Seanergy Maritime Holdings Corp (SHIP) 2021 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Seanergy Maritime Holdings Corp. second-quarter 2021 financial results webcast.

This press release contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, concerning future events. Words such as: may, should, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company.

Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the company's operating or financial results; the company's liquidity, including its ability to service its indebtedness; competitive factors in the market in which the company operates; shipping industry trends, including charter rates, vessel values, and factors affecting vessel supply and demand; future, pending, or recent acquisitions and dispositions; business strategy; areas of possible expansion or contraction and expected capital spending or operating expenses; risks associated with operations outside the United States; risks associated with the length and severity of the ongoing novel coronavirus, COVID-19 outbreak, including its effects on demand for dry bulk products and the transportation thereof; and other factors listed from time to time in the company's filings with the SEC, including its most recent annual report on Form 20-F. The company's filings can be obtained free of charge on the SEC's website at www.sec.gov.

Except to the extent required by law, the company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto, or any change in events, conditions or circumstances on which any statement is based.

(Operator Instructions) I must advise you, this conference is being recorded today.

I would now like to hand the call over to your first speaker today, Mr. Stamatis Tsantanis, CEO. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you for joining our call. Today, we will discuss our results for the second quarter and first six months of 2021, and we will provide you with a general update of the major corporate events that have taken place. I'm very excited to see that our strategic plan has started to pay off, and Seanergy is expected to prosper for years to come.

Our substantial freight fleet growth over the last 12 months has been well timed and has allowed Seanergy to maximize its participation in the strong market rise. I'm also happy to see that the freight rates have recovered close to historical averages after a decade of underperformance. I believe that Seanergy is well placed to reward its shareholders in this environment. In addition, our financial transactions over the past 12 months have solidified our capital structure, and we expect to take full advantage of the strongest market in a decade.

I think the following highlights are the most important. The company's fleet has reached 16 Cape vessels or 2.8 million deadweight tons. We have grown our fleet by more than 50% since the end of Q3 2020, and total vessels acquired are built at the highest quality shipyards in Japan, while two of them come with exhaust gas scrubbers installed.

Since our last update in May, we have purchased and already taken delivery of one more Japanese 2009-built Capesize vessel, and we have agreed to dispose of the Leadership, a 2001-built vessel that was acquired in 2015. As of the end of the second quarter, the market value of our fleet was approximately $448 million against debt outstanding of about $213 million.

A total investment of $160 million has been made in 2021 for these purchases, while total debt on the balance sheet has only risen by about $34.6 million. This implies a loan to value of approximately 22% on the new vessels. The weighted average interest rate of the new debt is about 3.35%, which will also partially replace some legacy, more expensive debt.

Regarding our commercial developments, further to the four new period employments announced in our previous earnings release, we have concluded one more fixed rate time charter at $31,750 per day for 12 to 16 months. This is the second vessel in our fleet to be employed at more than $31,000 a day for at least a one-year period. Currently, 12 vessels are employed on index-linked time charters, two are on fixed time charter rates, and two are employed on voyage basis. Therefore, close to 88% of our fleet is in period contracts.

Our fleet achieved a Q2 2021 daily time charter equivalent rate of $20,100, increased by 270% from the first quarter of 2020. Our Q2 fleet TCE is obviously lower than the index due to certain floating to fixed conversions we did in the beginning of the year for hedging purposes. However, in Q3 so far, about 94% of our fleet days are fixed at almost $29,000 a day, which will ensure a significant improvement in financial performance over the first half of 2021.

Adjusted EBITDA was equal to $11.3 million, compared to losses of $1.85 million in the same quarter of last year. Net income was equal to $2 million in the quarter and $640,000 in the six-month period. Cash and cash equivalents as of June 30, 2021, stood at $56.4 million, compared to $23.7 million as of December 31, 2020.

Debt outstanding at the end of the quarter was approximately $204 million. Shareholders' equity at the end of the second quarter of 2021 was $199.4 million, compared to $95.7 million at the end of 2020, which means an increase of about 110%.

