Top Ships Inc (TOPS) 2006 Q3 法說會逐字稿

Good morning ladies and gentlemen, and welcome to the Top Tankers Incorporated third quarter results conference call.

At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. [OPERATOR INSTRUCTIONS]. As a reminder this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Mike Mason from Allen & Caron. Thank you Mr. Mason, you may begin.

Thank you. Good morning and welcome to Top Tankers results conference call for the third quarter ended September 30, 2006. As mentioned by Dan, I'm Michael Mason of Allen & Caron Investor Relations.

Before we start this call there are a couple of items I'd like to cover. Many of you have received a copy of the press release announcing the Company's results for its third quarter 2006. It was released this morning at 7.35 a.m. Eastern time. If you did not receive a copy of the press release it is posted in the client section of our website at www.allencaron.com, or you may call our office in New York at 212 691 8087 and we will e-mail it to you right away. It is also posted on Yahoo Finance.

This call is being broadcast live over the internet at www.toptankers.com or www.vcall.com. The Internet replay will be available shortly after the end of this call and will continue through December 14, 2006.

In addition, a telephonic replay of the conference call will be available for seven days by calling 877 660 6853 from the U.S. and Canada, or 201 612 7415 from outside the U.S. and Canada, and our account number 286 and a conference ID number 219731.

I would now like to turn the call over to Mr. Thomas Jackson, Chairman of the Board of Directors of Top Tankers. Good afternoon Mr. Jackson.

Good afternoon Michael and thank you very much.

Good morning ladies and gentlemen. I am Tom Jackson, the Chairman of the Board of Directors of Top Tankers Inc. It is my great pleasure to welcome you to Top Tankers earning conference call in respect of the third quarter and nine month period of 2006 financial results.

Before we begin let me draw your attention to the fact that during the conference call we might make certain forward looking statements about the Company's future expectations, including future revenues and earnings. Those statements and all other statements here today, other than historical facts, are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Litigation Reform Act of 1995.

Such forward looking statements involve risks and uncertainties and are subject to change at any time. And the Company's actual results could differ materially from expected results.

The Company undertakes no obligation to publicly update forward looking statements to reflect subsequently occurring events or circumstances.

The Audit Committee have reviewed and recommended to the Board the acceptance of the accounts for the third quarter and nine month period of 2006 and restatement of first, second quarter and first half of 2006 as presented. And the Board of Directors in a meeting held this morning approved the accounts as presented.

With me today for our conference call are Mr. Evangelos Pistiolis, President and Chief Executive Officer and Mr. Stamatios Tsantanis, Chief Financial Officer. Mr. Pistiolis will provide you with details of Top Tankers’ operation, activities and general expectations. Furthermore, he will provide you with an overall perspective of the international tanker market together with his perceived outlook. Mr. Tsantanis will comment on the financial results of Top Tankers Inc. for the quarter and nine month period ended September 30, 2006. Following the financial highlights, the call will move into a Q&A session.

I would now like to pass you over to Mr. Evangelos Pistiolis.

Thank you Tom. Good morning ladies and gentlemen.

I'd like to start my presentation by addressing the circumstances surrounding Ernst & Young's resignation and our restatement of our financial statement of the first and second quarter of this year.

As you know, we undertook two sale leaseback transactions for a total of 13 vessels in March and April of this year. Before we entered into the sale leasebacks we discussed them with our auditors. One of the features of the sale leaseback arrangements were the seller's credit where we had agreed to be paid 10% of the total sales proceeds by the resource upon expiration of the leases.

And CFO, Stamatios Tsantanis will describe some of the accounting details to you later. But after consultation with E&Y, we deferred and amortized the total book gain from the sale of the vessels over the relevant lease periods. This was done both for our first and second quarter financial statements.

E&Y reviewed those statements and based on the comfort letter covering the first quarter in connection with consult equity offering that we were conducting at the time. However, some time later other E&Y personnel re-reviewed the seller's credit and decided they should be treated as residual value guarantees. This would result in the deferral of the seller's credit.

