few months to work itself out, just because of the flooding issues in the mines. It does take a long time to get those mines dry and get things going -- back up and going.

Okay, good, good, okay. And then one final question has to do with the Jinhui stake. I saw you guys increased it. What are your current thoughts on that particular investment, and that's all I had.

We're -- we still obviously like the position obviously, because we've added to it. We think it trades at a significant discount to the value of its steel on the water today.

Okay, great, thanks a lot, and congratulations once again.

Thank you, Doug.

We'll go next to Scott Burk with Bear Stearns.

Hi, good morning, guys. I wanted to follow up with some more questions -- or another question about your chartering strategy for the next six months. You have seven or eight vessels rolling off, like Doug mentioned. What is your strategy regarding those vessels? Should we expect to see more shorter charters like you've done with the Predator, or would we be looking for longer charters like on the Genco Success?

I think -- look, our chartering strategy overall hasn't changed. We're going to continue to focus on the one-to-three year market for the Panamaxes on down and probably the three-to-five-year market for the Capes, but we have, over the last couple of months, done a few short-term charters, as you correctly pointed out. And the reason for that is because we didn't like the look of the long-term charter market a month ago. Things are starting to strengthen, so I think you'll see it start to fix longer-term charters on some of these ships, but we were able to get very good rates on these three-to-five month charters, so we're pretty happy.

Okay, terrific. And then can you kind of describe what you guys are hearing about the iron ore negotiations? We saw the BHP news, as well as that. That meant they're still talking, but what -- do you have any more sense about when those might be resolved?

Honestly, Scott, no. I think the only people that really know what are going on are the guys sitting now at the negotiating table.

Okay, thank you.

We'll take our next question from John Chappell with JP Morgan.

Thank you. Good morning, guys.

Good morning, John.

Just two quick questions, first, to Gerry, regarding the long-term period activity, it seemed like there had been a lull in some of the longer term contracts through the end of last year and the beginning of this year. Have you seen a pickup in interest from charters to do the three and even like the five-year contracts that we had been seeing after most of '07?

Well, I think, John more or less touched on that in the last question. Yes, we have seen -- the market (inaudible) is getting harder and harder every day at the moment, and we see a big interest in the longer term charters.

John, there was some good data points that were out there. There's been a couple of Capesize ships recently that have been fixed for five years, in excess of $70,000 a day, and if you think about it, towards the height, I think that number was just above 75. So things are definitely looking pretty good right now.

Or almost back. A modeling question for John. Is there any required debt repayment in 2008 or 2009 above what you need to pay back on the Trader after you finish the sale of that?

No, we -- it's a non-amortizing facility and quite frankly, we don't actually have to pay that amount back on the Trader, but that's something that we anticipate doing.

Okay. So you expect to pay some on the Trader, but other than that, we would expect no significant debt reduction this year?

Well, no, I wouldn't say that. Oh, I think your question was, do we have to?

Yes, it was, and then I shifted it to, do you want to?

I would -- yes, I would say, first of all, on the Trader, we plan on paying back approximately $43 million when that closes, and that will be a first quarter event. And then, as cash flow provides, we plan on reducing debt during 2008.

Okay, great. Thanks, John and Gerry.

We'll take our next question from Natasha Boyden with Cantor.

Good morning, gentlemen.

Good morning, Natasha.

Regarding the [$50] million share repurchase you announced, you mentioned that the Board will review that program after 12 months. Are share repurchases going to become a permanent part of how the Company wants to provide return to the shareholders, or is this just a matter of believing that the stock is undervalued at present?

I think any share repurchase program that -- well, that we have in place now and going forward is obviously going to be done on an opportunistic basis, and it's a great tool that we have now at our disposal.

Okay. So it's really a question of believing that you think the stock is undervalued here?

Look, I think that again, not going into specifics on how the stock is valued, obviously, the Board wants to take a look at the potential to buy shares back, which is what we put in place, and we also had our banks agree to allowing us to do that.

