Safe Bulkers Inc (SB) 2014 Q4 法說會逐字稿

Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers Conference Call to discuss Fourth Quarter 2014 Financial Results. Today we have with us from Safe Bulkers, Chairman and Chief Executive Officer, Polys Hajioannou; President, Dr. Loukas Barmparis; and Chief Financial Officer, Konstantinos Adamopoulos. At this time, all participants are in a listen-only mode. There will be a presentation followed by question-and-answer session. (Operator Instructions) Following this conference call, if you need any further information on the conference call or on the presentation, please contact Capital Link at 212-661-7566. I must advise you that this conference is being recorded today.

Before we begin, please note that this presentation contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, and Section 21A of the Securities Exchange Act of 1934 as amended, concerning future events, the Company's growth strategy and measures to implement such strategy, including expected vessel acquisitions and entering into further time charters. 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.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. 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, changes in demand for drybulk vessels, competitive factors in the market in which the Company operates, risks associated with operations outside the United States, and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission.

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 in which any statements is based. And now we pass the floor to Dr. Barmparis. Please go ahead sir.

Good morning. I'm Loukas Barmparis, President of Safe Bulkers. Welcome to our conference call and webcast. Let's move on to discuss the financial results for the fourth quarter of 2014, which were announced yesterday after the close of the market in New York.

We're in slide 3, where we present a synopsis of main events in shipping industry. Market has been substantially under-performing the past period both from Capes and Panamaxes. Five years average is at $16,700 per day whereas the market low was $2,600 in Q3 2012, and the market high was at $59,300 recorded in Q2 2010. Presently, market trades at the region of low $4s. Market failed to perform after the second half of Q4 2014 and remains subdued ever since. Low activity due to Chinese New Year is keeping rates low. It's worth noting that all Capes, Cape vessels are fixed on long-term period charters. Same for Panamaxes, market is drifting at very low levels. Five year average is at $12,500. The day and market low was at $3,300 in Q3 2012 and the market high was at $37,100 in Q2 2010. Presently market trades at the region of low $4s. Disruption in trade is mainly in coal due to import limitations from China, which are keeping rates low. Seasonal grain trading ex East Coast South America is expected to provide some more activity and support on charter rates in the near term.

On slide 4, we present a brief outlook of the order book, which has been the main driver of our market. The order book remains large and accounts for about 10%, 8% and 2% of the existing fleet for 2015, 2016 and 2017, respectively. Despite its drop, this still substantial for 2015. order book remains weak but prospects for scrapping are good and potentially may counterbalance the problem. In 2014, about 47.7 million deadweight tonnage were delivered, also about 15.4 million were scrapped, which implies that for each three vessels entering the market, one ship older than 15 years is heading for scrapping. Looking on the table on the right bottom of the slide, we present the ships over 15 years old versus order book per category. Vessels older than 15 years account for more than the order book in Panamax and Handy sizes. New regulations are costly to comply with and is expected to push average age of scrapped vessels substantially lower. Scrapping may partially counterbalance heavy order book . Recently, the youngest cape ever sold for scrapping at the age of 15 years was reported, which was a Cape Flora built in 2000. Furthermore, order book is subject to substantial changes as many owners will try to push back their existing order. Our Company has successfully, proactively postponed six newbuilds on order out of 11 for several months up to one year. As a result, we have managed to smoothen our capital expenditure requirements and to place our vessel deliveries more strategically in potentially much better target markets.

Moving on to slide 5, on the graph we present our fleet (technical difficulty). Currently, we own a fleet of 33 high specification vessels with an average age of 5.8 years. We have pushed back the delivery of six out 11 newbuilds. Thus our delivery program is as follows: three in 2015, four in 2016, three in 2017 and one in 2018. By 2018, one-third of our fleet is expected to be comprised of eco-ship vessels.

Turning to slide 6, we evaluate the performance of our chartering policy against the spot market, which we outperform most of the times as presented on the bottom graph. The open days for our fleet including existing fleet and newbuilds are 72% of anticipated ownership days for the remaining of 2015, 90% in 2016 and 91% in 2017. We have a number of vessels open in next built and we maintain flexibility in this week’s aftermarket.