We had a number of conversations and communications with E&Y in Athens and the United States, in which E&Y could not convince us that their position was correct and we could not convince them that our position was correct.

Accordingly, we decided to approach the staff of the Securities and Exchange Commission for its views to see if we could reach a resolution, and we informed E&Y that we were going to do this. However, E&Y later told us that they were not happy with our having approached the SEC and then criticized our submission. Although we differed very much with E&Y's interpretation, we decided to withdraw our submission to the SEC and to restate our financial statements for the first and second quarters 2006.

Despite our agreement to withdraw our submission and restate our first and second quarters, relations broke down to the point that E&Y decided they did not want to continue as our auditors. Notwithstanding the resignation, we decided to restate our first and second quarter financials.

Purposely, and also some time after it had completed its reviews of the financial statements for the first and second quarter, E&Y rated the adequacy of support for the consulting period be paid to an independent third party in connection with the sale leasebacks.

Our Audit Committee believed that it was working on an agreed plan with E&Y to try to resolve the points of this matter. Again, despite management and Audit Committee's efforts to resolve all open matters, E&Y decided to resign.

The Audit Committee has engaged independent Counsel to look into the points raised by E&Y.

We are in discussions with other major accounting firms about it succeeding E&Y and other independent auditors. In the meantime, E&Y has offered to cooperate with our successor auditors and to provide them access and information to -- in accordance with all applicable professional standards. We have also asked E&Y to respond to all enquiries from our successor auditors.

We are also aware that a complaint has been filed against the Company in the U.S. District Court in the southern district of New York. We have not been served with a complaint and we are conferring with our Counsel. The matter will quantify for you the effect of the restatement related to the seller's credit in the sale leasebacks.

The operating results for the third quarter and nine month period of 2006, for the three months ended September 30, 2006 we had a net loss of $11.4m, or $0.35 per share compared to a net income of $7.9m or $0.28 per share for the third quarter of 2005. The results for the third quarter of 2006 include net charges of $5.4m, or $0.17 per share of special items that affected our net result for the period. These are described in the Appendix of our release.

In addition, third quarter 2006 was also reduced by $0.07 per share resulting from the revised accounting treatment of the seller's credit, which Stamatios will explain. Taking that into effect, our net loss would have been $0.11 per share, which is significantly better than the figure projected by the analysts.

Voyage revenues for the third quarter were $70.6m compared to $50m recorded in the third quarter last year.

For the nine months ended September 30, 2006 we had a net income of $11.9m, or $0.37 per share, compared with a net income of $40.6m, or $1.45 dollars per share for the nine months ended September 30, 2005. Again, the results for the nine months include net charges of $7.9m or $0.27 per share of special items that affected our net income for that period.

In addition, the first nine months of 2006 were also reduced by $0.15 per share resulting from the revised accounting treatment of the seller's credit. Voyage revenues for the nine month period were $242.2m, compared to $153.6m recorded in the same period of last year.

Dry docking and operating of the fleet. As we announced in our first quarter conference call, we decided to commence an extensive dry docking program in order to upgrade our fleet to the highest possible standards. Since then we have completed eight special surveys, four Suezmaxes and four Handymaxes. The final Suezmax is expected to be ready in mid January of 2007. For your convenience we have posted a detailed presentation for six of these surveys on our website and will update the remaining in due course.

The total upgrade in investment in our tankers will exceed $50m and has been completed by more than 60% in 2006. We have conducted extensive works on our tankers, closely supervised by our experienced technical team, in order to upgrade the vessels to the highest possible standards.

As with many shipping companies that decided to conduct dry docks in the Chinese shipyards, we experienced delays that were beyond our control. While our utilization rate and our revenue stream were affected from the extensive dry docking periods, we fully expect to be compensated by increased utilization rates and lower vessel operating expenses in the year to come. For 2007 we expect a significantly better special survey schedule of three Suezmaxes and five Handymaxes.

