Thank you for standing by, ladies and gentlemen, and welcome to the Seanergy Maritime Conference Call on the Fourth Quarter and 12 months 2020 Financial Results. We have with us Mr. Stamatis Tsantanis, Chairman and Chief Executive Officer; and Mr. Stavros Gyftakis, Chief Financial Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that this conference is being recorded today. Please be reminded that the Company publicly released its financial results, which are available to download on the Seanergy website at seanergymaritime.com. If you do not have a copy of the press release, you may contact Capital Link at (212) 661-7566, and they will be happy to send it to you.

Hello, everyone, and thank you for joining our call. Today, we’ll discuss our results for the fourth quarter and full year period 2020, and we will provide you with a general update for the major corporate events that have taken place until today. I will start by saying that 2020 was a transformational year for Seanergy, where we managed to achieve a number of successful deals and lay a solid foundation for the future. We have indeed started to reap the benefits of our actions since the beginning of 2021, and we expect Seanergy to prosper for many years to come. The highlights of the Company’s achievements for the trailing 12-month period have been the following: We’re growing our fleet by more than 40% with one Cape vessel delivered to us in Q3 ‘20 as well as three more Cape vessels agreed to be acquired since the beginning of 2021.

Thank you, Stamatis. Good morning, everyone, and a warm welcome to our fourth quarter 2020 earnings call. I hope that you and your families continue to be safe and healthy. Before we get into the discussion of the historical financials, I can only echo Stamatis’ views concerning the future of our Company. We have done a tremendous job over the last 15 months to navigate Seanergy through the uncertain environment of 2020 and are now in the best possible financial position to take advantage of the promising uptick in the market. The fourth quarter of 2020 was marked by increased volatility and day-rates were slightly lower than what most industry participants had expected. Net operating revenues, defined as revenues after deducting all voyage expense and commissions were equal to $16.7 million, a 13% reduction from $19.2 million in the fourth quarter of 2019. This reduction follows a 28% decrease in the daily time charter equivalent rate that was partly offset by increased fleet operating days after the delivery of the Goodship and the absence of expensive dry bulk and exhaust gas installation as was the case in the fourth quarter of 2019.

Thanks, Stavros. I will start our discussion about our industry outlook by stating that after years of marketing balances, we’re now entering into a possible supercycle. Since the beginning of 2021, we are seeing the strongest start of the year for the Capesize market since 2014. This is driven by healthy demand for our key raw materials, but most importantly, by the most balanced vessel supply in decades. As regards to the fourth quarter of 2020, the Capesize market was affected by operational inefficiencies in Brazilian iron ore mines. The market remained volatile and Capesize daily rates during Q4 2020 ranged from a low of about $10,000 a day to a high of about $35,000 a day. Despite the volatility, global demand for steel making raw materials remained strong throughout this period. This mix of favorable fundamentals led to considerable recent spike in the Capesize market in January, while BCI earnings so far in the first quarter have averaged more than $16,500 a day. As stated before, this is the highest start of the year since 2014. Having in mind that Q1 is traditionally the weakest quarter for Cape vessels, we expect to see a much stronger market in the rest of the year. We are particularly happy to see this optimistic sentiment reflected also in the time charter rates. Indicatively, one-year time charter levels for standard Capesize vessel are currently around 22,500 barrels per day, which is a big leap from 10,000 to 12,000 barrels one year ago. Cape asset values have risen as well by more than 30% since the end of 2020. Looking at market fundamentals over the next two years, dry bulk demand growth is expected to average by more than 2.5% in 2021 and 2022. In terms of iron ore and Capesize demand, we expect…

Thank you very much, sir. Our first question for today is from Tate Sullivan from Maxim Group. Please go ahead.

Yes. Hello. Good day. Thank you. Just circling back on a couple of your comments during the prepared remarks. Did you say earlier that the fixed rate in the current quarter is around $16,000 versus current rates of $22,500, or is that only on a portion of your ships, or did I hear that correctly, please?

Hi Tate. Good morning. The rate that we have fixed those ships for about 98% of our fleet days for Q1, it’s going to be a bit more than $15,000 a day, which is fully in line with the BCI. I mean, the BCI, the Baltic Capesize Index since the beginning of the year has been around 16,500, 16,600 . So we’re totally in line with the BCI for Q1.

Great. Thank you. And you’ve provided plenty of comments on your interest costs going forward after the restructurings. Can you…

Before we go into that, the other comment about $22,000 was about the one-year time charter rate. So, having in mind that Q1 at $16,000, that’s about twice as much as the first quarters of 2020 and 2019. So, it’s usually the weakest quarter of the year. One year going forward time charter rate, that’s about $22,000 a day. So, yes, we are below the one-year term at a rate, but we are now completing the historically lowest quarter of the year.

Understood. Thank you, sir. And just looking at your cash interest expense table breakdown, too, versus what you may report in 2021, did you -- and I understand excluding the restructuring expenses as well. But, is there a dollar range that you may be able to reduce your interest expense, or any comment for potential GAAP interest expense for ‘21 or just too many moving parts up next?

