UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
ý Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
For the fiscal year ended December 31, 2007
 
o Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
for the transition period from                  to                
 
Commission file number 000-51442
 
GENCO SHIPPING & TRADING LIMITED
(Exact name of registrant as specified in its charter)
 
Republic of the Marshall Islands	 	98-043-9758	
(State or other jurisdiction of	 	(I.R.S. Employer	
incorporation or organization)	 	Identification No.)	
 	 	 	
299 Park Avenue, 20 th Floor, New York, New York	 	10171	
(Address of principal executive office)	 	(Zip Code)	
 
Registrant’s telephone number, including area code: (646) 443-8550
 
Securities of the Registrant registered pursuant to Section 12(b) of the Act:

Title of Each Class

Common Stock, par value $.01 per share
 
Name of Each Exchange on Which Registered
 
New York Stock Exchange

Securities of the Registrant registered pursuant to Section 12(g) of the Act:
None

 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes   ý No o

 Indicated by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No   ý

 Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes   ý No o

 

 

 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes   ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ý         Accelerated filer o       Non-accelerated filer o

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No   ý

 The aggregate market value of the registrant's voting common equity held by non-affiliates of the registrant on the last business day of the registrant’s most recently completed second fiscal quarter, computed by reference to the last sale price of such stock of $41.26 per share as of June 30, 2007 on the New York Stock Exchange, was approximately $732.6 million. The registrant has no non-voting common equity issued and outstanding.  The determination of affiliate status for purposes of this paragraph is not necessarily a conclusive determination for any other purpose.
 
The number of shares outstanding of the registrant's common stock as of February 29, 2008 was 29,078,309 shares.
 
DOCUMENTS INCORPORATED BY REFERENCE

 Portions of our Proxy Statement for the 2008 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2007, are incorporated by reference in Part III herein.
 
PART I

ITEM 1.  BUSINESS

OVERVIEW

 We are a New York City-based company, incorporated in the Marshall Islands in 2004. We transport iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes. Our fleet currently consists of 28 drybulk carriers, 14 of which we acquired from a subsidiary of The China National Cereals Oil and Foodstuffs Corp., or COFCO, a Chinese conglomerate, in December 2004 and during the first six months of 2005. The Genco Muse was acquired in October 2005 from Western Bulk Carriers, and in November 2006, we took delivery of three drybulk vessels from affiliates of Franco Compania Naviera S.A.  In July 2007, we entered into an agreement to acquire nine Capesize vessels from companies within the Metrostar Management Corporation group for a net purchase price of $1,111 million.  The Company took delivery of four of these vessels in the second half of 2007 and the Genco Constantine in February 2008.  In August 2007, the Company also agreed to acquire six drybulk vessels (three Supramax and three Handysize) from affiliates of Evalend Shipping Co. S.A. for a net purchase price of $336 million.  The Company took delivery of five of these vessels in December 2007 and the sixth vessel in January 2008.  During 2007, the Company sold the Genco Glory and the Genco Commander and realized a gain of $27 million.  During February 2008, the Genco Trader was sold to SW Shipping Co., Ltd. for $44 million, less a 2% third party brokerage commission.  All of the vessels in our fleet are on time charter contracts, with an average remaining life of approximately 19.9 months as of February 26, 2008. All of our vessels are chartered to reputable charterers, including Lauritzen Bulkers A/S, or Lauritzen Bulkers, Cargill International S.A., or Cargill, NYK Bulkship Europe, or NYK Europe, Korea Line Corporation, or KLC, A/S Klaveness,

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Pacific Basin Chartering Ltd. or Pacbasin, SK Shipping Ltd. or SK, STX Panocean (UK) Co. Ltd. or STX, and Hyundai Merchant Marine Co. Ltd., or HMMC.

 We intend to continue to grow our fleet through timely and selective acquisitions of vessels in a manner that is accretive to our cash flow. In connection with the acquisitions made in 2007 and our growth strategy, we negotiated a new credit facility which we entered into as of July 20, 2007 (our “2007 Credit Facility”) for a total amount of $1,377 million that we expect to use to acquire additional vessels that will be employed either in the spot or time charter market.  As of February 26, 2008, we had approximately $332.5 million of availability under our 2007 Credit Facility.

 Our fleet currently consists of five Capesize, six Panamax, three Supramax, six Handymax and eight Handysize drybulk carriers with an aggregate carrying capacity of approximately 2,020,000 deadweight tons (dwt). As of February 26, 2008, the average age of the vessels currently in our fleet was 6.37 years, as compared to the average age for the world fleet of approximately 16 years for the drybulk shipping segments in which we compete. All of the vessels in our fleet were built in Japanese, Korean, Philippine and Chinese shipyards with reputations for constructing high-quality vessels.  Our fleet contains six groups of sister ships, which are vessels of virtually identical sizes and specifications.

AVAILABLE INFORMATION

 We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, or the Exchange Act. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at www.sec.gov.
 
 In addition, our company website can be found on the Internet at www.gencoshipping.com. The website contains information about us and our operations. Copies of each of our filings with the SEC on Form 10-K, Form 10-Q and Form 8-K, and all amendments to those reports, can be viewed and downloaded free of charge as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. To view the reports, access www.gencoshipping.com, click on Investor, then SEC Filings.
 
 Any of the above documents can also be obtained in print by any shareholder upon request to our Investor Relations Department at the following address:
 
Corporate Investor Relations
Genco Shipping & Trading Limited
299 Park Avenue, 20 th Floor
New York, NY 10171
 
BUSINESS STRATEGY
 
 Our strategy is to manage and expand our fleet in a manner that enables us to pay dividends to our shareholders. To accomplish this objective, we intend to:
 
·    	S trategically expand the size of our fleet  - We intend to acquire additional modern, high-quality drybulk carriers through timely and selective acquisitions of vessels in a manner that is accretive to our cash flow. We expect to fund acquisitions of additional vessels using cash reserves set aside for this purpose and additional borrowings.	

·     	Continue to operate a high-quality fleet - We intend to maintain a modern, high-quality fleet that	

 
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meets or exceeds stringent industry standards and complies with charterer requirements through our technical managers’ rigorous and comprehensive maintenance program. In addition, our technical managers maintain the quality of our vessels by carrying out regular inspections, both while in port and at sea.
·    	Pursue an appropriate balance of time and spot charters - All of our vessels are under time charters with an average remaining life of approximately 19.9 months as of February 26, 2008. These charters provide us with relatively stable revenues and a high fleet utilization.  We may in the future pursue other market opportunities for our vessels to capitalize on favorable market conditions, including arranging longer charter periods and entering into short-term time, voyage charters and use of vessel pools.	

·     	Maintain low-cost, highly efficient operations - We outsource technical management of our fleet to Wallem Shipmanagement Limited (“Wallem”), Anglo-Eastern Group (“Anglo”), Bernard Schulte Ship Management Hong Kong Limited (“BSSM”) and Barber International Ltd. (“Barber”), third-party independent technical managers, at a cost we believe is lower than what we could achieve by performing the function in-house. Our management team actively monitors and controls vessel operating expenses incurred by the independent technical managers by overseeing their activities. Finally, we seek to maintain low-cost, highly efficient operations by capitalizing on the cost savings and economies of scale that result from operating sister ships.	

·    	Capitalize on our management team's reputation  - We will continue to capitalize on our management team's reputation for high standards of performance, reliability and safety, and maintain strong relationships with major international charterers, many of whom consider the reputation of a vessel owner and operator when entering into time charters. We believe that our management team's track record improves our relationships with high quality shipyards and financial institutions, many of which consider reputation to be an indicator of creditworthiness.	

OUR FLEET

 Our fleet consists of five Capesize, six Panamax, three Supramax, six Handymax and eight Handysize drybulk carriers, with an aggregate carrying capacity of approximately 2,020,000 dwt. As of February 26, 2008 the average age of the vessels currently in our fleet was approximately 6.37 years, as compared to the average age for the world fleet of approximately 16 years for the drybulk shipping segments in which we compete.  All of the vessels in our fleet were built in Japanese, Korean, Philippine and Chinese shipyards with reputations for constructing high-quality vessels.  The table below summarizes the characteristics of our vessels:

Vessel	Class	Dwt	Year Built	
 	 	 	 	
Genco Augustus	Capesize	180,151	2007	
Genco Constantine	Capesize	180,183	2008	
Genco London	Capesize	177,833	2007	
Genco Tiberius	Capesize	175,874	2007	
Genco Titus	Capesize	177,729	2007	
Genco Acheron	Panamax	72,495	1999	
Genco Beauty	Panamax	73,941	1999	
Genco Knight	Panamax	73,941	1999	

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Genco Leader	Panamax	73,941	1999	
Genco Surprise	Panamax	72,495	1998	
Genco Vigour	Panamax	73,941	1999	
Genco Hunter	Supramax	58,729	2007	
Genco Predator	Supramax	55,407	2005	
Genco Warrior	Supramax	55,435	2005	
Genco Carrier	Handymax	47,180	1998	
Genco Marine	Handymax	45,222	1996	
Genco Muse	Handymax	48,913	2001	
Genco Prosperity	Handymax	47,180	1997	
Genco Success	Handymax	47,186	1997	
Genco Wisdom	Handymax	47,180	1997	
Genco Challenger	Handysize	28,428	2003	
Genco Champion	Handysize	28,445	2006	
Genco Charger	Handysize	28,398	2005	
Genco Explorer	Handysize	29,952	1999	
Genco Pioneer	Handysize	29,952	1999	
Genco Progress	Handysize	29,952	1999	
Genco Reliance	Handysize	29,952	1999	
Genco Sugar	Handysize	29,952	1998	
 
FLEET MANAGEMENT

 Our management team and other employees are responsible for the commercial and strategic management of our fleet. Commercial management involves negotiating charters for vessels, managing the mix of various types of charters, such as time charters and voyage charters, and monitoring the performance of our vessels under their charters. Strategic management involves locating, purchasing, financing and selling vessels.

 We utilize the services of reputable independent technical managers for the technical management of our fleet. We currently contract with Wallem, Anglo, BSSM, and Barber, independent technical managers, for our technical management. Technical management involves the day-to-day management of vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies. Members of our New York City-based management team oversee the activities of our independent technical managers. The head of our technical management team has over 30 years of experience in the shipping industry.

 Wallem, founded in 1971, Anglo, founded in 1974, BSSM, founded in 1981 and wholly owned by the century old ship owning company, Bernhard Schulte, and Barber, a subsidiary of Wilh. Wilhelmsen Group which was founded in 1861, are amongst the largest ship management companies in the world. These technical managers are known worldwide for their agency networks, covering all major ports in China, Hong Kong, Japan, Vietnam, Taiwan, Thailand, Malaysia, Indonesia, the Philippines and Singapore. These technical managers provide services to over 1,000 vessels of all types, including Capesize, Panamax, Supramax, Handymax and Handysize drybulk carriers that meet strict quality standards.

 Under our technical management agreements, our technical manager is obligated to:

·   	provide personnel to supervise the maintenance and general efficiency of our vessels;	

·   	arrange and supervise the maintenance of our vessels to our standards to assure that our vessels comply with applicable national and international regulations and the requirements of our vessels' classification societies;	

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·   	select and train the crews for our vessels, including assuring that the crews have the correct certificates for the types of vessels on which they serve;	

·   	check the compliance of the crews' licenses with the regulations of the vessels' flag states and the International Maritime Organization, or IMO;	

·   	arrange the supply of spares and stores for our vessels; and	

·   	report expense transactions to us, and make its procurement and accounting systems available to us.	

OUR CHARTERS

 Currently, we employ all of our drybulk carriers under time charters. A time charter involves the hiring of a vessel from its owner for a period of time pursuant to a contract under which the vessel owner places its ship (including its crew and equipment) at the disposal of the charterer. Under a time charter, the charterer periodically pays a fixed daily charterhire rate to Genco and bears all voyage expenses, including the cost of bunkers (“fuel”), port expenses, agents’ fees and canal dues.  Two of the vessels, the Genco Constantine and the Genco Titus, are chartered under time charters which include a profit sharing element.  Under these two charters, the Company received a fixed rate of $52,750 and $45,000 per day, respectively, and an additional profit sharing payment.  The profit sharing between the Company and the respective charterer for each 15-day period is calculated by taking the average over that period of the published Baltic Cape Index of the four T/C routes as reflected in daily reports.  If such average is more than the base rate payable under the charter, the excess amount is allocable 50% to the Company and 50% to the charterer.  A commission of 3.75% based on the profit sharing amount due to the Company is incurred out of the Company’s share.

 Subject to any restrictions in the contract, the charterer determines the type and quantity of cargo to be carried and the ports of loading and discharging. Our vessels operate worldwide within the trading limits imposed by our insurance terms. The technical operation and navigation of the vessel at all times remains the responsibility of the vessel owner, which is generally responsible for the vessel's operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel, costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses.

 Each of our current time charters expires within a range of dates (for example, a minimum of 11 and maximum of 13 months following delivery), with the exact end of the time charter left unspecified to account for the uncertainty of when a vessel will complete its final voyage under the time charter. The charterer may extend the charter period by any time that the vessel is off-hire. If a vessel remains off-hire for more than 30 consecutive days, the time charter may be cancelled at the charterer's option.

 In connection with the charter of each of our vessels, we incur commissions ranging from 1.25% to 6.25% of the total daily charterhire rate of each charter to third parties, depending on the number of brokers involved with arranging the relevant charter.

 We monitor developments in the drybulk shipping industry on a regular basis and strategically adjust the charterhire periods for our vessels according to market conditions as they become available for charter.

The following table sets forth information about the current employment of the vessels currently in our fleet as of February 26, 2008:

 
 
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Vessel	Year
Built	Charterer	Charter Expiration (1)	Cash Daily
Rate (2)	Revenue Daily Rate (3)	Expected Delivery (4)	
 
Capesize Vessels	 	 	 	 	 	 	
Genco Augustus	2007	Cargill International S.A.	December 2009	  45,263	62,750	-	
Genco Tiberius	2007	Cargill International S.A.	January 2010	  45,263	62,750	-	
Genco London	2007	SK Shipping Co., Ltd	August 2010	  57,500	64,250	-	
Genco Titus	2007	Cargill International S.A.	September 2011	  45,000(5)	46,250	-	
Genco Constantine	2008	Cargill International S.A.	August 2012	  52,750(7)	 	-	
Genco Hadrian	2008(6)	To be determined (“TBD”)	TBD	TBD	 	Q4 2008	
Genco Commodus	2009(6)	TBD	TBD	TBD	 	Q2 2009	
Genco Maximus	2009(6)	TBD	TBD	TBD	 	Q2 2009	
Genco Claudius	2009(6)	TBD	TBD	TBD	 	Q3 2009	
 	 	 	 	 	 	 	
Panamax Vessels	 	 	 	 	 	 	
Genco Beauty	1999	Cargill International S.A.	May 2009	  31,500	 	-	
Genco Knight	1999	SK Shipping Ltd.	May 2009	  37,700	 	-	
Genco Leader	 1999	A/S Klaveness	December 2008	25,650(8)	 	-	
Genco Vigour	 1999	STX Panocean (UK) Co. Ltd.	March 2009	29,000(9)	 	-	
Genco Acheron	 1999	STX Panocean (UK) Co. Ltd.	March 2008	30,000	 	-	
Genco Surprise	 1998	 Hanjin Shipping Co., Ltd.	December 2010	42,100 (10)	 	-	
 	 	 	 	 	 	 	
Supramax Vessels	 	 	 	 	 	 	
Genco Predator	2005	Oldendorff GmbH & Co. KG.	May 2008	55,000	 	-	
Genco Warrior	2005	Hyundai Merchant Marine Co. Ltd.	November 2010	38,750	 	-	
Genco Hunter	2007	Pacific Basin Chartering Ltd.	March 2008	65,000	 	-	
 	 	 	 	 	 	 	
Handymax Vessels	 	 	 	 	 	 	
Genco Success	1997	Korea Line Corporation	March 2008/
February 2011	24,000/
33,000(11)	 	-	
Genco Carrier	1998	Pacific Basin Chartering Ltd.	March 2008	24,000	 	-	
Genco Prosperity	1997	Pacific Basin Chartering Ltd.	April 2008	26,000	 	-	
Genco Wisdom	1997	Hyundai Merchant Marine Co. Ltd.	March 2008/
February 2011	24,000/(12)
34,500	 	-	
Genco Marine	1996	NYK Bulkship Europe S.A.	March 2008	24,000	 	-	
Genco Muse	2001	Oldendorff GmbH & Co. KG.	March 2008	58,000	 	-	
 	 	 	 	 	 	 	
Handysize Vessels	 	 	 	 	 	 	
Genco Explorer	1999	 Lauritzen Bulkers A/S	August 2009	19,500	 	-	
Genco Pioneer	   1999	Lauritzen Bulkers A/S	August 2009	  19,500	 	-	
Genco Progress	   1999	Lauritzen Bulkers A/S	August 2009	  19,500	 	-	
Genco Reliance	   1999	Lauritzen Bulkers A/S	August 2009	  19,500	 	-	
Genco Sugar	   1998	Lauritzen Bulkers A/S	August 2009	  19,500	 	-	
Genco Charger	   2005	Pacific Basin Chartering Ltd.	November 2010	  24,000	 	-	
Genco Challenger	   2003	Pacific Basin Chartering Ltd.	November 2010	  24,000	 	-	
Genco Champion	   2006	Pacific Basin Chartering Ltd.	December 2010	  24,000	 	-	

(1) The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course, under the terms of each contract, the charterer is entitled to extend time charters from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire. The charterer of the Genco Titus has the option to extend the charter for a period of one year.
 
(2) Time charter rates presented are the gross daily charterhire rates before the payments of brokerage commissions ranging from 1.25% to 6.25% to third parties, except as indicated for the Genco Leader in note 8 below. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues.
 
(3) For the vessels acquired with a below-market time charter rate, the approximate amount of revenue on a daily basis to be

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recognized as revenues is displayed in the column named “Revenue Daily Rate” and is net of any third-party commissions. Since these vessels were acquired with existing time charters with below-market rates, we allocated the purchase price between the respective vessel and an intangible liability for the value assigned to the below-market charterhire.  This intangible liability is amortized as an increase to voyage revenues over the minimum remaining term of the charter.  For cash flow purposes, we will continue to receive the rate presented in the “Cash Daily Rate” column until the charter expires.
(4) Dates for vessels being delivered in the future are estimates based on guidance received from the sellers and/or the respective shipyards.
(5) The Company receives a fixed rate of $45,000 per day less a 5% commission and an additional profit sharing payment. The profit sharing between the Company and the charterer for each 15-day period is calculated by taking the average over that period of the published Baltic Cape Index of the four T/C routes as reflected in daily reports.  If such average is more than the base rate payable under the charter, the excess amount is allocable 50% to the Company and 50% to the charterer.  A commission of 3.75% based on the profit sharing amount due to the Company is incurred out of the Company’s share.
(6) Year built for vessels being delivered in the future are estimates based on guidance received from the sellers and/or the respective shipyards.
(7) The Company receives a fixed rate of $52,750 per day less a 5% commission and an additional profit sharing payment. The profit sharing between the Company and the charterer for each 15-day period is calculated by taking the average over that period of the published Baltic Cape Index of the four T/C routes as reflected in daily reports.  If such average is more than the base rate payable under the charter, the excess amount is allocable 50% to the Company and 50% to the charterer.  A commission of 3.75% based on the profit sharing amount due to the Company is incurred out of the Company’s share.
(8) For the Genco Leader, the time charter rate presented is the net daily charterhire rate. There are no payments of brokerage commissions associated with these time charters.
(9) We have entered into a time charter for 23 to 25 months at a rate of $33,000 per day for the first 11 months, $25,000 per day for the following 11 months and $29,000 per day thereafter, less a 5% third-party brokerage commission. For purposes of revenue recognition, the time charter contract is reflected on a straight-line basis at approximately $29,000 per day for 23 to 25 months in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The time charter, commenced following the expiration of the vessel's previous time charter on May 5, 2007.
(10) The new charter commenced following the expiration of the previous charter on January 31, 2008.
 (11) We intend to extend the time charter for an additional 35 to 37.5 months at a rate of $40,000 per day for the first 12 months, $33,000 per day for the following 12 months and $26,000 per day for the next 12 months and $33,000 thereafter less a 5% third-party brokerage commission. In all cases the rate for the duration of the time charter will average $33,000.  For purposes of revenue recognition, the time charter contract is reflected on a straight-line basis at approximately $33,000 per day for 35 to 37.5 months in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.  The new charter will commence following the expiration of the previous charter on March 1, 2008.
(12) We have reached an agreement to extend the time charter for an additional 35 to 37.5 months at a rate of $34,500 per day less a 5% third party brokerage commission.  The new charter will commence following the expiration of the previous charter on March 1, 2008.

CLASSIFICATION AND INSPECTION
 
 All of our vessels have been certified as being “in class” by the American Bureau of Shipping (“ABS”), Nippon Kaiji Kyokai (“NK”), Det Norske Veritas (“DNV”) or Lloyd’s Register of Shipping (“Lloyd’s”). Each of these classification societies is a member of the International Association of Classification Societies. Every commercial vessel’s hull and machinery is evaluated by a classification society authorized by its country of registry. The classification society certifies that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member. Each vessel is inspected by a surveyor of the classification society in three surveys of varying frequency and thoroughness: every year for the annual survey, every two to three years for the intermediate survey and every four to five years for special surveys. Special surveys always require drydocking. Vessels that are 15 years old or older are required, as part of the intermediate survey process, to be drydocked every 24 to 30 months for inspection of the underwater portions of the vessel and for necessary repairs stemming from the inspection.

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 In addition to the classification inspections, many of our customers regularly inspect our vessels as a precondition to chartering them for voyages. We believe that our well-maintained, high-quality vessels provide us with a competitive advantage in the current environment of increasing regulation and customer emphasis on quality.

 We have implemented the International Safety Management Code, which was promulgated by the International Maritime Organization, or IMO (the United Nations agency for maritime safety and the prevention of marine pollution by ships), to establish pollution prevention requirements applicable to vessels. We obtained documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO.

CREWING AND EMPLOYEES

 Each of our vessels is crewed from 20 to 23 officers and seamen. Our technical managers are responsible for locating and retaining qualified officers for our vessels. The crewing agencies handle each seaman's training, travel and payroll, and ensure that all the seamen on our vessels have the qualifications and licenses required to comply with international regulations and shipping conventions. We typically man our vessels with more crew members than are required by the country of the vessel's flag in order to allow for the performance of routine maintenance duties.

 As of February 26, 2008, we employed 17 shore-based personnel and approximately 600 seagoing personnel on our vessels.

CUSTOMERS

 Our assessment of a charterer's financial condition and reliability is an important factor in negotiating employment for our vessels. We generally charter our vessels to major trading houses (including commodities traders), major producers and government-owned entities rather than to more speculative or undercapitalized entities. Our customers include national, regional and international companies, such as Lauritzen Bulkers, Cargill, Pacbasin, SK. STX, NYK Europe and HMMC. For 2007, two of our charterers, Lauritzen Bulkers and Cargill accounted for more than 10% of our revenues.

COMPETITION

 Our business fluctuates in line with the main patterns of trade of the major drybulk cargoes and varies according to changes in the supply and demand for these items. We operate in markets that are highly competitive and based primarily on supply and demand. We compete for charters on the basis of price, vessel location and size, age and condition of the vessel, as well as on our reputation as an owner and operator. We compete with other owners of drybulk carriers in the Capesize, Panamax, Supramax, Handymax and Handysize class sectors, some of whom may also charter our vessels as customers. Ownership of drybulk carriers is highly fragmented and is divided among approximately 1,300 independent drybulk carrier owners.

PERMITS AND AUTHORIZATIONS

 We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and other authorizations with respect to our vessels.  The kinds of permits, licenses, certificates and other authorizations required for each vessel depend upon several factors, including the commodity transported, the waters in which the vessel operates, the nationality of the vessel’s crew and the age of the vessel.  We believe that we have all material permits, licenses, certificates and other authorizations necessary for the conduct of our operations.  However, additional laws and regulations, environmental or otherwise, may be adopted which could limit our ability to do business or increase the cost of our doing business.

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INSURANCE

General

 The operation of any drybulk vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade.  The United States Oil Pollution Act of 1990, or OPA, which imposes virtually unlimited liability upon owners, operators and demise charterers of vessels trading in the U.S.-exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the U.S. market.

 While we maintain hull and machinery insurance, war risks insurance, protection and indemnity cover, and freight, demurrage and defense cover and loss of hire insurance for our fleet in amounts that we believe to be prudent to cover normal risks in our operations, we may not be able to achieve or maintain this level of coverage throughout a vessel's useful life. Furthermore, while we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery and War Risks Insurance

 We maintain marine hull and machinery and war risks insurance, which cover the risk of actual or constructive total loss, for all of our vessels. Our vessels are each covered up to at least fair market value with deductibles of $60,000 per vessel per incident for our Handysize vessels, $75,000 per vessel per incident for our Panamax, Supramax and Handymax vessels and $125,000 per vessel per incident for our Capesize vessels.

Protection and Indemnity Insurance

 Protection and indemnity insurance is provided by mutual protection and indemnity associations, or P&I Associations, which insure our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related expenses resulting from the injury or death of crew, passengers and other third parties, the loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or "clubs." Subject to the "capping" discussed below, our coverage, except for pollution, is unlimited.

 Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The 13 P&I Associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. As a member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on the group's claim records as well as the claim records of all other members of the individual associations and members of the pool of P&I Associations comprising the International Group.

Loss of Hire Insurance

 We maintain loss of hire insurance which covers business interruptions and related losses that result from the loss of use of a vessel. Our loss of hire insurance has a 14-day deductible and provides claim coverage for up to 90 days.

ENVIRONMENTAL AND OTHER REGULATION

 Government regulation significantly affects the ownership and operation of our vessels. We are subject to various international conventions and treaties, laws and regulations in force in the countries in which our vessels may operate or

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are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources.

A variety of governmental and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities, (applicable national authorities such as the United States Coast Guard and harbor masters), classification societies, flag state administration (country of registry) and charterers. Some of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Our failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend the operation of one or more of our vessels.

 In recent periods, heightened levels of environmental and operational safety concerns among insurance underwriters, regulators and charterers have led to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the drybulk shipping industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards.  We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations are frequently changed and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels.  In addition, a future serious marine incident that results in significant oil pollution or otherwise causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by ships, or the IMO, has adopted the International Convention for the Prevention of Marine Pollution, 1973, as modified by the related Protocol of 1978 relating thereto, which has been updated through various amendments, or the MARPOL Convention.  The MARPOL Convention establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms.  The IMO adopted regulations that set forth pollution prevention requirements applicable to drybulk carriers.  These regulations have been adopted by over 150 nations, including many of the jurisdictions in which our vessels operate.

In September 1997, the IMO adopted Annex VI to the MARPOL Convention to address air pollution from ships. Annex VI was ratified in May 2004, and became effective in May 2005. Annex VI set limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. Annex VI regulations pertaining to nitrogen oxide emissions apply to diesel engines on vessels built on or after January 1, 2000 or diesel engines undergoing major conversions after such date. All of our vessels comply with the IAPP (International Air Pollution and Prevention) for vessels built before January 1, 2000 and the EIAPP (Engine International Air Pollution and Prevention) requirements and are certified accordingly by the vessels’ respective Classification Society. Additional or new conventions, laws and regulations may be adopted that could adversely affect our business, results of operations, cash flows and financial condition.  Compliance with these regulations could require the installation of expensive emission control systems and could have an adverse financial impact on the operation of our vessels.

Safety Management System Requirements

IMO also adopted the International Convention for the Safety of Life at Sea, or SOLAS and the International Convention on Load Lines, or the LL Convention, which impose a variety of standards that regulate the design and operational features of ships. The IMO periodically revises the SOLAS Convention and LL Convention standards. We

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believe that all our vessels are in material compliance with SOLAS and LL Convention standards.

 Under Chapter IX of SOLAS, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, our operations are also subject to environmental standards and requirements contained in the ISM Code promulgated by the IMO. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that we and our technical manager have developed for compliance with the ISM Code.  The failure of a ship owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports. As of the date of this filing, each of our vessels is ISM code-certified.

 The ISM Code requires that vessel operators also obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We believe that we have all material requisite documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. We review these documents of compliance and safety management certificates annually.

Pollution Control and Liability Requirements

 IMO has negotiated international conventions that impose liability for oil pollution in international waters and the territorial waters of the signatory to such conventions. For example, IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009), to be replaced in time with mandatory concentration limits. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping.

 Although the United States is not a party to these conventions, many countries have ratified and follow the liability plan adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended in 2000, or the CLC. Under this convention and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain defenses.  The limits on liability outlined in the 1992 Protocol use the International Monetary Fund currency unit of Special Drawing Rights, or SDR. Under an amendment to the 1992 Protocol that became effective on November 1, 2003, for vessels between 5,000 and 140,000 gross tons (a unit of measurement for the total enclosed spaces within a vessel), liability is limited to approximately 4.51 million SDR plus 631 SDR for each additional gross ton over 5,000. For vessels of over 140,000 gross tons, liability is limited to 89.77 million SDR.  The exchange rate between SDRs and dollars was 0.633423 SDR per dollar on February 14, 2008. As the convention calculates liability in terms of a basket of currencies, these figures are based on currency exchange rates on February 14, 2008. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and under the 1992 Protocol where the spill is caused by the shipowner’s intentional or reckless conduct. Vessels trading with states that are parties to these conventions must provide evidence of insurance covering the liability of the owner. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to that of the convention. We believe that our protection and indemnity insurance will covers the liability under the plan adopted by the IMO.

In March 2006, the IMO amended Annex I to MARPOL, including a new regulation relating to oil fuel tank protection, which became effective August 1, 2007.  The new regulation will apply to various ships delivered on or after August 1, 2010.  It includes requirements for the protected location of the fuel tanks, performance standards for

 
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accidental oil fuel outflow, a tank capacity limit and certain other maintenance, inspection and engineering standards.

Compliance Enforcement

 The flag state, as defined by the United Nations Convention on Law of the Sea, has overall responsibility for the implementation and enforcement of international maritime regulations for all ships granted the right to fly its flag. The “Shipping Industry Guidelines on Flag State Performance” evaluates flag states based on factors such as sufficiency of infrastructure, ratification of international maritime treaties, implementation and enforcement of international maritime regulations, supervision of surveys, casualty investigations and participation at IMO meetings. Our vessels are flagged in the Marshall Islands. Marshall Islands-flagged vessels have historically received a good assessment in the shipping industry.  We recognize the importance of a credible flag state and do not intend to use flags of convenience or flag states with poor performance indicators.

 Noncompliance with the ISM Code or other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The United States Coast Guard and European Union authorities have indicated that vessels not in compliance with the ISM Code by the applicable deadlines will be prohibited from trading in United States and European Union ports, respectively. As of the date of this report, each of our vessels is ISM Code certified.  However, there can be no assurance that such certificate will be maintained.

The United States Oil Pollution Act of 1990 and Comprehensive Environmental Response, Compensation and Liability Act

 The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its two hundred nautical mile exclusive economic zone.  The United States has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, whether on land or at sea.  Both OPA and CERCLA impact our operations.

 Under OPA, vessel owners, operators and bareboat charterers are "responsible parties" and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:

·   	natural resources damage and the costs of assessment thereof;	

·   	real and personal property damage;	

·   	net loss of taxes, royalties, rents, fees and other lost revenues;	

·   	lost profits or impairment of earning capacity due to property or natural resources damage; and	

·   	net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.	

 Under amendments to OPA that became effective on July 11, 2006, the liability of responsible parties is limited to the greater of $950 per gross ton or $0.8 million per drybulk vessel that is over 300 gross tons (subject to possible adjustment for inflation). CERCLA, which applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal and natural resource damages.  Liability under CERCLA is limited to the greater of $300 per gross ton or $5 million.  These limits of liability do not apply if an incident was directly caused by violation of

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applicable United States federal safety, construction or operating regulations or by a responsible party's gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities.

 We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage it could have an adverse effect on our business and results of operation.

 OPA requires owners and operators of vessels to establish and maintain with the United States Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under OPA and CERCLA. Current United States Coast Guard regulations require evidence of financial responsibility in the amount of $900 per gross ton for non-tank vessels, which includes the OPA limitation on liability of $600 per gross ton and the CERCLA liability limit of $300 per gross ton. In February 2008, the United States Coast Guard issued a proposal rule to increase the amounts of financial responsibility to reflect the July 2006 increases in liability. Under the regulations, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance or guaranty. Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessels in the fleet having the greatest maximum liability under OPA.

 The United States Coast Guard's regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically provided certificates of financial responsibility under pre-OPA laws, including the major protection and indemnity organizations, have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or are required to waive insurance policy defenses.

 The United States Coast Guard's financial responsibility regulations may also be satisfied by evidence of surety bond, guaranty or by self-insurance. Under the self-insurance provisions, the ship owner or operator must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. We have complied with the United States Coast Guard regulations by providing a certificate of responsibility from third party entities that are acceptable to the United States Coast Guard evidencing sufficient self-insurance.

 OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states, which have enacted such legislation, have not yet issued implementing regulations defining vessels owners' responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.  We believe that we are in substantial compliance with all applicable existing state requirements.  In addition, we intend to comply with all future applicable state regulations in the ports where our vessels call.

Other Environmental Initiatives

The U.S. Clean Water Act, or CWA, prohibits the discharge of oil or hazardous substances in navigable waters and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA.

 Currently, under U.S. Environmental Protection Agency, or EPA, regulations that have been in place since 1978, vessels are exempt from the requirement to obtain CWA permits for the discharge in U.S. ports of ballast water and other substances incidental to their normal operation. However, on March 30, 2005, the United States District Court for the

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Northern District of California ruled in Northwest Environmental Advocate v. EPA , 2005 U.S. Dist. LEXIS 5373, that EPA exceeded its authority in creating an exemption for ballast water. On September 18, 2006, the court issued an order invalidating the blanket exemption in EPA's regulations for all discharges incidental to the normal operation of a vessel as of September 30, 2008 and directing EPA to develop a system for regulating all discharges from vessels by that date. Under the court's ruling, owners and operators of vessels visiting U.S. ports would be required to comply with any CWA permitting program to be developed by EPA or face penalties. Although the EPA has appealed the decision to the Ninth Circuit Court of Appeals, we cannot predict the outcome of the litigation. If the District Court's order is ultimately upheld, we will incur certain costs to obtain CWA permits for our vessels and meet any treatment requirements, although we do not expect that these costs would be material.

 The European Union is considering legislation that will affect the operation of vessels and the liability of owners and operators for oil pollution. It is difficult to predict what legislation, if any, may be promulgated by the European Union or any other country or authority.

 The United States National Invasive Species Act, or NISA, was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. NISA established a ballast water management program for ships entering U.S. waters. Under NISA, mid-ocean ballast water exchange is voluntary, except for ships heading to the Great Lakes or Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil. However, NISA's reporting and record-keeping requirements are mandatory for vessels bound for any port in the United States. Although ballast water exchange is the primary means of compliance with the act's guidelines, compliance can also be achieved through the retention of ballast water on board the ship, or the use of environmentally sound alternative ballast water management methods approved by the U.S. Coast Guard. If the mid-ocean ballast exchange is made mandatory throughout the United States, or if water treatment requirements or options are instituted, the cost of compliance could increase for ocean carriers. Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on the drybulk shipping industry.

 Our operations occasionally generate and require the transportation, treatment and disposal of both hazardous and non-hazardous solid wastes that are subject to the requirements of the U.S. Resource Conservation and Recovery Act, or RCRA, or comparable state, local or foreign requirements. In addition, from time to time we arrange for the disposal of hazardous waste or hazardous substances at offsite disposal facilities. If such materials are improperly disposed of by third parties, we may still be held liable for clean up costs under applicable laws.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security.  On November 25, 2002, the United States Maritime Transportation Security Act of 2002, or the MTSA came into effect.  To implement certain portions of the MTSA, in July 2003, the United States Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States.  Similarly, in December 2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security.  The new chapter became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the newly created International Ship and Port Facilities Security Code, or the ISPS Code.  The ISPS Code is designed to protect ports and international shipping against terrorism.  After July 1, 2004, to trade internationally, a vessel must attain an International Ship Security Certificate from a recognized security organization approved by the vessel’s flag state.  Among the various requirements are:

·   	on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status;	
·   	on-board installation of ship security alert systems, which do not sound on the vessel but only alerts the authorities on shore;	

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·   	the development of vessel security plans;	
·   	ship identification number to be permanently marked on a vessel’s hull;	
·   	a continuous synopsis record kept onboard showing a vessel’s history including, name of the ship and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and	
·   	compliance with flag state security certification requirements.	

The United States Coast Guard regulations, intended to align with international maritime security standards, exempt from MTSA vessel security measures non-United States vessels that have on board, as of July 1, 2004, a valid International Ship Security Certificate attesting to the vessel’s compliance with SOLAS security requirements and the ISPS Code.  Our managers intend to implement the various security measures addressed by MTSA, SOLAS and the ISPS Code, and we intend that our fleet will comply with applicable security requirements.  We have implemented the various security measures addressed by the MTSA, SOLAS and the ISPS Code.

Inspection by Classification Societies

Every seagoing vessel must be ‘‘classed’’ by a classification society.  The classification society certifies that the vessel is ‘‘in class,’’ signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member.  In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.

The classification society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state.  These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

For maintenance of the class certification, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are required to be performed as follows:

·   	Annual Surveys :  For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate.	
·   	Intermediate Surveys :  Extended annual surveys are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal.  Intermediate surveys may be carried out on the occasion of the second or third annual survey.	
·   	Class Renewal Surveys :  Class renewal surveys, also known as special surveys, are carried out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull.  At the special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures.  Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals.  The classification society may grant a one-year grace period for completion of the special survey.  Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear.  In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging with the classification society for the vessel’s hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. Upon a shipowner’s request, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class.  This process is referred to as continuous class renewal.	

All areas subject to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals between surveys are prescribed elsewhere.  The period between two subsequent

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surveys of each area must not exceed five years.

Most vessels are also drydocked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections.  If any defects are found, the classification surveyor will issue a ‘‘recommendation’’ which must be rectified by the shipowner within prescribed time limits.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as ‘‘in class’’ by a classification society which is a member of the International Association of Classification Societies.  All of our vessels have been certified as being “in class” by the American Bureau of Shipping (ABS), NK, DNV or Lloyd’s Register of Shipping. All new and secondhand vessels that we purchase must be certified prior to their delivery under our standard agreements.

SEASONALITY

 We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, charter rates.  We seek to mitigate the risk of these seasonal variations by entering into long-term time charters for our vessels, where possible.  However, this seasonality may result in quarter-to-quarter volatility in our operating results, depending on when we enter into our time charters or if our vessels trade on the spot market.  The drybulk sector is typically stronger in the fall and winter months in anticipation of increased consumption of coal and raw materials in the northern hemisphere during the winter months.  As a result, our revenues could be weaker during the fiscal quarters ended June 30 and September 30, and conversely, our revenue could be stronger during the quarters ended December 31 and March 31.
 
ITEM 1A.  RISK FACTORS

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

 This annual report on Form 10-K contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance.  These forward-looking statements are based on management’s current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward looking statements contained in this annual report on Form 10-K are the following: (i) changes in demand or rates in the drybulk shipping industry; (ii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iii) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (iv) changes in rules and regulations applicable to the cargo industry, including, without limitation, legislation adopted by international organizations or by individual countries and actions taken by regulatory authorities; (v) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, repairs, maintenance and general and administrative expenses; (vi) the adequacy of our insurance arrangements; (vii) changes in general domestic and international political conditions; (viii) changes in the condition of the Company’s vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs) and unanticipated drydock expenditures; (ix) the amount of offhire time needed to complete repairs on vessels and the timing and amount of any reimbursement by our insurance carriers for insurance claims including offhire days; (x) our acquisition or disposition of vessels; (xi) the fulfillment of the closing conditions under the Company's agreement to acquire the remaining four Metrostar drybulk vessels; (xii) those other risks and uncertainties contained under the heading “RISK FACTORS RELATED TO OUR BUSINESS & OPERATIONS”, and (xiii) other factors listed from time to time in our filings with the Securities and Exchange Commission.

 The following risk factors and other information included in this report should be carefully considered.  If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially and adversely affected and the trading price of our common stock could decline.

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RISK FACTORS RELATED TO OUR BUSINESS & OPERATIONS

Industry Specific Risk Factors

Charterhire rates for drybulk carriers are at relatively high levels as compared to historical levels   and may decrease in the future, which may adversely affect our earnings .
 
 The drybulk shipping industry is cyclical with attendant volatility in charterhire rates and profitability. The degree of charterhire rate volatility among different types of drybulk carriers has varied widely. Although charterhire rates decreased slightly during 2005 and the first half of 2006, since July 2006, charter rates have risen sharply and are currently near their historical highs reached during October and November of 2007. Because we generally charter our vessels pursuant to time charters, we are exposed to changes in spot market rates for drybulk carriers at the time of entering into charterhire contracts and such changes may affect our earnings and the value of our drybulk carriers at any given time. We cannot assure you that we will be able to successfully charter our vessels in the future or renew existing charters at rates sufficient to allow us to meet our obligations or to pay dividends to our shareholders. The supply of and demand for shipping capacity strongly influences freight rates. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.
 
 Factors that influence demand for vessel capacity include:
 
·   	demand for and production of drybulk products;	
 
·   	global and regional economic and political conditions including developments in international trade, fluctuations in industrial and agricultural production and armed conflicts;	
 
·   	the distance drybulk cargo is to be moved by sea;	
 
·   	environmental and other regulatory developments; and	
 
·   	changes in seaborne and other transportation patterns.	
 
 The factors that influence the supply of vessel capacity include:
 
·   	the number of newbuilding deliveries;	
 
·   	port and canal congestion;	
 
·   	the scrapping rate of older vessels;	
 
·   	vessel casualties; and	
 
·   	the number of vessels that are out of service, i.e., laid-up, drydocked, awaiting repairs or otherwise not available for hire.	
 
 In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage, the efficiency and age profile of the existing fleet in the market and government and industry regulation of maritime

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transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions.
 
 We anticipate that the future demand for our drybulk carriers will be dependent upon continued economic growth in the world's economies, including China and India, seasonal and regional changes in demand, changes in the capacity of the global drybulk carrier fleet and the sources and supply of drybulk cargo to be transported by sea. The capacity of the global drybulk carrier fleet seems likely to increase and there can be no assurance that economic growth will continue. Adverse economic, political, social or other developments could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

An over-supply of drybulk carrier capacity may lead to reductions in charterhire rates and profitability.
 
The market supply of drybulk carriers has been increasing, and the number of drybulk carriers on order are near historic highs. These newbuildings were delivered in significant numbers starting at the beginning of 2006 and are expected to continue to be delivered in significant numbers through 2007.  An over-supply of drybulk carrier capacity may result in a reduction of charterhire rates.  If such a reduction occurs, upon the expiration or termination of our vessels' current charters we may only be able to re-charter our vessels at reduced or unprofitable rates or we may not be able to charter these vessels at all.

The market values of our vessels may decrease, which could adversely affect our operating results, cause us to breach one or more of the covenants in our credit facilities or limit the total amount that we may borrow under our credit facilities.
 