Once again, we would like to emphasize our commitment to provide the high quality of service to our clients and we will continue to operate and maintain our fleet with the utmost efficiency and professionalism.

The chartering update. We have recently announced our mutual agreement with Glencore for the earlier delivery of three Suezmax tankers, the Flawless, Timeless and Stopless. The Timeless was only recently delivered from the dry dock, while the Stopless is expected to be completed by mid January. In any event, the vessels were scheduled to be delivered by Glencore within a few months. The six out of the -- sorry, six out of total of 11 Handymaxes that are already chartered with Glencore will expire around the beginning of 2010.

We have also entered into a time charter contract for the Suezmax tankers Priceless with a major oil trader. The contract, which has a base rate of $35,000 a day and a 50/50 sharing of the profit generated above the base rate and it expires in August of 2008.

We have recently sold three Handymaxes, one built in 1998 and two built in 1999. Many people in the industry consider the aggregate sale price of $128m to be one of the highest prices ever achieved for such vessels. The sale will generate an expected book gain of $12m and a net cash release to us will be approximately $30m.

In addition, we have entered into an agreement to acquire four new buildings for $191m. The vessels will be built in SPP in the -- Shipbuilding in the Republic of Korea, a very suitable yard with experience in building high quality vessels. Our new buildings will be approximately 50,000 deadweight tons each, Product/Chemical Handymax tankers with total tank capacity in excess of 54,000 cubics.

Assuming we exercise our option to acquire two additional new buildings, our current total order will increase to six vessels, or $286m. We expect to fund our order by securing credit line and working capital.

An important point I would like to raise is that we managed to achieve deliveries of all new buildings in the first and second quarters of 2009 even though most shipyards are not offering tanker new building deliveries before 2010 or 2011.

On that note, I would like to hand over the call to Stamatios, who will take you through the financial details.

Thank you Evangelos. Good morning ladies and gentlemen.

For the three months ended September 30, 2006 we had a net loss of $11.4m, or $0.35 per share compared to net income of $7.9m or $0.28 per share for the third quarter of 2005. The results for the third quarter of '06 include net charges of $5.4m, or $0.17 per share of special items, as explained in our press release. In addition, the third quarter of '06 was also reduced by $0.07 per share resulting from the revised accounting treatment of the seller's credit that I will explain later.

Our EBITDA for the third quarter was $7.7m compared with $28.3m for the third quarter of '05. Voyage revenues for the third quarters were 70.8% -- $70.6m compared to $50m in the first -- in the third quarter of '05. For the net -- for the nine months ended September 30 we had net income of $11.9m, or $0.37 per share compared with net income of $40.6m, or $1.45 per share for the nine months of 2005. Again, the results for the nine month period include net charges of $7.9m, or $0.27 per share of special items that affected our net income.

In addition, the nine months of 2006 were also reduced by $0.15 per share, resulting from the revised accounting treatment of the seller's credit. EBITDA for the period was $71.8m compared with $91.2m for the same period last year. Voyage revenues for the nine month period were $242m compared to $154m recorded in the same period last year.

Our restatement in the first and second quarter and first half of 2006 resulted from the accounting treatment of certain aspects of the sale and leaseback transactions that were completed in March and April 2006. The sale and leaseback transactions involved the sale of 13 vessels for a consideration of $550m and their simultaneous lease back under bareboat charters for a period of five to seven years.

Under the terms of the agreement, upon completion of the sale of the vessels we received 90% of the consideration, or $495m. The remaining 10%, or $55m, commonly referred to as seller's credit, is payable to us at the end of the leasing period.

The general purpose of the seller's credit in shipping is to secure a portion of the seller lessee's payments to the owner-lessor. The sale and leaseback transaction resulted in a total book gain of $96m.

We deferred and amortized over the relevant period the total gain of $82m, which includes the present value of the seller's credit. The amount is included in part in deferred income in our finances for the first quarter and in full in our finances for the second quarter. We have decided to restate both interim financial statements and exclude the seller's credit of $55m from the total gain and to defer recognition of the full amount until payment.