Going to next slide, number 7, we present on the bottom graph our daily operating and general and administrative expenses. In G&A, we include public company and management fees. In total, we paid daily $5,656 to run our vessels and our company. This figure includes all costs except the depreciation and financial expenses. It is amongst the lowest in the industry and contributes significantly to a relatively low breakeven point, which is very important, especially during weaker markets. On the top graph, we present the average interest rate of 1.698%, including the margin for all bank loan and credit facilities during 2014, maintaining low financing costs and presenting our financial flexibility. We comply with our covenants.

On slide 8, on the bottom graph, we present our net debt per vessel ratio at $8.5 million in Q4 2014 together with a fleet expansion. Our intention is to maintain comfortable leverage on a net debt per vessel basis and to comply at all times with our financial covenants. The average age of our fleet is 5.8 years while currently the value of the five-year old Panamax is about $18.2 million as per the Baltic Exchange Sale & Purchase Assessment Index. On the top graph, we present our liquidity and our build to finance our capital expenditure requirements. As of February 24, 2015, our liquidity was $482.6 million while our capital expenditure requirements were $277.7 million, expanded until 2018 following recapitulation agreements for delayed deliveries of six out of 11 newbuilds. We have not included out contracted revenue till 2018, providing us with further financial flexibility.

Moving on to slide 9, our board has declared a dividend of $0.02 per common share. At the low prevailing capital market conditions during this year, our board considered prudent to adopt a dividend policy to lower levels, which will further strengthen our liquidity and balance sheet. Safe Bulkers has paid over $200 million in consecutive quarterly dividends since the Company's IPO in 2008, in line with our policy to reward our shareholders. Now, our Chief Financial Officer Konstantinos Adamopoulos will present our financial results.

Thank you, Loukas and good morning to all. Slide 11, we present selected financial highlights [of] fourth quarter of 2014 compared with same period of 2013.

Net revenues decreased by 34% to $39.1 million from the $59.2 million, mainly due to a decrease in charter rates. Vessel daily running expenses remained stable to $4,226 compared to $4,224 for the same period in 2013. Interest expense decreased to $1.9 million or 10% in the fourth quarter of 2014 from $2.1 million for the same period of last year, as a result of a decrease in average outstanding amount of loans and credit facilities. Net loss was $100,000 for the [fourth] quarter of 2014 from $31 million net income during the same period in 2013.

Adjusted net income decreased by 85% to $4.7 million from $31.3 million. EBITDA decreased by 69% to $13.4 million from $43 million during the same period in 2013. Adjusted EBITDA decreased by 58% to $18.3 million from $43.3 million during the same period in 2013.

Loss per share and adjusted earnings per share were $0.04 and $0.01 respectively compared to earnings per share and adjusted earnings per share of $0.38, in the [fourth] quarter 2013, calculated on a weighted average number of [83,454,000 and 79,916,000] shares respectively.

Moving on to slide 12, we present definitions and reconciliation of our financial fundamentals for the fourth quarter of 2014 compared to the same period of 2013. In slide 13, we present selected operational highlights for the fourth quarter of 2014 compared to the same period of 2013. Ownership, available and operating days increased by approximately 14%. We owned and operated an average of 32 vessels and achieved the utilization rate of 99%, compared to an average of 28 vessels and the same utilization rate. The average daily time charter rate equivalent per vessel was $11,849 compared to $22,550.

Moving on to slide 14, we present definitions and reconciliation of our operational fundamentals for the fourth quarter and full year of 2014, compared to the same periods of [2013]. As presented in slide 15, our Board of Directors declared for the fourth quarter of 2014 a cash dividend of $0.02 per common share, payable on or about March 17, 2015 to shareholders of record at the close of trading on March 10. We have declared and paid dividends consecutively in all 27 quarters since our Company's IPO seven years ago, and we'll continue to be prudent, taking into account market conditions and prospects going forward.