 The fair market values of drybulk carriers have generally experienced high volatility.  The market prices for secondhand drybulk carriers declined from historically high levels during 2005 and the first half of 2006 and subsequently rose during 2006 and reached new historical highs in 2007.  You should expect the market value of our vessels to fluctuate depending on general economic and market conditions affecting the shipping industry and prevailing charterhire rates, competition from other shipping companies and other modes of transportation, types, sizes and ages of vessels, applicable governmental regulations and the cost of newbuildings.  If the book value of one of our vessels is impaired due to unfavorable market conditions or a vessel is sold at a price below its book value, we would incur a loss that could adversely affect our financial results.  A decrease in the fair market value of our vessels may cause us to breach one or more of the covenants in our credit facilities, which could accelerate the repayment of outstanding borrowing under the facility, or may limit the total amount that we may borrow under our credit facilities.  The occurrence of these events could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

An economic slowdown in the Asia Pacific region could have a material adverse effect on our business, financial position and results of operations.

 A significant number of the port calls made by our vessels involve the loading or discharging of raw materials and semi-finished products in ports in the Asia Pacific region.  As a result, a negative change in economic conditions in any Asia Pacific country, and particularly in China or Japan, may have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.  In particular, in recent years, China has been one of the world's fastest growing economies in terms of gross domestic product.  We cannot assure you that such growth will be sustained or that the Chinese economy will not experience a significant contraction in the future.  Moreover, any slowdown in the economies of the United States, the European Union or various Asian countries may adversely affect economic growth in China and elsewhere.  Our business, results of operations, cash flows, financial condition and ability to pay dividends will likely be materially and adversely affected by an economic downturn in any of these countries.

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We are subject to regulation and liability under environmental and operational safety laws that could require significant expenditures and affect our cash flows and net income and could subject us to increased liability under applicable law or regulation .
 
 Our business and the operation of our vessels are materially affected by government regulation in the form of international conventions and national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the countries of their registration.  Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with them or their impact on the resale prices or useful lives of our vessels.  Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of our doing business and that may materially adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends.  We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.
 
The operation of our vessels is affected by the requirements set forth in the United Nations' International Maritime Organization's International Management Code for the Safe Operation of Ships and Pollution Prevention, or ISM Code.  The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies.  The failure of a shipowner or bareboat charterer to comply with the ISM Code may subject it to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

Although the United States is not a party, many countries have ratified and follow the liability scheme adopted by the IMO and set out in the CLC, and the Convention for the Establishment of an International Fund for Oil Pollution of 1971, as amended. Under these conventions, a vessel's registered owner is strictly liable for pollution damage caused on the territorial waters of a contracting state by discharge of persistent oil, subject to certain complete defenses.

Many of the countries that have ratified the CLC have increased the liability limits through a 1992 Protocol to the CLC. The right to limit liability is also forfeited under the CLC where the spill is caused by the owner's actual fault and, under the 1992 Protocol, where the spill is caused by the owner's intentional or reckless conduct. Vessels trading to contracting states must provide evidence of insurance coverage. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to the CLC.

The United States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in U.S. waters. OPA allows for potentially unlimited liability without regard to fault of vessel owners, operators and bareboat charterers for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers, in U.S. waters. OPA also expressly permits individual states to impose their own liability regimes with regard to hazardous materials and oil pollution materials occurring within their boundaries.

While we do not carry oil as cargo, we do carry bunkers in our drybulk carriers. We currently maintain, for each of our vessels, pollution liability coverage insurance of $1 billion per incident. Damages from a catastrophic spill exceeding our insurance coverage could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

 
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Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.
 
 International shipping is subject to various security and customs inspection and related procedures in countries of origin and destination.  Inspection procedures can result in the seizure of the contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines or other penalties against us.

 It is possible that changes to inspection procedures could impose additional financial and legal obligations on us.  Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or impractical.  Any such changes or developments may have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
 
We operate our vessels worldwide and as a result, our vessels are exposed to international risks which could reduce revenue or increase expenses.
 
The international shipping industry is an inherently risky business involving global operations.  Our vessels will be at risk of damage or loss because of events such as mechanical failure, collision, human error, war, terrorism, piracy, cargo loss and bad weather.  All these hazards can result in death or injury to persons, increased costs, loss of revenues, loss or damage to property (including cargo), environmental damage, higher insurance rates, damage to our customer relationships, harm to our reputation as a safe and reliable operator and delay or rerouting.  In addition, changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts.  These sorts of events could interfere with shipping routes and result in market disruptions which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. We may have to pay drydocking costs that our insurance does not cover in full. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, would decrease our earnings. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or we may be forced to travel to a drydocking facility that is distant from the relevant vessel's position. The loss of earnings while vessels are forced to wait for space or to travel to more distant drydocking facilities would decrease our earnings.

The operation of drybulk carriers has certain unique operational risks which could affect our earnings and cash flow .
 
The operation of certain ship types, such as drybulk carriers, has certain unique risks.  With a drybulk carrier, the cargo itself and its interaction with the vessel can be an operational risk.  By their nature, drybulk cargoes are often heavy, dense, easily shifted, and react badly to water exposure.  In addition, drybulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers.  This treatment may cause damage to the vessel.  Vessels damaged due to treatment during unloading procedures may be more susceptible to breach to the sea.  Hull breaches in drybulk carriers may lead to the flooding of the vessels' holds.  If a drybulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel's bulkheads leading to the loss of a vessel.  If we are unable to adequately maintain our vessels we may be unable to prevent these events.  Any of these circumstances or events have a material adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends.  In addition, the loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.
 
Terrorist attacks, such as the attacks on the United States on September 11, 2001, and other acts of violence or war may affect the financial markets and our business, results of operations and financial condition.
 
Terrorist attacks such as the attacks in the United States on September 11, 2001 and the United States’ continuing response to these attacks, the attacks in London on July 7, 2005, as well as the threat of future terrorist attacks, continue to cause uncertainty in the world financial markets, including the energy markets.  The continuing conflict in Iraq may

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lead to additional acts of terrorism, armed conflict and civil disturbance around the world, which may contribute to further instability including in the drybulk shipping markets.  Terrorist attacks, such as the attack on the M.T. Limburg in Yemen in October 2002, may also negatively affect our trade patterns or other operations and directly impact our vessels or our customers.  Future terrorist attacks could result in increased volatility of the financial markets in the United States and globally and could result in an economic recession in the United States or the world.  Any of these occurrences, or the perception that drybulk carriers are potential terrorist targets, could have a material adverse impact on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Compliance with safety and other vessel requirements imposed by classification societies may be costly and could reduce our net cash flows and net income.

 The hull and machinery of every commercial vessel must be certified as being "in class" by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. Our vessels are currently enrolled with the ABS, NK, DNV, or Lloyd’s, each of which is a member of the International Association of Classification Societies.

 A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Our vessels are on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to three years for inspection of its underwater parts.

 If any vessel does not maintain its class or fails any annual, intermediate or special survey, the vessel will be unable to trade between ports and will be unemployable and we could be in violation of certain covenants in our New Credit Facility, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We may be unable to attract and retain qualified, skilled employees or crew necessary to operate our business.

Our success depends in large part on our ability to attract and retain highly skilled and qualified personnel.  In crewing our vessels, we require technically skilled employees with specialized training who can perform physically demanding work.  Competition to attract and retain qualified crew members is intense.  We expect crew costs to increase in 2008.  If we are not able to increase our rates to compensate for any crew cost increases, it could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.  Any inability we experience in the future to hire, train and retain a sufficient number of qualified employees could impair our ability to manage, maintain and grow our business.

Labor interruptions could disrupt our business.

 Our vessels are manned by masters, officers and crews that are employed by third parties. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out normally and could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

 We expect that our vessels will call in ports in South America and other areas where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

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Arrests of our vessels by maritime claimants could cause a significant loss of earnings for the related off-hire period.
 
Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages.  In many jurisdictions, a maritime lienholder may enforce its lien by “arresting” or “attaching” a vessel through foreclosure proceedings.  The arrest or attachment of one or more of our vessels could result in a significant loss of earnings for the related off-hire period.  In addition, in jurisdictions where the “sister ship” theory of liability applies, a claimant may arrest the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner.  In countries with “sister ship” liability laws, claims might be asserted against us or any of our vessels for liabilities of other vessels that we own.

Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.

 A government of a vessel's registry could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. A government could also requisition our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency.  Government requisition of one or more of our vessels could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Rising fuel prices may adversely affect our profits.
 
From time to time, we may operate our vessels on spot charters either directly or by placing them in pools with similar vessels.  Spot charter arrangements generally provide that the vessel owner or pool operator bear the cost of fuel (bunkers), which is a significant vessel operating expense.  Also, the cost of fuel may also be a factor in negotiating charter rates in the future.  As a result, an increase in the price of fuel beyond our expectations may adversely affect our profitability.  The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geo-political developments, supply and demand for oil and gas, actions by members of the Organization of the Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations.

Our results of operations are subject to seasonal fluctuations, which may adversely affect our financial condition.

 We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, charter rates.  This seasonality may result in quarter-to-quarter volatility in our operating results, depending on when we enter into our time charters or if our vessels trade on the spot market.  The drybulk sector is typically stronger in the fall and winter months in anticipation of increased consumption of coal and raw materials in the northern hemisphere during the winter months.  As a result, our revenues could be weaker during the fiscal quarters ended June 30 and September 30, and conversely, our revenue could be stronger during the quarters ended December 31 and March 31.  This seasonality could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Company Specific Risk Factors

Our earnings may be adversely affected if we do not successfully employ our vessels.

 All of the vessels in our fleet are presently engaged under time charter contracts that expire (assuming the option periods in the time charters are not exercised) between March 2008 and November 2011. Although time charters provide relatively steady streams of revenues, our vessels committed to time charters may not be available for spot voyages during periods of increasing charterhire rates, when spot voyages might be more profitable. While current charterhire rates for drybulk carriers are higher (relative to historical periods), the market is volatile, and in the past charterhire rates

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for drybulk carriers have declined below operating costs of vessels. If our vessels become available for employment in the spot market or under new time charters during periods when market prices have fallen, we may have to employ our vessels at depressed market prices, which would lead to reduced or volatile earnings. We cannot assure you that future charterhire rates will enable us to operate our vessels profitably.  In addition, our standard time charter contracts with our customers specify certain performance parameters, which if not met can result in customer claims.  Such claims may have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

If we cannot find profitable employment for additional vessels that we acquire, our earnings will be adversely affected.

 We generally acquire vessels free of charter, although we have and may again acquire some vessels with time charters. In addition, where a vessel has been under voyage charter, it is rare in the shipping industry for the last charterer of the vessel in the seller's hands to continue as the first charterer of the vessel in the buyer's hands. We cannot assure you that we will be able to arrange immediate or profitable employment for vessels that we acquire. If we cannot do so, it could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We depend upon a small number of charterers for a large part of our revenues. The loss of one or more of these charterers could adversely affect our financial performance.

 We have derived a significant part of our revenues from a small number of charterers. For the year ended December 31, 2007, 100% of our revenues were derived from eighteen charterers, for the year ended December 31, 2006, 100% of our revenues were derived from fourteen charterers, and for the year ended in December 2005, 97% of our revenues were derived from twelve charterers. If we were to lose any of these charters, or if any of these charterers significantly reduced its use of our services or was unable to make charter payments to us, it could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Our practice of purchasing and operating previously owned vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings.

 All of our drybulk carriers, other than the Genco Titus, the Genco London and the Genco Constantine, were previously owned by third parties. Our current business strategy includes additional growth through the acquisition of previously owned vessels. While we typically inspect previously owned vessels before purchase, this does not provide us with the same knowledge about their condition that we would have had if these vessels had been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with such vessels before purchase. Any such hidden defects or problems, when detected, may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. Also, when purchasing previously owned vessels, we do not receive the benefit of any builder warranties if the vessels we buy are older than one year.

 In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology.

 Governmental regulations, safety and other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to some of our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.  As a result, regulations and standards could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

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An increase in operating costs could adversely affect our cash flow and financial condition.
 
 Our vessel operating expenses include the costs of crew, provisions, deck and engine stores, insurance and maintenance and repairs, which depend on a variety of factors, many of which are beyond our control.  Some of these costs, primarily relating to insurance and enhanced security measures implemented after September 11, 2001, have been increasing.  In addition, if we enter the spot charter market in the future, we will need to include the cost of bunkers as part of our voyage expenses.  The price of fuel is near historical high levels and may increase in the future.  If our vessels suffer damage, they may need to be repaired at a drydocking facility.  The costs of drydock repairs are unpredictable and can be substantial.  Increases in any of these costs could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We depend to a significant degree upon third-party managers to provide the technical management of our fleet. Any failure of these technical managers to perform their obligations to us could adversely affect our business.

 We have contracted the technical management of our fleet, including crewing, maintenance and repair services, to third-party technical management companies. The failure of these technical managers to perform their obligations could materially and adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends. Although we may have rights against our third-party managers if they default on their obligations to us, our shareholders will share that recourse only indirectly to the extent that we recover funds.

In the highly competitive international drybulk shipping industry, we may not be able to compete for charters with new entrants or established companies with greater resources.
 
 We employ our vessels in a highly competitive market that is capital intensive and highly fragmented.  Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do.  Competition for the transportation of drybulk cargoes can be intense and depends on price, location, size, age, condition and the acceptability of the vessel and its managers to the charterers.  Due in part to the highly fragmented market, competitors with greater resources could enter and operate larger fleets through consolidations or acquisitions that may be able to offer better prices and fleets than we are able to offer.

The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.
 
In general, the costs to maintain a drybulk carrier in good operating condition increase with the age of the vessel.  The average age of the vessels in our current fleet is approximately 6.37 years as of February 26, 2008.  Older vessels are typically less fuel-efficient and more costly to maintain than more recently constructed drybulk carriers due to improvements in engine technology.  Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

We cannot assure you that we will pay dividends, which could reduce the return on your investment in us and the market value of our common stock.

 We will make dividend payments to our shareholders only if our board of directors, acting in its sole discretion, determines that such payments would be in our best interest and in compliance with relevant legal and contractual requirements.  The principal business factors that our board of directors considers when determining the timing and amount of dividend payments will be our earnings, financial condition and cash requirements at the time.  Currently, the principal contractual and legal restrictions on our ability to make dividend payments are those contained in our New Credit Facility and those created by Marshall Islands law.  Under our New Credit Facility, we are permitted to pay or declare dividends in accordance with our dividend policy so long as no default or event of default has occurred and is continuing or would result from such declaration or payment.  Marshall Islands law generally prohibits the declaration and payment of dividends other than from surplus.  Marshall Islands law also prohibits the declaration and payment of dividends while a company is insolvent or would be rendered insolvent by the payment of such a dividend.

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 We may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends. We may also enter into new agreements or the Marshall Islands or another jurisdiction may adopt laws or regulations that place additional restrictions on our ability to pay dividends. Consequently, we cannot assure you that dividends will be paid with the frequency indicated in this report or at all. If for any reason we are unable or elect not to pay dividends, the return on your investment in us may be reduced below what it would have been had such dividends been paid.

We may not be able to grow or effectively manage our growth, which could cause us to incur additional indebtedness and other liabilities and adversely affect our business.

 A principal focus of our business strategy is to grow by expanding our business. Our future growth will depend on a number of factors, some of which we can control and some of which we cannot. These factors include our ability to:

·   	identify vessels for acquisition;	

·   	consummate acquisitions or establish joint ventures;	

·   	integrate acquired vessels successfully with our existing operations;	

·   	expand our customer base; and	

·   	obtain required financing for our existing and new operations.	

 Growing any business by acquisition presents numerous risks, including undisclosed liabilities and obligations, difficulty obtaining additional qualified personnel, managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures. Future acquisitions could result in the incurrence of additional indebtedness and liabilities that could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.  In addition, competition from other buyers for vessels could reduce our acquisition opportunities or cause us to pay a higher price than we might otherwise pay. We cannot assure you that we will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection with these plans.

A decline in the market value of our vessels could lead to a default under our 2007 Credit Facility and the loss of our vessels, which would adversely affect our business.

 We have entered into a credit agreement with a syndicate of commercial lenders that provides us with the 2007 Credit Facility. If the market value of our fleet declines, we may not be in compliance with certain provisions of our 2007 Credit Facility, and we may not be able to refinance our debt or obtain additional financing. If we are unable to pledge additional collateral, our lenders could accelerate our debt. For instance, if the market value of our vessels declines below approximately 130% of the aggregate amount outstanding under our 2007 Credit Facility, we will not be in compliance with certain provisions of the facility, and we may not be able to refinance our debt or obtain additional financing. The market value of our fleet is currently above the minimum market value that is required by our 2007 Credit Facility. However, should our charter rates or vessel values materially decline in the future due to any of the reasons discussed in the risk factors set forth above or otherwise, we may be required to take action to reduce our debt or to act in a manner contrary to our business objectives to satisfy these provisions. Events beyond our control, including changes in the economic and business conditions in the shipping industry, may affect our ability to comply with these covenants. We cannot assure you that we will satisfy all our debt covenants in the future or that our lenders will waive any failure to do so.

 
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Restrictive covenants in our 2007 Credit Facility may impose financial and other restrictions on us which could negatively impact our growth and adversely affect our operations.
 
 Our ability to borrow amounts under our 2007 Credit Facility are subject to the satisfaction of certain customary conditions precedent and compliance with terms and conditions included in the related credit documents. It is a condition precedent to each drawdown under the facility that the aggregate fair market value of the mortgaged vessels must at all times be at least 130% of the aggregate outstanding principal amount under the credit facility plus all letters of credit outstanding (determined on a pro forma basis giving effect to the amount proposed to be drawn down). To the extent that we are not able to satisfy these requirements, we may not be able to draw down the full amount under our 2007 Credit Facility without obtaining a waiver or consent from the lender. In addition, the covenants in our 2007 Credit Facility include the following requirements:

·    The leverage covenant requires the maximum average net debt to EBITDA to be ratio of at least 5.5:1.0.

·    Cash and cash equivalents must not be less than $0.5 million per mortgaged vessel.

·    The ratio of EBITDA to interest expense, on a rolling last four-quarter basis, must be no less than 2.0:1.0.

  ·       	After July 20, 2007, consolidated net worth must be no less than $263.3 million plus 80% of the value of any new equity issuances of the Company from June 30, 2007.  Based on the equity offering completed in October 2007 the required consolidated net worth is to be no less than approximately $434.4 million.	

·       	The aggregate fair market value of the mortgaged vessels must at all times be at least 130% of the aggregate outstanding principal amount under the new credit facility plus all letters of credit outstanding; the Company has a 30 day remedy period to post additional collateral or reduce the amount of the revolving loans and/or letters of credit outstanding.	

 We cannot assure you that we will be able to comply with these covenants in the future.

Our 2007 Credit Facility imposes operating and financial restrictions on us. These restrictions may limit our ability to:

·        	incur additional indebtedness on satisfactory terms or at all;	

·        	incur liens on our assets;	

·        	sell our vessels or the capital stock of our subsidiaries;	

·        	make investments;	

·        	engage in mergers or acquisitions;	

·        	pay dividends (following an event of default or our breach of a covenant);	

·        	make capital expenditures;	

·        	compete effectively to the extent our competitors are subject to less onerous financial restrictions; and	

·        	change the management of our vessels or terminate or materially amend the management agreement relating to any of our vessels.	

 Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders' interests may be different from ours, and we cannot guarantee that we will be able to obtain our lenders' permission when needed. This may prevent us from taking actions that are in our best interest and from executing our

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business strategy of growth through acquisitions and may limit our ability to pay dividends to you and finance our future operations.

If we are unable to fund our capital expenditures, we may not be able to continue to operate some of our vessels, which would have a material adverse effect on our business and our ability to pay dividends.

 In order to fund our capital expenditures, we may be required to incur borrowings or raise capital through the sale of debt or equity securities. Our ability to borrow money and access the capital markets through future offerings may be limited by our financial condition at the time of any such offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures would limit our ability to continue to operate some of our vessels and could have a material adverse effect on our business, results of operations, financial condition, cash flows and ability to pay dividends. Even if we are successful in obtaining such funds through financings, the terms of such financings could further limit our ability to pay dividends.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial obligations or to make dividend payments.

 We are a holding company, and our subsidiaries, which are all wholly owned by us, either directly or indirectly, conduct all of our operations and own all of our operating assets.  We have no significant assets other than the equity interests in our wholly owned subsidiaries.  As a result, our ability to satisfy our financial obligations and to pay dividends to our shareholders depends on the ability of our subsidiaries to distribute funds to us.  In turn, the ability of our subsidiaries to make dividend payments to us will be dependent on them having profits available for distribution and, to the extent that we are unable to obtain dividends from our subsidiaries, this will limit the discretion of our board of directors to pay or recommend the payment of dividends.  We and our subsidiaries will be permitted to pay dividends under our 2007 Credit Facility only for so long as we are in compliance with all applicable financial covenants, terms and conditions.  In addition, we and our subsidiaries are subject to limitations on the payment of dividends under Marshall Islands laws.

Our ability to obtain additional debt financing may depend on the performance of our then existing charters and the creditworthiness of our charterers.

 The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that may be required to purchase additional vessels or may significantly increase our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost may have a material adverse affect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

If management is unable to continue to provide reports as to the effectiveness of our internal control over financial reporting or our independent registered public accounting firm is unable to continue to provide us with  unqualified attestation reports as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.

 Under Section 404 of the Sarbanes-Oxley Act of 2002, we are required to include in this and each of our future annual reports on Form 10-K a report containing our management's assessment of the effectiveness of our internal control over financial reporting and a related attestation of our independent registered public accounting firm.  If, in future annual reports on Form 10-K, our management cannot provide a report as to the effectiveness of our internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified attestation report as to the effectiveness of our internal control over financial reporting as required by Section 404, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.

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If we are unable to operate our financial and operations systems effectively or to recruit suitable employees as we expand our fleet, our performance may be adversely affected.

 Our current financial and operating systems may not be adequate as we implement our plan to expand the size of our fleet, and our attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will have to rely on our outside technical managers to recruit suitable additional seafarers and shore-based administrative and management personnel. We cannot assure you that our outside technical managers will be able to continue to hire suitable employees as we expand our fleet.

We may be unable to attract and retain key management personnel and other employees in the shipping industry, which may negatively affect the effectiveness of our management and our results of operations.

 Our success depends to a significant extent upon the abilities and efforts of our management team and our ability to hire and retain key members of our management team. The loss of any of these individuals could adversely affect our business prospects and financial condition. Difficulty in hiring and retaining personnel could have a material adverse effect our business, results of operations, cash flows, financial condition and ability to pay dividends.  We do not intend to maintain "key man" life insurance on any of our officers.
 
We may not ha ve adequate insurance to compensate us if we lose our vessels or to compensate third parties.
 
There are a number of risks associated with the operation of ocean-going vessels, including mechanical failure, collision, human error, war, terrorism, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes.  Any of these events may result in loss of revenues, increased costs and decreased cash flows.  In addition, the operation of any vessel is subject to the inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade.
 
We are insured against tort claims and some contractual claims (including claims related to environmental damage and pollution) through memberships in protection and indemnity associations or clubs, or P&I Associations.  As a result of such membership, the P&I Associations provide us coverage for such tort and contractual claims.  We also carry hull and machinery insurance and war risk insurance for our fleet.  We insure our vessels for third party liability claims subject to and in accordance with the rules of the P&I Associations in which the vessels are entered.  We currently maintain insurance against loss of hire, which covers business interruptions that result in the loss of use of a vessel.  We can give no assurance that we will be adequately insured against all risks.  We may not be able to obtain adequate insurance coverage for our fleet in the future.  The insurers may not pay particular claims.  Our insurance policies contain deductibles for which we will be responsible and limitations and exclusions which may increase our costs or lower our revenue.
 
 We cannot assure you that we will be able to renew our insurance policies on the same or commercially reasonable terms, or at all, in the future.  For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, protection and indemnity insurance against risks of environmental damage or pollution.  Any uninsured or underinsured loss could harm our business, results of operations, cash flows, financial condition and ability to pay dividends.  In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our ships failing to maintain certification with applicable maritime self-regulatory organizations.  Further, we cannot assure you that our insurance policies will cover all losses that we incur, or that disputes over insurance claims will not arise with our insurance carriers.  Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material.  In addition, our insurance policies are subject to limitations and exclusions, which may increase our costs or lower our revenues, thereby possibly having a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

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We are subject to funding calls by our protection and indemnity associations, and our associations may not have enough resources to cover claims made against them .

 We are indemnified for legal liabilities incurred while operating our vessels through membership in P&I Associations.  P&I Associations are mutual insurance associations whose members must contribute to cover losses sustained by other association members.  The objective of a P&I Association is to provide mutual insurance based on the aggregate tonnage of a member's vessels entered into the association.  Claims are paid through the aggregate premiums of all members of the association, although members remain subject to calls for additional funds if the aggregate premiums are insufficient to cover claims submitted to the association.  Claims submitted to the association may include those incurred by members of the association, as well as claims submitted to the association from other P&I Associations with which our P&I Association has entered into interassociation agreements.  We cannot assure you that the P&I Associations to which we belong will remain viable or that we will not become subject to additional funding calls which could adversely affect us.

We may have to pay tax on U.S. source income, which would reduce our net income and cash flows.
 
 If we do not qualify for an exemption pursuant to Section 883 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, then we will be subject to U.S. federal income tax on our shipping income that is derived from U.S. sources.  If we are subject to such tax, our net income and cash flows would be reduced by the amount of such tax.
 
 We will qualify for exemption under Section 883 if, among other things, our stock is treated as primarily and regularly traded on an established securities market in the United States.  Under the related Treasury regulations, we might not satisfy this publicly traded requirement in any taxable year in which 50% or more of our stock is owned for more than half the days in such year by persons who actually or constructively own 5% or more of our stock, or 5% shareholders.
 
 We believe that, based on the ownership of our stock in 2007, we satisfied the publicly traded requirement under the Section 883 regulations for 2007.  However, if 5% shareholders were to own more than 50% of our common stock for more than half the days of any future taxable year, we may not be eligible to claim exemption from tax under Section 883 for such taxable year.  We can provide no assurance that changes and shifts in the ownership of our stock by 5% shareholders will not preclude us from qualifying for exemption from tax in 2008 or in future years.
 
 If we do not qualify for the Section 883 exemption, our shipping income derived from U.S. sources, or 50% of our gross shipping income attributable to transportation beginning or ending in the United States, would be subject to a 4% tax imposed without allowance for deductions.
 
U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. holders.
 
 A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business, as defined in the Treasury Regulations.  For purposes of these tests, income derived from the performance of services does not constitute “passive income.” U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.
 
 We do not believe that our existing operations would cause us to be deemed to be a PFIC with respect to any taxable year.  In this regard, we treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather than rental income.  Accordingly, we believe that (1) our income from our time

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chartering activities does not constitute “passive income” and (2) the assets that we own and operate in connection with the production of that income do not constitute passive assets.
 
 There is, however, no direct legal authority under the PFIC rules addressing our operations.  Accordingly, no assurance can be given that the U.S. Internal Revenue Service, or IRS, or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC.  Moreover, no assurance can be given that we would not be a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.
 
 If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. shareholders will face adverse U.S. tax consequences.  Under the PFIC rules, unless a shareholder makes an election available under the Code (which election could itself have adverse consequences for such shareholder), such shareholder would be liable to pay U.S. federal income tax at the highest applicable income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common stock, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of our common stock.
 
Because we generate all of our revenues in U.S. dollars but incur a portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations.

 We generate all of our revenues in U.S. dollars, but we may incur drydocking costs and special survey fees in other currencies. If our expenditures on such costs and fees were significant, and the U.S. dollar were weak against such currencies, our business, results of operations, cash flows, financial condition and ability to pay dividends could be adversely affected.

RISK FACTORS RELATED TO OUR COMMON STOCK

Fleet Acquisition LLC and Peter Georgiopoulos own a large portion of our outstanding common stock, which may limit your ability to influence our actions.

 Fleet Acquisition LLC, or Fleet Acquisition, owns 10.17% of the outstanding shares of our common stock.   Peter C. Georgiopoulos, our Chairman, owns an additional 12.70% of our common stock.  As a result of this share ownership and for so long as these shareholders own a significant percentage of our outstanding common stock, these shareholders will be able to influence the outcome of any shareholder vote, including the election of directors, the adoption or amendment of provisions in our articles of incorporation or bylaws and possible mergers, corporate control contests and other significant corporate transactions.  This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, merger, consolidation, takeover or other business combination involving us.  This concentration of ownership could also discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which could in turn have an adverse effect on the market price of our common stock.
 
Because we are a foreign corporation, you may not have the same rights or protections that a stockholder in a United States corporation may have.
 
We are incorporated in the Marshall Islands, which does not have a well-developed body of corporate law and may make it more difficult for our shareholders to protect their interests.  Our corporate affairs are governed by our Amended and Restated Articles of Incorporation and bylaws and the Marshall Islands Business Corporations Act, or BCA.  The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States.  The rights and fiduciary responsibilities of directors under the law of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain U.S. jurisdictions and there have been few judicial cases in the Marshall Islands interpreting the BCA.  Shareholder rights may differ as well.  While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in the face of actions by the management, directors or controlling shareholders than would

31

 
 
shareholders of a corporation incorporated in a U.S. jurisdiction.  Therefore, you may have more difficulty in protecting your interests as a stockholder in the face of actions by the management, directors or controlling stockholders than would stockholders of a corporation incorporated in a United States jurisdiction.

Provisions of our Amended and Restated Articles of Incorporation and Bylaws may have anti-takeover effects which could adversely affect the market price of our common stock.

Several provisions of our amended and restated articles of incorporation and bylaws, which are summarized below, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire our company. However, these anti-takeover provisions could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.

Blank Check Preferred Stock.

 Under the terms of our amended and restated articles of incorporation, our board of directors has the authority, without any further vote or action by our shareholders, to authorize our issuance of up to 25,000,000 shares of blank check preferred stock. Our board of directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.

Classified Board of Directors.

 Our amended and restated articles of incorporation provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms beginning upon the expiration of the initial term for each class. Approximately one-third of our board of directors is elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our board of directors from removing a majority of our board of directors for up to two years.

Election and Removal of Directors.

 Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our articles of incorporation also provide that our directors may be removed only for cause and only upon the affirmative vote of 66 2 / 3 % of the outstanding shares of our capital stock entitled to vote for those directors or by a majority of the members of the board of directors then in office. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.

Limited Actions by Shareholders.

 Our amended and restated articles of incorporation and our bylaws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated articles of incorporation and our bylaws provide that, subject to certain exceptions, our Chairman, President, or Secretary at the direction of the board of directors may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice.

 
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Advance Notice Requirements for Shareholder Proposals and Director Nominations.
 
 Our bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder's notice must be received at our principal executive offices not less than 150 days nor more than 180 days before the date on which we first mailed our proxy materials for the preceding year's annual meeting. Our bylaws also specify requirements as to the form and content of a shareholder's notice. These provisions may impede shareholder's ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.

It may not be possible for our investors to enforce U.S. judgments against us.

 We are incorporated in the Republic of the Marshall Islands and most of our subsidiaries are also organized in the Marshall Islands.  Substantially all of our assets and those of our subsidiaries are located outside the United States.  As a result, it may be difficult or impossible for United States stockholders to serve process within the United States upon us or to enforce judgment upon us for civil liabilities in United States courts.  In addition, you should not assume that courts in the countries in which we are incorporated or where our assets are located (1) would enforce judgments of United States courts obtained in actions against based upon the civil liability provisions of applicable United States federal and state securities laws or (2) would enforce, in original actions, liabilities against us based upon these laws.

Future sales of our common stock could cause the market price of our common stock to decline.

The market price of our common stock could decline due to sales of a large number of shares in the market, including sales of shares by our large shareholders, or the perception that these sales could occur.  These sales could also make it more difficult or impossible for us to sell equity securities in the future at a time and price that we deem appropriate to raise funds through future offerings of common stock.  We have entered into a registration rights agreement with Fleet Acquisition LLC that entitles it to have all the shares of our common stock that it owns registered for sale in the public market under the Securities Act and, pursuant to the registration rights agreement, registered Fleet Acquisition LLC’s shares on a registration statement on Form S-3 in February 2007.  We also registered on Form S-8 an aggregate of 2,000,000 shares issued or issuable under our equity compensation plan.

Future issuances of our common stock could dilute your interest in our company.

We may, from time to time, issue additional shares of common stock to support our growth strategy, reduce debt or provide us with capital for other purposes that our board of directors believes to be in our best interest.  To the extent that you do not purchase additional shares that we may issue, your interest in our company will be diluted, which means that your percentage of ownership in our company will be reduced.  Following such a reduction, your common stock would represent a smaller percentage of the vote in our board of directors’ elections and other shareholder decisions.  In addition, if additional shares are issued, depending on the circumstances, our dividends per share could be reduced.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.  PROPERTIES

 We do not own any real property. In September 2005, we entered into a 15-year lease for office space in New York, New York. The monthly rental is as follows:  Free rent from September 1, 2005 to July 31, 2006, $40,000 per month from August 1, 2006 to August 31, 2010, $43,000 per month from September 1, 2010 to August 31, 2015, and $46,000 per month from September 1, 2015 to August 31, 2020. We received a tenant work credit of $324,000.  The monthly straight-line rental expense from September 1, 2005 to August 31, 2020 is $39,000.  We have the option to extend the lease for a period of five years from September 1, 2020 to August 31, 2025.  The rent for the renewal period will be based on the prevailing market rate for the six months prior to the commencement date of the extension term.

 
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Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $486,000 per year for 2008 through 2009, $496,000 for 2010, $518,000 for 2011 through 2012 and a total of $4,132,000 for the remaining term of the lease.

For a description of our vessels, see “Our Fleet” in Item 1, "Business” in this report.

We consider each of our significant properties to be suitable for its intended use.

ITEM 3.  LEGAL PROCEEDINGS

 We have not been involved in any legal proceedings which we believe are likely to have, or have had a significant effect on our business, financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which we believe are likely to have a significant effect on our business, financial position, results of operations or liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended December 31, 2007.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION, HOLDERS AND DIVIDENDS

 Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “GNK”, which commenced April 11, 2007, and was previously traded on the NASDAQ under the symbol “GSTL” from our initial public offering on July 22, 2005 through April 10, 2007. The following table sets forth for the periods indicated the high and low prices for the common stock as reported by the NYSE and NASDAQ:

FISCAL YEAR ENDED DECEMBER 31, 2007	 	HIGH	 	 	LOW	 	
1st Quarter	 	$	33.49	 	 	$	27.29	 	
2nd Quarter	 	$	42.47	 	 	$	30.65	 	
3rd Quarter	 	$	68.97	 	 	$	40.82	 	
4th Quarter	 	$	78.08	 	 	$	50.54	 	

FISCAL YEAR ENDED DECEMBER 31, 2006	 	HIGH	 	 	LOW	 	
1st Quarter	 	$	17.84	 	 	$	15.11	 	
2nd Quarter	 	$	18.50	 	 	$	16.00	 	
3rd Quarter	 	$	23.94	 	 	$	17.07	 	
4th Quarter	 	$	28.68	 	 	$	22.55	 	

 As of December 31, 2007, there were approximately 51 holders of record of our common stock.

On July 18, 2005, prior to the closing of the public offering of our common stock, our board of directors and

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stockholder approved a split (in the form of a stock dividend, giving effect to a 27,000:1 common stock split) of our common stock. All share and per share amounts relating to common stock, included in the accompanying consolidated financial statements and footnotes, have been restated to reflect the stock split for all periods presented.

During October 2007, the Company closed on an equity offering of 3,358,209 shares of Genco common stock (with the exercise of the underwriters’ over-allotment option) at an offering price of $67 per share.  The Company received net proceeds of approximately $213.9 million after deducting underwriters’ fees and expenses.

Our dividend policy is to declare quarterly distributions to shareholders, which commenced in November 2005, by each February, May, August and November substantially equal to our available cash from operations during the previous quarter, less cash expenses for that quarter (principally vessel operating expenses and debt service) and any reserves our board of directors determines we should maintain. These reserves may cover, among other things, drydocking, repairs, claims, liabilities and other obligations, interest expense and debt amortization, acquisitions of additional assets and working capital.  The following table summarizes the dividends declared based on the results of the respective fiscal quarter:

FISCAL YEAR ENDED DECEMBER 31, 2007	 	Dividend per share	 	 

Declaration date	
 	 	 	 	 	
4 th Quarter	 	$	0.85	 	2/13/08	
3 rd Quarter	 	$	0.66	 	10/25/07	
2 nd Quarter	 	$	0.66	 	7/26/07	
1 st Quarter	 	$	0.66	 	4/26/07	
FISCAL YEAR ENDED DECEMBER 31, 2006	 	 	 	 	 	
4 th Quarter	 	$	0.66	 	2/8/07	
3 rd Quarter	 	$	0.60	 	10/26/06	
2 nd Quarter	 	$	0.60	 	7/27/06	
1 st Quarter	 	$	0.60	 	4/27/06	

Our target rate for quarterly dividends for 2008 is $0.85, although actual dividends, if declared, may be more or less.  In the future, we may incur other expenses or liabilities or our board of directors may establish reserves that would reduce or eliminate the cash available for distribution as dividends.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2007 regarding the number of shares of our common stock that may be issued under the 2005 Equity Incentive Plan, which is our sole equity compensation plan:

 	 	Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights	 	 	Weighted-average exercise
price of outstanding
options, warrants and
rights	 	Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))	
Plan category	 	(a)	 	 	(b)	 	(c)	
 	 	 	 	 	 	 	 	
Equity compensation plans approved by security holders	 	 	—	 	 	$	—	 	1,652,401	
Equity compensation plans not approved by security holders	 	 	—	 	 	 	—	 	—	
 	 	 	 	 	 	 	 	
Total	 	 	—	 	 	$	—	 	1,652,401	

 
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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

 	 	For the years ended December 31,	 	 	For the period from September 27, 2004 to
December 31,	 	
 	 	2007	 	 	2006	 	 	2005	 	 	2004	 	
Income Statement Data:	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands except for share and per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	185,387	 	 	$	133,232	 	 	$	116,906	 	 	$	1,887	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	5,100	 	 	 	4,710	 	 	 	4,287	 	 	 	44	 	
Vessel operating expenses	 	 	27,622	 	 	 	20,903	 	 	 	15,135	 	 	 	141	 	
General and administrative expenses	 	 	12,610	 	 	 	8,882	 	 	 	4,937	 	 	 	113	 	
Management fees	 	 	1,654	 	 	 	1,439	 	 	 	1,479	 	 	 	27	 	
Depreciation and amortization	 	 	34,378	 	 	 	26,978	 	 	 	22,322	 	 	 	421	 	
Gain on Sale of Vessels	 	 	(27,047	)	 	 	-	 	 	 	-	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total operating expenses	 	 	54,317	 	 	 	62,912	 	 	 	48,160	 	 	 	746	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	131,070	 	 	 	70,320	 	 	 	68,746	 	 	 	1,141	 	
Other (expense) income	 	 	(24,261	)	 	 	(6,798	)	 	 	(14,264	)	 	 	(234	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	106,809	 	 	$	63,522	 	 	$	54,482	 	 	$	907	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share - Basic	 	$	4.08	 	 	$	2.51	 	 	$	2.91	 	 	$	0.07	 	
Earnings per share - Diluted	 	$	4.06	 	 	$	2.51	 	 	$	2.90	 	 	$	0.07	 	
Dividends declared and paid per share  	 	$	2.64	 	 	$	2.40	 	 	$	0.60	 	 	 	-	 	
Weighted average common shares outstanding - Basic
 	 	 	26,165,600	 	 	 	25,278,726	 	 	 	18,751,726	 	 	 	13,500,000	 	
Weighted average common shares outstanding - Diluted
 	 	 	26,297,521	 	 	 	25,351,297	 	 	 	18,755,195	 	 	 	13,500,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands, at end of period)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	71,496	 	 	$	73,554	 	 	$	46,912	 	 	$	7,431	 	
Total assets	 	 	1,653,272	 	 	 	578,262	 	 	 	489,958	 	 	 	201,628	 	
Total debt (current and long-term)	 	 	936,000	 	 	 	211,933	 	 	 	130,683	 	 	 	125,766	 	
Total shareholders’ equity	 	 	622,185	 	 	 	353,533	 	 	 	348,242	 	 	 	73,374	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash flow provided by operating activities	 	$	120,862	 	 	$	90,068	 	 	$	88,230	 	 	$	2,718	 	

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Net cash flow used in investing activities	 	 	(984,350	)	 	 	(82,840	)	 	 	(268,072	)	 	 	(189,414	)	
Net cash provided by financing activities	 	 	861,430	 	 	 	19,414	 	 	 	219,323	 	 	 	194,127	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (1)	 	$	161,122	 	 	$	100,845	 	 	$	91,743	 	 	$	1,562	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(1)  	EBITDA represents net income plus net interest expense, income tax expense, depreciation and amortization, plus amortization of nonvested stock compensation, and amortization of the value of time charters acquired which is included as a component of other long-term assets or fair market value of time charters acquired.  EBITDA is included because it is used by management and certain investors as a measure of operating performance. EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. EBITDA is also used by our lenders in certain loan covenants. For these reasons, we believe that EBITDA is a useful measure to present to our investors. EBITDA is not an item recognized by U.S. GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP. EBITDA is not a source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.  The following table demonstrates our calculation of EBITDA and provides a reconciliation of EBITDA to net income for each of the periods presented above:	
 
 	 	For the years ended December 31,	 	 	For the period from September 27, 2004 to
December 31,	 	
 	 	2007	 	 	2006	 	 	2005	 	 	2004	 	
(U.S. dollars in thousands except for per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	106,809	 	 	$	63,522	 	 	$	54,482	 	 	$	907	 	
Net interest expense	 	 	22,996	 	 	 	6,906	 	 	 	14,264	 	 	 	234	 	
Amortization of value of time charter acquired (1)	 	 	(5,139	)	 	 	1,850	 	 	 	398	 	 	 	—	 	
Amortization of nonvested stock compensation	 	 	2,078	 	 	 	1,589	 	 	 	277	 	 	 	—	 	
Depreciation and amortization	 	 	34,378	 	 	 	26,978	 	 	 	22,322	 	 	 	421	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 EBITDA	 	$	161,122	 	 	$	100,845	 	 	$	91,743	 	 	$	1,562	 	
 	__________	
 
(1) Amortization of liability or asset of time charter acquired is an (increase) reduction of revenue.