The non cash effect from deducting the seller's credit of $55m on the total gain of $96m is to reduce net income per share by $0.01 and $0.07 for the first and second quarters of 2006 respectively. The net income per share in all subsequent quarters until December 31, 2010 will be reduced by approximately $0.07.

In addition, there are some balance sheet reclassifications for the same period resulting from the financial covenants contained in the agreement. And the change of the discount rate initially used to value the seller's credit of $55m. Under financial covenants we are required to maintain a minimum amount of $20m as at December 15, 2006 and $25m thereafter and until the expiration of the bareboat charges in a specified Company bank account.

Furthermore, the bareboat charter period -- during the bareboat charter period we are required to maintain consolidated cash balances of at least $50m including the $20 to $25m mentioned before.

As of June 30, 2006 and during the bareboat charter period, the amount of $50m will be presented separately as a fixed cash, even though there are no actual restrictions as to withdrawal or use imposed by any financial institution.

As of September 30, 2006 our fleet under management totaled 27 vessels, or 2.6m deadweight tons, including 18 vessels sold and leased back for a period of five to seven years, compared to 22 vessels or 2m deadweight tons of September 30, 2005.

As Evangelos mentioned, in September and October '06 we agreed to sell the vessels Taintless, Soundless and Topless for a total consideration of $125 -- $127.5m resulting in a respective total book gain of $12m which will be recognized in the fourth quarter of '06. The Taintless and Soundless were delivered to their new owners in November and the Topless expect to be delivered to its new owner by the end of December.

During the third quarter of '06 we've had approximately 74% of our fleet operating days on long term employment contracts. 20 of our 27 tankers were in time charter contracts with an average term of over three years with all but two of the time charters including profit sharing agreements.

During the third quarter of '06, six of our Suezmax tankers operated in the spot market earning on average $39,400 per vessel per day on a time charter equivalent basis. In the same period, four of our Suezmax operated under time charter contracts earning on average $38,400 per vessel per day on a time charter base. Three of our Suezmax tankers were undergoing the special surveys and were not operational during the third quarter.

All of our Handymax fleet operated under long term employment agreements with Glencore and Vitol that provided additional profit sharing arrangements. During the third quarter of 2006, including the profit sharing allocated to us from these agreements, our Handymaxes earned on average $20,600 per vessel per day on time charter equivalent basis.

As of September 30, 2006 we had a total bank debt of $299m with the Royal Bank of Scotland and HSH Nordbank maturing in 2015 and 2013 respectively. As of today, and pro forma delivery of Topless, our total bank debt will be $204m.

Regarding our interest rate swap agreements, please refer to our earnings release.

On September 30, 2006 our debt to equity ratio was approximately $60.4m. Our current pro forma debt to equity ratio is 51% and our net debt to equity ratio is 37%.

On that note I would like to pass the call back to Tom.

Thank you Stamatios. I would now like to pass the call back to the operator for the Q&A session.

Thank you. [OPERATOR INSTRUCTIONS]. Our first question is coming from Natasha Boyden of Cantor Fitzgerald. Please proceed with your question.

Good morning gentlemen.

Hello.

Hello.

Hello, I just wanted to follow up on the comment you made about -- I think the Stopless is due to complete the special service in mid January 2007. Is that correct?

Yes, yes.

Now, that's at the same shipyard as the previous vessels, I believe. Is that right?

One more was in that shipyard.

Okay. What I'm trying to get at is you had delays on the other vessels that were going under -- undergoing dry docking. And I'm really wondering if you're anticipating any more delays to your mid January target date there?

That includes the delay.

Okay.

That includes the delay, although just to give you a picture, because you have been focusing on these so-called delays of TOP tankers. There were no TOP tankers delayed. They were Chinese delays. There are many, many companies that are taking months and months of delays in China. Chinese shipyards, most of them, if not all of them, have completely overbooked themselves. They have been taking on every ship that was coming across the water there.