Let's move on to discuss the most important developments since our last earnings call.

Overall, during the year, we have acquired six Capesize vessels, while we also decided to sell the oldest vessel in our fleet. On July 27, 2021, we took delivery of our newest addition to the fleet, the Friendship. This is a 2009-built Capesize vessel that we agreed to acquire in July. The vessel has been fixed on an index-linked time charter with NYK Line, which is one of the leading Japanese ship owners and operators for a period of 17 to 24 months. Employment will commence promptly the daily rate at a premium over the BCI.

During July, we also agreed to sell the Leadership to Asian buyers. The Leadership is a 20-year-old Capesize vessel and was the first ship acquired by Seanergy in March 2015. We are happy to take this opportunity to replace our oldest vessel during favorable market conditions. The delivery of the Leadership to its new owners is expected in early September.

As a brief recap of the information provided in the last earnings release, we took delivery of four new vessels in Q2 2021, two of which were delivered in May, and two in June. All vessels have entered their new time charters, two of which are fixed rates exceeding $31,000 as mentioned earlier. As of today, we're pending delivery of the Worldship, a 2012-built Capesize that we expect to take delivery by the end of August.

As a reminder, the special survey and ballast water treatment system installation for all new vessels was completed by their previous owners, and therefore, we do not anticipate incurring significant capital expenditure for at least the next two years. Moreover, two vessels come fitted with exhaust gas scrubber system.

Vessel values have been on a clear upward trajectory in the past months. And given the spot and time charter market conditions, I believe that further improvements are well within reach, given where asset prices have traded historically.

In Q2, we have concluded financing transactions of $117.3 million, including a $30.9 million sale and leaseback with a prominent Asian financial institution, as well as a new loan commitment from an existing bank. Stavros will go into more detail on this, but the average interest rates will be approximately 3.35% margin over LIBOR. This is a very significant improvement when compared to the facilities that were prepaid within 2021.

Seanergy is, today, in an optimal financial position to capitalize on improving market conditions, with the goal of creating substantial value for investors in the next few years. And with this message, I would like now to pass the call to our CFO, Stavros, who is going to discuss our financial results. I will come back to the call for the market update shortly.

Stavros, please go ahead.

Thank you, Stamatis. Welcome, everyone, to our second earnings call for 2021. Let's start by reviewing the main highlights of our financial statements for the second quarter and six-month period that ended on June 30, 2021.

Our financial performance benefited from the strong dry bulk market as gross revenue was equal to $28.9 million, an increase of 209% from the second quarter of 2020.

Our daily Time Charter Equivalent for the quarter was approximately $20,100, a 270% increase, compared to $5,424 for the second quarter of 2020. Our TCE performance was affected by the conversion of index-linked charters to fixed during the fourth quarter of 2020, which was done as part of our freight hedging strategy.

For the third quarter, the majority of our fleet's available days have been fixed at a rate that is roughly in line with the quarter-to-date average of the BCI, including eight conversions of index-linked rates to fixed. Based on our commercial performance so far, we are on track to see stronger financial results in the second -- the next quarter.

At the moment, 13 vessels are employed under index-linked charters that allow the company to benefit from the positive freight market trends, and eight of these charters have conversion options, allowing us to convert to flat rate based on the prevailing FFA curve.

For the fourth quarter, we have fixed only two index-linked ships at around $32,500, but we continue to monitor the movements of the FFA and may proceed with more similar fixtures.

Adjusted EBITDA in the second quarter of 2021 was $11.3 million, up from negative adjusted EBITDA of $1.8 million in the same quarter of 2020, while Seanergy also generated a net income of $2 million compared to a net loss of $11.3 million in the same quarter last year, and a net loss of $1.3 million in the first quarter of 2021.