37

 

For the years ended December 31,	 	For the period
from
September 27,
2004 to
December 31,	 	
 	2007	 	2006	 	2005	 	2004	 	
Fleet Data:	 	 	 	 	 	 	 	 	
Ownership days (1)	 	 	 	 	 	 	 	 	
Capesize	403.5	 	—	 	—	 	—	 	
Panamax	2555.0	 	1,923.7	 	1,538.6	 	15.5	 	
Supramax	37.3	 	—	 	—	 	—	 	
Handymax	2,578.3	 	2,614.4	 	2,046.6	 	26.7	 	
Handysize	1,860.0	 	1,825.0	 	1,810.9	 	41.8	 	
 	 	 	 	 	 	 	 	 	
 Total	7,434.1	 	6,363.1	 	5,396.1	 	84.0	 	
 	 	 	 	 	 	 	 	 	
Available days (2)	 	 	 	 	 	 	 	 	
Capesize	396.8	 	—	 	—	 	—	 	
Panamax	2,535.5	 	1,905.7	 	1,534.4	 	15.5	 	
Supramax	32.0	 	—	 	—	 	—	 	
Handymax	2,502.5	 	2,552.6	 	2,043.4	 	26.7	 	
Handysize	1,847.2	 	1,825.0	 	1,810.0	 	41.8	 	
 	 	 	 	 	 	 	 	 	
 Total	7,314.0	 	6,283.3	 	5,387.8	 	84.0	 	
 	 	 	 	 	 	 	 	 	
Operating days (3)	 	 	 	 	 	 	 	 	
Capesize	396.8	 	—	 	—	 	—	 	
Panamax	2,473.5	 	1,886.6	 	1,523.2	 	15.5	 	
Supramax	32.0	 	—	 	—	 	—	 	
Handymax	2,483.7	 	2,527.1	 	2,028.1	 	26.7	 	
Handysize	1,833.8	 	1,822.8	 	1,794.1	 	41.8	 	
 	 	 	 	 	 	 	 	 	
 Total	7,219.9	 	6,236.5	 	5,345.4	 	84.0	 	
 	 	 	 	 	 	 	 	 	
Fleet utilization (4)	 	 	 	 	 	 	 	 	
Capesize	100.0	%	—	 	—	 	—	 	
Panamax	97.6	%	99.0	%	99.3	%	100.0	%	
Supramax	100.0	%	—	 	—	 	—	 	
Handymax	99.3	%	99.0	%	99.3	%	100.0	%	
Handysize	99.3	%	99.9	%	99.1	%	100.0	%	
 Fleet average	98.7	%	99.3	%	99.2	%	100.0	%	

 
 
38

 
 	 	For the years ended December 31,	 	 	For the period from September 27, 2004 to
December 31,	 	
 	 	2007	 	 	2006	 	 	2005	 	 	2004	 	
 
Average Daily Results:
(U.S. dollars)
Time Charter Equivalent (5)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	$	68,377	 	 	$	—	 	 	$	—	 	 	$	—	 	
Panamax	 	 	26,952	 	 	 	24,128 	 	 	 	25,090	 	 	 	41,367	 	
Supramax	 	 	44,959	 	 	 	—	 	 	 	—	 	 	 	—	 	
Handymax	 	 	22,221	 	 	 	21,049	 	 	 	21,255	 	 	 	18,166	 	
Handysize	 	 	15,034	 	 	 	15,788	 	 	 	16,955	 	 	 	17,191	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet average	 	 	24,650	 	 	 	20,455	 	 	 	20,903	 	 	 	21,960	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Daily vessel operating expenses (6)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	$	4,190	 	 	$	—	 	 	$	—	 	 	$	—	 	
Panamax	 	 	4,261	 	 	 	3,615	 	 	 	3,061	 	 	 	2,101	 	
Supramax	 	 	4,334	 	 	 	—	 	 	 	—	 	 	 	—	 	
Handymax	 	 	3,395	 	 	 	3,228	 	 	 	2,796	 	 	 	1,577	 	
Handysize	 	 	3,295	 	 	 	3,019	 	 	 	2,597	 	 	 	1,597	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Fleet average	 	 	3,716	 	 	 	3,285	 	 	 	2,805	 	 	 	1,683	 	
 
(1)  We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
 
(2)  We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
 
(3)  We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
 
(4)  We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
 
(5)  We define TCE rates as our net voyage revenue (voyage revenues less voyage expenses) divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.

39

 
 	 	 	For the years ended December 31,  	 	For the period from September 27, 2004 to December 31,  	
Income statement data  	 	 	2007	 	 	 	2006 	 	 	 	2005 	 	 	 	2004 	 	
(U.S. dollars in thousands))  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Time Charter Equivalent (5)  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage revenues	 	$	185,387	 	 	$	133,232	 	 	$	116,906	 	 	$	1,887	 	
Voyage expenses	 	 	5,100	 	 	 	4,710	 	 	 	4,287	 	 	 	44	 	
Net voyage revenue	 	$	180,287	 	 	$	128,522	 	 	$	112,619	 	 	$	1,843	 	

(6) We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.
 
ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General
 
We are a Marshall Islands company incorporated in September 2004 to transport iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk carrier vessels. As of February 26, 2008, our fleet consisted of five Capesize, six Panamax, three Supramax, six Handymax and eight Handysize drybulk carriers, with an aggregate carrying capacity of approximately 2,020,000 dwt, and the average age of our fleet was approximately 6.37 years, as compared to the average age for the world fleet of approximately 16 years for the drybulk shipping segments in which we compete. All of the vessels in our fleet are on time charters to reputable charterers, including Lauritzen Bulkers, Cargill, HMMC, SK, STX, Pacbasin, DS Norden, A/S Klaveness, Cosco Bulk Carrier Co., Ltd., and NYK Europe. All of the vessels in our fleet are presently engaged under time charter contracts that expire (assuming the option periods in the time charters are not exercised) between March 2008 and November 2011.
 
See page F-7 for a table indicating the delivery dates of all vessels currently in our fleet.
 
We intend to grow our fleet through timely and selective acquisitions of vessels in a manner that is accretive to our cash flow. In connection with this growth strategy, we negotiated the 2007 Credit Facility, for the purpose of acquiring the nine new Capesize vessels, refinancing the outstanding indebtedness under our previous credit facilities, and acquiring additional vessels, including the six drybulk vessels acquired in August 2007 from affiliates of Evalend Shipping Co. S.A.

Our management team and our other employees are responsible for the commercial and strategic management of our fleet. Commercial management includes the negotiation of charters for vessels, managing the mix of various types of charters, such as time charters and voyage charters, and monitoring the performance of our vessels under their charters. Strategic management includes locating, purchasing, financing and selling vessels. We currently contract with three independent technical managers, to provide technical management of our fleet at a lower cost than we believe would be possible in-house. Technical management involves the day-to-day management of vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies. Members of our New York City-based management team oversee the activities of our independent technical managers.
 
 	Year ended December 31, 2007 compared to the year ended December 31, 2006	
 
 	Factors Affecting Our Results of Operations	
 
We believe that the following table reflects important measures for analyzing trends in our results of operations.  The table reflects our ownership days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the years ended December 31, 2007 and 2006.

40

 	 	For the years
ended
December 31,	 	 	Increase	 	 	 	 	
 	 	2007	 	 	2006	 	 	(Decrease)	 	 	% Change	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet Data:	 	 	 	 	 	 	 	 	 	 	 	 	
Ownership days (1)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	403.5	 	 	 	—	 	 	 	403.5	 	 	N/A	 	
Panamax	 	 	2555.0	 	 	 	1,923.7	 	 	 	631.3	 	 	 	32.8	%	
Supramax	 	 	37.3	 	 	 	—	 	 	 	37.3	 	 	N/A	 	
Handymax	 	 	2,578.3	 	 	 	2,614.4	 	 	 	(36.1	)	 	 	(1.4	%)	
Handysize	 	 	1,860.0	 	 	 	1,825.0	 	 	 	35.0	 	 	 	1.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total	 	 	7,434.1	 	 	 	6,363.1	 	 	 	1,071.0	 	 	 	16.8	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Available days (2)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	396.8	 	 	 	—	 	 	 	396.8	 	 	N/A	 	
Panamax	 	 	2,535.5	 	 	 	1,905.7	 	 	 	629.8	 	 	 	33.0	%	
Supramax	 	 	32.0	 	 	 	—	 	 	 	32.0	 	 	N/A	 	
Handymax	 	 	2,502.5	 	 	 	2,552.6	 	 	 	(50.1	)	 	 	(2.0	%)	
Handysize	 	 	1,847.2	 	 	 	1,825.0	 	 	 	22.2	 	 	 	1.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total	 	 	7,314.0	 	 	 	6,283.3	 	 	 	1,030.7	 	 	 	16.4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating days (3)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	396.8	 	 	 	—	 	 	 	396.8	 	 	N/A	 	
Panamax	 	 	2,473.5	 	 	 	1,886.6	 	 	 	586.9	 	 	 	31.1	%	
Supramax	 	 	32.0	 	 	 	—	 	 	 	32.0	 	 	N/A	 	
Handymax	 	 	2,483.7	 	 	 	2,527.1	 	 	 	(43.4	)	 	 	(1.7	%)	
Handysize	 	 	1,833.8	 	 	 	1,822.8	 	 	 	11.0	 	 	 	0.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total	 	 	7,219.9	 	 	 	6,236.5	 	 	 	983.4	 	 	 	15.8	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet  utilization (4)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	100.0	%	 	 	—	 	 	 	100.0	%	 	N/A	 	
Panamax	 	 	97.6	%	 	 	99.0	%	 	 	(1.4	%)	 	 	(1.4	%)	
Supramax	 	 	100.0	%	 	 	—	 	 	 	100.0	%	 	N/A	 	
Handymax	 	 	99.3	%	 	 	99.0	%	 	 	0.3	%	 	 	0.3	%	
Handysize	 	 	99.3	%	 	 	99.9	%	 	 	(0.6	%)	 	 	(0.6	%)	
 Fleet average	 	 	98.7	%	 	 	99.3	%	 	 	(0.6	%)	 	 	(0.6	%)	

 
 	 	For the years ended December 31,	 	 	Increase	 	 	 	 	
 	 	2007	 	 	2006	 	 	(Decrease)	 	 	% Change	 	
(U.S. dollars)	 	 	 	 	 	 	 	 	 	 	 	 	
Average Daily Results:	 	 	 	 	 	 	 	 	 	 	 	 	
Time Charter Equivalent (5)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	$	68,377	 	 	$	—	 	 	$	68,377	 	 	N/A	 	
Panamax	 	 	26,952	 	 	 	24,128	 	 	 	2,824	 	 	 	11.7	%	

41

 
 
Supramax	 	 	44,959	 	 	 	—	 	 	 	44,959	 	 	N/A	 	
Handymax	 	 	22,221	 	 	 	21,049	 	 	 	1,172	 	 	 	5.6	%	
Handysize	 	 	15,034	 	 	 	15,788	 	 	 	(754	)	 	 	(4.8	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet average	 	 	24,650	 	 	 	20,455	 	 	 	4,195	 	 	 	20.5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Daily vessel operating expenses (6)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	$	4,190	 	 	$	—	 	 	$	4,190	 	 	N/A	 	
Panamax	 	 	4,261	 	 	 	3,615	 	 	 	646	 	 	 	17.9	%	
Supramax	 	 	4,334	 	 	 	—	 	 	 	4,334	 	 	N/A	 	
Handymax	 	 	3,395	 	 	 	3,228	 	 	 	167	 	 	 	5.2	%	
Handysize	 	 	3,295	 	 	 	3,019	 	 	 	276	 	 	 	9.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Fleet average	 	 	3,716	 	 	 	3,285	 	 	 	431	 	 	 	13.1	%	
 
(1)  We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
 
(2) We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
 
(3)  We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
 
(4)  We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
 
(5)  We define TCE rates as net voyage revenue (voyage revenues less voyage expenses) divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.

 	For the years endedDecember 31,	
 	2007	2006	
Income statement data	 	 	
(U.S. dollars in thousands)	 	 	
Voyage revenues	$ 185,387	$ 133,232	
Voyage expenses	   5,100	   4,710	
Net voyage revenue	$ 180,287	$ 128,522	

 
42

 
(6)  We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.
 
 	Operating Data	
 
The following compares our operating income and net income for the years ended December 31, 2007 and 2006.
 
 	 	For the years ended December 31,	 	 	Increase	 	 	 	 	
 	 	2007	 	 	2006	 	 	(Decrease)	 	 	% Change	 	
Income Statement Data:	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands except for per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	185,387	 	 	$	133,232	 	 	$	52,155	 	 	 	39.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	5,100	 	 	 	4,710	 	 	 	390	 	 	 	8.3	%	
Vessel operating expenses	 	 	27,622	 	 	 	20,903	 	 	 	6,719	 	 	 	32.1	%	
General and administrative expenses	 	 	12,610	 	 	 	8,882	 	 	 	3,728	 	 	 	42.0	%	
Management fees	 	 	1,654	 	 	 	1,439	 	 	 	215	 	 	 	14.9	%	
Depreciation and amortization	 	 	34,378	 	 	 	26,978	 	 	 	7,400	 	 	 	27.4	%	
Gain on sale of vessels	 	 	(27,047	)	 	 	-	 	 	 	27,047	 	 	 N/A	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total operating expenses	 	 	54,317	 	 	 	62,912	 	 	 	(8,595	)	 	 	(13.7	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	131,070	 	 	 	70,320	 	 	 	60,750	 	 	 	86.4	%	
Other (expense) income	 	 	(24,261	)	 	 	(6,798	)	 	 	(17,463	)	 	 	256.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	106,809	 	 	$	63,522	 	 	$	43,287	 	 	 	68.1	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share - Basic	 	$	4.08	 	 	$	2.51	 	 	$	1.57	 	 	 	62.5	%	
Earnings per share - Diluted	 	$	4.06	 	 	$	2.51	 	 	$	1.55	 	 	 	61.8	%	
Dividends declared and paid per share 	 	$	2.64	 	 	$	2.40	 	 	$	0. 24	 	 	 	10.0	%	
Weighted average common shares outstanding - Basic
 	 	 	26,165,600	 	 	 	25,278,726	 	 	 	886,874	 	 	 	3.5	%	
Weighted average common shares outstanding - Diluted
 	 	 	26,297,521	 	 	 	25,351,297	 	 	 	946,224	 	 	 	3.7	%	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands,
at end of period)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	71,496	 	 	$	73,554	 	 	$	(2,058	)	 	 	(2.8	%)	
Total assets	 	 	1,653,272	 	 	 	578,262	 	 	 	1,075,010	 	 	 	185.9	%	
Total debt (current and long-term)	 	 	936,000	 	 	 	211,933	 	 	 	724,067	 	 	 	341.6	%	
Total shareholders’ equity	 	 	622,185	 	 	 	353,533	 	 	 	268,652	 	 	 	76.0	%	

43

 
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash flow provided by operating activities	 	$	120,862	 	 	$	90,068	 	 	$	30,794	 	 	 	34.2	%	
Net cash flow used in investing activities	 	 	(984,350	)	 	 	(82,840	)	 	 	(901,510	)	 	 	1,088.3	%	
Net cash provided by financing activities	 	 	861,430	 	 	 	19,414	 	 	 	842,016	 	 	 	4,337.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (1)	 	$	161,122	 	 	$	100,845	 	 	$	60,277	 	 	 	59.8	%	

(1)  	EBITDA represents net income plus net interest expense, income tax expense, depreciation and amortization, plus amortization of nonvested stock compensation, and amortization of the value of time charters acquired which is included as a component of other long-term assets or fair market value of time charters acquired.  EBITDA is included because it is used by management and certain investors as a measure of operating performance.  EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. EBITDA is also used by our lenders in certain loan covenants. For these reasons, we believe that EBITDA is a useful measure to present to our investors. EBITDA is not an item recognized by U.S. GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP.  EBITDA is not a source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.  The following table demonstrates our calculation of EBITDA and provides a reconciliation of	
EBITDA to net income for each of the periods presented above:
 	 	For the years ended December 31,	 	
 	 	2007	 	 	2006	 	
(U.S. dollars in thousands except for per share amounts)	 	 	 	 	 	 	
Net income	 	$	106,809	 	 	$	63,522	 	
Net interest expense	 	 	22,996	 	 	 	6,906	 	
Amortization of value of time charter acquired (*)	 	 	(5,139	)	 	 	1,850	 	
Amortization of nonvested stock compensation	 	 	2,078	 	 	 	1,589	 	
Depreciation and amortization	 	 	34,378	 	 	 	26,978	 	
 	 	 	 	 	 	 	 	 	
 EBITDA	 	$	161, 122	 	 	$	100,845	 	

 	(*) Amortization of liability or asset of time charter acquired is an (increase) reduction of revenue.	

 
44

 
 
 	Results of Operations	
 
REVENUES-
 
Our revenues are driven primarily by the number of vessels in our fleet, the number of days during which our vessels operate and the amount of daily charterhire that our vessels earn, that, in turn, are affected by a number of factors, including:
 
·   	the duration of our charters;	
 
·   	our decisions relating to vessel acquisitions and disposals;	
 
·   	the amount of time that we spend positioning our vessels;	
 
·   	the amount of time that our vessels spend in drydock undergoing repairs;	
 
·   	maintenance and upgrade work;	
 
·   	the age, condition and specifications of our vessels;	
 
·   	levels of supply and demand in the drybulk shipping industry; and	
 
·   	other factors affecting spot market charter rates for drybulk carriers.	
 
For 2007, revenues grew 39.1% to $185.4 million versus $133.2 million for 2006.  Revenues in both periods consisted of charter payments for our vessels.  The increase in revenues was primarily due to the growth of our fleet during the twelve months ended December 31, 2007, as well as higher TCE rates obtained for all Panamax vessels and three Handymax vessels, off-set by lower rates for the five Handysize vessels chartered to Lauritzen.
 
The average TCE rate of our fleet increased to $24,650 a day for 2007 from $20,455 a day for 2006.  The increase in TCE rates was primarily due to higher time charter rates achieved in 2007 versus the prior year for all of the Panamax vessels, as well as 3 of the Handymax vessels in our current fleet.  Additionally, included in the TCE rates for the third and fourth quarter of 2007 are the time charter rates for the four Capesize vessels from the Metrostar acquisition and three Supramax vessels from the Evalend acquisition that furthered the Company’s TCE rate in comparison to the 2006 period.  The increase was countered by lower charter rates achieved in 2007 versus 2006 for the five Handysize vessels on charter with Lauritzen Bulkers A/S, which commenced their time charter contracts at $13,500 per vessel per day during the third quarter of 2006. The five Handysize vessels commenced time charter extensions at higher rates of $19,500 per vessel per day on September 5, 2007.
 
For 2007 and 2006, we had ownership days of 7,434.1 days and 6,363.1 days, respectively.  Fleet utilization for 2007 and 2006 was 98.7% and 99.3%, respectively.  The decline in utilization was due primarily to the unscheduled offhire of approximately 50 days in aggregate for the Genco Trader, Genco Glory and Genco Sugar associated with maintenance and other delays.
 
Please see page 7 for a table that sets forth information about the current employment of the vessels currently in our fleet as of February 26, 2008.

VOYAGE EXPENSES-
 
Voyage expenses include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated third parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on voyage charters because these expenses are for the account of the vessel owner.

45

 
 
For the years ended 2007 and 2006, we did not incur port and canal charges or any significant expenses related to the consumption of bunkers as part of our vessels’ overall expenses, because all of our vessels were employed under time charters that require the charterer to bear all of those expenses.
 
For 2007 and 2006, voyage expenses were $5.1 million and $4.7 million, respectively, and consisted primarily of brokerage commissions paid to third parties.
 
VESSEL OPERATING EXPENSES-
 
Vessel operating expenses increased to $27.6 million from $20.9 million for 2007 and 2006, respectively.  This was mostly due to the expansion of our fleet during 2007 as compared to 2006.  Furthermore, the increased costs were due to an increase in crewing, repairs and maintenance and lube costs.
 
For 2007 and 2006, the average daily vessel operating expenses for our fleet were $3,716 and $3,285 per day, respectively.  This increase was mostly due to increased costs for crewing, repairs and maintenance and lube costs.  We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation.
 
Our vessel operating expenses, which generally represent fixed costs, will increase as a result of the expansion of our fleet. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for insurance, may also cause these expenses to increase.  The Company increased its 2008 budget based on the anticipated increased cost for crewing and lubes.

Based on management’s estimates and budgets provided by our technical manager, we expect our vessels to have daily vessel operating expenses during 2008 of:

Vessel Type	 	Average
Daily
Budgeted
Amount	 	
Capesize	 	$	5,200	 	
Panamax	 	 	5,150	 	
Supramax	 	 	4,250	 	
Handymax	 	 	4,700	 	
Handysize	 	 	4,200	 	

GENERAL AND ADMINISTRATIVE EXPENSES-
 
We incur general and administrative expenses, which relate to our onshore non-vessel-related activities. Our general and administrative expenses include our payroll expenses, including those relating to our executive officers, rent, legal, auditing and other professional expenses.
 
For 2007 and 2006, general and administrative expenses were $12.6 million and $8.9 million, respectively.  The increased general and administrative expenses were mainly due to higher professional expenses, including professional fees associated with the sale of shares by Fleet Acquisition LLC during the first quarter of 2007, costs associated with higher employee non-cash compensation and other employee related costs.
 
MANAGEMENT FEES-
 
 We incur management fees to third-party technical management companies for the day-to-day management of

46

 
our vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies.  For 2007 and 2006, management fees were $1.7 million and $1.4 million, respectively.  The increase was due primarily to increased rates charged by the management companies we use as well to as the operation of a larger fleet.

DEPRECIATION AND AMORTIZATION-
 
We depreciate the cost of our vessels on a straight-line basis over the expected useful life of each vessel. Depreciation is based on the cost of the vessel less its estimated residual value. We estimate the useful life of our vessels to be 25 years, which we believe is an industry standard in the drybulk shipping industry. Furthermore, we estimate the residual values of our vessels to be based upon $175 per lightweight ton, which we believe is also a standard in the drybulk shipping industry.
 
For years ended December 31, 2007 and 2006, depreciation and amortization charges were $34.4 million and $27.0 million, respectively, an increase of $7.4 million.  The increase primarily was due to the growth in our fleet during 2007 as compared to 2006.
 
GAIN ON SALE OF VESSELS-
 
For year ended December 31, 2007, the gain on the sale of vessels was $27.0 million attributable to the sale of the Genco Glory and Genco Commander.  During the year ended December 31, 2006, the Company did not sell any vessels.

OTHER (EXPENSE) INCOME-

(LOSS) INCOME FROM DERIVATIVE INSTRUMENTS-

 Effective August 16, 2007, the Company has elected hedge accounting for forward currency contracts in place associated with the cost basis of shares of Jinhui stock it has purchased.     For further details of the application of hedge accounting, please refer to the discussion under the subheading “Currency risk management” on page 64.  For 2007 and 2006, (loss) income from derivative instruments was ($1.3) million and $0.1 million, respectively.  The net loss is primarily attributable to the forward currency contracts associated with Jinhui prior to electing hedge accounting.  The gain in 2006 is due solely to the gain in value of the Company’s two interest rate swaps with DnB NOR Bank having fixed rates of 5.075% and 5.25%, respectively, prior to being designated against borrowings.
 
 	NET INTEREST EXPENSE-	
 
For 2007 and 2006, net interest expense was $23.0 million and $6.9 million, respectively.  Net interest expense consisted mostly of interest payments made under our 2005 Credit Facility, the Short-term Line, and the 2007 Credit Facility.  During the third quarter of 2007, the Company refinanced the 2005 Credit Facility and the Short-term Line with the 2007 Credit Facility resulting in a non-cash charge of $3.6 million associated with the write-down of unamortized deferred bank charges related to our former facilities.  Additionally, the Company capitalized certain interest costs associated with seven of the Capesize vessels under construction.  Interest income as well as amortization of deferred financing costs related to our respective credit facilities is included in both periods.  The increase in net interest expense for 2007 versus 2006 was mostly a result of higher outstanding debt due to the acquisition of nine vessels in the second half of 2007, and interest expense associated with the borrowings used for the purchase of Jinhui stock.

47

 

 
Year ended December 31, 2006 compared to the year ended December 31, 2005
 
 	Factors Affecting Our Results of Operations	
 
We believe that the following table reflects important measures for analyzing trends in our results of operations.  The table reflects our ownership days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the years ended December 31, 2006 and 2005.

 	 	For the years ended December 31,	 	 	Increase	 	 	 	 	
 	 	2006	 	 	2005	 	 	(Decrease)	 	 	% Change	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet Data:	 	 	 	 	 	 	 	 	 	 	 	 	
Ownership days (1)	 	 	 	 	 	 	 	 	 	 	 	 	
Panamax	 	 	1,923.7	 	 	 	1,538.6	 	 	 	385.1	 	 	 	25.0	%	
Handymax	 	 	2,614.4	 	 	 	2,046.6	 	 	 	567.8	 	 	 	27.7	%	
Handysize	 	 	1,825.0	 	 	 	1,810.9	 	 	 	14.1	 	 	 	0.8	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total	 	 	6,363.1	 	 	 	5,396.1	 	 	 	967.0	 	 	 	17.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Available days (2)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Panamax	 	 	1,905.7	 	 	 	1,534.4	 	 	 	371.3	 	 	 	24.2	%	
Handymax	 	 	2,552.6	 	 	 	2,043.4	 	 	 	509.2	 	 	 	24.9	%	
Handysize	 	 	1,825.0	 	 	 	1,810.0	 	 	 	15.0	 	 	 	0.8	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total	 	 	6,283.3	 	 	 	5,387.8	 	 	 	895.5	 	 	 	16.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating days (3)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Panamax	 	 	1,886.6	 	 	 	1,523.2	 	 	 	363.4	 	 	 	23.9	%	
Handymax	 	 	2,527.1	 	 	 	2,028.1	 	 	 	499.0	 	 	 	24.6	%	
Handysize	 	 	1,822.8	 	 	 	1,794.1	 	 	 	28.7	 	 	 	1.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total	 	 	6,236.5	 	 	 	5,345.4	 	 	 	891.1	 	 	 	16.7	%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet  utilization (4)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Panamax	 	 	99.0	%	 	 	99.3	%	 	 	(0.3	%)	 	 	(0.3	%)	
Handymax	 	 	99.0	%	 	 	99.3	%	 	 	(0.3	%)	 	 	(0.3	%)	
Handysize	 	 	99.9	%	 	 	99.1	%	 	 	0.8	%	 	 	0.8	%	
 Fleet average	 	 	99.3	%	 	 	99.2	%	 	 	0.1	%	 	 	0.1	%	

 

48

 

 	For the years ended December 31,	 	Increase	 	 	 	 	
 	2006	 	2005	 	(Decrease)	 	 	% Change	
(U.S. dollars)	 	 	 	 	 	 	 	 	 	
Average Daily Results:	 	 	 	 	 	 	 	 	 	
Time Charter Equivalent (5)	 	 	 	 	 	 	 	 	 	
Panamax	$	24,128	 	$	25,090	 	$	(962	)	 	(3.8	%)	
Handymax	 	21,049	 	 	21,255	 	 	(206	)	 	(1.0	%)	
Handysize	 	15,788	 	 	16,955	 	 	(1,167	)	 	(6.9	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet average	 	20,455	 	 	20,903	 	 	(448	)	 	(2.1	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Daily vessel operating expenses (6)	 	 	 	 	 	 	 	 	 	 	 	 	
Panamax	$	3,615	 	$	3,061	 	$	554	 	 	18.1	%	
Handymax	 	3,228	 	 	2,796	 	 	432	 	 	15.5	%	
Handysize	 	3,019	 	 	2,597	 	 	422	 	 	16.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 Fleet average	 	3,285	 	 	2,805	 	 	480	 	 	17.1	%	

(1)  We define ownership days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ownership days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
 
(2) We define available days as the number of our ownership days less the aggregate number of days that our vessels are off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys and the aggregate amount of time that we spend positioning our vessels. Companies in the shipping industry generally use available days to measure the number of days in a period during which vessels should be capable of generating revenues.
 
(3)  We define operating days as the number of our available days in a period less the aggregate number of days that our vessels are off-hire due to unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a period during which vessels actually generate revenues.
 
(4)  We calculate fleet utilization by dividing the number of our operating days during a period by the number of our available days during the period. The shipping industry uses fleet utilization to measure a company’s efficiency in finding suitable employment for its vessels and minimizing the number of days that its vessels are off-hire for reasons other than scheduled repairs or repairs under guarantee, vessel upgrades, special surveys or vessel positioning.
 
(5)  We define TCE rates as net voyage revenue (voyage revenues less voyage expenses) divided by the number of our available days during the period, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charterhire rates for vessels on voyage charters are generally not expressed in per-day amounts while charterhire rates for vessels on time charters generally are expressed in such amounts.

 	 	For the years
ended
December 31,	 	
 	 	2006	 	2005	 	
Income statement data	 	 	 	 	 	
(U.S. dollars in thousands)	 	 	 	 	 	
Voyage revenues	 	$	133,232	 	$	116,906	 	
Voyage expenses	 	 	4,710	 	 	4,287	 	
Net voyage revenue	 	$	128,522	 	$	112,619	 	

 

49

 
 
(6)  We define daily vessel operating expenses to include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance (excluding drydocking), the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses. Daily vessel operating expenses are calculated by dividing vessel operating expenses by ownership days for the relevant period.
 
 	Operating Data	
 
The following discusses our operating income and net income for the years ended December 31, 2006 and 2005.
 
 	 	For the years ended December 31,	 	 	Increase	 	 	 	 	
 	 	2006	 	 	2005	 	 	(Decrease)	 	 	% Change	 	
Income Statement Data:	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands except for per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	$	133,232	 	 	$	116,906	 	 	$	16,326	 	 	 	14.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	4,710	 	 	 	4,287	 	 	 	423	 	 	 	9.9	%	
Vessel operating expenses	 	 	20,903	 	 	 	15,135	 	 	 	5,768	 	 	 	38.1	%	
General and administrative expenses	 	 	8,882	 	 	 	4,937	 	 	 	3,945	 	 	 	79.9	%	
Management fees	 	 	1,439	 	 	 	1,479	 	 	 	(40	)	 	 	(2.7	%)	
Depreciation and amortization	 	 	26,978	 	 	 	22,322	 	 	 	4,656	 	 	 	20.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Total operating expenses	 	 	62,912	 	 	 	48,160	 	 	 	14,752	 	 	 	30.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	70,320	 	 	 	68,746	 	 	 	1,574	 	 	 	2.3	%	
Other (expense) income	 	 	(6,798	)	 	 	(14,264	)	 	 	7,466	 	 	 	52.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	63,522	 	 	$	54,482	 	 	$	9,040	 	 	 	16.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share - Basic	 	$	2.51	 	 	$	2.91	 	 	$	(0.40	)	 	 	(13.7	%)	
Earnings per share - Diluted	 	$	2.51	 	 	$	2.90	 	 	$	(0.39	)	 	 	(13.4	%)	
Dividends declared and paid per share 	 	$	2.40	 	 	$	0.60	 	 	$	1.80	 	 	 	300.0	%	
Weighted average common shares outstanding - Basic	 	 	25,278,726	 	 	 	18,751,726	 	 	 	6,527,000	 	 	 	34.8	%	
Weighted average common shares outstanding - Diluted	 	 	25,351,297	 	 	 	18,755,195	 	 	 	6,596,102	 	 	 	35.2	%	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands, at end of period)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	73,554	 	 	$	46,912	 	 	$	26,642	 	 	 	56.8	%	
Total assets	 	 	578,262	 	 	 	489,958	 	 	 	88,304	 	 	 	18.0	%	
Total debt (current and long-term)	 	 	211,933	 	 	 	130,683	 	 	 	81,250	 	 	 	62.2	%	
Total shareholders’ equity	 	 	353,533	 	 	 	348,242	 	 	 	5,291	 	 	 	1.5	%	

 

50

 

Other Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash flow provided by operating activities	 	$	90,068	 	 	$	88,230	 	 	$	1,838	 	 	 	2.1	%	
Net cash flow used in investing activities	 	 	(82,840	)	 	 	(268,072	)	 	 	185,232	 	 	 	(69.1	%)	
Net cash provided by financing activities	 	 	19,414	 	 	 	219,323	 	 	 	(199,909	)	 	 	(91.1	%)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (1)	 	$	100,845	 	 	$	91,743	 	 	$	9,102	 	 	 	9.9	%	

(1)  	EBITDA represents net income plus net interest expense, income tax expense, depreciation and amortization, plus amortization of nonvested stock compensation, and amortization of the value of time charters acquired which is included as a component of other long-term assets or fair market of time charters acquired.  EBITDA is included because it is used by management and certain investors as a measure of operating performance.  EBITDA is used by analysts in the shipping industry as a common performance measure to compare results across peers. Our management uses EBITDA as a performance measure in consolidating internal financial statements and it is presented for review at our board meetings. EBITDA is also used by our lenders in certain loan covenants. For these reasons, we believe that EBITDA is a useful measure to present to our investors.  EBITDA is not an item recognized by U.S. GAAP and should not be considered as an alternative to net income, operating income or any other indicator of a company’s operating performance required by U.S. GAAP.  EBITDA is not a source of liquidity or cash flows as shown in our consolidated statement of cash flows. The definition of EBITDA used here may not be comparable to that used by other companies.  The following table demonstrates our calculation of EBITDA and provides a reconciliation of	

EBITDA to net income for each of the periods presented above:

 	 	For the years ended December 31,	 	
 	 	2006	 	2005	 	
(U.S. dollars in thousands except for per share amounts)	 	 	 	 	 	
Net income	 	$	63,522	 	$	54,482	 	
Net interest expense	 	 	6,906	 	 	14,264	 	
Amortization of value of time charter acquired (*)	 	 	1,850	 	 	398	 	
Amortization of nonvested stock compensation	 	 	1,589	 	 	277	 	
Depreciation and amortization	 	 	26,978	 	 	22,322	 	
 	 	 	 	 	 	 	 	
 EBITDA	 	$	100,845	 	$	91,743	 	
 
 	 	(*) Amortization of liability or asset of time charter acquired is an (increase) reduction of revenue.	
 
 	Results of Operations	
 
 	REVENUES -	
 
For 2006, revenues grew 13.9% to $133.2 million versus $116.9 million for 2005.  Revenues in both periods consisted of charterhire payments for our vessels.  The increase in revenues was due primarily to the operation of a larger fleet.

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The average TCE rate of our fleet declined by 2.1% to $20,455 a day for 2006 from $20,903 a day for 2005 mostly due to lower charter rates achieved on the five handysize vessels on time charter to Lauritzen Bulkers.  The five vessels were renewed under a time charter with Lauritzen Bulkers in the third quarter of 2006 at a lower charter rate than the previous time charter.  Furthermore, lower charter rates were realized on the Genco Leader, which was subject to lower overall spot market in 2006 versus 2005.
 
For 2006 and 2005, we had ownership days of 6,363.1 days and 5,396.1 days, respectively.  Fleet utilization remained static at 99.3% in 2006 versus 99.2% in 2005, respectively.

 VOYAGE EXPENSES-
 
Voyage expenses include port and canal charges, fuel (bunker) expenses and brokerage commissions payable to unaffiliated third parties. Port and canal charges and bunker expenses primarily increase in periods during which vessels are employed on voyage charters because these expenses are for the account of the vessel owner.
 
For the years ended 2006 and 2005, we did not incur port and canal charges or any significant expenses related to the consumption of bunkers as part of our vessels’ overall expenses, because all of our vessels were employed under time charters that require the charterer to bear all of those expenses.
 
For 2006 and 2005, voyage expenses were $4.7 million and $4.3 million, respectively, and consisted primarily of brokerage commissions paid to third parties.
 
VESSEL OPERATING EXPENSES-
 
Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes and other miscellaneous expenses.  For 2006 and 2005, vessel operating expenses were $20.9 million and $15.1 million, respectively.  The increase in vessel operating expenses year over year was due mostly to the fact that our operations had not fully ramped up in 2005 and our fleet expanded during 2006 as compared to 2005.
 
The average daily vessel operating expenses for our fleet were $3,285 and $2,805 per day for 2006 and 2005, respectively.  As 2005 was our initial period of operations for the majority of our fleet, we believe 2006 is more reflective of our daily vessel operating expenses.  We believe daily vessel operating expenses are best measured for comparative purposes over a 12-month period in order to take into account all of the expenses that each vessel in our fleet will incur over a full year of operation.
 
GENERAL AND ADMINISTRATIVE EXPENSES-
 
For 2006 and 2005, general and administrative expenses were $8.9 million and $4.9 million, respectively.  General and administrative expenses increased as a result of the expansion of our fleet and the costs associated with running a public company for a full twelve-month period, including the preparation of disclosure documents, legal and accounting costs, incremental director and officer liability insurance costs, incremental director and employee compensation, and costs related to compliance with the Sarbanes-Oxley Act of 2002.
 
MANAGEMENT FEES-
 
 We incur management fees to third-party technical management companies that include such services as the day-to-day management of our vessels, including performing routine maintenance, attending to vessel operations and

 

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arranging for crews and supplies. For 2006 and 2005, management fees were $1.4 million and $1.5 million, respectively.

DEPRECIATION AND AMORTIZATION-
 
For 2006 and 2005, depreciation and amortization charges were $27.0 million and $22.3 million, respectively.  The increase primarily was due to the growth in our fleet during 2006 as compared to 2005.

OTHER (EXPENSE) INCOME-

(LOSS) INCOME FROM DERIVATIVE INSTRUMENTS-

For 2006, income from derivative instruments was $0.1 million and is due solely to the gain in value during the time the 5.075% and 5.25% Swaps had not been designated against our debt.  For 2005, we had no derivative instruments in place that resulted in income from derivative instruments.

NET INTEREST EXPENSE-
 
For 2006 and 2005, net interest expense was $6.9 million and $14.3 million, respectively.  Net interest expense consisted mostly of interest payments made under our 2005 Credit Facility for the 2006 period.  For the 2005 period, net interest expense consisted mostly of interest payments made under our Original Credit Facility entered into on December 3, 2004 and the 2005 Credit Facility.  Additionally, interest income as well as amortization of deferred financing costs related to our credit facilities is included in both periods.  The decrease in net interest expense for 2006 versus 2005 was mostly a result of a charge of $4.1 million in 2005 which is associated with the write-down of unamortized deferred bank charges related to our Original Credit Facility, lower interest margin and a lower debt outstanding under our 2005 Credit Facility.
 
LIQUIDITY AND CAPITAL RESOURCES
 
To date, we have financed our capital requirements with cash flow from operations, equity contributions and bank debt. We have used our funds primarily to fund vessel acquisitions, regulatory compliance expenditures, the repayment of bank debt and the associated interest expense and the payment of dividends. We will require capital to fund ongoing operations, acquisitions and debt service.  We expect to rely on operating cash flows as well as long-term borrowings to implement our growth plan and continue our dividend policy.  In October 2007, the Company closed on an equity offering of 3,358,209 shares of our common stock (with the exercise of the underwriters’ over-allotment option) at an offering price of $67 per share.  The Company received net proceeds of $213.9 million after deducting underwriters’ fees and expenses.  The Company has repaid a portion of the outstanding balance under the 2007 Credit Facility with proceeds from the offering.  We also may consider debt and additional equity financing alternatives from time to time.
 
In connection with the agreement to acquire nine Capesize vessels announced on July 18, 2007 and the additional acquisition of three Supramax and three Handysize vessels announce in August 2007, the Company, entered into the 2007 Credit Facility on July 20, 2007 to fund acquisitions and the repayment of all other existing debt under the 2005 Credit Facility and Short-Term Line.  We anticipate that internally generated cash flow and borrowings under our 2007 Credit Facility will be sufficient to fund the operations of our fleet, including our working capital requirements for the foreseeable future.  The Company anticipates primarily utilizing its 2007 Credit Facility as well as internally generated cash flow to fund the acquisition of the remaining four Capesize vessels, but may also consider debt (including convertible securities) and equity financing alternatives.
 
Dividend Policy
 
Our dividend policy is to declare quarterly distributions to shareholders by each February, May, August and November, which commenced in November 2005, substantially equal to our available cash from operations during the

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previous quarter, less cash expenses for that quarter (principally vessel operating expenses and debt service) and any reserves our board of directors determines we should maintain. These reserves may cover, among other things, drydocking, repairs, claims, liabilities and other obligations, interest expense and debt amortization, acquisitions of additional assets and working capital. The following table summarizes the dividends declared based on the results of the respective fiscal quarter:

FISCAL YEAR ENDED DECEMBER 31, 2007	 	Dividend per share	 	Declaration
date	
 	 	 	 	 	
4 th Quarter	 	$	0.85	 	2/13/08	
3 rd Quarter	 	$	0.66	 	10/25/07	
2 nd Quarter	 	$	0.66	 	7/26/07	
1 st Quarter	 	$	0.66	 	4/26/07	
FISCAL YEAR ENDED DECEMBER 31, 2006	 	 	 	 	 	
4 th Quarter	 	$	0.66	 	2/8/07	
3 rd Quarter	 	$	0.60	 	10/26/06	
2 nd Quarter	 	$	0.60	 	7/27/06	
1 st Quarter	 	$	0.60	 	4/27/06	

The aggregate amount of the dividend paid in 2007, 2006 and 2005 was $69.6 million, $61.0 million and $15.2 million, respectively, which we funded from cash on hand. However, in the future, we may incur other expenses or liabilities that would reduce or eliminate the cash available for distribution as dividends.
 
The declaration and payment of any dividend is subject to the discretion of our board of directors. The timing and amount of dividend payments will depend on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions in our loan agreements, the provisions of Marshall Islands law affecting the payment of distributions to shareholders and other factors. Our board of directors may review and amend our dividend policy from time to time in light of our plans for future growth and other factors.
 
We believe that, under current law, our dividend payments from earnings and profits will constitute “qualified dividend income” and, as such, will generally be subject to a 15% U.S. federal income tax rate with respect to non-corporate U.S. shareholders that meet certain holding period and other requirements (through 2010). Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of a U.S. shareholder's tax basis in its common stock on a dollar-for-dollar basis and, thereafter, as capital gain.
 
Cash Flow
 
Net cash provided by operating activities for 2007 and 2006, was $120.9 million and $90.1 million, respectively.  The increase was primarily due to the operation of a larger fleet, which contributed to increases in net income, depreciation, accounts payable, and deferred revenues. These increases were also due to an unrealized loss of $1.5 million associated with the forward currency contract in place at December 31, 2007 and $9.9 million in realized losses associated with Jinhui investing activities, offset by an unrealized gain of $10.2 million on the currency translation associated with the Jinhui investment. Furthermore there was a $27.0 million gain related to the sale of the Genco Commander and the Genco Glory for 2007.  Net cash provided by operating activities for 2007 was a result primarily of net income of $106.8 million, less the gain from the sale of the Genco Commander and the Genco Glory of $27.0 million, plus depreciation and amortization charges of $34.4 million.  Net cash provided by operating activities for 2006 increased 2.1% to $90.1 million from $88.2 million in 2005. The increase primarily was due to higher net income and depreciation and amortization in 2006 due to the operation of a larger fleet.  Net cash from operating activities for year ended December 31, 2006 was primarily a result of recorded net income of $63.5 million, and depreciation and

 

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amortization charges of $27.0 million. For 2005, net cash provided from operating activities was primarily a result of recorded net income of $54.5 million, and depreciation and amortization charges of $22.3 million, and amortization of deferred financing costs of $4.6 million.
 
Net cash used in investing activities increased to $984.4 million for 2007 from $82.8 for 2006.  For 2007, the cash used in investing activities related primarily to the purchase of $115.6 million of Jinhui stock, the purchase price of vessels of $764.6 million, and deposits made on vessels to be acquired of $150.3 million, offset by proceeds received from the sale of the Genco Commander and the Genco Glory of $56.5 million.  For 2006 the cash used in investing activities related primarily to the purchase of three vessels for $81.6 million.  The majority of our initial fleet was acquired in 2005 and as a result net cash used in investing activities was $268.1 million for 2005.  For 2005, the cash used in investing activities relating to the acquisition of ten vessels was $267.0 million.
 
Net cash provided by financing activities for 2007 and 2006 was $861.4 million and $19.4 million, respectively.  For 2007, net cash provided by financing activities consisted of the drawdown of $77.0 million related to the purchase of shares of Jinhui stock, $213.9 million in proceeds received from the equity offering, the drawdown of $1,193.0 million on our 2007 Credit Facility related to the completion of nine vessel acquisitions and deposits on six vessels to be acquired, the refinancing of our prior credit facilities for $288.9 million, repayment of $257.0 million under our new credit facility from proceeds received from the equity offering and the sale of vessels, and the payment of cash dividends of $69.6 million.  For 2006, net cash used by financing activities consisted mostly of the payment of cash dividends of $61.0 million offset by $81.3 million of proceeds from our 2005 Credit Facility used to acquire three vessels.  Net cash provided by financing activities for the years ended 2005 was $219.3 million. For 2005, the primary sources of net cash provided by financing activities were net proceeds from our initial public equity offering of $230.3 million and $130.7 million in net borrowings under our 2005 Credit Facility. In addition, we retired the $357.0 million outstanding under our Original Credit Facility and paid cash dividends of $15.2 million.
 