And finally, our Board of Directors declared a cash dividend of $0.50 per share on our 8.00% Series B Preferred Shares, a cash dividend of $0.50 per share on our 8.00% Series C Preferred Shares and a cash dividend of $0.50 per share on our 8.00% Series D Preferred Shares. Each dividend was paid on January 30 to shareholders of record as of January 23.

Summing up our presentation, as the market outlook is still challenging, we're prepared as a long-term oriented company. We have been in shipping for more than 50 years with an outstanding track record and reputation. We maintained low financing costs as a result of our low spreads and our present leverage in compliance with our financial covenants. We have expanded our capital expenditure program until 2018 through the delay of six out of 11 newbuilds. We remain committed to a prudent dividend policy to reward shareholders and at the same time ensure future expansion and deleveraging. You may find our contact details in Slide 16. Thank you for listening and we are ready to accept questions.

(Operator Instructions). Jon Chappell, Evercore ISI.

Thank you. Good afternoon, guys. Loukas or Konstantinos, the first question I had is about this inventory -- this bunker inventory loss. Never seen that before. Every other company who has already reported this quarter hasn't had that. So, could you just explain a little bit, what that charge is for? And then going forward, if bunker prices rise, would we see a reversal of that charge?

This was related to reduction of price of oil and as you all know, I mean, we have oil intended in our vessels which was both in previous time when it was -- the cost was about [$600]. And right now, I mean, at the end of the year, the cost was about [$320]. So, that's why we had this which is not realized but it represents the decrease of the value of the inventory of fuel oil.

Right, but --

If the price of oil goes up, this will reverse.

Okay. I've just never seen that. Alright, couple other just quick --

We never had a drop in one quarter.

No, it's true. But probably 25 shipping companies have already reported this quarter and none of them had these in the same bunker markets. So, I mean, it's just -- it’s different. Anyway, just a couple more Company-specific questions. First, you gave the CapEx breakdown, appreciate that transparency. What was the payment for the Kypros Bravery in January just so we know the full 2015 annual CapEx?

What was the --

How much did you pay for the Kypros Bravery in January?

I think it was $28 million.

Normally, the last installment is 70% of the contract costs.

Okay. So, 70% of $28 million, that was your CapEx quarter to date?

Yes.

Got it. And then, can you just provide an update on your annual debt amortization, quarterly annual for 2015?

Sorry. What do you mean?

How much debt you're required to repay the series part of your facilities?

I think there is a breakdown.

Can we get another question and give it to you in five minutes?

Yes, sure. I just have one last one. It's regarding the new building delays and the extension. Where there any fees required to be paid for that or any changes in the terms of the payment schedule in order to get those delays?

On some cases, there are some fees but they are on the low side, I would say. Because our ships have to be maintained alongside for a number of months and they need some maintenance costs, monthly maintenance costs. But this is way below what are the running costs of the ships. On some cases, something like, could be $500 to $1,000 a day.

Okay. And those cash fees that were paid, will you renegotiate it or are those capitalized over the period until delivery?

Those fees will be paid when the delivery takes place.

Okay.

A couple of answers before. The current portion of the long-term debt is about $17 million, which will be payable during December -- during this year, 2015. And the second question -- and the previous question that you asked, I mean, there is a paragraph in the capital expenditure requirements and liquidity, which states the status as of February 24, [2015] and describes the number of vessels and the liquidity at that point. So we have given the numbers and also the annual figures for payments of CapEx as well as the liquidity as of February 24, so it will be quite helpful. This CapEx while in previous quarters was more heavy on 2015 and 2016, now, it has been spread equally over 2015, 2016 and 2017, and small amount in 2018 for one delivery. And, if you see (technical difficulty) presentation, there is a bar that is on page 8, is $95 million for this year, $91 million for next year and $69 million for 2017. So it has been spread out and $20 million in 2018. So it has been spread out in three years and a small portion in 2018.

In addition, you want to compare to find the benefit, you can see the first two paragraphs where we describe as of December 31, where we describe the previous situation.

Yes, understood. I appreciate that transparency.