For the six-month period that ended June 30, 2021, Seanergy recorded a daily Time Charter Equivalent of $18,327 compared to $6,985 and $8,368 in the corresponding periods of 2020 and 2019. Gross revenue was equal to $50 million, an increase of 116% from last year's corresponding interim period.

Adjusted EBITDA for the first six months of 2021 was equal to $19.2 million, a big improvement from a negative adjusted EBITDA of $0.5 million in 2020. Lastly, we recorded net income of $0.6 million compared to a net loss of $19.7 million in the first six months of 2020.

As a reminder, from our first-quarter earnings release, our daily breakeven for the rest of 2021 is around [13,000], excluding our anticipated vessel CapEx, which are fully funded by cash reserves. So we expect a high operating levels to result in continued cash flow improvements going forward.

Moving on from our operating results, I'm very glad to see that the financial restructuring that was completed in December last year, in combination with the aggressive prepayment of our legacy loans in the first quarter of 2021, are now bearing fruit in the form of significantly lower interest and finance expenses.

Second-quarter 2021 interest and finance expenses were equal to $4.3 million compared to $5.6 million in the same period of 2020. When factoring in the non-cash items, the company incurred approximately $2.9 million of cash interest and finance costs, a significant decrease from $4 million in the second quarter of 2020.

For the six-month period that ended June 30, 2021, interest and finance expense was equal to $8.3 million compared to $11.2 million in 2020. Excluding non-cash items, the cash interest expense for the interim period was equal to $5.2 million, when compared to $8.2 million in the same period last year.

As a reminder, the large non-cash expenses are related mainly to the amortization feature of the convertible notes and to the amortization of deferred finance charges. The expensive legacy debt that was repaid and refinanced over the past year was generally placed with competitively priced financing arrangements that reflect the improved financial footing of our company.

The weighted average interest rate on the facilities that were fully prepaid was 8.4% as compared to 3.35% for the new $104.3 million incoming financings. Given the market environment in dry bulk shipping and the track record we have established with our lenders, we expect that terms of our financings will improve further going forward.

For the time being, as regards to our current results, it is encouraging to see the significant reduction in interest expenses with little variation in outstanding debt period over period, as our debt balance as of the end of the second quarter of 2021 was about $204 million, compared to $213 million in the end of the second quarter of 2020.

When compared to the end of 2020, total debt outstanding has increased by approximately $35 million against an expected increase in the book value of our fleet of around $160 million. This implies that the effective loan to value on new vessel acquisitions is, in any case, lower than 30%.

I would like to stress that our ability to lower both the average rates and leverage ratio of our fleet during this positive market inflection is an important positive development for the future. Moreover, we ended the second quarter with a cash balance of $56.4 million, up from $23.7 million at the end of 2020.

Total shareholders' equity has increased to $199.4 million as of June 30, 2021, from $95.7 million at the end of 2020. As was also the case in our previous earnings call, the rapid increase in vessel values since the start of the year has caused the market values of our vessels as of the end of the second quarter to be higher than the book value on the balance sheet. The market value adjusted equity is, therefore, higher than what is reflected on our balance sheet.

Indicatively, we note that based on third-party broker valuations as of the end of June, the market value of the six vessels that we have agreed to acquire this year has already appreciated by approximately 15% -- excuse me, $15 million versus the acquisition price. Based on the same market values for our fleet as per June 30, 2021, our corporate leverage is estimated at approximately 50%.

I will now move on to discuss the financing transactions that have taken place since our last update. During the quarter, the company has secured approximately $104.3 million in vessel financings, while it has also received a commitment letter for an additional secured loan of about $13 million.

As a brief recap of what was mentioned previously in our first quarter results between April and May 2021, we entered into a $37.45 million facility with Alpha Bank for the financing of the Leadership, the Squireship and the Lordship; a $20.5 million sale and leaseback with Cargill for the Flagship; and a $15.5 million loan facility with the Aegean Baltic Bank for the Tradership and the Goodship. The term of these financings range between four and five years, and the weighted average interest rate is approximately 3.3%.