2007 Credit Facility

On July 20, 2007, the Company entered into the 2007 Credit Facility for the purpose of acquiring the nine new Capesize vessels and refinancing the Company’s existing 2005 Credit Facility and Short-Term Line.  DnB Nor Bank ASA is Mandated Lead Arranger, Bookrunner, and Administrative Agent. The Company has used borrowings under the 2007 Credit Facility to repay amounts outstanding under the 2005 Credit Facility and the Short-Term Line, which have been terminated.  The maximum amount that may be borrowed under the 2007 Credit Facility is $1,377 million.  Lastly, the Company, as required, pledged all of the Jinhui shares it has purchased as collateral against the 2007 Credit Facility.  As of December 31, 2007, $441.0 million remains available to fund future vessel acquisitions.  The Company may borrow up to $50 million of the $441.0 million for working capital purposes.  As of February 26, 2008, after repayment of $43 million of borrowings due to the sale of the Genco Trader and additional borrowings of $151.5 million for the acquisition of the Genco Champion and Genco Constantine during the first quarter of 2008, $332.5 million remains available to fund future vessel acquisitions.
 
 Under the 2007 Credit Facility, subject to the conditions set forth in the credit agreement, the Company may borrow an amount up to $1,377 million.  Amounts borrowed and repaid under the 2007 Credit Facility may be reborrowed.  The 2007 Credit Facility has a maturity date of July 20, 2017, or ten years from the signing date of the 2007 Credit Facility.
 
 Loans made under the 2007 Credit Facility may be used for the following:

·  	up to 100% of the en bloc purchase price of $1,111 million for nine modern drybulk Capesize vessels, which the Company has agreed to purchase from companies within the Metrostar Management Corporation group;	

·  	repayment of amounts previously outstanding under the Company’s 2005 Credit Facility, or $206.2 million;	

 

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·  	the repayment of amounts previously outstanding under the Company’s Short-Term Line, or $77 million;	

·  	possible acquisitions of additional dry bulk carriers between 25,000 and 180,000 dwt that are up to ten years of age at the time of delivery and not more than 18 years of age at the time of maturity of this credit facility;	

·  	up to $50 million of working capital; and	

·  	the issuance of up to $50 million of standby letters of credit. At December 31, 2007, there were no letters of credit issued under the 2007 Credit Facility.	
 
All amounts owing under the 2007 Credit Facility are secured by the following:

·  	cross-collateralized first priority mortgages of each of the Company’s existing vessels and any new vessels financed with the new credit facility;	

·  	an assignment of any and all earnings of the mortgaged vessels;	

·  	an assignment of all insurances of the mortgaged vessels;	

·  	a first priority perfected security interest in all of the shares of Jinhui owned by the Company;	

·  	an assignment of the shipbuilding contracts and an assignment of the shipbuilder’s refund guarantees meeting the Administrative Agent’s criteria for any additional newbuildings financed under the new credit facility; and	

·  	a first priority pledge of the Company’s ownership interests in each subsidiary guarantor.	

The Company has completed a pledge of its ownership interests in the subsidiary guarantors that own the nine Capesize vessels to be acquired.  The other collateral described above was pledged, as required, within thirty days of the effective date of the 2007 Credit Facility.
 
 The Company’s borrowings under the 2007 Credit Facility bear interest at the London Interbank Offered Rate (“LIBOR”) for an interest period elected by the Company of one, three, or six months, or longer if available, plus the Applicable Margin (which is 0.90% per annum for the first five years of the 2007 Credit Facility and 0.95% thereafter).  If the Company’s ratio of Total Debt to Total Capitalization (each as defined in the credit agreement for the 2007 Credit Facility) is less than 70%, the Applicable Margin decreases to 0.85% and 0.90%, respectively.  In addition to other fees payable by the Company in connection with the 2007 Credit Facility, the Company paid a commitment fee at a rate of 0.20% per annum of the daily average unutilized commitment of each lender under the facility until September 30, 2007, and 0.25% thereafter.
 
 The 2007 Credit Facility will be subject to ten consecutive semi-annual reductions of 7.0% of the total amount of credit granted under the new facility, with the first reduction occurring on the fifth anniversary of the signing date and a balloon payment reduction of 30% on the maturity date.  The Company may prepay the 2007 Credit Facility, without penalty, with two days notice for LIBOR rate advances, in minimum amounts of $10 million together with accrued interest on the amount prepaid.
 
 The 2007 Credit Facility includes the following financial covenants which will apply to the Company and its subsidiaries on a consolidated basis and will be measured at the end of each fiscal quarter beginning with June 30, 2007:

 

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·  	The leverage covenant requires the maximum average net debt to EBITDA to be a ratio of at least 5.5:1.0.	
 
·  	Cash and cash equivalents must not be less than $0.5 million per mortgaged vessel.	

·  	The ratio of EBITDA to interest expense, on a rolling last four-quarter basis, must be no less than 2.0:1.0.	

·  	After July 20, 2007, consolidated net worth must be no less than $263,300 plus 80% of the value of the any new equity issuances of the Company from June 30, 2007.  Based on the equity offering completed in October 2007, this would require the consolidated net worth to be no less than approximately $434.4 million.	
 
·  	The aggregate fair market value of the mortgaged vessels must at all times be at least 130% of the aggregate outstanding principal amount under the new credit facility plus all letters of credit outstanding; the Company has a 30 day remedy period to post additional collateral or reduce the amount of the revolving loans and/or letters of credit outstanding.	

 Other covenants in the 2007 Credit Facility are substantially similar to the covenants in the Company’s previous credit facilities. As of December 31, 2007, the Company has been in compliance with these covenants since the inception of the facility.

 The Company can continue to pay cash dividends in accordance with its dividend policy and certain terms of the credit agreement so long as no event of default has occurred and is continuing and no event of default will occur as a result of the payment of such dividend.  In addition, the 2007 Credit Facility was amended as of February 13, 2008 to permit the Company to implement its share repurchase program, which was recently approved by its board of directors.  Under this amendment, the dollar amount of shares repurchased is counted toward the maximum dollar amount of dividends that may be paid in any fiscal quarter.  For further details of our share repurchase program, see Note 21 – Subsequent Events to our financial statements.

Due to refinancing of the Company’s previous facilities, the Company incurred a non-cash write-off of the unamortized deferred financing cost in the amount of $3.6 associated with the Company’s previous facilities.
 
Short-Term Line - Refinanced by the 2007 Credit Facility
 
On May 3, 2007, the Company entered into a short-term line of credit facility under which DnB NOR Bank ASA, Grand Cayman Branch and Nordea Bank Norge ASA, Grand Cayman Branch are serving as lenders (the “Short-Term Line”).   The Short-Term Line was used to fund a portion of acquisitions we made of in the shares of capital stock of Jinhui.  Under the terms of the Short-Term Line, we were allowed to borrow up to $155 million for such acquisitions, and we had borrowed a total of $77.0 million under the Short-Term Line prior to its refinancing.  The term of the Short-Term Line was for 364 days, and the interest on amounts drawn was payable at the rate of LIBOR plus a margin of 0.85% per annum for the first six month period and LIBOR plus a margin of 1.00% for the remaining term.  We were obligated to pay certain commitment and administrative fees in connection with the Short-Term Line.  The Company, as required, pledged all of the Jinhui shares it has purchased as collateral against the Short-Term Line.  The Short-Term Line incorporated by reference certain covenants from our 2005 Credit Facility.

The Short-Term Line was refinanced in July 2007 by the 2007 Credit Facility.  

2005 Credit Facility - Refinanced by the 2007 Credit Facility
 
The Company’s 2005 Credit Facility, initially for $450.0 million, was with a syndicate of commercial lenders

 

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consisting of Nordea Bank Finland Plc, New York Branch, DnB NOR Bank ASA, New York Branch and Citigroup Global Markets Limited.  The 2005 Credit Facility was used to refinance our indebtedness under our Original Credit Facility, and was used to acquire vessels. Under the terms of our 2005 Credit Facility, borrowings in the amount of $106.2 million were used to repay indebtedness under our Original Credit Facility, and additional net borrowings of $100 million were obtained to fund vessel acquisitions. In July 2006, the Company increased the line of credit by $100 million to a total facility of $550 million.

Additionally, on February 7, 2007, we reached an agreement with our lenders to allow us to increase the amount of the 2005 Credit Facility by $100 million, for a total maximum availability of $650 million.  We had the option to increase the facility amount by $25 million increments up to the additional $100 million, so long as at least one bank within the syndicate agreed to fund such increase.  Any increase associated with this agreement was generally governed by the existing terms of the 2005 Credit Facility, although we and any banks providing the increase may agree to vary the upfront fees, unutilized commitment fees, or other fees payable by us in connection with the increase.

The 2005 Credit Facility was refinanced in July 2007 with the 2007 Credit Facility.

Interest Rate Swap Agreements and Forward Freight Agreements
 
The Company has entered into eight interest rate swap agreements with DnB NOR Bank to manage interest costs and the risk associated with changing interest rates. The total notional principal amount of the swaps is $631.2 million and the swaps have specified rates and durations.  The following table summarizes the interest rate swaps in place as of December 31, 2007 and 2006:

Interest Rate Swap Detail	 	December 31, 2007	 	December 31, 2006	 	
Trade Date	Fixed Rate	Start Date
of  Swap	End date
of  Swap	 	Notional
Amount
Outstanding	 	Notional Amount Outstanding	 	
9/6/05	 	4.485	%	9/14/05	7/29/15	 	$	106,233	 	$	106,233	 	
3/29/06	 	5.25	%	1/2/07	1/1/14	 	 	50,000	 	 	50,000	 	
3/24/06	 	5.075	%	1/2/08	1/2/13	 	 	50,000	 	 	50,000	 	
9/7/07	 	4.56	%	10/1/07	12/31/09	 	 	75,000	 	 	 	 	
7/31/07	 	5.115	%	11/30/07	11/30/11	 	 	100,000	 	 	 	 	
8/9/07	 	5.07	%	1/2/08	1/3/12	 	 	100,000	 	 	 	 	
8/16/07	 	4.985	%	3/31/08	3/31/12	 	 	50,000	 	 	 	 	
8/16/07	 	5.04	%	3/31/08	3/31/12	 	 	100,000	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	$	631,233	 	$	206,233	 	

The differential to be paid or received for these swap agreements are recognized as an adjustment to interest expense as incurred.  The Company is currently utilizing cash flow hedge accounting for the swaps whereby the effective portion of the change in value of the swaps is reflected as a component of Other Comprehensive Income (“OCI”).  The ineffective portion is recognized as income or (loss) from derivative instruments which is a component of other (expense) income.  For any period of time that the Company did not designate the swaps for hedge accounting, the change in the value of the swap agreements prior to designation was recognized as income or (loss) from derivative instruments and was listed as a component of other expense.

The interest income pertaining to the interest rate swaps for 2007 and 2006 was $1.0 million and $0.6 million, respectively.

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The swap agreements, with effective dates prior to December 31, 2007, synthetically convert variable rate debt the fixed interest rate of swap plus the Applicable Margin (which is 0.85% per annum for the first five years of the new credit facility and 0.90% thereafter).  If the Company’s ratio of Total Debt to Total Capitalization (each as defined in the credit agreement for the 2007 Credit Facility) is greater than or equal to 70%, the Applicable Margin increases to 0.90% for the first five years and 0.95% thereafter.
 
The liability associated with the swaps at December 31, 2007 is $21.0 million and $0.8 million at December 31, 2006, and are presented as the fair value of derivatives on the balance sheet.  The asset associated with the swaps at December 31, 2006 was $4.5 million and there were no swaps in an asset position at December 31, 2007, and are presented as the fair value of derivatives on the balance sheet.  As of December 31, 2007 and December 31, 2006, the Company has accumulated OCI of ($21.1) million and $3.5 million, respectively, related to the effectively hedged portion of the swaps.  Hedge ineffectiveness associated with the interest rate swaps resulted in income or (loss) from derivative instruments of ($0.1) million for 2007.  The change in value of the swaps prior to being designated resulted in income or (loss) from derivative instruments of $0.1 million for 2006.   At December 31, 2007, ($3.1 million) of OCI is expected to be reclassified into income over the next 12 months associated with interest rate derivatives.

During January 2008, the Company entered into a $50 million dollar interest rate swap at a fixed interest rate of 2.89%, plus the Applicable Margin and is effective February 1, 2008 and ends on February 1, 2011.  The company has elected to utilize hedge accounting for this interest rate swap.

The Company has entered into a number of short-term forward currency contracts to protect the Company from the risk associated with the fluctuation in the exchange rate associated with the cost basis of the Jinhui shares as described above under the heading “Short-term investments” in Note 2 of our financial statements.  The Company had a forward currency contract in place for a notional amount of 685.1 million NOK (Norwegian Kroner) or $124.6 million, which matured on January 17, 2008. As forward contracts expire, the Company continues to enter into new forward currency contracts for the cost basis of the Short-term investment, excluding commissions.  However the hedge is limited to the lower of the cost basis or the market value at time of designation.  As February 19, 2008 the Company has a forward currency contract for the notional amount of 739.2 million NOK for $135.6 million.  Effective August 16, 2007, the Company has elected hedge accounting for such forward currency contracts, the application of which is described under the subheading “Currency risk management” on page 64.  For 2007, the net losses (realized and unrealized) of $1.2 million related to the forward currency contracts and to the hedged translations gain on the cost basis of the Jinhui stock are reflected as (loss) income from derivative instruments and are included as a component of other expense.  The short-term liability associated with the forward currency contract at December 31, 2007 is $1.4 million and is presented as the fair value of derivatives on the balance sheet and is included in the net loss from derivative instruments in the income statement.

As part of our business strategy, we may enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage market risks relating to the deployment of our existing fleet of vessels.  These arrangements may include future contracts, or commitments to perform in the future a shipping service between ship owners, charters and traders.  Generally, these arrangements would bind us and each counterparty in the arrangement to buy or sell a specified tonnage freighting commitment “forward” at an agreed time and price and for a particular route.  Although FFAs can be entered into for a variety of purposes, including for hedging, as an option, for trading or for arbitrage, if we decided to enter into FFAs, our objective would be to hedge and manage market risks as part of our commercial management. It is not currently our intention to enter into FFAs to generate a stream of income independent of the revenues we derive from the operation of our fleet of vessels.  If we determine to enter into FFAs, we may reduce our exposure to any declines in our results from operations due to weak market conditions or downturns, but may also limit our ability to benefit economically during periods of strong demand in the market.  We have not entered into any FFAs as of December 31, 2007.

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Interest Rates
 
The effective interest rate associated with the interest expense for the 2005 Credit Facility, the Short-term Line and the 2007 Credit Facility, and including the rate differential between the pay fixed receive variable rate on the swaps that were in effect, combined, including the cost associated with unused commitment fees with these facilities for 2007 was 6.25%.  The effective interest rate associated with the interest expense for the 2005 Credit Facility, and including the rate differential between the pay fixed receive variable rate on the swaps that were in effect, combined, including the cost associated with unused commitment fees with these facilities for 2006, was 6.75%.  The interest rate on the debt, excluding the unused commitment fees, ranged from 5.54% to 6.66% and from 6.14% to 6.45% for 2007 and 2006, respectively.
 
Contractual Obligations
 
The following table sets forth our contractual obligations and their maturity dates that are reflective of the subsequent events as described in Note 21 – Subsequent Events to our financial statements.  These events include the interest rate swap entered into on January 2008 for $50 million at a fixed rate of 2.89% plus the Applicable Margin from February 1, 2008 to February 1, 2011, the repayment of $43 million repayment of debt associated with the sale of the Genco Trader included in the commitment table as due with in one year, as well as additional borrowings of $151.5 million for the completed acquisition of the Genco Champion and Genco Constantine during the first quarter of 2008.  Additionally, the table incorporates the agreement to acquire the remaining four Capesize vessels for $385.6 million, inclusive of commissions, and the employment agreement entered into in September 2007 with our Chief Financial Officer, John Wobensmith. The Company plans to fund the remaining acquisitions with the remaining availability under the credit facility and cash generated from operations.  The interest and fees are also reflective of the 2007 Credit Facility and the interest rate swap agreements as discussed above under “Interest Rate Swap Agreements and Forward Freight Agreements.”

 	 	Total	 	 	Within One
Year (1)	 	 	One to Three
Years	 	 	Three to Five
Years	 	 	More than
Five Years	 	
 	 	(U.S. dollars in thousands)	 	
2007 Credit Facility	 	$	1,087,500	 	 	$	43,000	 	 	$	-	 	 	$	-	 	 	$	1,044,500	 	
Remainder of purchase price of acquisitions (2)	 	$	385,600	 	 	$	96,800	 	 	$	288,800	 	 	$	-	 	 	$	-	 	
Interest and borrowing fees	 	$	412,704	 	 	$	53,843	 	 	$	107,643	 	 	$	100,708	 	 	$	150,510	 	
Executive employment agreement	 	$	636	 	 	$	370	 	 	$	266	 	 	$	-	 	 	$	-	 	
Office lease	 	$	6,636	 	 	$	486	 	 	$	982	 	 	$	1,036	 	 	$	4,132	 	

(1)  	Represents the twelve month period ending December 31, 2008 and includes the $43 million repayment of debt associated with the sale of the Genco Trader.	
(2)  	The timing of these obligations are based on estimated delivery dates for the remaining four Capesize vessels which are currently being constructed and the obligation is inclusive of the commission due to brokers upon purchase of the vessels.	

Interest expense has been estimated using the fixed hedge rate for the effective period and notional amount of the debt which is effectively hedged and 3.125% for the portion of the debt that has no designated swap against it, plus the applicable bank margin of 0.85% in the first five years of the 2007 Credit Facility and 0.90% in the last five years, as long as the ratio of Total Debt to Total Capitalization as defined in the 2007 Credit Facility remains below 70%. If the ratio of Total Debt to Total Capitalization is equal to or greater than 70% then the applicable margin is increased to 0.90% in the first five years of the 2007 Credit Facility and 0.95% in the last five years.   The Company is obligated to pay certain commitment fees in connection with the 2007 Credit Facility.

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Capital Expenditures
 
We make capital expenditures from time to time in connection with our vessel acquisitions. Our fleet currently consists of five Capesize drybulk carriers, six Panamax drybulk carriers, three Supramax drybulk carriers, six Handymax drybulk carriers and eight Handysize drybulk carriers.

In addition to acquisitions that we may undertake in future periods, we will incur additional capital expenditures due to special surveys and drydockings. We estimate our drydocking costs and scheduled off-hire days for our fleet through 2009 to be:
 
 	 	Estimated Drydocking Cost	 	 	Estimated Offhire Days	 	
 	 	(U.S. dollars in millions)	 	 	 	 	
Year	 	 	 	 	 	 	
2008	 	$	4.6	 	 	 	140	 	
2009	 	 	3.7	 	 	 	100	 	

The costs reflected are estimates based on drydocking our vessels in China.  We estimate that each drydock will result in 20 days of offhire.  Actual costs will vary based on various factors, including where the drydockings are actually performed.  We expect to fund these costs with cash from operations.
 
During 2007, we completed drydockings for the Genco Surprise, the Genco Wisdom, the Genco Prosperity, the Genco Reliance and Genco Success at a combined cost of $3.5 million .
 
During 2006, we completed drydockings for the Genco Trader, the Genco Marine, the Genco Muse, Genco Carrier and Genco Glory at a combined cost of $3.2 million.
 
We estimate that five of our vessels will be drydocked during 2008, and an additional seven vessels in 2009 of which one will be drydocked during the first quarter of 2008.
 
Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements.
 
Inflation
 
Inflation has only a moderate effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, general and administrative, and financing costs.  However, the Company expects its 2009 budget to increase based on the anticipated increased cost for crewing and lubes.
 
CRITICAL ACCOUNTING POLICIES
 
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.
 
Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are

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our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application. For an additional description of our significant accounting policies, see Note 2 to our consolidated financial statements included in this 10-K.
 
REVENUE AND VOYAGE EXPENSE RECOGNITION-
 
Revenues are generated from time charters. A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily or monthly hire rate.  In time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel, and port charges are paid by the charterer. There are certain other non-specified voyage expenses such as commissions which are borne by us.
 
We record time charter revenues over the term of each charter as service is provided. Revenues are recognized on a straight-line basis as the average revenue over the term of each time charter. We recognize vessel operating expenses when incurred.
 
In December 2005 and February 2006, respectively, the Genco Trader and Genco Leader entered into the Baumarine Panamax Pool.  Vessel pools, such as the Baumarine Panamax Pool, provide cost-effective commercial management activities for a group of similar class vessels.  The pool arrangement provides the benefits of a large-scale operation and chartering efficiencies that might not be available to smaller fleets.   Under the pool arrangement, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the charterer and operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel.  Since the members of the pool share in the revenue generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these two vessels was subject to the fluctuations of the spot market.  In December 2006 and January 2007, respectively, the Genco Trader and Genco Leader exited the Baumarine Panamax Pool.
 
Our standard time charter contracts with our customers specify certain performance parameters, which if not met can result in customer claims.  As of December 31, 2007, we had no reserve, and as of December 31, 2006, we had a reserve $0.2 million against due from charterers’ balance and an additional reserve of $0.7 million and $0.6 million, respectively.  Both reserves are associated with estimated customer claims against us including time charter performance issues.
 
SHORT-TERM INVESTMENTS-
 
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”).  Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping.  This investment is designated as available-for-sale and is reported at fair value, with unrealized gains and losses recorded in shareholders’ equity as a component of OCI.  Effective August 16, 2007, the Company has elected hedge accounting for forward currency contracts in place associated with the cost basis of the Jinhui shares and therefore the unrealized currency gain or loss associated with Jinhui cost basis will now be reflected in the income statement as a component of income or (loss) from derivative instruments to off-set the gain or loss associated with these forward currency contracts.  The cost of securities when sold is based on the specific identification method.  Realized gains and losses on the sale of these securities will be reflected in the consolidated statement of operations in other (expense) income.  Additionally, the realized gain or loss on the forward currency contracts is reflected in the Consolidated Statement of Cash Flows as an investing activity and is reflected in the caption Payments on forward currency contracts, net.

Short-term investments are reviewed periodically to identify possible other-than-temporary impairment.  When evaluating the investments, the Company reviews factors such as the length of time and extent to which fair value has been below the cost basis, the financial condition of the issuer, the underlying net asset value of the issuers assets and liabilities, and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in market value.  Should the decline in the value of any investment be deemed to be

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other-than-temporary, the investment basis would be written down to fair market value, and the write-down would be recorded to earnings as a loss.
 
VESSEL ACQUISITIONS -
 
When we enter into an acquisition transaction, we determine whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction.  In the shipping industry, the purchase of a vessel is normally treated as a purchase of an asset as the historical operating data for the vessel is not reviewed nor is material to our decision to make such acquisition.
 
When a vessel is acquired with an existing time charter, we allocate the purchase price of the vessel and the time charter based on, among other things, vessel market valuations and the present value (using an interest rate which reflects the risks associated with the acquired charters) of the difference between (i) the contractual amounts to be paid pursuant to the charter terms and (ii) management's estimate of the fair market charter rate, measured over a period equal to the remaining term of the charter. The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction or increase, respectively, to voyage revenues over the remaining term of the charter.
 
DEPRECIATION-
 
We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. We depreciate our drybulk vessels on a straight-line basis over their estimated useful lives, estimated to be 25 years from the date of initial delivery from the shipyard. Depreciation is based on cost less the estimated residual scrap value. We estimate the residual values of our vessels to be based upon $175 per lightweight ton. An increase in the useful life of a drybulk vessel or in its residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a drybulk vessel or in its residual value would have the effect of increasing the annual depreciation charge. However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, we will adjust the vessel’s useful life to end at the date such regulations preclude such vessel’s further commercial use.
 
IMPAIRMENT OF LONG-LIVED ASSETS-
 
We follow Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset’s carrying amount. In the evaluation of the fair value and future benefits of long-lived assets, we perform an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including future charter rates, scrap values, future drydock costs and vessel operating costs are included in this analysis.
 
DEFERRED DRYDOCKING COSTS-
 
Our vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. We capitalize the costs associated with drydockings as they occur and depreciate these costs on a straight-line basis over the period between drydockings. Capitalized drydocking costs include actual costs incurred at the drydock yard; cost of parts that are believed to be reasonably likely to reduce the duration or cost of the drydocking; cost of travel, lodging and subsistence of our personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee the drydocking. We believe that these criteria are consistent with U.S. GAAP guidelines and industry practice and that our policy of capitalization reflects the economics and market values of the vessels.

 

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DERIVATIVE FINANCIAL INSTRUMENTS-
 
Interest rate risk management
 
The Company is exposed to the impact of interest rate changes.  The Company’s objective is to manage the impact of interest rate changes on its earnings and cash flow in relation to borrowings for the purpose of acquiring drybulk vessels.  These borrowings are subject to a variable borrowing rate.  The Company uses forward starting pay-fixed receive-variable interest rate swaps to manage future interest costs and the risk associated with changing interest rate obligations.  These swaps are designated as cash flow hedges of future variable rate interest payments and are tested for effectiveness on a quarterly basis.
 
 The differential to be paid or received for the effectively hedged portion of any swap agreement is recognized as an adjustment to interest expense as incurred.  Additionally, the changes in value for the portion of the swaps that are effectively hedging future interest payments are reflected as a component of OCI.

For the portion of the forward interest rate swaps that are not effectively hedged, the change in the value and the rate differential to be paid or received is recognized as income or (expense) from derivative instruments and is listed as a component of other expense until such time the Company has obligations against which the swap is designated and is an effective hedge.
 
Currency risk management
 
The Company currently holds an investment in Jinhui shares that are traded on the Oslo Stock Exchange located in Norway, and as such, the Company is exposed to the impact of exchange rate changes on this available-for-sale security denominated in Norwegian Kroner.  The Company’s objective is to manage the impact of exchange rate changes on its earnings and cash flow in relation to its cost basis associated with its short-term investments. The Company uses foreign currency forward contracts to protect its original investment from changing exchange rates.
 
The change in the value in the forward currency contracts is recognized as income or (expense) from derivative instruments and is listed as a component of other expense.  Effective August 16, 2007, the Company  elected to utilize fair value hedge accounting for these instruments whereby the change in the value in the forward contracts continues to be recognized as income or (expense) from derivative instruments and is listed as a component of other expense.  Fair value hedge accounting then accelerates the recognition of the effective portion of the currency translation gain or (loss) on the Available for Sale Security from August 16, 2007 into income or (expense) from derivative instruments and is listed as a component of other expense.  Time value of the forward contracts are excluded from effectiveness testing and recognized currently in income.
 
  INCOME TAXES
 
Pursuant to Section 883 of the U.S. Internal Revenue Code of 1986 as amended (the “Code”), qualified income derived from the international operations of ships is excluded from gross income and exempt from U.S. federal income tax if a company engaged in the international operation of ships meets certain requirements. Among other things, in order to qualify, the company must be incorporated in a country which grants an equivalent exemption to U.S. corporations and must satisfy certain qualified ownership requirements.

The Company is incorporated in the Marshall Islands. Pursuant to the income tax laws of the Marshall Islands, the Company is not subject to Marshall Islands income tax. The Marshall Islands has been officially recognized by the Internal Revenue Service as a qualified foreign country that currently grants the requisite equivalent exemption from tax.

Based on the ownership of our common stock prior to our initial public offering on July 22, 2005 as discussed in Note 1 of our financial statements, we qualified for exemption from income tax for 2005 under Section 883, since we

 

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were a Controlled Foreign Corporation (“CFC”) and satisfied certain other criteria in the Section 883 regulations. We were a CFC, as defined in the Code, since until the initial public offering on July 22, 2005, over 50% of our stock was owned by United States holders each of whom owned ten percent or more of our voting stock, or US 10% Owners. During that time, approximately 93% of our common stock was held by US 10% Owners.

Based on the publicly traded requirement of the Section 883 regulations, we believe that the Company qualified for exemption from income tax for 2007 and 2006.  In order to meet the publicly traded requirement, our stock must be treated as being primarily and regularly traded for more than half the days of any such year. Under the Section 883 regulations, our qualification for the publicly traded requirement may be jeopardized if shareholders of our common stock that own five percent or more of our stock (“5% shareholders”) own, in the aggregate, 50% or more of our common stock for more than half the days of the year.   We believe that during 2007 and 2006, the combined ownership of our 5% shareholders did not equal 50% or more of our common stock for more than half the days of 2007 and 2006. However if our 5% shareholders were to increase their ownership to 50% or more of our common stock for more than half the days of 2008 or any future taxable year, we may not be eligible to claim exemption from tax under Section 883 for that taxable year. We can therefore give no assurance that changes and shifts in the ownership of our stock by 5% shareholders will not preclude us from qualifying for exemption from tax in 2008 or in future years.

If the Company does not qualify for the exemption from tax under Section 883, it would be subject to a 4% tax on the gross “shipping income” (without the allowance for any deductions) that is treated as derived from sources within the United States or “United States source shipping income.” For these purposes, “shipping income” means any income that is derived from the use of vessels, from the hiring or leasing of vessels for use, or from the performance of services directly related to those uses; and “United States source shipping income” includes 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK
 
Interest rate risk
 
We are exposed to the impact of interest rate changes.  Our objective is to manage the impact of interest rate changes on our earnings and cash flow in relation to our borrowings.  We held eight interest rate risk management instruments at December 31, 2007 and three interest rate risk management instruments at December 31, 2006, in order to manage future interest costs and the risk associated with changing interest rates.
 
The Company has entered into eight interest rate swap agreements with DnB NOR Bank to manage interest costs and the risk associated with changing interest rates. The total notional principal amount of the swaps is $631.2 million, and the swaps have specified rates and durations.  The following table summarizes the interest rate swaps in place as of December 31, 2007 and 2006:

Interest Rate Swap Detail	 	December 31, 2007	 	December 31, 2006	 	
Trade Date	Fixed Rate	 	Start Date
of  Swap	End Date
of  Swap	 	Notional Amount Outstanding	 	Notional Amount Outstanding	 	
9/6/05	 	4.485	%	9/14/05	7/29/15	 	$	106,233	 	$	106,233	 	
3/29/06	 	5.25	%	1/2/07	1/1/14	 	 	50,000	 	 	50,000	 	
3/24/06	 	5.075	%	1/2/08	1/2/13	 	 	50,000	 	 	50,000	 	
9/7/07	 	4.56	%	10/1/07	12/31/09	 	 	75,000	 	 	 	 	
7/31/07	 	5.115	%	11/30/07	11/30/11	 	 	100,000	 	 	 	 	
8/9/07	 	5.07	%	1/2/08	1/3/12	 	 	100,000	 	 	 	 	
8/16/07	 	4.985	%	3/31/08	3/31/12	 	 	50,000	 	 	 	 	
8/16/07	 	5.04	%	3/31/08	3/31/12	 	 	100,000	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	$	631,233	 	$	206,233	 	

 

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The swap agreements, with effective dates prior to December 31, 2007 synthetically convert variable rate debt the fixed interest rate of swap plus the Applicable Margin (which is 0.85% per annum for the first five years of the new credit facility and 0.90% thereafter).  If the Company’s ratio of Total Debt to Total Capitalization (each as defined in the credit agreement for the 2007 Credit Facility) is equal to or greater than 70%, the Applicable Margin increases to 0.90% for the first five years and 0.95% thereafter.
 
The liability associated with the swaps at December 31, 2007 is $21.0 million and $0.8 million at December 31, 2006, and are presented as the fair value of derivatives on the balance sheet.  The asset associated with the swaps at December 31,2006 was $4.5 million and there were no swaps in an asset position at December 31, 2007, and are presented as the fair value of derivatives on the balance sheet.    As of December 31, 2007 and 2006, the Company has accumulated OCI of ($21.1) million and $3.5 million, respectively, related to the effectively hedged portion of the swaps.  Hedge ineffectiveness associated with the interest rate swaps resulted in income or (loss) from derivative instruments of ($0.1) million for 2007.  The change in value of the swaps prior to being designated resulted in income or (loss) from derivative instruments of $0.1 million for 2006.   At December 31, 2007, ($3.1 million) of OCI is expected to be reclassified into income over the next 12 months associated with interest rate derivatives.

During January 2008, the Company entered into a $50 million dollar interest rate swap at a fixed interest rate of 2.89%, plus the Applicable Margin and is effective February 1, 2008 and ends on February 1, 2011.  The company has elected to utilize hedge accounting for this interest rate swap.

Derivative financial instruments

The Company entered into eight interest rate swap agreements with DnB NOR Bank to manage interest costs and the risk associated with changing interest rates. The total notional principal amount of the swaps is $631.2 million, and the swaps have specified rates and durations.  See “Interest Rate Risk” above under this Item 7 or 7A for a table summarizing the interest rate swaps in place as of December 31, 2007 and 2006.  Also note that during January 2008, the Company entered into a $50 million dollar interest rate swap at a fixed interest rate of 2.89%, plus the Applicable Margin and is effective February 1, 2008 and ends on February 1, 2011.  The company has elected to utilize hedge accounting for this interest rate swap

The differential to be paid or received for these swap agreements are recognized as an adjustment to interest expense as incurred.  The Company is currently utilizing cash flow hedge accounting for the swaps whereby the effective portion of the change in value of the swaps is reflected as a component of OCI.  The ineffective portion is recognized as income or (loss) from derivative instruments which is a component of other (expense) income.  For any period of time that the Company did not designate the swaps for hedge accounting, the change in the value of the swap agreements prior to designation was recognized as income or (loss) from derivative instruments and was listed as a component of other (expense) income.

Amounts receivable or payable arising at the settlement of hedged interest rate swaps are deferred and amortized as an adjustment to interest expense over the period of interest rate exposure provided the designated liability continues to exist.  Amounts receivable or payable arising at the settlement of unhedged interest rate swaps are reflected as income or expense from derivative instruments and is listed as a component of other (expense) income.
 
The interest income pertaining to the interest rate swaps for 2007 and 2006 was $1.0 million and $0.6 million, respectively.
 
The swap agreements, with effective dates prior to December 31, 2007 synthetically convert variable rate debt the fixed interest rate of swap plus the Applicable Margin (which is 0.85% per annum for the first five years of the new

 

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credit facility and 0.90% thereafter).  If the Company’s ratio of Total Debt to Total Capitalization (each as defined in the credit agreement for the 2007 Credit Facility) is greater than or equal to 70%, the Applicable Margin increases to 0.90% for the first five years and 0.95% thereafter.
 
The asset associated with the swaps at December 31,2006 was $4.5 million and there were no swaps in an asset position at December 31, 2007, and are presented as the fair value of derivatives on the balance sheet.  The liability associated with the swaps at December 31, 2007 is $21.0 million and $0.8 million at December 31, 2006, and are presented as the fair value of derivatives on the balance sheet.  As of December 31, 2007 and December 31, 2006, the Company has accumulated OCI of ($21.1) million and $3.5 million, respectively, related to the effectively hedged portion of the swaps.  Hedge ineffectiveness associated with the interest rate swaps resulted in income or (loss) from derivative instruments of ($0.1) million for 2007.  The change in value of the swaps prior to being designated resulted in income or (loss) from derivative instruments of $0.1 million for 2006.   At December 31, 2007, ($3.1 million) of OCI is expected to be reclassified into income over the next 12 months associated with interest rate derivatives.

The Company has entered into a number of short-term forward currency contracts to protect the Company from the risk associated with the fluctuation in the exchange rate associated with the cost basis of the Jinhui shares as described above under the heading “Short-term investments” in Note 2 of our financial statements.  For further information on these forward currency contracts, please see page 58 under the heading “Interest Rate Swap Agreements and Forward Freight Agreements”.

We are subject to market risks relating to changes in interest rates because we have significant amounts of floating rate debt outstanding. For 2007, we paid LIBOR plus 0.85% on the 2007 Credit Facility. LIBOR plus 0.95% on the 2005 Credit Facility and LIBOR plus 0.85% on the Short-term Line for the debt in excess of any designated swap’s notional amount for the respective swap’s effective period. For each effective swap, the interest rate is fixed at the fixed interest rate of swap plus the applicable margin on the respective debt in place.  For 2006, we paid LIBOR plus 0.95% for the debt in excess of any designated swap’s notional amount for the respective swap’s effective period.  A 1% increase in LIBOR would result in an increase of $1.7 million in interest expense for 2007, considering the increase would be only on the unhedged portion of the debt for which the rate differential on the respective swap is not in effect.

FOREIGN EXCHANGE RATE RISK

The international shipping industry’s functional currency is the U.S. Dollar. Virtually all of our revenues and most of our operating costs are in U.S. Dollars. We incur certain operating expenses in currencies other than the U.S. dollar, and the foreign exchange risk associated with these operating expenses is immaterial.

The Company has entered into a number of short-term forward currency contracts to protect the Company from the risk associated with the fluctuation in the exchange rate associated with the cost basis of the Jinhui shares as described above under the heading “Short-term investments” in Note 2 of our financial statements.  For further information on these forward currency contracts, please see page 58 under the heading “Interest Rate Swap Agreements and Forward Freight Agreements.”

Upon maturation of the forward currency contract in place for 685.1 NOK million at December 31, 2007, a 1% change in the value of the Norwegian Kroner could result in a currency gain or loss of $1.3 million.  However, since the Company is utilizing hedge accounting on the cost basis of the Jinhui stock, the effective portion of the currency translation gain or (loss) on the Available for Sale Security is netted against the fluctuation in the currency gain or loss on the forward currency contract itself to the extent of the hedged notional amount.

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Genco Shipping & Trading Limited
Form 10-K as of December 31, 2007 and 2006 and For the years ended December 31, 2007, 2006 and 2005
Index to consolidated financial statements

                                                                                                            Page
 
           a)   Report of Independent Registered Public Accounting Firm                                                                                 F-2

           b) Consolidated Balance Sheets -
                  December 31, 2007 and December 31, 2006                                                       F-3
 
           c) Consolidated Statements of Operations -   
            For the Years Ended December 31, 2007, 2006 and 2005                                           F-4
 
           d) Consolidated Statements of Shareholders’ Equity and Comprehensive Income -
                  For the Years Ended December 31, 2007, 2006 and 2005                                           F-5
 
           e) Consolidated Statements of Cash Flows -
           For the Years Ended December 31, 2007, 2006 and 2005                                           F-6
 
           f) Notes to Consolidated Financial Statements
                 For the Years Ended December 31, 2007, 2006 and 2005                                            F-7

 

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Genco Shipping & Trading Limited
New York, New York

We have audited the accompanying consolidated balance sheets of Genco Shipping & Trading Limited and subsidiaries (the "Company") as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2007.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Genco Shipping & Trading Limited and subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2008 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

New York, New York
February 29, 2007

 

F-2

 

Genco Shipping & Trading Limited
Consolidated Balance Sheets as of December 31, 2007
and December 31, 2006
(U.S. Dollars in thousands, except share data)

 	 	December 31,	 	
 	 	2007	 	 	2006	 	
Assets	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	
Cash and cash equivalents	 	$	71,496	 	 	$	73,554	 	
Short-term investments	 	 	167,524	 	 	 	-	 	
Vessel held for sale	 	 	16,857	 	 	 	9,450	 	
Due from charterers, net	 	 	2,343	 	 	 	471	 	
Prepaid expenses and other current assets	 	 	9,374	 	 	 	4,643	 	
Total current assets	 	 	267,594	 	 	 	88,118	 	
 	 	 	 	 	 	 	 	 	
Noncurrent assets:	 	 	 	 	 	 	 	 	
Vessels, net of accumulated depreciation of $71,341 and $43,769, respectively	 	 	1,224,040	 	 	 	476,782	 	
Deposits on vessels	 	 	149,017	 	 	 	-	 	
Deferred drydock, net of accumulated depreciation of $941 and $366, respectively	 	 	4,552	 	 	 	2,452	 	
Other assets, net of accumulated amortization of $288 and $468, respectively	 	 	6,130	 	 	 	4,571	 	
Fixed assets, net of accumulated depreciation and amortization of $722 and $348, respectively	 	 	1,939	 	 	 	1,877	 	
Fair value of derivative instruments	 	 	-	 	 	 	4,462	 	
Total noncurrent assets	 	 	1,385,678	 	 	 	490,144	 	
 	 	 	 	 	 	 	 	 	
Total assets	 	$	1,653,272	 	 	$	578,262	 	
 	 	 	 	 	 	 	 	 	
Liabilities and Shareholders’ Equity	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable and accrued expenses	 	$	17,514	 	 	$	7,784	 	
Current portion of long term debt	 	 	 43,000	 	 	 	 4,322	 	
Deferred revenue	 	 	8,402	 	 	 	3,067	 	
Fair value of derivative instruments	 	 	1,448	 	 	 	-	 	
Total current liabilities	 	 	70,364	 	 	 	15,173	 	
 	 	 	 	 	 	 	 	 	
Noncurrent liabilities:	 	 	 	 	 	 	 	 	
Deferred revenue	 	 	968	 	 	 	395	 	
Deferred rent credit	 	 	725	 	 	 	743	 	
Fair market value of time charters acquired	 	 	44,991	 	 	 	-	 	
Fair value of derivative instruments	 	 	21,039	 	 	 	807	 	
Long term debt	 	 	893,000	 	 	 	207,611	 	
Total noncurrent liabilities	 	 	960,723	 	 	 	209,556	 	
 	 	 	 	 	 	 	 	 	
Total liabilities	 	 	1,031,087	 	 	 	224,729	 	
 	 	 	 	 	 	 	 	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	 	 	 	 	
Common stock, par value $0.01; 100,000,000 shares authorized; issued and	 	 	 	 	 	 	 	 	
outstanding 28,965,809 and 25,505,462 shares at December 31, 2007 and December 31, 2006, respectively	 	 	290	 	 	 	255	 	
Paid in capital	 	 	523,002	 	 	 	307,088	 	
Accumulated other comprehensive income	 	 	19,017	 	 	 	3,546	 	
Retained earnings	 	 	79,876	 	 	 	42,644	 	
Total shareholders’ equity	 	 	622,185	 	 	 	353,533	 	
 	 	 	 	 	 	 	 	 	
Total liabilities and shareholders’ equity	 	$	1,653,272	 	 	$	578,262	 	
 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.	 	

F-3

Genco Shipping & Trading Limited
Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006, and 2005
(U.S. Dollars in Thousands, Except Earnings per Share and share data)

 	 	For the Years Ended December 31,	 	
 	 	2007	 	 	2006	 	 	2005	 	

Revenues	 	$	185,387	 	 	$	133,232	 	 	$	116,906	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	5,100	 	 	 	4,710	 	 	 	4,287	 	
Vessel operating expenses	 	 	27,622	 	 	 	20,903	 	 	 	15,135	 	
General and administrative expenses	 	 	12,610	 	 	 	8,882	 	 	 	4,937	 	
Management fees	 	 	1,654	 	 	 	1,439	 	 	 	1,479	 	
Depreciation and amortization	 	 	34,378	 	 	 	26,978	 	 	 	22,322	 	
Gain on sale of vessels	 	 	(27,047	)	 	 	-	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	54,317	 	 	 	62,912	 	 	 	48,160	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	131,070	 	 	 	70,320	 	 	 	68,746	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other (expense) income:	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) income from derivative instruments	 	 	(1,265	)	 	 	108	 	 	 	-	 	
Interest income	 	 	3,507	 	 	 	3,129	 	 	 	1,084	 	
Interest expense	 	 	(26,503	)	 	 	(10,035	)	 	 	(15,348	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other (expense) income	 	 	(24,261	)	 	 	(6,798	)	 	 	(14,264	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	106,809	 	 	$	63,522	 	 	$	54,482	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share-basic	 	$	4.08	 	 	$	2.51	 	 	$	2.91	 	
Earnings per share-diluted	 	$	4.06	 	 	$	2.51	 	 	$	2.90	 	
Weighted average common shares outstanding-basic	 	 	26,165,600	 	 	 	25,278,726	 	 	 	18,751,726	 	
Weighted average common shares outstanding-diluted	 	 	26,297,521	 	 	 	25,351,297	 	 	 	18,755,195	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.	 	