Okay. And some of the dividend, you've raised the dividend here almost 30%, at the same time, implementing a share repurchase program. Is this -- can we look at this as perhaps you see the asset prices are too high to provide attractive returns, or are you still actively looking at growing the fleet?

No, we're still actively looking at growing the fleet. I think the cash-on-cash numbers still make sense at these levels, but as you're well aware, we're very patient and we wait to find the right transaction.

That's a lot of things going on at once there, John. All right, thanks very much. I appreciate the info.

We'll go next to Omar Nokta with Dahlman Rose.

Thank you. Good morning, guys.

Morning, Omar.

Just to touch off on Natasha's question with the buyback. You mentioned that it would be subject to some restrictions on your credit facility. Could you expand on that a little bit?

Yes, there are really two things. One, the most important one, we obviously can't be in default under the credit facility, which we clearly are not, and two, we have a basket of -- that we can use to purchase shares back.

Okay. And just with the -- now that you've got the higher dividend, it still looks like you're going to be generating a lot more on cash flow this year. Do you still plan on using your credit facility to fund your commitments for this year, or would you rather use more cash?

You mean as far as the acquisitions --

Yes.

-- that we are delivering the Constantine and the Hadrian?

Right.

You'll see us draw down on the credit facility for both of those transactions.

Okay. The majority of it?

Yes, the majority of it, but as an answer to John's question, we clearly also plan on repaying debt during 2008.

Right. Okay, that's all I had. Thanks a lot.

Thanks, Omar.

We'll go next to Urs Dur with Lazard.

Hi, good afternoon or good morning, gentlemen. Actually, I'm overseas. It's afternoon for me. Congratulations, nice quarter. I guess you guys have already commented fully on your Jinhui position. You're obviously very satisfied with that, so I guess we have an answer, but maybe can you maybe give a little color or just comment on the liquidity of Jinhui shares and have you seen improvement in Jinhui share liquidity over the last six, eight months?

Yes, if you look at the sheer volume numbers, they're definitely up, no doubt about that. And as I said before, we still think that it's, at least right now, priced at a good discount to its net asset value. So we're happy and we think it has a ways to go.

Okay. That's what I expected. Everything else has been asked for me. Thank you very much, congrats.

Thank you.

We'll go now to Greg Lewis of Credit Suisse.

Yes, good morning, and congratulations on a good quarter. My first question is more of just a general macro. There's been a lot of talk about the slowdown in coal exports out of Australia. My understanding was that initially, the existing inventories at the ports were ample to supply near-term coal export. So I guess the bigger question is over the next few weeks as that number sort of comes down, what areas do you expect to be the primary beneficiaries of coal exports over the next few weeks into Southeast Asia?

Well, if that happens, I would say South Africa would be a beneficiary. You'd see more coal coming from South Africa to Southeast Asia.

And probably also the U.S. Gulf.

Yes.

Okay, great. And then I guess I just had another question. Given your close relationship with Jinhui, was there any -- did Jinhui consider shopping around those two new building very large or carrier contracts that they just simply terminated?

I don't know. You'll have to ask them.

But in other words, they didn't offer you to buy them?

No.

Okay, great. Yes, that's all for me. Thanks.

Okay.

We'll go next to Charles Rupinski with Maxim Group.

Good morning, and congratulations on the quarter.

Thank you.

Just one quick question on other bulk trades as it relates to the Panamax market in general, do you have a view on sort of the grain market as it goes forward to spring, and any of the other minor bulks that might be sort of a kicker to the marketplace that people aren't talking about as much as they should?

Grain market, we're seeing movement of soybean going Transatlantic and also into Southeast Asia. The grain market seems to be following the same patterns that it has in previous years with -- we see increase in tonnages going into Southeast Asia as well. And the other minor bulks, nothing much has changed there, to be honest with you. They don't affect the Panamax market very much. It's mainly in the Handymax, the Handysize and to some extent, the Supramax as well, but certainly not the Panamax.

Okay. Well, thank you very much.

Okay.

Having no other questions in queue, this does conclude the Genco Shipping and Trading Limited conference call. We thank you for your participation and please, have a nice day.

Thank you.