Further to these three financings, we concluded successfully a $30.9 million sale and leaseback agreement with China Merchants Bank financial leasing, one of the most prominent Chinese lessors in order to finance two of our new acquisitions, the Hellasship and the Patriotship. The applicable interest rate is LIBOR plus a margin of 3.5%. This financing has an important strategic angle for Seanergy, since we expand our exposure to the Chinese financing market, which has proven to be a reliable and efficient source of capital for shipping.

Lastly, most recently in July, we agreed terms with Alpha Bank for a secured loan facility of up to $13 million to finance our latest acquisition, the 2009-built Capesize that was named Friendship. The facility will be for a term of four years with bear interest at a rate of LIBOR plus 3.25%, and will be structured as an additional tranche in our existing loan with Alpha Bank, one of our key lenders that has supported our company through thick and thin.

Following a proactive approach to managing the company's overall leverage, we are glad to be able to negotiate competitive terms with our lenders. In this respect, the financings concluded in 2021 have daily debt service rates ranging from approximately $3,000 to about $6,500 per vessel per day. As a result, the overall fleet breakeven, when including anticipated daily operating expenses, is expected to remain low, especially when compared to current charter market and FFA levels.

This is a very important improvement from previous years, and I would probably highlight it as the main takeaway from my remarks today. The actions taken since April 2020 positioned Seanergy favorably for the significant improvement in the dry bulk market that started in the second half of last year and has accelerated within 2021.

At this point, I would like to conclude by acknowledging the fact that purely from a financial perspective, we are undergoing a transitional period with radical changes. The changes in capital structure have been quite extensive by any standard, and it will take some time before we see the full benefit of lower interest rate margins and lower breakeven rates reflecting our financial results. As regards to fleet, we're yet to take delivery of one more vessel, while the delivery of the recently sold Leadership to its new owners has still not been concluded.

Needless to mention that operating and general and administrative expenses continue to be somewhat inflated, as we manage the implications of the pandemic in the worldwide operations of our fleet, let alone ranging and successfully completing the deliveries of newly acquired vessels. The current financial statements, therefore, do not reflect the full revenue-generating capacity of our fleet, and I expect that the second half of the year will be more representative.

This concludes my review. I will now turn the call back to Stamatis who will discuss the market and industry fundamentals. Stamatis?

Thank you, Stavros. Once again, we're very excited to be in the strongest market in a decade. After years of marketing balances, we seem to have entered a long-term period of strong demand and slow fleet growth.

In 2021 and 2022, dry bulk demand is expected to rise by approximately 4% and 2%, respectively, on a ton-mile basis, while net fleet growth is projected to be around 3.3% and 1.2%, respectively, in 2021 and 2022. These figures are very constructive for the dry bulk market, especially when viewed in the context of strong fiscal spending and infrastructure construction in many parts of the world.

During the second quarter and first half of 2021, the Baltic Exchange Index averaged about $31,000 and $24,000, respectively. These healthy levels have been realized, even as the market has not yet recovered completely from the operational inefficiencies in Brazilian iron ore mines that started in early 2019.

Capesize day rates are currently at around $30,000 a day. This performance is truly exceptional considering the weak seasonality of the first half. All major miners are estimating more than 90 million tons of additional iron ore production in the second half of 2021, which implies much stronger seaborne iron ore volumes in the next months.

Global demand for steel and iron ore remains very strong, as China continues record volumes of steel making with a 12% year-on-year rise. In addition, high-quality iron ore exports from Brazil have lower emissions and are benefiting from China's environmental pollution reduction targets.

Vale recently stated its target of achieving 400 million tons of iron ore production by the end of 2022. And given the long-distance voyage out of Brazil, I expect this to generate significant incremental Capesize demand.

Coal seaborne volumes are also staging a very strong recovery from the extreme COVID-induced weakness of 2020, while the tensions between China and Australia have helped coal-ton miles to increase even more. Coal-generated electricity in China has outpaced the growth in domestic coal mining by a wide margin in 2021, which we expect to be positive for coal import demand.