 
F-4

Genco Shipping & Trading Limited
Consolidated Statements of Shareholders’ Equity and Comprehensive Income
for the Years Ended December 31, 2007, 2006 and 2005
(U.S. Dollars in Thousands)
 
 	 	Common
Stock	 	 	Paid in
Capital	 	 	Retained
Earnings	 	 	Accumulated Other Comprehensive Income	 	 	Comprehensive Income	 	 	Total	 	
Balance – January 1, 2005	 	$	135	 	 	$	72,332	 	 	$	907	 	 	$	-	 	 	$	-	 	 	$	73,374	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	 	 	 	 	 	 	 	 	54,482	 	 	 	 	 	 	 	54,482	 	 	 	54,482	 	
Unrealized derivative gains from cash flow hedge, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,325	 	 	 	2,325	 	 	 	2,325	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	56,807	 	 	 	 	 	
Cash dividends paid ($0.60 per share)	 	 	 	 	 	 	 	 	 	 	(15,226	)	 	 	 	 	 	 	 	 	 	 	(15,226	)	
Capital contribution from Fleet Acquisition LLC	 	 	 	 	 	 	2,705	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,705	 	
Issuance of common stock	 	 	118	 	 	 	230,187	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	230,305	 	
Issuance of 174,212 shares of nonvested stock	 	 	1	 	 	 	(1	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	-	 	
Nonvested stock amortization	 	 	 	 	 	 	277	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	277	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance – December 31, 2005	 	$	254	 	 	$	305,500	 	 	$	40,163	 	 	$	2,325	 	 	 	 	 	 	$	348,242	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	 	 	 	 	 	 	 	 	63,522	 	 	 	 	 	 	 	63,522	 	 	 	63,522	 	
Unrealized derivative gains from cash flow hedge, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,221	 	 	 	1,221	 	 	 	1,221	 	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	64,743	 	 	 	 	 	
Cash dividends paid ($2.40 per share)	 	 	 	 	 	 	 	 	 	 	(61,041	)	 	 	 	 	 	 	 	 	 	 	(61,041	)	
Issuance of 72,000 shares of nonvested stock, less forfeitures of 750 shares	 	 	1	 	 	 	(1	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	-	 	
Nonvested stock amortization	 	 	 	 	 	 	1,589	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,589	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance – December 31, 2006	 	$	255	 	 	$	307,088	 	 	$	42,644	 	 	$	3,546	 	 	 	 	 	 	$	353,533	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	 	 	 	 	 	 	 	 	106,809	 	 	 	 	 	 	 	106,809	 	 	 	106,809	 	
Unrealized gain on short-term investments	 	 	 	 	 	 	 	 	 	 	 	 	 	 	38,540	 	 	 	38,540	 	 	 	38,540	 	
Unrealized gain on currency translation on short-term investments, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,545	 	 	 	1,545	 	 	 	1,545	 	
Unrealized derivative loss on cash flow hedges, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(24,614	)	 	 	(24,614	)	 	 	(24,614	)	
Comprehensive income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	122,280	 	 	 	 	 	
Cash dividends paid ($2.64 per share)	 	 	 	 	 	 	 	 	 	 	(69,577	)	 	 	 	 	 	 	 	 	 	 	(69,577	)	
Issuance of common stock, 3,358,209 shares	 	 	34	 	 	 	213,837	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	213,871	 	
Issuance of 109,200 shares of nonvested stock, less forfeitures of 7,062 shares	 	 	1	 	 	 	(1	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	-	 	
Nonvested stock amortization	 	 	 	 	 	 	2,078	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,078	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance – December 31, 2007	 	$	290	 	 	$	523,002	 	 	$	79,876	 	 	$	19,017	 	 	 	 	 	 	$	622,185	 	

  See accompanying notes to consolidated financial statements.

 
 
F-5

Genco Shipping & Trading Limited
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005
(U.S. Dollars in Thousands)
 
 	 	Year ended December 31,	 	
 	 	2007	 	 	2006	 	 	2005	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	
Net income	 	$	106,809	 	 	$	63,522	 	 	$	54,482	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	34,378	 	 	 	26,978	 	 	 	22,322	 	
Amortization of deferred financing costs	 	 	4,128	 	 	 	341	 	 	 	4,611	 	
Amortization of fair market value of time charter acquired	 	 	(5,139	)	 	 	1,850	 	 	 	398	 	
Realized losses on forward currency contract	 	 	9,864	 	 	 	-	 	 	 	-	 	
Unrealized loss (gain) on derivative instruments	 	 	80	 	 	 	(108	)	 	 	-	 	
Unrealized gain on hedged short-term investment	 	 	(10,160	)	 	 	-	 	 	 	-	 	
Unrealized loss on forward currency contract	 	 	1,448	 	 	 	-	 	 	 	-	 	
Amortization of nonvested stock compensation expense	 	 	2,078	 	 	 	1,589	 	 	 	277	 	
Gain on sale of vessel	 	 	(27,047	)	 	 	-	 	 	 	-	 	
Change in assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	
(Increase) decrease in due from charterers	 	 	(1,872	)	 	 	(252	)	 	 	445	 	
Increase in prepaid expenses and other current assets	 	 	(2,241	)	 	 	(2,069	)	 	 	(2,140	)	
Increase in accounts payable and accrued expenses	 	 	6,164	 	 	 	2,288	 	 	 	4,610	 	
Increase (decrease) in deferred revenue	 	 	5,908	 	 	 	(1,114	)	 	 	2,933	 	
(Decrease) increase in deferred rent credit	 	 	(19	)	 	 	264	 	 	 	479	 	
Deferred drydock costs incurred	 	 	(3,517	)	 	 	(3,221	)	 	 	(187	)	
Net cash provided by operating activities	 	 	120,862	 	 	 	90,068	 	 	 	88,230	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Purchase of vessels	 	 	(764,574	)	 	 	(81, 638	)	 	 	(267,024	)	
Deposits on vessels	 	 	(150,279	)	 	 	-	 	 	 	-	 	
Purchase of short-term investments	 	 	(115,577	)	 	 	-	 	 	 	-	 	
Payments on forward currency contracts, net	 	 	(9,897	)	 	 	-	 	 	 	-	 	
Proceeds from sale of vessels	 	 	56,536	 	 	 	-	 	 	 	-	 	
Purchase of other fixed assets	 	 	(559	)	 	 	(1,202	)	 	 	(1,048	)	
Net cash used in investing activities	 	 	(984,350	)	 	 	(82, 840	)	 	 	(268,072	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from the 2007 Credit Facility	 	 	1,193,000	 	 	 	-	 	 	 	-	 	
Repayments on the 2007 Credit Facility	 	 	(257,000	)	 	 	-	 	 	 	-	 	
Proceeds from the 2005 Credit Facility, Short-term Line and Original Credit Facility	 	 	77,000	 	 	 	81,250	 	 	 	371,917	 	
Repayments on the 2005 Credit Facility, Short-term Line and Original Credit Facility	 	 	(288,933	)	 	 	-	 	 	 	(367,000	)	
Payment of deferred financing costs	 	 	(6,931	)	 	 	(795	)	 	 	(3,378	)	
Capital contributions from shareholder	 	 	-	 	 	 	-	 	 	 	2,705	 	
Cash dividends paid	 	 	(69,577	)	 	 	(61,041	)	 	 	(15,226	)	
Net proceeds from issuance of common stock	 	 	213,871	 	 	 	-	 	 	 	230,305	 	
Net cash provided by financing activities	 	 	861,430	 	 	 	19,414	 	 	 	219,323	 	
Net (decrease) increase in cash	 	 	(2,058	)	 	 	26,642	 	 	 	39,481	 	
Cash and cash equivalents at beginning of period	 	 	73,554	 	 	 	46,912	 	 	 	7,431	 	
Cash and cash equivalents at end of period	 	$	71,496	 	 	$	73,554	 	 	$	46,912	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.	 	

F-6

 
Genco Shipping & Trading Limited
 (U.S. Dollars in Thousands)
 
Notes to Consolidated Financial Statements for the Years Ended December 31, 2007, 2006 and 2005

  1 - GENERAL INFORMATION
 
The accompanying consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its wholly owned subsidiaries (collectively, the “Company,” “we” or “us”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T was incorporated on September 27, 2004 under the laws of the Marshall Islands and is the sole owner of all of the outstanding shares of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; and the ship-owning subsidiaries as set forth below.
 
The Company began operations on December 6, 2004 with the delivery of its first vessel.  The Company agreed to acquire a fleet of 16 drybulk carriers from an unaffiliated third party on November 19, 2004 for approximately $421,900; these vessels were delivered during 2004 and 2005.
 
 On October 14, 2005, the Company acquired the Genco Muse a 2001 Handymax vessel and time charter contract for a total of $34,450 and was funded entirely by the Company’s credit facility entered into on July 29, 2005 (the “2005 Credit Facility”).  On July 10, 2006, the Company acquired the Genco Acheron, the Genco Commander, and the Genco Surprise for a total purchase price of $81,250, all of which were delivered in the fourth quarter of 2006.  During February 2007, the Company completed the sale of the Genco Glory to Cloud Maritime S.A. for $13,004, net of commission.  On July 18, 2007, the Company entered into an agreement to acquire nine Capesize vessels from companies within the Metrostar Management Corporation group for a net purchase price of $1,111,000, consisting of the value of the vessels and the liability for the below market time charter contracts acquired.  On August 10 and August 13, 2007, the Company also agreed to acquire six drybulk vessels (three Supramax and three Handysize) from affiliates of Evalend Shipping Co. S.A. for a net purchase price of $336,000, consisting of the value of the vessels and the liability for the below market time charter contract acquired.
 
On August 15, 2007, the Company decided to sell the two oldest vessels in its fleet, the Genco Commander and the Genco Trader.  On September 3, 2007, the Company reached an agreement to sell the Genco Commander, a 1994-built Handymax vessel, to Dan Sung Shipping Co. Ltd. for $44,450 less a 2% brokerage commission payable to a third party.  On December 3, 2007, the Company realized a net gain of $23,472 and received net proceeds of $43,532.  Lastly, on October 2, 2007, the Company reached an agreement to sell the Genco Trader, a 1990-built Panamax vessel, to SW Shipping Co., Ltd for $44,000 less a 2% brokerage commission payable to a third party. The Company expects to   realize a net gain of approximately $26,200 from the sale of the vessel, which occurred first quarter of 2008.  The Genco Trader is classified as held for sale at December 31, 2007.   Upon completion of these acquisitions and dispositions, Genco's fleet will consist of nine Capesize, six Panamax, three Supramax, six Handymax, and eight Handysize drybulk carriers, with a total carrying capacity of approximately 2,700,000 dwt and an average age of 7 years.
 
Below is the list of the Company’s wholly owned ship-owning subsidiaries as of December 31, 2007:
 
Wholly Owned
Subsidiaries	Vessels
Acquired	dwt	Date
Delivered	Year
Built	Date Sold	 	
 	 	 	 	 	 	 	
Genco Reliance Limited....................................	Genco Reliance	29,952	12/6/04	1999	—	 	
Genco Glory Limited.........................................	Genco Glory	41,061	12/8/04	1984	2/21/07	 	
Genco Vigour Limited.......................................	Genco Vigour	73,941	12/15/04	1999	—	 	
Genco Explorer Limited....................................	Genco Explorer	29,952	12/17/04	1999	—	 	
Genco Carrier Limited.......................................	Genco Carrier	47,180	12/28/04	1998	—	 	
Genco Sugar Limited........................................	Genco Sugar	29,952	12/30/04	1998	—	 	
Genco Pioneer Limited.....................................	Genco Pioneer	29,952	1/4/05	1999	—	 	
Genco Progress Limited...................................	Genco Progress	29,952	1/12/05	1999	—	 	
Genco Wisdom Limited...................................	Genco Wisdom	47,180	1/13/05	1997	—	 	
Genco Success Limited.....................................	Genco Success	47,186	1/31/05	1997	—	 	
Genco Beauty Limited.......................................	Genco Beauty	73,941	2/7/05	1999	—	 	
Genco Knight Limited......................................	Genco Knight	73,941	2/16/05	1999	—	 	

 

F-7

 
 
Genco Leader Limited......................................	Genco Leader	73,941	2/16/05	1999	—	 	
Genco Marine Limited.....................................	Genco Marine	45,222	3/29/05	1996	—	 	
Genco Prosperity Limited...............................	Genco Prosperity	47,180	4/4/05	1997	—	 	
Genco Trader Limited....................................	Genco Trader	69,338	6/7/05	1990	2/26/08	 	
Genco Muse Limited …………………	Genco Muse	48,913	10/14/05	2001	—	 	
Genco Commander Limited …………	Genco Commander	45,518	11/2/06	1994	12/3/07	 	
Genco Acheron Limited ……………..	Genco Acheron	72,495	11/7/06	1999	—	 	
Genco Surprise Limited ……………..	Genco Surprise	72,495	11/17/06	1998	—	 	
Genco Augustus Limited …………….	Genco Augustus	180,151	8/17/07	2007	—	 	
Genco Tiberius Limited ……………..	Genco Tiberius	175,874	8/28/07	2007	—	 	
Genco London Limited ………………	Genco London	177,833	9/28/07	2007	—	 	
Genco Titus Limited …………….......	Genco Titus	177,729	11/15/07	2007	—	 	
Genco Challenger Limited ………….	Genco Challenger	28,428	12/14/07	2003	—	 	
Genco Charger Limited ……………..	Genco Charger	28,398	12/14/07	2005	—	 	
Genco Warrior Limited …………….	Genco Warrior	55,435	12/17/07	2005	—	 	
Genco Predator Limited …………….	Genco Predator	55,407	12/20/07	2005	—	 	
Genco Hunter Limited ………………	Genco Hunter	58,729	12/20/07	2007	—	 	
Genco Champion Limited …………..	Genco Champion	28,445	1/2/08	2006	—	 	
Genco Constantine Limited …………	Genco Constantine	180,183	2/21/08	2008	—	 	
Genco Hadrian Limited ……………..	Genco Hadrian	170,500	Q4 2008 (1)	2008 (2)	—	 	
Genco Commodus Limited …………	Genco Commodus	170,500	Q2 2009 (1)	2009 (2)	—	 	
Genco Maximus Limited ……………	Genco Maximus	170,500	Q2 2009 (1)	2009 (2)	—	 	
Genco Claudius Limited …………….	Genco Claudius	170,500	Q3 2009 (1)	2009 (2)	—	 	
 	 	 	 	 	 	 	
 	(1) Dates for vessels being delivered in the future are estimates based on guidance received from the sellers and/or the respective shipyards.	
   (2) Built dates for vessels delivering in the future are estimates based on guidance received from the sellers and respective shipyards.	 	

Prior to its initial public offering, GS&T was 100% owned by Fleet Acquisition LLC, a limited liability company organized on November 3, 2004 under the laws of the Marshall Islands.  Fleet Acquisition LLC was owned approximately 65.65% by OCM Principal Opportunities III Fund, L.P. and OCM Principal Opportunities Fund IIIA, L.P., collectively, (“Oaktree”) of which Oaktree Management LLC is the General Partner, approximately 26.57% by Peter Georgiopoulos, and 7.78% by others.  As of December 31, 2005, Fleet Acquisition LLC maintained a 53.08% ownership in the Company.  On April 14, 2006, Fleet Acquisition LLC distributed 1,050,210 shares to certain of its members, and on December 15, 2006, Fleet Acquisition LLC distributed 3,587,361 shares to Peter Georgiopoulos, our Chairman.  As a result, at December 31, 2006, Oaktree beneficially owned approximately 34.75% of the Company through Fleet Acquisition, LLC and Peter Georgiopoulos beneficially owned approximately 14.08%.

On July 18, 2005, prior to the closing of the public offering of GS&T’s common stock, GS&T’s board of directors and stockholder approved a split (in the form of a stock dividend, giving effect to a 27,000:1 common stock split) of the Company’s common stock. All share and per share amounts relating to common stock, included in the accompanying consolidated financial statements and footnotes, have been restated to reflect the stock split for all periods presented.

In January 2007, we filed a registration statement on Form S-3 with the Securities and Exchange Commission (the “SEC”) to register possible future offerings, including possible resales by Fleet Acquisition LLC.  That registration statement, as amended, was declared effective by the SEC on February 7, 2007.  Fleet Acquisition LLC utilized that registration statement to conduct an underwritten offering of 4,830,000 shares it owned, including an over-allotment option granted to underwriters for 630,000 shares which the underwriters exercised in full.  Following completion of that offering, Fleet Acquisition LLC owns 15.80% of our common stock.   During October 2007, the Company closed on an equity offering of 3,358,209 shares of Genco common stock (with the exercise of the underwriters’ over-allotment option) at an offering price of $67 per share.  The Company received net proceeds of $213,871 after deducting underwriters’ fees and expenses.  On October 5, 2007, the Company utilized $214,000 including these proceeds to repay outstanding borrowings under the 2007 Credit Facility.  Additionally, in the same offering, Fleet Acquisition LLC sold

 

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1,076,291 shares (with the exercise of the underwriters’ over-allotment option) at the same offering price of $67 per share.  The Company did not receive any proceeds from the common stock sold by Fleet Acquisition LLC.  On January 10, 2008, the Board of Directors approved a grant of 100,000 nonvested common stock to Peter Georgiopoulos, Chairman of the Board.  This grant vests ratably on each of the ten anniversaries of the determined vesting date beginning with November 15, 2008.  After the offering and the grant to the Mr. Georgiopoulos, Fleet Acquisition LLC owns approximately 10.17% of the Company, and Mr. Georgiopoulos owns approximately 12.70% of the Company.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Principles of consolidation
 
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which include the accounts of Genco Shipping & Trading Limited and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
 
Business geographics
 
The Company’s vessels regularly move between countries in international waters, over hundreds of trade routes and, as a result, the disclosure of geographic information is impracticable.
 
Vessel acquisitions
 
When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was the purchase of an asset or a business based on the facts and circumstances of the transaction.  As is customary in the shipping industry, the purchase of a vessel is normally treated as a purchase of an asset as the historical operating data for the vessel is not reviewed nor is material to our decision to make such acquisition.
 
When a vessel is acquired with an existing time charter, the Company allocates the purchase price of the vessel and the time charter based on, among other things, vessel market valuations and the present value (using an interest rate which reflects the risks associated with the acquired charters) of the difference between (i) the contractual amounts to be paid pursuant to the charter terms and (ii) management's estimate of the fair market charter rate, measured over a period equal to the remaining term of the charter.  The capitalized above-market (assets) and below-market (liabilities) charters are amortized as a reduction or increase, respectively, to voyage revenues over the remaining term of the charter.

Segment reporting
 
The Company reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers, i.e., spot or time charters. The Company does not use discrete financial information to evaluate the operating results for different types of charters. Although revenue can be identified for these types of charters, management cannot and does not separately identify expenses, profitability or other financial information for these charters. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet and thus, the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide and, as a result, the disclosure of geographic information is impracticable.
 
Revenue and voyage expense recognition
 
Since the Company’s inception, revenues have been generated from time charter agreements and pool agreements. A time charter involves placing a vessel at the charterer’s disposal for a set period of time during which the charterer may use the vessel in return for the payment by the charterer of a specified daily hire rate. In time charters, operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel and port charges are paid by the charterer. There are certain other non-specified voyage expenses such as commissions which are borne by the Company.

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The Company records time charter revenues over the term of the charter as service is provided. Revenues are recognized on a straight-line basis as the average revenue over the term of the respective time charter agreement.  The Company recognizes vessel operating expenses when incurred.
 
In December 2005 and February 2006, respectively, the Genco Trader and the Genco Leader entered into the Baumarine Panamax Pool.  Vessel pools, such as the Baumarine Panamax Pool, provide cost-effective commercial management activities for a group of similar class vessels.  The pool arrangement provides the benefits of a large-scale operation, and chartering efficiencies that might not be available to smaller fleets.   Under the pool arrangement, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the charterer and operating costs including crews, maintenance and insurance are typically paid by the owner of the vessel.  Since the members of the pool share in the revenue generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these two vessels was subject to the fluctuations of the spot market.  Effective December 24, 2006 and January 15, 2007, respectively, the Genco Trader and Genco Leader exited the Baumarine Panamax Pool.
 
Due from charterers, net
 
Due from charterers, net includes accounts receivable from charters net of the provision for doubtful accounts. At each balance sheet date, the Company provides for the provision based on a review of all outstanding charter receivables. Included in the standard time charter contracts with our customers are certain performance parameters, which if not met can result in customer claims.  As of December 31, 2007, we had no reserve against due from charterers balance and an additional reserve of $734 in deferred revenue, each of which is associated with estimated customer claims against the Company including time charter performance issues.  As of December 31, 2006, the Company had a reserve of $187 against due from charterers balance and an additional reserve of $571 in deferred revenue, each of which is associated with estimated customer claims against the Company, including time charter performance issues.

Revenue is based on contracted charterparties and, although the Company's business is with customers whom the Company believes to be of the highest standard, there is always the possibility of dispute over terms and payment of hires and freights. In particular, disagreements may arise as to the responsibility of lost time and revenue due to the Company as a result. As such, the Company periodically assesses the recoverability of amounts outstanding and estimates a provision if there is a possibility of non-recoverability. Although the Company believes its provisions to be reasonable at the time they are made, it is possible that an amount under dispute is not ultimately recovered and the estimated provision for doubtful accounts is inadequate.
 
Vessel operating expenses
 
Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, and other miscellaneous expenses. Vessel operating expenses are recognized when incurred.
 
Vessels, net
 
Vessels, net are stated at cost less accumulated depreciation. Included in vessel costs are acquisition costs directly attributable to the acquisition of a vessel and expenditures made to prepare the vessel for its initial voyage.  The Company also considers interest costs for a vessel under construction as a cost which is directly attributable to the acquisition of a vessel.  Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from the date of initial delivery from the shipyard.  Depreciation expense for vessels for the years ended December 31, 2007, 2006 and 2005 was $32,900, $26,344, and $22,238, respectively.
 
Depreciation expense is calculated based on cost less the estimated residual scrap value. The costs of significant replacements, renewals and betterments are capitalized and depreciated over the shorter of the vessel’s remaining estimated useful life or the estimated life of the renewal or betterment. Undepreciated cost of any asset component being replaced that was acquired after the initial vessel purchase is written off as a component of vessel operating expense. Expenditures for routine maintenance and repairs are expensed as incurred. Scrap value is estimated by the Company by taking the cost of steel times the weight of the ship noted in lightweight ton (lwt). At December 31, 2007 and 2006, the Company estimated the residual value of vessels to be $175/lwt.

 

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Fixed assets, net
 
Fixed assets, net are stated at cost less accumulated depreciation and amortization.  Depreciation and amortization are based on a straight line basis over the estimated useful life of the specific asset placed in service.  The following table is used in determining the estimated useful lives:
 
Description                                           Useful lives
 
Leasehold improvements                                                      15 years
Furniture, fixtures & other equipment                                  5 years
Vessel equipment                                                                 2-5 years
Computer equipment                                                               3 years

Depreciation expense for fixed assets for the years ended December 31, 2007, 2006 and 2005 was $393, $304, and $49, respectively.
 
Deferred drydocking costs
 
The Company’s vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. The Company capitalizes the costs associated with the drydockings as they occur and depreciates these costs on a straight-line basis over the period between drydockings. Costs capitalized as part of a vessel’s drydocking include actual costs incurred at the drydocking yard; cost of parts that are reasonably made in anticipation of reducing the duration or cost of the drydocking; cost of travel, lodging and subsistence of personnel sent to the drydocking site to supervise; and the cost of hiring a third party to oversee the drydocking.  Depreciation expense for drydocking for the years ended December 31, 2007, 2006 and 2005 was $1,084, $331, and $36, respectively.
 
Inventory
 
Inventory consists of lubricants and bunkers (fuel) which are stated at the lower of cost or market. Cost is determined by the first-in, first-out method.  Inventory is included in prepaid expenses and other current assets.
 
Impairment of long-lived assets
 
The Company follows the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. In the evaluation of the fair value and future benefits of long-lived assets, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including anticipated future charter rates, estimated scrap values, future drydocking costs and estimated vessel operating costs, are included in this analysis.
 
For the years ended December 31, 2007, 2006 and 2005, no impairment charges were recorded, based on the analysis described above.
 
Deferred financing costs
 
Deferred financing costs, included in other assets, consist of fees, commissions and legal expenses associated with obtaining loan facilities. These costs are amortized over the life of the related debt, which is included in interest expense.

 

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Cash and cash equivalents
 
The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.
 
Short-term investments
 
The Company holds an investment in the capital stock of Jinhui Shipping and Transportation Limited (“Jinhui”).  Jinhui is a drybulk shipping owner and operator focused on the Supramax segment of drybulk shipping.  This investment is designated as Available For Sale (“AFS”) and is reported at fair value, with unrealized gains and losses recorded in shareholders’ equity as a component of other comprehensive income (“OCI”).  Effective August 16, 2007, the Company has elected hedge accounting for forward currency contracts in place associated with the cost basis of the Jinhui shares, and therefore the unrealized currency gain or loss associated with the cost basis in the Jinhui shares will now be reflected in the income statement as income or (loss) from derivative instruments to offset the gain or loss associated with these forward currency contracts.  The cost of securities when sold is based on the specific identification method.  Realized gains and losses on the sale of these securities will be reflected in the consolidated statement of operations in other (expense) income.  Additionally, the realized gain or loss on the forward currency contracts is reflected in the Consolidated Statement of Cash Flows as an investing activity and is reflected in the caption Payments on forward currency contracts, net.

Short-term investments are reviewed periodically to identify possible other-than-temporary impairment.  When evaluating the investments, the Company reviews factors such as the length of time and extent to which fair value has been below the cost basis, the financial condition of the issuer, the underlying net asset value of the issuers assets and liabilities, and the Company’s ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery in market value.  Should the decline in the value of any investment be deemed to be other-than-temporary, the investment basis would be written down to fair market value, and the write-down would be recorded to earnings as a loss.
 
Income taxes
 
Pursuant to Section 883 of the U.S. Internal Revenue Code of 1986 as amended (the “Code”), qualified income derived from the international operations of ships is excluded from gross income and exempt from U.S. federal income tax if a company engaged in the international operation of ships meets certain requirements. Among other things, in order to qualify, the company must be incorporated in a country which grants an equivalent exemption to U.S. corporations and must satisfy certain qualified ownership requirements.

The Company is incorporated in the Marshall Islands. Pursuant to the income tax laws of the Marshall Islands, the Company is not subject to Marshall Islands income tax. The Marshall Islands has been officially recognized by the Internal Revenue Service as a qualified foreign country that currently grants the requisite equivalent exemption from tax.
 
Based on the ownership of our common stock prior to our initial public offering on July 22, 2005 as discussed in Note 1, we qualified for exemption from income tax for 2005 under Section 883, since we were a Controlled Foreign Corporation (“CFC”) and satisfied certain other criteria in the Section 883 regulations. We were a CFC, as defined in the Code, since until the initial public offering on July 22, 2005, over 50% of our stock was owned by United States holders each of whom owned ten percent or more of our voting stock, or US 10% Owners. During that time, approximately 93% of our common stock was held by US 10% Owners.

Based on the publicly traded requirement of the Section 883 regulations, we believe that the Company qualified for exemption from income tax for 2007 and 2006.    In order to meet the publicly traded requirement, our stock must be treated as being primarily and regularly traded for more than half the days of any such year. Under the Section 883 regulations, our qualification for the publicly traded requirement may be jeopardized if shareholders of our common stock that own five percent or more of our stock (“5% shareholders”) own, in the aggregate, 50% or more of our common stock for more than half the days of the year.   We believe that during 2007 and 2006, the combined ownership of our 5% shareholders did not equal 50% or more of our common stock for more than half the days of 2007 and 2006. However if our 5% shareholders were to increase their ownership to 50% or more of our common stock for more than half the days of 2008 or any future taxable year, we would not be eligible to claim exemption from tax under Section 883 for that

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taxable year. We can therefore give no assurance that changes and shifts in the ownership of our stock by 5% shareholders will not preclude us from qualifying for exemption from tax in 2008 or in future years.

If the Company does not qualify for the exemption from tax under Section 883, it would be subject to a 4% tax on the gross “shipping income” (without the allowance for any deductions) that is treated as derived from sources within the United States or “United States source shipping income.” For these purposes, “shipping income” means any income that is derived from the use of vessels, from the hiring or leasing of vessels for use, or from the performance of services directly related to those uses; and “United States source shipping income” includes 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
 
Deferred revenue
 
Deferred revenue primarily relates to cash received from charterers prior to it being earned. These amounts are recognized as income when earned.  Additionally, deferred revenue includes estimated customer claims mainly due to time charter performance issues.

Comprehensive income
 
The Company follows SFAS No. 130 “Reporting Comprehensive Income,” which establishes standards for reporting and displaying comprehensive income and its components in financial statements.  Comprehensive income is comprised of net income and amounts related to SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” as well as unrealized gains or losses associated with the Company’s short-term investments.
 
Nonvested stock awards
 
In 2006, the Company adopted SFAS No. 123R, Share-Based Payment, for nonvested stock issued under its equity incentive plan.  Adoption of this new accounting policy did not change the method of accounting for nonvested stock awards.  However, deferred compensation costs from nonvested stock have been classified as a component of paid-in capital as required by SFAS No. 123R.
 
Accounting estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include vessel and drydock valuations and the valuation of amounts due to / due from charterers.  Actual results could differ from those estimates.

  Concentration of credit risk
 
Financial instruments that potentially subject the Company to concentrations of credit risk are amounts due from charterers. With respect to amounts due from charterers, the Company attempts to limit its credit risk by performing ongoing credit evaluations and, when deemed necessary, requiring letters of credit, guarantees or collateral. The Company earned 100% of revenues from 18 customers in 2007 and earned 100% of revenue from 14 customers in 2006 and 97% of revenues from 12 customers in 2005, management does not believe significant risk exists in connection with the Company’s concentrations of credit at December 31, 2007 and 2006.
 
For the year ended December 31, 2007 there were two customers that individually accounted for more than 10% of revenue, which represented 15.42% and 13.74%, of revenue, respectively.  For the year ended December 31, 2006 there were two customers that individually accounted for more than 10% of revenue, which represented 15.74% and 21.51% of revenue, respectively.   For the year ended December 31, 2005 there were three customers that individually accounted for more than 10% of revenue, which represented 11.68%, 15.27% and 26.33% of revenue, respectively.

 

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Fair value of financial instruments
 
The estimated fair values of the Company’s financial instruments such as amounts due to / due from charterers, and accounts payable approximate their individual carrying amounts as of December 31, 2007 and December 31, 2006 due to their short-term maturity or the variable-rate nature of the respective borrowings.

The fair value of the interest rate swaps and forward currency contracts (used for purposes other than trading) is the estimated amount the Company would receive to terminate these agreements at the reporting date, taking into account current interest rates and the creditworthiness of the counterparty for assets and creditworthiness of the Company for liabilities.  See Note 10 - Fair Value of Financial Instruments for additional disclosure on the fair values of long term debt, derivative instruments, and available-for-sale securities.

The Company adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) in the first quarter of 2007, which did not have a material impact on the financial statements of the Company.

Derivative financial instruments
 
Interest rate risk management
 
The Company is exposed to the impact of interest rate changes.  The Company’s objective is to manage the impact of interest rate changes on its earnings and cash flow in relation to borrowings primarily for the purpose of acquiring drybulk vessels.  These borrowings are subject to a variable borrowing rate. The Company uses forward starting pay-fixed receive-variable interest rate swaps to manage future interest costs and the risk associated with changing interest rate obligations.  These swaps are designated as cash flow hedges of future variable rate interest payments and are tested for effectiveness on a quarterly basis.
 
 The differential to be paid or received for the effectively hedged portion of any swap agreement is recognized as an adjustment to interest expense as incurred.  Additionally, the changes in value for the portion of the swaps that are effectively hedging future interest payments are reflected as a component of OCI.

For the portion of the forward interest rate swaps that are not effectively hedged, the change in the value and the rate differential to be paid or received is recognized as income or (expense) from derivative instruments and is listed as a component of other (expense) income until such time the Company has obligations against which the swap is designated and is an effective hedge.

Currency risk management

The Company currently holds an investment in Jinhui shares that are traded on the Oslo Stock Exchange located in Norway, and as such, the Company is exposed to the impact of exchange rate changes on this available-for-sale security denominated in Norwegian Kroner.  The Company’s objective is to manage the impact of exchange rate changes on its earnings and cash flows in relation to its cost basis associated with its short-term investments. The Company uses foreign currency forward contracts to protect its original investment from changing exchange rates.

The change in the value of the forward currency contracts is recognized as income or (expense) from derivative instruments and is listed as a component of other (expense) income.  Effective August 16, 2007, the Company elected to utilize fair value hedge accounting for these instruments whereby the change in the value in the forward contracts continues to be recognized as income or (expense) from derivative instruments and is listed as a component of other (expense) income.  Fair value hedge accounting then accelerates the recognition of the effective portion of the currency translation gain or (loss) on the Available for Sale Security from August 16, 2007 from OCI into income or (expense) from derivative instruments and is listed as a component of other (expense) income.  Time value of the forward contracts are excluded from effectiveness testing and recognized currently in income.

New accounting pronouncements
 
 In September 2006, FASB issued SFAS No.157, “Fair Value Measurements” which enhances existing guidance for measuring assets and liabilities using fair value. Previously, guidance for applying fair value was incorporated in several accounting pronouncements.  The new statement provides a single definition of fair value,

 

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together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities.  While the statement does not add any new fair value measurements, it does change current practice. One such change is a requirement to adjust the value of nonvested stock for the effect of the restriction even if the restriction lapses within one year.
 
Additionally, in February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, which delays the effective date of SFAS Statement No. 157 to fiscal years beginning after November 15, 2008 and interim periods with those fiscal years for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until January 1, 2009 for calendar year end entities. The Company has already adopted this Statement except as it applies to nonfinancial assets and liabilities as noted in FSP 157-2. The partial adoption of SFAS No. 157 did not have a significant impact on its consolidated results of operations or financial position. The Company is currently evaluating the effect that the adoption of SFAS No. 157, as it relates to nonfinancial assets and liabilities, will have on its consolidated results of operations or financial position.

In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes–an Interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized by prescribing a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  FIN 48 is effective for years beginning after December 15, 2006. The Company has adopted FIN 48, and its adoption did not have a material impact on the Company’s consolidated financial statements.

 In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”).  Under this statement, the Company may elect to report financial instruments and certain other items at fair value on a contract-by-contract basis with changes in value reported in earnings.  This election is irrevocable.  SFAS No. 159 is effective for the Company commencing in 2008.  Early adoption within 120 days of the beginning of the year is permissible, provided the Company has adopted SFAS No. 157.  The adoption of SFAS 159 on January 1, 2008, is not expected to have a material impact on the financial statements of the Company.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (SFAS No. 141R). SFAS No. 141R will significantly change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R also includes a substantial number of new disclosure requirements and applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. As the provisions of SFAS No. 141R are applied prospectively, the impact to the Company cannot be determined until the transactions occur.
 
3 - CASH FLOW INFORMATION
 
The Company currently has eight interest rate swaps, and these swaps are described and discussed in Note 8. The fair value of the swaps is in a liability position of $21,039 as of December 31, 2007.  At December 31, 2006, there were a total of three interest rate swaps of which one of the swaps was in an asset position of $4,462 and other two swaps were in a liability position of $807.

The Company had non-cash operating and investing activities not included in the Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses consisting of $682 for the purchase of vessels, $1,227 associated with deposits on vessels, $1,670 for the purchase of short-term investments, and $16 for the purchase of fixed assets for the year ended December 31, 2007.  For the year ended December 31, 2006, the Company had non-cash operating and investing activities not included in the Consolidated Statement of Cash Flows for items included in accounts payable and accrued expenses for the purchase of vessels of approximately $41. Lastly, the Company had items in prepaid expenses and other current assets consisting of $2,489 which had reduced the deposits on vessels.

During the years ended December 31, 2007, 2006 and 2005, the cash paid for interest, net of amounts capitalized were $18,887, $9,553, and $9,587, respectively.
 
On February 8, 2007, the Company granted nonvested stock to certain directors and employees. The fair value of such nonvested stock was $494 on the grant date and was recorded in equity. Additionally, during January 2007,

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nonvested stock forfeited amounted to $54 for shares granted in 2005 and is recorded in equity.  During May 2007, nonvested stock forfeited amounted to $88 for shares granted in 2006 and 2005 and is recorded in equity.  Lastly, on December 21, 2007, the Company granted nonvested stock to certain employees. The fair value of such nonvested stock was $4,935 on the grant date and was recorded in equity.

During 2006, the Company granted nonvested stock to its employees. The fair value of such nonvested stock was $2,018 on the grant date and was recorded in equity.  Additionally, during 2006, nonvested stock forfeited amounted to $12 for shares granted in 2005 and is recorded in equity.   

During 2005, the Company granted nonvested stock to its employees and directors. The fair value of such nonvested stock was $2,940 on the grant dates and was recorded in equity.
 
4 - VESSEL ACQUISITIONS AND DISPOSITIONS
 
 On August 15, 2007, the Company decided to sell the two oldest vessels in its fleet, the Genco Commander and the Genco Trader.  On September 3, 2007, the Company reached an agreement to sell the Genco Commander, a 1994-built Handymax vessel, to Dan Sung Shipping Co. Ltd. for $44,450 less a 2% brokerage commission payable to a third party.  On December 3, 2007, the Company realized a net gain of $23,472 and received net proceeds of $43,532.  Lastly, on October 2, 2007, the Company reached an agreement to sell the Genco Trader, a 1990-built Panamax vessel, to SW Shipping Co., Ltd for $44,000 less a 2% brokerage commission payable to a third party. The Company expects to realize a net gain of approximately $26,200 from the sale of the vessel in the first quarter of 2008.  The Genco Trader is classified as held for sale at December 31, 2007 in the amount of $16,857.

    On August 10 and August 13, 2007, the Company also agreed to acquire six drybulk vessels (three Supramax and three Handysize) from affiliates of Evalend Shipping Co. S.A. for a net purchase price of $336,000, consisting of the value of the vessels and the liability for the below market time charter contract acquired.  As of December 31, 2007, the Company completed the acquisition of five of the vessels, the Genco Predator, Genco Warrior, Genco Hunter, Genco Charger, Genco Challenger, and completed the acquisition of the sixth vessel, the Genco Champion, on January 2, 2008.

In July 2007 the Company entered into an agreement to acquire nine Capesize vessels from companies within the Metrostar Management Corporation group for a net purchase price of $1,111,000, consisting of the value of the vessels and the liability for the below market time charter contracts acquired.  As of December 31, 2007, four of the nine Capesize vessels, the Genco Augustus, Genco Tiberius, Genco London, and Genco Titus, all 2007 built vessels, were delivered to Genco.  On February 21, 2008, the Company completed the acquisition of the Genco Constantine, a 2008 built Capesize vessel.  The remaining four Capesize vessels are expected to be built, and subsequently delivered to Genco, between the fourth quarter of 2008 and the third quarter of 2009. Upon completion of these acquisitions and dispositions, Genco's fleet will consist of nine Capesize, six Panamax, three Supramax, six Handymax, and eight Handysize drybulk carriers, with a total carrying capacity of approximately 2,700,000 dwt and an average age of 7 years.

As four of the Capesize vessels and one of the Supramax vessels delivered during 2007 had existing below market time charters at the time of the acquisition, the Company recorded the fair market value of time charter acquired of $51,373 which is being amortized as an increase to voyage revenues during the remaining term of each respective time charter. For year ended December 31, 2007, $6,382 was amortized into revenue.  No amortization occurred during 2006 as the transaction occurred in 2007.  This balance will be amortized into revenue over a weighted average period of 2.25 years and will be amortized as follows: $21,405 for 2008, $18,975 for 2009, $3,635 for 2010 and $976 for 2011.  The remaining unamortized fair market value of time charter acquired at December 31, 2007 and December 31, 2006 is $44,991 and $0, respectively.
 
On December 21, 2006, the Company engaged the services of WeberCompass (Hellas) S.A. to sell the Genco Glory.  The Company, as of such date, reclassed the net assets associated with the Genco Glory to “Vessel held for Sale” in the current asset section of the balance sheet and discontinued depreciating such assets.  At December 31, 2006, the net assets classified as Vessel held for Sale was $9,450.  On February 21, 2007, the Genco Glory was sold to Cloud Maritime S.A. for $13,004 net of a brokerage commission of 1% was paid to WeberCompass (Hellas) S.A.  Based on the selling price and the net book value of the vessel, the Company recorded a gain of $3,575 during the first quarter of 2007.

On July 10, 2006, the Company entered into an agreement with affiliates of Franco Compania Naviera S.A.

F-16

 
 
under which the Company purchased three drybulk vessels for an aggregate price of $81,250.  These vessels were delivered in the fourth quarter of 2006.  The acquisition consisted of a 1999 Japanese-built Panamax vessel, the Genco Acheron, a 1998 Japanese-built Panamax vessel, the Genco Surprise, and a 1994 Japanese-built Handymax vessel, the Genco Commander.

On October 14, 2005, the Company took delivery of the Genco Muse, a 48,913 dwt Handymax drybulk carrier and the results of its operations are included in the consolidated results of the Company after that date. The vessel is a 2001 Japanese-built vessel. The total purchase price of the vessel was $34,450. The purchase price included the assumption of an existing time charter with Qatar Navigation QSC at a rate of $26.5 per day. Due to the above-market rate of the existing time charter, the Company capitalized $3,492 of the purchase price as an asset which is being amortized as a reduction of voyage revenues through September 2007 (the remaining term of the charter). For 2007, 2006 and 2005, $1,244, $1,850 and $398, respectively, was amortized and $0 and $1,244, respectively, remains unamortized at December 31, 2007 and 2006.
.  
See Note 1 for discussion on the initial acquisition of our initial 16 drybulk carriers.

The purchase and sale of the aforementioned vessels is consistent with the Company's strategy of selectively expanding the number and maintaining the high-quality vessels in the fleet.

5 – SHORT-TERM I NVESTMENTS

The Company holds an investment of 15,439,800 shares of Jinhui capital stock and is recorded at the fair value of $167,524 based on the closing price of 59.00 NOK at December 28, 2007, the last trading date on the Oslo exchange in 2007.  The unrealized gain due to the appreciation of stock and currency translation gain at December 31, 2007 is $38,540 and $11,705, respectively.   The unrealized currency translation gain prior to the implementation of hedge accounting of $1,545 is recorded as a component of OCI since this investment is designated as an AFS security.  However, effective on August 16, 2007, the Company elected to utilize hedge accounting for forward contracts hedging the currency risk associated with the Norwegian Kroner cost basis in the Jinhui stock.  Fair value hedge accounting resulted in recognizing both an unrealized currency translation gain of $10,160 on the stock basis and an offsetting loss on the forward contracts.  The unrealized appreciation in the stock and the currency translation gain above the cost basis are recorded as a component of OCI.  Realized gains and losses on the sale of these securities will be reflected in the consolidated statement of operations in other expense once sold.  Time value of the forward contracts are excluded from effectiveness testing and recognized currently in income.  At December 31, 2007, an immaterial amount was recognized in income or (expense) from derivative instruments associated with excluded time value and ineffectiveness.
 