Also the graph on page 8 refers to the as of year-end schedule.

Chris Wetherbee, Citigroup.

Thanks. Good afternoon, guys. Thinking a little bit longer-term about the chartering strategy, I mean, certainly, the market has forced your hand into a scenario being short-term and focused with most of your ships open as you go through 2015 and 2016. When you think about sort of the longer-term and a better rate environment, whenever that maybe, should we still be thinking about Safe Bulkers as more of a committed sort of term charter vehicle? I just wanted to get a rough sense of kind of maybe how you guys think about, if your thinking has changed at all through the cycle about how you want to employ your vessels?

Look, we cannot have all the vessels in the spot market, which is very low at the moment. We need to have some on the short period to get the premium. And, but we don't intend to employ on more than short period because premium on one-year charter over the short period is minimal. So, we may roughly say spot market right now is $5,000 a day, short period is $7,500 and one year period is $8,000. So, between these numbers you have to choose between the $5,000 and $7,500. The $5,000, because if the market changes you will immediately enjoy the benefit, and the $7,500, because you cannot have everything at $5,000 in case market stay low for six months. So, but it's no absolutely no point to fix one year or two years at this present point. When the market improves, whenever that happens, latter in the year or whenever the market improves, one year rates go above $11,000, $12,000 a day, then you start considering the one year or the longer period like we did in the past. So, for the time being for us, it will be a mixture of spot and short period fixes. Short period means up to six months.

Okay. And so, it's really just looking at this spread to think about it and then like you said, longer term, we go back to what we thought previously about Safe Bulkers' employment strategy being sort of maybe largely chartered out with some sort of more modest bad exposure?

Yes, when the market improves, of course, we will consider the longer-term employments as well.

Okay, that makes sense. And when you think about the delay in the newbuilds, was cancelling an option? Did you think about sort of the potential opportunity to maybe sort of consolidate maybe some of the orders from the bigger numbers into something smaller than that? I guess, I just wanted to get a sense, at some point, does that enter your thought process in terms of maybe mitigating some of your near-term exposure to ships or just that sort of not economic to do in this environment?

Look, what we're doing is being -- our duty is to act in a responsible manner, and the easiest part to do and the faster one is to delay. By delaying, of course, you have the time to discuss other things with the yards and you see that other people now starting considering similar options. So it doesn't mean the fact that you delay that you cannot cancel in the next six months should a reasonable bill offered by the yards because you know, yards also, they have other designs, they have tanker designs. The market there is very good at the moment. They can see profit for early barrels coming from the tanker business. So maybe the yards will be more flexible in the next few months to discuss these things, but what we have done, we have done what is prudent and what is responsible approach to delay six vessels, some of them up to a year and help our market and I think all owners should consider similar things. It's no point to take delivery when you ship -- when the market is $5,000, $6,000, $7000 a day. You want to take delivery of a ship, a new ship in a market that you can make money.

Certainly, I would completely agree with those comments. And then my last question is just as you think about the dividend and the sustainability of that through what has been a very extended trough of the cycle, you guys have historically been extraordinarily committed to the dividend obviously. There's a significant amount of inside ownership. Is it something though you might have to consider potentially reducing further at some point if this cycle lasts and we don't see better rates until 2016 or 12 months, 18 months from now, is it something that you might reconsider?

Yes. Look, the issue would be, we're very pro-dividend company, and even at this extremely low market, we try to maintain a -- I mean, our dividend policy says that we distribute part of free cash flows and right now, the cash flows are reducing. However, I mean, this was one effort and strong effort to maintain the dividend and we hope that during this year, the market will react and the environment will become better and there will be no further need for adjustments. Our policy remains that we want to pay dividends and reward our shareholders.

That makes sense. Thanks very much for the time, guys. I appreciate it.

Fotis Giannakoulis, Morgan Stanley.