As mentioned before, we have already fixed two of our vessels on a one-year time charters above $31,000, and we see additional demand for period charters at a lucrative fixed rates. In addition, Capesize asset values have risen by more than 45% since the end of 2020.

Looking at business supply over the next two years, we're very optimistic as the upcoming environmental regulations will have a positive effect in the market. The immediate reduction of emissions that will be enforced in 2023, which is unavoidable, will lead to a speed reduction of 10% to 15% for the global fleet and create a strong vessel supply squeeze. This event will likely boost the market even more. The effect will be even greater when adjusted for the larger ships, like Capes and Valemax ships.

In addition, the uncertainties surrounding future prevailing marine technologies compatible with the 2030 global shipping emissions and the extensive orders for vessels like container ships have led to the lowest newbuilding order book in decades.

Going back to my initial point, we have entered the period of strong demand and slow fleet growth that we expect will last for the next few years. Over the last years, we have carefully positioned Seanergy to take advantage of this super cycle. Our great fleet with full market exposure is expected to benefit substantially from this market. We are fully committed to creating shareholder value.

And with that, I would like to turn the call over to the operator and answer any questions you may have. Operator, please take the call.

(Operator Instructions) Tate Sullivan, Maxim Group.

Thank you, good day, everyone.

Hi, Tate.

On your TCE guidance commentary that mostly of around $29,000 for 3Q, will most of the contracts that you converted to fixed reset by 4Q?

Well, yes, they do reset. We have a lot of fixtures, which is the weighted average of the spot rates, what we expect to be the end of the quarter rate that we will receive from the index-linked ones, as well as the fixed rates and the ones that we have converted from floating to fixed. So this is pretty much a figure that we can be quite certain that we can meet for Q3.

And then -- but then going into Q4 and given -- if fixed rates stay around $30,000, would you employ that same type of strategy? I think you mentioned earlier, maybe continuing to consider fixed as well -- a floating to fixed conversion.

Yes. Yes. So we have already fixed two ships from floating to fixed in Q4 at rates that are exceeding the $30,000 that we have set for Q3. And we're optimistic that we will try and beat -- Q4 is going to beat Q3, and Q3 will surely beat Q2 by a lot. So we're very optimistic with the trend of the rates going forward.

Great. And can you comment on the -- you have the two contracts with year terms, I believe, maybe the options go a little longer, what is the longest term contract that you would consider in this type of market? And were term contracts longer than a year available historically, going back 15 to 20 years? Or is a year about as long as you'd go?

Well, of course. First of all, in a normalized healthy market, you see a lot of contract availability for two, three, five years. And it's kind of obvious that the market is now recovering from multi-year load. So the charters are only now starting to provide fixed rates for longer periods of time. So it's a natural course of events. We expect that to change in the near future, and we hope and we expect that you will see a longer-period fixed rate contracts being offered and taken by a number of companies.

So we're optimistic. We're getting there. We're still in a volatile spot market with strengthening on a day-by-day basis. And we are pretty sure that we will see in the next three to six months longer period of fixed contracts being offered.

Great. Well, thank you and great detail on the growth in your fleet, and the current -- and the 3Q market. Thank you.

Thank you very much, Tate. Thank you.

Peder Jarlsby, Fearnley Securities.

Hi, guys. Just a couple of quick ones from me. So on the fleet side, you've obviously been quite aggressive in recent months. And you're now in a position where you could basically lock in a lot of free cash flow through the triggering potential further options on the floating time charters.

But with that backdrop, how are you thinking on your capital allocation priorities going forward, both in terms of refinancing the debt, returning value to shareholders and assets and further acquisitions? If you could just elaborate a bit on that, that would be great.

Well, this is a great question. And we have been discussing that internally a lot. As you know, since the beginning of the year, we have already grown the fleet by 60%, so I wouldn't anticipate another same rate of fleet increase in the near future. I think that we will come to a point where we will start considering more aggressively to reward our shareholders in the near future.