And the bottom line was one day you have 10 guys working on your ship, the next day you have 20, then you have 150 and then you go back to 20 again. And it's a constant day and night fight about who is going to get the shipyard workforce on their ship. So, now that's one thing.

And the other thing I want to mention is that dry docking is something very vague. By saying that, it is that dry docking you can go and have a quick dry dock, which is a cleaning of your ship and painting of your ship and go if it's a one, two year old ship or something, or you have done extensive work before you can do that very quickly.

Now, dry docking doesn't necessarily mean that you're not going to do anything else. And like we said, we are not doing straight dry dock. We're doing special survey, dry dock and upgrading of all our ships, meaning we're going to make them Cat One. We're going to recoat all the ballast tanks. And recoating a ballast tank on the Suezmax, believe me, is not something you're going to do in a month even if the shipyard is empty.

So, from that point of view I think we've got to make the message clear to everybody that there was no actual delay in terms of not properly checking out the shipyard or something. We have been checking the shipment even [legally], just for your guidance, about delays that were happening that and that they are not happy with the progress that they are doing. They will respond and that's all we can do. And that was an ongoing process, which still is not done yet.

I just want to clarify that point so we're all on the same page as far as dry docks are concerned.

And what compensation are you assuming from the shipyard in terms of their delays, or if you are receiving any?

We are trying to receive. We are trying to reduce some of our base by using that compensation, if you want, and a clause that, of course, we have in our contracts. It's not an easy process, and I cannot disclose to you any further details of that thing.

We are trying to get sometimes a 5 or 10% discount on the bill as far as that is concerned. But we are going to get something and the reason why we are going to get something is because what I am telling you is what it is. And if it wasn't the shipyard's fault then, of course, we wouldn't get anything right?

Sure. Okay and now if we could just move on to the auditor’s resignation. If I can just be clear here, you were essentially saying that even after you took their advice and did restate as they wanted, it was essentially a relationship issue which was why they left? The two parties couldn't get along.

The relationship that has broken up. When relationships break up, there was no communication at the end and something like this, you need to look at things always from two points of view at least, if not more than two. So you can say that at the end of the day, yes there was a break up of relationship and we were not feeling comfortable with them, they were not feeling comfortable with us. And that was basically the end of the story.

Okay and how close do you think you are to actually appointing another auditor?

We're working on it 24/7. I can guarantee you that. I would not be in a position to give you any timetables now because we don't have any timetable. It's a 24/7 thing and as quickly as we can we're going to get the new guys on board and then we're going to make an announcement of who it is and how we go forward.

Okay. And lastly, can you just give us an update on the previously disclosed SEC inquiry where that stands right now?

It stands nowhere. We haven't heard anything since then and that is where we stand today.

Okay, so you've not heard any further communications from them?

We did not have any further communications from them.

Okay, great, thank you very much.

Thank you.

Our next question is coming from [Inaudible] of [Financial Guarantee]. Please proceed with your question.

Sure, thank you very much. A couple of quick questions I have, the first being are you able to provide us with a little bit of information on the average rates that you're now getting in the fourth quarter compared to the numbers you are showing here in the third quarter in terms of Suezmax and Handymax.

Right now we have our spot versus booked at an average rate of approximately $34,000 on a time charter program basis.

34 Suezmax and Handymax?

[Inaudible]. Handymax we expect around 20,500 including profit-sharing to us.

Okay, thank you. Next question I have is are you able to give a sense of what the utilization ratios are that you expect to have for the fourth quarter as compared to the three months of the third quarter?

Yes, well the overall utilization rate was going to be something like 87%.

And basically it was 100% for Handymax and a lesser percent for Suez?

No it's not 100% for Handymax because we had one dry dock in the Handymax also. So it's a little bit less than that. It's approximately 94, 95% for the Handymaxes and 85 for the Suezmaxes.

Okay, thank you. And one other question I have is with regard to your core Company capital. Even over the past six months the share price of the stock has fallen, the Company has been issuing more shares, increasing that to over 32m shares. Maybe you can just comment a little bit about what's your target, what's your overall strategy for maintaining a balance of common share stock and debt?