At December 31, 2007, the Company had one short-term forward currency contract to hedge the Company’s exposure to the Norwegian Kroner related to the cost basis of Jinhui stock as described above.  The forward currency contract for a notional amount of 685.1 million NOK (Norwegian Kroner) or $124,557, matured on January 17, 2008. As forward contracts expire, the Company continues to enter into new forward currency contracts for the cost basis of the Short-term investment, excluding commissions, however the hedge is limited to the lower of the cost basis or the market value at time of designation.  As February 19, 2008 the Company has a forward currency contract for the notional amount of 739.2 million NOK for $135.6 million.  For the year ended December 31, 2007, the net losses (realized and unrealized) of $1,185 related to the forward currency contracts and to the hedged translations gain on the cost basis of the Jinhui stock are reflected as (loss) income from derivative instruments and are included as a component of other expense.  The short-term liability associated with the forward currency contract at December 31, 2007 is $1,448, and is presented as the fair value of derivatives on the balance sheet.  The loss associated with this liability is included in the net loss from derivative instruments.

6 - EARNINGS PER COMMON SHARE
 
The computation of basic earnings (loss) per share is based on the weighted average number of common shares outstanding during the year. The computation of diluted earnings (loss) per share assumes the vesting of granted nonvested stock awards (see Note 18), for which the assumed proceeds upon grant are deemed to be the amount of compensation cost attributable to future services and are not yet recognized using the treasury stock method, to the extent dilutive. For the years ended December 31, 2007, 2006 and 2005, the nonvested stock grants are dilutive. 

 

F-17

 
The components of the denominator for the calculation of basic earnings per share and diluted earnings per share are as follows:
 
 	 	Year s Ended December 31,	 	
 	 	2007	 	 	2006	 	 	2005	 	
 	 	 	 	 	 	 	 	 	 	
Common shares outstanding, basic:	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding, basic	 	 	26,165,600	 	 	 	25,278,726	 	 	 	18,751,726	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Common shares outstanding, diluted:	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding, basic	 	 	26,165,600	 	 	 	25,278,726	 	 	 	18,751,726	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average nonvested stock awards	 	 	131,921	 	 	 	72,571	 	 	 	3,469	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding, diluted	 	 	26,297,521	 	 	 	25,351,297	 	 	 	18,755,195	 	
 
7 - RELATED PARTY TRANSACTIONS
 
The following are related party transactions not disclosed elsewhere in these financial statements:
 
In June 2006, the Company made an employee performing internal audit services available to General Maritime Corporation (“GMC”), where the Company’s Chairman, Peter C. Georgiopoulos, also serves as Chairman of the Board, Chief Executive Officer and President.   For the years ended December 31, 2007 and 2006, the Company invoiced $167 and $52, respectively, to GMC for the time associated with such internal audit services.  In 2005, no such arrangement was in place.  In April 2005, the Company began renting office space in a building leased by GenMar Realty LLC, a company wholly owned by Peter C. Georgiopoulos, the Chairman of the Board.  There was no lease agreement between the Company and GenMar Realty LLC. The Company paid an occupancy fee on a month-to-month basis in the amount of $55.  For the year ended December 31, 2005, the Company incurred $440 and this lease was terminated at December 31, 2005.  At December 31, 2007 the amount due GMC from the Company is $5 and the amount due the Company from GMC at December 31, 2006 is $25.
 
During the years ended December 31, 2007, 2006 and 2005, the Company incurred travel-related and miscellaneous expenditures totaling $248, $257 and $113, respectively.  These travel-related expenditures are reimbursable to GMC or its service provider.  For the years ended December 31, 2007, 2006 and 2005, approximately $0, $49 and $113, respectively of these travel expenditures were paid from the gross proceeds received from the initial public offering and as such were included in the determination of net proceeds.  Prior to its initial public offering, and for the year ended December 31, 2005, the Company purchased $25 of computers and incurred $17 of expense for consultative services provided by GMC.
 
During the years ended December 31, 2007, 2006 and 2005, the Company incurred legal services (primarily in connection with vessel acquisitions) aggregating $219, $82, and $176, respectively, from Constantine Georgiopoulos, the father of Peter C. Georgiopoulos, Chairman of the Board. At December 31, 2007 and 2006, $86 and $54, respectively was outstanding to Constantine Georgiopoulos.
 
In December 2006, the Company engaged the services of WeberCompass (Hellas) S.A. (“WC”), a shipbroker, to facilitate the sale of the Genco Glory.  One of our directors, Basil G. Mavroleon, is a Managing Director of WC and a Managing Director and shareholder of Charles R. Weber Company, Inc., which is 50% shareholder of WC.  WC received a commission of $132, or 1% of the gross selling price of the Genco Glory.
 
During 2007, the Company utilized the services of North Star Maritime, Inc. (“NSM”) which is owned and operated by one of our directors, Rear Admiral Robert C. North, USCG (ret.).  NSM, a marine industry consulting firm, specializes in international and domestic maritime safety, security and environmental protection issues.  NSM billed $12 for services rendered.  There are no amounts due to NSM at December 31, 2007 and 2006.

 

F-18

 
 
8 - LONG-TERM DEBT
 
Long-term debt consists of the following:
 
 	 	December 31,	 	
 	 	2007	 	 	2006	 	
 	 	 	 	 	 	 	
Outstanding total debt	 	$	936,000	 	 	$	211,933	 	
Less: Current portion	 	 	43,000	 	 	 	4,322	 	
 	 	 	 	 	 	 	 	 	
Long-term debt	 	$	 893,000	 	 	$	 207,611	 	

The above table reflects $43,000 as current debt as of December 31, 2007, of which $43,000 was repaid in February 2008 using proceeds from the sale of  the Genco Trader described in Note 21 - Subsequent Events.  Upon the sale of a mortgaged vessel, the 2007 Credit Facility requires the Company to repay a pro-rata portion of the long-term debt upon the sale of a mortgaged vessel.  The repayment amount is calculated by dividing the value of the mortgaged vessels being sold by the value of the entire mortgaged fleet at time of sale and multiplying such percentage by the total expected debt outstanding at time of sale.  However the Company elected to utilize the majority of the proceeds from the sale of the Genco Trader to repay debt.

2007 Credit Facility

On July 20, 2007, the Company entered into a new credit facility with DnB Nor Bank ASA (the “2007 Credit Facility”) for the purpose of acquiring the nine new Capesize vessels and refinancing the Company’s existing 2005 Credit Facility and Short-Term Line.  DnB Nor Bank ASA is also Mandated Lead Arranger, Bookrunner, and Administrative Agent. The Company has used borrowings under the 2007 Credit Facility to repay amounts outstanding under the 2005 Credit Facility and the Short-Term Line, and these two facilities have accordingly been terminated.  The maximum amount that may be borrowed under the 2007 Credit Facility is $1,377,000.  Subsequent to the equity offering completed in October 2007, the Company is no longer required pay up to $6,250 or such lesser amount as is available from Net Cash Flow (as defined in the credit agreement for the 2007 Credit Facility) each fiscal quarter to reduce borrowings under the 2007 Credit Facility.  As of December 31, 2007, $441,000 remains available to fund future vessel acquisitions.  The Company may borrow up to $50,000 of the $441,000 for working capital purposes.  On February 26, 2008, after repayment of $43,000 of borrowings due to the sale of the Trader and additional borrowings of $151,500 for the acquisition of the Genco Champion and Genco Constantine during the first quarter of 2008, $332,500 remains available to fund future vessel acquisitions.
 
Under the 2007 Credit Facility, subject to the conditions set forth in the credit agreement, the Company may borrow an amount up to $1,377,000.  Amounts borrowed and repaid under the 2007 Credit Facility may be reborrowed.  The 2007 Credit Facility has a maturity date of July 20, 2017, or ten years from the signing date of the 2007 Credit Facility.
 
Loans made under the 2007 Credit Facility may be used for the following:

·  	up to 100% of the en bloc purchase price of $1,111,000 for nine modern drybulk Capesize vessels, which the Company has agreed to purchase from companies within the Metrostar Management Corporation group;	

·  	repayment of amounts previously outstanding under the Company’s 2005 Credit Facility, or $206,233;	

·  	the repayment of amounts previously outstanding under the Company’s Short-Term Line, or $77,000;	

·  	possible acquisitions of additional dry bulk carriers between 25,000 and 180,000 dwt that are up to ten years of age at the time of delivery and not more than 18 years of age at the time of maturity of the new credit facility;	

·  	up to $50,000 of working capital; and	

 

F-19

 
·  	the issuance of up to $50,000 of standby letters of credit. At December 31, 2007, there were no letters of credit issued under the 2007 Credit Facility.	

  All amounts owing under the 2007 Credit Facility are secured by the following:

·  	cross-collateralized first priority mortgages of each of the Company’s existing vessels and any new vessels financed with the new credit facility;	

·  	an assignment of any and all earnings of the mortgaged vessels;	

·  	an assignment of all insurances of the mortgaged vessels;	

·  	a first priority perfected security interest in all of the shares of Jinhui owned by the Company;	

·  	an assignment of the shipbuilding contracts and an assignment of the shipbuilder’s refund guarantees meeting the Administrative Agent’s criteria for any additional newbuildings financed under the new credit facility; and	

·  	a first priority pledge of the Company’s ownership interests in each subsidiary guarantor.	

The Company has completed a pledge of its ownership interests in the subsidiary guarantors that own the nine Capesize vessels acquired or to be acquired.  The other collateral described above was pledged, as required, within thirty days of the effective date of the 2007 Credit Facility.
 
The Company’s borrowings under the 2007 Credit Facility bear interest at the London Interbank Offered Rate (“LIBOR”) for an interest period elected by the Company of one, three, or six months, or longer if available, plus the Applicable Margin (which is 0.90% per annum for the first five years of the 2007 Credit Facility and 0.95% thereafter).  If the Company’s ratio of Total Debt to Total Capitalization (each as defined in the credit agreement for the 2007 Credit Facility) is less than 70%, the Applicable Margin decreases to 0.85% and 0.90%, respectively.  In addition to other fees payable by the Company in connection with the 2007 Credit Facility, the Company paid a commitment fee at a rate of 0.20% per annum of the daily average unutilized commitment of each lender under the facility until September 30, 2007, and 0.25% thereafter.
 
The 2007 Credit Facility will be subject to ten consecutive semi-annual reductions of 7.0% of the total amount of credit granted under the new facility, with the first reduction occurring on the fifth anniversary of the signing date and a balloon payment reduction of 30% on the maturity date.  The Company may prepay the 2007 Credit Facility, without penalty, with two days notice for LIBOR rate advances, in minimum amounts of $10,000 together with accrued interest on the amount prepaid.
 
The 2007 Credit Facility includes the following financial covenants which will apply to the Company and its subsidiaries on a consolidated basis and will be measured at the end of each fiscal quarter beginning with June 30, 2007:

·  	The leverage covenant requires the maximum average net debt to EBITDA to be ratio of at least 5.5:1.0.	
 
·  	Cash and cash equivalents must not be less than $500 per mortgaged vessel.	
 
·  	The ratio of EBITDA to interest expense, on a rolling last four-quarter basis, must be no less than 2.0:1.0.	

·  	After July 20, 2007, consolidated net worth must be no less than $263,300 plus 80% of the value of the any new equity issuances of the Company from June 30, 2007.  Based on the equity offering completed in October 2007, requires the consolidated net worth to be no less than $434,397.	

 

F-20

 
·  	The aggregate fair market value of the mortgaged vessels must at all times be at least 130% of the aggregate outstanding principal amount under the new credit facility plus all letters of credit outstanding; the Company has a 30 day remedy period to post additional collateral or reduce the amount of the revolving loans and/or letters of credit outstanding.	

Other covenants in the 2007 Credit Facility are substantially similar to the covenants in the Company’s previous credit facilities. As of December 31, 2007, the Company has been in compliance with these covenants since the inception of the facility.

The Company can continue to pay cash dividends in accordance with its dividend policy and certain terms of the credit agreement so long as no event of default has occurred and is continuing and that no event of default will occur as a result of the payment of such dividend.  The 2007 Credit Facility also establishes a basket to accrue for dividends permitted but not actually distributed under the permitted dividend calculation since July 29, 2005.  In addition to Genco’s regular quarterly dividend, Genco can pay up to $150,000 in dividends from this basket. In addition, the 2007 Credit Facility was amended as of February 13, 2008 to permit the Company to implement its share repurchase program, which was recently approved by its board of directors.  Under this amendment, the dollar amount of shares repurchased is counted toward the maximum dollar amount of dividends that may be paid in any fiscal quarter.  For further details of our share repurchase program, see Note 21 – Subsequent Events to our financial statements.

Due to refinancing of the Company’s previous facilities, the Company incurred a non-cash write-off of the unamortized deferred financing cost in the amount of $3,568 associated with the Company’s previous facilities and this charge was reflected in interest expense.

The following table sets forth the repayment of the outstanding debt of $936,000 at December 31, 2007 under the 2007 Credit Facility.  Upon the sale of a mortgaged vessel, the 2007 Credit Facility requires the Company to repay a pro-rata portion of the long-term debt upon the sale of a mortgaged vessel.  The repayment amount is calculated by dividing the value of the mortgaged vessels being sold by the value of the entire mortgaged fleet at time of sale and multiplying such percentage by the total expected debt outstanding at time of sale.  However the Company elected to utilize the majority of the proceeds or $43,000 from the sale of the Genco Trader to repay debt, and as such is reflected as the amount due in the 2008.

Period Ending December 31,	 	Total	 	
 	 	 	 	
2008	 	$	43,000	 	
2009	 	 	-	 	
2010	 	 	-	 	
2011	 	 	-	 	
2012	 	 	-	 	
Thereafter	 	 	863,000	 	
 	 	 	 	 	
Total long-term debt	 	$	936,000	 	
 	 	 	 	 	
Interest rates

For the year ended December 31, 2007, the effective interest rate associated with the interest expense for the 2005 Credit Facility, the Short-term Line and the 2007 Credit Facility, and including the rate differential between the pay fixed receive variable rate on the swaps that were in effect, combined, including the cost associated with unused commitment fees with these facilities was 6.25%.  For the year ended December 31, 2006, the effective interest rate associated with the interest expense for the 2005 Credit Facility, and including the rate differential between the pay fixed receive variable rate on the swaps that were in effect, combined, including the cost associated with unused commitment fees with these facilities was 6.75%.  For the year ended December 31, 2005, the effective interest rate associated with the interest expense for the 2005 Credit Facility and the Original Credit Facility, and including the rate differential between the pay fixed receive variable rate on the swap that was in effect, combined, including the cost associated with unused commitment fees with these facilities was 4.83%.

 

F-21

 
The interest rate on the debt, excluding the unused commitment fees, ranged from 5.54% to 6.66%, from 6.14% to 6.45%, and from 3.69% to 5.26% for the years ended December 31, 2007, 2006 and 2005, respectively.
 
Short-Term Line-Refinanced by the 2007 Credit Facility
 
On May 3, 2007, the Company entered into a short-term line of credit facility under which DnB NOR Bank ASA, Grand Cayman Branch and Nordea Bank Norge ASA, Grand Cayman Branch are serving as lenders (the “Short-Term Line”).   The Short-Term Line was used to fund a portion of acquisitions we made of in the shares of capital stock of Jinhui.  Under the terms of the Short-Term Line, we were allowed to borrow up to $155,000 for such acquisitions, and we had borrowed a total of $77,000 under the Short-Term Line prior to its refinancing.  The term of the Short-Term Line was for 364 days, and the interest on amounts drawn was payable at the rate of LIBOR plus a margin of 0.85% per annum for the first six month period and LIBOR plus a margin of 1.00% for the remaining term.  We were obligated to pay certain commitment and administrative fees in connection with the Short-Term Line.  The Company, as required, pledged all of the Jinhui shares it has purchased as collateral against the Short-Term Line.  The Short-Term Line incorporated by reference certain covenants from our 2005 Credit Facility.

The Short-Term Line was refinanced in July 2007 with the 2007 Credit Facility.
 
2005 Credit Facility -Refinanced by the 2007 Credit Facility
 
The Company entered into the 2005 Credit Facility as of July 29, 2005.  The 2005 Credit Facility was with a syndicate of commercial lenders including Nordea Bank Finland plc, New York Branch, DnB NOR Bank ASA, New York Branch and Citibank, N.A.  The 2005 Credit Facility has been used to refinance our indebtedness under our original credit facility entered into on December 3, 2004 (the “Original Credit Facility”). Under the terms of our 2005 Credit Facility, borrowings in the amount of $106,233 were used to repay indebtedness under our Original Credit Facility and additional net borrowings of $24,450 were obtained to fund the acquisition of the Genco Muse.  In July 2006, the Company increased the line of credit by $100,000 and during the second and third quarters of 2006 borrowed $81,250 for the acquisition of three vessels.
 
The 2005 Credit Facility had a term of ten years and would have matured on July 29, 2015. The facility permitted borrowings up to 65% of the value of the vessels that secure our obligations under the 2005 Credit Facility up to the facility limit, provided that conditions to drawdown are satisfied. Certain of these conditions required the Company, among other things, to provide to the lenders acceptable valuations of the vessels in our fleet confirming that the aggregate amount outstanding under the facility (determined on a pro forma basis giving effect to the amount proposed to be drawn down) will not exceed 65% of the value of the vessels pledged as collateral.  The facility limit is reduced by an amount equal to 8.125% of the total $550,000, commitment, semi-annually over a period of four years and is reduced to $0 on the tenth anniversary.

On February 7, 2007, the Company reached an agreement with its syndicate of commercial lenders to allow the Company to increase the amount of the 2005 Credit Facility by $100,000, for a total maximum availability of $650,000.  The Company had the option to increase the facility amount by $25,000 increments up to the additional $100,000, so long as at least one bank within the syndicate agrees to fund such increase.  Any increase associated with this agreement was generally governed by the existing terms of the 2005 Credit Facility, although we and any banks providing the increase could have agreed to vary the upfront fees, unutilized commitment fees, or other fees payable by us in connection with the increase.

The obligations under the 2005 Credit Facility were secured by a first-priority mortgage on each of the vessels in our fleet as well as any future vessel acquisitions pledged as collateral and funded by the 2005 Credit Facility. The 2005 Credit Facility was also secured by a first-priority security interest in our earnings and insurance proceeds related to the collateral vessels.

All of our vessel-owning subsidiaries were full and unconditional joint and several guarantors of our 2005 Credit Facility. Each of these subsidiaries is wholly owned by Genco Shipping & Trading Limited.  Genco Shipping & Trading Limited has no independent assets or operations.
 
Interest on the amounts drawn was payable at the rate of 0.95% per annum over LIBOR until the fifth

 

F-22

 
 
anniversary of the closing of the 2005 Credit Facility and 1.00% per annum over LIBOR thereafter. We were also obligated to pay a commitment fee equal to 0.375% per annum on any undrawn amounts available under the facility. On July 29, 2005, the Company paid an arrangement fee to the lenders of $2.7 million on the original commitment of $450,000 and an additional $600 for the $100,000 commitment increase which equates to 0.6% of the total commitment of $550,000 as of July 12, 2006. These arrangement fees along with other costs were capitalized as deferred financing costs.
 
Under the terms of our 2005 Credit Facility, we were permitted to pay or declare dividends in accordance with our dividend policy so long as no default or event of default has occurred and is continuing or would result from such declaration or payment.
 
The 2005 Credit Facility had certain financial covenants that require the Company, among other things, to:  ensure that the fair market value of the collateral vessels maintains a certain multiple as compared to the outstanding indebtedness; maintain a specified ratio of total indebtedness to total capitalization; maintain a specified ratio of earnings before interest, taxes, depreciation and amortization to interest expense; maintain a net worth of approximately $263,000; and maintain working capital liquidity in an amount of not less than $500 per vessel securing the borrowings.  Additionally, there were certain non-financial covenants that required the Company, among other things, to provide the lenders with certain legal documentation, such as the mortgage on a newly acquired vessel using funds from the 2005 Credit Facility, and other periodic communications with the lenders that include certain compliance certificates at the time of borrowing and on a quarterly basis.  For the period since facility inception through retirement of the facility, the Company was in compliance with these covenants, except for an age covenant in conjunction with the acquisition of the Genco Commander, a 1994 vessel, for which the Company obtained a waiver for the term of the agreement.

The 2005 Credit Facility permitted the issuance of letters of credit up to a maximum amount of $50,000. The conditions under which letters of credit can be issued were substantially the same as the conditions for borrowing funds under the facility. Each letter of credit must terminate within twelve months, but can be extended for successive periods also not exceeding twelve months. The Company would pay a fee of 1/8 of 1% per annum on the amount of letters of credit outstanding. At December 31, 2006, there were no letters of credit issued under the 2005 Credit Facility.

Due to the agreement related to the sale of the Genco Glory, the 2005 Credit Facility required a certain portion of the debt be repaid based on a pro-rata basis.  The repayment amount is calculated by dividing the value of the vessel being sold by the value of the entire fleet and multiplying such percentage by the total debt outstanding.  Therefore, the Company reflected $4,322 as current portion of long-term debt as of December 31, 2006.  The Company repaid $5,700 during the first quarter of 2007 to comply with the repayment requirement from the sale of the Genco Glory.

The 2005 Credit Facility has been refinanced with the 2007 Credit Facility.

Orig inal Credit Facility -Refinanced by the 2005 Credit Facility
 
The Original Credit Facility, entered into on December 3, 2004, has been refinanced by the 2005 Credit Facility. The Original Credit Facility had a five year maturity at a rate of LIBOR plus 1.375% per year until $100 million had been repaid and thereafter at LIBOR plus 1.250%. In the event of late principal payments, additional interest charges would have been incurred. This facility was retired with proceeds from the initial public offering and proceeds from our 2005 Credit Facility.
 
The Company's entry into the 2005 Credit Facility in July 2005 resulted in a write-off to interest expense of $4,103 of unamortized deferred financing costs associated with the Original Credit Facility, in the third quarter of 2005. 
 
Letter of credit

In conjunction with the Company entering into a new long-term office space lease (See Note 16 - Lease Payments), the Company was required to provide a letter of credit to the landlord in lieu of a security deposit. As of September 21, 2005, the Company obtained an annually renewable unsecured letter of credit with DnB NOR Bank.  The letter of credit amount as of December 31, 2007 and 2006 was in the amount of $520 and $650, respectively, at a fee of 1% per annum. The letter of credit is reduced to $416 on August 1, 2008 and is cancelable on each renewal date provided the landlord is given 150 days minimum notice.

 

F-23

 
Interest rate swap agreements
 
The Company has entered into eight interest rate swap agreements with DnB NOR Bank to manage interest costs and the risk associated with changing interest rates. The total notional principal amount of the swaps is $631,233 and the swaps have specified rates and durations.  The following table summarizes the interest rate swaps in place as of December 31, 2007 and 2006:

Interest Rate Swap Detail	 	December 31, 2007	 	December 31, 2006	 	
Trade
Date	Fixed
Rate	 	Start Date
of  Swap	End date
of  Swap	 	Notional Amount Outstanding	 	Notional Amount Outstanding	 	
9/6/05	 	4.485	%	9/14/05	7/29/15	 	$	106,233	 	$	106,233	 	
3/29/06	 	5.25	%	1/2/07	1/1/14	 	 	50,000	 	 	50,000	 	
3/24/06	 	5.075	%	1/2/08	1/2/13	 	 	50,000	 	 	50,000	 	
9/7/07	 	4.56	%	10/1/07	12/31/09	 	 	75,000	 	 	 	 	
7/31/07	 	5.115	%	11/30/07	11/30/11	 	 	100,000	 	 	 	 	
8/9/07	 	5.07	%	1/2/08	1/3/12	 	 	100,000	 	 	 	 	
8/16/07	 	4.985	%	3/31/08	3/31/12	 	 	50,000	 	 	 	 	
8/16/07	 	5.04	%	3/31/08	3/31/12	 	 	100,000	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	$	631,233	 	$	206,233	 	

The differential to be paid or received for these swap agreements are recognized as an adjustment to interest expense as incurred.  The Company is currently utilizing cash flow hedge accounting for the swaps whereby the effective portion of the change in value of the swaps is reflected as a component of Other Comprehensive Income (“OCI”).  The ineffective portion is recognized as income or (loss) from derivative instruments, which is a component of other (expense) income.  For any period of time that the Company did not designate the swaps for hedge accounting, the change in the value of the swap agreements prior to designation was recognized as income or (loss) from derivative instruments and was listed as a component of other (expense) income.

The interest income (expense) pertaining to the interest rate swaps for the years ended December 31, 2007, 2006 and 2005 was $1,039, $637 and ($143), respectively.
 
The swap agreements, with effective dates prior to December 31, 2007 synthetically convert variable rate debt the fixed interest rate of swap plus the Applicable Margin (which is 0.85% per annum for the first five years of the new credit facility and 0.90% thereafter).  If the Company’s ratio of Total Debt to Total Capitalization (each as defined in the credit agreement for the 2007 Credit Facility) is greater than or equal to 70%, the Applicable Margin increases to 0.90% for the first five years and 0.95% thereafter.
 
The liability associated with the swaps at December 31, 2007 is $21,039 and $807 at December 31, 2006, and are presented as the fair value of derivatives on the balance sheet.  The asset associated with the swaps at December 31, 2006 was $4,462 and there were no swaps in an asset position at December 31, 2007, and are presented as the fair value of derivatives on the balance sheet.  As of December 31, 2007 and December 31, 2006, the Company has accumulated OCI of ($21,068) and $3,546, respectively, related to the effectively hedged portion of the swaps.  Hedge ineffectiveness associated with the interest rate swaps resulted in income or (loss) from derivative instruments of ($98) for the year ended December 31, 2007.  The change in value of the swaps prior to being designated resulted in income or (loss) from derivative instruments of $108 for the year ended December 31, 2006.   At December 31, 2007, ($3,123) of OCI is expected to be reclassified into income over the next 12 months associated with interest rate derivatives.

During January 2008, the Company entered into a $50,000 dollar interest rate swap at a fixed interest rate of 2.89%, plus the Applicable Margin and is effective February 1, 2008 and ends on February 1, 2011.  The company has elected to utilize hedge accounting for this interest rate swap.

 

F-24

 
9 – ACCUMULATED OTHER COMPREHENSIVE INCOME
 
The components of accumulated other comprehensive income included in the accompanying consolidated balance sheets consist of net unrealized gain (loss) from short-term investments, net gain (loss) on derivative instruments designated and qualifying as cash-flow hedging instruments, and cumulative translation adjustments on the short-term investment in Jinhui stock as December 31, 2007 and 2006.

 	 	Accumulated OCI	 	 	Unrealized Gain (loss) on Cash Flow Hedges	 	 	Unrealized Gain on Short-term Investments	 	 	Currency Translation Gain (loss) on Short-term Investments	 	
OCI – January 1, 2006	 	$	2,325	 	 	$	2,325	 	 	$	-	 	 	$	-	 	
Unrealized gain on cash flow hedges	 	 	1,858	 	 	 	1,858	 	 	 	 	 	 	 	 	 	
Interest income reclassed to (loss) income from derivative instruments	 	 	(637	)	 	 	(637	)	 	 	 	 	 	 	 	 	
OCI – December 31, 2006	 	 	3,546	 	 	 	3,546	 	 	 	-	 	 	 	-	 	
Unrealized gain on short-term investments	 	 	38,540	 	 	 	 	 	 	 	38,540	 	 	 	-	 	
Translation gain on short-term investments	 	 	11,705	 	 	 	 	 	 	 	 	 	 	 	11,705	 	
Translation gain reclassed to (loss) income from derivative instruments	 	 	(10,160	)	 	 	 	 	 	 	 	 	 	 	(10,160	)	
Unrealized loss on cash flow hedges	 	 	(23,575	)	 	 	(23,575	)	 	 	 	 	 	 	 	 	
Interest income reclassed to (loss) income from derivative instruments	 	 	(1,039	)	 	 	(1,039	)	 	 	 	 	 	 	 	 	
OCI – December 31, 2007	 	$	19,017	 	 	$	(21,068	)	 	$	38,540	 	 	$	1,545	 	

10 - FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The estimated fair values of the Company’s financial instruments are as follows:
 
 	 	December 31, 2007	 	 	December 31, 2006	 	
 	 	Carrying Value	 	 	Fair Value	 	 	Carrying Value	 	 	Fair Value	 	
Cash and cash equivalents	 	$	71,496	 	 	$	71,496	 	 	$	73,554	 	 	$	73,554	 	
Short-term investments	 	 	167,524	 	 	 	167,524	 	 	 	-	 	 	 	-	 	
Floating rate debt	 	 	936,000	 	 	 	936,000	 	 	 	211,933	 	 	 	211,933	 	
Derivative instruments – asset position	 	 	-	 	 	 	-	 	 	 	4,462	 	 	 	4,462	 	
Derivative instruments – liability position	 	 	22,487	 	 	 	22,487	 	 	 	807	 	 	 	807	 	

The fair value of the short-term investments is based on quoted market rates.  The fair value of the revolving credit facility is estimated based on current rates offered to the Company for similar debt of the same remaining maturities and additionally, the Company considers its creditworthiness in determining the fair value of the revolving credit facility.  The carrying value approximates the fair market value for the floating rate loans.  The fair value of the interest rate and currency swaps (used for purposes other than trading) is the estimated amount the Company would receive to terminate the swap agreements at the reporting date, taking into account current interest rates and the creditworthiness of the swap counterparty.
 
The Company elected to early adopt SFAS No. 157 beginning in its 2007 fiscal year and there was no material impact to its first quarter financial statements.  SFAS No. 157 applies to all assets and liabilities that are being measured and reported on a fair value basis.   SFAS No. 157 requires new disclosure that establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements.  This statement enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the

 

F-25

 
 
quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
 
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

The following table summarizes the valuation of our short-term investments and financial instruments by the above SFAS No. 157 pricing levels as of the valuation dates listed:

 	 	December 31, 2007	 	
 	 	Total	 	 	Quoted market prices in active markets (Level 1)	 	 	
Significant Other Observable Inputs
(Level 2)	 	
Short-term investments	 	$	167,524	 	 	$	167,524	 	 	 	 	
Derivative instruments – liability  position	 	 	22,487	 	 	 	 	 	 	 	22,487	 	

The Company holds an investment in the capital stock of Jinhui, which is classified as a short-term investment.  The stock of Jinhui is publicly traded on the Norwegian stock exchange and is considered a Level 1 item.  The Company’s derivative instruments are pay-fixed, receive-variable interest rate swaps based on LIBOR swap rate.  The LIBOR swap rate is observable at commonly quoted intervals for the full term of the swaps and therefore is considered a level 2 item.  In addition, the Company’s derivative instruments include a forward currency contract based on the Norwegian Kroner, which is observable at commonly quoted intervals for the full term of the swaps and therefore is considered a Level 2 item.  SFAS No. 157 states that the fair value measurement of a liability must reflect the nonperformance risk of the entity. Therefore, the impact of the Company’s creditworthiness has also been factored into the fair value measurement of the derivative instruments in a liability position.
 
11 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
 
 	Prepaid expenses and other current assets consist of the following :	
 
 	 	December 31,
2007	 	December   31,
2006	 	
Lubricant inventory and other stores	 	$	2,720	 	$	1,671	 	
Prepaid items	 	 	1,769	 	 	820	 	
Insurance Receivable	 	 	1,331	 	 	783	 	
Other	 	 	3,554	 	 	1,369	 	
Total	 	$	9,374	 	$	4,643	 	
 
12 – OTHER ASSETS, NET
 
Other assets consist of the following:
 
(i) Deferred financing costs which include fees, commissions and legal expenses associated with securing loan facilities. These costs are amortized over the life of the related debt, which is included in interest expense. The Company has unamortized deferred financing costs of $6,130 at December 31, 2007 associated with the 2007 Credit Facility and $3,794 at December 31, 2006 for the 2005 Credit Facility. Accumulated amortization of deferred financing costs as of December 31, 2007 and December 31, 2006 was $288 and $467, respectively.  During July 2007, the Company refinanced its previous facilities (the Short-Term Line and the 2005 Credit Facility) resulting in the non-cash write-off of the unamortized deferred financing cost of $3,568 to interest expense.  In July 2005, the

 

F-26

 
 
Company entered into the 2005 Credit Facility, which resulted in a write-off of $4,103 of unamortized deferred financing costs associated with the Original Credit Facility.  The Company has incurred deferred financing costs of $6,418 in total for the 2007 Credit Facility.  Amortization expense for deferred financing costs, including the write-off any unamortized costs upon refinancing credit facilities for the years ended December 31, 2007, 2006 and 2005 was $4,128, $341, and $4,611, respectively.
 
(ii) Value of time charter acquired which represents the value assigned to the time charter acquired with the Genco Muse in October 2005.  The value assigned to the time charter was $3,492.  This intangible asset was amortized as a reduction of revenue over the minimum life of the time charter.  The amount amortized for this intangible asset was $1,244, $1,850 and $398 for the years ended December 31, 2007, 2006, and 2005, respectively. At December 31, 2007 and 2006, $0 and $1,244, remained unamortized.
 
13 - FIXED ASSETS
 
 	Fixed assets consist of the following:	
 
 	 	December 31, 2007	 	 	December 31, 2006	 	
Fixed assets:	 	 	 	 	 	 	
Vessel equipment	 	$	826	 	 	$	533	 	
Leasehold improvements	 	 	1,146	 	 	 	1,146	 	
Furniture and fixtures	 	 	347	 	 	 	210	 	
Computer equipment	 	 	342	 	 	 	336	 	
Total cost	 	 	2,661	 	 	 	2,225	 	
Less: accumulated depreciation and amortization	 	 	722	 	 	 	348	 	
Total	 	$	1,939	 	 	$	1,877	 	

14 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
 	Accounts payable and accrued expenses consist of the following :	
 
 	 	December 31, 2007	 	 	December 31, 2006	 	
Accounts payable	 	$	4,164	 	 	$	1,885	 	
Accrued general and administrative	 	 	9,108	 	 	 	2,936	 	
Accrued vessel operating expenses	 	 	4,242	 	 	 	2,963	 	
 	 	 	 	 	 	 	 	 	
Total	 	$	17,514	 	 	$	7,784	 	
 
15 - REVENUE FROM TIME CHARTERS
 
Total revenue earned on time charters for the years ended December 31, 2007, 2006 and 2005 was 185,387, $133,232, and $116,906 respectively. Included in revenues for the year ended December 31, 2007, is $400 received from loss of hire insurance associated with the Genco Trader’s unscheduled off-hire due to repairs and maintenance in the first half of 2007.  The Company expects to receive an additional $176 during 2008 in loss of hire insurance proceeds associated with this unscheduled off-hire.   Future minimum time charter revenue, based on vessels committed to noncancelable time charter contracts as of February 26, 2008 will be $287,021 during 2008, $213,668 during 2009, $124,759 during 2010, $32,723 during 2011, and $11,830 for 2012, assuming 20 days of off-hire due to any scheduled drydocking and no additional off-hire time is incurred.  Future minimum revenue excludes the future acquisitions of the remaining four Capesize vessels to be delivered to Genco in the future, since estimated delivery dates are not firm.

 

F-27

 
16 - LEASE PAYMENTS
 
In September 2005, the Company entered into a 15-year lease for office space in New York, New York.  The monthly rental is as follows:  Free rent from September 1, 2005 to July 31, 2006, $40 per month from August 1, 2006 to August 31, 2010, $43 per month from September 1, 2010 to August 31, 2015, and $46 per month from September 1, 2015 to August 31, 2020.  The Company obtained a tenant work credit of $324.  The monthly straight-line rental expense from September 1, 2005 to August 31, 2020 is $39.  As a result of the straight-line rent calculation generated by the free rent period and the tenant work credit, the Company has a deferred rent credit at December 31, 2007 and 2006 of $725 and $743, respectively.  The Company has the option to extend the lease for a period of five years from September 1, 2020 to August 31, 2025.  The rent for the renewal period will be based on prevailing market rate for the six months prior to the commencement date of the extension term.  Rent expense for the years ended December 31, 2007, 2006 and 2005 was $468, $472, and $598, respectively.

Future minimum rental payments on the above lease for the next five years and thereafter are as follows: $486 per year for 2008 through 2009, $496 for 2010, $518, for 2011 through 2012 and a total of $4,132 for the remaining term of the lease.

17 - SAVINGS PLAN
 
In August 2005, the Company established a 401(k) plan which is available to full-time employees who meet the plan’s eligibility requirements.  This 401(k) plan is a defined contribution plan, which permits employees to make contributions up to maximum percentage and dollar limits allowable by IRS Code Sections 401(k), 402(g), 404 and 415 with the Company matching up to the first six percent of each employee’s salary on a dollar-for-dollar basis.  The matching contribution vests immediately.  For the years ended December 31, 2007, 2006 and 2005, the Company’s matching contributions to this plan were $127, $94 and $22, respectively.
 
18- NONVESTED STOCK AWARDS
 
On July 12, 2005, the Company’s board of directors approved the Genco Shipping and Trading Limited 2005 Equity Incentive Plan (the “Plan”).  Under this plan the Company’s board of directors, the compensation committee, or another designated committee of the board of directors may grant a variety of stock-based incentive awards to employees, directors and consultants whom the compensation committee (or other committee or the board of directors) believes are key to the Company’s success.  Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, nonvested stock, unrestricted stock and performance shares.  The aggregate number of shares of common stock available for award under the Plan is 2,000,000 shares.
 
On October 31, 2005, the Company made grants of nonvested common stock under the Plan in the amount of 111,412 shares to the executive officers and employees and 7,200 shares to directors of the Company.  The executive and employee grants vest ratably on each of the four anniversaries of the date of the Company’s initial public offering (July 22, 2005).  On July 22, 2007 and 2006, 26,478 and 27,853 shares, respectively, of the employees’ nonvested stock vested, and during the year ended December 31, 2007 and the year ended December 31, 2006, 3,375 and 750 shares, respectively, were forfeited.  Grants to the directors vested in full on May 18, 2006, the date of the Company’s annual shareholders’ meeting.  Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the date of the grant, or $1,949, was recorded as a component of shareholders’ equity.  After forfeitures, the unamortized portion of this award at December 31, 2007 and 2006 was $250 and $653, respectively.  Amortization of this charge, which is included in general and administrative expenses for the years ended December 31, 2007, 2006 and 2005 was $347, $1,025 and $260, respectively.  The remaining expense for the years ended 2008, and 2009 will be $190 and $60, respectively.
 
On December 21, 2005, the Company made grants of nonvested common stock under the Plan in the amount of 55,600 shares to the executive officers and employees of the Company.  Theses grants vest ratably on each of the four anniversaries of the determined vesting date beginning with November 15, 2006.  During the year ended December 31, 2007and 2006, 13,338 and 13,900 shares, respectively, of the employees’ nonvested stock vested and during the year ended December 31, 2007 1,687 shares were forfeited.  Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the date of the grant, or $991, was recorded as a component of shareholders’ equity.  After forfeitures, the unamortized portion of this award at December 31, 2007 and 2006 was $181

 

F-28

 
and $441, respectively.  Amortization of this charge, which is included in general and administrative expenses, for the years ended December 31, 2007, 2006 and 2005 was $230, $533 and $17, respectively. The remaining expense for the years ended 2008 and 2009 will be $129 and $52, respectively.
 
On December 20, 2006 and December 22, 2006, the Company made grants of nonvested common stock under the Plan in the amount of 37,000 shares to employees other than executive officers and 35,000 shares to the executive officers, respectively.  Theses grants vest ratably on each of the four anniversaries of the determined vesting date beginning with November 15, 2007.  During the year ended December 31, 2007, 17,500 shares of the employees’ nonvested stock vested and during the year ended December 31, 2007 2,000 shares were forfeited.  Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the respective date of the grants, or $2,018, was recorded as a component of shareholders’ equity.  After forfeitures, the unamortized portion of this award at December 31, 2007 and 2006 was $873 and $1,986, respectively.  Amortization of this charge, which is included in general and administrative expenses for the years ended December 31, 2007, 2006 and 2005, was $1,056, $32 and $0, respectively. The remaining expense for the years ended 2008, 2009 and 2010 will be $501, $265 and $107, respectively.
 
On February 8, 2007, the Company made grants of nonvested common stock under the Plan in the amount of 9,000 shares to employees and 7,200 shares to directors of the Company.  The employee grants vest ratably on each of the four anniversaries of the determined vesting date beginning with November 15, 2007.  During the year ended December 31, 2007, 2,250 shares of the employees’ nonvested stock vested   Grants to the directors vested in full on May 16, 2007, the date of the Company’s annual shareholders’ meeting.  Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the date of the grants, or $494, was recorded as a component of shareholders’ equity.  The unamortized portion of this award at December 31, 2007 was $133.  Amortization of this charge, which is included in general and administrative expenses for the years ended December 31, 2007, 2006 and 2005, was, $361, $0, and $0, respectively.  The remaining expense for the years ending 2008, 2009, and 2010 will be $32, $77, $40 and $16, respectively.
 
On December 21, 2007, the Company made grants of nonvested common stock under the Plan in the amount of 93,000 shares to the executive officers and the employees of the Company.  These grants vest ratably on each of the four anniversaries of the determined vesting date beginning with November 15, 2008.  Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the date of the grants, or $4,935, was recorded as a component of shareholders’ equity.  The unamortized portion of this award at December 31, 2007 and 2006 was $4,852 and $0, respectively.  Amortization of this charge, which is included in general and administrative expenses for the years ended December 31, 2007, 2006 and 2005, was, $83, $0, and $0, respectively.  The remaining expense for the years ending 2008, 2009, 2010 and 2011 will be $2,585, $1,305, $686 and $276, respectively.
 
The table below summarizes the Company’s nonvested stock awards as of December 31, 2007:
 
 	 	Number of Shares	 	 	Weighted Average Grant Date Price	 	
Outstanding at January 1, 2007	 	 	196,509	 	 	$	20.97	 	
Granted	 	 	109,200	 	 	 	49.72	 	
Vested	 	 	(66,766	)	 	 	21.74	 	
Forfeited	 	 	(7,062	)	 	 	20.03	 	
 	 	 	 	 	 	 	 	 	
Outstanding at December 31, 2007	 	 	231,881	 	 	$	34.32	 	

The fair value of nonvested stock at the grant date is equal to the closing stock price on that date.  The Company is amortizing these grants over the applicable vesting periods.  As of December 31, 2007, unrecognized compensation cost related to nonvested stock will be recognized over a weighted average period of 2.86 years.  The weighted average grant-date fair value of nonvested stock granted during the years ended December 31, 2007, 2006 and 2005 is $49.72, $28.02 and $16.88, respectively.	

 

F-29

 
 
19 - LEGAL PROCEEDINGS
 
From time to time the Company may be subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. The Company is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on the Company, its financial condition, results of operations or cash flows.
 