Again, the management and Board are in constant discussions about this matter. And come September, I think that we will be in a better position to assess where we see the short-, medium- and longer-term effect of the cash flow.

Our debt position is now quite comfortable, I must say. I mean we're in the low-40% net loan to value. So I wouldn't consider -- except for some fine tunings here and there, I wouldn't expect any radical debt reduction. We're at very comfortable levels. But shareholder rewards are top of our priorities, and we will make sure to reward them as much as we can in the near future.

All right. Thank you. And then just a quick one, if you have the answer that would be great. But could you just give us a quick status and the outstanding amount on the Jelco notes and the convertibles for quarter end?

Yes, of course, our CFO will give you that numbers right now.

Good morning, also, from my side. I mean, there has been no change in the outstanding convertibles. They continue to be [$38.7 million]. And there is also [1.8 million] of loans outstanding. So the loans have been reduced from a [26 million] balance at the beginning of 2020 to only [1.8 million] now.

Okay, that's perfect. Thank you very much, guys.

Thank you. Very welcome.

Poe Fratt, NOBLE Capital Markets.

Good morning. Stamatis and Stavros, can you -- a lot of good questions before, so answered some of the questions I had. But one thing I noticed in the second quarter is that OpEx ticked up on a per day basis. And I'm hoping that it's associated with the acquisitions that you closed in the quarter. But can you just talk about OpEx in the third quarter and the rest of the year?

Yeah. Poe, first of all, I mean, if you look at -- I'd say, we have discussed a number of times that the picture of the OpEx, if you look at the quarter, so six-month period is a bit distorted. Nevertheless, the average OpEx for the first six months of the year at $5,700 is in line with our average OpEx for 2020. So I mean, when you compare with 2020, there is not much difference, so I think 1.5% increase.

Now, of course, the fact that we have taken delivery within the first six months of four ships was a number of the delivery expenses. And I mean, flying cruise all over the world in a network -- I mean, to optimize the delivery ports of those ships has been an expensive exercise, and let alone the fact that also predelivery inspections of the ships are not in the way you used to do them. So I mean, some excessive ordering of spares and equipment should also be factored in.

But nonetheless, I mean, going to the second half and actually going to the fourth quarter of the year, you should expect that OpEx would normalize at the levels you are used to. So around $5,700, $5,800 per day on an average basis.

Great. That's helpful. And can you -- it sounds like, if I heard correctly, your TCE guidance incorporates $30,000 for the rest of the quarter, but yet, FFAs have moved up a little bit. Is there any potential for you to lock in those higher rates through in the FFA market? Or is that something you're not looking at right now?

Well, for Q3, we have effectively locked in as much as we could have locked in. So we are at the maximum potential locking in that we could. So I wouldn't anticipate any additional floating to fixed rate conversions.

For Q4, however, we still have a lot of potential. And we have set a number internally as to what would that watermark be for us to start doing that, and we have. I mean, right now, we have already fixed two ships for Q4. And when we see the market strengthening, that we strongly believe it's going to strengthen a lot in the second half further, we will certainly see into additional conversions to fixed.

Okay. And just to clarify, Stamatis, that would mean that you have four ships total fixed in the fourth quarter, including the two-time charters that -- once the Worldship is delivered?

Yes, yes. And the weighted average of these four ships is higher than the guidance we have provided for Q3.

So north of $30,000. Okay.

Yes.

Can you break out -- it would be helpful to get some more color on the cash flow. Can you break out CapEx for the second quarter, what you spent in acquisitions, and then what you expect to spend in acquisitions in the third quarter? I know there isn't much left, but if you could just give those two figures, that'd be helpful.

Well, we can provide you that in a greater detail since the beginning of the year, but it's somewhere in the region of $159.8 million or $158.9 million, I'm not 100% certain right now. I don't have the analysis. But Stavros can send you the full breakdown on a per quarter basis for Q1, Q2 and Q3.