We have not sold any shares since June.

I think you -- I think from the disclosure here and disclosure from the previous quarter that you increased the number of shares outstanding.

No, the number of shares outstanding were -- hold on let me check -- but the number of shares outstanding has not been increased during the third quarter at all. We have not raised any new shares in the third quarter.

How many shares are remaining authorized but not yet issued under the previous authorization?

Well basically we can raise up to 100m shares but the agreement with [Candor] was originally for 5m if I remember. But that could have been extended. So I don't think that we have any immediate plans to raise any new shares right now.

Okay. Thank you very much.

Thank you.

The next question is coming from Jonathan Chappell of JP Morgan Chase. Please proceed with your question.

Thank you. Good afternoon guys. Just to complete the dry docking issue. You mentioned three Suez and five Handy surveys next year. Do you have a cost estimate for what you're expecting there? And also just a rough estimate of how long you expect each of those ships to be offline. Will these be special surveys, dry dockings and upgrades?

Just to -- if I may I may talk, the upgradings, yes. If I may just before Stamatios is going to give you some numbers, if I just may add that, like I said on my statement at the beginning of the call, we are like I believe about 60% there with what we need to do. That is in terms of cost, total net cost, as well as time. Sometimes, as you probably know, time is even more sensitive depending of where the market is. So to give you more details if you want about next year, it is -- we have maybe the same number of vessels or about the same number of vessels. But the vessels that needed more attention from our point of view, they needed more recoating if you want or needed more work in sensitive areas where cost and time is very sensitive, the main ships with these items have undergone their service this year. So next year we do have a total number of eight, but the -- two things. One is that the estimated costs are significantly lower than this year's. And the second thing, we expect to spend maybe even half the time that those ships this year spent in the yards.

Okay.

Of course I must add here that factors like the Chinese complete overbooking that happened this summer is something that is not really in our control or anybody else's control. But from the workload point of view we have a lot less to do next year. Now Stamatios might give you some numbers.

I understand.

We expect the total CapEx for 2007 to be around $22, $23m, and sales that we project at this moment is around 350 on our fleet.

And Stamatios, does that CapEx number include any down payments for the new buildings you've just announced?

No, no, no, that's just dry dock.

Just for the dry dock, right. What's the timing of the new building payments?

New building payments we have for the fourth ship that we have signed we have not yet received the refund guarantees, which is something that you receive always before paying the first payment. So we expect for the first four ships to have a payment in about 10, 15 days. The next payment for these ships is that so-called [de-cutting] which is usually like nine months before delivery. So if we say that these ships are Q1, Q2 '09 which is the case and then we'll take from there nine, 10 months, this will make it like second quarter of '08 having the second payment.

Okay. Right and then another cash question. Stamatios, you mentioned in your comments that this restricted cash there's no limitations on what you can actually use it for.

That's correct.

Just out of curiosity, I'm sure this fits under the category of nil limitations, but is a dividend something that you could potentially use that cash for or do you think that might be something that would be restricted?

We have no limitation as to the dividend policy of the Company from any of our agreements right now.

And then finally on the Glencore redeliveries, what's happened to those three ships that have been redelivered? Have you employed them in the spot market?

Those ships are -- one of them is still in the shipyard like we mentioned before. The one that Natasha mentioned that is going to be finishing at mid Jan '07. And that will go unless [expect] somewhere else of course on the spot market. The others we are currently but latest news we are currently taking all of those [inaudible] in the first quarter voyage. Yes, so the answer is yes we are for the time being working on the spot market, which is -- if you ask me it might even be better having the winter in front of us. But really what happened there is that we had a mutual agreement those ships were anyway finishing up at the first quarter of '07. And bearing in mind that these ships have spent a lot of time in the shipyards and approvals have expired as you will appreciate, which is something that happens with every ship that spends a lot of time in the shipyard or out of service or whatever. Because all these major approvals as you probably know have an expiration date. We came to the conclusion -- sorry to an agreement that instead of fighting about what -- we have anyway four or five months left so instead of fighting about when they should give us notice of delivery etc. We preferred to have a good relationship which we always had with each other and we still have many ships with them as you know on the Handymax side. And we preferred to have an amicable settlement. We are going to work those ships on the spot market like we do with so many other Suezmaxes. And we hope even to have better results at the end of the day. After today I think all of our quarters the spot Suezmax rate has been higher than the Suezmaxes and the time charter. So we hope that will happen again. So it's not really a big deal I think from that point of view.