20 – UNAUDITED QUARTERLY RESULTS OF OPERATIONS

In the opinion of the Company’s management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation have been included on a quarterly basis.
 	 	2007 Quarter Ended	 	 	2006 Quarter Ended	 	
 	 	Mar 31	 	 	Jun 30	 	 	Sept 30	 	 	Dec. 31	 	 	Mar 31	 	 	Jun 30	 	 	Sept 30	 	 	Dec. 31	 	
 	 	(In thousands, except per share amounts)	 	
Revenues	 	$	37,220	 	 	$	36,847	 	 	$	45,630	 	 	$	65,690	 	 	$	32,572	 	 	$	32,303	 	 	$	32,642	 	 	$	35,715	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	22,261	 	 	 	18,507	 	 	 	25,107	 	 	 	65,195	 	 	 	17,696	 	 	 	17,346	 	 	 	16,740	 	 	 	18,538	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	19,837	 	 	 	13,721	 	 	 	16,320	 	 	 	56,931	 	 	 	16,578	 	 	 	17,522	 	 	 	12,904	 	 	 	16,518	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share - Basic	 	$	0.78	 	 	$	0.54	 	 	$	0.64	 	 	$	1.99	 	 	$	0.66	 	 	$	0.69	 	 	$	0.51	 	 	$	0.65	 	
Earnings per share - Diluted	 	$	0.78	 	 	$	0.54	 	 	$	0.64	 	 	$	1.98	 	 	$	0.66	 	 	$	0.69	 	 	$	0.51	 	 	$	0.65	 	
Dividends declared and paid per share 	 	$	0.66	 	 	$	0.66	 	 	$	0.66	 	 	$	0.66	 	 	$	0.60	 	 	$	0.60	 	 	$	0.60	 	 	$	0.60	 	
Weighted average common shares outstanding - Basic
 	 	 	25,309	 	 	 	25,313	 	 	 	25,337	 	 	 	28,676	 	 	 	25,260	 	 	 	25,263	 	 	 	25,289	 	 	 	25,302	 	
Weighted average common shares outstanding - Diluted
 	 	 	25,421	 	 	 	25,456	 	 	 	25,482	 	 	 	28,826	 	 	 	25,304	 	 	 	25,337	 	 	 	25,372	 	 	 	25,391	 	

21 - SUBSEQUENT EVENTS
 
On January 2, 2008, the Company took delivery of the Genco Champion, a 2006-built Handysize vessel.   The Genco Champion is the final vessel to be delivered to the Company under Genco's previously announced agreements on August 14, 2007 to acquire six drybulk vessels from affiliates of Evalend Shipping Co. S.A.  The Company borrowed $41,850 from the 2007 Credit Facility to complete this acquisition.

On January 10, 2008, the Board of Directors approved a grant of 100,000 nonvested common stock to Peter Georgiopoulos, Chairman of the Board, this grant vests ratably on each of the ten anniversaries of the determined vesting date beginning with November 15, 2008.  After this grant to the Chairman, Peter Georgiopoulos owns approximately 12.70% of the Company.  Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the date of the grant, or $4,191 was recorded as a component of shareholders' equity. Amortization of this charge which will be included in general and administrative expenses in 2008 through 2017.

On January 22, 2008, the Company entered into a $50,000 dollar interest rate swap at a fixed interest rate of 2.89%, plus the Applicable Margin and is effective February 1, 2008 and ends on February 1, 2011.  The company has elected to utilize hedge accounting for this interest rate swap.

During the first quarter of 2008, the Company purchased an additional 895,300 shares of Jinhui, the Company’s now owns 16.3 million shares or approximately 19.4% of Jinhui at a total cost of $125,866.

On February 13, 2008, our board of directors declared a dividend of $0.85 per share to be paid on or about

 

F-30

 
 
March 7, 2008 to shareholders of record as of February 29, 2008.  The aggregate amount of the dividend is expected to be $24,717, which the Company anticipates will be funded from cash on hand at the time payment is to be made.
 
On February 13, 2008, our board of directors also approved a share repurchase program for up to a total of $50,000 of the Company's common stock.  The board will review the program after 12 months.  Share repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined by management based upon market conditions and other factors.  Purchases may be made pursuant to a program adopted under Rule 10b5-1 under the Securities Exchange Act. The program does not require the Company to purchase any specific number or amount of shares and may be suspended or reinstated at any time in the Company's discretion and without notice. Repurchases will be subject to restrictions under the 2007 Credit Facility.  The 2007 Credit Facility was amended as of February 13, 2008 to permit the share repurchase program and provide that the dollar amount of shares repurchased is counted toward the maximum dollar amount of dividends that may be paid in any fiscal quarter.
 
On February 13, 2008, the Company made grants of nonvested common stock under the Plan in the amount of 12,500 shares to directors of the Company.  The grants to directors vest in full on the earlier of the first anniversary of the grant date or the date of the next annual shareholders meeting of the Company. Upon grant of the nonvested stock, an amount of unearned compensation equivalent to the market value at the date of the grant, or $689 will be recorded as a component of shareholders' equity.  Amortization of this charge is expected to be included in general and administrative expenses during 2008.

On February 21, 2008, the Company completed the acquisition of the Genco Constantine, a 2008 built Capesize vessel.  The Genco Constantine is the fifth of the Capesize vessels to be delivered from the acquisition from companies within the Metrostar Management Corporation group. The Company borrowed $109,650 from the 2007 Credit facility to complete this acquisition.  The remaining four Capesize vessels from the Metrostar acquisition are expected to be built, and subsequently delivered to Genco, between the fourth quarter of 2008 and the third quarter of 2009.

On February 26, 2008, the Company completed the sale of the Genco Trader, a 1990-built Panamax vessel, to SW Shipping Co., Ltd for $44,000 less a 2% brokerage commission payable to a third party. The Company expects the realized net gain to approximate $26,200 from this sale.  At December 31, 2007, the Genco Trader was classified under vessels held for sale.  Additionally, under the 2007 Credit Facility, the Company is required to repay a portion of the proceeds from the sale of mortgaged property, however the Company has repaid, $43,000 which represents substantially all the proceeds received from the sale. At December 31, 2007, the Company reflected the $43,000 as current portion of long-term debt.

 F-31

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

No changes were made to, nor was there any disagreement with the Company's independent registered public accounting firm regarding, the Company's accounting or financial disclosure.
 
 ITEM 9A.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our President and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 as of the end of the period covered by this Report. Based upon that evaluation, our President and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them at a reasonable assurance level to material information required to be included in our periodic Securities and Exchange Commission filings.

INTERNAL CONTROL OVER FINANCIAL REPORTING
 
MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
 
Our internal control over financial reporting includes those policies and procedures that:
 
 	•                     p ertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;	
 	 	
 	•                    provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and	
 	 	
 	•                    provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.	
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become ineffective because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
 
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, our management believes that we maintained effective internal control over financial reporting as of December 31, 2007.  
 
CHANGES IN INTERNAL CONTROLS

There have been no changes in our internal controls or over financial reporting that occurred during our most recent fiscal quarter (the fourth fiscal quarter) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
68

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of
Genco Shipping & Trading Limited
New York, New York

We have audited the internal control over financial reporting of Genco Shipping & Trading Limited and subsidiaries (the "Company") as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.
 
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
 
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.  Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2007 of the Company and our report dated February 29, 2008 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

New York, New York
February 29, 2008

69

 

ITEM 9B.             OTHER INFORMATION

Not applicable.

 

 

70

 
 
PART III
 
 ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
Information regarding our directors and executive officers is set forth in our Proxy Statement for our 2008 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2007 (the “2008 Proxy Statement”) under the headings “Election of Directors” and “Management” and is incorporated by reference herein.  Information relating to our Code of Conduct and Ethics and to compliance with Section 16(a) of the 1934 Act is set forth in the 2008 Proxy Statement under the heading “Corporate Governance” and is incorporated by reference herein.

We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of the Code of Ethics for Chief Executive and Senior Financial Officers by posting such information on our website,  www.gencoshipping.com .

 ITEM 11.  EXECUTIVE COMPENSATION

Information regarding compensation of our executive officers and information with respect to Compensation Committee Interlocks and Insider Participation in compensation decisions is set forth in the 2008 Proxy Statement under the headings “Management” and “Compensation Committee’s Report on Executive Compensation” and is incorporated by reference herein.
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
Information regarding the beneficial ownership of shares of our common stock by certain persons is set forth in the 2008 Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management” and is incorporated by reference herein.
 
 ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain of our transactions is set forth in the 2008 Proxy Statement under the heading “Certain Relationships and Related Transactions” and is incorporated by reference herein.
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding our accountant fees and services is set forth in the 2008 Proxy Statement under the heading “Ratification of Appointment of Independent Auditors” and is incorporated by reference herein.

 PART IV
 
 ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)           The following documents are filed as a part of this report:

1.	 	The financial statements listed in the “Index to Consolidated Financial Statements”	

2.	 	Exhibits:	

3.1	 	Amended and Restated Articles of Incorporation of Genco Shipping & Trading Limited (1)	
 	 	 	
3.2	 	Articles of Amendment of Articles of Incorporation of Genco Shipping & Trading Limited as adopted July 21, 2005 (2)	

71

 
 	 	 	
3.3	 	Articles of Amendment of Articles of Incorporation of Genco Shipping & Trading Limited as adopted May 18, 2006 (3)	
 	 	 	
3.4	 	Certificate of Designations of Series A Preferred Stock (4)	
 	 	 	
3.5	 	Amended and Restated By-Laws of Genco Shipping & Trading Limited, dated as of April 9, 2007 (4)	
 	 	 	
4.1	 	Form of Share Certificate of the Company (5)	
 	 	 	
4.2	 	Shareholder Rights Agreement, dated as of April 11, 2007, between Genco Shipping & Trading Limited and Mellon Investor Services LLC, as Rights Agent (4)	
 	 	 	
10.1	 	Registration Rights Agreement (5)	
 	 	 	
10.2	 	2005 Equity Incentive Plan, as amended and restated effective December 31, 2005 (6)	
 	 	 	
10.3	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Explorer Limited (1)	
 	 	 	
10.4	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Pioneer Limited (1)	
 	 	 	
10.5	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Progress Limited (1)	
 	 	 	
10.6	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Reliance Limited (1)	
 	 	 	
10.7	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Sugar Limited (1)	
 	 	 	
10.8	 	Restricted Stock Grant Agreement dated October 31, 2005 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (7)	
 	 	 	
10.9	 	Restricted Stock Grant Agreement dated October 31, 2005 between Genco Shipping & Trading Limited and John C. Wobensmith (7)	
 	 	 	
10.10	 	Restricted Stock Grant Agreement dated December 21, 2005 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (7)	
 	 	 	
10.17	 	Restricted Stock Grant Agreement dated December 21, 2005 between Genco Shipping & Trading Limited and John C. Wobensmith (7)	
 	 	 	
10.18	 	Restricted Stock Grant Agreement dated December 22, 2006 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (8)	
 	 	 	
10.19	 	Restricted Stock Grant Agreement dated December 22, 2006 between Genco Shipping & Trading Limited and John C. Wobensmith (8)	
 	 	 	
10.20	 	Restricted Stock Grant Agreement dated December 21, 2007 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (*)	
 	 	 	
10.21	 	Restricted Stock Grant Agreement dated December 21, 2007 between Genco Shipping & Trading Limited and John C. Wobensmith (*)	
 	 	 	
10.22	 	Restricted Stock Grant Agreement dated January 10, 2008 between Genco Shipping & Trading Limited and Peter C. Georgiopoulos (*)	
 	 	 	
10.23	 	Form of Director Restricted Stock Grant Agreement dated as of February 13, 2008 (*)	

 
72

 
 	 	 	
10.24	 	Master Agreement by and between Genco Shipping & Trading Limited and Metrostar Management Corporation (9)	
 	 	 	
10.25	 	Form of Memorandum of Agreement dated as of August 8, 2007 by and between Subsidiaries of Genco Shipping & Trading Limited and affiliates of Evalend Shipping Co. S.A. (10)	
 	 	 	
10.26	 	Credit Agreement, dated as of July 20, 2007, among Genco Shipping & Trading Limited, Various Lenders, DnB NOR Bank ASA, New York Branch, as Administrative Agent and Collateral Agent, and DnB NOR Bank ASA, New York Branch, as Mandated Lead Arranger and Bookrunner (11)	
 	 	 	
10.27	 	Pledge and Security Agreement, dated as of July 20, 2007, by Genco Augustus Limited, Genco Claudius Limited, Genco Commodus Limited, Genco Constantine Limited, Genco Hadrian Limited, Genco London Limited, Genco Maximus Limited, Genco Tiberius Limited and Genco Titus Limited, as pledgors, to DnB NOR Bank, ASA, New York Branch, as Collateral Agent, for the benefit of the Secured Creditors and Nordea Bank Finland PLC, New York Branch, as Deposit Account Bank (11)	
 	 	 	
10.28	 	Guaranty, dated as of July 20, 2007, by Genco Augustus Limited, Genco Claudius Limited, Genco Commodus Limited, Genco Constantine Limited, Genco Hadrian Limited, Genco London Limited, Genco Maximus Limited, Genco Tiberius Limited and Genco Titus Limited, as guarantors, for the benefit of the Secured Creditors (11)	
 	 	 	
10.29	 	Amendment and Supplement No. 1 to Senior Secured Credit Agreement, dated as of September 21, 2007, among Genco Shipping & Trading Limited, the lenders party thereto, and DNB NOR Bank ASA, New York Branch, as Administrative Agent. (12)	
 	 	 	
10.30	 	Amendment and Supplement No. 2 to Senior Secured Credit Agreement, dated as of February 13, 2008, among Genco Shipping & Trading Limited, the lenders party thereto, and DNB NOR Bank ASA, New York Branch, as Administrative Agent (*)	
 	 	 	
10.31	 	Letter Agreement, dated September 21, 2007, between Genco Shipping & Trading Limited and John C. Wobensmith. (12)	
 	 	 	
14.1	 	Code of Ethics (*)	
 	 	 	
21.1	 	Subsidiaries of Genco Shipping & Trading Limited (*)	
 	 	 	
23.1	 	Consent of Independent Registered Public Accounting Firm (*)	
 	 	 	
31.1	 	Certification of President pursuant to Rule 13(a) - 14(a) and 15(d) - 14(a) of the Securities Exchange Act of 1934, as amended (*)	
 	 	 	
31.2	 	Certification of Chief Financial Officer pursuant to Rule 13(a) - 14(a) and 15(d) - 14(a) of the Securities Exchange Act of 1934, as amended (*)	
 	 	 	
32.1	 	Certification of President pursuant to 18 U.S.C. Section 1350 (*)	
 	 	 	
32.2	 	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (*)	

(*)	 	Filed herewith.	
(1)	 	Incorporated by reference to Genco Shipping & Trading Limited's Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission on July 6, 2005.	
(2)	 	Incorporated by reference to Genco Shipping & Trading Limited's Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission on July 21, 2005.	
(3)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on May 18, 2006.	

 
73

 
(4)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on April 9, 2007.	
(5)	 	Incorporated by reference to Genco Shipping & Trading Limited's Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission on July 18, 2005.	
(6)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on November 4, 2005.	
(7)	 	Incorporated by reference to Genco Shipping & Trading Limited's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2006.	
(8)	 	Incorporated by reference to Genco Shipping & Trading Limited's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 9, 2007.	
(9)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on July 18, 2007.	
(10)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 10-Q, filed with the Securities and Exchange Commission on November 9, 2007.	
(11)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on July 26, 2007.	
(12)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on September 21, 2007.	

 

 
74

 

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on February 29, 2008.

 	GENCO SHIPPING & TRADING LIMITED	 	
 	 	 	 	
 	By:	  /s/ Robert Gerald Buchanan	 	
 	 	Name: Robert Gerald Buchanan	 	
 	 	Title:   President and Principal Executive Officer	 	

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacity and on February 29, 2008.
 
SIGNATURE	 	TITLE	

 	/s/ Robert Gerald Buchanan 	 	PRESIDENT	
 	Robert Gerald Buchanan	 	(PRINCIPAL EXECUTIVE OFFICER)	

 	/s/ John C. Wobensmith 	 	CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER	
      John C. Wobensmith	 	(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)	

 	 /s/ Peter C. Georgiopoulos	 	CHAIRMAN OF THE BOARD AND DIRECTOR	
              Peter C. Georgiopoulos	 	 	

 	 /s/ Stephen A. Kaplan	 	DIRECTOR	
 	Stephen A. Kaplan	 	 	

 	 /s/ Nathaniel C. A. Kramer	 	DIRECTOR	
 	Nathaniel C. A. Kramer	 	 	

 	 /s/ Harry A. Perrin	 	DIRECTOR	
 	Harry A. Perrin	 	 	

 	 /s/ Mark F. Polzin	 	DIRECTOR	
 	Mark F. Polzin	 	 	

 	 /s/ Robert C. North	 	DIRECTOR	
 	Rear Admiral Robert C. North, USCG (ret.)	 	 	

 	 /s/ Basil G. Mavroleon	 	DIRECTOR	
 	Basil G. Mavroleon	 	 	

 
75

 

EXHIBIT INDEX

Exhibit    Document

3.1	 	Amended and Restated Articles of Incorporation of Genco Shipping & Trading Limited (1)	
 	 	 	
3.2	 	Articles of Amendment of Articles of Incorporation of Genco Shipping & Trading Limited as adopted July 21, 2005 (2)	
 	 	 	
3.3	 	Articles of Amendment of Articles of Incorporation of Genco Shipping & Trading Limited as adopted May 18, 2006 (3)	
 	 	 	
3.4	 	Certificate of Designations of Series A Preferred Stock (4)	
 	 	 	
3.5	 	Amended and Restated By-Laws of Genco Shipping & Trading Limited, dated as of April 9, 2007 (4)	
 	 	 	
4.1	 	Form of Share Certificate of the Company (5)	
 	 	 	
4.2	 	Shareholder Rights Agreement, dated as of April 11, 2007, between Genco Shipping & Trading Limited and Mellon Investor Services LLC, as Rights Agent (4)	
 	 	 	
10.1	 	Registration Rights Agreement (5)	
 	 	 	
10.2	 	2005 Equity Incentive Plan, as amended and restated effective December 31, 2005 (6)	
 	 	 	
10.3	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Explorer Limited (1)	
 	 	 	
10.4	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Pioneer Limited (1)	
 	 	 	
10.5	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Progress Limited (1)	
 	 	 	
10.6	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Reliance Limited (1)	
 	 	 	
10.7	 	Time Charter Party Between Lauritzen Bulkers A/S and Genco Sugar Limited (1)	
 	 	 	
10.8	 	Restricted Stock Grant Agreement dated October 31, 2005 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (7)	
 	 	 	
10.9	 	Restricted Stock Grant Agreement dated October 31, 2005 between Genco Shipping & Trading Limited and John C. Wobensmith (7)	
 	 	 	
10.10	 	Restricted Stock Grant Agreement dated December 21, 2005 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (7)	
 	 	 	
10.17	 	Restricted Stock Grant Agreement dated December 21, 2005 between Genco Shipping & Trading Limited and John C. Wobensmith (7)	
 	 	 	
10.18	 	Restricted Stock Grant Agreement dated December 22, 2006 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (8)	
 	 	 	
10.19	 	Restricted Stock Grant Agreement dated December 22, 2006 between Genco Shipping & Trading Limited and John C. Wobensmith (8)	
 	 	 	
10.20	 	Restricted Stock Grant Agreement dated December 21, 2007 between Genco Shipping & Trading Limited and Robert Gerald Buchanan (*)	

 
76

 
 	 	 	
10.21	 	Restricted Stock Grant Agreement dated December 21, 2007 between Genco Shipping & Trading Limited and John C. Wobensmith (*)	
 	 	 	
10.22	 	Restricted Stock Grant Agreement dated January 10, 2008 between Genco Shipping & Trading Limited and Peter C. Georgiopoulos (*)	
 	 	 	
10.23	 	Form of Director Restricted Stock Grant Agreement dated as of February 13, 2008 (*)	
 	 	 	
10.24	 	Master Agreement by and between Genco Shipping & Trading Limited and Metrostar Management Corporation (9)	
 	 	 	
10.25	 	Form of Memorandum of Agreement dated as of August 8, 2007 by and between Subsidiaries of Genco Shipping & Trading Limited and affiliates of Evalend Shipping Co. S.A. (10)	
 	 	 	
10.26	 	Credit Agreement, dated as of July 20, 2007, among Genco Shipping & Trading Limited, Various Lenders, DnB NOR Bank ASA, New York Branch, as Administrative Agent and Collateral Agent, and DnB NOR Bank ASA, New York Branch, as Mandated Lead Arranger and Bookrunner (11)	
 	 	 	
10.27	 	Pledge and Security Agreement, dated as of July 20, 2007, by Genco Augustus Limited, Genco Claudius Limited, Genco Commodus Limited, Genco Constantine Limited, Genco Hadrian Limited, Genco London Limited, Genco Maximus Limited, Genco Tiberius Limited and Genco Titus Limited, as pledgors, to DnB NOR Bank, ASA, New York Branch, as Collateral Agent, for the benefit of the Secured Creditors and Nordea Bank Finland PLC, New York Branch, as Deposit Account Bank (11)	
 	 	 	
10.28	 	Guaranty, dated as of July 20, 2007, by Genco Augustus Limited, Genco Claudius Limited, Genco Commodus Limited, Genco Constantine Limited, Genco Hadrian Limited, Genco London Limited, Genco Maximus Limited, Genco Tiberius Limited and Genco Titus Limited, as guarantors, for the benefit of the Secured Creditors (11)	
 	 	 	
10.29	 	Amendment and Supplement No. 1 to Senior Secured Credit Agreement, dated as of September 21, 2007, among Genco Shipping & Trading Limited, the lenders party thereto, and DNB NOR Bank ASA, New York Branch, as Administrative Agent. (12)	
 	 	 	
10.30	 	Amendment and Supplement No. 2 to Senior Secured Credit Agreement, dated as of February 13, 2008, among Genco Shipping & Trading Limited, the lenders party thereto, and DNB NOR Bank ASA, New York Branch, as Administrative Agent (*)	
 	 	 	
10.31	 	Letter Agreement, dated September 21, 2007, between Genco Shipping & Trading Limited and John C. Wobensmith. (12)	
 	 	 	
14.1	 	Code of Ethics (*)	
 	 	 	
21.1	 	Subsidiaries of Genco Shipping & Trading Limited (*)	
 	 	 	
23.1	 	Consent of Independent Registered Public Accounting Firm (*)	
 	 	 	
31.1	 	Certification of President pursuant to Rule 13(a) - 14(a) and 15(d) - 14(a) of the Securities Exchange Act of 1934, as amended (*)	
 	 	 	
31.2	 	Certification of Chief Financial Officer pursuant to Rule 13(a) - 14(a) and 15(d) - 14(a) of the Securities Exchange Act of 1934, as amended (*)	
 	 	 	
32.1	 	Certification of President pursuant to 18 U.S.C. Section 1350 (*)	
 	 	 	
32.2	 	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (*)	

 
77

 

(*)	 	Filed herewith.	
(1)	 	Incorporated by reference to Genco Shipping & Trading Limited's Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission on July 6, 2005.	
(2)	 	Incorporated by reference to Genco Shipping & Trading Limited's Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission on July 21, 2005.	
(3)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on May 18, 2006.	
(4)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on April 9, 2007.	
(5)	 	Incorporated by reference to Genco Shipping & Trading Limited's Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission on July 18, 2005.	
(6)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on November 4, 2005.	
(7)	 	Incorporated by reference to Genco Shipping & Trading Limited's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2006.	
(8)	 	Incorporated by reference to Genco Shipping & Trading Limited's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 9, 2007.	
(9)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on July 18, 2007.	
(10)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 10-Q, filed with the Securities and Exchange Commission on November 9, 2007.	
(11)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on July 26, 2007.	
(12)	 	Incorporated by reference to Genco Shipping & Trading Limited's Report on Form 8-K, filed with the Securities and Exchange Commission on September 21, 2007.	

 

 
 
78

 

 
Exhibit 10.20

 
Genco Shipping & Trading Limited
Executive Officer Restricted Stock Grant Agreement
 
THIS AGREEMENT, made as of December 21, 2007, between GENCO   SHIPPING & TRADING LIMITED   (the “Company”) and Robert Gerald Buchanan (the “Participant”).
 
WHEREAS, the Company has adopted and maintains the Genco   Shipping & Trading Limited 2005 Equity Incentive Plan (as amended and restated effective December 21, 2005) (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;
 
WHEREAS, the Plan provides that the Board of Directors of the Company (the “Board of Directors”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards; and
 
WHEREAS, the Board of Directors has determined that the purposes of the Plan would be furthered by granting the Participant an award under the Plan as set forth in this Agreement;
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:
 
1.       Grant of Restricted Stock .  Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Board of Directors hereby grants to the Participant 15,000 restricted shares (the “Restricted Stock”) of common stock of the Company, par value $0.01 per share (“Common Stock”).  
 
2.       Grant Date .  The Grant Date of the Restricted Stock is December 21, 2007.
 
3.       Incorporation of Plan .  All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein.  If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Board of Directors, shall govern.  Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan.
 
4.       Vesting .
 
(a)           Subject to Section 4(b) hereof and the further provisions of this Agreement, a number of whole shares of Restricted Stock as close as possible to 25% of the total number of shares granted hereunder shall vest on each of November 15, 2008, 2009, 2010 and 2011 (each such date, a “Vesting Date”).

 

 
 
(b)           In the event of the occurrence of a Change in Control, as defined in Section 3.8(a) of the Plan, as in effect on the date of such occurrence, the Restricted Stock shall become vested in full on the date of such Change in Control.
 
5.       Restrictions on Transferability .  Until a share of Restricted Stock vests, the Participant shall not transfer the Participant’s rights to such share of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such shares of Restricted Stock or such related rights.
 
6.       Termination of Service .
 
(a)           In the event that the Participant’s Service with the Company terminates before all the shares of Restricted Stock are vested for any reason other than a termination by the Company without cause (as defined in the Plan) or the Participant’s death or disability (as defined in the Plan), all unvested shares of Restricted Stock, together with any property received in respect of such shares, subject to and as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing such shares, together with any cash dividends or other property received in respect of such shares.  For purposes hereof, “Service” means a continuous time period during which the Participant is at least one of the following:  an employee or a director of, or a consultant to, the Company.
 
(b)           In the event that the Participant’s Service with the Company is terminated before all the shares of Restricted Stock are vested by the Company without cause (as defined in the Plan) or for reason of the Participant’s death or disability (as defined in the Plan), a portion of the shares of Restricted Stock shall become vested immediately prior to the date such Service terminates, and all other shares of Restricted Stock which are not and have not become vested, together with any property received in respect of such shares, as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing such shares, together with any cash dividends or other property received in respect of such shares.  The number of shares to become vested immediately prior to the date such Service terminates shall be as follows:
 
(i)   If the termination occurs prior to November 15, 2008, 25% of the number of shares set forth in Section 1 hereof multiplied by a fraction, the denominator of which is 11 and the numerator of which is the number of completed months between the date hereof and the date such Service terminates.  For the purposes of this paragraph, a month shall be deemed completed on the 15th of such month.
 
(ii)   If the termination occurs on or after November 15, 2008, 25% of the number of shares set forth in Section 1 hereof multiplied by a fraction, the denominator of which is 12 and the numerator of which is the number of completed months between the immediately preceding November 15 and the date such Service terminates.  For the purposes of this paragraph, a month shall be deemed completed on the 15th of such month.

 

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7.       Issuance of Shares .
 
(a)           Reasonably promptly after the Grant Date, the Company shall issue and deliver to the Participant stock certificates, registered in the name of the Participant, evidencing the shares of Restricted Stock or shall instruct its transfer agent to issue shares of Restricted Stock which shall be maintained in book entry form on the books of the transfer agent.  The Restricted Stock, if certificated, shall bear the following legend:
 
“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE GENCO   SHIPPING & TRADING LIMITED   2005 EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK GRANT AGREEMENT BETWEEN GENCO   SHIPPING & TRADING LIMITED   AND THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF GENCO   SHIPPING & TRADING LIMITED.”
 
If the Restricted Stock is in book entry form, it shall be subject to electronic coding or stop order indicating that such shares of Restricted Stock are restricted by the terms of this Agreement and the Plan.  Such legend, electronic coding or stop order shall not be removed until such shares of Restricted Stock vest.
 
(b)           Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 4 hereof, (i) in the case of certificated shares, in exchange for the surrender to the Company of the certificates evidencing the Restricted Stock, delivered to the Participant under Section 7(a) hereof, and the certificates evidencing any other securities received in respect of such shares, if any, the Company shall issue and deliver to the Participant (or the Participant’s legal representative, beneficiary or heir) certificates evidencing such shares of Restricted Stock and such other securities, free of the legend provided in Section 7(a) hereof and (ii) in the case of book entry shares, the Company shall cause to be lifted and removed any electronic coding or stop order established pursuant to Section 7(a) hereof.
 
(c)           The Company may require as a condition of the delivery of stock certificates or the removal of any electronic coding or stop order, pursuant to Section 7(b) hereof, that the Participant remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to the vesting of the applicable shares.  The Board of Directors, in its sole discretion, may permit the Participant to satisfy such obligation by delivering shares of Common Stock or by directing the Company to withhold from delivery shares of Common Stock, in either case valued at their Fair Market Value on the Vesting Date with fractional shares being settled in cash.

 

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(d)           The Participant shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock certificate is issued therefor or an appropriate book entry is made on the books of the transfer agent reflecting the issuance thereof pursuant to Section 7(a) hereof, and then only from the date such certificate is issued or such book entry is made.  Upon the issuance of a stock certificate or the making of an appropriate book entry on the books of the transfer agent, the Participant shall have the rights of a shareholder with respect to the Restricted Stock, including the right to vote the shares, subject to the restrictions on transferability and the forfeiture provisions, as set forth in this Agreement.
 
8.       Securities Matters .  The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended (the “1933 Act”) of any interests in the Plan or any shares of Common Stock to be issued thereunder or to effect similar compliance under any state laws.  The Company shall not be obligated to cause to be issued any shares, whether by means of stock certificates or appropriate book entries, unless and until the Company is advised by its counsel that the issuance of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded.  The Board of Directors may require, as a condition of the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that any certificates bear such legends and any book entries be subject to such electronic coding, as the Board of Directors, in its sole discretion, deems necessary or desirable.  The Participant specifically understands and agrees that the shares of Common Stock, if and when issued, may be “restricted securities,” as that term is defined in Rule 144 under the 1933 Act and, accordingly, the Participant may be required to hold the shares indefinitely unless they are registered under such Act or an exemption from such registration is available.
 
9.       Dividends, etc .  Any cash dividends or other property (but not including securities) received by a Participant with respect to a share of Restricted Stock shall be returned to the Company in the event such share of Restricted Stock is forfeited, subject to Section 2.7(e) of the Plan.  Any securities received by a Participant with respect to a share of Restricted Stock as a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of Restricted Stock vests and shall be forfeited if such share of Restricted Stock is forfeited, subject to Section 2.7(e) of the Plan.  Unless the Board of Directors otherwise determines, such securities shall bear the legend or be subject to the electronic coding or stop order set forth in Section 7(a) hereof.
 
10.     Delays or Omissions .  No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing.

 

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11.       Right of Discharge Preserved .  Nothing in this Agreement shall confer upon the Participant the right to continue in the employ or other service of the Company, or affect any right which the Company may have to terminate such employment or service.
 
12.       Integration .  This Agreement contains the entire understanding of the parties with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.
 
13.       Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
 
14.       Governing Law .  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to the provisions governing conflict of laws.
 
15.       Obligation to Notify .  If the Participant makes the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), the Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service and shall within the same 10-day period remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to such inclusion in Participant’s income. The Participant should consult with his or her tax advisor to determine the tax consequences of acquiring the Restricted Stock and the advantages and disadvantages of filing the Section 83(b) election.  The Participant acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely election under Section 83(b), even if the Participant requests the Company or its representatives to make this filing on his or her behalf.
 
16.       Reduction in Benefits .  Unless the Participant and the Company agree otherwise in writing, in the event that the Participant would incur an Excise Tax on any payments or benefits under this Agreement as a result of a Change of Control (or any other change described in Section 280G(b)(2) of the Code), the Company shall reduce the payments or benefits to be paid to or granted to Participant hereunder to the greater of (i) the maximum amount payable to the Participant without the imposition of any Excise Tax with respect to the Restricted Stock and (ii) the amount that yields the Participant the greatest after-tax amount of benefits under this Agreement after taking into account any Excise Tax imposed on Participant, whether due to payments and benefits under this Agreement or otherwise.  “Excise Tax” means the tax imposed by Section 4999 of the Code and any successor tax.  The determination of whether the Participants payments and benefits should be reduced and the amount of any such reduction shall be made by independent counsel selected by the Participant and reasonably acceptable to the Company (“Independent Counsel”).  For purposes of such determination, (x) the total amount of payments and benefits received by the Participant as a result of such Change in Control (or such other change) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of

 

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Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of Independent Counsel, a payment or benefit hereunder (in whole or in part) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code and the Treasury Regulations under Section 280G of the Code (the “Regulations”), or such “excess parachute payments” (in whole or in part) are not subject to the Excise Tax; (y) the amount of the payments and benefits hereunder that shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of such payments and benefits or (B) the amount of “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code (after applying clause (x) hereof); and (z) the value of any noncash benefits or any deferred payment or benefit shall be determined by Independent Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  All fees and expenses of Independent Counsel shall be borne by the Company.
 
17.       Participant Acknowledgment .  The Participant hereby acknowledges receipt of a copy of the Plan.  The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board of Directors in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive.
 
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.

                           GENCO   SHIPPING & TRADING LIMITED

                                                                 By: /s/ John C. Wobensmith           
                                                                 Name: John C. Wobensmith
                                                                 Title:   Chief Financial Officer
 	
                                                             /s/ Robert Gerald Buchanan            	
                                                                 ROBERT GERALD BUCHANAN	

 

 
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Exhibit 10.21

 
Genco Shipping & Trading Limited
Executive Officer Restricted Stock Grant Agreement
 
THIS AGREEMENT, made as of December 21, 2007, between GENCO   SHIPPING & TRADING LIMITED   (the “Company”) and John C. Wobensmith (the “Participant”).
 
WHEREAS, the Company has adopted and maintains the Genco   Shipping & Trading Limited 2005 Equity Incentive Plan (as amended and restated effective December 21, 2005) (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;
 
WHEREAS, the Plan provides that the Board of Directors of the Company (the “Board of Directors”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards; and
 
WHEREAS, the Board of Directors has determined that the purposes of the Plan would be furthered by granting the Participant an award under the Plan as set forth in this Agreement;
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:
 
1.       Grant of Restricted Stock .  Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Board of Directors hereby grants to the Participant 5 0,000 restricted shares (the “Restricted Stock”) of common stock of the Company, par value $0.01 per share (“Common Stock”).  
 
2.       Grant Date .  The Grant Date of the Restricted Stock is December 21, 2007.
 
3.       Incorporation of Plan .  All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein.  If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Board of Directors, shall govern.  Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan.
 
4.       Vesting .
 
(a)           Subject to Section 4(b) hereof and the further provisions of this Agreement, a number of whole shares of Restricted Stock as close as possible to 25% of the total number of shares granted hereunder shall vest on each of November 15, 2008, 2009, 2010 and 2011 (each such date, a “Vesting Date”).

 

 
 
(b)           In the event of the occurrence of a Change in Control, as defined in Section 3.8(a) of the Plan, as in effect on the date of such occurrence, the Restricted Stock shall become vested in full on the date of such Change in Control.
 
5.       Restrictions on Transferability .  Until a share of Restricted Stock vests, the Participant shall not transfer the Participant’s rights to such share of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such shares of Restricted Stock or such related rights.
 
6.       Termination of Service .
 
(a)           In the event that the Participant’s Service with the Company terminates before all the shares of Restricted Stock are vested for any reason other than a termination by the Company without cause (as defined in the Plan) or the Participant’s death or disability (as defined in the Plan), all unvested shares of Restricted Stock, together with any property received in respect of such shares, subject to and as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing such shares, together with any cash dividends or other property received in respect of such shares.  For purposes hereof, “Service” means a continuous time period during which the Participant is at least one of the following:  an employee or a director of, or a consultant to, the Company.
 
(b)           In the event that the Participant’s Service with the Company is terminated before all the shares of Restricted Stock are vested by the Company without cause (as defined in the Plan) or for reason of the Participant’s death or disability (as defined in the Plan), a portion of the shares of Restricted Stock shall become vested immediately prior to the date such Service terminates, and all other shares of Restricted Stock which are not and have not become vested, together with any property received in respect of such shares, as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing such shares, together with any cash dividends or other property received in respect of such shares.  The number of shares to become vested immediately prior to the date such Service terminates shall be as follows:
 
(i)   If the termination occurs prior to November 15, 2008, 25% of the number of shares set forth in Section 1 hereof multiplied by a fraction, the denominator of which is 11 and the numerator of which is the number of completed months between the date hereof and the date such Service terminates.  For the purposes of this paragraph, a month shall be deemed completed on the 15th of such month.
 
(ii)   If the termination occurs on or after November 15, 2008, 25% of the number of shares set forth in Section 1 hereof multiplied by a fraction, the denominator of which is 12 and the numerator of which is the number of completed months between the immediately preceding November 15 and the date such Service terminates.  For the purposes of this paragraph, a month shall be deemed completed on the 15th of such month.

 

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7.         Issuance of Shares .
 
(a)           Reasonably promptly after the Grant Date, the Company shall issue and deliver to the Participant stock certificates, registered in the name of the Participant, evidencing the shares of Restricted Stock or shall instruct its transfer agent to issue shares of Restricted Stock which shall be maintained in book entry form on the books of the transfer agent.  The Restricted Stock, if certificated, shall bear the following legend:
 
“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE GENCO   SHIPPING & TRADING LIMITED   2005 EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK GRANT AGREEMENT BETWEEN GENCO   SHIPPING & TRADING LIMITED   AND THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF GENCO   SHIPPING & TRADING LIMITED.”
 
If the Restricted Stock is in book entry form, it shall be subject to electronic coding or stop order indicating that such shares of Restricted Stock are restricted by the terms of this Agreement and the Plan.  Such legend, electronic coding or stop order shall not be removed until such shares of Restricted Stock vest.
 
(b)           Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 4 hereof, (i) in the case of certificated shares, in exchange for the surrender to the Company of the certificates evidencing the Restricted Stock, delivered to the Participant under Section 7(a) hereof, and the certificates evidencing any other securities received in respect of such shares, if any, the Company shall issue and deliver to the Participant (or the Participant’s legal representative, beneficiary or heir) certificates evidencing such shares of Restricted Stock and such other securities, free of the legend provided in Section 7(a) hereof and (ii) in the case of book entry shares, the Company shall cause to be lifted and removed any electronic coding or stop order established pursuant to Section 7(a) hereof.
 
(c)           The Company may require as a condition of the delivery of stock certificates or the removal of any electronic coding or stop order, pursuant to Section 7(b) hereof, that the Participant remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to the vesting of the applicable shares.  The Board of Directors, in its sole discretion, may permit the Participant to satisfy such obligation by delivering shares of Common Stock or by directing the Company to withhold from delivery shares of Common Stock, in either case valued at their Fair Market Value on the Vesting Date with fractional shares being settled in cash.

 

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(d)           The Participant shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock certificate is issued therefor or an appropriate book entry is made on the books of the transfer agent reflecting the issuance thereof pursuant to Section 7(a) hereof, and then only from the date such certificate is issued or such book entry is made.  Upon the issuance of a stock certificate or the making of an appropriate book entry on the books of the transfer agent, the Participant shall have the rights of a shareholder with respect to the Restricted Stock, including the right to vote the shares, subject to the restrictions on transferability and the forfeiture provisions, as set forth in this Agreement.
 
8.         Securities Matters .  The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended (the “1933 Act”) of any interests in the Plan or any shares of Common Stock to be issued thereunder or to effect similar compliance under any state laws.  The Company shall not be obligated to cause to be issued any shares, whether by means of stock certificates or appropriate book entries, unless and until the Company is advised by its counsel that the issuance of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded.  The Board of Directors may require, as a condition of the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that any certificates bear such legends and any book entries be subject to such electronic coding, as the Board of Directors, in its sole discretion, deems necessary or desirable.  The Participant specifically understands and agrees that the shares of Common Stock, if and when issued, may be “restricted securities,” as that term is defined in Rule 144 under the 1933 Act and, accordingly, the Participant may be required to hold the shares indefinitely unless they are registered under such Act or an exemption from such registration is available.
 
9.       Dividends, etc .  Any cash dividends or other property (but not including securities) received by a Participant with respect to a share of Restricted Stock shall be returned to the Company in the event such share of Restricted Stock is forfeited, subject to Section 2.7(e) of the Plan.  Any securities received by a Participant with respect to a share of Restricted Stock as a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of Restricted Stock vests and shall be forfeited if such share of Restricted Stock is forfeited, subject to Section 2.7(e) of the Plan.  Unless the Board of Directors otherwise determines, such securities shall bear the legend or be subject to the electronic coding or stop order set forth in Section 7(a) hereof.
 
10.     Delays or Omissions .  No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing.

 

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11.     Right of Discharge Preserved .  Nothing in this Agreement shall confer upon the Participant the right to continue in the employ or other service of the Company, or affect any right which the Company may have to terminate such employment or service.
 
12.     Integration .  This Agreement contains the entire understanding of the parties with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.
 
13.       Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
 
14.       Governing Law .  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to the provisions governing conflict of laws.
 
15.       Obligation to Notify .  If the Participant makes the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), the Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service and shall within the same 10-day period remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to such inclusion in Participant’s income. The Participant should consult with his or her tax advisor to determine the tax consequences of acquiring the Restricted Stock and the advantages and disadvantages of filing the Section 83(b) election.  The Participant acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely election under Section 83(b), even if the Participant requests the Company or its representatives to make this filing on his or her behalf.
 
16.       Reimbursement for Excise Tax .  In the event that the Participant incurs any Excise Tax (as defined in the Participant's Employment Agreement with the Company dated as of September 21, 2007 (the “Employment Agreement”)) on any payments or benefits under this Agreement, the Company shall gross-up the Participant the amount of such Excise Tax incurred in accordance with the provisions of Section 7(b) of the Employment Agreement (such provisions to apply irrespective of whether the Employment Agreement or its Term continues in effect at the time of such Excise Tax) and such Section 7(b) of the Employment Agreement relating to the Gross-Up Payment (as defined in the Employment Agreement) shall be incorporated with full effect into this Agreement, provided that any reference to "you" and to "this Agreement" in such Section 7(b) shall be deemed to refer to the "Participant" and this Restricted Stock Grant Agreement, respectively.
 
17.       Participant Acknowledgment .  The Participant hereby acknowledges receipt of a copy of the Plan.  The Participant hereby acknowledges that all decisions,

 

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determinations and interpretations of the Board of Directors in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive.
 
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.

                           GENCO   SHIPPING & TRADING LIMITED

                                                                 By: /s/ Robert Gerald Buchanan       
                                                                 Name: Robert Gerald Buchanan
                                                                 Title:   President
 	
                                                             /s/ John C. Wobensmith                     	
                                                                 JOHN C. WOBENSMITH	

 

 
6

 

 
Exhibit 10.22

 
Genco Shipping & Trading Limited
Restricted Stock Grant Agreement
 
THIS AGREEMENT, made as of January 10, 2008, between GENCO   SHIPPING & TRADING LIMITED   (the “Company”) and Peter C. Georgiopoulos (the “Participant”).
 
WHEREAS, the Company has adopted and maintains the Genco   Shipping & Trading Limited 2005 Equity Incentive Plan (as amended and restated effective December 21, 2005) (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;
 
WHEREAS, the Plan provides that the Board of Directors of the Company (the “Board of Directors”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards; and
 
WHEREAS, the Board of Directors has determined that the purposes of the Plan would be furthered by granting the Participant an award under the Plan as set forth in this Agreement;
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:
 
1.       Grant of Restricted Stock .  Pursuant to, and subject to, the terms and conditions set forth herein (including without limitation Section 17 hereof) and in the Plan, the Board of Directors hereby grants to the Participant one hundred thousand (100,000) restricted shares (the “Restricted Stock”) of common stock of the Company, par value $0.01 per share (“Common Stock”).  
 
2.       Grant Date .  The Grant Date of the Restricted Stock is January 10, 2008.
 
3.       Incorporation of Plan .  All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein.  If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Board of Directors, shall govern.  Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan.
 
4.       Vesting .
 
(a)           Subject to Section 4(b) hereof and the further provisions of this Agreement, ten thousand (10,000) shares of Restricted Stock shall vest on each of the first ten (10) anniversaries of November 15, 2007 (each such date, a “Vesting Date”).
 
(b)           In the event of the occurrence of a Change in Control, as defined in Section 3.8(a) of the Plan, as in effect on the date of such occurrence, the Restricted Stock shall become vested in full on the date of such Change in Control.