Having said that, in Q3, we have remaining of -- taking delivery of one more ship and giving delivery of our older ship to its new owners. So it's going to be a timing event between end of August and beginning of September as to how these things will materialize.

For Q4, we don't anticipate an additional acquisition CapEx. So I think it's going to be the first quarter without any additional acquisition CapEx to the best of our estimate right now.

We will also be filing next week with the commission the 6-K with the full set of interim financials, so there will be detailed cash flow there.

Okay. Great. And then when we look at it, Stamatis, you sort of alluded to it from the standpoint of acquisition activity. Looking at your cash balance ending at the second quarter, given the acquisition activity, it was only down $2 million, roughly from the first-quarter level. And with less acquisition activity and the sale in the third quarter, my gut is the cash should remain relatively high.

Can you just talk about your potential capital needs looking at the second half of the year? Also, in the context of the F-3 filing that you recently did, and if you could just talk about why you filed the F-3 and how you're looking at that at this point in time?

Yes. Great question, Poe. Thank you.

First of all, as for the F-3, we do not anticipate raising any equity in the immediate future. We just do it as part of the company's normal course of business to have an F-3 in place for whatever reason. So for us, an F-3 is not something that you use immediately, but it's something that you may use within a three-year period of time.

Obviously, the previous three years are not the same like what we anticipate to be the next three years. So having said that, we do not really anticipate to have a big use of that F-3, unless a super spectacular opportunity knocks on the door, which I don't have anything in mind right now, to be honest. So the F-3 is effectively something in the normal course of business of the company, and we have it there as part of our governance, and as part of our normal going concern.

In respect of the accumulated cash, yes, we are also in discussions with a couple of lenders to potentially finance some of the debt-free ships, not because we have to, but because of relationships. And like Stavros said and we already stated in the press release, all our new lending has been at around 20% loan to value. So for us, it's not a matter of need, it's a matter of relationship with a number of lenders. And we do it just to expand further our banking universe. So we might have some additional liquidity coming in.

Now, if another great ship comes across, we will seriously consider. If not, and we feel that we need to reward our shareholders further, we will do that. So again, as I mentioned in the previous question, we will reexamine the whole matter in September, and we'll decide how to best allocate the cash into shareholder returns or additional acquisitions.

Great. That's helpful. Stavros, could you remind me how many of the Capes are not encumbered at this point in time?

Currently, we have taken delivery of the Friendship, which at the moment is not encumbered. We have, nevertheless, received the commitment letter from Alpha Bank for the ship. We expect to close the facility within the next couple of weeks.

And after that, I mean, we have the Worldship coming in. We will take delivery using our own cash and cash on hand. And we have not concluded on the financing for share yet. So after the delivery of the Worldship, we expect to have around $4 million to $5 million in cash and a debt-free vessel.

Okay. Great. And I'm not sure if you can talk about this much, but you do have the convert out there, and my sense is the convert might be an overhang for the stock price. Can you just talk about what your potential plans for either trying to refinance that or take out the convert debt?

That's a very good point. We are considering various solutions with that. And when the time comes, also from September onwards, we will have a discussion with the holder of the convertible note and we will discuss what are the potential options.

But surely, it's going to be for the benefit of the shareholders. And I fully appreciate the fact that this is an overhang for our shares outstanding. We realize that internally, we've been discussing that, and we will try to resolve it with the best possible way for our shareholders.

Great. Thank you so much for your time.

You're very welcome, Poe. Have a great day.

We have no further questions at this time. Please continue.

Well, Laura, if there are no further questions, then I guess, we should terminate the call and thank everyone for participating in our Q2 and first six months of 2021 financial results.

So thanks, everyone, for participating. And thank you, Laura, for hosting this call for us.

Thank you. That does conclude the conference for today. Thank you for participating. You may all disconnect. Speakers, please stand by.