Yes, I was just curious about that. We are entering the winter and clearly there's more concern about having the availability for tonnage so the timing is a little --.

That is correct, although unfortunately, we are entering winter which is at least down here like summer more than winter if you know what I mean. We are still at 20 degrees actually during the day. So it's a winter which is like you said entering. It has not entered yet. And I hope as it enters the mood and the numbers actually at the end of the day will change.

So there's no compensation to be paid to Glencore? If rates do triple tomorrow and you employ these ships at better rates, then Glencore doesn't have to pay up [inaudible]?

No, no. No, my God, no. This like I said is an amicable divorce if you want. We decided to divorce on those three ships and look at it again at a later stage. It was a clearly business decision and nothing more. There is no compensation or anything like that involved either way.

Okay. And no risk to the Handys in your view?

And no sorry?

No risk to the Handymaxes?

No risk?

Yes.

None that I know of today.

Okay.

I wouldn't call it a [inaudible] risk. The market is what it is. We know where the market is and our ships I think are [inaudible] for a lot of time and we have as far as we can see from our side excellent relationships with the guys. We talk to them many times on the phone every day. And in the good spirit of cooperation we also agreed on that amicable settlement. That's exactly what happened and nothing more.

Okay. Great. Well thanks Evangelos.

Okay, thank you very much.

Our next question comes from [Inaudible] of Citigroup. Please proceed with your question.

Morning. I have a few market related questions. And first of all, could you share with us your view on the tanker market in the next two years considering the high tanker supply growth for the period?

Yes high tanker supply growth you mean in terms of new buildings?

In terms of order book, new buildings, yes.

Yes. The fact of the matter is that really the order book has not changed since our last calls or any other companies' calls because as you well know -- as you are aware I'm sure that the shipyard has been fully booked for '07 and '08. So basically we know exactly what's coming, right? So from that -- for the next few years let me say -- from that point of view I think that more of the questions is shifting towards the demand side rather than the supply of ships. Because the supply of ships we can take that as a more or less fixed number, right? These ships have been ordered some time ago and are just waiting to be delivered.

So we know what's coming more or less. And we expect the demand to pick up again. We know that we have the China and the India economies not really showing any signs of -- worrying signs if you want. So from that point of view I don't see anything big changing. Of course, as you know, every market in every business has its ups and downs. And we have experienced that last year as well. And we have experienced that the previous year as well. That doesn't necessarily mean that what I'm saying is that in a couple of months we're going to be again in $100,000 a day. But it doesn't also mean -- it does also mean that we might, right? So I think that the fundamentals are still there.

And I was saying once before again and talking before now, we'll see. I can't really predict the future myself unfortunately but I think that the fundamentals are there. Nothing so dramatic has happened since last year for example or since six months ago that would make me change my mind a bit as far as I can see from my point of view.

But if say on the supply perspective if you continue to see a 7% growth for '07, '08 and for '09 even higher. So in this period I think the [inaudible] should put some pressure on the rate going forward. What do you think about that?

The numbers are not small, I can tell you that. On the other hand of course the numbers that are leaving the market are also not small, as well as the numbers of the economies are growing are also not small. So I think we -- you could say we were in a kind of a balance over those two numbers over the past years. Really you're asking me a question about predicting the future which is not going to be that easy.

Yes.