 

 
 
5.       Restrictions on Transferability .  Until a share of Restricted Stock vests, the Participant shall not transfer the Participant’s rights to such share of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such shares of Restricted Stock or such related rights.
 
6.       Termination of Service .
 
(a)           In the event that the Participant’s Service with the Company terminates before all the shares of Restricted Stock are vested for any reason (including without limitation the Participant’s death or disability as defined in the Plan) other than (i) removal as a Director for cause (as defined in Article III, Section 4 of the Amended and Restated By-Laws of the Company) or (ii) due to the Participant’s voluntary termination of his Service, all shares of Restricted Stock shall become vested immediately prior to such termination of Service.  For purposes hereof, “Service” means a continuous time period during which the Participant is at least one of the following:  an employee or a director of, or a consultant to, the Company.
 
(b)           In the event that the Participant’s Service with the Company terminates before all the shares of Restricted Stock are vested (i) due to removal as a Director for cause (as defined in Article III, Section 4 of the Amended and Restated By-laws of the Company) or (ii) due to the Participant’s voluntary termination of his Service, all unvested shares of Restricted Stock, together with any property received in respect of such shares, subject to and as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing such shares, together with any cash dividends or other property received in respect of such shares.
 
7.       Issuance of Shares .
 
(a)           Reasonably promptly after the Grant Date, the Company shall issue and deliver to the Participant stock certificates, registered in the name of the Participant, evidencing the shares of Restricted Stock or shall instruct its transfer agent to issue shares of Restricted Stock which shall be maintained in book entry form on the books of the transfer agent.  The Restricted Stock, if certificated, shall bear the following legend:
 
“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE GENCO   SHIPPING & TRADING LIMITED   2005 EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK GRANT AGREEMENT BETWEEN GENCO   SHIPPING & TRADING LIMITED   AND THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF GENCO   SHIPPING & TRADING LIMITED.”

 

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If the Restricted Stock is in book entry form, it shall be subject to electronic coding or stop order indicating that such shares of Restricted Stock are restricted by the terms of this Agreement and the Plan.  Such legend, electronic coding or stop order shall not be removed until such shares of Restricted Stock vest.
 
(b)           Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 4 hereof, (i) in the case of certificated shares, in exchange for the surrender to the Company of the certificates evidencing the Restricted Stock, delivered to the Participant under Section 7(a) hereof, and the certificates evidencing any other securities received in respect of such shares, if any, the Company shall issue and deliver to the Participant (or the Participant’s legal representative, beneficiary or heir) certificates evidencing such shares of Restricted Stock and such other securities, free of the legend provided in Section 7(a) hereof and (ii) in the case of book entry shares, the Company shall cause to be lifted and removed any electronic coding or stop order established pursuant to Section 7(a) hereof.
 
(c)           The Company may require as a condition of the delivery of stock certificates or the removal of any electronic coding or stop order, pursuant to Section 7(b) hereof, that the Participant remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to the vesting of the applicable shares.  The Board of Directors, in its sole discretion, may permit the Participant to satisfy such obligation by delivering shares of Common Stock or by directing the Company to withhold from delivery shares of Common Stock, in either case valued at their Fair Market Value on the Vesting Date with fractional shares being settled in cash.
 
(d)           The Participant shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock certificate is issued therefor or an appropriate book entry is made on the books of the transfer agent reflecting the issuance thereof pursuant to Section 7(a) hereof, and then only from the date such certificate is issued or such book entry is made.  Upon the issuance of a stock certificate or the making of an appropriate book entry on the books of the transfer agent, the Participant shall have the rights of a shareholder with respect to the Restricted Stock, including the right to vote the shares, subject to the restrictions on transferability and the forfeiture provisions, as set forth in this Agreement.
 
8.       Securities Matters .  The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended (the “1933 Act”) of any interests in the Plan or any shares of Common Stock to be issued thereunder or to effect similar compliance under any state laws.  The Company shall not be obligated to cause to be issued any shares, whether by means of stock certificates or appropriate book entries, unless and until the Company is advised by its counsel that the issuance of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded.  The Board of Directors may require, as a condition of the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that any

 

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certificates bear such legends and any book entries be subject to such electronic coding, as the Board of Directors, in its sole discretion, deems necessary or desirable.  The Participant specifically understands and agrees that the shares of Common Stock, if and when issued, may be “restricted securities,” as that term is defined in Rule 144 under the 1933 Act and, accordingly, the Participant may be required to hold the shares indefinitely unless they are registered under such Act or an exemption from such registration is available.
 
9.        Dividends, etc .  Any cash dividends or other property (but not including securities) received by a Participant with respect to a share of Restricted Stock shall be returned to the Company in the event such share of Restricted Stock is forfeited, subject to Section 2.7(e) of the Plan.  Any securities received by a Participant with respect to a share of Restricted Stock as a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of Restricted Stock vests and shall be forfeited if such share of Restricted Stock is forfeited, subject to Section 2.7(e) of the Plan.  Unless the Board of Directors otherwise determines, such securities shall bear the legend or be subject to the electronic coding or stop order set forth in Section 7(a) hereof.
 
10.       Delays or Omissions .  No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing.
 
11.       Right of Discharge Preserved .  Nothing in this Agreement shall confer upon the Participant the right to continue in the employ or other service of the Company, or affect any right which the Company may have to terminate such employment or service.
 
12.       Integration .  This Agreement contains the entire understanding of the parties with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.
 
13.       Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
 
14.       Governing Law .  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to the provisions governing conflict of laws.

 

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15.       Obligation to Notify .  If the Participant makes the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), the Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service and shall within the same 10-day period remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to such inclusion in Participant’s income. The Participant should consult with his or her tax advisor to determine the tax consequences of acquiring the Restricted Stock and the advantages and disadvantages of filing the Section 83(b) election.  The Participant acknowledges that it is his sole responsibility, and not the Company’s, to file a timely election under Section 83(b), even if the Participant requests the Company or its representatives to make this filing on his behalf.
 
16.       Reimbursement for Excise Tax .
 
(a)           Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined (as hereafter provided) that any payment, benefit or distribution to or for the Participant’s benefit under this Agreement (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto), or any interest or penalties with respect to such excise tax (such tax, together with any such interest and penalties, hereafter collectively referred to as the “Excise Tax”), then the Participant shall be entitled to receive an additional payment or payments (a “Gross-Up Payment”) in an amount such that, after payment by the Participant of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  For purposes of determining the amount of the Gross-Up Payment, the Participant shall be deemed to pay federal income taxes at the highest marginal rates of federal income taxation applicable to individuals in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the state and locality of the Participant’s residence in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates.
 
(b)           All determinations required to be made under this Section 16, including whether an Excise Tax is payable by the Participant, the amount of such Excise Tax, whether a Gross-Up Payment is required, and the amount of such Gross-Up Payment, shall be made by an independent auditor (the “Firm”) selected by the Participant and the Company.  The Firm shall be a nationally-recognized United States public accounting firm which has not, during the two years preceding the date of its selection, acted in any way for the Company or any affiliate thereof.  Either the Company or the Participant may request that a determination be made.  The Firm shall submit its determination and detailed supporting calculations to the Participant and the Company as promptly as practicable.  If the Firm determines that any Excise Tax is payable by the Participant and that a Gross-Up Payment is required, the Company shall pay the Participant the required Gross-Up Payment within thirty (30) days of receipt of such determination and calculations.  In no event shall the Gross-Up Payment be paid later than December 31 of the year following the year in which the Participant pays the applicable Excise Tax.  If the Firm

 

5

 
 
determines that no Excise Tax is payable by the Participant, it shall, at the same time it makes such determination, furnish the Participant with an opinion that the Participant has substantial authority not to report any Excise Tax on the Participant’s federal income tax return.  Any determination by the Firm as to the amount of the Gross-Up Payment shall be binding upon the Participant and the Company.
 
(c)           As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) at the time of the initial determination by the Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an “Underpayment”).  If the Participant thereafter is required to make a payment of any Excise Tax, the Firm shall determine the amount of the Underpayment (if any) that has occurred and submit its determination and detailed supporting calculations to the Participant and the Company as promptly as possible.  Any such Underpayment shall be promptly paid by the Company to the Participant, or for the Participant’s benefit, within thirty (30) days of receipt of such determination and calculations, but in no event later than December 31 of the year following the year in which the Participant pays the applicable Excise Tax.
 
(d)           In the event that the Internal Revenue Service makes any claim, gives notice of any potential claim or institutes a proceeding against the Participant asserting that any Excise Tax or additional Excise Tax is due in respect of the Payments, the Participant shall promptly give the Company notice of any such claim, potential claim or proceeding.  The Company shall have the right to conduct all discussions, negotiations, defenses, actions and proceedings, to the extent reasonably requested by the Company.  The Participant will not settle any claim or proceeding relating solely to the Excise Tax payable in respect of the Payments without the consent of the Company, which consent shall not be unreasonably withheld.  The Participant shall file, at the Company’s expense, all requests for refunds of the Gross-Up Amount, or any portion thereof, paid to any taxing authority as shall be reasonably requested by the Company and shall pay over to the Company (net of any tax payable thereon) any such refunds, together with any interest thereon, when and as such refunds and interest are received by the Participant.  All fees and expenses for services in connection with the determinations and calculations contemplated by this Section 5(f)(ii), including without limitation the costs of the Participant’s own counsel, shall be borne by the Company and shall be paid not later than December 31 of the year following the year in which any such Internal Revenue Service audit is completed or there is a final and nonappealable settlement or other resolution.
 
17.       HSR Act .  Notwithstanding anything herein to the contrary, the Restricted Stock will not be issued unless and until the applicable waiting period for acquisition of such shares under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations thereunder (collectively, the "HSR Act") has expired or been terminated. Immediately upon the expiration or termination of the applicable waiting period, the Restricted Stock shall be issued to the Participant in accordance with the other provisions hereof.  If the waiting period under the HSR Act has not expired or been terminated on or prior to March 31, 2008, the Participant and the Company shall agree upon an alternative arrangement reasonably acceptable to the Participant in compliance with applicable law. The Company and the Participant shall each cooperate with the other in making filings under the HSR Act, and each party shall use its reasonable best efforts to resolve such issues, if any, as the Antitrust Division of the Department of Justice or the Federal Trade Commission may raise under applicable

 

6

 
 
competition laws with respect to the filing. The Company and its counsel shall assist in the preparation of such filing. The Company will pay any filing fees and any fees and disbursements of counsel in connection with such filing and obtaining the expiration or termination of the waiting period under the HSR Act.
 
18.       Participant Acknowledgment .  The Participant hereby acknowledges receipt of a copy of the Plan.  The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board of Directors in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive.
 
[Signature page follows.]

 

 
 
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.

                           GENCO   SHIPPING & TRADING LIMITED

                                                                 By: /s/ John C. Wobensmith           
                                                                 Name: John C. Wobensmith
                                                                 Title:   Chief Financial Officer
 	
                                                             /s/ Peter C. Georgiopoulos              	
                                                                 PETER C. GEORGIOPOULOS	

 

 

 
 
8

 
Exhibit 10.23

 
Genco Shipping & Trading Limited
Director Restricted Stock Grant Agreement
 
THIS AGREEMENT, made as of _____________, 20__, between GENCO   SHIPPING & TRADING LIMITED   (the “Company”) and _______________ (the “Participant”).
 
WHEREAS, the Company has adopted and maintains the Genco   Shipping & Trading Limited 2005 Equity Incentive Plan (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;
 
WHEREAS, the Plan provides that the Board of Directors of the Company (the “Board of Directors”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards; and
 
WHEREAS, the Board of Directors has determined that the purposes of the Plan would be furthered by granting the Participant an award under the Plan as set forth in this Agreement;
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:
 
1.       Grant of Restricted Stock .  Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Board of Directors hereby grants to the Participant 2,500 restricted shares (the “Restricted Stock”) of common stock of the Company, par value $0.01 per share (“Common Stock”).  
 
2.       Grant Date .  The Grant Date of the Restricted Stock is February 13, 2008.
 
3.       Incorporation of Plan .  All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein.  If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Board of Directors, shall govern.  Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan.
 
4.       Vesting .  Subject to the further provisions of this Agreement, the Restricted Stock shall vest on the earliest of (i) February 13, 2009, (ii) the date of the annual shareholders meeting of the Company next following the date hereof (the “Annual Meeting Date”) and (iii) the occurrence of a Change in Control, as defined in Section 3.8(a) of the Plan, as in effect on the date of such occurrence (each such date, the “Vesting Date”).
 
5.       Restrictions on Transferability .  Until a share of Restricted Stock vests, the Participant shall not transfer the Participant’s rights to such share of Restricted Stock or to any rights related thereto.  Any attempt to transfer unvested shares of Restricted Stock or any rights related thereto, whether by transfer, pledge, hypothecation or otherwise and whether voluntary or

 

 
 
involuntary, by operation of law or otherwise, shall not vest the transferee with any interest or right in or with respect to such shares of Restricted Stock or such related rights.
 
6.       Termination of Service .
 
(a)           In the event that the Participant’s Service with the Company terminates before the Vesting Date for any reason other than the Participant’s death or disability (as defined in the Plan), the Restricted Stock, together with any property received in respect of such shares, as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates, and the Participant promptly shall return to the Company any certificates evidencing the Restricted Stock, together with any cash dividends or other property received in respect of such shares.  For purposes hereof, “Service” means a continuous time period during which the Participant is at least one of the following:  an employee or a director of, or a consultant to, the Company.
 
(b)           In the event that the Participant’s Service with the Company terminates before the Vesting Date for reason of the Participant’s death or disability (as defined in the Plan), all shares of Restricted Stock shall become vested immediately prior to such termination of Service.
 
                7.        Issuance of Shares .
 
(a)           Reasonably promptly after the Grant Date, the Company shall issue and deliver to the Participant a stock certificate, registered in the name of the Participant, evidencing the shares of Restricted Stock or shall instruct its transfer agent to issue shares of Restricted Stock which shall be maintained in book entry form on the books of the transfer agent.  Such certificate may bear the following legend:
 
“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE GENCO   SHIPPING & TRADING LIMITED   2005 EQUITY INCENTIVE PLAN AND A RESTRICTED STOCK GRANT AGREEMENT BETWEEN GENCO   SHIPPING & TRADING LIMITED   AND THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF GENCO   SHIPPING & TRADING LIMITED.”
 
If the Restricted Stock is in book entry form, it shall be subject to electronic coding or stop order indicating that such shares of Restricted Stock are restricted by the terms of this Agreement and the Plan.  Such legend, electronic coding or stop order shall not be removed until such shares of Restricted Stock vest.
 
(b)           Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 4 hereof, (i) in the case of certificated shares, in exchange for the surrender to the Company of the certificates evidencing the Restricted Stock, delivered to the Participant under Section 7(a) hereof, and the certificates evidencing any other securities received in respect of such

2

 
 
shares, if any, the Company shall issue and deliver to the Participant (or the Participant’s legal representative, beneficiary or heir) a certificate evidencing such shares of Restricted Stock and such other securities, free of the legend provided in Section 7(a) hereof and (ii) in the case of book entry shares, the Company shall cause to be lifted and removed any electronic coding or stop order established pursuant to Section 7(a) hereof.
 
(c)           The Company may require as a condition of the delivery of stock certificates or the removal of any electronic coding or stop order, pursuant to Section 7(b) hereof, that the Participant remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to the vesting of the applicable shares.  The Board of Directors, in its sole discretion, may permit the Participant to satisfy such obligation by delivering shares of Common Stock or by directing the Company to withhold from delivery shares of Common Stock, in either case valued at their Fair Market Value on the Vesting Date with fractional shares being settled in cash.
 
(d)           The Participant shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock certificate is issued therefor or an appropriate book entry is made on the books of the transfer agent reflecting the issuance thereof pursuant to Section 7(a) hereof, and then only from the date such certificate is issued or such book entry is made.  Upon the issuance of a stock certificate or the making of an appropriate book entry on the books of the transfer agent, the Participant shall have the rights of a shareholder with respect to the Restricted Stock, including the right to vote the shares, subject to the restrictions on transferability and the forfeiture provisions, as set forth in this Agreement.
 
8.       Securities Matters .  The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended (the “1933 Act”) of any interests in the Plan or any shares of Common Stock to be issued thereunder or to effect similar compliance under any state laws.  The Company shall not be obligated to cause to be issued any shares, whether by means of stock certificates or appropriate book entries, unless and until the Company is advised by its counsel that the issuance of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded.  The Board of Directors may require, as a condition of the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that any certificates bear such legends and any book entries be subject to such electronic coding, as the Board of Directors, in its sole discretion, deems necessary or desirable.  The Participant specifically understands and agrees that the shares of Common Stock, if and when issued, may be “restricted securities,” as that term is defined in Rule 144 under the 1933 Act and, accordingly, the Participant may be required to hold the shares indefinitely unless they are registered under such Act or an exemption from such registration is available.
 
9.       Dividends, etc .  Any cash dividends or other property (but not including securities) received by a Participant with respect to a share of Restricted Stock shall be returned to the Company in the event such share of Restricted Stock is forfeited.  Any securities received by a Participant with respect to a share of Restricted Stock as a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares or otherwise will not vest until such share of Restricted Stock vests and shall be forfeited if such share of Restricted Stock is forfeited.  Unless the

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Board of Directors otherwise determines, such securities shall bear the legend or be subject to the electronic coding or stop order set forth in Section 7(a) hereof.
 
10.        Delays or Omissions .  No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing.
 
11.        Right of Discharge Preserved .  Nothing in this Agreement shall confer upon the Participant the right to continue as a director of or in other service of the Company, or affect any right which the Company may have to terminate such service.
 
12.        Integration .  This Agreement contains the entire understanding of the parties with respect to its subject matter.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.
 
13.        Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
 
14.        Governing Law .  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to the provisions governing conflict of laws.
 
15.        Obligation to Notify .  If the Participant makes the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), the Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service and shall within the same 10-day period remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to such inclusion in Participant’s income. The Participant should consult with his or her tax advisor to determine the tax consequences of acquiring the Restricted Stock and the advantages and disadvantages of filing the Section 83(b) election.  The Participant acknowledges that it is his or her sole responsibility, and not the Company’s, to file a timely election under Section 83(b), even if the Participant requests the Company or its representatives to make this filing on his or her behalf.
 
16.       Reduction in Benefits .  Unless the Participant and the Company agree otherwise in writing, in the event that the Participant would incur an Excise Tax on any payments or benefits under this Agreement as a result of a Change of Control (or any other change described in Section 280G(b)(2) of the Code), the Company shall reduce the payments or benefits to be paid to or

 

4

 
 
granted to Participant hereunder to the greater of (i) the maximum amount payable to the Participant without the imposition of any Excise Tax with respect to the Restricted Stock and (ii) the amount that yields the Participant the greatest after-tax amount of benefits under this Agreement after taking into account any Excise Tax imposed on Participant, whether due to payments and benefits under this Agreement or otherwise.  “Excise Tax” means the tax imposed by Section 4999 of the Code and any successor tax.  The determination of whether the Participants payments and benefits should be reduced and the amount of any such reduction shall be made by independent counsel selected by the Participant and reasonably acceptable to the Company (“Independent Counsel”).  For purposes of such determination, (x) the total amount of payments and benefits received by the Participant as a result of such Change in Control (or such other change) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except to the extent that, in the opinion of Independent Counsel, a payment or benefit hereunder (in whole or in part) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code and the Treasury Regulations under Section 280G of the Code (the “Regulations”), or such “excess parachute payments” (in whole or in part) are not subject to the Excise Tax; (y) the amount of the payments and benefits hereunder that shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of such payments and benefits or (B) the amount of “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code (after applying clause (x) hereof); and (z) the value of any noncash benefits or any deferred payment or benefit shall be determined by Independent Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.  All fees and expenses of Independent Counsel shall be borne by the Company.
 
17.    Participant Acknowledgment .  The Participant hereby acknowledges receipt of a copy of the Plan.  The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board of Directors in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive.
 
[Signature page follows]

 
 
5

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.

                           GENCO   SHIPPING & TRADING LIMITED

                                                                 By: _____________________________
                                                                 Name: John C. Wobensmith
                                                                 Title:   Chief Financial Officer
 
                                                                   ________________________________
                                                           [ Director]	

 

 
6

 

 
Exhibit 10.30

 
AMENDMENT AND SUPPLEMENT NO. 2 TO
SENIOR SECURED CREDIT AGREEMENT
 
THIS AMENDMENT AND SUPPLEMENT NO. 2 TO SENIOR SECURED CREDIT AGREEMENT (this “ Amendment ”) is made as of February 13, 2008, by and among (1) GENCO SHIPPING & TRADING LIMITED, a corporation organized and existing under the laws of the Republic of Marshall Islands (the “ Borrower ”), (2) the banks and financial institutions acceptable to the Borrower and Mandated Lead Arranger (as defined below) as are signatories hereto, as lenders (the “ Lenders ”), and (3) DnB NOR BANK ASA, acting through its New York branch (“ DnB ”) as Administrative Agent (in such capacity, the “ Administrative Agent ”), mandated lead arranger (in such capacity, the “ Mandated Lead Arranger ”), as bookrunner (in such capacity, the “ Bookrunner ”), as security trustee and as collateral agent under the Security Documents (in such capacity, the “ Collateral Agent ”) and amends and is supplemental to the Senior Secured Credit Agreement dated as of July 20, 2007, as amended by that certain Amendment and Supplement No. 1 to the Senior Secured Credit Agreement dated as of September 21, 2007 (the “ Credit Agreement ”), made by and among the parties. All capitalized terms used herein and defined in Section 13 of the Credit Agreement are used as therein defined.
 
W I T N E S S E T H :
 
WHEREAS, pursuant to the Credit Agreement, the Lenders made available to the Borrower a senior secured credit facility in the amount of US$1,377,000,000 (the “ Facility ”);
 
WHEREAS, the Borrower has requested that the Lenders permit the Borrower to purchase or redeem shares of common stock in the Borrower;
 
WHEREAS, the Lenders have agreed to permit the Borrower to purchase or redeem shares of common stock in the Borrower subject to those terms and conditions as set forth herein; and
 
WHEREAS, the Lenders and the Borrower have agreed to certain other amendments to the Credit Agreement and to that certain Pledge and Security Agreement dated August 17, 2007, by and among the Borrower, the Administrative Agent and the Subsidiary Guarantors (the “Pledge and Security Agreement”) and executed pursuant to Section 7.03 of the Credit Agreement.
 
NOW, THEREFORE, in consideration of the premises and such other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by the parties, it is hereby agreed as follows:
 
1.       Definitions .  Unless otherwise defined herein, words and expressions defined in the Credit Agreement have the same meanings when used herein, including in the recitals hereto.

 

 
 
2.       Representations and Warranties .  The Borrower hereby reaffirms, as of the date hereof, each and every representation and warranty made thereby in the Credit Agreement, the Note and the Security Documents (updated mutatis mutandis).
 
3.       No Defaults .  The Borrower hereby represents and warrants that as of the date hereof no Event of Default or event which, with the passage of time, giving of notice or both would become an Event of Default, has occurred.
 
4.       Performance of Covenants .  The Borrower hereby reaffirms that it has duly performed and observed the covenants and undertakings set forth in the Credit Agreement, the Note and the Security Documents, on its part to be performed, and the Borrower covenants and undertakes to continue duly to perform and observe such covenants and undertakings so long as the Credit Agreement, as the same is amended hereby and may hereafter be amended or supplemented, shall remain in effect.
 
5.       Amendments to the Credit Agreement .  Subject to the terms and conditions of this Amendment, the Credit Agreement is hereby amended and supplemented as follows:
 
(a)   All references to “this Agreement” shall be deemed to refer to the Credit Agreement, as further amended and supplemented hereby.
 
(b)   The text of Section 11.03(ii) shall be amended by deleting the word “and” at the end of the last line of this subsection.
 
(c)   The following subsection (iii) shall be added to Section 11.03 of the Credit Agreement:
 
“(iii)                      the Borrower may purchase or redeem shares of common stock in the Borrower in market purchases under Rule 10b-18 or other purchases approved by the Borrower’s Board of Directors, any committee thereof or any authorized officer in an amount up to the Permitted Dividend Amount for the immediately preceding fiscal quarter; provided that , (A) no Default or Event of Default has occurred and is continuing at the time of any such purchases, (B) no Default or Event of Default would arise after giving effect to any such purchases and (C) the Borrower in the exercise of its rights under this Section 11.03(iii) shall not be permitted to purchase or redeem shares beneficially owned directly or indirectly by Peter Georgiopoulos; and”.

(d)   Section 11.03(iii) of the Credit Agreement shall be renumbered accordingly as subsection (iv).
 
(e)   The definitions of “Permitted Dividend Amount” and “Permitted Dividend Carry Forward Amount” in Section 13.01 shall be deleted and replaced in their entirety with the following:

 

2

 
 
“ Permitted Dividend Amount ” shall mean, for each fiscal quarter of the Borrower, (i) the sum of (x) Available Cash for such fiscal quarter and (y) the Permitted Dividend Carry Forward Amount for the immediately preceding fiscal quarter minus (ii) the sum of (a) the Fleet Maintenance Reserve for such fiscal quarter (b) the Fleet Renewal Reserve for such fiscal quarter, and (c) Consolidated Interest Expense for such fiscal quarter; provided that the aggregate amount of all Dividends made pursuant to Sections 11.03(ii) and (iii) as a result of this subclause (y) shall not exceed US$150,000,000.
 
“ Permitted Dividend Carry Forward Amount ” shall mean (i) for the fiscal quarter ending June 30, 2005, zero, and (ii) for each fiscal quarter thereafter, the Permitted Dividend Amount for such fiscal quarter; provided that to the extent the Permitted Dividend Amount for any fiscal quarter is a positive amount, only the portion of the Permitted Dividend Amount that has not been distributed as a Dividend pursuant to Section 11.03(ii) or (iii) shall be included in the calculation of this clause (ii)”.
 
6.       Fees and Expenses .  The Borrower shall pay promptly to the Lenders all costs and expenses (including reasonable legal fees) of the Lenders in connection with the preparation and execution of this Amendment.
 
7.       No Other Amendment .  All other terms and conditions of the Credit Agreement shall remain in full force and effect and the Credit Agreement shall be read and construed as if the terms of this Amendment were included therein by way of addition or substitution, as the case may be.
 
8.       Amendment to the Pledge and Security Agreement .  Annex A to the Pledge and Security Agreement shall be amended by adding the following information to the last row of the table contained therein:
 
“GENCO WISDOM LIMITED      Marshall Islands        N/A”.
 
9.       Other Documents .  By the execution and delivery of this Amendment, each of the parties hereby consents and agrees that all references in the Note and the Security Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended and supplemented by this Amendment.  By the execution and delivery of this Amendment, the Borrower hereby consents and agrees that the Security Documents and any other documents that have been or may be executed as security for the Facility and any of its obligations under the Credit Agreement, the Note or any Security Document shall remain in full force and effect notwithstanding the amendments contemplated hereby.
 
10.    Governing Law .  This Amendment shall be governed by and construed in accordance with the laws of the State of New York.
 
11.    Further Assurances .  The Borrower hereby consents and agrees that if this Amendment or any of the Security Documents shall at any time be deemed by the Lenders for

 

3

 
 
any reason insufficient in whole or in part to carry out the true intent and spirit hereof or thereof, it will execute or cause to be executed such other and further assurances and documents as in the reasonable opinion of the Lenders may be reasonably required in order more effectively to accomplish the purposes of this Amendment or any of the Security Documents.
 
12.     Counterparts .  This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed to be an original but all such counterparts shall constitute but one and the same agreement.
 
13.     Headings; Amendment .  In this Amendment, section headings are inserted for convenience of reference only and shall be ignored in the interpretation of this Amendment.  This Amendment cannot be amended other than by written agreement signed by the parties hereto.

 

 
4

IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment by its duly authorized representative on the day and year first above written.
 
BORROWER:

GENCO SHIPPING & TRADING LIMITED , as Borrower

By /s/ John C. Wobensmith            
 Name: John C. Wobensmith
 Title:   Chief Financial Officer

Address :

299 Park Avenue, 20th floor
New York, NY 10171
Telephone:(646) 443-8550
Facsimile:  (646) 443-8551

 

5

LENDERS :

DNB NOR BANK ASA, NEW YORK
BRANCH , as Administrative Agent,
Collateral Agent, Mandated Lead Arranger,
Bookrunner and a Lender

By   /s/ Nikolai A. Nachamkin                
 Name: Nikolai A. Nachamkin
 Title:   Senior Vice President

By   /s/ Cathleen Buckley                       
 Name: Cathleen Buckley
 Title:   Vice President

 

 
6

 

BANK OF SCOTLAND PLC ,
as a Lender
 
By   /s/ Brian R. Allan                         
        Name: Brian R. Allan
        Title:   Director, Marine Finance
 
By   /s/ Alan Boothby                       
        Name: Alan Boothby
        Title:   Director, Marine Finance

 

7

 

WEST LB, NEW YORK BRANCH,
as a Lender
 
By   /s/ Renata Gontijo                    
        Name:  Renata Gontijo
        Title:  Director
 
By   /s/ Jeff Nelson                           
        Name: Jeff Nelson
        Title:   Executive Director

 

8

 

ALLIANCE & LEICESTER
COMMERCIAL FINANCE PLC,
as a Lender
 
By   /s/ Chris Jones                             
        Name: Chris Jones
        Title:   Director of Corporate &
          Structured Finance
 
By   /s/ Mark McCarthy                     
      Name: Mark McCarthy
      Title:   Head of Shipping

 

9

 

CREDIT INDUSTRIEL ET COMMERCIAL, NEW YORK BRANCH,
as a Lender
 
By   /s/ Alex Aupoix
           Name:  Alex Aupoix
           Title:  Vice President
 
By   /s/ Adrienne Molloy
           Name:  Adrienne Molloy
           Title:  Vice President

 
10

 

DEXIA BANK BELGIUM SA/NV,
as a Lender
 
By   /s/ Marc Lauwers                        
        Name: Marc Lauwers
        Title:   Member of the Management  Board

By   /s/ D. Gyselinck                          
       Name: D. Gyselinck
       Title:   Member of the Management  Board

 

11

 

LLOYDS TSB BANK,
as a Lender
 
By   /s/ Nadeem Samaha                  
        Name: Nadeem Samaha
        Title:   Associate
 
By   /s/ David Sumner                      
        Name: David Sumner
        Title:   Associate Director

 

12

 

SWEDBANK AB (PUBL),
as a Lender
 
By   /s/ Dagobert Billsten                           
        Name: Dagobert Billsten
        Title:   Attorney-in-Fact
 
By____________________________
           Name:
           Title:

 

 

 
13

 

 
Exhibit 14.1

 
Genco Shipping & Trading Limited
 
CODE OF ETHICS
 
(as revised April 9, 2007)
 
I.         Foreword
 
The Board of Directors of Genco Shipping & Trading Limited (the "Company") has adopted this Code of Ethics (the "Code") for all of the Company's employees, directors, officers and agents ("Employees").    Among the Company’s most fundamental operating principles are adherence to high ethical standards and compliance with all laws and regulations applicable to our business.  The reputation of our Company, the quality of our work-place experience, and the satisfaction of our obligations to shareholders depend on each employee achieving these levels of conduct.
 
The Code is not intended to be a comprehensive rulebook and cannot address every situation that an Employee may face.  If an Employee feels uncomfortable about a situation or has any doubts about whether it is consistent with the Company’s ethical standards, the Employee should contact an executive officer of the Company or counsel to the Company immediately.

II.      Conflicts of Interest
 
A conflict of interest occurs when an Employee's private interests in interfere, or even appears to interfere, with the interests of the Company as a whole.  While it is not possible to describe every situation in which a conflict of interest may arise, Employees must never use or attempt to use their position with the Company to obtain improper personal benefits.  Any Employee who is aware of a conflict of interest, or is concerned that a conflict might develop, should discuss the matter with an executive officer of the Company or counsel to the Company immediately.
 
III.     Corporate Opportunities
 
Employees owe a duty to advance the legitimate interests of the Company when the opportunities to do so arise.  Employees may not take for themselves personally opportunities that are discovered through the use of corporate property, information or position.
 
IV.     Confidentiality and Privacy
 
It is important that Employees protect the confidentiality of Company information.  Employees may have access to proprietary and confidential information concerning the Company's business, clients and suppliers.  Confidential information includes such items as non-public information concerning the Company's business, financial results and prospects and potential corporate transactions.  Employees are required to keep such information confidential during employment as well as thereafter, and not to use, disclose, or communicate that confidential information other than in the course of employment.  The consequences to the

 

 
 
Company and the Employee concerned can be severe where there is unauthorized disclosure of any non-public, privileged or proprietary information.
 
To ensure the confidentiality of any personal information collected and to comply with applicable laws, any Employee in possession of non-public, personal information about the Company's customers, potential customers, or Employees, must maintain the highest degree of confidentiality and must not disclose any personal information unless authorization is obtained.
 
V.      Honest and Fair Dealing
 
Employees must endeavor to deal honestly, ethically and fairly with the Company's customers, suppliers, competitors and employees.  No Employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.  Honest conduct is considered to be conduct that is free from fraud or deception.  Ethical conduct is considered to be conduct conforming to accepted professional standards of conduct.
 
VI.     Protection and Proper Use of Company Assets
 
The Company's assets are only to be used for legitimate business purposes and only by authorized Employees or their designees.  This applies to tangible assets (such as office equipment, telephone, copy machines, etc.) and intangible assets (such as trade secrets and confidential information).  Employees have a responsibility to protect the Company's assets from theft and loss and to ensure their efficient use.  Theft, carelessness and waste have a direct impact on the Company's profitability.  If you become aware of theft, waste or misuse of the Company's assets you should report this to your manager.
 
VII.        Compliance with Laws, Rules and Regulations Generally
 
Each Employee has an obligation to comply with all laws, rules and regulations applicable to the Company.  These include, without limitation, laws covering securities trading, bribery and kickbacks, illegal political contributions, antitrust prohibitions, foreign corrupt practices, offering or receiving gratuities, environmental hazards, employment discrimination or harassment, occupational health and safety, false or misleading financial information or misuse of corporate assets.  Employees are expected to understand and comply with all laws, rules and regulations that apply.  If any doubt exists about whether a course of action is lawful, Employees should contact an executive officer of the Company or the Company’s outside legal counsel.
 
VIII.       Securities Trading
 
Employees are prohibited from trading in the stock or other securities of the Company while in possession of material, non-public information about the Company.  In addition, Employees are prohibited from recommending, “tipping” or suggesting that anyone else buy or sell stock or other securities of the Company on the basis of material, non-public information.  Employees who obtain material, non-public information about another company in the course of their employment are prohibited from trading in the stock or securities of the other company while in possession of such information or “tipping” others to trade on the basis of such

 
 
information.  Violation of insider trading laws can result in severe fines and criminal penalties, as well as disciplinary action by the Company, up to and including termination of employment.
 
Information is "material" when there is a substantial likelihood that a reasonable investor would consider the information important in deciding whether to buy, hold or sell securities.  In short, any information that could reasonably affect the price of securities is material.  Information is considered to be "public" only when it has been released to the public through appropriate channels and enough time has elapsed to permit the investment market to absorb and evaluate the information.  If you have any doubt as to whether you possess material nonpublic information, you should contact a manager and the advice of legal counsel may be sought.
 
IX.         International Business
 
Employees who conduct business outside the United States must comply with the specific laws and regulations of the host country.  Any questions concerning specific appropriate international conduct should be directed to an executive officer of the Company or the Company’s outside legal counsel.
 
Employees must comply with U.S. anti-boycott laws that prohibit U.S. citizens and companies from supporting in any way one foreign country's boycott of another foreign country (for example, a boycott of Israel).  In some cases, the mere receipt of a request to participate in a boycott must be reported to the U.S. government.  Failure to report may constitute a legal violation, even if the Employee has refused to participate in the boycott.
 
The Foreign Corrupt Practices Act (the “FCPA”) prohibits the Company and its employees and agents from offering or giving money or any other item of value to win or retain business or to influence any act or decision of any governmental official, political party, candidate for political office or official of a public international organization.  Stated more concisely, the FCPA prohibits the payment of bribes, kickbacks or other inducements to foreign officials.  This prohibition also extends to payments to a sales representative or agent if there is reason to believe that the payment will be used indirectly for a prohibited payment to foreign officials.  Violation of the FCPA is a crime that can result in severe fines and criminal penalties, as well as disciplinary action by the Company, up to and including termination of employment.
 
In some instances, small facilitating or expediting payments to lower level foreign officials, while discouraged by the Company, may be permissible under the FCPA if customary in the country or locality and intended to secure routine governmental action.  Governmental action is “routine” if it is ordinarily and commonly performed by a foreign official and does not involve the exercise of discretion.  To ensure legal compliance, such payments must receive prior approval from an executive officer of the Company who will consult with legal counsel as appropriate and report from time to time to the Audit Committee.  All such payments must be clearly and accurately reported as a business expense.

 

 
 
X.       Disclosure
 
Employees are responsible for ensuring that the disclosure in the Company's periodic reports is full, fair, accurate, timely and understandable.  In doing so, Employees shall take such action as is reasonably appropriate to (I) establish and comply with disclosure controls and procedures and accounting and financial controls that are designed to ensure that material information relating to the Company is made known to them; (ii) confirm that the Company's periodic reports comply with applicable law, rules and regulations; and (iii) ensure that information contained in the Company's periodic reports fairly presents in all material respects the financial condition and results of operations of the Company.
 
Employees will not knowingly (i) make, or permit or direct another to make, materially false or misleading entries in the Company's, or any of its subsidiary's, financial statements or records; (ii)  fail to correct materially false and misleading financial statements or records; (iii) sign, or permit another to sign, a document containing materially false and misleading information; or (iv) falsely respond, or fail to respond, to specific inquiries of the Company's independent  auditor or outside legal counsel.
 
X.            Procedures Regarding Waivers
 
Because of the importance of the matters involved in this Code, waivers will be granted only in limited circumstances and where such circumstances would support a waiver.  Waivers of the Code for the Company’s chief executive officer, chief financial officer, principal accounting officer, controller or directors shall be only made by the Board or its Audit Committee and will be disclosed by the Company to the extent required by law or regulation.
 
XI.         Internal Reporting
 
Employees shall take all appropriate action to stop any known misconduct by fellow Employees or other Company personnel that violate this Code.  Employees shall report any known or suspected misconduct to the Chairman of the Audit Committee or the Company's outside legal counsel.  The Company prohibits retaliation against an Employee who, in good faith, seeks help or reports known or suspected violations.  Any reprisal or retaliation against an Employee because the Employee, in good faith, sought help or filed a report will be subject to disciplinary action, including potential termination of employment.
 
XII.           Audit Committee May Be Contacted Directly and Anonymously
 
Anyone with concerns about accounting, internal accounting controls or auditing matters relating to the Company may contact the Audit Committee directly.  Inquiries or communications intended to be anonymous should be made in writing without indicating your name or address and mailed to the Company’s address, Attention: Chairman of the Audit Committee. Please mark the envelope “Confidential”.

 

 

Exhibit 21.1

 
Subsidiaries of the Company
 
The following is a list of the Company's subsidiaries as of February 26, 2008.
 
Name of Significant
Subsidiary	Jurisdiction o f
Incorporation	Portion of 
Ownership
Interest	 	
 	 	 	 	
Genco Beauty Limited	Marshall Islands	100%	 	
Genco Knight Limited	Marshall Islands	100%	 	
Genco Leader Limited	Marshall Islands	100%	 	
Genco Vigour Limited	Marshall Islands	100%	 	
Genco Trader Limited	Marshall Islands	100%	 	
Genco Prosperity Limited	Marshall Islands	100%	 	
Genco Success Limited	Marshall Islands	100%	 	
Genco Carrier Limited	Marshall Islands	100%	 	
Genco Wisdom Limited	Marshall Islands	100%	 	
Genco Marine Limited	Marshall Islands	100%	 	
Genco Glory Limited	Marshall Islands	100%	 	
Genco Progress Limited	Marshall Islands	100%	 	
Genco Sugar Limited	Marshall Islands	100%	 	
Genco Explorer Limited	Marshall Islands	100%	 	
Genco Pioneer Limited	Marshall Islands	100%	 	
Genco Reliance Limited	Marshall Islands	100%	 	
Genco Ship Management LLC	Delaware	100%	 	
Genco Muse Limited	Marshall Islands	100%	 	
Genco Acheron Limited	Marshall Islands	100%	 	
Genco Commander Limited	Marshall Islands	100%	 	
Genco Surprise Limited	Marshall Islands	100%	 	
Genco Investments LLC	Marshall Islands	100%	 	
Genco Augustus Limited	Marshall Islands	100%	 	
Genco Tiberius Limited	Marshall Islands	100%	 	
Genco London Limited	Marshall Islands	100%	 	
Genco Titus Limited	Marshall Islands	100%	 	
Genco Constantine Limited	Marshall Islands	100%	 	
Genco Hadrian Limited	Marshall Islands	100%	 	
Genco Commodus Limited	Marshall Islands	100%	 	
Genco Maximus Limited	Marshall Islands	100%	 	
Genco Claudius Limited	Marshall Islands	100%	 	
Genco Predator Limited	Marshall Islands	100%	 	
Genco Warrior Limited	Marshall Islands	100%	 	
Genco Hunter Limited	Marshall Islands	100%	 	
Genco Charger Limited	Marshall Islands	100%	 	
Genco Challenger Limited	Marshall Islands	100%	 	
Genco Champion Limited	Marshall Islands	100%	 	

 

 

Exhibit 23.1

 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements No. 333-128936 on Form S-8 and No. 333-140158 on Form S-3 of our reports dated February 29, 2008, relating to the financial statements of Genco Shipping & Trading Limited (the “Company”) and the effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Genco Shipping & Trading Limited for the year ended December 31, 2007.

/s/ DELOITTE & TOUCHE LLP	 	
 	
New York, New York	
February 29, 2008	

 

Exhibit 31.1

CERTIFICATION OF THE PRESIDENT

I, Robert Gerald Buchanan, certify that:

1.  	I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2007 of Genco Shipping & Trading Limited;	
 
2.  	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 
3.  	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 
4.  	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

(a)  	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
(b)  	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
(c)  	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

(d)  	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	
 
5.  	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	

(a)  	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	
 
(b)  	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

 	
 	/s/ Robert Gerald Buchanan	 	
 	Name: Robert Gerald Buchanan	
Date:	February 29, 2008	 	Title:   President	

 

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, John C. Wobensmith, certify that:

1.  	I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2007 of Genco Shipping & Trading Limited;	
 
2.  	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 
3.  	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 
4.  	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 
(a)  	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
(b)  	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
(c)  	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
(d)  	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	
 
5.  	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	
 
(a)  	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	
 
(b)  	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

 	/s/  John C. Wobensmith                       	 	
 	Name: John C. Wobensmith	
Date:	February 29, 2008	 	Title:   Chief Financial Officer, Secretary & Treasurer	

 

Exhibit 32.1

President Certification  

In connection with Genco Shipping & Trading Limited's (the “Company”) annual report of on Form 10-K for fiscal year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned President of the Company, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 
(2)  	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

 	 	 	
Date: February 29, 2008	 	/s/ Robert Gerald Buchanan	 	
 	 	Name: Robert Gerald Buchanan	
 	 	Title:   President	

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

 

Exhibit 32.2

Chief Financial Officer Certification  

In connection with Genco Shipping & Trading Limited's (the “Company”) annual report of on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 
(2)  	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

 	 	 	
Date: February 29, 2008	 	/s/ John C. Wobensmith  	 	
 	 	Name: John C. Wobensmith	
 	 	Title:   Chief Financial Officer, Secretary & Treasurer	

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.