Yes. Hello, guys. I want to ask you about the raise of (inaudible). Today, you mentioned that in your presentation that they are in low $4,000. This is obviously the Baltic Index, but we understand that given the slow steaming and the ability to triangulate owners, they have opportunity to get a little bit higher. What would be the rate that you can actually achieve? And also given the fact that you have Post-Panamaxes and Kamsarmax vessels, how do they get compensated with vessels vis-a-vis what we see on the index?

Yes, look, I mean, whether you triangulate or whatever in a bad market, bad market is a bad market. So you make very, very little gain out of doing combination of cargos and things like that. The decision at the moment is whether you stay spot and you get, of course, you don't get $4,000, that is Baltic Dry Index. Panamax Index, you get according to the ship's particulars, $5,000, $5,500 up to $6,000. We've been fixing on some case in the spot market. So we are doing a little bit of improvement on the spot rates by doing some fix for three to five months, four to six months in the region between $7,500 and $8,000 a day. It's no need to go for any longer because the rate stays the same. So why to commit at a loss-making rate for more than six months.

And the premium regarding Kamsarmaxes and Post-Panamaxes, there is a premium of 6% -- 5%, 6%, 7% for Kamsarmaxes and Post-Panamaxes are more or less getting the same like Kamsarmaxes. We said before in the very low market, Post Panamaxes, they don't get any benefit because especially one Capesize market is down or they don't get any split cargos from Capes and any premium from that side. So there is a premium of Kamsarmaxes and Post-Panamaxes are about the same like Kamsarmaxes.

Thank you, Polys. Obviously, your results, given the current market have been quite good. They have been positive and I understand that this is to a large degree the result of low expenses and also the fact that four of the vessels are chartered at a very high level. If my calculation is correct, these vessels, they earn something like $26,000, which corresponds to more than $30 million incremental revenue from where the market is right now. Can you tell us who are the charters that you have this long-term contracts with? Have they come to you and discuss potentially any reduction on this charters? And how stable do you see this four long-term contracts that you have at this high levels?

These charters are quite safe, are charters with very big conglomerates, very big companies who secured contracts at the very high market as well and that's why they fix vessel for 10 years or 20 years and they are people who never asked for reduction and simply they have -- they will not loan over their company maybe because they're companies which are making huge profits in their respective sectors. So, these are contracts that they were done in the good market, but also have been secured. They are not ships playing the spot market. They are secured against long-term contracts that they have booked for the ships when those ships were ordered. So, I mean, we're very confident that everything will be very smooth and these people will perform in the long run.

And regarding your operating expenses, your operating expenses were already quite low, but we saw that this quarter they dropped even further. I see here that the vessels were operated at $4,200 per day, which is quite low versus everybody else. Is this a one-time off? How this reduction came versus the previous quarter? And how shall we see the daily vessel expenses in the quarters ahead?

Look, we are doing our utmost to keep running costs very low especially in a bad market and the Company has very well alerted all departments to try and do the utmost to reduce even by a little bit every quarter the running expenses. I'm confident that we can continue delivering low running costs because we are making certain rearrangements with our suppliers and making certain, whether that is suppliers of lubricants or supplier of other things and also items like insurance and we're shifting between our underwriters according to who is giving better terms from people that we know over the years, and we create competition. We create competition also, in the P&I Clubs, we're reducing -- we reduced our P&I Clubs from three P&I Clubs for the fleet to only two in order to have more power and more leverage with them over the years and getting better numbers. So, we will do everything that is possible because every $50 or every $100 you can save on the running cost, as the fleet grows, it makes a huge difference at the end of the year. So, this is a company that will constantly deliver. If not the best running cost in the shipping market, we will always be in the Top 3, let's put it that way, because I don't know if anybody else can beat us but we will confidently be in the Top 3.

On the other hand, variation, you may see from a quarter-to-quarter could also be influenced by the number of drydockings. And going forward, I think that we have scheduled some drydocking during this year. So, you may see this number picking up a little bit. But I mean, this will also, I mean, by the doing the drydocking let's say either this quarter or the next one, you may see that next quarter you have a lower number. So, it's an average number and yes, we expect that during this year, during 2015, that we'll have some more drydockings.