Hi Tate, this is Stavros. I mean, there are still some moving parts, because, as you know, I mean, we are acquiring some ships. I mean, we intend to get some debt on those. I mean, we tend to approach leverage going forward on a very conservative basis. So, we intend to not leverage those vessels above 50%. But, I mean, assuming conservative assumptions on our leverage going forward, interest expense per quarter should not be more than $2.6 million, $2.7 million or so.

Great. Thank you. And you mentioned at start, you have the targeted combined capital ratio and you gave -- I think you mentioned the current debt around $130 million today. Are you targeting certain capital ratios or leverage ratios in general going forward, please?

Yes. We are targeting a leverage ratio of 55% to 60% overall. I mean, that’s our target. Today, we may be slightly below those levels, considering that we want to finance the ships that we get, because, I mean, we want to end up a certain -- with a certain sales -- precaution. So assuming that we leverage the new acquisitions at around 50% to 55%, we should end up at 55% to 60% overall leverage as a company, which is still, I mean, on the conservative side.

And last from me on the topic of securing of the financing behind the ship acquisition, the two additional ship acquisitions. Are you seeing similar rates to your other ships into your current financing? Has that changed since you restructured some of your debt? Can you comment on what you are seeing from lenders?

Since the last equity raising, the fact that the Company -- I mean, the leverage of the Company has reduced a lot and our ratios have improved a lot. Seanergy has become a much more bankable company. So the interests that we see from potential lenders are in the region of 3%, 3.5% plus LIBOR, so considerably lower than our existing implied interest rate. So, I mean, we will announce any financing arrangements pretty soon. I mean, we are in discussion with some of our existing lenders, some new lenders, but expect the cost to be below 4%.

Okay. Well, thank you for all those comments. And thank you for the comments about the market and the bulk activity as well. Have a great rest of the day.

Thank you, Tate. Have a good day as well.

Our next question for today is from Poe Fratt from Noble Capital Markets. Please go ahead.

Yes. Good morning. I have several. So, if we could just start off by one. Rates have been very volatile. Stamatis, you think there’s a supercycle coming up, so you want to stay a little bit open. But, one thing that fit you in the past, just the rates have fallen out of bed, when there are things that just seem to happen to the industry. So, can you highlight how you’re trying to lock in or take advantage of what is a very strong first quarter and strong year and create a little more visibility on the cash flow front?

First of all, good morning, Poe. Nice to hear from you. That’s an excellent question. We have -- especially in Q3 and Q4 of 2020, we tried to be as consistent with the time charter equivalent rate as we could. The same thing we’re doing now in Q1. So, as you can see, we have a very high consistency between Q4 and Q1. And we have already started to look into some fixed rates that we believe on a target basis, they will deliver about $17,000, $18,000 a day fixed for Q2 and Q3. This is what we’re trying to do. So, we’re doing a short-term locking of our fleet, when we see the opportunity with the FSA market. Like you very well said, we anticipate that the market is going to go much, much higher in the coming quarters. But trying to have the visibility for the next two or three quarters as much as we can and about the volatility -- excessive volatility. We are going to fix some of the ships that could be fixed at this rate. So, a portion of our fleet for Q2 and Q3 will be fixed and has been fixed pretty much at an average of about $17,000, $18,000 a day. We have now, of course, a bulk of deliveries is coming up in the next couple of months. Then, we will continue doing short-term fixing as well. But, the way that we think that the market is going to move from Q2 and Q3 onwards, we think we’re going to see substantially higher margin.

Great. And can you just clarify, with the scrubber investment reimbursement, I thought your TCE rates should be above the indexes by anywhere from $1,500 to $2,500 just because of the structure of the TCE reimbursement. Can you just clarify whether that’s the case or what’s going on there?

Yes. That’s also a very good question. On some of the ships that we have the scrubbers, we did make a premium above the market. So, we get the reimbursement and we get the premium. Some of our Capes, however, are now 180,000 deadweight tons, they are smaller, they are 170,000 -- 170,000 deadweight tons. So, these ships -- these particular ships have a small discount to the index. So, while -- is averaging the other. So, the smaller ships are giving a small discount, which is about 5% to 9% compared to the index because they are a bit smaller ships. And the scrubber ships are making a premium. So, that pretty much averages the whole thing. And we’re growing that around the Baltic Capesize Index.

Great. And then, including the Goodship, all the acquisitions don’t have any debt right now. So, you have four, maybe call it, $90 million of acquisitions that were unencumbered that you could lever up to that 50% target. Are there other Capes within the fleet that are also unencumbered at this point in time?