I agree with you that the numbers are not the lowest ever. But we have seen numbers like that before in the past in the 80s and in the 70s without having the very, very important phase-out cycle that we have today in this industry. So that's definitely going to help, I'm sure about that. And it clearly again depends how the other economies are going to be performing and what's the demand going to be. We all know that there is only one way street to which they are capitalizing their economies. And every -- all that means buildings, roads, cars, motorcycles and all the rest of it. So we are definitely working there building towards a target of higher need and consumption around the world. I think that nobody will doubt that. Now if that number is going to be lower or bigger in two years from the new buildings coming in, that's a very difficult question.

And on the second question, have you seen any impact of OPEC tariffs on the change of trading patterns, specifically for Suezmax and Handymax?

As far as OPEC is concerned?

As far as the impact of OPEC tariffs on the trading pattern for Suezmax and Handymax.

Well basically the output of -- if I look at Handymax to start with I think that the output of the OPEC countries is not -- that's the output of crude that we're talking about if I'm not mistaken in what you're saying.

Right, right.

So as far as the Handymaxes and the clean products and maybe some of the [inaudible] are concerned, this has more to do with where the location of the refineries is. So I don't see much change of the pattern. On the other hand, as far as the crude is concerned, Suezmax and [inaudible] etc. if you reduce the output means that -- it usually means that the demand at that specific point in time is not that high. So if the demand is not that high then why should people go and take from somewhere else, right. So if the demand was high people would still take from OPEC, right. So I don't think that that will actually affect the trading patterns. At least we haven't experienced anything like that here at this Company.

Okay, thank you.

Okay, thank you.

[OPERATOR INSTRUCTIONS]. Our next question is coming from Paul Tugwell of Bloomberg. Please proceed with your question.

What made you restate after you had initially disagreed with Ernst & Young?

We actually decided to -- well we strongly believed that we're very right. We were never presented any documentation to convince us that we are wrong. However, and without risking change auditors and having the new auditors restate the accounts, we decided to follow the more conservative approach even though we don't agree completely.

Okay.

Our next question is coming from Larry Netherland of Netherland Securities. Please proceed with your question.

Hello fellas. I just wondered what the thought process was behind the $7.5 dividend that you paid. Are you glad you did it? Things don't seem to be the same since you have.

Things are not the same you said?

The stock doesn't act like it did before you paid it.

So basically we paid a $7.5 dividend at that point in time still keeping money in the Company for anything further that we needed. Right from the very beginning of this Company going public the idea was really that when cash is here then we either have something to invest or we keep it -- or we give it back to the shareholders. That was the message that [inaudible] from the very first road show. Now having said that, the idea of the [inaudible] and the cashing in at that point in time which was -- at that point in time we feel that was a very good deal and we still think that it was, was really to be able to write off your books the older part of the fleet which was actually what happened at the end. And by that -- and having said that actually, even with the way that the market is today -- we all hope that it will change tomorrow but the way the market is today, those ships would have brought in a lot less money if you were -- decided at some point in time to sell them.

Now, looking at the whole package thing, I think that still yes it was a very good deal.

Okay. I haven't quite understood the 11% adult family members stock that's floating around out there. Was that in an institution before it became a family-owned piece of stock?

Sorry, what percentage are you referring at?

Isn't there 11% of stock owned by an adult family members? Is that -- isn't that the way that the press release read before? Heck this is months ago.

Yes, that's correct. It's a separate entity unrelated to TOP Tankers as the Company. And it's adult members of the Pistiolis family that have nothing to do with the Company's management or Board of Directors.

But did they buy it from an institution or did they have it to start off with?

No, that -- it came from the beginning.

Okay. That's it from me. Thanks.

Thank you.

As we have no further questions in the queue at this time I'd like to turn the floor back over for closing remarks.

Thank you operator. That completes the Q&A session for today. Thank you ladies and gentlemen for participating in this call. We look forward to talking to you again and sharing our continuing progress on our next quarterly conference call. Thank you and have a good day. Ladies and gentlemen you may now disconnect your lines.