This is year of more drydockings because a low freight market helps you to put ships on the drydock easier and little bit ahead of schedule. So, expect little bit more on the drydockings for this year.

Thank you. I wanted to ask about the market. The market is as low as it can be at this point. How do you view it developing the months ahead? Obviously, we have the grain season coming, but still there are questions, how much of a boost that can be? And have you -- I assume you have done your stress test in the Company and I want to ask you, first of all, what is you view about the recovery and the timing of the recovery? And, in your stress test, at what point -- how long do you think that the market can remain the way it is and how do you view [that these dampen] the potential of coming to scale down further on the dividend or even if you see any possibility of the need of raising equity?

Look, the liquidity of the Company is very strong. Of course, we don't know if the low freight market stays another three months, six months, nine months, twelve months or eighteen months, and there is a point that it will turn. What we have to do is to ask to act responsibly. I mean, we all have to delay the order book and spread it over the next four years instead of the next two years. I know it's difficult for ships you have in the first half of 2015 to do much about them but for later ships, it's a matter of good relations with the yards and have a honest talk without trying to achieve any better potential cost from the shipyards, being fair with them and the contracts you have signed, but to ask for a little bit more of breathing space, to drop or to push the CapEx down the road. So, all of us, we must be responsible. We don't need more orders. We have the existing orders, we have to push them over the next four years instead of the next two years. This alone will allow breathing space for the market. And the market could always surprise us faster than we think.

The other thing that people should keep in mind is that if we have another fund coming into the market, which I don't think they are coming at the moment, but if there is another fund coming in the market, they should not be, let's say, get induced by the low shipbuilding prices that yards may soon start offering. They should not hear what the manager may say to them and go and order 80 ships in one go. They should go and buy very cheap, (inaudible) that is in the market already and they can make very good money from those acquisitions instead of doing stupid things. Again, another huge order of that degree of 70 ships, 80 ships will kill the market for the next I don't know how many years. So, we all must act responsibly if we want to see a return to profitability like the tanker owners. For four years, they have not placed any orders and now they enjoy very good returns. The returns they don't enjoy because OPEC countries push up production of a million barrels a day. They enjoy because this extra demand, this extra cargo came to the market at a time when the order book was very, very low. That's why they enjoy the rates we have seen. And this can happen in the next 12 months, 18 months, 24 months in the drybulk market should the participants be responsible.

(Operator Instructions) Shawn Collins, Merrill Lynch.

Great. Thank you. Hi, Loukas and Konstantinos. Good morning and good afternoon.

Yes, good morning to you.

Just looking at page 8 of your slide deck, focusing on liquidity and leverage, when you think about comfortable leverage, do your aggregate bank facilities, do they have a total debt to EBITDA financial covenant? And if so, what would that covenant be?

We have several covenants on the Company level. We have debt to -- like liabilities to assets covenant of maximum 85%. We don't have it -- we used to have a debt to EBITDA covenant, but we have changed that, and instead we have an EBITDA to interest covenant.

Which is a much more comfortable and much more easy to be within this covenant.

Okay. Understand. That makes a lot of sense.

This was changed last year by (multiple speakers).

We changed last year. [I did] to act proactively and change it on time.

Very good timing, very good move, great. And then if -- this is theoretical and may be hard to answer, but if you look out a couple of years and the market normalizes and your new builds come on line, where do you think you are comfortable from a total debt to EBITDA level?

We don't discussing about debt to EBITDA, because this covenant is not further in place. So why should we try to make an assessment to some that does not exist.

Yes. We changed this covenant to EBITDA over interest and it's at a very comfortable level, which is 2 times the EBITDA to 2 times of the interest. And interest in our case last year was how much? Was $15 million. So the two times is $30 million, which is very comfortable for our Company.

Very comfortable. Okay, I understand that. That make sense. Okay, switching to -- just thinking about the US, the United States and thinking about the West Coast port delays and the congesting there, I don't imagine that the West Coast port delays and congestions would have any impact on your drybulk operations. Just wanted to ask if you have seen any unintended consequences from this situation?