Well, right now, from the existing delivered ships that we have on the fleet, the Goodship and the Loadship are basically debt-free. These are the two ships that we have debt-free. We have two -- three more deliveries coming up. So, we are in discussions, like Stavros mentioned before, with some renowned financial institutions to get competitive leverage of about 50%. And this is what we expect to happen in the next couple of months. We’re also reaching into some additional partners, agreements that will pay finance and commercial joint ventures as well, like the ones that we have already. But, that’s in the pipeline. We cannot announce anything yet because we have a lot of things going on, and I don’t want to discuss anything right now.

Great. And Stamatis, I think in your prepared remarks, you might have said how much pro forma cash is right now. But, if you didn’t, could you clarify how much cash you have after all the refinancings, the early repayments and net of the acquisitions, accounting for the acquisitions that are in process?

Pro forma for the repayments, prepayments and the advanced state for the ships that we have announced already, the cash is about $68 million. So, it’s a very sizable and significant cash amount for the Company.

Yes. That’s what I thought I heard, $68 million, but does that include the -- any deposits on the current pending acquisitions, or how clean is that number? What else should we adjust for to get your current cash level?

Yes. That includes deposits for all the three ships that we have announced already. So that includes all the deposits. That includes the prepayments made. So yes, that includes that, of course.

Okay. And then, when do you think you’re going to file your 20-F? And when can we get a full cash flow statement for 2020?

We expect the 20-F to be filed on the 31st of March, which is next week. So, next Wednesday, we will be filing the 20-F, and we might have some additional corporate developments, post the corporate developments by that time.

Okay. And then, you recently filed an F-1. And I expected it to take longer, but it looks like it was effective March 12?

Yes.

My understanding is that Jelco has the option to convert $3 million of debt into shares at a pretty attractive valuation level. That is what -- they have 45 days to do that after the effective date of F-1. What do you think is going to happen? Have they told you anything about whether they’re going to convert to $3 million into equity, or can you just discuss that, if you know anything about that?

To be honest, we don’t have any guidance yet. We don’t know what their plans are. So, they might or they might not. So, that’s build and control. It’s an optional item that we granted to Jelco when the stock price was at $0.50. And now, of course, it might look differently. But, we don’t know what we’re going to do because that’s their option to exercise if they want it or not.

Okay. And then, you said you have a 155.1 million shares out. How many of the warrants are still -- the class-E warrants are still outstanding?

Yes. It’s very -- it’s about, if I remember, was around 8 million -- 8 million warrants still outstanding, which have not been exercised yet. So, that’s about it. It’s a small amount compared to the issuance.

Okay, great. And then, you -- with the acquisition, you have one additional scrubber. So, you have 7 scrubbers of the fleet of 14 pro forma. Do you anticipate putting -- installing additional scrubbers, or do you think that’s -- it sounds like you implied that having half the fleet scrubbed is a good way to look at it from a standpoint of creating a little bit of flexibility on both sides of the equation?

Not really, Poe. The -- we’ve done already -- we are doing already right now in China, the not -- any scrubber fitting from our end. If we come to an agreement with charterers or long-term future charterers to install scrubbers in additional ships, we might consider doing so. One of these new acquisitions we just announced happened at the scrubber and happened -- we have scrubber that we feel comfortable with the equipment and everything associated with the scrubber. So, we proceeded on that basis. Generally, we take a very careful approach in the scrubber, and we try to be as balanced as possible.

And then, Stavros, can you give us your current amortization? After everything is done and before the financing on the new vessels, how much debt is actually -- how much amortization is due in 2021? And then, if you give us ‘22, that would be helpful.

Yes. Poe, we have currently around $136 million of debt outstanding. And as a rule of thumb, you can assume that around 10% of that’s amortizing annually. So it’s around $14 million that’s amortizing annually. Now on top of that, I mean we have value that we come up from time to time now. As you may remember, since the recent restructuring, I mean, we have a clean two-year runway. So basically, you can assume that around 10% of our debt is being repaid annually.

Yes. And you already satisfied the $12 million of prepayment for Jelco this year. And then, there’s another $12 million that you might have to prepay if cash is sufficient next year.

No, no, no. The prepayment that we did to Jelco, the $12 million, that was a mandatory repayment event treated by the equity offering. Now, our repayment obligation to Jelco for next year is $8 million at the end of the year, at the end of 2022. I’m sorry, we don’t have anything else in 2021. So, we have $8 million to Jelco at the end of ‘22 and another $8 million at the end of ‘23.

Great. That’s helpful. Thank you, Stavros.

Thank you, Poe.

There are no further questions. I will now hand back to the speakers for closing comments.

Thank you, Jody. As we mentioned in our earnings release, we’re very confident that 2021 is going to be a very, very positive year. And we took all the successful actions in 2020 and 2021 so far in order for the Company to prosper for many, many years to come. We’re very optimistic about the market. We have now a great fleet. And we look forward to announcing more and more positive corporate developments that will create significant value for all the shareholders of the Company. On that note, thank you very much for listening to our call and look forward again to -- for any of your comments if you want, by email or any other form of communication. Thank you.

Thank you very much, sir. Ladies and gentlemen, that does conclude the call for today. Thank you all for joining. You may now disconnect.