Yes, this is on the container shipping and in our case, congestion in drybulk will be always be helpful. We start seeing some congestion at the moment in some ports in Australia and some ports in East Coast, South America, which is always good because to be honest with you, the last year, I don't remember to have seen any congestion anywhere in the world. I mean, ships were going in and out very fast because there was a lot of hit on the demand side last year. There was a lot of problems on the demand side and many external factors affecting the demand. And this was clearly demonstrating by how fast ships were going in and out of ports, which is, it's against the market of course. Right now, I start seeing some congestion, not huge things but something like seven or 10 days delays in Australian ports and seven or 10 days delays in South America grain loading ports and a week delay in some Indian ports too. All these things are slowly coming back in the market and I think will help change this miserable rates we have in the first quarter. You have to remember, back in November, when there was restocking and we have spot market in Panamaxes of $14,000 a day. So, I mean, things can change very fast in our market.

That makes sense. That's helpful, great. So, thank you and just my last question. On page 4, focusing on the order book, which -- it's remains a problem which is accurate. A very positive move on your part to delay six of the newbuilds. I just wanted to ask, are you hearing of any other market participants possibly that are in the works to delay ship deliveries or in the works to potentially convert from drybulk ships to possibly liquid ships? Anything that you're hearing where you're far closer to the source than we might be?

Yes. First of all, the order book you see there in 2015, as the various brokers quote it and usually the last -- historically, the last three years, four years, we've seen that only 70% of this order book actually delivers in any year. So, it's a bit less than what we see here. It's very difficult for companies to delay or to change the schedule for first half of this year. It's very difficult, but I think companies, they are trying for ships that have come at the end of the year and definitely ships coming in 2016. They are trying to push them back and try to rearrange with the shipyard. We're hearing some companies making conversion to other type of vessel like containers or tankers, which enjoy better market at the moment and this also will help a lot, if there are more conversions. But the most important, whatever we do with the current order book, is not to inflate it and I'm saying this thing because I know shipyards, they will try and offer very attractive deals and some people may be tempted and this will be a big mistake.

So the most important thing is not to add and irrespective, each one of us makes rearrangement or some people will succeed, some people will not succeed because it depends also how close relationship you have and how many years you've been a client of a particular shipyard. But the most important is not to get attracted to any low prices that yards maybe offering, especially in the second quarter of this year, before the middle of this year. So, people should see that second hand prices have dropped substantially. They're at lower levels right now than they were in the end of 2012. So, it's a new 27 year low, the current prices. Everybody can make his investments on very modern second hand tonnage. So you make, you can make money out of that without overstressing the shipping market. So this will be the most important and of course, as many owners manage to rearrange their order book and push it further out, the better the market and faster the market will be.

Another important thing of course is, if you see on page 4, is you see the current fleet that is over 15 years old and the order book is almost similar. So, if we see scrapping of ships that are 17 years, 18 years old, there is absolutely no reason why owners to keep 17 year, 18 year old ship and wait to scrap it after two years when it becomes 20 year old. They should move ahead now, but scrap prices are still [$380 or $370 or $360] and not leave it after two years when they will be most likely [$200]. So, I believe that -- we saw recently a Capesize build in 2000 sold for scrap and this is a 15-year old Capesize. In some cases, it makes sense even to consider that but age, you have to spend a lot of money on the special survey, but most on this -- on the fourth intermediate survey, which is when the ship is 17.5 years, 18 years old, owner should consider scrapping because the market is not good and you have to pay good money away on the intermediate survey and also on the special, that is after 2016 on the special survey, you have to meet ballast water treatment installation which is costing anything up to $1 million. So if you add all these things up, it makes absolutely no economic sense to keep ships after 18 years old in this market, of course.

Okay, that's great. That's very insightful.

Thank you.

Okay. Thank you, Loukas. Thank you, Konstantinos. I appreciate the time and insight.

Thank you.

(Operator Instructions). There are no further questions at this time gentlemen, please continue.

So, thank you very much for being with us today and we hope that we'll be with you in our next quarter, three months from now. Thank you.

Thank you.

Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect.