Table of Contents
ce

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2019
or
☐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 001-33393
 
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
incorporation or organization	 	(I.R.S. Employer
Identification No.)	
299 Park Avenue, 12th Floor, New York, New York	 	10171	
(Address of principal executive offices)	 	 (Zip Code)	
Registrant’s telephone number, including area code: (646) 443-8550
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
 	
Common Stock, par value $.01 per share
 	GNK	New York Stock Exchange

       Securities 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 ☐ No ☒
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 ☐ No ☒
Indicate by check mark 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	 	Accelerated filer ☒	
 	 	 	
Non-accelerated filer  ☐	 	Smaller reporting company ☒	
 	 	Emerging growth company ☐	
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
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 $8.44 per share as of June 28, 2019 was approximately $129.6 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 27, 2020 was 41,754,413 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Proxy Statement for the 2019 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2019, are incorporated by reference in Part III herein.

Table of Contents

Website Information
 
We intend to use our website, www.GencoShipping.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor section. Accordingly, investors should monitor the Investor portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please submit your e-mail address at the Investor Relations Home page of the Investor section of our website. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

i

Table of Contents

PART I
 
ITEM 1. BUSINESS
 
OVERVIEW
 
General
 
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 through the ownership and operation of drybulk carrier vessels.  Our fleet currently consists of 54 drybulk carriers, including 17 Capesize drybulk carriers, one Panamax drybulk carriers, six Ultramax drybulk carriers, 20 Supramax drybulk carriers, and 10 Handysize drybulk carriers, with an aggregate carrying capacity of approximately 4,914,000 deadweight tons (“dwt”).  The average age of our current fleet is approximately 9.7 years.  All of the vessels in our fleet were built in shipyards with reputations for constructing high-quality vessels.  Of the vessels in our fleet, 30 are currently on spot market voyage charters, 20 are on fixed-rate time charter contracts and we are currently time chartering-in five third party vessels. 
 
See pages 7 - 8 for a table of our current fleet.
 
In 2017, we began implementing initiatives to expand our commercial platform and more actively manage the employment of our vessels.  We hired commercial directors for our major bulk and minor bulk fleets and began employment of our vessels directly with cargo owners under cargo contracts.  To better capitalize on opportunities to employ our vessels, we expanded our global commercial presence with the establishment of new offices in Singapore and Copenhagen.  Additionally, we withdrew all of our vessels from their respective pools and reallocated our freight exposure to the Atlantic basin to seek to capture the earnings premium historically offered.  Overall, our fleet deployment strategy remains weighted towards short-term fixtures, which provide optionality in a potentially rising freight rate environment.  In addition to both short and long-term time charters, we fix our vessels on spot market voyage charters as well as spot market-related time charters depending on market conditions and management’s outlook.
 
Over the course of 2018, the United States imposed a series of tariffs on several goods imported from various countries. Certain of these countries, including China, undertook retaliatory actions by implementing tariffs on select U.S. products. Most notably in terms of drybulk trade volumes is China’s tariff placed upon U.S. soybean exports, which could adversely affect drybulk rates. To date, our observation of trade flows has been that China has increased its market share of Brazilian and Argentine soybeans, while a portion of U.S. shipments have been re-directed to other destinations such as Latin America and Europe.  With the signing of the “phase one” trade agreement between China and the U.S. in January 2020, China has agreed in principle to purchase meaningful quantities of soybeans from the U.S.  However, a re-escalation of protectionist measures taken between these countries or other could lead to reduced volumes of drybulk trade.
 
In 2017, we began a fleet renewal program to modernize our fleet by replacing older vessels with newer vessels having greater fuel efficiency and other improved specifications.  Please see below under “Vessel Sales” and “Vessel Acquisitions” for further details. We have determined to expand our previously announced fleet renewal plan aimed at modernizing our fleet.  In addition to the fifteen original vessel designated to be sold under the plan, we have determined to pursue the sale of ten Handysize vessels that were not already part of the plan and are viewed as non-core vessels within our fleet.  Given this decision, as the estimated future undiscounted cash flows for each of these vessels did not exceed their net book values, we will be adjusting the values of these ten vessels to their respective market values during the first quarter of 2020.  We therefore anticipate a non-cash impairment charge in the range of $79 million to $85 million in the first quarter of 2020.  
 
We report financial information and evaluate our operations by charter revenues and not by the length of ship employment for our customers, i.e., spot or time charters.  Each of our vessels serves the same type of customer, has similar operations and maintenance requirements, operates in the same regulatory environment, and is subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment in which we are

1

Table of Contents
engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. 
 
Our management team and our other employees are responsible for the commercial and strategic management of our fleet.  Commercial management includes the negotiation of employment for vessels, managing the mix of various types of employment, such as time charters, spot market voyage charters and spot market-related time charters, and monitoring the performance of our vessels under their employment.  Strategic management includes locating, purchasing, financing and selling vessels.  We currently contract with two 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.
 
Scrubbers
 
On October 27, 2016, the Marine Environment Protection Committee (“MEPC”) announced the ratification of regulations mandating reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020 rather than pushing the deadline back to 2025. Accordingly, ships now have to reduce sulfur emissions, for which the principal solutions are the use of exhaust gas cleaning systems (“scrubbers”) or buying fuel with low sulfur content. If a vessel is not retrofitted with a scrubber, it will need to use low sulfur fuel, which is currently more expensive than standard marine fuel containing 3.5% sulfur content.  This increased demand for low sulfur fuel has resulted in an increase in prices for such fuel and may result in additional increases. 
 
We have installed scrubbers on our 17 Capesize vessels, 16 of which were completed during 2019 and one of which was completed in January 2020.  The remainder of our fleet has begun consuming compliant, low sulfur fuel beginning in 2020, although we intend to continue to evaluate other options.  During the course of 2018, we sold seven of our older, less fuel efficient vessels and purchased six modern high specification vessels with a goal of improving fuel consumption and further reduce emissions.  We also sold four additional vessels during the course of 2019 as well as one vessel during February 2020 and will continue to seek opportunities to renew our fleet going forward.    
 
Vessel Sales
 
During 2019, we completed the sale of four vessels, one of which was classified as held for sale as of December 31, 2018.  During 2018, we completed the sale of seven vessels that were part of our previously announced fleet renewal program. 
 
Vessel Acquisitions
 
On July 12, 2018, we entered into agreements to purchase two modern, high specification Capesize drybulk vessels for an aggregate purchase price of $98.0 million.  These vessels were renamed the Genco Defender and the Genco Liberty (both 2016-built Capesize vessels) and were delivered during the third quarter of 2018.  We utilized a combination of cash on hand and proceeds from the $108 Million Credit Facility as described below under “Credit Facilities.”
 
On June 6, 2018, we entered into an agreement for the en bloc purchase of four drybulk vessels, including two Capesize drybulk vessels and two Ultramax drybulk vessels for approximately $141.0 million.  Each vessel was built with a fuel-saving “eco” engine.  These vessels were renamed the Genco Weatherly (2014-built Ultramax vessel), the Genco Columbia (2016-built Ultramax vessel), the Genco Endeavour (2015-built Capesize vessel) and the Genco Resolute (2015-built Capesize vessel) and were delivered during the third quarter of 2018. The Company utilized a combination of cash on hand and proceeds from the $108 Million Credit Facility as described below under “Credit Facilities.”
Credit Facilities

2

Table of Contents

On May 31, 2018, we entered into a five-year $460 million senior secured credit facility.   On June 5, 2018, proceeds of $460.0 million from this facility were used, together with cash on hand, to refinance all of our prior credit facilities (the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities as defined in Note 7 – Debt of our Consolidated Financial Statements) into one facility, and pay down the debt of seven of the Company’s oldest vessels, which have been identified for sale. The mandated lead arrangers and bookrunners for this facility are Nordea Bank AB (publ), New York Branch (“Nordea”), Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S. 
 
On February 28, 2019, we entered into an Amendment and Restatement Agreement for this facility (the “$495 Million Credit Facility”) to provide an additional tranche of up to $35.0 million to cover a portion of the expenses related to the acquisition and installation of scrubbers on our 17 Capesize vessels.  Borrowings under the $35.0 million tranche will bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent on total net indebtedness to consolidated EBITDA for the preceding four calendar quarters.   Nordea, Skandinaviska Enskilda Banken AB (publ), Crédit Agricole Corporate & Investment Bank and Danish Ship Finance A/S are the lenders for the additional tranche. 
 
On August 14, 2018, we entered into a five-year senior secured credit facility (the “$108 Million Credit Facility”) with Crédit Agricole Corporate & Investment Bank.  We have used proceeds from the $108 Million Credit Facility to finance a portion of the purchase price for the six vessels, as identified above under “Vessel Acquisitions,” which were delivered during the third quarter of 2018 and serve as collateral under the $108 Million Credit Facility.  
 
Equity Offering
 
On June 19, 2018, we closed an equity offering of 7,015,000 shares of common stock at an offering price of $16.50 per share.  We received net proceeds of approximately $109.6 million after deducting underwriters’ discounts and commissions and other expenses.  We used the net proceeds to finance a portion of the purchase price for the two Capesize and two Ultramax vessels that we acquired during the third quarter of 2018 as identified above under “Vessel Acquisitions.”   
 
AVAILABLE INFORMATION
 
We file annual, quarterly and current reports, proxy statements, and other documents with the SEC, under the Securities Exchange Act of 1934, or the Exchange Act.  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 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.  No information on our company website is incorporated by reference into this annual report on Form 10-K.
 
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, 12th Floor
New York, NY 10171

3

Table of Contents

BUSINESS STRATEGY
 
Our strategy is to manage and expand our fleet in a manner that maximizes our cash flows from operations.  To accomplish this objective, we intend to:
 
	·		Continue to operate a high-quality fleet — We intend to maintain a modern, high-quality fleet that 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.	
 
	·		Utilize an active commercial strategy — Our current fleet of 54 drybulk vessels concentrates on the transportation of major and minor bulk commodities globally.  Historically, Genco has employed its fleet mostly through time charter contracts as well as pooling arrangements.  In 2017, the Company made a strategic decision to augment its existing in-house commercial operating platform shifting to an active commercial approach as compared to the previous tonnage provider model in order to improve margins and grow our network of customers.  We expanded our presence globally with the establishment of offices in Singapore and Copenhagen in addition to our corporate headquarters in New York.  As a result of this strategic shift, we have been fixing an increasing number of vessels on spot market voyage charters, where we provide a vessel for the transportation of goods between a load port and discharge port at a specified per-ton or on a lump sum basis, as well as on contracts of affreightment directly with cargo providers.   We believe that our active platform provides added flexibility to changing market conditions and improves operational efficiencies within our owned fleet.  Furthermore, we also assess arbitrage opportunities on cargoes through utilizing vessel positions by time chartering-in third party vessels and/or reletting cargo commitments on a voyage basis. In addition to these options, we continue to fix our vessels on both short and medium-term time charters, as well as spot market-related time charters, depending on market conditions and outlook.  Overall, our fleet deployment strategy is currently weighted towards short-term fixtures which provide optionality for the Company.  We continuously monitor the drybulk market and may in the future pursue other market opportunities for our vessels to capitalize on market conditions, including arranging longer charter periods and entering into vessel pools.	
 
	·		Strategically expand the size of our fleet — We may acquire additional modern, high-quality, fuel-efficient drybulk vessels through timely and selective acquisitions in a manner that is accretive to our cash flows.  If we make such acquisitions, we may consider additional debt or equity financing alternatives.	
 
	·		Maintain low-cost, highly efficient operations — We currently outsource technical management of our fleet to Wallem Shipmanagement Limited (“Wallem”) and Anglo-Eastern Group (“Anglo”), third party independent technical managers.  Our management team actively monitors and controls vessel operating expenses incurred by the independent technical managers by overseeing their activities.  We also seek to maintain low-cost, highly efficient operations by capitalizing on the cost savings and economies of scale that result from operating sister ships. In the future, we may explore opportunities to outsource to other third party independent technical managers, as well as providing in-house technical management for our vessels.	
 
	·		Capitalize on our management team’s reputation — We seek to capitalize on our management team’s reputation for high standards of performance, reliability and safety, and maintain strong relationships with major international charterers and cargo providers, 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 vendors, as well as financial institutions, many of which consider reputation to be an indicator of creditworthiness.	

4

Table of Contents

OUR FLEET
 
The table below summarizes the characteristics of our vessels that have been delivered to us that are currently in our fleet:

Vessel	    	Class	    	Dwt	    	Year Built	 	
 	 	 	 	 	 	 	 	
Genco Augustus	 	Capesize	 	180,151	 	
2007	 	
Genco Claudius	 	Capesize	 	169,001	 	
2010	 	
Genco Constantine	 	Capesize	 	180,183	 	
2008	 	
Genco Commodus	 	Capesize	 	169,098	 	
2009	 	
Genco Hadrian	 	Capesize	 	169,025	 	
2008	 	
Genco London	 	Capesize	 	177,833	 	
2007	 	
Genco Maximus	 	Capesize	 	169,025	 	
2009	 	
Genco Tiberius	 	Capesize	 	175,874	 	
2007	 	
Genco Tiger	 	Capesize	 	179,185	 	
2011	 	
Genco Titus	 	Capesize	 	177,729	 	
2007	 	
Baltic Bear	 	Capesize	 	177,717	 	
2010	 	
Baltic Lion	 	Capesize	 	179,185	 	
2012	 	
Baltic Wolf	 	Capesize	 	177,752	 	
2010	 	
Genco Endeavour	 	Capesize	 	181,060	 	
2015	 	
Genco Resolute	 	Capesize	 	181,060	 	
2015	 	
Genco Defender	 	Capesize	 	180,021	 	
2016	 	
Genco Liberty	 	Capesize	 	180,032	 	
2016	 	
Genco Thunder	 	Panamax	 	76,588	 	
2007	 	
Baltic Hornet	 	Ultramax	 	63,574	 	
2014	 	
Baltic Wasp	 	Ultramax	 	63,389	 	
2015	 	
Baltic Scorpion	 	Ultramax	 	63,462	 	
2015	 	
Baltic Mantis	 	Ultramax	 	63,470	 	
2015	 	
Genco Weatherly	 	Ultramax	 	61,556	 	
2014	 	
Genco Columbia	 	Ultramax	 	60,294	 	
2016	 	
Genco Aquitaine	 	Supramax	 	57,981	 	
2009	 	
Genco Ardennes	 	Supramax	 	58,018	 	
2009	 	
Genco Auvergne	 	Supramax	 	58,020	 	
2009	 	
Genco Bourgogne	 	Supramax	 	58,018	 	
2010	 	
Genco Brittany	 	Supramax	 	58,018	 	
2010	 	
Genco Hunter	 	Supramax	 	58,729	 	
2007	 	
Genco Languedoc	 	Supramax	 	58,018	 	
2010	 	
Genco Loire	 	Supramax	 	53,430	 	
2009	 	
Genco Lorraine	 	Supramax	 	53,417	 	
2009	 	
Genco Normandy	 	Supramax	 	53,596	 	
2007	 	
Genco Picardy	 	Supramax	 	55,257	 	
2005	 	
Genco Predator	 	Supramax	 	55,407	 	
2005	 	
Genco Provence	 	Supramax	 	55,317	 	
2004	 	
Genco Pyrenees	 	Supramax	 	58,018	 	
2010	 	
Genco Rhone	 	Supramax	 	58,018	 	
2011	 	
Genco Warrior	 	Supramax	 	55,435	 	
2005	 	
Baltic Cougar	 	Supramax	 	53,432	 	
2009	 	
Baltic Jaguar	 	Supramax	 	53,473	 	
2009	 	

5

Table of Contents

Vessel	    	Class	    	Dwt	    	Year Built	 	

Baltic Leopard	 	Supramax	 	53,446	 	
2009	 	
Baltic Panther	 	Supramax	 	53,350	 	
2009	 	
Genco Avra	 	Handysize	 	34,391	 	
2011	 	
Genco Bay	 	Handysize	 	34,296	 	
2010	 	
Genco Mare	 	Handysize	 	34,428	 	
2011	 	
Genco Ocean	 	Handysize	 	34,409	 	
2010	 	
Genco Spirit	 	Handysize	 	34,432	 	
2011	 	
Baltic Breeze	 	Handysize	 	34,386	 	
2010	 	
Baltic Cove	 	Handysize	 	34,403	 	
2010	 	
Baltic Fox	 	Handysize	 	31,883	 	
2010	 	
Baltic Hare	 	Handysize	 	31,887	 	
2009	 	
Baltic Wind	 	Handysize	 	34,408	 	
2009	 	
 
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, spot market voyage charters, vessel pools and spot market-related time 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, Wallem and Anglo, for the technical management of our fleet.  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 and Anglo, founded in 1974, are among 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 850 vessels of all types, including Capesize, Panamax, Ultramax, 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;	
 
	·		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.	

6

Table of Contents

OUR CHARTERS
 
As of February 25, 2020, we employed 30 of our vessels on spot market voyage charters where we provide a vessel for the transportation of goods between a load port and discharge port at a specified per-ton or on a lump sum basis.  Under spot market voyage charters, voyage expenses such as fuel and port charges are borne by us.  Additionally, as of February 25, 2020, we employed 20 of our vessels under fixed-rate 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 the owner of the vessel and bears all voyage expenses, including the cost of bunkers (fuel), port expenses, agents’ fees and canal dues.  Lastly, as of February 25, 2020, none of our vessels were fixed under spot market-related time charters.  Spot market-related time charters are time charters with rates based on published Baltic Indices.  These types of charters are similar to time charters with the exception of having a variable rate over the term of the time charter agreement.  As such, the revenue earned by these vessels is subject to the fluctuations of the spot market.  Additionally, as of February 25, 2020, we were chartering in five third party vessels.
 
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.
 
For the vessels that we employ on time charters and spot market-related time charters, agreements expire within a range of dates (for example, a minimum of 4 months and maximum of 6 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 generally ranging from 1.25% to 6.25% of the total daily charterhire rate of each charter or total freight revenue 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 time and duration of employment for our vessels according to market conditions as they become available for hire.
 
The following table sets forth information about the current employment of the vessels in our fleet as of February 25, 2020: 

 	  	Year	  	Charter	  	 	 	
Vessel	    	Built	    	Expiration(1)	    	Cash Daily Rate(2)	 	
 	 	 	 	 	 	 	 	
Capesize Vessels	 	 	 	 	 	 	 	
Genco Augustus	 	2007	 	May 2020	 	Voyage	 	
Genco Tiberius	 	2007	 	March 2020	 	Voyage	 	
Genco London	 	2007	 	March 2020	 	Voyage	 	
Genco Titus	 	2007	 	April 2020	 	Voyage	 	
Genco Constantine	 	2008	 	April 2020	 	Voyage	 	
Genco Hadrian	 	2008	 	March 2020	 	Voyage	 	
Genco Commodus	 	2009	 	March 2020	 	Voyage	 	
Genco Maximus	 	2009	 	March 2020	 	Voyage	 	
Genco Claudius	 	2010	 	March 2020	 	$9,500	 	
Genco Tiger	 	2011	 	April 2020	 	Voyage	 	
Baltic Lion	 	2012	 	April 2020	 	Voyage	 	
Baltic Bear	 	2010	 	March 2020	 	Voyage	 	
Baltic Wolf	 	2010	 	May 2020	 	Voyage	 	
Genco Resolute	 	2015	 	March 2020	 	Voyage	 	
Genco Endeavour	 	2015	 	April 2020	 	Voyage	 	
Genco Defender	 	2016	 	February 2020	 	Voyage	 	
Genco Liberty	 	2016	 	February 2020	 	Voyage	 	

7

Table of Contents

 	  	Year	  	Charter	  	 	 	
Vessel	    	Built	    	Expiration(1)	    	Cash Daily Rate(2)	 	

Panamax Vessels	 	 	 	 	 	 	 	
Genco Thunder	 	2007	 	March 2020	 	$10,000	 	
 	 	 	 	 	 	 	 	
Ultramax Vessels	 	 	 	 	 	 	 	
Baltic Hornet	 	2014	 	May 2020	 	$1,150	 	
Baltic Wasp	 	2015	 	February 2020	 	$7,100	 	
Baltic Scorpion	 	2015	 	April 2020	 	Voyage	 	
Baltic Mantis	 	2015	 	April 2020	 	Voyage	 	
Genco Weatherly	 	2014	 	April 2020	 	Voyage	 	
Genco Columbia	 	2016	 	April 2020	 	$6,000	 	
 	 	 	 	 	 	 	 	
Supramax Vessels	 	 	 	 	 	 	 	
Genco Predator	 	2005	 	May 2020	 	$17,500	 	
Genco Warrior	 	2005	 	April 2020	 	$9,000	 	
Genco Hunter	 	2007	 	March 2020	 	Voyage	 	
Genco Lorraine	 	2009	 	March 2020	 	$9,500	 	
Genco Loire	 	2009	 	March 2020	 	Voyage	 	
Genco Aquitaine	 	2009	 	March 2020	 	Voyage	 	
Genco Ardennes	 	2009	 	March 2020	 	Voyage	 	
Genco Auvergne	 	2009	 	February 2020	 	$19,750	 	
Genco Bourgogne	 	2010	 	March 2020	 	$8,050	 	
Genco Brittany	 	2010	 	February 2020	 	$1,750	 	
Genco Languedoc	 	2010	 	March 2020	 	Voyage	 	
Genco Normandy	 	2007	 	February 2020	 	Voyage	 	
Genco Picardy	 	2005	 	February 2020	 	Voyage	 	
Genco Provence	 	2004	 	April 2020	 	$3,000	 	
Genco Pyrenees	 	2010	 	March 2020	 	$4,000	 	
Genco Rhone	 	2011	 	March 2020	 	Voyage	 	
Baltic Leopard	 	2009	 	March 2020	 	$9,000	 	
Baltic Panther	 	2009	 	March 2020	 	$11,250	 	
Baltic Jaguar	 	2009	 	March 2020	 	Voyage	 	
Baltic Cougar	 	2009	 	March 2020	 	Voyage	 	
 	 	 	 	 	 	 	 	
Handysize Vessels	 	 	 	 	 	 	 	
Baltic Hare	 	2009	 	March 2020	 	$7,000	 	
Baltic Fox	 	2010	 	April 2020	 	$3,000	 	
Baltic Wind	 	2009	 	March 2020	 	$6,000	 	
Baltic Cove	 	2010	 	March 2020	 	Voyage	 	
Baltic Breeze	 	2010	 	February 2020	 	$6,000	 	
Genco Ocean	 	2010	 	April 2020	 	Voyage	 	
Genco Bay	 	2010	 	March 2020	 	Voyage	 	
Genco Avra	 	2011	 	April 2020	 	$10,000	 	
Genco Mare	 	2011	 	March 2020	 	$10,500	 	
Genco Spirit	 	2011	 	April 2020	 	$10,500	 	

	(1)		The charter expiration dates presented represent the earliest dates that our charters may be terminated in the ordinary course. Under the terms of certain contracts, the charterer is entitled to extend the time charter from two to four months in order to complete the vessel's final voyage plus any time the vessel has been off-hire.	
 
	(2)		Time charter rates presented are the gross daily charterhire rates before third party brokerage commission generally ranging from 1.25% to 6.25%. In a time charter, the charterer is responsible for voyage expenses such as bunkers, port expenses, agents’ fees and canal dues.	
 
CLASSIFICATION AND INSPECTION
 
All of our vessels have been certified as being “in class” by the American Bureau of Shipping (“ABS”), DNVGL or Lloyd’s Register of Shipping (“Lloyd’s”).  Each of these classification societies is a member of the

8

Table of Contents
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 36 months for inspection of the underwater portions of the vessel and for necessary repairs stemming from the inspection.
 
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 and safety management certificates for all of our vessels, which are required by the IMO.
 
CREWING AND EMPLOYEES
 
Each of our vessels is crewed with 21 to 24 officers and seamen.  We do not provide any seaborne personnel to crew our vessels.  Instead, 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.  Our vessels are typically manned 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.
 
We currently employ approximately 40 shore-based personnel, including in our Singapore and Copenhagen offices.  In addition, approximately 1,215 seagoing personnel are employed 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 Rio Tinto Shipping (Asia) Pte. Ltd., Cargill International S.A., Gavilon Grain LLC, BHP, FMG International Pte Ltd, ADMIntermare, a division of ADM International Sarl, and Vale International S.A.  For the year ended December 31, 2019,  no customer accounted for more than 10% of our voyage revenue.  
 
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, Ultramax, Supramax 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 2,100 independent drybulk carrier owners.

9

Table of Contents

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.
 
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, piracy, 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 (“U.S.”) 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.  Additionally, an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition and results of operations.
 
Hull and Machinery, War Risks, Kidnap and Ransom Insurance
 
We maintain marine hull and machinery, war risks and kidnap and ransom 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, which depend primarily on the class of the insured vessel and are subject to change.  We are covered, subject to limitations in our policy, to have the crew released in the case of kidnapping due to piracy in the Gulf of Aden off the coast of Somalia and the Gulf of Guinea.
 
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.
 
We maintain protection and indemnity insurance coverage for pollution of $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.  The International Group’s website states that the pool provides a mechanism for sharing all claims in excess of $10 million up to, currently, approximately $8.2 billion.  We are a member of P&I Associations, which are members of the International Group. As a result, we are subject to calls payable to the associations based on the group’s claim records as

10

Table of Contents
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 REGULATIONS 
Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or 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. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications, procurement of specialized fuels and implementation of certain operating procedures.
A variety of government 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 (“USCG”), harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.
Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. 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 frequently change and may impose increasingly stricter requirements, we cannot predict our ability to comply and 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 causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.
As one of the largest drybulk shipping companies in the world, we recognize the need to operate a safe, responsible and sustainable business built for the long term.  We regularly integrate Environmental, Social and Governance (ESG) practices into our operational and strategic decision making. As such, we aim to meet and, if possible and appropriate for our business, exceed minimum compliance levels set forth in rules and regulations governing the maritime industry, including certain rules and regulations described below.
 Over the last several years, we have taken various steps to reduce our carbon footprint and improve the environment, including through investments made to our fleet. Specifically, we have:

	·		Purchased modern, fuel-efficient vessels with lower overall fuel consumption than older vessels in order to reduce our fleet’s greenhouse gas emissions;	
	·		Divested of certain older, less fuel-efficient vessels	
	·		Installed fuel-saving equipment on board 30 of our vessels, including the installation of Mewis Ducts on 19 of our vessels to reduce the fuel consumption of these vessels;	
	·		Installed performance-monitoring systems on board 30 of our vessels to gather real-time fuel consumption data to optimize the voyage efficiency of these vessels;	

11

Table of Contents

	·		Utilized a third-party data collection platform that analyzes information from our vessels in an effort to reduce fuel consumption, CO2 and greenhouse gas emissions;	
	·		Established and executed a compliance program regarding IMO 2020 fuel regulations (as described below);	
	·		Ballast water treatment systems are installed in 28 vessels in our fleet, representing approximately 52% of our current fleet; and	
	·		Partnered with a third-party firm to conduct internal audits of our vessels with a goal of identifying areas of potential improvement on the daily maintenance and operation of our vessels in order to improve the quality of the services our vessels provide and to mitigate operational risks.	
	·		Installation of Engine Power Limitation (EPL) systems on certain major bulk vessels to increase the level of energy efficiency by ensuring the ship’s engine power is maintained within optimal levels.	
International Maritime Organization (IMO)
The International Maritime Organization, the United Nations agency for maritime safety and the prevention of pollution by vessels (the “IMO”), has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as “MARPOL,” the International Convention for the Safety of Life at Sea of 1974 (“SOLAS Convention”), and the International Convention on Load Lines of 1966 (the “LL Convention”). MARPOL 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.  MARPOL is applicable to drybulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020.
In 2013, the IMO’s Marine Environmental Protection Committee, or the “MEPC,” adopted a resolution amending MARPOL Annex I Condition Assessment Scheme, or “CAS.” These amendments became effective on October 1, 2014, and require compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers, or “ESP Code,” which provides for enhanced inspection programs. We may need to make certain financial expenditures to comply with these amendments, which could be significant.
Air Emissions
In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks, and the shipboard incineration of specific substances. 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, as explained below.  Emissions of “volatile organic compounds” from certain vessels, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also prohibited.  We believe that all our vessels are currently compliant in all material respects with these regulations.
The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into force on July 1, 2010.  The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. On October 27, 2016, at its 70th session, the MEPC agreed to implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020.  This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems.  Ships are now required to obtain bunker delivery notes and International Air Pollution Prevention (“IAPP”) Certificates from their flag states that specify sulfur content.  Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% Sulphur on ships were adopted and will take effect March 1, 2020, with the exception of vessels

12

Table of Contents
fitted with exhaust gas cleaning equipment (“scrubbers”) which can carry fuel of higher sulfur content.  These regulations subject ocean-going vessels to stringent emissions controls, and may cause us to incur substantial costs, including those related to the purchase, installation and operation of scrubbers and the purchase of compliant fuel oil.
Sulfur content standards are even stricter within certain “Emission Control Areas,” or (“ECAs”). As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Amended Annex VI establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portions of the Baltic Sea area, North Sea area, North American area and United States Caribbean area.  Ocean-going vessels in these areas will be subject to stringent emission controls and may cause us to incur additional costs. Certain ports in which our vessels call, including China and Singapore, are currently or may become subject to local regulations that impose stricter emission controls.  If other ECAs are approved by the IMO, or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency (“EPA”) or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.  Refer to “Capital Expenditures” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and “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” in Item 1A. Risk Factors for further details of our plan for compliance and potential costs.
Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. At the MEPC meeting held from March to April 2014, amendments to Annex VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect.  Under the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1, 2016.  Tier III requirements could apply to areas that will be designated for Tier III NOx in the future. At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010 and we are compliant with the Tier I and Tier II requirements for NOx emissions under the EPA standards and Annex VI.  We do not currently own any vessels subject to the Tier III requirements, although we may acquire such vessels in the future.  As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.
As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection commencing on January 1, 2019.  The IMO intends to use such data as the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.
As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship Energy Efficiency Management Plans (“SEEMPS”), and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index (“EEDI”).  Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014.
We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.
 
Safety Management System Requirements
The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills.  The Convention of Limitation of Liability for Maritime Claims (the “LLMC”) sets limitations of liability for a

13

Table of Contents
loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.
Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (the “ISM Code”), our operations are also subject to environmental standards and requirements. 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 management team have developed for compliance with the ISM Code. The failure of a vessel 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.
The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. Our technical managers have valid documents of compliance for our offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The document of compliance and safety management certificate are renewed as required.
Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code (“IMDG Code”). Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods, and (3) new mandatory training requirements.  Amendments that took effect on January 1, 2020, also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provision regarding IMO type 9 tank, (2) new abbreviations for segregations groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas.
The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (“STCW”).  As of February 2017, all seafarers are required to meet the STCW standards and be in possession of a valid STCW certificate.  Flag states that have ratified SOLAS and STCW generally employ the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.
The IMO's Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the “Polar Code”). The Polar Code, which entered into force on January 1, 2017, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution prevention as well as recommendatory provisions.  The Polar Code applies to new ships constructed after January 1, 2017, and after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.
Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. For example, cyber-risk management systems must be incorporated by ship-owners and managers by 2021. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures.  The impact of such regulations is hard to predict at this time.

14

Table of Contents

Pollution Control and Liability Requirements
The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”) in 2004. The BWM Convention entered into force on September 8, 2017.  The BWM Convention requires ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments.  The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.  
On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of BWM Convention so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention.  This, in effect, makes all vessels delivered before the entry into force date “existing vessels” and allows for the installation of ballast water management systems on such vessels at the first International Oil Pollution Prevention (IOPP) renewal survey following entry into force of the convention. The MEPC adopted updated guidelines for approval of ballast water management systems (G8) at MEPC 70. At MEPC 71, the schedule regarding the BWM Convention’s implementation dates was also discussed and amendments were introduced to extend the date existing vessels are subject to certain ballast water standards.  Those changes were adopted at MEPC 72.  Ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters.  The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing vessels must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms.  Ballast water management systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3).  As of October 13, 2019, MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water Management Systems, which governs assessment of ballast water management systems, mandatory rather than permissive, and formalized an implementation schedule for the D-2 standard.  Under these amendments, all ships must meet the D-2 standard by September 8, 2024.
Once mid-ocean ballast exchange ballast water treatment requirements become mandatory under the BWM Convention, the cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements.  The system specification requirements for trading in the U.S. have been formalized and we have been installing ballast water treatment systems on our vessels as their special survey deadlines come due.  These ballast water treatment systems range in cost from $0.5 million to $0.9 million each, primarily dependent on the size of the vessel.  Refer to “Capital Expenditures” section for further information.
The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols in 1976, 1984, and 1992, and amended in 2000 (the “CLC”). Under the CLC 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 may be strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions.  The 1992 Protocol changed certain limits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights. The limits on liability have since been amended so that the compensation limits on liability were raised.  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 act or omission where the shipowner knew pollution damage would probably result.  The CLC requires ships over 2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident. We have protection and indemnity insurance for environmental incidents.   P&I Clubs in the International Group issue the required Bunkers Convention “Blue Cards” to enable

15

Table of Contents
signatory states to issue certificates. All of our vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force.
The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC).  With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur. 
Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such as the United States where the CLC or the Bunker Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.
Anti-Fouling Requirements
 
In 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or the “Anti‑fouling Convention.” The Anti‑fouling Convention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. The exteriors of vessels constructed prior to January 1, 2003 that have not been in drydock must, as of September 17, 2008, either not contain the prohibited compounds or have coatings applied to the vessel exterior that act as a barrier to the leaching of the prohibited compounds.  Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an International Anti‑fouling System Certificate is issued for the first time; and subsequent surveys when the anti‑fouling systems are altered or replaced We have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.
Compliance Enforcement
Noncompliance with the ISM Code or other IMO regulations may subject the ship owner 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 USCG and European Union authorities have indicated that vessels not in compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. 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 certificates will be maintained in the future.  The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.
United States Regulations
The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act
The U.S. Oil Pollution Act of 1990 (“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 or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200 nautical mile exclusive economic zone around the U.S.  The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA

16

Table of Contents
both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel.  Both OPA and CERCLA impact our operations.
Under OPA, vessel owners and operators 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, including bunkers (fuel).  OPA defines these other damages broadly to include:

	i.		injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;	
	ii.		injury to, or economic losses resulting from, the destruction of real and personal property;	
	iii.		loss of subsistence use of natural resources that are injured, destroyed or lost;	
	iv.		net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;	
	v.		lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and	
	vi.		net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.	
OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs.  Effective November 12, 2019, the USCG adjusted the limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,200 per gross ton or $997,100 (subject to periodic adjustment for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party's gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.
CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations.  The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law.  OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives and statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling, and a pilot

17

Table of Contents
inspection program for offshore facilities.  However, several of these initiatives and regulations have been or may be revised.  For example, the U.S. Bureau of Safety and Environmental Enforcement’s (“BSEE”) revised Production Safety Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR.  Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms regarding the safety of drilling operations, and the U.S. President has proposed leasing new sections of U.S. waters to oil and gas companies for offshore drilling.  The effects of these changes and proposals are currently unknown.  Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our business. 
OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills.  Many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance.  These laws may be more stringent than U.S. federal law.  Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws. We intend to comply with all applicable state regulations in the ports where our vessels call.
While we do not carry oil as cargo, we do carry fuel and lube oil in our drybulk carriers.  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 a material adverse effect on our business, financial condition, and results of operations, cash flows, and ability to pay dividends.
Other United States Environmental Regulations
The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants.  The CAA requires states to adopt State Implementation Plans, or SIPs, some of which regulate emissions resulting from vessel loading and unloading operations which may affect our vessels.
The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly-issued permit or exemption, 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.  In 2015, the EPA expanded the definition of “waters of the United States” (“WOTUS”), thereby expanding federal authority under the CWA.  Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of “waters of the United States.”  The proposed rule was published in the Federal Register on February 14, 2019, and was subject to public comment.  On October 22, 2019, the agencies published a final rule repealing the 2015 Rule.  The final rule became effective on December 23, 2019.  On January 23, 2020, the EPA published the “Navigable Waters Protection Rule,” which replaces the rule published on October 22, 2019, and redefines “waters of the United States.”  The effect of this rule is currently unknown.
The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels from entering U.S. Waters.  The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018 and replaces the 2013 Vessel General Permit (“VGP”) program (which authorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in U.S. waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species Act (“NISA”), such as mid-ocean

18

Table of Contents
ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters.  VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean Water Act (CWA), requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation, compliance, and enforcement regulations within two years of EPA’s promulgation of standards.  Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballast water treatment remain in force and effect until the EPA and U.S. Coast Guard regulations are finalized.  Non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent (“NOI”) or retention of a PARI form and submission of annual reports. We have submitted NOIs for our vessels where required.   Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters. 
European Union Regulations
In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.  Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses. 
The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. Regulations also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so-called “SOx-Emission Control Area”).  As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control are, use fuels with a 0.5% maximum sulfur content.
Greenhouse Gas Regulation
Our industry currently is heavily dependent on the consumption of fossil fuels, which has been linked by certain experts to greenhouse gas emissions and the warming of the global climate system.  We are committed to working to reduce our carbon footprint, including by transitioning to low-carbon fuels while continuing to deliver for our customers.  Our governance, strategy, risk management and performance monitoring efforts with respect to managing this challenge continue to evolve.
Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets extended through 2020.  International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions.  The 2015 United Nations Climate Change Conference in Paris resulted in the Paris

19

Table of Contents
Agreement, which entered into force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships.  The U.S. initially entered into the agreement, but on June 1, 2017, the U.S. President announced that the United States intends to withdraw from the Paris Agreement, which provides for a four-year exit process, meaning that the earliest possible effective withdrawal date cannot be before November 4, 2020.  The timing and effect of such action has yet to be determined.
At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships.  The initial strategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely.  The initial strategy notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition.  These regulations could cause us to incur additional substantial expenses.
The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period from 2013 to 2020.  Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information.
In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certain mobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources. However, in March 2017, the U.S. President signed an executive order to review and possibly eliminate the EPA’s plan to cut greenhouse gas emissions, and in August 2019, the Administration announced plans to weaken regulations for methane emissions.  The EPA or individual U.S. states could enact environmental regulations that would affect our operations.
Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.
International Labour Organization
The International Labour Organization (the “ILO”) is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 (“MLC 2006”). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in another country.   We believe that all of our vessels are in substantial compliance with and are certified to meet MLC 2006.
Vessel Security Regulations
Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel security such as the U.S. Maritime Transportation Security Act of 2002 (“MTSA”). To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.

20

Table of Contents

Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the International Ship and Port Facilities Security Code (“the ISPS Code”). The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attain an International Ship Security Certificate (“ISSC”) from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate may be detained, expelled from, or refused entry at port until they obtain an ISSC.  The various requirements, some of which are found in the SOLAS Convention, include, for example, 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 alert the authorities on shore; 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 the name of the ship, 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 USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant financial impact on us.  We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.
The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area, as well as off the coast of Western Africa.  Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.
Inspection by Classification Societies
 
The hull and machinery of every commercial vessel must be classed 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 SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of Classification Societies, the IACS.  The IACS has adopted harmonized Common Structural Rules, or “the Rules,” which apply to oil tankers and bulk carriers contracted for construction on or after July 1, 2015.  The Rules attempt to create a level of consistency between IACS Societies.  All of our vessels are certified as being “in class” by all the applicable Classification Societies (American Bureau of Shipping, DNVGL, 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.
A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of the vessel.  If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.

21

Table of Contents

SEASONALITY
 
We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, freight and charter rates.  We may seek to mitigate the risk of these seasonal variations by entering into long-term time charters for certain of 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 revenues 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,” “budget,” “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 our 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) declines or sustained weakness in demand in the drybulk shipping industry; (ii) continuation of weakness or declines in drybulk shipping rates; (iii) changes in the supply of or demand for drybulk products, generally or in particular regions; (iv) changes in the supply of drybulk carriers including newbuilding of vessels or lower than anticipated scrapping of older vessels; (v) 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; (vi) increases in costs and expenses including but not limited to: crew wages, insurance, provisions, lube oil, bunkers, repairs, maintenance, general and administrative expenses, and management fee expenses; (vii) whether our insurance arrangements are adequate; (viii) changes in general domestic and international political conditions; (ix) acts of war, terrorism, or piracy; (x) 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; (xi) the Company’s acquisition or disposition of vessels; (xii) 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; (xiii) the completion of definitive documentation with respect to charters; (xiv) charterers’ compliance with the terms of their charters in the current market environment; (xv) the extent to which our operating results continue to be affected by weakness in market conditions and freight and charter rates; (xvi) our ability to maintain contracts that are critical to our operation, to obtain and maintain acceptable terms with our vendors, customers and service providers and to retain key executives, managers and employees; (xvii) completion of documentation for vessel transactions and the performance of the terms thereof by buyers or sellers of vessels and us; (xviii) the relative cost and availability of low sulfur and high sulfur fuel or any additional scrubbers we may seek to install; (xix) our ability to realize the economic benefits or recover the cost of the scrubbers we have installed;  (xx) worldwide compliance with sulfur emissions regulations that took effect on January 1, 2020; (xxi) our financial results for the year ending December 31, 2019 and other factors relating to determination of the tax treatment of dividends we have declared; (xxii) the duration and impact of the Covid-19 novel coronavirus epidemic; (xxiii)  those other risks and uncertainties discussed below under the headings “RISK FACTORS RELATED TO OUR BUSINESS & OPERATIONS”, and (xxiii) other factors listed from time to time in our filings with the Securities and Exchange Commission (the “SEC”).  We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
The following risk factors and other information included in this report should be carefully considered.  If any of the following risks actually occur, our business, financial condition, operating results or cash flows could be materially and adversely affected and the trading price of our common stock could decline.

22

Table of Contents

RISK FACTORS RELATED TO OUR BUSINESS AND OPERATIONS
 
Industry Specific Risk Factors
 
A downturn in the global economic environment may negatively impact our business.
 
Slow growth rates in the global economy may negatively impact the drybulk industry.  General market volatility has endured over the last several years as a result of uncertainty about the growth rate of the world economy and the Chinese economy in particular, on which the drybulk industry depends to a significant degree.  Freight and charter rates have declined significantly in recent years, but have increased from historic lows due to a relative improvement of demand for drybulk commodities, as well as due to slowing growth rates in the supply of drybulk newbuilding vessel deliveries.  See “Oversupply of drybulk carrier capacity may lead to rate weakness or further reductions in freight rates, charterhire rates and profitability” for further details.  As a result, a number of drybulk shipping companies, including us, have experienced declining revenues, negative cash flow, and liquidity issues in recent years. 
 
If the current global economic environment worsens or does not sufficiently recover, we may be negatively affected in the following ways:
 
	·		As a result of low freight and charter rates that in some instances do not allow us to operate our vessels profitably, our earnings and cash flows could decline.  If these conditions continue for a prolonged period of time, they may leave us with insufficient cash resources to fund our operations or make required debt repayments under our credit facilities, which would potentially accelerate the repayment of our outstanding indebtedness.  Please refer to “We may face liquidity issues if conditions in the drybulk market worsen for a prolonged period” below for further details.	
 
	·		If our earnings and cash flows decline for a prolonged period of time, we may also breach one or more of the covenants in our credit facilities, including covenants relating to our minimum cash balance, collateral maintenance and our minimum working capital. This also would potentially accelerate the repayment of outstanding indebtedness. 	
 
	·		Market values of our vessels could decrease in the future, which may cause us to recognize losses if any of our vessels are sold, scrapped or if their values are impaired.  Moreover, all of our credit facilities contain collateral maintenance covenants that depend on the appraised values of our vessels.  We currently are in compliance with all such covenants under our credit facilities but may not be in compliance if the appraised values of our vessels decline. The collateral maintenance covenants are tested on a quarterly basis under our $495 Million Credit Facility and our $108 Million Credit Facility.  Please refer to “The market values of our vessels may decrease, which could adversely affect our operating results” below for further details.	
 
	·		Our charterers may fail to meet their obligations under our time charter and freight agreements.	
 
The occurrence of any of the foregoing could have a material adverse effect on our business, results of operations, cash flows, financial condition, ability to pay dividends, and ability to continue as a going concern.
 
Freight and charterhire rates for drybulk carriers could remain low from a historical perspective or further decrease in the future, which may adversely affect our earnings.  
 
A prolonged downturn in the drybulk charter market, from which we derive the large majority of our revenues, has severely affected the drybulk shipping industry for several years.  Although the Baltic Dry Index (“BDI”), an index published by The Baltic Exchange of shipping rates for key drybulk routes, has shown some improvement.  Although the BDI for 2019 is higher than the lows reached in such period was in line with the average seen in 2018, there were significant fluctuations in freight rates experienced during the year due to factors mentioned in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.  Moreover, the BDI so far in 2020 has

23

Table of Contents
remained volatile, and the economic conditions underlying its overall decline have not abated. Some of the factors behind this decline in the year-to-date are seasonal such as frontloaded newbuilding deliveries, the Lunar New Year celebration in China and weather related disruptions impacting cargo availability.  However, other factors have arisen this year, such as the onset of the Covid-19 novel coronavirus that was reported to have originally surfaced in Wuhan, China, which has resulted in reduced industrial activity in China, with temporary closures of factories and other facilities, and currently has affected market sentiment. The extent to which the coronavirus impacts our results will depend on future developments, which are uncertain and cannot be predicted, including information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.  Accordingly, there can be no assurance that the drybulk charter market will recover in the near future, and the market could experience a further downturn.
 
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; 	
 
	·		events impacting the production of the commodities that we carry; and	
 
	·		changes in seaborne and other transportation patterns.	
 
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;	
 
	·		conversion of vessels to other uses;	
 
	·		the number of vessels that are out of service, i.e., laid-up, drydocked, awaiting repairs or otherwise not available for hire; and	
 
	·		environmental concerns and regulations	
 
In addition to 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 fuel 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 transportation practices, particularly environmental protection laws and regulations.  These factors influencing the

24

Table of Contents
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 drybulk carriers will continue to depend on economic growth in the world’s economies, particularly 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.  Adverse economic, political, social or other developments, including a change in worldwide fleet capacity, could have a material adverse effect on our business, results of operations, cash flows, financial condition, ability to pay dividends, and ability to continue as a going concern.
 
The Covid-19 novel coronavirus, or other epidemics, could have a material adverse impact on our business, results of operations, or financial condition.
 
We believe the Covid-19 novel coronavirus has negatively affected our business and could continue to do so.  The coronavirus has resulted in reduced industrial activity in China, with temporary closures of factories and other facilities, and we believe it is a contributing factor along with seasonal factors to lower drybulk rates in 2020 thus far, given lower demand for the some of the cargoes we carry, including iron ore and coal.  Moreover, because our vessels travel to ports in China and other countries in which cases of coronavirus have been reported, we face risks to our personnel and operations.  Such risks include delays in the loading and discharging of cargo on or from our vessels, offhire time due to quarantine regulations requiring a minimum of 14 days between departure from a port in China and arrival at a port in certain other countries, delays and expenses in finding substitute crew members if any of our vessels’ crew members become infected, and delays in drydocking if insufficient shipyard personnel are working due to quarantines.  Epidemics may also affect personnel operating payment systems through which we receive revenues from the chartering of our vessels or pay for our expenses, resulting in delays in payments.  At present, it is not possible to ascertain the overall impact of the coronavirus on our business.  However, the occurrence of any of the foregoing events or other epidemic or an increase in the severity or duration of the coronavirus or other epidemic could have a material adverse effect on our business, results of operations, cash flows, financial condition, values of our vessels, and ability to pay dividends. 
 
Oversupply of drybulk carrier capacity may lead to rate weakness or further reductions in freight rates, charterhire rates and profitability.
 
Although growth rates have slowed, the market supply of drybulk carriers has continued to increase as a result of the delivery of newbuilding orders, which peaked in 2007.  Scrapping of older vessels has not been sufficient to offset the delivery of such newbuildings.  Moreover, while the order book for new vessels has decreased since its peak in 2008, an improved market environment over the last three years has resulted in new orders being placed.  If the supply of newbuilding vessels outpaces the demand for vessels in the future, it could have a negative impact on freight rates and charterhire rates. If market conditions deteriorate, upon the expiration or termination of our vessels’ current employment, we may only be able to employ our vessels at depressed or unprofitable rates, or we may not be able to employ these vessels at all.  The occurrence of these events could have a material adverse effect on our business, results of operations, cash flows, financial condition, ability to pay dividends, and ability to continue as a going concern.
 
Prolonged declines in freight and charter rates, changes in the useful life of vessels, and other market deterioration could cause us to incur impairment charges.
 
We evaluate the carrying amounts of our vessels to determine if events have occurred that would require us to evaluate our vessels for an impairment of their carrying amounts. The recoverable amount of vessels is reviewed based on events and changes in circumstances that would indicate that the carrying amount of the assets might not be recovered. The review for potential impairment indicators and projection of future cash flows related to the vessels is complex and requires us to make various estimates including future freight rates and earnings from the vessels. All of these items have been historically volatile.
 
We determine the recoverable amount of each vessel by estimating the undiscounted future cash flows associated with each vessel. If the recoverable amount is less than the carrying amount of the vessel, the vessel is

25

Table of Contents
deemed impaired and such vessel would be written down to its fair market value. The carrying values of our vessels may not represent their fair market value in the future because the new market prices of second-hand vessels tend to fluctuate with changes in freight and charter rates and the cost of newbuildings. Any impairment charges incurred as a result of declines in freight and charter rates could have a material adverse effect on our business, results of operations, cash flows, financial condition, ability to pay dividends, and ability to continue as a going concern.
 
An economic slowdown, weakness, or changes in the economic and political environment 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, India or Japan, could 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, although its rate of growth has been decreasing. We cannot assure you that the Chinese economy will not experience a contraction in the future.  To the extent the Chinese government does not continue to pursue a policy of economic growth and urbanization, including infrastructure stimulus spending, the level of imports to and exports from China could be adversely affected by changes to these initiatives by the Chinese government, as well as by changes in political, economic and social conditions or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions.  Notwithstanding economic reform, the Chinese government may adopt policies that favor domestic drybulk shipping companies and may hinder our ability to compete with them effectively.  The Chinese government has also taken actions seen as protecting domestic industries such as coal or steel, which may reduce the demand for drybulk cargoes bound for China and negatively impact the drybulk industry.  Moreover, a significant or protracted slowdown in the economies of the United States, the European Union or various Asian countries may adversely affect economic growth in China and elsewhere. 
 
Any increased trade barriers or restrictions on trade, especially trade with China, could have an adverse impact on global economic conditions and, as a result, the amount of cargo that charterers pay to have transported on drybulk vessels.  As an example of such restrictions, and most notable in term of drybulk trade volumes, China imposed tariffs on U.S. soybean exports.  With the signing of the “phase one” trade agreement between China and the U.S. in January 2020, China has agreed in principle to purchase meaningful quantities of soybeans from the U.S.  However, a re-escalation of protectionist measures taken between these two countries or others could lead to reduced volumes of drybulk trade.  Our business, results of operations, cash flows, financial condition and ability to pay dividends could be materially and adversely affected by an economic downturn in any of these countries or by increased trade barriers or restrictions on trade.
 
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.  See “Overview — Environmental and Other Regulation” in Item 1, “Business” of this annual report for a discussion of such conventions, laws, and regulations.  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 ISM Code.  The ISM Code requires ship owners, 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

26

Table of Contents
safe operation and describing procedures for dealing with emergencies.  The failure of a ship owner 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.
 
The U.S. Oil Pollution Act of 1990 (“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 U.S., its territories and possessions or whose vessels operate in U.S. waters.  OPA allows for liability without regard to fault of vessel owners, operators and demise 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.  Such liability is potentially unlimited in cases of willful misconduct or gross negligence.  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, provided they accept, at a minimum, the levels of liability established under OPA.
 
On October 27, 2016, at MEPC 70, MEPC announced the results from a vote to ratify and formalize regulations mandating a reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020 rather than pushing the deadline back to 2025. Ships now must either remove sulfur from emissions through the use of emission scrubbers or buy fuel with low sulfur content.  If a vessel is not retrofitted with a scrubber, it will need to use low sulfur fuel, which is more expensive than standard marine fuel.  This increased demand for low sulfur fuel may result in an increase in prices for such fuel. 
 
 In order to comply with regulations mandating a reduction in sulfur emissions from 3.5% to 0.5% as of the beginning of 2020, we entered into agreements to install exhaust gas cleaning systems (“scrubbers”) on our 17 Capesize vessels, sixteen of which installations were completed by December 31, 2019, and the last of which the installation was completed by January 17, 2020.  Additionally, we have transitioned to consuming IMO compliant fuels as of January 1, 2020 on our vessels that are not equipped with scrubbers and when our scrubbers may not be used.  We will continue to evaluate all options to comply with IMO regulations. Our fuel costs and fuel inventories may increase as a result of these sulfur emission regulations.  Low sulfur fuel is more expensive than standard marine fuel containing 3.5% sulfur content and may become more expensive or difficult to obtain as a result of increased demand.  If the cost differential between low sulfur fuel and high sulfur fuel is significantly higher than anticipated, or if low sulfur fuel is not available at ports on certain trading routes, it may not be feasible or competitive to operate vessels on certain trading routes without installing scrubbers or without incurring deviation time to obtain compliant fuel.  Scrubbers may not be available to be installed on such vessels at a favorable cost or at all if we seek them at a later date.  Conversely,  if the cost differential between low sulfur fuel and high sulfur fuel is significantly lower than anticipated, or if regulations are passed negatively impacting the use of open-loop scrubbers, we may not realize the economic benefits or recover the cost of the scrubbers we have installed.  The occurrence of any of the foregoing events may have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.  In addition, a number of countries have imposed restrictions on the discharge of wash water from open loop scrubbers within their port limits.  While there are no restrictions on using open loop scrubbers outside of port limits, any changes in these regulations or more stringent standards globally could impact the use of open loop scrubbers going forward.
 
Recent action by the IMO’s Maritime Safety Committee and U.S. agencies indicate that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats.  This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures.  However, the impact of such regulations is difficult to predict at this time.
Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s ballast water.  Depending on the date of the IOPP renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019.  For most vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms.  Ships constructed on or after September 8, 2017 are to comply with the D-2 standards on or after September 8, 2017.  During the fourth quarter of 2018, we entered into agreements for the

27

Table of Contents
purchase of ballast water treatments systems for 42 of our vessels.  Such systems have been installed on 18 vessels, and we expect the remainder to be installed by 2022.  After the installation of these ballast water treatment systems, all of our vessels will be in compliance with these standards.  The costs of compliance may be substantial and adversely affect our revenues and profitability. 
Furthermore, United States regulations are currently changing.  Although the 2013 Vessel General Permit (“VGP”) program and U.S. National Invasive Species Act (“NISA”) are currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018, requires that the EPA develop national standards of performance for approximately 30 discharges, similar to those found in the VGP within two years.  By approximately 2022, the U.S. Coast Guard must develop corresponding implementation, compliance and enforcement regulations regarding ballast water.  The new regulations could require the installation of new equipment, which may cause us to incur substantial costs.
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.  Our vessels may operate in particularly dangerous areas, including areas of the South China Sea, the Arabian Sea, the Indian Ocean, the Gulf of Aden off the coast of Somalia, the Gulf of Guinea, and the Red Sea.  In November 2013, the government of the People’s Republic of China announced an Air Defense Identification Zone, or ADIZ, covering much of the East China Sea. When introduced, the Chinese ADIZ was controversial because a number of nations are not honoring the ADIZ, and the ADIZ includes certain maritime areas that have been contested among various nations in the region. Tensions relating to the Chinese ADIZ may escalate as a result of incidents relating to the ADIZ or other territorial disputes, which may result in additional  limitations on navigation or trade.  These sorts of events could interfere with shipping routes and result in market disruptions that could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
 
In addition, public health threats, such as the Covid-19 novel coronavirus, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, and the operations of our customers.
 
Our vessels may suffer damage, and we may face unexpected drydocking costs, which could adversely affect our cash flow and financial condition.
 
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

28

Table of Contents
in full.  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 our vessels are being repaired and repositioned or from being forced to wait for space or to travel to more distant drydocking facilities, as well as the actual cost of repairs, could negatively impact our business, results of operations, cash flows, financial condition and ability to pay dividends.
 
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 may 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.
 
Acts of piracy on ocean-going vessels have continued and could adversely affect our business.
 
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Arabian Sea, the Indian Ocean, the Gulf of Aden off the coast of Somalia, the Gulf of Guinea, and the Red Sea.  Sea piracy incidents continue to occur particularly in the Gulf of Aden, the Gulf of Guinea and increasingly in Southeast Asia.  If these piracy attacks result in regions in which our vessels are deployed being characterized by insurers as “war risk” zones, or Joint War Committee (JWC) “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain, if available at all.  In addition, crew costs, including costs that may be incurred to the extent we employ onboard security guards, could increase in such circumstances.  We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us.  In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, results of operations, cash flows, financial condition, and ability to pay dividends.
 
In response to piracy incidents, following consultation with regulatory authorities, we may station guards on some of our vessels in some instances. While our use of guards is intended to deter and prevent the hijacking of our vessels, it may also increase our risk of liability for death or injury to persons or damage to personal property. If we do not have adequate insurance in place to cover such liability, it could adversely impact our business, results of operations, cash flows, and financial condition.
 
Terrorist attacks and other acts of violence or war may have an adverse effect on our business, results of operations and financial condition.
 
Terrorist attacks continue to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. Continuing conflicts and recent developments in the Middle East, and the presence of U.S. and other armed forces in the Middle East and Afghanistan, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. Following the withdrawal of the United States from the Joint Comprehensive Plan of Action agreed to on July 14, 2015 with regard to the Iranian nuclear program, tensions have been rising between Iran on the one hand and the United States and its allies on the other.  Recent incidents have included the alleged sabotage of oil tankers off the coast of the United Arab Emirates, the seizure of a British-flagged oil tanker by Iranian forces, the killing of Iranian Maj. Gen. Qasem Soleimani by a U.S. drone strike, and a retaliatory Iranian missile strike on military bases in Iraq housing U.S.

29

Table of Contents
soldiers.  As our vessels transit the Arabian Gulf from time to time, they may face an increased risk of damage or seizure. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Any of these occurrences could have a material adverse impact on our business, results of operation, 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 commercial vessels 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 SOLAS Convention.  Our vessels are currently enrolled with the ABS, DNVGL, or Lloyd’s, each of which is a member of the IACS. Further, to trade internationally, a vessel must attain an ISSC from a recognized security organization.
 
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 five years during the special survey.  For vessels that are less than 15 years old, intermediate surveys can be performed in the form of in-water examination of its underwater parts every two to three years.  For vessels that are older than 15 years, the vessel is required to be drydocked during the intermediate survey as well as the special survey.
 
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 credit facilities, 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 call on ports located in countries that are subject to restrictions imposed by the U.S. or other governments, that could adversely affect our reputation and the market for our common shares.
 
All of our charters with customers contain restrictions prohibiting our vessels from entering any countries or conducting any trade prohibited by the United States. However, there is no assurance that, on such charterers’ instructions, our vessels will not call on ports located in countries subject to sanctions or embargoes imposed by the U.S. government or countries identified by the U.S. government as state sponsors of terrorism, such as Iran, Sudan and Syria. Although we believe that we are in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there is no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. Additionally, some investors may decide to divest their interest, or not to invest, in us simply because we do business with companies that do business in sanctioned countries. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. Investor perception of the value of our common stock may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.
 
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, UK Bribery Act, and other applicable worldwide anti-corruption laws.
 
The U.S. Foreign Corrupt Practices Act (“FCPA”) and other applicable worldwide anti-corruption laws generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business.  These laws include the U.K. Bribery Act, which became effective on July 1, 2011 and which is broader in scope than the FCPA, as it contains no facilitating payments exception.  We charter our vessels into some jurisdictions that international corruption monitoring groups have identified as having high levels of

30

Table of Contents
corruption.  Our activities create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of the FCPA or other applicable anti-corruption laws.  Our policies mandate compliance with applicable anti-corruption laws.  Although we have policies, procedures and internal controls in place to monitor internal and external compliance, we cannot assure that our policies and procedures will protect us from governmental investigations or inquiries surrounding actions of our employees or agents.  If we are found to be liable for violations of the FCPA or other applicable anti-corruption laws (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others), we could suffer from civil and criminal penalties or other sanctions.
 
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.  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 our third party technical managers or 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, which could have a material adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends.
 
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.
 
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.

31

Table of Contents

Changes in fuel prices could adversely affect our profits.
 
We operate a large portion of the vessels in our fleet on spot market voyage charters.  Spot market voyage charter arrangements generally provide that the vessel owner bear the cost of fuel in the form of bunkers, which is a significant expense of operating the vessel.  We currently have 30 vessels operating on spot market voyage charters and we may arrange for more vessels to do so, depending on market conditions.  Depending on the timing of increases in the price of fuel and market conditions, we may be unable to pass along increases in fuel prices to our customers.  Currently, a portion of our vessels are operating on spot market voyage charters while the balance are operating under standard time charter arrangements.  Under standard time charter arrangements, the charterer bears the cost of fuel in the form of bunkers.  At the commencement of a charter, the charterer purchases fuel from us at the then-prevailing market rates, and we are obligated to repurchase fuel at that same initial rate when the charterer redelivers the vessel back to us. Market rates at the time the charterer redelivers the vessel to us after completion of the charter (including any direct continuations) may be more or less than the prevailing market rates at the commencement of the charter.  In certain of our short-term time charter agreements, we sell the charterer the amount of the bunkers actually consumed and the charterer is required to redeliver the vessel to us without replenishment of the bunkers consumed. We believe the staggered nature of time charter expirations and the cyclical nature of fuel prices over time should reduce the risk of these repurchase obligations.  However, the date of redelivery of vessels and fluctuations in the price and supply of fuel are unpredictable and therefore these arrangements could result in losses or reductions in working capital that are beyond our control.
 
Given that under certain arrangements with short-term or spot market voyage charters, we may bear the cost of fuel, the recent volatility in fuel prices could be a factor affecting profitability in these arrangements. To profitably price an individual charter, we must take into account the anticipated cost of fuel for the duration of the charter. Changes in the actual price of fuel at the time the charter is to be performed could result in the charter being performed at a significantly greater or lesser profit than originally anticipated or even result in a loss.
 
We have implemented a comprehensive approach to compliance with IMO regulations that limit sulfur emissions from vessels to 0.5% down from 3.5% on a global basis to improve air quality. This approach includes retrofitting our 17 Capesize vessels with scrubbers while our remaining fleet of minor bulk vessels consumes very-low sulfur fuel (“VLSFO”). The performance of our investment in scrubbers is dependent upon, among other factors, the fuel spread between compliant and high sulfur fuel. Any adverse changes to the spread between these two fuel types could result in a lengthening of the anticipated payback period for this investment.
 
For our minor bulk fleet, the cost of low sulfur fuel is more expensive than standard marine fuel. The increased demand for low sulfur fuel has resulted in an increase in prices for such fuel and may result in further increases. We may not be able to pass these incremental fuel costs along in our freight rates. As such, we may have to absorb the higher cost of fuel. We believe that our ability to pass along the added fuel costs will depend on supply and demand fundamentals in the global drybulk shipping industry.
 
To mitigate the  risk associated with fuel price increases, we may enter into forward bunker contracts from time to time that permit us to purchase fuel at a fixed price in exchange for payment of a certain amount.  We may incur a loss on such contracts if the price of fuel declines below the price at which the contract permits us to purchase fuel, or a significant increase in the price of fuel may not be mitigated by our entry into such contracts, if any.  Either occurrence could have a material adverse effect on our business, financial condition, and results of operations, cash flows, and ability to pay dividends.
 
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, freight and 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

32

Table of Contents
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
 
We may face liquidity issues if conditions in the drybulk market worsen for a prolonged period.
 
While supply and demand fundamentals have improved starting in 2017, persistent, historically low rates prior to 2017 in the drybulk shipping market resulted in decreases in our prior period revenues.  As a result, we experienced negative cash flows, and in turn, our liquidity was negatively impacted. If the market environment declines over a prolonged period of time, we may have insufficient liquidity to fund ongoing operations or satisfy our obligations under our credit facilities, which may lead to a default under one or more of our credit facilities. 
 
If we are in default of any of our credit facilities, the repayment of our indebtedness under the relevant facility could potentially be accelerated.   In addition, each of our credit facilities contain cross default provisions that could be triggered by a default under any of our other credit facilities, with the result that the repayment of some or all of our indebtedness could potentially be accelerated.
 
As a result, we could experience a material adverse effect on our business, results of operations, cash flows, financial condition, ability to pay dividends, and we may cease to continue as a going concern.  For a further discussion of our liquidity issues, see “Liquidity and Capital Resources” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” below.
 
The market values of our vessels may decrease, which could adversely affect our operating results.
 
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.  Refer to the “Impairment of long-lived assets” section under the heading “Critical Accounting Policies” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” for further information.  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.
 
Our earnings and our ability to pay dividends will be adversely affected if we do not successfully employ our vessels.
 
As of February 25, 2020, approximately 56% of our vessels were in arrangements in which they were trading at spot market rates through spot market voyage charters.  Thirty of our vessels were engaged under spot market voyage charters as of such date.  Additionally,  20 of the vessels in our fleet were engaged under fixed rate time charters as of such date.  All of the charter contracts for our vessels expire (assuming the option periods in the time charters are not exercised) between February 2020 and May 2020. The charterhire rates for our vessels have sometimes declined below the operating costs of our vessels.  Because we currently charter most of our vessels on spot market voyage charters and spot market-related time charters, we are exposed to the cyclicality and volatility of the spot charter market, and we do not have significant long-term, fixed-rate time charters to ameliorate the adverse effects of downturns in the spot market. Capesize vessels, which we operate as part of our fleet, have been particularly susceptible to significant freight rate fluctuations in spot charter rates.
 
To the extent our vessels trade in the spot charter market, we may experience fluctuations in revenue, cash flow and net income.  The spot charter market is highly competitive, and spot market voyage charter rates may fluctuate dramatically based primarily on the worldwide supply of drybulk vessels available in the market and the worldwide demand for the transportation of drybulk cargoes.  We can provide no assurance that future freight rates and 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.

33

Table of Contents

To the extent our vessels are engaged under spot market voyages, we will face operational risks because we will be responsible for delays in delivery of the cargo, which may be due to issues with weather, the breakdown of a vessel, congestion at the port of delivery, or other factors that may be beyond our control.  Such delays can result in customer claims.  In addition, spot market voyages will require us to make payments directly to third parties that our charters would ordinarily make under chartering arrangements.   Such arrangements carry a risk of disputes and fraud by third parties.  As a result of any of these circumstances, we may experience a material adverse effect on our business, results of operations, cash flows, financial condition, and ability to pay dividends.
 
In addition, while we try to capture arbitrage opportunities by taking cargo positions, a significant fluctuation in the rate environment could adversely affect the profitability of those trades.
 
The revenues we earn may depend on the success and profitability of any vessel pools in which we may operate our vessels.
 
We currently do not deploy any of our vessels in pooling arrangements.  However, we may deploy our vessels in one or more vessel pools from time to time as part of our chartering strategy.  Chartering arrangements for our vessels deployed in a pool are handled by the commercial manager of the pool. The profitability of our vessels operating in vessel pools will depend upon the pool managers’ ability to successfully implement a profitable chartering strategy, which could include, among other things, obtaining favorable charters and employing vessels in the pool efficiently in order to service those charters. The pool’s profitability will also depend on minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. Furthermore, should an incident occur that negatively affects a pool’s revenues or should a pool underperform, then our profitability will be negatively impacted as a result. Commercial managers of pools typically exercise significant control and discretion over the operation of the pool, and our success and profitability will depend on the success of the pools in which we participate, particularly if we transition to a new pool. If vessels from other owners which enter into pools in which we participate are not of comparable design or quality to our vessels, or if the owners of such other vessels negotiate for greater pool weightings than those obtained by us, this could negatively impact the profitability of the pools in which we participate or dilute our interest in pool profits. If we wish to withdraw a vessel from a pool, we are required to give advance notice and the agreements we enter into with pools in which we participate may provide the applicable pool the right to defer withdrawal of our vessels. If the commercial manager of the pools in which we participate were to cease serving in such capacity, the pools may not be able to find a replacement commercial manager who will be as successful as the current commercial manager in chartering vessels and who may not have the same customer relationships. Additionally, were we to seek to assume direct commercial management of these vessels, either by choice or because of our failure to negotiate or maintain favorable terms with a profitable and well-managed pool, we may face similar challenges.    
 
Restrictive covenants under our credit facilities may restrict our growth and operations.
 
Our credit facilities impose operating and financial restrictions that may limit our ability to:
 
	·		utilize cash above a certain amount as a result of cash sweeps;	
 
	·		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;	

34

Table of Contents

	·		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 business strategy of growth through acquisitions and may restrict or limit our ability to pay dividends and finance our future operations.
 
We depend upon ten charterers for a large part of our revenues.  The loss of one or more of these charterers or any other significant customers 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, 2019, approximately 39% of our revenues were derived from ten charterers. Of our total revenue for the year ended December 31, 2019, we did not have any customer that accounted for more than 10% of our voyage revenue. While we are seeking to expand customer relationships with cargo providers, this may not sufficiently diversify our customer base to mitigate this risk.  If we were to lose any of our major customers, or if any of them significantly reduced its use of our services or was unable to make 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.
 
The aging of our fleet and 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.
 
The majority of our drybulk carriers were previously owned by third parties.  We may seek 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.  The average age of the vessels in our current fleet is approximately 9.8 years.  Older vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology and cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.
 
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.
 
An increase in operating costs or interest rates could adversely affect our cash flow and financial condition.
 
Our vessel operating expenses include the costs of crewing and insurance.  In addition, to the extent we enter the spot charter market, we would incur the cost of bunkers as part of our voyage expenses.  The price of bunker fuel may be volatile over the relatively short periods of spot charters 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

35

Table of Contents
be substantial.  Moreover, we expect that the cost of maintenance and drydocking will increase as our fleet ages.  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 are also subject to market risks relating to changes in LIBOR rates because we have significant amounts of floating rate debt outstanding.  Moreover, in the recent past, concerns have been publicized that some of the member banks surveyed by the British Bankers’ Association (“BBA”) in connection with the calculation of LIBOR may have been underreporting or otherwise manipulating the inter-bank lending rate applicable to them. A number of BBA member banks entered into settlements with their regulators and law enforcement agencies with respect to alleged LIBOR manipulation, and investigations by regulators and governmental authorities in various jurisdictions are ongoing.  In addition, on July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.  It is not currently possible to predict the effect of any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere.  If LIBOR or any alternative reference rate were to increase significantly, the amount of interest payable on our outstanding indebtedness could increase significantly and 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.
 
Future dividends are subject to the discretion of our Board of Directors; dividends and share repurchases are limited under our credit facilities.
 
Our quarterly dividend policy and declaration and payment of dividends is subject to legally available funds, compliance with law and contractual obligations and our Board of Directors’ determination that each declaration and payment is in the best interest of the Company and our shareholders.  While we have initiated this policy, there is no legal obligation to continue paying dividends at the same rate or at all, and this policy may change in the future.  Our declaration and payment of dividends is also subject to a number of conditions and restrictions as described below.
 
Under the terms of our $495 Million Credit Facility and our $108 Million Credit Facility, our payment of dividends or repurchases of our stock are subject to customary conditions.  We may pay dividends or repurchase stock under these facilities to the extent our total cash and cash equivalents are greater than $100 million and 18.75% of our total indebtedness, whichever is higher; if we cannot satisfy this condition, we are subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter, for which purpose the full commitment of up to $35 million of our new scrubber tranche is assumed to be drawn.  The declaration and payment of any dividend or any stock repurchase is subject to the discretion of our Board of Directors.  The principal business factors that our Board of Directors expects to consider when determining the timing and amount of dividend payments or stock repurchases include our earnings,

36

Table of Contents
financial condition, and cash requirements at the time. Marshall Islands law generally prohibits the declaration and payment of dividends or stock repurchases other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends or stock repurchases while a company is insolvent or would be rendered insolvent by the payment of such a dividend or such a stock repurchase.
 
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.  If we decrease, suspend or terminate the payment of dividends, our stock price may decline.  If we suspend or terminate dividends, the return on your investment would be limited to the price at which you could sell your shares.
 
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.
 
We may seek growth 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.	
 
Currently, there is no availability under our existing credit facilities except for the $12.5 million remainder of the $35 million tranche under the $495 Million Credit Facility, which we will drawdown during the first quarter of 2020 Facility to cover a portion of the expenses related to the acquisition and installation of scrubbers on our 17 Capesize vessels. These limitations place significant restrictions on financing that we could use for our growth.
 
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.
 
We currently maintain all of our cash and cash equivalents with four financial institutions, which subjects us to credit risk.
 
We currently maintain all of our cash and cash equivalents with four financial institutions.  None of our balances are covered by insurance in the event of default by the financial institutions.  The occurrence of such a default of any of these institutions could therefore have a material adverse effect on our business, financial condition, results of operations, cash flows, and ability to pay dividends.

37

Table of Contents

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 or impair the value 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. 
 
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 are at risk for the creditworthiness of our charterers.
 
The actual or perceived credit quality of our charterers, and any defaults by them, or market conditions affecting the time charter market and the credit markets, 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 effect 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 if required, 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, if we are an accelerated or large accelerated filer, a related attestation of our independent registered public accounting firm.  As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, as amended, management concluded that our internal controls over financial reporting were not effective as of December 31, 2014 as a result of internal control design deficiencies limited to certain aspects of our implementation of fresh-start accounting.  Our independent registered public accounting firm’s attestation report as to the effectiveness of our internal control over financial reporting was adverse as a result.  If, in such 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 if required by Section 404, investors could lose confidence in the reliability of our Consolidated Financial Statements, which could result in a decrease in the value of our common stock.

38

Table of Contents

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 have 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, piracy, 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.

39

Table of Contents

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 U.S. tax on U.S. source income, which will 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” (which we refer to as the “Section 883 exemption”), 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 the Section 883 exemption if, among other things, (i) our stock is treated as primarily and regularly traded on an established securities market in the United States (which we refer to as the “publicly traded test”), or (ii) we satisfy the qualified shareholder test or (iii) we satisfy the controlled foreign corporation test (which we refer to as the “CFC test”).  Under applicable Treasury Regulations, the publicly-traded test cannot be satisfied in any taxable year in which persons who actually or constructively own 5% or more of our stock (which we sometimes refer to as “5% shareholders”), together own 50% or more of our stock (by vote and value) for more than half the days in such year (which we sometimes refer to as the “five percent override rule”), unless an exception applies.  A foreign corporation satisfies the qualified shareholder test if more than 50% of the value of its outstanding shares is owned (or treated as owned by applying certain attribution rules) for at least half of the number of days in the foreign corporation’s taxable year by one or more “qualified shareholders.”  A qualified shareholder includes a foreign corporation that, among other things, satisfies the publicly traded test.  A foreign corporation satisfies the CFC test if it is a “controlled foreign corporation” and one or more qualified U.S. persons own more than 50 percent of the total value of all the outstanding stock.
 
Based on the ownership and trading of our stock in 2019 and 2018, we believe that we satisfied the publicly traded test and qualified for the Section 883 exemption in 2019 and 2018. If we do not qualify for the Section 883 exemption, our U.S. source shipping income, i.e., 50% of our gross shipping income attributable to transportation beginning or ending in the U.S., would be subject to a 4% tax without allowance for deductions (which we sometimes refer to as the “U.S. gross transportation income tax”).  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 the Section 883 exemption in 2020 or future taxable years.
 
During 2017, based on the ownership and trading of our stock, we believe that we did not satisfy the publicly traded test, the qualified shareholder test, or the CFC test, and therefore did not qualify for the Section 883 exemption in 2017.  As such, during the year ended December 31, 2017, we recorded $0.4 million of estimated U.S. gross transportation tax which has been recorded in Voyage Expenses in the Consolidated Statements of Operations.  Refer to Note 2 – Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information. 
 
To the extent Genco's U.S. source shipping income, or other U.S. source income, is considered to be effectively connected income, as described below, any such income, net of applicable deductions, would be subject to the U.S. federal corporate income tax, currently imposed at a 21% rate. In addition, Genco may be subject to a 30% "branch profits" tax on such income, and on certain interest paid or deemed paid attributable to the conduct of such trade or business.  Shipping income is generally sourced 100% to the United States if attributable to transportation exclusively

40

Table of Contents
between United States ports (Genco is prohibited from conducting such voyages), 50% to the United States if attributable to transportation that begins or ends, but does not both begin and end, in the United States and otherwise 0% to the United States.
 
Genco's U.S. source shipping income would be considered effectively connected income only if:
 
•Genco has, or is considered to have, a fixed place of business in the U.S. involved in the earning of U.S. source shipping income; and
 
•substantially all of Genco's U.S. source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the U.S.
 
Genco does not intend to have, or permit circumstances that would result in having, any vessel sailing to or from the U.S. on a regularly scheduled basis. Based on the current shipping operations of Genco and Genco’s expected future shipping operations and other activities, Genco believes that none of its U.S. source shipping income will constitute effectively connected income. However, Genco may from time to time generate non-shipping income that may be treated as effectively connected income.
 
If Genco qualifies for the Section 883 exemption in respect of its shipping income, gain from the sale of a vessel likewise should be exempt from tax under Section 883 of the Code. If, however, Genco's shipping income does not, for whatever reason, qualify for the Section 883 exemption, and assuming that any gain derived from the sale of a vessel is attributable to Genco's U.S. office, as Genco believes would likely be the case, such gain would likely be treated as effectively connected income (determined under rules different from those discussed above) and subject to the net income and branch profits tax regime described above.
 
We established Genco Shipping Pte. Ltd. (“GSPL”), which is based in Singapore, on September 8, 2017.  GSPL applied for and was awarded the Maritime Sector Incentive – Approved International Shipping Enterprise (“MSI-AIS”) status under Section 13F of the Singapore Income Tax Act (“SITA”) by the Maritime and Port Authority of Singapore.  The award is for an initial period of 10 years, commencing on August 15, 2018, and is subject to a review of performance at the end of the initial five year period.  The MSI-ASI status provides for a tax exemption on income derived by GSPL from qualifying shipping operations under Section 13F of the SITA.  Income from non-qualifying activities is taxable at the prevailing Singapore Corporate income tax rate (currently 17%).  During the years ended December 31, 2019, 2018 and 2017, GSPL did not record any income taxes. 
 
During 2018, we established Genco Shipping A/S, which is a Danish-incorporated corporation which is based in Copenhagen and considered to be a resident for tax purposes in Denmark.  Genco Shipping A/S is subject to corporate taxes in Denmark a rate of 22% during 2018.  During the year ended December 31, 2019 and 2018, Genco Shipping A/S recorded $0.2 million and $0.08 million of income tax which has been recorded in Other income (expense) in the Consolidated Statements of Operations in our Consolidated Financial Statements.
 
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. shareholders.
 
A foreign corporation generally will be treated as a “passive foreign investment company,” which we sometimes refer to as a PFIC, for U.S. federal income tax purposes if, after applying certain look through rules, either (1) at least 75% of its gross income for any taxable year consists of “passive income” or (2) at least 50% of the average value or adjusted bases of its assets (determined on a quarterly basis) produce or are held for the production of passive income, i.e., “passive assets.”  U.S. shareholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to distributions they receive from the PFIC and gain, if any, they derive from the sale or other disposition of their stock in the PFIC.
 
For purposes of these tests, “passive income” generally includes dividends, interest, gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated

41

Table of Contents
parties in connection with the active conduct of a trade or business, as defined in applicable Treasury Regulations.  Income derived from the performance of services does not constitute “passive income.” By contrast, rental income would generally constitute passive income unless such income was treated under specific rules as derived from the active conduct of a trade or business.  We do not believe that our past or existing operations would cause, or would have caused, us to be deemed 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 and spot chartering activities as services income, rather than rental income.  Accordingly, we believe that (1) our income from our time and spot 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.
 
While there is no direct legal authority under the PFIC rules addressing our method of operation, there is legal authority supporting this position consisting of pronouncements by the U.S. Internal Revenue Service (which we sometimes refer to as the “IRS”), concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes.  However, it should be noted that there is also legal authority, consisting of case law, which characterizes time charter income as rental income rather than services income for other tax purposes.
 
No assurance can be given that the 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, there can be no assurance that we will not become a PFIC in any future taxable year because the PFIC test is an annual test, there are uncertainties in the application of the PFIC rules, and although we intend to manage our business so as to avoid PFIC status to the extent consistent with our other business goals, there could be changes in the nature and extent of our operations in future taxable years.
 
If we were to be treated as a PFIC for any taxable year (and regardless of whether we remain a PFIC for subsequent taxable years), our U.S. shareholders would face adverse U.S. tax consequences.  Under the PFIC rules, unless a shareholder makes certain elections available under the Code (which elections could themselves have adverse consequences for such shareholder), such shareholder would be liable to pay U.S. federal income tax at the highest applicable ordinary income tax rates upon the receipt of excess distributions and upon any gain from the disposition of our common stock, plus interest on such amounts, as if such 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, voyage expenses (including port costs, etc.), special survey fees and other expenses 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.
 
Legislative action relating to taxation could materially and adversely affect us.
 
Our tax position could be adversely impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by any tax authority. We cannot predict the outcome of any specific legislative proposals. 
 
RISK FACTORS RELATED TO OUR COMMON STOCK
 
Certain shareholders own large portions of our outstanding common stock, which may limit your ability to influence our actions.
 
Certain shareholders currently hold significant percentages of our common stock. As of February 27, 2020,  affiliates of Centerbridge Partners, L.P. owned approximately 25%; affiliates of Apollo Global Management owned approximately 13%; and affiliates of Strategic Value Partners, LLC owned approximately 20% of our common stock.

42

Table of Contents

To the extent a significant percentage of the ownership of our common stock is concentrated in a small number of holders, such holders 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 by-laws 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 shareholder in a United States corporation may have.
 
We are incorporated in the Republic of 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 shareholders of a corporation incorporated in a U.S. jurisdiction.  Therefore, you may have more difficulty in protecting your interests as a shareholder in the face of actions by the management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction.
 
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 entered into a registration rights agreement that provides parties who received 10% or more of our common stock in our reorganization with demand and piggyback registration rights. This agreement was amended and restated in connection with our $125 million equity raise to cover shares issued to Centerbridge, SVP, and Apollo.  We entered into an additional registration rights agreement that required us to file a resale registration statement to cover the shares issued in such equity raise.  Such registration statement became effective on January 18, 2017 with respect to the resale of 27,061,856 shares of our common stock. 
 
We may need to raise additional capital in the future, which may not be available on favorable terms or at all or which may dilute our common stock or adversely affect its market price.
 
We may require additional capital to expand our business and increase revenues, add liquidity in response to negative economic conditions, meet unexpected liquidity needs caused by industry volatility or uncertainty and reduce our outstanding indebtedness under our existing facilities. To the extent that our existing capital and borrowing capabilities are insufficient to meet these requirements and cover any losses, we will need to raise additional funds through debt or equity financings, including offerings of our common stock, securities convertible into our common stock, or rights to acquire our common stock or curtail our growth and reduce our assets or restructure arrangements with existing security holders. Any equity or debt financing, or additional borrowings, if available at all, may be on terms that are not favorable to us. Equity financings could result in dilution to our stockholders, as described further below, and the securities issued in future financings may have rights, preferences and privileges that are senior to those of our common stock. If our need for capital arises because of significant losses, the occurrence of these losses may make it more difficult for us to raise the necessary capital. If we cannot raise funds on acceptable terms if and when needed, we may

43

Table of Contents
not be able to take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements.
 
Future issuances of our common stock could dilute our shareholders’ interests 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 an existing shareholder does not purchase additional shares that we may issue, that shareholder’s interest in our company will be diluted, which means that its percentage of ownership in our company will be reduced.  Following such a reduction, that shareholder’s common stock would represent a smaller percentage of the vote in our Board of Directors’ elections and other shareholder decisions.
 
Volatility in the market price and trading volume of our common stock could adversely impact the trading price of our common stock.
 
The stock market in recent years has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market factors may materially reduce the market price of our common stock, regardless of our operating performance. The market price of our common stock, which has experienced significant price and volume fluctuations in recent months, could continue to fluctuate significantly for many reasons, including in response to the risks described herein or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by our competitors or suppliers regarding their own performance, as well as industry conditions and general financial, economic and political instability. A decrease in the market price of our common stock would adversely impact the value of your shares of common stock.
 
Provisions of our amended and restated articles of incorporation and by-laws 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 by-laws, 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.
 
Election and Removal of Directors.
 
Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors.  Our by-laws require parties other than the board of directors to give advance written notice of nominations for the election of directors.  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 by-laws provide that, consistent with Marshall Islands law, any action required or permitted to be taken by our shareholders must be affected 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 by-laws provide that, subject to certain exceptions, our Chairman, President, or Secretary at the direction of the Board of Directors or our Secretary at the request of one or more shareholders that hold in the aggregate at least a majority of our outstanding shares entitled to vote may call special meetings of our shareholders, and the business transacted at the special meeting is limited to the purposes stated in the notice.

44

Table of Contents

Advance Notice Requirements for Shareholder Proposals and Director Nominations.
 
Our by-laws 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 120 days nor more than 150 days before the anniversary date of the immediately preceding annual meeting of shareholders.  Our by-laws also specify requirements as to the form and content of a shareholder’s notice.  These provisions may impede a 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 shareholders 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 us 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.
 
Security breaches and other disruptions to our information technology infrastructure could interfere with our operations and expose us to liability which could materially adversely impact our business.
 
In the ordinary course of business, we rely on information technology networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to confidential information in the conduct of our business. Despite our cybersecurity measures (including monitoring of networks and systems, and maintenance of backup and protective systems) which are continuously reviewed and upgraded, our information technology networks and infrastructure may still be vulnerable to damage, disruptions, or shutdowns due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters, or other catastrophic events. Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could materially adversely affect our business.   
 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
Not applicable.
 
ITEM 2. PROPERTIES
 
We do not own any real property.  Effective April 4, 2011, we entered into a seven-year sub-sublease agreement for our main office in New York, New York.  The term of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments were $0.1 million per month until May 31, 2015 and thereafter were $0.1 million per month until the end of the seven-year term.  We also entered into a direct lease with the over-landlord of such office space that commenced immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provided for a free base rental period from May 1, 2018 to September 30, 2018.  Following the expiration of the free base rental period, the monthly base rental payments are $0.2 million per month from October 1, 2018 to April 30, 2023 and $0.2 million per month from May 1, 2023 to September 30, 2025.   

45

Table of Contents

Future minimum rental payments on the above lease for the next five years and thereafter are as follows:  $2.2 million annually for 2020 through 2022, $2.4 million for 2023, $2.5 million for 2024 and a total of $1.8 million for the remaining term of the lease.
 
On June 14, 2019, we entered into a sublease agreement for a portion of this leased space for our main office in New York, New York that commenced on July 26, 2019 and will end on September 29, 2025.  There is a free base rental period for the first four and a half months commencing on July 26, 2019.  Following the expiration of the free base rental period, the monthly base sublease income will be $0.1 million per month until September 29, 2025. 
 
In addition, during October 2017 we entered into a lease for office space in Singapore that expired in January 2019.  A lease was signed for a new office space in Singapore effective January 17, 2019 for a three-year term.
 
Lastly, during July 2018, we entered into a lease for office space in Copenhagen which commenced on July 1, 2018 and ended on April 30, 2019.  A lease was signed for a new office space in Copenhagen effective May 1, 2019 for a minimum period ending May 1, 2023.
 
For a description of our vessels, see “Our Fleet” in Item 1, “Business” in this report.  All of the vessels in our current fleet serve as collateral under our credit facilities.  Please see “Liquidity and Capital Resources” and “Critical Accounting Policies — Vessels and Depreciation” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” for a further description.  The foregoing descriptions are incorporated into this Item 2 by reference.
 
We consider each of our significant properties to be suitable for its intended use.
 
ITEM 3. LEGAL PROCEEDINGS
 
We are not involved in any other legal proceedings that we believe are likely to have, or have had a significant effect on our business, financial position, results of operations or cash flows, 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. MINE SAFETY DISCLOSURES
 
Not applicable.
 
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.”
 
As of February 27, 2020, there were approximately 18 holders of record of our common stock.
 
Our Board of Directors has adopted a quarterly dividend policy to pay a dividend of $0.175 per share, and the first quarterly dividend under this policy was announced on November 6, 2019, together with a special dividend of $0.325 per share.  Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with law and contractual obligations and our Board of Directors’ determination that each declaration and payment is in the best interest of the Company and our shareholders. 

46

Table of Contents

For a discussion of restrictions applicable to our payment of dividends, please see “Liquidity and Capital Resources—Dividends” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” below.
 
PART II
 
ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

 	 	For the Years Ended December 31,	 	
 	    	2019	 	2018	 	2017	    	2016	 	2015	    	
Income Statement Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands except for share and per share amounts)	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage revenues	 	$	389,496	 	$	367,522	 	$	209,698	 	$	133,246	 	$	150,784	 	
Service revenues	 	 	 —	 	 	 —	 	 	 —	 	 	2,340	 	 	3,175	 	
Total revenues	 	$	389,496	 	$	367,522	 	$	209,698	 	$	135,586	 	$	153,959	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	173,043	 	 	114,855	 	 	25,321	 	 	13,227	 	 	20,257	 	
Vessel operating expenses	 	 	96,209	 	 	97,427	 	 	98,086	 	 	113,636	 	 	122,008	 	
Charter hire expenses	 	 	16,179	 	 	1,534	 	 	 —	 	 	 —	 	 	 —	 	
General and administrative expenses (inclusive of nonvested stock amortization expense of $2,057, $2,231, $4,053, $20,680 and $42,136, respectively) (3)	 	 	24,516	 	 	23,141	 	 	22,190	 	 	45,174	 	 	74,941	 	
Technical management fees (3)	 	 	7,567	 	 	8,000	 	 	7,659	 	 	8,932	 	 	8,961	 	
Depreciation and amortization	 	 	72,824	 	 	68,976	 	 	71,776	 	 	76,330	 	 	79,556	 	
Other operating income	 	 	 —	 	 	 —	 	 	 —	 	 	(960)	 	 	—	 	
Impairment of vessel assets	 	 	27,393	 	 	56,586	 	 	21,993	 	 	69,278	 	 	39,893	 	
Loss (gain) on sale of vessels	 	 	168	 	 	(3,513)	 	 	(7,712)	 	 	(3,555)	 	 	1,210	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	417,899	 	 	367,006	 	 	239,313	 	 	322,062	 	 	346,826	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	(28,403)	 	 	516	 	 	(29,615)	 	 	(186,476)	 	 	(192,867)	 	
Other expense	 	 	(27,582)	 	 	(33,456)	 	 	(29,110)	 	 	(30,300)	 	 	(58,595)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss before reorganization items, net	 	 	(55,985)	 	 	(32,940)	 	 	(58,725)	 	 	(216,776)	 	 	(251,462)	 	
Reorganization items, net	 	 	 —	 	 	 —	 	 	 —	 	 	(272)	 	 	(1,085)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss before income taxes	 	 	(55,985)	 	 	(32,940)	 	 	(58,725)	 	 	(217,048)	 	 	(252,547)	 	
Income tax expense	 	 	 —	 	 	 —	 	 	 —	 	 	(709)	 	 	(1,821)	 	
Net loss	 	 	(55,985)	 	 	(32,940)	 	 	(58,725)	 	 	(217,757)	 	 	(254,368)	 	
Less: Net loss attributable to noncontrolling interest	 	 	 —	 	 	 —	 	 	 —	 	 	 —	 	 	(59,471)	 	
Net loss attributable to Genco Shipping & Trading Limited	 	$	(55,985)	 	$	(32,940)	 	$	(58,725)	 	$	(217,757)	 	$	(194,897)	 	
Net loss per share - basic  (1)	 	$	(1.34)	 	$	(0.86)	 	$	(1.71)	 	$	(30.03)	 	$	(29.61)	 	
Net loss per share - diluted  (1)	 	$	(1.34)	 	$	(0.86)	 	$	(1.71)	 	$	(30.03)	 	$	(29.61)	 	
Weighted average common shares outstanding - Basic  (1)	 	 	41,762,893	 	 	38,382,599	 	 	34,242,631	 	 	7,251,231	 	 	6,583,163	 	
Weighted average common shares outstanding - Diluted  (1)	 	 	41,762,893	 	 	38,382,599	 	 	34,242,631	 	 	7,251,231	 	 	6,583,163	 	

47

Table of Contents

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	
 	    	2019	 	2018	 	2017	    	2016	 	2015	    	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands, at end of period)	 	 	 	 	
Cash, including restricted cash	 	$	162,249	 	$	202,761	 	$	204,946	 	$	169,068	 	 	140,889	 	
Total assets  (2)	 	 	1,528,892	 	 	1,627,470	 	 	1,520,959	 	 	1,568,960	 	 	1,714,663	 	
Total debt (current and long-term, including notes payable, net of deferred financing costs)  (2)	 	 	482,730	 	 	535,148	 	 	515,392	 	 	513,020	 	 	579,023	 	
Total equity	 	 	978,428	 	 	1,053,307	 	 	975,027	 	 	1,029,699	 	 	1,105,966	 	
Other Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. dollars in thousands)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities (6)	 	$	59,526	 	$	65,907	 	$	24,071	 	$	(52,307)	 	 	(57,500)	 	
Net cash (used in) provided by investing activities (5) (6)	 	 	(22,849)	 	 	(195,375)	 	 	17,405	 	 	25,051	 	 	(65,240)	 	
Net cash (used in) provided by financing activities	 	 	(77,189)	 	 	127,283	 	 	(5,598)	 	 	55,435	 	 	150,520	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (4)	 	$	44,699	 	$	65,326	 	$	41,997	 	$	(112,469)	 	 	(93,598)	 	

	(1)		On July 7, 2016, we completed a one-for-ten reverse stock split with no change in par value per share.  The authorized shares of the common stock were not adjusted.  All common share and per share amounts of the Company prior to July 7, 2016 have retroactively adjusted to reflect the reverse stock split.	
 
	(2)		In the first quarter of 2016, the Company adopted Accounting Standards Update (“ASU”) 2015-03 where certain deferred financing costs that were previously presented as a non-current asset were reclassified from non-current assets to a reduction of current and long-term debt. 	
 
	(3)		During the year ended December 31, 2016, we opted to break out expenses previously classified as General, administrative and management fees into two separate categories to provide a greater level of detail of the underlying expenses.  These fees were broken out into General and administrative expenses and Technical management fees.  This change was made retrospectively for comparability purposes and there was no effect on the Net Loss for the years ended December 31, 2019, 2018, 2017, 2016 and 2015.	
 
	(4)		EBITDA represents net loss attributable to Genco Shipping & Trading Limited plus net interest expense, taxes and depreciation and amortization.  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 our consolidated internal financial statements, and it is presented for review at our board meetings.  We believe that EBITDA is useful to investors as the shipping industry is capital intensive which often results in significant depreciation and cost of financing.  EBITDA presents investors with a measure in addition to net income to evaluate our performance prior to these costs.  EBITDA is not an item recognized by U.S. GAAP (i.e. non-GAAP measure) 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 measure of liquidity or cash flows as shown in our Consolidated Statements 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 loss attributable to Genco Shipping & Trading Limited for each of the periods presented above:	

 	 	For the Years Ended December 31,	 	
 	    	2019	 	2018	 	2017	    	2016	 	2015	    	
Net loss attributable to Genco Shipping & Trading Limited	 	$	(55,985)	 	$	(32,940)	 	$	(58,725)	 	$	(217,757)	 	$	(194,897)	 	
Net interest expense	 	 	27,860	 	 	29,290	 	 	28,946	 	 	28,249	 	 	19,922	 	
Income tax expense	 	 	 —	 	 	 —	 	 	 —	 	 	709	 	 	1,821	 	
Depreciation and amortization	 	 	72,824	 	 	68,976	 	 	71,776	 	 	76,330	 	 	79,556	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (4)	 	$	44,699	 	$	65,326	 	$	41,997	 	$	(112,469)	 	$	(93,598)	 	

48

Table of Contents

	(5)		In the first quarter of 2017, the Company adopted ASU 2016-18, which requires the Company to show the changes in the total cash, cash equivalents and restricted cash in the statement of cash flows.  Changes in restricted cash were previously recorded as an investing cash inflow or outflow.  The adoption of ASU 2016-18 resulted in a change in net cash (used in) provided by investing activities of $15.9 million and ($9.9) million during the years ended December 31, 2016 and December 31, 2015, respectively.	
 
	(6)		In the first quarter of 2018, the Company adopted ASU 2016-15, which resulted in insurance proceeds for protection and indemnity claims and loss of hire claims to be separately disclosed in the cash flows from operating activities and resulted in insurance proceeds for hull and machinery claims to be separately disclosed in the cash flows from investing activities. Additionally, as part of ASU 2016-15, any cash payments for debt prepayment or debt extinguishment costs (including third party costs, premiums paid and other fees paid to lenders) must be classified as cash outflows for financing activities.  Lastly, for any debt instruments that contain interest payable in-kind, any cash payments attributable to the payment of in-kind interest will be classified as cash outflows for operating activities.  The adoption of ASU 2016-15 resulted in a change in net cash provided by (used in) operating activities and cash (used in) provided by investing activities of $2.4 million, $2.3 million and $1.4 million during the years ended December 31, 2017, 2016 and December 31, 2015, respectively.	

49

Table of Contents

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
General
 
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand our results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and notes thereto included in Item 8 - Financial Statements and Supplementary Data.
 
The MD&A generally discusses 2019 and 2018 items and year-to-year comparisons between 2019 and 2018. Discussions of 2017 items and year-to-year comparisons between 2018 and 2017 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results or Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on March 5, 2019.
 
We are a Marshall Islands company that transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes through the ownership and operation of drybulk carrier vessels.  Our fleet currently consists of 54 drybulk vessels, including 17 Capesize drybulk vessels, one Panamax drybulk vessels, six Ultramax drybulk vessels, 20 Supramax drybulk vessels, and 10 Handysize drybulk vessels, with an aggregate carrying capacity of approximately 4,914,000 deadweight tons (“dwt”), and the average age of our fleet is currently approximately 9.7 years.  We seek to deploy our vessels on time charters, spot market voyage charters, spot market-related time charters or in vessel pools trading in the spot market, to reputable charterers.  The majority of the vessels in our current fleet are presently engaged under time charter, spot market voyage charters and spot market-related time charter that expire (assuming the option periods in the time charters are not exercised) between February 2020 and May 2020.
 
See pages 7 - 8 for a table of our current fleet.
 
In 2017, we began implementing initiatives to expand our commercial platform and more actively manage the employment of our vessels.  We hired commercial directors for our major bulk and minor bulk fleets and began employment of our vessels directly with cargo owners under cargo contracts.  To better capitalize on opportunities to employ our vessels, we expanded our global commercial presence with the establishment of new offices in Singapore and Copenhagen.  Additionally, we withdrew all of our vessels from their respective pools and reallocated our freight exposure to the Atlantic basin to seek to capture the earnings premium historically offered.  Overall, our fleet deployment strategy remains weighted towards short-term fixtures, which provide optionality in a potentially rising freight rate environment.  In addition to both short and long-term time charters, we fix our vessels on spot market voyage charters as well as spot market-related time charters depending on market conditions and management’s outlook.
 
Over the course of 2018, the United States imposed a series of tariffs on several goods imported from various countries. Certain of these countries, including China, undertook retaliatory actions by implementing tariffs on select U.S. products. Most notably in terms of drybulk trade volumes is China’s tariff placed upon U.S. soybean exports, which could adversely affect drybulk rates. To date, our observation of trade flows has been that China has increased its market share of Brazilian and Argentine soybeans, while a portion of U.S. shipments have been re-directed to other destinations such as Latin America and Europe.  With the signing of the “phase one” trade agreement between China and the U.S. in January 2020, China has agreed in principle to purchase meaningful quantities of soybeans from the U.S.  However, a re-escalation of protectionist measures taken between these countries or other could lead to reduced volumes of drybulk trade.
 
On October 27, 2016, the Marine Environment Protection Committee (“MEPC”) announced the ratification of regulations mandating reduction in sulfur emissions from 3.5% currently to 0.5% as of the beginning of 2020 rather than pushing the deadline back to 2025. Accordingly, ships now have to reduce sulfur emissions, for which the principal solutions are the use of exhaust gas cleaning systems (“scrubbers”) or buying fuel with low sulfur content. If a vessel is

50

Table of Contents
not retrofitted with a scrubber, it will need to use low sulfur fuel, which is currently more expensive than standard marine fuel containing 3.5% sulfur content.  This increased demand for low sulfur fuel has resulted in an increase in prices for such fuel and may result in additional increases. 
 
We have installed scrubbers on our 17 Capesize vessels, 16 of which were completed  during 2019 and one of which was completed in January 2020.  The remainder of our fleet has begun consuming compliant, low sulfur fuel beginning in 2020, although we intend to continue to evaluate other options.  During the course of 2018, we sold seven of our older, less fuel efficient vessels and purchased six modern high specification vessels with a goal of improving fuel consumption and further reduce emissions.  We also sold four additional vessels during the course of 2019 as well as one vessel during February 2020 and will continue to seek opportunities to renew our fleet going forward. 
 
On January 1, 2019, we adopted Accounting Standards Codification (“ASC”) 842 — Leases which resulted in a right-of-use and operating lease liability for our office leases.  Refer to Note 2 — Summary of Significant Accounting Policies and Note 13 — Leases of our Consolidated Financial Statements for further information.
 
We report financial information and evaluate our operations by charter revenues and not by the length of ship employment for our customers, i.e., spot or time charters.  Each of our vessels serve the same type of customer, have similar operations and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment, the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. 
 
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, spot market voyage charters and spot market-related time charters, and monitoring the performance of our vessels under their charters.  Strategic management includes locating, purchasing, financing and selling vessels.  We currently contract with two 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.
 
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, chartered-in days, available days, operating days, fleet utilization, TCE rates and daily vessel operating expenses for the years ended December 31, 2019 and 2018 on a consolidated basis.

 	 	For the Year Ended	 	 	 	 	 	 	
 	 	December 31, 	 	Increase	 	 	 	
 	    	2019	    	2018	    	(Decrease)	    	% Change	 	
Fleet Data:	 	 	 	 	 	 	 	 	 	 	 	 	
Ownership days (1)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	6,205.0	 	 	5,251.5	 	 	953.5	 	18.2	%	
Panamax	 	 	736.6	 	 	2,022.7	 	 	(1,286.1)	 	(63.6)	%	
Ultramax	 	 	2,190.0	 	 	1,731.2	 	 	458.8	 	26.5	%	
Supramax	 	 	7,300.0	 	 	7,588.4	 	 	(288.4)	 	(3.8)	%	
Handymax	 	 	 —	 	 	338.4	 	 	(338.4)	 	(100.0)	%	
Handysize	 	 	4,590.9	 	 	5,316.4	 	 	(725.5)	 	(13.6)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	21,022.5	 	 	22,248.6	 	 	(1,226.1)	 	(5.5)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Chartered-in days (2)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	227.3	 	 	 —	 	 	227.3	 	100.0	%	
Panamax	 	 	 —	 	 	 —	 	 	 —	 	 —	%	
Ultramax	 	 	128.5	 	 	 —	 	 	128.5	 	100.0	%	
Supramax	 	 	658.7	 	 	49.4	 	 	609.3	 	1,233.4	%	

51

Table of Contents

 	 	For the Year Ended	 	 	 	 	 	 	
 	 	December 31, 	 	Increase	 	 	 	
 	    	2019	    	2018	    	(Decrease)	    	% Change	 	

Handymax	 	 	17.4	 	 	37.3	 	 	(19.9)	 	(53.4)	%	
Handysize	 	 	293.9	 	 	45.8	 	 	248.1	 	541.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	1,325.8	 	 	132.5	 	 	1,193.3	 	900.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Available days (owned & chartered-in fleet) (3)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	5,573.9	 	 	5,171.7	 	 	402.2	 	7.8	%	
Panamax	 	 	732.0	 	 	2,021.7	 	 	(1,289.7)	 	(63.8)	%	
Ultramax	 	 	2,299.3	 	 	1,724.0	 	 	575.3	 	33.4	%	
Supramax	 	 	7,547.4	 	 	7,624.4	 	 	(77.0)	 	(1.0)	%	
Handymax	 	 	17.4	 	 	365.7	 	 	(348.3)	 	(95.2)	%	
Handysize	 	 	4,824.9	 	 	5,323.8	 	 	(498.9)	 	(9.4)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	20,994.9	 	 	22,231.3	 	 	(1,236.4)	 	(5.6)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Available days (owned fleet) (4)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	5,346.6	 	 	5,171.7	 	 	174.9	 	3.4	%	
Panamax	 	 	732.0	 	 	2,021.7	 	 	(1,289.7)	 	(63.8)	%	
Ultramax	 	 	2,170.8	 	 	1,724.0	 	 	446.8	 	25.9	%	
Supramax	 	 	6,888.7	 	 	7,575.0	 	 	(686.3)	 	(9.1)	%	
Handymax	 	 	 —	 	 	328.4	 	 	(328.4)	 	(100.0)	%	
Handysize	 	 	4,531.0	 	 	5,278.0	 	 	(747.0)	 	(14.2)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	19,669.1	 	 	22,098.8	 	 	(2,429.7)	 	(11.0)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating days (5)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	5,525.4	 	 	5,169.5	 	 	355.9	 	6.9	%	
Panamax	 	 	697.0	 	 	1,970.9	 	 	(1,273.9)	 	(64.6)	%	
Ultramax	 	 	2,240.1	 	 	1,700.4	 	 	539.7	 	31.7	%	
Supramax	 	 	7,413.2	 	 	7,528.4	 	 	(115.2)	 	(1.5)	%	
Handymax	 	 	17.4	 	 	351.8	 	 	(334.4)	 	(95.1)	%	
Handysize	 	 	4,695.8	 	 	5,253.8	 	 	(558.0)	 	(10.6)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	20,588.9	 	 	21,974.7	 	 	(1,385.8)	 	(6.3)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet utilization (6)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	 	98.4	%  	 	99.4	%  	 	(1.0)	%  	(1.0)	%	
Panamax	 	 	94.6	%  	 	97.4	%  	 	(2.8)	%  	(2.9)	%  	
Ultramax	 	 	97.4	%  	 	98.2	%  	 	(0.8)	%  	(0.8)	%	
Supramax	 	 	97.3	%  	 	98.6	%  	 	(1.3)	%  	(1.3)	%	
Handymax	 	 	100.0	%  	 	93.6	%  	 	6.4	%  	6.8	%	
Handysize	 	 	97.3	%  	 	98.4	%  	 	(1.1)	%  	(1.1)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet average	 	 	97.5	%  	 	98.5	%  	 	(1.0)	%  	(1.0)	%	

52

Table of Contents

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Year Ended	 	 	 	 	 	 	
 	 	December 31, 	 	Increase	 	 	 	
 	    	2019	    	2018	    	(Decrease)	    	% Change	 	
Average Daily Results:	 	 	 	 	 	 	 	 	 	 	 	 	
Time Charter Equivalent (7)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	$	13,181	 	$	15,422	 	$	(2,241)	 	(14.5)	%	
Panamax	 	 	10,397	 	 	9,648	 	 	749	 	7.8	%	
Ultramax	 	 	10,994	 	 	10,420	 	 	574	 	5.5	%	
Supramax	 	 	8,939	 	 	10,816	 	 	(1,877)	 	(17.4)	%	
Handymax	 	 	 —	 	 	12,031	 	 	(12,031)	 	(100.0)	%	
Handysize	 	 	8,157	 	 	9,099	 	 	(942)	 	(10.4)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet average	 	 	10,182	 	 	11,364	 	 	(1,182)	 	(10.4)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Daily vessel operating expenses (8)	 	 	 	 	 	 	 	 	 	 	 	 	
Capesize	 	$	5,076	 	$	4,855	 	$	221	 	4.6	%	
Panamax	 	 	4,621	 	 	4,137	 	 	484	 	11.7	%	
Ultramax	 	 	4,665	 	 	4,531	 	 	134	 	3.0	%	
Supramax	 	 	4,474	 	 	4,303	 	 	171	 	4.0	%	
Handymax	 	 	 —	 	 	4,767	 	 	(4,767)	 	(100.0)	%	
Handysize	 	 	4,016	 	 	4,035	 	 	(19)	 	(0.5)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Fleet average	 	 	4,576	 	 	4,379	 	 	197	 	4.5	%	

	(1)		Ownership days.  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)		Chartered-in days.  We define chartered-in days as the aggregate number of days in a period during which we chartered-in third party vessels. 	
 
	(3)		Available days (owned and chartered-in fleet).  We define available days, which we have recently updated and incorporated in the table above to better demonstrate the manner in which we evaluate our business, as the number of our ownership days and chartered-in days less the aggregate number of days that our vessels are off-hire due to familiarization upon acquisition, repairs or repairs under guarantee, vessel upgrades or special surveys.  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.	
 
	(4)		Available days (owned fleet).  We define available days for the owned fleet as available days less chartered-in days.	
 
	(5)		Operating days.  We define operating days as the number of our total 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. 	
 
	(6)		Fleet utilization.  We calculate fleet utilization, which we have recently updated and incorporated in the table above to better demonstrate the manner in which we evaluate our business, as the number of our operating days during a period divided by the number of ownership days plus chartered-in days less drydocking days. 	
 
	(7)		Time Charter Equivalent (“TCE”).  We define TCE rates as our voyage revenues less voyage expenses and charter-hire expenses, divided by the number of the available days of our owned fleet 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.	

53

Table of Contents

 	 	 	 	 	 	 	 	
 	 	For the Year Ended	 	
 	 	December 31, 	 	
 	 	2019	    	2018	 	
Voyage revenues (in thousands)	 	$	389,496	 	$	367,522	 	
Voyage expenses (in thousands)	 	 	173,043	 	 	114,855	 	
Charter hire expenses (in thousands)	 	 	16,179	 	 	1,534	 	
 	 	 	200,274	 	 	251,133	 	
Total available days for owned fleet	 	 	19,669	 	 	22,099	 	
Total TCE rate	 	$	10,182	 	$	11,364	 	

	(8)		Daily vessel operating expenses.  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 tables represent the operating data and certain balance sheet and other data as of for the years ended December 31, 2019 and 2018 on a consolidated basis. 

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	 	 	 	 	 	
 	    	2019	    	2018	    	Change	    	% Change	 	
Income Statement Data:	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. Dollars in thousands, except for per share amounts)	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage revenues	 	$	389,496	 	$	367,522	 	$	21,974	 	6.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	 	389,496	 	 	367,522	 	 	21,974	 	6.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	173,043	 	 	114,855	 	 	58,188	 	50.7	%	
Vessel operating expenses	 	 	96,209	 	 	97,427	 	 	(1,218)	 	(1.3)	%	
Charter hire expenses	 	 	16,179	 	 	1,534	 	 	14,645	 	954.7	%	
General and administrative expenses (inclusive of nonvested stock amortization expense of $2,057 and $2,231, respectively)	 	 	24,516	 	 	23,141	 	 	1,375	 	5.9	%	
Technical management fees	 	 	7,567	 	 	8,000	 	 	(433)	 	(5.4)	%	
Depreciation and amortization	 	 	72,824	 	 	68,976	 	 	3,848	 	5.6	%	
Impairment of vessel assets	 	 	27,393	 	 	56,586	 	 	(29,193)	 	(51.6)	%	
Loss (gain) on sale of vessels	 	 	168	 	 	(3,513)	 	 	3,681	 	(104.8)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	417,899	 	 	367,006	 	 	50,893	 	13.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	(28,403)	 	 	516	 	 	(28,919)	 	(5,604.5)	%	
Other expense	 	 	(27,582)	 	 	(33,456)	 	 	5,874	 	(17.6)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	(55,985)	 	 	(32,940)	 	 	(23,045)	 	70.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss per share - basic	 	$	(1.34)	 	$	(0.86)	 	$	(0.48)	 	55.8	%	
Net loss per share - diluted	 	$	(1.35)	 	$	(0.86)	 	$	(0.49)	 	57.0	%	
Weighted average common shares outstanding - basic	 	 	41,762,893	 	 	38,382,599	 	 	3,380,294	 	8.8	%	
Weighted average common shares outstanding - diluted	 	 	41,762,893	 	 	38,382,599	 	 	3,380,294	 	8.8	%	

54

Table of Contents

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	 	 	 	 	 	
 	    	2019	    	2018	    	Change	    	% Change	 	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. Dollars in thousands, at end of period)	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, including restricted cash	 	$	162,249	 	$	202,761	 	$	(40,512)	 	(20.0)	%	
Total assets	 	 	1,528,892	 	 	1,627,470	 	 	(98,578)	 	(6.1)	%	
Total debt (current and long-term, net of deferred financing fees)	 	 	482,730	 	 	535,148	 	 	(52,418)	 	(9.8)	%	
Total equity	 	 	978,428	 	 	1,053,307	 	 	(74,879)	 	(7.1)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Data:	 	 	 	 	 	 	 	 	 	 	 	 	
(U.S. Dollars in thousands)	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	$	59,526	 	$	65,907	 	 	(6,381)	 	(9.7)	%	
Net cash used in investing activities	 	 	(22,849)	 	 	(195,375)	 	 	172,526	 	(88.3)	%	
Net cash (used in) provided by financing activities	 	 	(77,189)	 	 	127,283	 	 	(204,472)	 	(160.6)	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA (1)	 	 	44,699	 	 	65,326	 	$	(20,627)	 	(31.6)	%	

	(1)		EBITDA represents net loss plus net interest expense, taxes and depreciation and amortization.  Refer to page 48 included in Item 6 where the use of EBITDA is discussed and for a table demonstrating our calculation of EBITDA that provides a reconciliation of EBITDA to net (loss) income attributable to Genco Shipping & Trading for each of the periods presented above.	
 
Results of Operations
 
VOYAGE 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 or freight rates 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.	
 
During 2019, voyage revenues increased by $22.0 million, or 6.0%, as compared to 2018. The increase in voyage revenues was primarily due to increased employment of vessels on spot market voyage charters, partially offset by reduced rates from trading our Capesize vessels primarily in the Pacific basin and offhire related to scrubber installations, ballast water treatment installation and special surveys during 2019.
 
The average TCE rate of our fleet decreased by 10.4% to $10,182 a day during 2019 from $11,364 a day during 2018.  The decrease in TCE rates was primarily due to lower rates achieved by the majority of the vessels in our fleet.

55

Table of Contents

The Baltic Dry Index, or BDI (a drybulk index), on average was the same level in 2019 as it was in 2018 despite reaching multi-year highs in the second half of the year. Overall, the 2019 drybulk freight market was a tale of two halves. In the first half of 2019, the BDI came under seasonal pressure due to the front-loaded nature of the orderbook, which led to increased newbuilding vessel deliveries as well as the occurrence of the Lunar New Year holiday in China. On top of these factors, a dam breach occurred in Brazil at a mine operated by Vale. This impacted over 90MT of iron ore production from the world’s largest producer of the commodity. This development accentuated the impact of the seasonal factors previously described pressuring the BDI to a low of 595 on February 11, 2019. Following several months of a softer rate environment, the BDI began to increase in May as Brazilian iron ore exports started to recover. Heading into the second half of the year, given the industry-wide environmental regulations set to commence on January 1, 2020, many shipowners began installing scrubbers on their vessels primarily in shipyards in the Far East, which led to increased tonnage in the Pacific. This rush ahead of the compliance date artificially reduced fleet-wide capacity and productivity at a time when Brazilian iron ore shipments were ramping up once again. The combination of increased iron ore exports from the Atlantic basin, together with a shortage of vessels in the region led to a surge in Capesize rates to nearly $40,000 per day and highs not seen since 2013. The smaller drybulk vessel classes also experienced stronger rates due to increased coal shipments to China during the third quarter as well as another solid South American grain season. As such, the BDI reached 2,518 on September 4, 2019, its highest mark since November 2010. During the fourth quarter of the year, the BDI retreated from these strong levels due to coal import restrictions in China, an easing of grain shipments out of South America, limited U.S. soybean shipments to China during the ordinarily peak season as well as lower than expected iron ore shipments out of Brazil due to disruptions at Vale’s operations. 
 
In 2020 to date, various seasonal factors including increased newbuilding deliveries, weather related disruptions and the Lunar New Year in China have negatively impacted the drybulk market in the short-term. The onset of the Covid-19 novel coronavirus has also limited industrial activity in China, with temporary closures of factories and other facilities, and impacted sentiment surrounding the global economy.  We therefore believe it is a contributing factor to lower drybulk rates in 2020 as a result of lower demand for the some of the cargoes we carry, including iron ore and coal.  We also believe that such reduced demand has resulted in lower sale prices in the market for vessels, which may result in reduced prices for vessels that we intend to sell.   In addition, the coronavirus epidemic presents operational risks for our business as described above in “The Covid-19 novel coronavirus, or other epidemics, could have a material adverse impact on our business, results of operations, or financial condition”  in Item I.A., Risk Factors.  Operational risks include delays in transferring cargo due to quarantines of affected individuals, offhire time due to quarantine regulations requiring a minimum of 14 days between departure from a port in China and arrival at a port in certain other countries, delays and expenses in finding substitute crew members for any who may become infected, delays in drydocking if insufficient shipyard personnel are working due to quarantines, and delays in payment systems through which we receive revenues .    We have instituted measures to reduce the risk that the coronavirus would impact our crew or our vessels.  However, if the coronavirus epidemic is prolonged or becomes more severe, rates in the drybulk market, our vessel values, and our operations may continue to be negatively affected.
 
For 2019 and 2018, we had ownership days of 21,022.5 days and 22,248.6 days, respectively.  The decrease in ownership days is primarily due to the sale of eleven vessels during the second half of 2018 and during 2019 partially offset by the delivery of six vessels during the third quarter of 2018. Fleet utilization decreased to 97.5% during 2019 from 98.5% during 2018 primarily due to an increase in drydocking days.
 
Please see pages 7 – 8 for a table that sets forth information about the current employment of the vessels in our fleet.
 
VOYAGE EXPENSES-
 
In time charters, spot market-related time charters and pool agreements, 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.  These expenses are borne by the Company during spot market voyage charters.  There are certain other non-specified voyage expenses such as commissions which are typically borne by us.  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 spot

56

Table of Contents
market voyage charters because these expenses are for the account of the vessel owner.  At the inception of a time charter, we record the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses.  In short-term time charters, voyage expenses include the cost of bunkers consumed pursuant to the terms of the time charter agreement.  Additionally, we may record lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses. Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements.
   
Voyage expenses increased by $58.2 million from $114.9 million during 2018 to $173.0 million during 2019.  This increase was primarily due to the employment of vessels on additional spot market voyage charters during 2019, which incur significantly higher voyage expenses as compared to time charters, spot market-related time charters and pool arrangements. 
 
VESSEL OPERATING EXPENSES-
 
Vessel operating expenses decreased by $1.2 million from $97.4 million during 2018 to $96.2 million during 2019.  This decrease was primarily due to fewer owned vessels during 2019 as compared to 2018, partially offset by higher drydocking and insurance related expenses.
 
Average daily vessel operating expenses for our fleet increased by $197 per day from $4,379 per day during 2018 as compared to $4,576 in 2019.  The increase in daily vessel operating expenses was predominantly due to higher drydock related expenses and lubricant expense. 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 actual daily vessel operating expenses per vessel for the year ended December 31, 2019 were $51 above the weighted-average budgeted rate of $4,525 per vessel per day.
 
Our vessel operating expenses, which generally represent fixed costs, may increase due to factors beyond our control, some of which may affect the shipping industry in general.  These include potential increases in lube expenses as a result of the positioning or sailing time of our vessels, as well as developments relating to market prices for crewing and insurance, which may also cause these expenses to increase.
 
Based on our management’s estimates and budgets provided by our technical manager for our fleet of 54 vessels as of December 31, 2019 (after the anticipated sale of the Genco Thunder), we expect our vessels to have average daily vessel operating expenses during 2020 of:

 	    	Average Daily	 	
Vessel Type	    	Budgeted Amount	 	
Capesize	 	$	5,085	 	
Ultramax	 	 	4,761	 	
Supramax	 	 	4,321	 	
Handysize	 	 	4,221	 	
 
Based on these average daily budgeted amounts by vessel type, we expect our fleet to have average daily vessel operating expenses of $4,590 during 2020.
 
CHARTER HIRE EXPENSES-
 
Charter hire expenses increased by $14.6 million from $1.5 million during 2018 to $16.2 million during 2019.  During 2019, we chartered in 27 third-party vessels as compared to only five during 2018.
 
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,

57

Table of Contents
legal, auditing and other professional expenses. General and administrative expenses include nonvested stock amortization expense which represent the amortization of stock-based compensation that has been issued to our Directors and employees pursuant to the Management Incentive Program (the “MIP”) and the 2015 Equity Incentive Plan.  Refer to Note 16 — Stock-Based Compensation in our Consolidated Financial Statements.  General and administrative expenses also include legal and professional fees associated with our credit facilities which are not capitalizable to deferred financing costs.  We have incurred additional general and administrative expenses during 2019 as a result of our global expansion to Singapore and Copenhagen and may incur additional such expenses during 2020.
 
General and administrative expenses increased by $1.4 million from $23.1 million during 2018 to $24.5 million during 2019, primarily due to an increase in compensation related expenses.
 
TECHNICAL MANAGEMENT FEES-
 
We incur management fees to third party technical management companies for the day-to-day management of our vessels, including performing routine maintenance, attending to vessel operations and arranging for crews and supplies.
   
For the years ended December 31, 2019 and 2018, technical management fees were $7.6 million and $8.0 million, respectively.  The $0.4 million decrease was primarily due to a smaller fleet during 2019.
 
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 and we estimate the residual value by taking the estimated scrap value of $310 per lightweight ton times the weight of the ship in lightweight tons.
 
Depreciation and amortization expenses increased by $3.8 million from $69.0 million during 2018 to $72.8 million during 2019.  This increase was primarily due to depreciation expense recorded during 2019 for the six vessels delivered during the third quarter of 2018, partially offset by a decrease in depreciation for the eleven vessels that were sold during the second half of 2018 and 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions in our Consolidated Financial Statements.  There was also an increase in in the amortization of drydocking assets as there were more vessels that completed drydockings during 2019 as compared to the same period during 2018.  Refer to “Capital Expenditures” below for further detail.
 
IMPAIRMENT OF VESSEL ASSETS-
 
During 2019 and 2018, we recorded $27.4 million and $56.6 million of impairment of vessel assets, respectively. 
 
On February 3, 2020, the Company entered into an agreement to sell the Genco Charger, a 2005-built Handysize vessel, to a third party for $5.2 million less a 1.0% commission payable to a third party.  The sale of the vessel was completed on February 24, 2020.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of December 31, 2019, the vessel value for the Genco Charger was adjusted to its net sales price of $5.1 million as of December 31, 2019. This resulted in an impairment loss of $1.3 million during 2019.
 
On November 4, 2019, the Company entered into an agreement to sell the Genco Raptor, a 2007-built Panamax vessel, to a third party for $10.2 million less a 2.0% commission payable to a third party.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of September 30, 2019, the vessel value for the Genco Raptor was adjusted to its net sales price of $10.0 million as of September 30, 2019. This resulted in an impairment loss of $5.8 million during 2019.

58

Table of Contents

On September 25, 2019, the Company entered into an agreement to sell the Genco Thunder, a 2007-built Panamax vessel, for $10.4 million less a 2.0% broker commission payable to a third party.  Therefore, the vessel value for the Genco Thunder was adjusted to its net sales price of $10.2 million as of September 30, 2019.  This resulted in an impairment loss of $5.7 million during 2019. 
 
On September 20, 2019, the Company entered into an agreement to sell the Genco Champion, a 2006-built Handysize vessel, for $6.6 million less a 3.0% broker commission payable to a third party.  Therefore, the vessel value for the Genco Champion was adjusted to its net sales price of $6.4 million as of September 30, 2019.  This resulted in an impairment loss of $0.6 million during 2019. 
 
On August 2, 2019, we entered into an agreement to sell the Genco Challenger, a 2003-built Handysize vessel, for $5.3 million less a 2.0% broker commission payable to a third party.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of June 30, 2019, we reduced the carrying value of the Genco Challenger to the net sales price on June 30, 2019.  This resulted in an impairment loss of $4.4 million during 2019.  
 
At June 30, 2019, we determined that the expected estimated future undiscounted cash flows for the Genco Champion, a 2006-built Handysize vessel, and the Genco Charger, a 2005-built Handysize vessel, did not exceed the net book value of these vessels as of June 30, 2019.  As such, we adjusted the value of these vessels to their respective fair market values as of June 30, 2019.  This resulted in an impairment loss of $9.5 million during 2019.
 
On July 24, 2018, we entered into an agreement to sell the Genco Surprise.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of June 30, 2018, we reduced the carrying value of the Genco Surprise to the net sales price on June 30, 2018.  This resulted in an impairment loss of $0.2 million during 2018.
 
On February 27, 2018, our Board of Directors determined to dispose of our following nine vessels; the Genco Cavalier, the Genco Loire, the Genco Lorraine, the Genco Muse, the Genco Normandy, the Baltic Cougar, the Baltic Jaguar, the Baltic Leopard and the Baltic Panther, at times and on terms to be determined in the future.  Given this decision, and that the estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel, we have adjusted the values of these older vessels to their respective fair market values during 2018.  This resulted in an impairment loss of $56.4 million during 2018.
 
Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information.
 
LOSS (GAIN) ON SALE OF VESSELS-
 
During 2019, we recorded a $0.2 million net loss on sale of vessels related primarily to the sale of the Genco Challenger, Genco Champion and Genco Raptor which was largely offset by a net gain related to the sale of the Genco Vigour. During 2018, we recorded a net gain on sale of vessels of $3.5 million related primarily to the sale of the Genco Progress during the third quarter of 2018 and the sale of the Genco Cavalier, Genco Explorer, Genco Muse, Genco Beauty and Genco Knight during the fourth quarter of 2018. 
 
OTHER (EXPENSE) INCOME-
 
NET INTEREST EXPENSE-
 
Net interest expense decreased by $1.4 million to $27.9 million during 2018 as compared to $29.3 million during 2018.  Net interest expense during the years ended 2019 and 2018 consisted of interest expense under our credit facilities and amortization of deferred financing costs for those facilities.  The decrease is primarily due to a decrease in interest expense associated with the $495 Million Credit Facility partially offset by an increase in interest expense associated with the $108 Million Credit Facility, which was entered into on August 14, 2018.   Refer to Note 7 — Debt in the Consolidated Financial Statements for information regarding our credit facilities.

59

Table of Contents

IMPAIRMENT OF RIGHT-OF-USE ASSET –
 
During the 2019, we recognized $0.2 million of impairment charges on our operating lease right-of-use asset in accordance with ASC 360.  Refer to Note 13 — Leases in our Consolidated Financial Statements for further information.
 
LOSS ON DEBT EXTINGUISHMENT –
 
During 2018, we recorded a $4.5 million loss on debt extinguishment as a result of the refinancing of our $400 Million Credit Facility, $98 Million Credit Facility and 2014 Term Loan Facilities with the $495 Million Credit Facility on June 5, 2018.  Refer to Note 7 — Debt in our Consolidated Financial Statements for information regarding our credit facilities.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Our primary sources of liquidity are cash flow from operations, cash on hand, equity offerings and credit facility borrowings. We currently use our funds primarily for the acquisition of vessels generally and under our ongoing fleet renewal program, drydocking for our vessels, and satisfying working capital requirements as may be needed to support our business and make required payments under our indebtedness.  Our ability to continue to meet our liquidity needs is subject to and will be affected by cash utilized in operations, the economic or business environment in which we operate, shipping industry conditions, the financial condition of our customers, vendors and service providers, our ability to comply with the financial and other covenants of our indebtedness, and other factors.  We expect that our fuel costs and value of our fuel inventories may increase in 2020 as a result of sulfur emission regulations that took effect on January 1, 2020.
 
On June 19, 2018, we closed an equity offering of 7,015,000 shares of common stock at an offering price of $16.50 per share.  We received net proceeds of approximately $109.6 million after deducting underwriters’ discounts and commissions and other expenses.  We used the net proceeds to finance a portion of the purchase price for the two Capesize and two Ultramax vessels that we acquired during the third quarter of 2018.  Refer to Note 4 — Vessel Acquisitions and Dispositions.
 
We entered into the $495 Million Credit Facility on May 31, 2018, which was initially used to refinance our prior credit facilities: the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities on June 5, 2018 and originally allowed borrowings of up to $460 million.  On February 28, 2019, we entered into an amendment to the $495 Million Credit Facility that provides for an additional tranche of up to $35 million to finance a portion of the acquisitions, installations, and related costs for exhaust cleaning systems (or “scrubbers”) for 17 of the Company’s Capesize vessels.  Additionally, we entered into the $108 Million Credit Facility on August 14, 2018 to finance a portion of the purchase price for the six vessels that were purchased during the third quarter of 2018.  Refer to Note 7 — Debt in our Consolidated Financial Statements.
 
At December 31, 2019, we were in compliance with all financial covenants under the $495 Million Credit facility and the $108 Million Credit Facility.    
 
We believe our capital resources are sufficient to fund our operations for at least the next twelve months. Given quarterly amortization payments of $17.4 million under our credit facilities, anticipated capital expenditures related to drydockings and the installation of ballast water treatment systems (“BWTS”), as well as the anticipated quarterly dividend payment of $0.175 per share, we anticipate that our cash expenditures will increase.
 
In the future, we may require capital to fund acquisitions or to improve or support our ongoing operations and debt structure.  We may from time to time seek to raise additional capital through equity or debt offerings, selling vessels or other assets, pursuing strategic opportunities, or otherwise.  We may also from time to time seek to refinance our indebtedness or obtain waivers or modifications to our credit agreements to obtain more favorable terms, enhance flexibility in conducting our business, or otherwise.  We may seek to accomplish any of these independently or in

60

Table of Contents
conjunction with one or more of these actions.  However, if market conditions are unfavorable, we may be unable to accomplish any of the foregoing on acceptable terms or at all.
 
Dividends
 
Our Board of Directors has adopted a quarterly dividend policy to pay a dividend of $0.175 per share.  Accordingly, on February 25, 2020, we announced a quarterly dividend of $0.175 per share.  Our quarterly dividend policy and declaration and payment of dividends are subject to legally available funds, compliance with law and contractual obligations and our Board of Directors’ determination that each declaration and payment is in the best interest of the Company and our shareholders.  Our declaration and payment of dividends is subject to a number of conditions and restrictions as described below. 
 
 On November 5, 2019, we entered into amendments with our lenders to the dividend covenants of the credit agreements for our $495 Million Credit Facility and our $108 Million Credit Facility.  Under the terms of these two facilities as so amended, dividends or repurchases of our stock are subject to customary conditions.  We may pay dividends or repurchase stock under these facilities to the extent our total cash and cash equivalents are greater than $100 million and 18.75% of our total indebtedness, whichever is higher; if we cannot satisfy this condition, we are subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter, for which purpose the full commitment of up to $35 million of our new scrubber tranche is assumed to be drawn.
 
The declaration and payment of any dividend or any stock repurchase is subject to the discretion of our Board of Directors.  The principal business factors that our Board of Directors expects to consider when determining the timing and amount of dividend payments or stock repurchases include our earnings, financial condition, and cash requirements at the time. Marshall Islands law generally prohibits the declaration and payment of dividends or stock repurchases other than from surplus. Marshall Islands law also prohibits the declaration and payment of dividends or stock repurchases while a company is insolvent or would be rendered insolvent by the payment of such a dividend or such a stock repurchase. 
 
U.S. Federal Income Tax Treatment of Dividends
 
U.S. Holders
 
For purposes of this discussion, the term "U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, (i) an individual U.S. citizen or resident, (ii) a corporation that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or any other U.S. entity taxable as a corporation, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (x) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (y) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. If a partnership, or an entity treated for U.S. federal income tax purposes as a partnership, such as a limited liability company, holds common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. If you are a partner in such a partnership holding our common stock, you are encouraged to consult your tax advisor. A beneficial owner of our common stock (other than a partnership) that is not a U.S. Holder is referred to below as a "Non-U.S. Holder."
 
Subject to the discussion of passive foreign investment company (PFIC) status on pages 41 – 42 above, any distributions made by us to a U.S. Holder with respect to our common shares generally will constitute dividends to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of those earnings and profits will be treated first as a nontaxable return of capital to the extent of the U.S. Holder's tax basis in our common shares (determined on a share-by-share basis), and thereafter as capital gain. U.S. Holders that own at least 10% of our shares may be able to claim a dividends-received-deduction and should consult their tax advisors.

61

Table of Contents

Dividends paid on our common shares to a U.S. Holder who is an individual, trust or estate, or a "non-corporate U.S. Holder," will generally be treated as "qualified dividend income" that is taxable to such non-corporate U.S. Holder at preferential tax rates, provided that (1) our common shares are readily tradable on an established securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we have been, are, or will be); (3) the non-corporate U.S. Holder's holding period of our common shares includes more than 60 days in the 121-day period beginning 60 days before the date on which our common shares becomes ex-dividend; and (4) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. A non-corporate U.S. Holder will be able to take qualified dividend income into account in determining its deductible investment interest (which is generally limited to its net investment income) only if it elects to do so; in such case, the dividend will be taxed at ordinary income rates. Non-corporate U.S. Holders also may be required to pay a 3.8% surtax on all or part of such holder's "net investment income," which includes, among other items, dividends on our shares, subject to certain limitations and exceptions. Investors are encouraged to consult their own tax advisors regarding the effect, if any, of this surtax on their ownership of our shares.
 
Amounts taxable as dividends generally will be treated as passive income from sources outside the U.S. However, if (a) we are 50% or more owned, by vote or value, by U.S. Holders and (b) at least 10% of our earnings and profits are attributable to sources within the U.S., then for foreign tax credit purposes, a portion of our dividends would be treated as derived from sources within the U.S. With respect to any dividend paid for any taxable year, the U.S. source ratio of our dividends for foreign tax credit purposes would be equal to the portion of our earnings and profits from sources within the U.S. for such taxable year divided by the total amount of our earnings and profits for such taxable year. The rules related to U.S. foreign tax credits are complex and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available.
 
Special rules may apply to any "extraordinary dividend" — generally, a dividend in an amount which is equal to or in excess of 10% of a shareholder's adjusted basis (or fair market value in certain circumstances) in a share of our common shares — paid by us. If we pay an "extraordinary dividend" on our common shares that is treated as "qualified dividend income", then any loss derived by a non-corporate U.S. Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.
 
Tax Consequences if We Are a Passive Foreign Investment Company
 
As discussed in “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. shareholders” in Item 1.A Risk Factors above, a foreign corporation generally will be treated as a PFIC for U.S. federal income tax purposes if, after applying certain look through rules, either (1) at least 75% of its gross income for any taxable year consists of “passive income” or (2) at least 50% of the average value or adjusted bases of its assets (determined on a quarterly basis) produce or are held for the production of passive income, i.e., “passive assets.”  As discussed above, we do not believe that our past or existing operations would cause, or would have caused, us to be deemed a PFIC with respect to any taxable year.  No assurance can be given that the 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, there can be no assurance that we will not become a PFIC in any future taxable year because the PFIC test is an annual test, there are uncertainties in the application of the PFIC rules, and although we intend to manage our business so as to avoid PFIC status to the extent consistent with our other business goals, there could be changes in the nature and extent of our operations in future taxable years.
 
If we were to be treated as a PFIC for any taxable year in which a U.S. Holder owns shares of our common stock (and regardless of whether we remain a PFIC for subsequent taxable years), the tax consequences to such a U.S. holder upon the receipt of  distributions in respect of such shares that are treated as “excess distributions” would differ from those described above. In general, an excess distribution is the amount of distributions received during a taxable year that exceed 125% of the average amount of distributions received by a U.S. Holder in respect of the common shares during the preceding three taxable years, or if shorter, during the U.S. Holder’s holding period prior to the taxable year of the distribution. The distributions that are excess distributions would be allocated ratably over the U.S. Holder’s holding period for the common shares. The amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income. The amount allocated to each of the other

62

Table of Contents
taxable years would be subject to tax at the highest marginal rate in effect for the U.S. Holder for that taxable year, and an interest charge for the deemed deferral benefit would be imposed on the resulting tax allocated to such other taxable years. The tax liability with respect to the amount allocated to taxable years prior to the year of the distribution cannot be offset by net operating losses. As an alternative to such tax treatment, a U.S. Holder may make a “qualified electing fund” election or “mark to market” election, to the extent available, in which event different rules would apply.  The U.S. federal income tax consequences to a U.S. Holder if we were to be classified as a PFIC are complex. A U.S. Holder should consult with his or her own advisor with regard to those consequences, as well as with regard to whether he or she is eligible to and should make either of the elections described above.
 
Non-U.S. Holders
 
Non-U.S. Holders generally will not be subject to U.S. federal income tax on dividends received from us on our common shares unless the income is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States (“effectively connected income”) (and, if an applicable income tax treaty so provides, the dividends are attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.).  Effectively connected income (or, if an income tax treaty applies, income attributable to a permanent establishment maintained in the U.S.) generally will be subject to regular U.S. federal income tax in the same manner discussed above relating to taxation of U.S. Holders. In addition, earnings and profits of a corporate Non-U.S. Holder that are attributable to such income, as determined after allowance for certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable income tax treaty. Non-U.S. Holders may be subject to tax in jurisdictions other than the United States on dividends received from us on our common shares.
 
Dividends paid on our common shares to a non-corporate U.S. Holder may be subject to U.S. federal backup withholding tax if the non-corporate U.S. Holder:
 
	·		fails to provide us with an accurate taxpayer identification number;	
	·		is notified by the IRS that they have become subject to backup withholding because they previously failed to report all interest or dividends required to be shown on their federal income tax returns; or	
	·		fails to comply with applicable certification requirements.	
 
A holder that is not a U.S. Holder or a partnership may be subject to U.S. federal backup withholding with respect to such dividends unless the holder certifies that it is a non-U.S. person, under penalties of perjury, or otherwise establishes an exemption therefrom.  Backup withholding tax is not an additional tax. Holders generally may obtain a refund of any amounts withheld under backup withholding rules that exceed their income tax liability by timely filing a refund claim with the IRS.
 
You are encouraged to consult your own tax advisor concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local, or foreign law from the payment of dividends on our common stock.
 
Cash Flow
 
Net cash provided by operating activities for the year ended December 31, 2019 was $59.5 million as compared to $65.9 million for the year ended December 31, 2018.  Included in the net loss during the year ended December 31, 2019 were $27.4 million of non-cash impairment charges, $0.2 million net loss arising from the sale of four vessels, $1.2 million of non-cash lease expense and a loss of $0.2 million related to the non-cash impairment of our right-of-use operating lease asset.  Included in the net loss during the year ended December 31, 2018 were $56.6 million of non-cash impairment charges, as well as a $4.5 million loss on the extinguishment of debt, a $5.3 million payment on the $400 Million Credit Facility and gains totaling $3.5 million arising from the sale of seven vessels.  Depreciation and amortization expense for the year ended December 31, 2019 increased by $3.8 million primarily due to depreciation expense for the six vessels delivered during the third quarter of 2018, partially offset by a decrease in depreciation expense for the eleven vessels that were sold during the second half of 2018 and 2019.  Additionally, there was an $18.7 million increase in the fluctuation in due from charterers due to the timing of payments received from charterers and a $5.8 million increase in the fluctuation in prepaid expenses and other current assets due to the timing of

63

Table of Contents
payments.  There was also a $16.6 million increase in the fluctuation in inventories primarily associated with vessels on spot market voyage charters.  Lastly, there was a $10.6 million increase in the fluctuation of accounts payable and accrued expenses due to the timing of payments made.  These increases were partially offset by a $12.4 million increase in deferred drydocking costs as there were more vessels that completed drydocking during 2019 as compared to 2018.   
 
Net cash used in investing activities was $22.8 million and $195.4 million during the years ended December 31, 2019 and 2018, respectively.  Net cash used in investing activities during the year ended December 31, 2019 consisted primarily of $31.8 million purchase of scrubbers for our vessels, $14.0 million purchase of vessels related primarily to ballast water treatment systems and $4.7 million for the purchase of other fixed assets due to the purchase of vessel equipment.  These cash outflows during the year ended December 31, 2019 were partially offset by $27.0 million of proceeds from the sale of four vessels during 2019. Net cash used in investing activities during 2018 consisted primarily of $241.9 million purchase of vessels related primarily to the six vessels that delivered to us during the third quarter of 2018.  This cash outflow during 2018 was partially offset by $44.3 million proceeds from the sale of seven vessels during the second half of 2018 and $3.6 million of proceeds received for hull and machinery claims related primarily to the receipt of the remaining insurance settlement for the main engine repair claim for the Genco Tiger. 
 
Net cash used in financing activities during the year ended December 31, 2019 was $77.2 million as compared to net cash provided by financing activities of $127.3 million during the year ended December 31, 2018.  Net cash used in financing activities of $77.2 million for the year ended December 31, 2019 consisted primarily of the following:  $70.8 million repayment of debt under the $495 Million Credit Facility; $20.9 million of dividends paid; $6.3 million repayment of debt under the $108 Million Credit Facility; $0.6 million payment of deferred financing costs; and $0.1 million payment of common stock issuance costs.  These cash outflows were partially offset by total drawdowns of $21.5 million under the $495 Million Credit Facility during the year ended December 31, 2019.  Net cash provided by financing activities of $127.3 million during 2018 consisted primarily of the $460.0 million drawdown on the $495 Million Credit Facility, the $108.0 million drawdown on the $108 Million Credit Facility and the net proceeds from the issuance of common stock on June 19, 2018 of $109.8 million partially offset by the following:  $399.6 million repayment of debt under the $400 Million Credit Facility; $93.9 million repayment of debt under the $98 Million Credit Facility; $25.5 million repayment of debt under the 2014 Term Loan Facilities; $15.0 million repayment of debt under the $495 Million Credit Facility; $11.8 million payment of deferred financing costs; $3.0 million payment of debt extinguishment costs and $1.6 million repayment of debt under the $108 Million Credit Facility.  On June 5, 2018, the $495 Million Credit Facility refinanced the following three existing credit facilities with its original $460 million tranche; the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities.  Additionally, on February 28, 2019, the $495 Million Credit Facility was amended to add a tranche of $35 million for the purchase of scrubbers in addition to the original $460 million tranche used for the refinancing on June 5, 2018.
 
Credit Facilities
 
Refer to Note 7 — Debt in our Consolidated Financial Statements for information regarding our current credit facilities, including the underlying financial and non-financial covenants.  We entered into the $108 Million Credit Facility on August 14, 2018 to finance a portion of the purchase price for the six vessels that were purchased during the third quarter of 2018.  Additionally, we entered into the $495 Million Credit Facility on May 31, 2018, which was initially used to refinance our prior credit facilities: the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities on June 5, 2018.  On February 28, 2019, we entered into an amendment to the $495 Million Credit Facility, which provides for an additional tranche of up to $35 million to finance a portion of the acquisitions, installations, and related costs for exhaust cleaning systems (or “scrubbers”) for 17 of our Capesize vessels.
 
Interest Rate Swap Agreements, Forward Freight Agreements and Currency Swap Agreements
 
At December 31, 2019 and 2018, we did not have any interest rate swap agreements.  As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates.  In determining the fair value of interest rate derivatives, we would consider the creditworthiness of both the counterparty and ourselves, which in the past, have resulted in an immaterial adjustment.  Valuations prior to any adjustments for credit risk would be validated by comparison with counterparty valuations.  Amounts would not and should not be identical due to the different modeling assumptions.  Any material differences would be investigated.

64

Table of Contents

As part of our business strategy, we may enter into arrangements commonly known as forward freight agreements, or FFAs, to hedge and manage our exposure to the charter market risks relating to the deployment of our vessels.  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.  Upon settlement, if the contracted charter rate is less than the average of the rates (as reported by an identified index) for the specified route and period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate multiplied by the number of days in the specific period.  Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum.  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, 2019 and 2018.
 
Interest Rates
 
The effective interest rate for the years ended December 31, 2019, 2018 and 2017 include interest rates associated with the interest expense for our various credit facilities including the following: the $108 Million Credit Facility; the $495 Million Credit Facility; the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities (until these facilities were refinanced with the $495 Million Credit Facility).
 
The effective interest rate for the aforementioned credit facilities, including the cost associated with unused commitment fees, if applicable, was 5.31%, 5.71% and 5.29% during 2019, 2018 and 2017, respectively.  The interest rate on the debt, excluding unused commitment fees, ranged from 4.05% to 5.76%; 3.83% to 8.43% and 3.36% to 7.82% during 2019, 2018 and 2017, respectively. 
 
Contractual Obligations
 
The following table sets forth our contractual obligations and their scheduled maturity dates as of December 31, 2019.  The table incorporates the employment agreement entered into in September 2007 with our Chief Executive Officer and President, John C. Wobensmith, as amended.  The interest and borrowing fees and scheduled credit agreement payments below reflect the $495 Million Credit Facility and the $108 Million Credit Facility, as well as other fees associated with the facilities.  The following table also incorporates the future lease payments associated with our office leases. Refer to Note 13 — Leases in our Consolidated Financial Statements for further information regarding the terms of our lease agreements.  Lastly, the table incorporates the remaining contractual purchase obligations for the purchase of ballast water treatment systems for 42 of our vessels and the contractual purchase obligations remaining for the purchase of scrubber equipment for 17 of our vessels, refer to “Capital Expenditures” below for further information.  All of our time charter-in agreements with third parties are less than twelve months and have not been included below. 

 	    	 	 	    	Less Than	    	One to	    	Three to	    	 	 	 	
 	 	 	 	 	One	 	Three	 	Five	 	More than	 	
 	 	Total	 	Year	 	Years	 	Years	 	Five Years	 	
 	 	(U.S. dollars in thousands)	 	
Credit Agreements	    	$	495,824	    	$	69,747	    	$	139,495	 	$	286,582	    	$	 —	 	
Interest and borrowing fees	 	 	63,913	 	 	22,620	 	 	35,092	 	 	6,201	 	 	 —	 	
Vessel purchase obligations	 	 	9,729	 	 	4,214	 	 	5,515	 	 	 —	 	 	 —	 	
Executive employment agreement	 	 	467	 	 	467	 	 	 —	 	 	 —	 	 	 —	 	
Office leases	 	 	13,360	 	 	2,230	 	 	4,459	 	 	4,831	 	 	1,840	 	
Totals	 	$	583,293	 	$	99,278	 	$	184,561	 	$	297,614	 	$	1,840	 	

65

Table of Contents

Interest expense has been estimated using 1.66% based on one-month LIBOR plus the applicable margin of 3.25% for the $460 million tranche of the $495 Million Credit Facility; 2.50% for the $35 million tranche of the $495 Million Credit Facility and 2.50% for the $108 Million Credit Facility.
 
Capital Expenditures
 
We make capital expenditures from time to time in connection with our vessel acquisitions.  Our fleet currently consists of 54 drybulk vessels, including 17 Capesize drybulk carriers, one Panamax drybulk carrier, six Ultramax drybulk carriers, 20 Supramax drybulk carriers, and 10 Handysize drybulk carriers.
 
As previously announced, we have initiated a fuel efficiency upgrade program for certain of our vessels in an effort to generate fuel savings and increase the future earnings potential for these vessels.  The upgrades have been successfully installed on 17 of our vessels in the aggregate during planned drydockings from 2014 to 2017.
 
Under U.S. Federal law and 33 CFR, Part 151, Subpart D, U.S. approved BWTS will be required to be installed in all vessels at the first out of water drydocking after January 1, 2016 if these vessels are to discharge ballast water inside 12 nautical miles of the coast of the U.S. U.S. authorities did not approve ballast water treatment systems until December 2016. Therefore, the U.S. Coast Guard (“USCG”) has granted us extensions for our vessels with 2016 drydocking deadlines until January 1, 2018; however, an alternative management system (“AMS”) may be installed in lieu. For example, in February 2015, the USCG added Bawat to the list of ballast water treatment systems that received AMS acceptance. An AMS is valid for five years from the date of required compliance with ballast water discharge standards, by which time it must be replaced by an approved system unless the AMS itself achieves approval. Furthermore, we received extensions for vessels drydocking in 2016 that allowed for further extensions to the vessels’ next scheduled drydockings in year 2021.  Additionally, for our vessels that were scheduled to drydock in 2017 and 2018, the USCG has granted an extension that enables us to defer installation to the next scheduled out of water drydocking.  Any newbuilding vessels that we acquire will have a USCG approved system or at least an AMS installed when the vessel is being built.
 
In addition, on September 8, 2016, the Ballast Water Management (“BWM”) Convention was ratified and had an original effective date of September 8, 2017.  However, on July 7, 2017, the effective date of the BWM Convention was extended two years to September 8, 2019 for existing ships.  This will require vessels to have a BWTS installed to coincide with the vessels’ next International Oil Pollution Prevention Certificate (“IOPP”) renewal survey after September 8, 2019.   In order for a vessel to trade in U.S. waters, it must be compliant with the installation date as required by the USCG as outlined above. 
 
During the second half of 2018, we entered into agreements for the purchase of BWTS for 42 of our vessels.  The cost of these systems will vary based on the size and specifications of each vessel and whether the systems will be installed in China.  Based on the contractual purchase price of the BWTS and the estimated installation fees, the Company estimates the cost of the systems to be approximately $0.9 million for Capesize, $0.6 million for Supramax and $0.5 million for Handysize vessels. These costs will be capitalized and depreciated over the remainder of the life of the vessel.  During 2019, we completed the installation of BWTS on 17 of our vessels.  We intend to fund the remaining BWTS purchase price and installation fees using cash on hand.  

66

Table of Contents

Under maritime regulations that went into effect January 1, 2020, our vessels were required to reduce sulfur emissions, for which the principal solutions are the use of scrubbers or buying fuel with low sulfur content.  We have completed the installation of scrubbers on our 17 Capesize vessels, 16 of which were completed as of December 31, 2019 and the last one of which was completed on January 17, 2020. The remainder of our vessels are consuming VLSFO.  The costs for the scrubber equipment and installation will be capitalized and depreciated over the remainder of the life of the vessel.  This does not include any lost revenue associated with offhire days due to the installation of the scrubbers.  During February 2019, we entered into an amendment to our $495 Million Credit Facility for an additional tranche of up to $35 million to cover a portion of the expenses to the acquisition and installation of scrubbers on our 17 Capesize vessels.  We intend to fund the remainder of the costs with cash on hand.  The off-hire days associated with the installation of the scrubbers are included in the expenditure table below.  For vessels on which we did not install scrubbers, we incurred additional costs during 2019 in order to transition these vessels from high sulfur fuel to compliant low sulfur fuel.
 
In addition to acquisitions that we may undertake in future periods, we will incur additional expenditures due to special surveys and drydockings for our fleet.  Through December 31, 2019, we have paid $31.8 million in cash installments towards our scrubber program and have drawn down $21.5 million under the scrubber tranche under our $495 Million Credit Facility.  While we completed 16 scrubber retrofits before year end, due the timing of cash flows, we have approximately $9.5 million relating to our scrubber program currently recorded in accounts payable as of December 31, 2019, which we plan to pay in 2020, as well as any residual costs incurred during the first quarter of 2020.  We also plan to draw down the remaining capacity under the $35 million tranche of our $495 Million Credit Facility of approximately $11 million to fund these remaining cash outflows.
 
We estimate our drydocking costs, including capitalized costs incurred during drydocking related to vessel assets and vessel equipment, BWTS costs, scrubber costs and scheduled off-hire days for our fleet through 2021 to be:

Year	    	Estimated Drydocking 
Cost	 	Estimated BWTS
Cost	    	Estimated Off-hire 
Days	 	
 	 	(U.S. dollars in millions)	 	 	 	
 	 	 	 	 	 	 	 	 	 	
2020	 	$	11.9	 	$	4.5	 	346	 	
2021	 	$	9.3	 	$	5.5	 	230	 	
 
The costs reflected are estimates based on drydocking our vessels in China.  Actual costs will vary based on various factors, including where the drydockings are actually performed.  We expect to fund these costs with cash on hand.  These costs do not include drydock expense items that are reflected in vessel operating expenses.
 
Actual length of drydocking will vary based on the condition of the vessel, yard schedules and other factors.  Higher repairs and maintenance expenses during drydocking for vessels which are over 15 years old typically result in a higher number of off-hire days depending on the condition of the vessel.
 
During 2019 and 2018, we incurred a total of $14.6 million and $2.2 million of drydocking costs, respectively, excluding costs incurred during drydocking that were capitalized to vessel assets or vessel equipment.
 
Twenty-nine vessels completed their respective drydockings during 2019.  One of our vessels began its drydocking during the fourth quarter of 2019 and did not complete until the first quarter of 2020.  In addition to this vessel, we estimate that 16 additional vessels will be drydocked during 2020 and 11 of our vessels will be drydocked during 2021. 
 
As of January 17, 2020, we have completed the installation of scrubbers on our 17 Capesize vessels. 
 
Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

67

Table of Contents

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.
 
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 accounting principles generally accepted in the United States of America (“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 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.
 
Vessels and 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 of $310/lwt based on the 15-year average scrap value of steel.  An increase in the residual value of the vessels will decrease the annual depreciation charge over the remaining useful life of the vessels.  Similarly, an increase in the useful life of a drybulk vessel would also decrease the annual depreciation charge.  Comparatively, 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.
 
The carrying value of each of our vessels does not represent the fair market value of such vessel or the amount we could obtain if we were to sell any of our vessels, which could be more or less.  Under U.S. GAAP, we would not record a loss if the fair market value of a vessel (excluding its charter) is below our carrying value unless and until we determine to sell that vessel or the vessel is impaired as discussed below under the heading “Impairment of long-lived assets.”  As of December 31, 2019, excluding the three Bourbon vessels we resold immediately upon delivery to Maritime Equity Partners LLC at our cost, we have sold 24 of our vessels since our inception and realized a profit in each instance, with the exception of the Genco Marine which was scrapped on May 17, 2016, the Genco Surprise which sold during the third quarter of 2018, the Genco Muse which was sold during the fourth quarter of 2018, and the Genco Challenger, Genco Champion and Genco Raptor which were sold during the fourth quarter of 2019. 
 
During the year ended December 31, 2019, we recorded losses of $27.4 million related to the impairment of vessel assets.  On February 3, 2020, we entered into an agreement to sell the Genco Charger and the vessel value was written down to its net sales price of December 31, 2019 which resulted in an impairment loss of $1.3 million.  Additionally, there was $5.8 million of impairment expense recorded during 2019 for the Genco Raptor.  On November 4, 2019, we entered into an agreement to sell the Genco Raptor.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel at September 30, 2019, the vessel value was adjusted to its net sales price as of September 30, 2019.  During September 2019, we entered into an agreement to sell the Genco Thunder and the Genco Champion and the vessel values were written down to their net sales price as of September 30, 2019 which resulted in an impairment loss of $5.7 million and $0.6 million during 2019.  There was also $4.4 million of

68

Table of Contents
impairment expense recorded during 2019 for the Genco Challenger.  On August 2, 2019, we entered into an agreement to sell the Genco Challenger.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel at June 30, 2019, the vessel value was adjusted to its net sales price as of June 30, 2019.  Lastly, at June 30, 2019, the Company determined that the expected estimated future undiscounted cash flows for the Genco Champion and the Genco Charger did not exceed the net book value of these vessels as of June 30, 2019.  As such, the Company adjusted the value of these vessels to their respective fair market values as of June 30, 2019.  This resulted in an impairment loss of $9.5 million during 2019.  Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information.
 
During the year ended December 31, 2018, we recorded losses of $56.6 million related to the impairment of vessel assets.  There was $0.2 million of impairment expense recorded during 2018 for the Genco Surprise.  On July 24, 2018 we entered into an agreement to sell the Genco Surprise.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel at June 30, 2018, the vessel value was adjusted to its net sales price as of June 30, 2018.  Additionally, there was $56.4 million of impairment expense recorded during 2018 for nine of our vessels; the Genco Cavalier, the Genco Loire, the Genco Lorraine, the Genco Muse, the Genco Normandy, the Baltic Cougar, the Baltic Jaguar, the Baltic Leopard and the Baltic Panther.  On February 27, 2018, our Board of Directors determined to dispose of these vessels at times and on terms to be determined in the future.  As such, the future undiscounted cash flows did not exceed the net book value of these vessels and the vessel values were adjusted to their respective fair market values which resulted in an impairment loss.  Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information.
 
During the year ended December 31, 2017, we recorded losses of $22.0 million related to the impairment of vessel assets.  There was $18.7 million of impairment expense recorded during 2017 for five of our vessels; the Genco Beauty, the Genco Explorer, the Genco Knight, the Genco Progress and the Genco Vigour.  On August 4, 2017, the Board of Directors determined to dispose of these vessels at times and on terms to be determined in the future.  As such, the future undiscounted cash flows did not exceed the net book value of these vessels and the vessel values were adjusted to their respective fair market values which resulted in an impairment loss.  Additionally, during 2017, a $3.3 million impairment loss was recorded for the Genco Surprise at June 30, 2017 when we determined that the future undiscounted cash flows did not exceed the net book value for the Genco Surprise. Therefore, we adjusted the value of the Genco Surprise to its fair market value which resulted in an impairment loss of $3.3 million.  Refer to Note 2 — Summary of Significant Accounting Policies in our Consolidated Financial Statements for further information.
 
Pursuant to our credit facilities, we regularly submit to the lenders valuations of our vessels on an individual charter free basis in order to evidence our compliance with the collateral maintenance covenants under our bank credit facilities.  Such a valuation is not necessarily the same as the amount any vessel may bring upon sale, which may be more or less, and should not be relied upon as such.  We were in compliance with the collateral maintenance covenants under our $495 Million Credit Facility and $108 Million Credit Facility as of December 31, 2019.  Refer to Note 7 — Debt in our Consolidated Financial Statements for additional information. We obtained valuations for all of the vessels in our fleet pursuant to the terms of the $495 Million Credit Facility and the $108 Million Credit Facility.  In the chart below, we list each of our vessels, the year it was built, the year we acquired it, and its carrying value at December 31, 2019 and 2018.  Vessels have been grouped according to their collateralized status as of December 31, 2019.  The carrying value of the Genco Thunder and Genco Charger at December 31, 2019 reflect the impairment loss recorded during 2019 for these vessels.  The carrying value of the Genco Loire, Genco Lorraine, Genco Normandy, Baltic Cougar, Baltic Jaguar, Baltic Leopard and Baltic Panther at December 31, 2019 and 2018 reflect the impairment loss recorded during 2018 for these vessels.  Lastly, the carrying value of the Genco Vigour at December 31, 2018 reflects the impairment loss recorded during 2017 for this vessel.
 
At December 31, 2019, the vessel valuations of all of our vessels for covenant compliance purposes under our credit facilities as of the most recent compliance testing date were lower than their carrying values at December 31, 2019, with the exception of the Genco Charger, which was impaired during the year ended December 31, 2019 as noted above. At December 31, 2018, the vessel valuations of all of our vessels for covenant compliance purposes under our credit facility as of the most recent compliance testing date were lower than their carrying values at December 31, 2018, with the exception of the Baltic Lion, Genco Tiger, Genco Weatherly, and Genco Vigour.

69

Table of Contents

The amount by which the carrying value at December 31, 2019 of all of the vessels in our fleet, with the exception of the one aforementioned vessels, exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual basis, from $1.3 million to $18.1 million per vessel, and $419.4 million on an aggregate fleet basis.  The amount by which the carrying value at December 31, 2018 of all of the vessels in our fleet, with the exception of the four aforementioned vessels, exceeded the valuation of such vessels for covenant compliance purposes ranged, on an individual basis, from $1.1 million to $14.9 million per vessel, and $336.3 million on an aggregate fleet basis.  The average amount by which the carrying value of these vessels exceeded the valuation of such vessels for covenant compliance purposes was $7.8 million and $6.1 million as of December 31, 2019 and 2018, respectively. However, neither such valuation nor the carrying value in the table below reflects the value of long-term time charters related to some of our vessels.

70

Table of Contents

 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Carrying Value (U.S.	 	
 	 	 	 	 	 	dollars in	 	
 	 	 	 	 	 	thousands) as of	 	
 	    	 	    	Year	    	December 31, 	    	December 31, 	 	
Vessels	    	Year Built	    	Acquired	    	2019	    	2018	 	
$495 Million Credit Facility	 	 	 	 	 	 	 	 	 	 	 	
Genco Commodus	 	
2009	 	
2009	 	$	39,472	 	$	38,389	 	
Genco Maximus	 	
2009	 	
2009	 	 	39,498	 	 	38,423	 	
Genco Claudius	 	
2010	 	
2009	 	 	41,314	 	 	40,376	 	
Baltic Bear	 	
2010	 	
2010	 	 	40,967	 	 	39,866	 	
Baltic Wolf	 	
2010	 	
2010	 	 	41,163	 	 	39,989	 	
Baltic Lion	 	
2009	 	
2013	 	 	32,199	 	 	30,870	 	
Genco Tiger	 	
2010	 	
2013	 	 	30,115	 	 	28,716	 	
Genco Raptor	 	
2007	 	
2008	 	 	 —	 	 	16,096	 	
Genco Thunder	 	
2007	 	
2008	 	 	10,303	 	 	16,173	 	
Baltic Scorpion	 	
2015	 	
2015	 	 	25,583	 	 	26,648	 	
Baltic Mantis	 	
2015	 	
2015	 	 	25,835	 	 	26,897	 	
Genco Hunter	 	
2007	 	
2007	 	 	17,121	 	 	18,223	 	
Genco Warrior	 	
2005	 	
2007	 	 	15,053	 	 	15,674	 	
Genco Aquitaine	 	
2009	 	
2010	 	 	17,046	 	 	17,436	 	
Genco Ardennes	 	
2009	 	
2010	 	 	17,080	 	 	17,466	 	
Genco Auvergne	 	
2009	 	
2010	 	 	17,094	 	 	17,582	 	
Genco Bourgogne	 	
2010	 	
2010	 	 	17,802	 	 	18,420	 	
Genco Brittany	 	
2010	 	
2010	 	 	17,829	 	 	18,444	 	
Genco Languedoc	 	
2010	 	
2010	 	 	17,609	 	 	18,448	 	
Genco Loire	 	
2009	 	
2010	 	 	10,777	 	 	10,773	 	
Genco Lorraine	 	
2009	 	
2010	 	 	10,748	 	 	10,769	 	
Genco Normandy	 	
2007	 	
2010	 	 	8,717	 	 	9,134	 	
Baltic Leopard	 	
2009	 	
2009	 	 	10,773	 	 	10,779	 	
Baltic Jaguar	 	
2009	 	
2010	 	 	10,782	 	 	10,785	 	
Baltic Panther	 	
2009	 	
2010	 	 	10,784	 	 	10,782	 	
Baltic Cougar	 	
2009	 	
2010	 	 	10,791	 	 	10,784	 	
Genco Picardy	 	
2005	 	
2010	 	 	14,669	 	 	15,736	 	
Genco Provence	 	
2004	 	
2010	 	 	14,164	 	 	14,809	 	
Genco Pyrenees	 	
2010	 	
2010	 	 	17,528	 	 	18,395	 	
Genco Rhone	 	
2011	 	
2011	 	 	18,610	 	 	19,532	 	
Genco Bay	 	
2010	 	
2010	 	 	16,411	 	 	17,284	 	
Genco Ocean	 	
2010	 	
2010	 	 	16,562	 	 	17,356	 	
Genco Avra	 	
2011	 	
2011	 	 	17,505	 	 	18,378	 	
Genco Mare	 	
2011	 	
2011	 	 	17,546	 	 	18,420	 	
Genco Spirit	 	
2011	 	
2011	 	 	17,614	 	 	18,470	 	
Genco Challenger	 	
2003	 	
2007	 	 	 —	 	 	9,543	 	
Baltic Wind	 	
2009	 	
2010	 	 	15,996	 	 	16,427	 	
Baltic Cove	 	
2010	 	
2010	 	 	16,490	 	 	17,296	 	
Baltic Breeze	 	
2010	 	
2010	 	 	16,603	 	 	17,382	 	
Baltic Fox	 	
2010	 	
2013	 	 	15,995	 	 	16,876	 	
Baltic Hare	 	
2009	 	
2013	 	 	15,395	 	 	15,910	 	
Genco Constantine	 	
2008	 	
2008	 	 	36,450	 	 	36,086	 	
Genco Augustus	 	
2007	 	
2007	 	 	34,330	 	 	33,747	 	
Genco London	 	
2007	 	
2007	 	 	33,600	 	 	33,152	 	
Genco Titus	 	
2007	 	
2007	 	 	33,590	 	 	33,235	 	
Genco Tiberius	 	
2007	 	
2007	 	 	34,276	 	 	33,756	 	
Genco Hadrian	 	
2008	 	
2008	 	 	36,638	 	 	36,139	 	
Genco Predator	 	
2005	 	
2007	 	 	14,846	 	 	15,701	 	

71

Table of Contents

 	 	 	 	 	 	Carrying Value (U.S.	 	
 	 	 	 	 	 	dollars in	 	
 	 	 	 	 	 	thousands) as of	 	
 	    	 	    	Year	    	December 31, 	    	December 31, 	 	
Vessels	    	Year Built	    	Acquired	    	2019	    	2018	 	

Genco Champion	 	
2006	 	
2008	 	 	 —	 	 	12,314	 	
Genco Charger	 	
2005	 	
2007	 	 	5,099	 	 	11,453	 	
Baltic Hornet	 	
2014	 	
2014	 	 	24,086	 	 	25,114	 	
Baltic Wasp	 	
2015	 	
2015	 	 	24,340	 	 	25,370	 	
TOTAL	 	 	 	 	 	$	1,044,798	 	$	1,105,823	 	
 	 	 	 	 	 	 	 	 	 	 	 	
$108 Million Credit Facility	 	 	 	 	 	 	 	 	 	 	 	
Genco Endeavour	 	
2015	 	
2018	 	 	45,947	 	 	45,368	 	
Genco Resolute	 	
2015	 	
2018	 	 	46,093	 	 	45,497	 	
Genco Columbia	 	
2016	 	
2018	 	 	26,627	 	 	27,702	 	
Genco Weatherly	 	
2014	 	
2018	 	 	21,676	 	 	22,564	 	
Genco Liberty	 	
2016	 	
2018	 	 	49,506	 	 	48,930	 	
Genco Defender	 	
2016	 	
2018	 	 	49,517	 	 	48,986	 	
 	 	 	 	 	 	$	239,366	 	$	239,047	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Unencumbered	 	 	 	 	 	 	 	 	 	 	 	
Genco Vigour	 	
1999	 	
2004	 	 	 —	 	 	5,699	 	
TOTAL	 	 	 	 	 	$	 —	 	$	5,699	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Total	 	 	 	 	 	$	1,284,164	 	$	1,350,569	 	
 
If we were to sell a vessel or hold a vessel for sale, and the carrying value of the vessel were to exceed its fair market value, net of commission, we would record a loss in the amount of the difference.  Refer to Note 2 — Summary of Significant Accounting Policies and Note 4 — Vessel Acquisitions and Dispositions in our Consolidated Financial Statements for information regarding the sale of vessel assets and the classification of vessel assets held for sale as of December 31, 2019 and 2018.
 
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 amortize these costs on a straight-line basis over the period between drydockings.  Deferred drydocking costs include actual costs incurred at the drydock yard; 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.  Costs that are not related to drydocking are expensed as incurred.  If the vessel is drydocked earlier than originally anticipated, any remaining deferred drydock costs that have not been amortized are expensed at the end of the next drydock.
 
Impairment of long-lived assets 
 
We follow the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) subtopic 360-10, “Property, Plant and Equipment” (“ASC 360-10”) 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.  If indicators of impairment are present, we perform an analysis of the anticipated undiscounted future net cash flows to be derived from the related long-lived assets.

72

Table of Contents

The weak supply and demand fundamentals experienced in recent years has negatively impacted the drybulk industry.  General market volatility has endured as a result of uncertainty about the growth rate of the world economy and the Chinese economy in particular, on which the drybulk industry depends to a significant degree.  Additional unforeseen events such as the dam breach that occurred in Brazil at a mine operated by Vale during 2019 and the Covid-19 novel coronavirus have also negatively impacted the market. The economies of the U.S., European Union, and other parts of the world continue to experience relatively slower growth rates.  As a result of these factors and the increased supply of drybulk vessels, freight rates and charter rates have declined significantly in recent years, albeit better performance in 2017 and 2018 as compared to previous years. 
 
When indicators of impairment are present and our estimate of future undiscounted cash flows for any vessel is lower than the vessel’s carrying value, the carrying value is written down, by recording a charge to operations, to the vessel’s fair market value if the fair market value is lower than the vessel’s carrying value.
 
We determined that as of December 31, 2019, the future income streams expected to be earned by such vessels over their remaining operating lives and upon disposal on an undiscounted basis would be sufficient to recover their carrying values.  Our estimated future undiscounted cash flows exceeded each of our vessels’ carrying values by a margin of approximately 9% - 92% of the carrying value.  Our vessels remain fully utilized and have a relatively long average remaining useful life of approximately 15 years in which to recover sufficient cash flows on an undiscounted basis to recover their carrying values as of December 31, 2019.  Management will continue to monitor developments in charter rates in the markets in which it participates with respect to the expectation of future rates over an extended period of time that are utilized in the analyses.
 
In developing estimates of future undiscounted cash flows, we make assumptions and estimates about the vessels’ future performance, with the significant assumptions being related to charter rates, fleet utilization, vessels’ operating expenses, vessels’ capital expenditures and drydocking requirements, vessels’ residual value and the estimated remaining useful life of each vessel. The assumptions used to develop estimates of future undiscounted cash flows are based on historical trends.  Specifically, we utilize the rates currently in effect for the duration of their current time charters or spot market voyage charters, without assuming additional profit sharing.  For periods of time where our vessels are not fixed on time charters or spot market voyage charters, we utilize an estimated daily time charter equivalent for our vessels’ unfixed days based on the most recent ten year historical one-year time charter average.  Further, for our older vessels, those vessels in operation for at least 18 years, we evaluate the current rate environment compared to the ten-year historical one-year time charter rate and adjust the rate to better reflect the expected cash flows over the remaining useful lives of those vessels. Older vessels are inherently more susceptible to impairment from weakness in the charter rate environment as their shorter remaining useful lives provide for less of an opportunity for them to benefit from potentially stronger rates in the future. It is reasonably possible that the estimate of undiscounted cash flows may change in the near term due to changes in current rates which adversely affect the average rates being utilized and could result in impairment of certain of our older vessels. Actual equivalent drybulk shipping rates are currently lower than the estimated rates.  We believe current rates have been driven by seasonal issues, as well as a number of factors that have affected demand growth and overall sentiment in the drybulk market as discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Voyage Revenues.”

73

Table of Contents

Of the inputs that the Company uses for its impairment analysis, future charter rates are the most significant and most volatile.  Based on the sensitivity analysis performed by the Company, the Company would record impairment on its vessels for time charter declines from their most recent ten-year historical one-year time charter averages as follows:

 	 	Percentage Decline from Ten-Year	 	
 	 	Historical One-Year Time Charter	 	
 	 	Average at Which Point Impairment	 	
 	 	Would be Recorded	 	
 	    	As of	    	As of	 	
 	 	December 31, 	 	December 31, 	 	
Vessel Class	    	2019	    	2018	 	
Capesize	 	(9.1)	%  	(16.1)	%	
Panamax (1)	 	 —	%  	(22.3)	%	
Ultramax	 	(18.8)	%  	(19.9)	%	
Supramax	 	(3.8)	%  	(6.4)	%	
Handymax	 	 —	%  	 —	%	
Handysize (2)	 	(6.2)	%  	(3.6)	%	

	(1)		The Genco Thunder is the only Panamax vessel that we own as of December 31, 2019.  This vessel was impaired during the year ended December 31, 2019 and the vessel has been classified as held for sale as of December 31, 2019 and is expected to be sold during the first quarter of 2020.  As such, it was excluded from this sensitivity analysis.	
	(2)		We excluded the Genco Charger from this sensitivity analysis as the vessel was impaired during the year ended December 31, 2019 and the vessel was sold on February 24, 2020.	
 
The ten-year historical one-year time charter average being used is from 2010 through 2019.  The rates for 2010 were the highest rates during the ten-year period.  Depending what rates are achieved during 2020, the Company may incur impairment as the ten-year average incorporates future rates for 2020 replacing potentially higher rates achieved in 2010.
 
Our time charter equivalent (TCE) rates for our fiscal years ended December 31, 2019 and 2018, respectively, were above or (below) the ten-year historical one-year time charter average as of such dates as follows:

 	 	TCE Rates as Compared with Ten-	 	
 	 	Year Historical One-Year Time	 	
 	 	Charter Average	 	
 	 	(as percentage above/(below))	 	
 	    	As of	    	As of	 	
 	 	December 31, 	 	December 31, 	 	
Vessel Class	    	2019	    	2018	 	
Capesize	 	(19.8)	%  	(14.0)	%	
Panamax	 	(9.2)	%  	(19.9)	%	
Ultramax	 	(9.7)	%  	(16.0)	%	
Supramax	 	(18.2)	%  	(4.1)	%	
Handymax	 	 —	%  	 —	%	
Handysize	 	(6.4)	%  	2.4	%	

The projected net operating cash flows are determined by considering the future voyage revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days over the estimated remaining life of the vessel, assumed to be 25 years from the delivery of the vessel from the shipyard, reduced by brokerage and address commissions, expected outflows for vessels’ maintenance and vessel operating expenses (including planned drydocking and special survey expenditures) and capital expenditures adjusted annually for inflation, assuming fleet utilization of 98%. The salvage value used in the impairment test is estimated to be $310 per light weight ton, consistent with our vessels’ depreciation policy discussed above.
 
Although we believe that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. There can be no assurance as to how long charter rates and vessel values will

74

Table of Contents
remain at their currently low levels or whether they will improve by any significant degree. Charter rates may remain at depressed levels for a prolonged period of time, which could adversely affect our revenue and profitability, and future assessments of vessel impairment.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET 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. At December 31, 2019 and 2018, we did not have any interest rate swap agreements to manage interest costs and the risks associated with changing interest rates.
 
We are subject to market risks relating to changes in LIBOR rates because we have significant amounts of floating rate debt outstanding.  During the years ended December 31, 2019, 2018 and 2017, we were subject to the following interest rates on the outstanding debt under our credit facilities (refer to Note 7 — Debt in our Consolidated Financial Statements for effective dates and termination dates for our credit facilities outlined below):
 
	·		$108 Million Credit Facility — one-month LIBOR plus 2.50% effective during the third quarter of 2018.  We drew down $51.8 million on August 17, 2018, $22.1 million on September 6, 2018 and $34.1 million on September 11, 2018	
 
	·		$495 Million Credit Facility  —	
 
	·		$460 Million Tranche - one-month LIBOR plus 3.25% effective June 5, 2018, when the initial $460 million draw down on this tranche of this facility was made.  The applicable margin was reduced to 3.00% from March 5, 2019 to August 9, 2019 pursuant to the terms of the facility.	
 
	·		$35 Million Tranche – one-month LIBOR plus 2.50% effective August 28, 2019 when the initial draw down on this tranche of this facility was made.	
 
	·		$400 Million Credit Facility — three-month LIBOR plus 3.75% until June 5, 2018, when this credit facility was refinanced with the $495 Million Credit Facility	
 
	·		$98 Million Credit Facility — three-month LIBOR plus 6.125% until June 5, 2018, when this credit facility was refinanced with the $495 Million Credit Facility	
 
	·		2014 Term Loan Facilities — three-month or six-month LIBOR plus 2.50% until June 5, 2018, when this credit facility was refinanced with the $495 Million Credit Facility	
 
A 1% increase in LIBOR would result in an increase of $5.3 million in interest expense for the year ended December 31, 2019. 
 
From time to time, the Company may consider derivative financial instruments such as swaps and caps or other means to protect itself against interest rate fluctuations.
 
Derivative financial instruments
 
As part of our business strategy, we may enter into interest rate swap agreements to manage interest costs and the risk associated with changing interest rates.  As of December 31, 2019 and 2018, we did not have any derivative financial instruments.
 
Refer to the “Interest rate risk” section above for further information regarding interest rate swap agreements.

75

Table of Contents

Currency and 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.

76

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Genco Shipping & Trading Limited
Consolidated Financial Statements
Index to Consolidated Financial Statements

 	 	Page	
 	 	 	
a) 	Report of Independent Registered Public Accounting Firm	F-2	
 	 	 	
b) 	Consolidated Balance Sheets as of December 31, 2019 and 2018	F-3	
 	 	 	
c) 	Consolidated Statements of Operations	F-4	
 	 	 	
d) 	Consolidated Statements of Comprehensive Loss	F-5	
 	 	 	
e) 	Consolidated Statements of Equity	F-6	
 	 	 	
f) 	Consolidated Statements of Cash Flows	F-7	
 	 	 	
g) 	Notes to Consolidated Financial Statements	F-9	

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of
Genco Shipping & Trading Limited

Opinion on the Financial Statements
 
We have audited the accompanying consolidated balance sheets of Genco Shipping & Trading Limited and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.
 
Basis for Opinion
 
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 	 	
/s/ Deloitte & Touche LLP	 	
 	 	
New York, New York	 	
February 27, 2020
 
We have served as the Company's auditor since 2005.

F-2

Table of Contents

Genco Shipping & Trading Limited
Consolidated Balance Sheets as of December 31, 2019 and 2018
(U.S. Dollars in thousands, except for share and per share data)

 	 	December 31, 	 	December 31, 	 	
 	    	2019	    	2018	 	
 	    	 	    	 	 	
Assets	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	155,889	 	$	197,499	 	
Restricted cash	 	 	6,045	 	 	4,947	 	
Due from charterers, net of a reserve of $1,064 and $669, respectively	 	 	13,701	 	 	22,306	 	
Prepaid expenses and other current assets	 	 	10,049	 	 	10,449	 	
Inventories	 	 	27,208	 	 	29,548	 	
Vessels held for sale	 	 	10,303	 	 	5,702	 	
Total current assets	 	 	223,195	 	 	270,451	 	
 	 	 	 	 	 	 	 	
Noncurrent assets:	 	 	 	 	 	 	 	
Vessels, net of accumulated depreciation of $288,373 and $244,529, respectively	 	 	1,273,861	 	 	1,344,870	 	
Deferred drydock, net of accumulated amortization of $11,862 and $13,553 respectively	 	 	17,304	 	 	9,544	 	
Fixed assets, net of accumulated depreciation and amortization of $2,154 and $1,281, respectively	 	 	5,976	 	 	2,290	 	
Operating lease right-of-use assets	 	 	8,241	 	 	 —	 	
Restricted cash	 	 	315	 	 	315	 	
Total noncurrent assets	 	 	1,305,697	 	 	1,357,019	 	
 	 	 	 	 	 	 	 	
Total assets	 	$	1,528,892	 	$	1,627,470	 	
 	 	 	 	 	 	 	 	
Liabilities and Equity	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	
Accounts payable and accrued expenses	 	$	49,604	 	$	29,143	 	
Current portion of long-term debt	 	 	69,747	 	 	66,320	 	
Deferred revenue	 	 	6,627	 	 	6,404	 	
Current operating lease liabilities	 	 	1,677	 	 	 —	 	
Total current liabilities:	 	 	127,655	 	 	101,867	 	
 	 	 	 	 	 	 	 	
Noncurrent liabilities:	 	 	 	 	 	 	 	
Long-term operating lease liabilities	 	 	9,826	 	 	 —	 	
Deferred rent	 	 	 —	 	 	3,468	 	
Long-term debt, net of deferred financing costs of $13,094 and $16,272, respectively	 	 	412,983	 	 	468,828	 	
Total noncurrent liabilities	 	 	422,809	 	 	472,296	 	
 	 	 	 	 	 	 	 	
Total liabilities	 	 	550,464	 	 	574,163	 	
 	 	 	 	 	 	 	 	
Commitments and contingencies (Note 14)	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
Equity:	 	 	 	 	 	 	 	
Common stock, par value $0.01; 500,000,000 shares authorized; 41,754,413 and 41,644,470 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively	 	 	417	 	 	416	 	
Additional paid-in capital	 	 	1,721,268	 	 	1,740,163	 	
Retained deficit	 	 	(743,257)	 	 	(687,272)	 	
Total equity	 	 	978,428	 	 	1,053,307	 	
Total liabilities and equity	 	$	1,528,892	 	$	1,627,470	 	
 
See accompanying notes to consolidated financial statements.

F-3

Table of Contents

Genco Shipping & Trading Limited
Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017
(U.S. Dollars in Thousands, Except for Earnings Per Share and Share Data)

 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	
 	   	2019	   	2018	   	2017	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	
Voyage revenues	 	$	389,496	 	$	367,522	 	$	209,698	 	
 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	 	389,496	 	 	367,522	 	 	209,698	 	
 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	
Voyage expenses	 	 	173,043	 	 	114,855	 	 	25,321	 	
Vessel operating expenses	 	 	96,209	 	 	97,427	 	 	98,086	 	
Charter hire expenses	 	 	16,179	 	 	1,534	 	 	 —	 	
General and administrative expenses (inclusive of nonvested stock amortization expense of $2,057, $2,231 and $4,053, respectively)	 	 	24,516	 	 	23,141	 	 	22,190	 	
Technical management fees	 	 	7,567	 	 	8,000	 	 	7,659	 	
Depreciation and amortization	 	 	72,824	 	 	68,976	 	 	71,776	 	
Impairment of vessel assets	 	 	27,393	 	 	56,586	 	 	21,993	 	
Loss (gain) on sale of vessels	 	 	168	 	 	(3,513)	 	 	(7,712)	 	
 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	417,899	 	 	367,006	 	 	239,313	 	
 	 	 	 	 	 	 	 	 	 	 	
Operating (loss) income	 	 	(28,403)	 	 	516	 	 	(29,615)	 	
 	 	 	 	 	 	 	 	 	 	 	
Other (expense) income:	 	 	 	 	 	 	 	 	 	 	
Other income (expense)	 	 	501	 	 	367	 	 	(164)	 	
Interest income	 	 	4,095	 	 	3,801	 	 	1,551	 	
Interest expense	 	 	(31,955)	 	 	(33,091)	 	 	(30,497)	 	
Impairment of right-of-use asset	 	 	(223)	 	 	 —	 	 	 —	 	
Loss on debt extinguishment	 	 	 —	 	 	(4,533)	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	
Other expense	 	 	(27,582)	 	 	(33,456)	 	 	(29,110)	 	
 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(55,985)	 	$	(32,940)	 	$	(58,725)	 	
 	 	 	 	 	 	 	 	 	 	 	
Net loss per share-basic	 	$	(1.34)	 	$	(0.86)	 	$	(1.71)	 	
Net loss per share-diluted	 	$	(1.34)	 	$	(0.86)	 	$	(1.71)	 	
Weighted average common shares outstanding-basic	 	 	41,762,893	 	 	38,382,599	 	 	34,242,631	 	
Weighted average common shares outstanding-diluted	 	 	41,762,893	 	 	38,382,599	 	 	34,242,631	 	
See accompanying notes to consolidated financial statements.

F-4

Table of Contents

Genco Shipping & Trading Limited
Consolidated Statements of Comprehensive Loss
For the Years Ended December 31, 2019, 2018 and 2017
(U.S. Dollars in Thousands)

 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	 	
 	 	2019	    	2018	  	2017	  	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(55,985)	 	$	(32,940)	 	$	(58,725)	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income	 	 	 —	 	 	 —	 	 	 —	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive loss	 	$	(55,985)	 	$	(32,940)	 	$	(58,725)	 	 	
 
See accompanying notes to consolidated financial statements.

 

F-5

Table of Contents

Genco Shipping & Trading Limited
Consolidated Statements of Equity
(U.S. Dollars in Thousands)

 	 	Series A	 	 	 	 	Additional	 	 	 	 	 	 	
 	 	Preferred	 	Common	 	Paid-in	 	Retained	 	 	 	
 	 	Stock	 	Stock	 	Capital	 	Deficit	 	Total Equity	 	
Balance — January 1, 2017	 	$	120,789	 	$	74	 	$	1,503,784	 	$	(594,948)	 	$	1,029,699	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	 	 	 	 	 	 	 	 	 	(58,725)	 	 	(58,725)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Conversion of 27,061,856 shares of Series A Preferred Stock	 	 	(120,789)	 	 	270	 	 	120,519	 	 	 	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of 115,700 shares of vested RSUs	 	 	 	 	 	 1	 	 	(1)	 	 	 	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nonvested stock amortization	 	 	 	 	 	 	 	 	4,053	 	 	 	 	 	4,053	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance — December 31, 2017, as previously reported	 	$	 —	 	$	345	 	$	1,628,355	 	$	(653,673)	 	$	975,027	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Impact of adoption of ASC 606	 	 	 	 	 	 	 	 	 	 	 	(659)	 	 	(659)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance — January 1, 2018	 	$	 —	 	$	345	 	$	1,628,355	 	$	(654,332)	 	$	974,368	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	 	 	 	 	 	 	 	 	 	(32,940)	 	 	(32,940)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of 7,015,000 shares of common stock	 	 	 	 	 	70	 	 	109,578	 	 	 	 	 	109,648	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of 97,466 shares of vested RSUs	 	 	 	 	 	 1	 	 	(1)	 	 	 	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nonvested stock amortization	 	 	 	 	 	 	 	 	2,231	 	 	 	 	 	2,231	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance — December 31, 2018	 	$	 —	 	$	416	 	$	1,740,163	 	$	(687,272)	 	$	1,053,307	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	 	 	 	 	 	 	 	 	 	 	(55,985)	 	 	(55,985)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of 109,943 shares of vested RSUs	 	 	 	 	 	 1	 	 	(1)	 	 	 	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash dividends declared ($0.50 per share)	 	 	 	 	 	 	 	 	(20,951)	 	 	 	 	 	(20,951)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nonvested stock amortization	 	 	 	 	 	 	 	 	2,057	 	 	 	 	 	2,057	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance — December 31, 2019	 	$	 —	 	$	417	 	$	1,721,268	 	$	(743,257)	 	$	978,428	 	
 
See accompanying notes to consolidated financial statements.

F-6

Table of Contents

Genco Shipping & Trading Limited
Consolidated Statements of Cash Flows
(U.S. Dollars in Thousands)

 	 	For the Years Ended December 31,	 	 	
 	 	2019	    	2018	 	2017	  	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	 	 	
Net loss	 	$	(55,985)	 	$	(32,940)	 	$	(58,725)	 	 	
Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	72,824	 	 	68,976	 	 	71,776	 	 	
Amortization of deferred financing costs	 	 	3,788	 	 	3,035	 	 	2,325	 	 	
PIK interest, net	 	 	 —	 	 	 —	 	 	4,542	 	 	
Payment of PIK interest	 	 	 —	 	 	(5,341)	 	 	 —	 	 	
Noncash operating lease expense	 	 	1,246	 	 	 —	 	 	 —	 	 	
Amortization of nonvested stock compensation expense	 	 	2,057	 	 	2,231	 	 	4,053	 	 	
Impairment of right-of-use asset	 	 	223	 	 	 —	 	 	 —	 	 	
Impairment of vessel assets	 	 	27,393	 	 	56,586	 	 	21,993	 	 	
Loss (gain) on sale of vessels	 	 	168	 	 	(3,513)	 	 	(7,712)	 	 	
Loss on debt extinguishment	 	 	 —	 	 	4,533	 	 	 —	 	 	
Insurance proceeds for protection and indemnity claims	 	 	494	 	 	303	 	 	765	 	 	
Insurance proceeds for loss of hire claims	 	 	 —	 	 	58	 	 	2,230	 	 	
Change in assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	
Decrease (increase) in due from charterers	 	 	8,605	 	 	(10,099)	 	 	(2,482)	 	 	
Increase in prepaid expenses and other current assets	 	 	(789)	 	 	(6,626)	 	 	(5,875)	 	 	
Decrease (increase) in inventories	 	 	2,340	 	 	(14,215)	 	 	(6,485)	 	 	
Decrease in other noncurrent assets	 	 	 —	 	 	514	 	 	 —	 	 	
Increase in accounts payable and accrued expenses	 	 	13,172	 	 	2,571	 	 	1,494	 	 	
Increase in deferred revenue	 	 	223	 	 	1,190	 	 	3,234	 	 	
Decrease in operating lease liabilities	 	 	(1,592)	 	 	 —	 	 	 —	 	 	
Increase in deferred rent	 	 	 —	 	 	880	 	 	720	 	 	
Deferred drydock costs incurred	 	 	(14,641)	 	 	(2,236)	 	 	(7,782)	 	 	
Net cash provided by operating activities	 	 	59,526	 	 	65,907	 	 	24,071	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	 	 	
Purchase of vessels and ballast water treatment systems, including deposits	 	 	(13,960)	 	 	(241,872)	 	 	(262)	 	 	
Purchase of scrubbers (capitalized in Vessels)	 	 	(31,750)	 	 	 —	 	 	 —	 	 	
Purchase of other fixed assets	 	 	(4,714)	 	 	(1,462)	 	 	(290)	 	 	
Net proceeds from sale of vessels	 	 	26,963	 	 	44,330	 	 	15,513	 	 	
Insurance proceeds for hull and machinery claims	 	 	612	 	 	3,629	 	 	2,444	 	 	
Net cash (used in) provided by investing activities	 	 	(22,849)	 	 	(195,375)	 	 	17,405	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	 	 	
Proceeds from the $108 Million Credit Facility	 	 	 —	 	 	108,000	 	 	 —	 	 	
Repayments on the $108 Million Credit Facility	 	 	(6,320)	 	 	(1,580)	 	 	 —	 	 	
Proceeds from $495 Million Credit Facility	 	 	21,500	 	 	460,000	 	 	 —	 	 	
Repayments on the $495 Million Credit Facility	 	 	(70,776)	 	 	(15,000)	 	 	 —	 	 	
Repayments on the $400 Million Credit Facility	 	 	 —	 	 	(399,600)	 	 	(400)	 	 	
Repayments on the $98 Million Credit Facility	 	 	 —	 	 	(93,939)	 	 	(1,332)	 	 	

F-7

Table of Contents

 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	 	
 	 	2019	    	2018	 	2017	  	 	

Repayments on the 2014 Term Loan Facilities	 	 	 —	 	 	(25,544)	 	 	(2,763)	 	 	
Payment of debt extinguishment costs	 	 	 —	 	 	(2,962)	 	 	 —	 	 	
Proceeds from issuance of common stock	 	 	 —	 	 	110,249	 	 	 —	 	 	
Payment of common stock issuance costs	 	 	(105)	 	 	(496)	 	 	 —	 	 	
Payment of Series A Preferred Stock issuance costs	 	 	 —	 	 	 —	 	 	(1,103)	 	 	
Cash dividends paid	 	 	(20,877)	 	 	 —	 	 	 —	 	 	
Payment of deferred financing costs	 	 	(611)	 	 	(11,845)	 	 	 —	 	 	
Net cash (used in) provided by financing activities	 	 	(77,189)	 	 	127,283	 	 	(5,598)	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Net (decrease) increase in cash, cash equivalents and restricted cash	 	 	(40,512)	 	 	(2,185)	 	 	35,878	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents and restricted cash at beginning of period	 	 	202,761	 	 	204,946	 	 	169,068	 	 	
Cash, cash equivalents and restricted cash at end of period	 	$	162,249	 	$	202,761	 	$	204,946	 	 	
 
See accompanying notes to consolidated financial statements.

F-8

Table of Contents

Genco Shipping & Trading Limited
(U.S. Dollars in Thousands, Except per Share Data)
Notes to Consolidated Financial Statements for the Years Ended December 31, 2019, 2018 and 2017
 
1 - GENERAL INFORMATION
 
The accompanying consolidated financial statements include the accounts of Genco Shipping & Trading Limited (“GS&T”) and its direct and indirect wholly-owned subsidiaries (collectively, the “Company”). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels. GS&T is incorporated under the laws of the Marshall Islands and as of December 31, 2019, is the direct or indirect owner of all of the outstanding shares or limited liability company interests of the following subsidiaries: Genco Ship Management LLC; Genco Investments LLC; Genco RE Investments LLC; Genco Shipping Pte. Ltd.; Genco Shipping A/S; Baltic Trading Limited (“Baltic Trading”); and the ship-owning subsidiaries as set forth below under “Other General Information.” 
 
On June 19, 2018, the Company closed an equity offering of 7,015,000 shares of common stock at an offering price of $16.50 per share.  The Company received net proceeds of $109,648 after deducting underwriters’ discounts and commissions and other expenses.
 
 On November 15, 2016, pursuant to stock purchase agreements (the “Purchase Agreements”) effective as of October 4, 2016 with Centerbridge Partners, L/P, or its affiliates, Strategic Value Partners, LLC and funds managed by affiliates of Apollo Global Management, LLC, the Company completed the private placement of 27,061,856 shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”) which included 25,773,196 shares at a price per share of $4.85 and an additional 1,288,660 shares issued as a commitment fee on a pro rata basis.  The Company received net proceeds of $120,789 after deducting placement agents’ fees and expenses.  On January 4, 2017, the Company’s shareholders approved at a Special Meeting of Shareholders the issuance of up to 27,061,856 shares of common stock of the Company upon the conversion of shares of the Series A Preferred Stock, par value $0.01 per share, which were purchased by certain investors in a private placement (the “Conversion Proposal”).  As a result of shareholder approval of the Conversion Proposal, all outstanding 27,061,856 shares of Series A Preferred Stock were automatically and mandatorily converted into 27,061,856 shares of common stock of the Company on January 4, 2017.

F-9

Table of Contents

Other General Information
 
At December 31, 2019, 2018 and 2017, the Company’s fleet consisted of 55,  59 and 60 vessels, respectively.
 
Below is the list of Company’s wholly owned ship-owning subsidiaries as of December 31, 2019:

Wholly Owned Subsidiaries	    	Vessel Acquired	    	Dwt	    	Delivery Date	    	Year Built	 	
 	 	 	 	 	 	 	 	 	 	
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 Charger Limited	 	Genco Charger	 	28,398	 	12/14/07	(3)	
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 Constantine Limited	 	Genco Constantine	 	180,183	 	2/21/08	 	
2008	 	
Genco Thunder LLC	 	Genco Thunder	 	76,588	 	9/25/08	 	
2007	 	
Genco Hadrian Limited	 	Genco Hadrian	 	169,025	 	12/29/08	 	
2008	 	
Genco Commodus Limited	 	Genco Commodus	 	169,098	 	7/22/09	 	
2009	 	
Genco Maximus Limited	 	Genco Maximus	 	169,025	 	9/18/09	 	
2009	 	
Genco Claudius Limited	 	Genco Claudius	 	169,001	 	12/30/09	 	
2010	 	
Genco Bay Limited	 	Genco Bay	 	34,296	 	8/24/10	 	
2010	 	
Genco Ocean Limited	 	Genco Ocean	 	34,409	 	7/26/10	 	
2010	 	
Genco Avra Limited	 	Genco Avra	 	34,391	 	5/12/11	 	
2011	 	
Genco Mare Limited	 	Genco Mare	 	34,428	 	7/20/11	 	
2011	 	
Genco Spirit Limited	 	Genco Spirit	 	34,432	 	11/10/11	 	
2011	 	
Genco Aquitaine Limited	 	Genco Aquitaine	 	57,981	 	8/18/10	 	
2009	 	
Genco Ardennes Limited	 	Genco Ardennes	 	58,018	 	8/31/10	 	
2009	 	
Genco Auvergne Limited	 	Genco Auvergne	 	58,020	 	8/16/10	 	
2009	 	
Genco Bourgogne Limited	 	Genco Bourgogne	 	58,018	 	8/24/10	 	
2010	 	
Genco Brittany Limited	 	Genco Brittany	 	58,018	 	9/23/10	 	
2010	 	
Genco Languedoc Limited	 	Genco Languedoc	 	58,018	 	9/29/10	 	
2010	 	
Genco Loire Limited	 	Genco Loire	 	53,430	 	8/4/10	 	
2009	 	
Genco Lorraine Limited	 	Genco Lorraine	 	53,417	 	7/29/10	 	
2009	 	
Genco Normandy Limited	 	Genco Normandy	 	53,596	 	8/10/10	 	
2007	 	
Genco Picardy Limited	 	Genco Picardy	 	55,257	 	8/16/10	 	
2005	 	
Genco Provence Limited	 	Genco Provence	 	55,317	 	8/23/10	 	
2004	 	
Genco Pyrenees Limited	 	Genco Pyrenees	 	58,018	 	8/10/10	 	
2010	 	
Genco Rhone Limited	 	Genco Rhone	 	58,018	 	3/29/11	 	
2011	 	
Genco Weatherly Limited	 	Genco Weatherly	 	61,556	 	7/26/18	 	
2014	 	
Genco Columbia Limited	 	Genco Columbia	 	60,294	 	9/10/18	 	
2016	 	
Genco Endeavour Limited	 	Genco Endeavour	 	181,060	 	8/15/18	 	
2015	 	
Genco Resolute Limited	 	Genco Resolute	 	181,060	 	8/14/18	 	
2015	 	
Genco Defender Limited	 	Genco Defender	 	180,021	 	9/6/18	 	
2016	 	
Genco Liberty Limited	 	Genco Liberty	 	180,032	 	9/11/18	 	
2016	 	
Baltic Lion Limited	 	Baltic Lion	 	179,185	 	4/8/15	(1)	
2012	 	
Baltic Tiger Limited	 	Genco Tiger	 	179,185	 	4/8/15	(1)	
2011	 	
Baltic Leopard Limited	 	Baltic Leopard	 	53,446	 	4/8/10	(2)	
2009	 	
Baltic Panther Limited	 	Baltic Panther	 	53,350	 	4/29/10	(2)	
2009	 	
Baltic Cougar Limited	 	Baltic Cougar	 	53,432	 	5/28/10	(2)	
2009	 	
Baltic Jaguar Limited	 	Baltic Jaguar	 	53,473	 	5/14/10	(2)	
2009	 	
Baltic Bear Limited	 	Baltic Bear	 	177,717	 	5/14/10	(2)	
2010	 	
Baltic Wolf Limited	 	Baltic Wolf	 	177,752	 	10/14/10	(2)	
2010	 	
Baltic Wind Limited	 	Baltic Wind	 	34,408	 	8/4/10	(2)	
2009	 	
Baltic Cove Limited	 	Baltic Cove	 	34,403	 	8/23/10	(2)	
2010	 	
Baltic Breeze Limited	 	Baltic Breeze	 	34,386	 	10/12/10	(2)	
2010	 	
Baltic Fox Limited	 	Baltic Fox	 	31,883	 	9/6/13	(2)	
2010	 	
Baltic Hare Limited	 	Baltic Hare	 	31,887	 	9/5/13	(2)	
2009	 	
Baltic Hornet Limited	 	Baltic Hornet	 	63,574	 	10/29/14	(2)	
2014	 	
Baltic Wasp Limited	 	Baltic Wasp	 	63,389	 	1/2/15	(2)	
2015	 	
Baltic Scorpion Limited	 	Baltic Scorpion	 	63,462	 	8/6/15	 	
2015	 	
Baltic Mantis Limited	 	Baltic Mantis	 	63,470	 	10/9/15	 	
2015	 	

	(1)		The delivery date for these vessels represents the date that the vessel was purchased from Baltic Trading.	
	(2)		The delivery date for these vessels represents the date that the vessel was delivered to Baltic Trading.	
	(3)		The Genco Charger was sold on February 24, 2020.  Refer to Note 19 — Subsequent Events	

 

F-10

Table of Contents

 
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Principles of consolidation
 
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which includes the accounts of GS&T and its direct and indirect 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 it material to the Company’s decision to make such acquisition.
 
When a vessel is acquired with an existing time charter, the Company allocates the purchase price to 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 voyage revenues and not by the length of ship employment for its customers, i.e., spot or time charters.  Each of the Company’s vessels serve the same type of customer, have similar operation and maintenance requirements, operate in the same regulatory environment, and are subject to similar economic characteristics. Based on this, the Company has determined that it operates in one reportable segment, the ocean transportation of drybulk cargoes worldwide through the ownership and operation of drybulk carrier vessels.    
 
Revenue recognition
 
Since the Company’s inception, revenues have been generated from time charter agreements, spot market voyage charters, pool agreements and spot market-related time charters.  Voyage revenues also include the sale of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.
 
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 hire rate, including any ballast bonus payments received pursuant to the time charter agreement.  Spot market-related time charters are the same as other time charter agreements, except the time charter rates are variable and are based on a percentage of the average daily rates as published by the Baltic Dry Index (“BDI”). 
 
The Company records time charter revenues, including spot market-related time charters, 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 for which the performance obligations are satisfied beginning when the vessel is

F-11

Table of Contents
delivered to the charterer until it is redelivered back to the Company.  The Company records spot market-related time charter revenues over the term of the charter as service is provided based on the rate determined based on the BDI for each respective billing period.  As such, the revenue earned by the Company’s vessels that are on spot market-related time charters is subject to fluctuations of the spot market.  Time charter contracts, including spot market-related time charters, are considered operating leases and therefore do not fall under the scope of ASC 606 (as defined under “Recent accounting pronouncements” below) because (i) the vessel is an identifiable asset; (ii) the Company does not have substantive substitution rights; and (iii) the charterer has the right to control the use of the vessel during the term of the contract and derives economic benefit from such use. 
 
The Company has identified that time charter agreements, including fixed rate time charters and spot market-related time charters, contain a lease in accordance with ASC 842 (as defined under “Recent accounting pronouncements” below).  Refer to Note 12 — Voyage Revenue for further discussion.
 
During the year ended December 31, 2017, six of the Company’s vessels were chartered under spot-market related time charters that included a profit-sharing element, the Genco Commodus, Baltic Lion, Genco London, Genco Maximus, Baltic Wasp and Baltic Wolf.  These time charters all ended during the year ended December 31, 2017.  Under these charter agreements, the rate for the spot market-related time charter was linked to a floor of $3 with a 50% index-based profit sharing component. During the years ended December 31, 2019 and 2018, there were no time charters with profit-sharing elements.
 
Spot market voyage charters
 
In a spot market voyage charter contract, the charterer hires the vessel to transport a specific agreed-upon cargo for a single voyage, which may contain multiple load ports and discharge ports. The consideration in such a contract is determined on the basis of a freight rate per metric ton of cargo carried or occasionally on a lump sum basis. The charter party generally has a minimum amount of cargo. The charterer is liable for any short loading of cargo or "dead" freight. The contract generally has a "demurrage" or "despatch" clause. As per this clause, the charterer reimburses the Company for any potential delays exceeding the allowed laytime as per the charter party clause at the ports visited which is recorded as demurrage revenue. Conversely, the charterer is given credit if the loading/discharging activities happen within the allowed laytime known as despatch resulting in a reduction in revenue. The voyage contracts generally have variable consideration in the form of demurrage or despatch. The amount of revenue earned as demurrage or despatch paid by the Company for the years ended December 31, 2019, 2018 and 2017 is not material.
 
Pursuant to the new revenue recognition guidance as disclosed in Note 12 — Voyage Revenue, which was adopted during the first quarter of 2018, revenue for spot market voyage charters is now recognized ratably over the total transit time of each voyage, which commences at the time the vessel arrives at the loading port and ends at the time the discharge of cargo is completed at the discharge port.  Prior to the adoption of the new guidance, revenue for spot market voyage charters was recognized ratably over the total transit time of the voyage, which previously commenced the latter of when the vessel departed from its last discharge port and when an agreement was entered into with the charterered, and ended at the time discharge of cargo was completed at the discharge port.
 
Vessel Pools
 
At December 31, 2019 and 2018, the Company did not have any of its vessels in vessel pools. Under pool arrangements, the vessels operate under a time charter agreement whereby the cost of bunkers and port expenses are borne by the pool 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 less voyage expenses generated by the entire group of vessels in the pool, and the pool operates in the spot market, the revenue earned by these vessels is subject to the fluctuations of the spot market.  The Company recognizes revenue from these pool arrangements based on its portion of the net distributions reported by the relevant pool, which represents the net voyage revenue of the pool after voyage expenses and pool manager fees.

F-12

Table of Contents

Voyage expense recognition
 
In time charters, spot market-related time charters and pool agreements, 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. These expenses are borne by the Company during spot market voyage charters.  As such, there are significantly higher voyage expenses for spot market voyage charters as compared to time charters, spot market-related time charters and pool agreements. There are certain other non-specified voyage expenses, such as commissions, which are typically borne by the Company. At the inception of a time charter, the Company records the difference between the cost of bunker fuel delivered by the terminating charterer and the bunker fuel sold to the new charterer as a gain or loss within voyage expenses. Additionally, the Company records lower of cost and net realizable value adjustments to re-value the bunker fuel on a quarterly basis for certain time charter agreements where the inventory is subject to gains and losses.  These differences in bunkers, including any lower of cost and net realizable value adjustments, resulted in a net (loss) gain of ($829), $3,000 and $2,021 during the years ended December 31, 2019, 2018 and 2017, respectively. Additionally, voyage expenses include the cost of bunkers consumed during short-term time charters pursuant to the terms of the time charter agreement.    
 
Loss on debt extinguishment
 
During the year ended December 31, 2018, the Company recorded $4,533 related to the loss on the extinguishment of debt in accordance with Accounting Standards Codification (“ASC”) 470-50 — “Debt – Modifications and Extinguishments” (“ASC 470-50”). This loss was recognized as a result of the refinancing of the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities with the $495 Million Credit Facility on June 5, 2018 as described in Note 7 — Debt.
 
Due from charterers, net
 
Due from charterers, net includes accounts receivable from charters, including receivables for spot market voyages, net of the provision for doubtful accounts.  At each balance sheet date, the Company records the provision based on a review of all outstanding charter receivables.  Included in the standard time charter contracts with the Company’s customers are certain performance parameters which, if not met, can result in customer claims.  As of December 31, 2019 and 2018, the Company had a reserve of $1,064 and $669, respectively, against the due from charterers balance and an additional accrual of $577 and $345, respectively, in deferred revenue, each of which is primarily associated with estimated customer claims against the Company including vessel performance issues under time charter agreements.
 
Revenue is based on contracted charterparties.  However, there is always the possibility of dispute over terms and payment of hires and freights.  In particular, disagreements may arise concerning the responsibility of lost time and revenue.  Accordingly, the Company periodically assesses the recoverability of amounts outstanding and estimates a provision if there is a possibility of non-recoverability.  The Company believes its provisions to be reasonable based on information available.
 
Inventories
 
Inventories consist of consumable bunkers and lubricants.  For bunkers that are subject to gains and losses as a result of certain time charter agreements, these inventories are stated at the lower of cost and net realizable value, and all others are stated at cost. Cost is determined by the first in, first out method.    
 
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.

F-13

Table of Contents

Charter hire expenses
 
During the second quarter of 2018, the Company began chartering-in third party vessels.  The costs to charter-in these vessels, which primarily include the daily charter hire rate net of commissions or net freight revenue, are recorded as Charter hire expenses.  The Company recorded $16,179,  $1,534 and $0 of charter hire expenses during the years ended December 31, 2019, 2018 and 2017, respectively.
 
Vessels, net
 
Vessels, net is 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 capitalizes interest costs for a vessel under construction as a cost that 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, 2019, 2018 and 2017 was $66,351, $64,012 and $66,514, 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 estimated scrap value of $310 per lightweight ton (“lwt”) times the weight of the vessel noted in lwt.
 
Vessels held for sale

On September 25, 2019, the Company entered into an agreement to sell the Genco Thunder, and the relevant vessel assets have been classified as held for sale in the Consolidated Balance Sheet as of December 31, 2019.  The vessel is expected to be sold during the first quarter of 2020.
 
On November 23, 2018, the Company reached an agreement to sell the Genco Vigour, and the relevant vessel assets have been classified as held for sale in the Consolidated Balance Sheet as of December 31, 2018. This vessel was sold on January 28, 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions for additional information.
           
Fixed assets, net
 
Fixed assets, net is 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 typical estimated useful lives:

Description	    	Useful lives	
 	 	 	 	 	 	
Leasehold improvements	 	Lesser of the estimated useful life of the asset or life of the lease	
Furniture, fixtures & other equipment	 	5 years	
Vessel equipment	 	2-15 years	
Computer equipment	 	3 years	
 
Depreciation and amortization expense for fixed assets for the years ended December 31, 2019, 2018 and 2017 was $989, $335 and $274, respectively. 

F-14

Table of Contents

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 defers the costs associated with the drydockings as they occur and amortizes these costs on a straight-line basis over the period between drydockings.  Costs deferred as part of a vessel’s drydocking include actual costs incurred at the drydocking yard; 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.  If the vessel is drydocked earlier than originally anticipated, any remaining deferred drydock costs that have not been amortized are expensed at the end of the next drydock.
 
Amortization expense for drydocking for the years ended December 31, 2019, 2018 and 2017 was $5,484, $4,629 and $4,988, respectively, and is included in Depreciation and amortization expense in the Consolidated Statements of Operations.  All other costs incurred during drydocking are expensed as incurred.
 
Impairment of long-lived assets
 
During the years ended December 31, 2019, 2018 and 2017 the Company recorded $27,393,  $56,586 and $21,993, respectively, related to the impairment of vessel assets in accordance with ASC 360 — “Property, Plant and Equipment” (“ASC 360”).  ASC 360 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.  If indicators of impairment are present, the Company performs an analysis of the anticipated undiscounted future net cash flows to be derived from the related long-lived assets. 
 
On February 3, 2020, the Company entered into an agreement to sell the Genco Charger, a 2005-built Handysize vessel, to a third party for $5,150 less a 1.0% commission payable to a third party.   As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of December 31, 2019, the vessel value for the Genco Charger was adjusted to its net sales price of $5,099 as of December 31, 2019. This resulted in an impairment loss of $1,314 during the year ended December 31, 2019.  Refer to Note 19 — Subsequent Events for further detail regarding the sale.
 
On November 4, 2019, the Company entered into an agreement to sell the Genco Raptor, a 2007-built Panamax vessel, to a third party for $10,200 less a 2.0% commission payable to a third party.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of September 30, 2019, the vessel value for the Genco Raptor was adjusted to its net sales price of $9,996 as of September 30, 2019. This resulted in an impairment loss of $5,812 during the year ended December 31, 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale.
 
On September 25, 2019, the Company entered into an agreement to sell the Genco Thunder, a 2007-built Panamax vessel, for $10,400 less a 2.0% broker commission payable to a third party.  Therefore, the vessel value for the Genco Thunder was adjusted to its net sales price of $10,192 as of September 30, 2019.  This resulted in an impairment loss of $5,749 during the year ended December 31, 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale.
 
 On September 20, 2019, the Company entered into an agreement to sell the Genco Champion, a 2006-built Handysize vessel, for $6,600 less a 3.0% broker commission payable to a third party.  Therefore, the vessel value for the Genco Champion was adjusted to its net sales price of $6,402 as of September 30, 2019.  This resulted in an impairment loss of $621 during the year ended December 31, 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale. 
 
On August 2, 2019, the Company entered into an agreement to sell the Genco Challenger, a 2003-built Handysize vessel, for $5,250 less a 2.0% broker commission payable to a third party.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of June 30, 2019, the vessel value for the Genco Challenger was adjusted to its net sales price of $5,145 as of June 30, 2019.  This resulted in an

F-15

Table of Contents
impairment loss of $4,401 during the year ended December 31, 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale.
 
At June 30, 2019, the Company determined that the expected estimated future undiscounted cash flows for the Genco Champion, a 2006-built Handysize vessel, and the Genco Charger, a 2005-built Handysize vessel, did not exceed the net book value of these vessels as of June 30, 2019.  As such, the Company adjusted the value of these vessels to their respective fair market values as of June 30, 2019.  This resulted in an impairment loss of $9,496 during the year ended December 31, 2019. 
 
On July 24, 2018, the Company entered into an agreement to sell the Genco Surprise, a 1998-built Panamax vessel, for $5,300 less a 3.0% broker commission payable to a third party.  As the anticipated undiscounted cash flows, including the net sales price, did not exceed the net book value of the vessel as of June 30, 2018, the vessel value for the Genco Surprise was adjusted to its net sales price of $5,141 as of June 30, 2018.  This resulted in an impairment loss of $184 during the year ended December 31, 2018.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale. 
 
On February 27, 2018, the Board of Directors determined to dispose of the Company’s following nine vessels: the Genco Cavalier, the Genco Loire, the Genco Lorraine, the Genco Muse, the Genco Normandy, the Baltic Cougar, the Baltic Jaguar, the Baltic Leopard and the Baltic Panther, at times and on terms to be determined in the future.  Given this decision, and that the estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel, we adjusted the values of these older vessels to their respective fair market values during the year ended December 31, 2018.  This resulted in an impairment loss of $56,402 during the year ended December 31, 2018.
 
On August 4, 2017, the Board of Directors determined to dispose of the Company’s vessels built in 1999, namely the Genco Beauty, the Genco Explorer, the Genco Knight, the Genco Progress and the Genco Vigour, at times and on terms to be determined in the future.  Given this decision, and that the estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel, the Company has adjusted the values of these older vessels to their respective fair market values during the year ended December 31, 2017.  This resulted in an impairment loss of $18,654 during the year ended December 31, 2017. Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale of these vessels.
 
At June 30, 2017, the Company determined that the sum of the estimated undiscounted future cash flows attributable to the Genco Surprise did not exceed the carrying value of the vessel at June 30, 2017 and reduced the carrying value of the Genco Surprise, a 1998-built Panamax vessel, to its fair market value as of June 30, 2017.  This resulted in an impairment loss of $3,339 during the year ended December 31, 2017. 
 
Loss (gain) on sale of vessels
 
During the years ended December 31, 2019, 2018 and 2017, the Company recorded net (losses) gains of ($168), $3,513 and $7,712, respectively, related to the sale of vessels.  The ($168) net loss recognized during the year ended December 31, 2019 related primarily to the sale of the Genco Challenger, Genco Champion and Genco Raptor which was largely offset by a net gain related to the sale of the Genco Vigour. The $3,513 net gain recognized during the year ended December 31, 2018 related primarily to the sale of the Genco Progress, the Genco Cavalier, the Genco Explorer, the Genco Muse, the Genco Beauty and the Genco Knight.  The $7,712 net gain recognized during the year ended December 31, 2017 related primarily to the sale of the Genco Wisdom, the Genco Reliance, the Genco Carrier, the Genco Success and the Genco Prosperity.  Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale of these vessels.
 
Deferred financing costs
 
Deferred financing costs, which are presented as a direct deduction within the outstanding debt balance in the Company’s Consolidated Balance Sheets, consist of fees, commissions and legal expenses associated with securing loan

F-16

Table of Contents
facilities and other debt offerings and amending existing loan facilities.  These costs are amortized over the life of the related debt and are included in Interest expense in the Consolidated Statement of Operations.
 
Cash and cash equivalents
 
The Company considers highly liquid investments, such as money market funds and certificates of deposit with an original maturity of three months or less to be cash equivalents.
 
Restricted Cash
 
Current and non-current restricted cash includes cash that is restricted pursuant to our credit facilities, refer to Note 7 — Debt.  The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows:

 	 	December 31, 	 	December 31, 	 	December 31, 	 	December 31, 	 	
 	    	2019	    	2018	 	2017	 	2016	 	
Cash and cash equivalents	 	$	155,889	 	$	197,499	 	$	174,479	 	$	133,400	 	
Restricted cash - current	 	 	6,045	 	 	4,947	 	 	7,234	 	 	8,242	 	
Restricted cash - noncurrent	 	 	315	 	 	315	 	 	23,233	 	 	27,426	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents and restricted cash	 	$	162,249	 	$	202,761	 	$	204,946	 	$	169,068	 	

United States Gross Transportation Tax 
 
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 (the “Section 883 exemption”).  Among other things, in order to qualify, the Company must be incorporated in a country that 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.  The Company is not taxable in any other jurisdiction, with the exception of Genco Management (USA) Limited, Genco Shipping Pte. Ltd. and Genco Shipping A/S, as noted in the “Income taxes” section below.
 
The Company will qualify for the Section 883 exemption if, among other things, (i) the Company’s stock is treated as primarily and regularly traded on an established securities market in the United States (the “publicly traded test”) or (ii) the Company satisfies the qualified shareholder test or (iii) the Company satisfies the controlled foreign corporation test (the “CFC test”).  Under applicable Treasury Regulations, the publicly traded test cannot be satisfied in any taxable year in which persons who actually or constructively own 5% or more of the Company’s stock (which the Company sometimes refers to as “5% shareholders”), together own 50% or more of the Company’s stock (by vote and value) for more than half the days in such year (which the Company sometimes refers to as the “five percent override rule”), unless an exception applies.  A foreign corporation satisfies the qualified shareholder test if more than 50 percent of the value of its outstanding shares is owned (or treated as owned by applying certain attribution rules) for at least half of the number of days in the foreign corporation's taxable year by one or more “qualified shareholders.”  A qualified shareholder includes a foreign corporation that, among other things, satisfies the publicly traded test.  A foreign corporation satisfies the CFC test if it is a “controlled foreign corporation” and one or more qualified U.S. persons own more than 50 percent of the total value of all the outstanding stock.

F-17

Table of Contents

Based on the publicly traded requirement of the Section 883 regulations, the Company believes that it qualified for exemption from income tax on income derived from the international operations of vessels during the years ended December 31, 2019 and 2018.  However, based on the ownership and trading of the Company’s stock in 2017, the Company believes that it did not satisfy the publicly traded test, the qualified shareholder test or the CFC test, and therefore did not qualify for the Section 883 exemption in 2017.  In order to meet the publicly traded requirement, the Company’s 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, the Company’s qualification for the publicly traded requirement may be jeopardized if 5% shareholders own, in the aggregate, 50% or more of the Company’s common stock for more than half the days of the year.  Management believes that during the year ended December 31, 2017, the combined ownership of its 5% shareholders equaled 50% or more of its common stock for more than half the days of that year. Management believes that during the years ended December 31, 2019 and 2018, the combined ownership of its 5% shareholders did not equal 50% or more of its common stock for more than half the days of each of those years. 
 
If the Company does not qualify for the Section 883 exemption, the Company’s U.S. source shipping income, i.e., 50% of its gross shipping income attributable to transportation beginning or ending in the U.S. (but not both beginning and ending in the U.S.) is subject to a 4% tax without allowance for deductions (the “U.S. gross transportation tax”).
 
During the year ended December 31, 2017, the Company recorded estimated U.S. gross transportation tax of $365 which was recorded in Voyages expenses in the Consolidated Statements of Operations.  During the years ended December 31, 2019 and 2018, the Company qualified for Section 883 exemption and, therefore, did not record any U.S. gross transportation tax. 
 
Income taxes
 
To the extent the Company’s U.S. source shipping income, or other U.S. source income, is considered to be effectively connected income, as described below, any such income, net of applicable deductions, would be subject to the U.S. federal corporate income tax, imposed at a 21% rate effective 2018. In addition, the Company may be subject to a 30% "branch profits" tax on such income, and on certain interest paid or deemed paid attributable to the conduct of such trade or business. Shipping income is generally sourced 100% to the United States if attributable to transportation exclusively between United States ports (the Company is prohibited from conducting such voyages), 50% to the United States if attributable to transportation that begins or ends, but does not both begin and end, in the United States (as described in “United States Gross Transportation Tax” above) and otherwise 0% to the United States.
 
The Company’s U.S. source shipping income would be considered effectively connected income only if:
 
	·		the Company has, or is considered to have, a fixed place of business in the U.S. involved in the earning of U.S. source shipping income; and	
 
	·		substantially all of the Company’s U.S. source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular intervals between the same points for voyages that begin or end in the U.S.	
 
The Company does not intend to have, or permit circumstances that would result in having, any vessel sailing to
or from the U.S. on a regularly scheduled basis. Based on the current shipping operations of the Company and the
Company’s expected future shipping operations and other activities, the Company believes that none of its U.S. source
shipping income will constitute effectively connected income. However, the Company may from time to time generate
non-shipping income that may be treated as effectively connected income.
 
The Company established Genco Shipping Pte. Ltd. (“GSPL”), which is based in Singapore, on September 8, 2017.  GSPL applied for and was awarded the Maritime Sector Incentive – Approved International Shipping Enterprise (“MSI-AIS”) status under Section 13F of the Singapore Income Tax Act (“SITA”) by the Maritime and Port Authority of Singapore.  The award is for an initial period of 10 years, commencing on August 15, 2018, and is subject to a review of

F-18

Table of Contents
performance at the end of the initial five year period.  The MSI-ASI status provides for a tax exemption on income derived by GSPL from qualifying shipping operations under Section 13F of the SITA.  Income from non-qualifying activities is taxable at the prevailing Singapore Corporate income tax rate (currently 17%).  During the years ended December 31, 2019, 2018 and 2017, there was no income tax recorded by GSPL.
 
During 2018, the Company established Genco Shipping A/S, which is a Danish-incorporated corporation which is based in Copenhagen and considered to be a resident for tax purposes in Denmark.  Genco Shipping A/S was subject to corporate taxes in Denmark a rate of 22% during 2018 and 2019.  During the years ended December 31, 2019 and 2018, Genco Shipping A/S recorded $241 and $79, respectively, of income tax in Other income (expense) in the Consolidated Statements of Operations.
 
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.  Refer to “Revenue recognition” above for description of the Company’s revenue recognition policy.
 
Nonvested stock awards
 
The Company follows ASC Subtopic 718-10, “Compensation — Stock Compensation” (“ASC 718-10”), for nonvested stock issued under its equity incentive plans.  Stock-based compensation costs from nonvested stock have been classified as a component of additional paid-in capital in the Consolidated Statements of Equity.
 
Accounting estimates
 
The preparation of financial statements in conformity with U.S. GAAP 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 valuations, the valuation of amounts due from charterers, performance claims, residual value of vessels, useful life of vessels and the fair value of derivative instruments, if any.  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 and cash and cash equivalents.  With respect to amounts due from charterers, the Company attempts to limit its credit risk by performing ongoing credit evaluations and, when deemed necessary, requires letters of credit, guarantees or collateral.  The Company earned all of its voyage revenues from 170, 182 and 102 customers during the years ended December 31, 2019, 2018 and 2017. 
 
For the years ended December 31, 2019 and 2018, there were no customers that individually accounted for more than 10% of voyage revenues. For the year ended December 31, 2017, there were two customers that individually accounted for more than 10% of voyage revenues; Swissmarine Services S.A., including its subsidiaries (“Swissmarine”) and Clipper Group, including Clipper Bulk Shipping, the Clipper Logger Pool and the Clipper Sapphire Pool (“Clipper”), which represented 15.09% and 10.98% of voyage revenues, respectively.  
 
At December 31, 2019 and 2018, the Company maintains all of its cash and cash equivalents with four financial institutions.  None of the Company’s cash and cash equivalent balance is covered by insurance in the event of default by these financial institutions.

F-19

Table of Contents

Fair value of financial instruments
 
The estimated fair values of the Company’s financial instruments, such as amounts due to / due from charterers, accounts payable and long-term debt, approximate their individual carrying amounts as of December 31, 2019 and 2018 due to their short-term maturity or the variable-rate nature of the respective borrowings under the credit facilities.  See Note 8 — Fair Value of Financial Instruments for additional disclosure on the fair value of long-term debt.
 
Recent accounting pronouncements
 
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”),” which change the disclosure requirements for fair value measurements by removing, adding, and modifying certain disclosures. This ASU is effective for fiscal years beginning after December 15, 2019, and for interim periods within that year.  Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU.  The Company has evaluated the impact of the adoption of ASU 2018-03 and has determined that there is no effect on its consolidated financial statements.
 
In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting” (“ASU 2017-09”).  This ASU provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting.  This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within that year and early adoption is permitted.  ASU 2017-09 must be applied prospectively to an award modified on or after the adoption date.  The Company adopted ASU 2017-09 during the first quarter of 2018 and there was no effect on its consolidated financial statements.
 
In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230):  Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”).  This ASU adds or clarifies the guidance in ASC 230 – Statement of Cash Flows regarding the classification of certain cash receipts and payments in the statement of cash flows.  This ASU is effective for fiscal years beginning after December 15, 2017, and for interim periods within those years and early adoption is permitted.  This ASU shall be applied retrospectively to all periods presented, but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable.  The Company adopted ASU 2016-15 during the first quarter of 2018.  The retrospective application of ASU 2016-15 resulted in insurance proceeds for protection and indemnity claims and loss of hire claims to be separately disclosed in the cash flows from operating activities and resulted in insurance proceeds for hull and machinery claims to be separately disclosed in the cash flows from investing activities.  These amounts were previously recorded in the cash flows from operating activities as the change in prepaid expenses and other current assets.  Additionally, as part of ASU 2016-15, any cash payments for debt prepayment or debt extinguishment costs (including third party costs, premiums paid and other fees paid to lenders) must be classified as cash outflows for financing activities.  Lastly, for any debt instruments that contain interest payable in-kind, any cash payments attributable to the payment of in-kind interest will be classified as cash outflows for operating activities.  There were no cash payments for in-kind interest during the years ended December 31, 2019 and 2017.  Refer to the Consolidated Statements of Cash Flows.
 
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASC 842”), which replaced the existing guidance in ASC 840 – Leases (“ASC 840”).  This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases.  Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability for leases with lease terms of more than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset and for operating leases, the lessee would recognize a straight-line total lease expense.  Accounting by lessors will remain largely unchanged from current U.S. GAAP.  The requirements of this standard include an increase in required disclosures.  This ASU was effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years.  Lessees and lessors were required to apply the new standard at the beginning of the earliest period presented in the financial statements in which they first apply the new guidance, using a modified retrospective transition method. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” which provided clarifications and improvements to ASC 842, including allowing entities to elect an

F-20

Table of Contents
additional transition method with which to adopt ASC 842.  The approved transition method enables entities to apply the transition requirements at the effective date of ASC 842 (rather than at the beginning of the earliest comparative period presented as currently required) with the effect of the initial application of ASC 842 recognized as a cumulative-effect adjustment to retained earnings in the period of adoption.  As a result, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with ASC 840, including the disclosure requirements of ASC 840.   The Company adopted ASC 842 on January 1, 2019 using this transition method. 
 
The new guidance provides a number of optional practical expedients in the transition.  The Company had elected the package of practical expedients, which among other things, allows the carryforward of the historical lease classification. Further, upon implementation of the new guidance, the Company has elected the practical expedients to combine lease and non-lease components and to not recognize right-of-use assets and lease liabilities for short-term leases.  Upon adoption of ASC 842 on January 1, 2019, the Company recorded a right-of-use asset of $9,710  and an operating lease liability of $13,095 in the Consolidated Balance Sheets.  Refer to Note 13 — Leases for further information regarding our operating lease agreement and the effect of the adoption of ASC 842 from a lessor perspective.  
 
Pursuant to ASC 842, the Company has identified revenue from its time charter agreements as lease revenue.  Refer to Note 12 — Voyage revenue for additional information regarding the adoption of ASC 842 from a lessor perspective. 
 
In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). This ASU requires that equity investments be measured at fair value with changes in fair value recognized in net income (loss). ASU 2016-01 is effective for annual periods beginning after December 15, 2017, and interim periods within those years. The Company adopted ASU 2016-01 during the first quarter of 2018 and there was no impact on the Company’s consolidated financial statements as the Company currently does not have any equity investments.
 
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09” or “ASC 606”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative effect adjustment as of the date of adoption (the “modified retrospective transition method”). The Company adopted ASC 606 during the first quarter of 2018 using the modified retrospective transition method applied to all contracts and determined that the only impact was to spot market voyage charter contracts that were not completed as of January 1, 2018. Upon adoption, the Company recognized the cumulative effect of adopting this guidance as an adjustment to its opening balance of retained deficit as of January 1, 2018. Prior periods were not retrospectively adjusted. The adoption of ASC 606 did not have a financial impact on the recognition of revenue generated from time charter agreements, spot market-related time charters and pool agreements. Refer to Note 12 — Voyage Revenue for further discussion of the financial impact on the Company’s consolidated financial statements.

3 - CASH FLOW INFORMATION
 
For the year ended December 31, 2019, the Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $548 for the Purchase of vessels and ballast water treatment systems, including deposits, $9,520 for the Purchase of scrubbers, $413 for the Purchase of other fixed assets and $118 for the Net proceeds from sale of vessels.  For the year ended December 31, 2019, the Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $74 for Cash dividends paid.

F-21

Table of Contents

For the year ended December 31, 2018, the Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $2,228 for the Purchase of vessels and ballast water treatment systems, including deposits, $428 for the Purchase of Scrubbers, $262 for the Net proceeds from sale of vessels and $360 for the Purchase of other fixed assets.  For the year ended December 31, 2018, the Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $105 for the Payment of common stock issuance costs and $1 for Payment of deferred financing costs.
 
For the year ended December 31, 2017, the Company had non-cash investing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expenses consisting of $36 for the Purchase of other fixed assets.
 
Professional fees and trustee fees incurred related to the Company’s emergence of bankruptcy on July 9, 2014 in the amount of $0 were recognized by the Company in Reorganization items, net for the year ended December 31, 2017.  During this period, $25 of professional fees and trustee fees were paid through December 31, 2017 and $0 is included in Accounts payable and accrued expenses as of December 31, 2017.
 
During the year ended December 31, 2019, the Company made a reclassification of $10,303 from Vessels, net of accumulated depreciation and Fixed assets, net of accumulated depreciation and amortization to Vessels held for sale due to the approval by the Board of Directors to sell the Genco Thunder prior to December 31, 2019.  Refer to Note 4 — Vessel Acquisitions and Dispositions.
 
During the year ended December 31, 2018, the Company made a reclassification of $5,702 from Vessels, net of accumulated depreciation to Vessels held for sale due to the approval by the Board of Directors to sell the Genco Vigour prior to December 31, 2018.  Refer to Note 4 — Vessel Acquisitions and Dispositions.
 
During the years ended December 31, 2019, 2018 and 2017, cash paid for interest, excluding the PIK interest paid as a result of the refinancing of the $400 Million Credit Facility, was $28,376,  $30,167 and $25,098, respectively.  Refer to Note 7 — Debt. 
 
During the years ended December 31, 2019, 2018 and 2017, there was no cash paid for estimated income taxes.
 
On May 15, 2019, the Company issued 29,580 restricted stock units to certain members of the Board of Directors.  The aggregate fair value of these restricted stock units was $255.
 
On March 4, 2019, the Company issued 106,079 restricted stock units and options to purchase 240,540 shares of the Company’s stock at an exercise price of $8.065, as adjusted for the special dividend declared on November 5, 2019, to certain individuals. The fair value of these restricted stock units and stock options were $890 and $904, respectively.
 
On May 15, 2018, the Company issued 14,268 restricted stock units to certain members of the Board of Directors.  These restricted stock units vested on May 15, 2019. The aggregate fair value of these restricted stock units was $255.
 
On February 27, 2018, the Company issued 37,436 restricted stock units and options to purchase 122,608 shares of the Company’s stock at an exercise price of $13.365, as adjusted for the special dividend declared on November 5, 2019, to certain individuals.  The fair value of these restricted stock units and stock options were $512 and $926, respectively.
 
On May 17, 2017, the Company issued 25,197 restricted stock units to certain members of the Board of Directors.  These restricted stock units vested on May 15, 2018.  The aggregate fair value of these restricted stock units was $255. 

F-22

Table of Contents

On March 23, 2017, the Company issued 292,398 restricted stock units and options to purchase 133,000 shares with an exercise price of $10.805, as adjusted for the special dividend declared on November 5, 2019, per share to John C. Wobensmith, Chief Executive Officer and President.  The fair value of these restricted stock units and stock options were $3,254 and $853, respectively.
 
Refer to Note 16 — Stock-Based Compensation for further information regarding the aforementioned grants.

4 - VESSEL ACQUISITIONS AND DISPOSITIONS
 
Vessel Acquisitions
 
On June 6, 2018, the Company entered into an agreement for the en bloc purchase of four drybulk vessels, including two Capesize drybulk vessels and two Ultramax drybulk vessels for approximately $141,000.  Each vessel was built with a fuel-saving “eco” engine.  The Genco Resolute, a 2015-built Capesize vessel, was delivered on August 14, 2018 and the Genco Endeavour, a 2015-built Capesize vessel, was delivered on August 15, 2018.  The Genco Weatherly, a 2014-built Ultramax vessel, was delivered on July 26, 2018 and the Genco Columbia, a 2016-built Ultramax vessel, was delivered on September 10, 2018. The Company utilized a combination of cash on hand and proceeds from the $108 Million Credit Facility to finance the purchase.
 
On July 12, 2018, the Company entered into agreements to purchase two 2016-built Capesize drybulk vessels for an aggregate purchase price of $98,000.  The Genco Defender was delivered on September 6, 2018, and the Genco Liberty was delivered on September 11, 2018. The Company utilized a combination of cash on hand and proceeds from the $108 Million Credit Facility to finance the purchase.
 
Vessel Dispositions
 
On November 4, 2019, the Company entered into an agreement to sell the Genco Raptor, a 2007-built Panamax vessel, for $10,200 less a 2.0% broker commission payable to a third party.  The sale was completed on December 11, 2019.  The Genco Raptor served as collateral under the $495 Million Credit Facility; therefore, $6,045 of the net proceeds received from the sale will remain classified as restricted cash for 180 days following the sale date, which has been reflected as current restricted cash in the Consolidated Balance Sheets as of December 31, 2019.  That amount can be used to towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility.  If such a replacement vessel is not added as collateral within such 180 day period, the Company will be required to use the proceeds as a loan prepayment.  
 
On September 25, 2019, the Company entered into an agreement to sell the Genco Thunder, a 2007-built Panamax vessel, for $10,400 less a 2.0% broker commission payable to a third party.  The sale is expected to be completed during the first quarter of 2020.  The vessel assets have been classified as held for sale in the Consolidated Balance Sheets as of December 31, 2019.  The Genco Thunder serves as collateral under the $495 Million Credit Facility.
 
On September 20, 2019, the Company entered into an agreement to sell the Genco Champion, a 2006-built Handysize vessel, for $6,600 less a 3.0% broker commission payable to a third party.  The sale was completed on October 21, 2019.  On August 2, 2019, the Company entered into an agreement to sell the Genco Challenger, a 2003-built Handysize vessel, for $5,250 less a 2.0% broker commission payable to a third party.  The sale was completed on October 10, 2019.  The Genco Champion and Genco Challenger served as collateral under the $495 Million Credit Facility; therefore, $6,880 of the net proceeds from the sale of these two vessels was required to be used as a loan prepayment since a replacement vessel was not going to be added as collateral within 180 days following the sales dates. Refer to Note 7 — Debt for further information.
 
On November 23, 2018, the Company entered into an agreement to sell the Genco Vigour, a 1999-built Panamax vessel, to a third party for $6,550 less a 2.0% broker commission payable to a third party.  The sale was

F-23

Table of Contents
completed on January 28, 2019.  The vessel assets were classified as held for sale in the Consolidated Balance Sheets as of December 31, 2018.  
 
On November 21, 2018, the Company entered into an agreement to sell the Genco Knight, a 1999-built Panamax vessel, to a third party for $6,200 less a 3.0% broker commission payable to a third party.  The sale was completed on December 26, 2018.
 
On November 15, 2018, the Company entered into an agreement to sell the Genco Beauty, a 1999-built Panamax vessel, to a third party for $6,560 less a 3.0% broker commission payable to a third party.  The sale was completed on December 17, 2018.
 
On October 31, 2018, the Company entered into an agreement to sell the Genco Muse, a 2001-built Handymax vessel, to a third party for $6,660 less a 2.0% broker commission payable to a third party.  The sale was completed on December 5, 2018.
 
On August 30, 2018, the Company entered into an agreement to sell the Genco Cavalier, a 2007-built Supramax vessel, to a third party for $10,000 less a 2.5% broker commission payable to a third party.  The sale was completed on October 16, 2018.  This vessel served as collateral under the $495 Million Credit Facility; therefore, $4,947 of the net proceeds received from the sale remained classified as restricted cash for 180 days following the sale date which was reflected as current restricted cash in the Consolidated Balance Sheets as of December 31, 2018.  That amount could be used towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility.  If such a replacement vessel was not added as collateral within such 180 day period, the Company was required to use the proceeds as a loan prepayment.  On April 15, 2019, the Company utilized these proceeds as a loan prepayment under the $495 Million Credit Facility, refer to Note 7 — Debt. 
 
On July 24, 2018, the Company entered into an agreement to sell the Genco Surprise, a 1998-built Panamax vessel, for $5,300 less a 3.0% broker commission payable to a third party.  The sale was completed on August 7, 2018.
 
On June 27, 2018, the Company reached agreements to sell the Genco Explorer and the Genco Progress, both 1999-built Handysize vessels, to a third party for $5,600 each less a 3.0% broker commission payable to a third party.  The sale of the Genco Progress was completed on September 13, 2018 and the sale of the Genco Explorer was completed on November 13, 2018.
 
With the exception of the Genco Cavalier, the aforementioned six vessels that were sold during the year ended December 31, 2018 and the Genco Vigour do not serve as collateral under any of the Company’s credit facilities; therefore the Company was not required to pay down any indebtedness with the proceeds from the sales. 
 
On December 19, 2016, the Board of Directors unanimously approved selling the Genco Prosperity, a 1997-built Handymax vessel, and on December 21, 2016, the Company reached an agreement to sell the Genco Prosperity to a third party for $3,050 less a 3.5% broker commission payable to a third party.  The sale was completed on May 16, 2017.
 
On December 5, 2016, the Board of Directors unanimously approved selling the Genco Success, a 1997-built Handymax vessel, and on December 15, 2016, the Company reached an agreement to sell the Genco Success to a third party for $2,800 less a 3.0% broker commission payable to a third party.  The sale was completed on March 19, 2017. 
 
During January 2017, the Board of Directors unanimously approved selling the Genco Carrier, a 1998-built Handymax vessel, and on January 25, 2017, the Company reached an agreement to sell the Genco Carrier to a third party for $3,560 less a $92 broker commission payable to a third party.  The sale was completed on February 16, 2017. 
 
During January 2017, the Board of Directors unanimously approved selling the Genco Reliance, a 1999-built Handysize vessel, and on January 12, 2017, the Company reached an agreement to sell the Genco Reliance to a third party for $3,500 less a 3.5% broker commission payable to a third party.  The sale was completed on February 9, 2017.

F-24

Table of Contents

On December 19, 2016, the Board of Directors unanimously approved selling the Genco Wisdom, a 1997-built Handymax vessel. On December 21, 2016, the Company reached an agreement to sell the Genco Wisdom to a third party for $3,250 less a 3.5% broker commission payable to a third party.  The sale was completed on January 9, 2017.
 
Refer to Note 1 — General Information for a listing of the delivery dates for the vessels in the Company’s fleet.
 
5 - NET LOSS PER SHARE
 
The computation of basic net loss per share is based on the weighted-average number of common shares outstanding during the reporting period. The computation of diluted net loss per share assumes the vesting of nonvested stock awards and the exercise of stock options (refer to Note 16 — Stock-Based Compensation), for which the assumed proceeds upon vesting 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.  There were 162,097,  149,170 and 226,931 shares of restricted stock and restricted stock units excluded from the computation of diluted net loss per share during the years ended December 31, 2019, 2018 and 2017, respectively, because they were anti-dilutive.  There were 496,148,  255,608 and 133,000 stock options excluded from the computation of diluted net loss per share during the years ended December 31, 2019, 2018 and 2017, respectively, because they were anti-dilutive. (refer to Note 16 — Stock-Based Compensation)
 
The Company’s diluted net loss per share will also reflect the assumed conversion of the equity warrants issued when the Company emerged from bankruptcy on July 9, 2014 (the “Effective Date”) and MIP Warrants issued by the Company (refer to Note 16 — Stock-Based Compensation) if the impact is dilutive under the treasury stock method. The equity warrants have a 7-year term which commenced on the day following the Effective Date and are exercisable for one tenth of a share of the Company’s common stock.  There were no unvested MIP Warrants during the years ended December 31, 2019, 2018 and 2017 excluded from the computation of diluted net loss per share because they were anti-dilutive.  There were 3,936,761 equity warrants excluded from the computation of diluted net loss per share during the years ended December 31, 2019, 2018 and 2017 because they were anti-dilutive.  

The components of the denominator for the calculation of basic and diluted net loss per share are as follows:

 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	 	
 	 	2019	    	2018	  	2017	 	 	
 	 	 	 	 	 	 	 	 	
Common shares outstanding, basic:	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding, basic 	 	41,762,893	 	38,382,599	 	34,242,631	 	 	
 	 	 	 	 	 	 	 	 	
Common shares outstanding, diluted:	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding, basic 	 	41,762,893	 	38,382,599	 	34,242,631	 	 	
 	 	 	 	 	 	 	 	 	
Dilutive effect of warrants 	 	 —	 	 —	 	 —	 	 	
 	 	 	 	 	 	 	 	 	
Dilutive effect of stock options	 	 —	 	 —	 	 —	 	 	
 	 	 	 	 	 	 	 	 	
Dilutive effect of restricted stock awards 	 	 —	 	 —	 	 —	 	 	
 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding, diluted 	 	41,762,893	 	38,382,599	 	34,242,631	 	 	

 
6 - RELATED PARTY TRANSACTIONS
 
During the years ended December 31, 2019, 2018 and 2017, the Company did not identify any related party transactions. 

F-25

Table of Contents

7 - DEBT
 
Long-term debt consists of the following:

 	 	December 31, 	 	December 31, 	 	
 	    	2019	    	2018	 	
Principal amount 	 	$	495,824	 	$	551,420	 	
Less:  Unamortized debt financing costs 	 	 	(13,094)	 	 	(16,272)	 	
Less: Current portion 	 	 	(69,747)	 	 	(66,320)	 	
 	 	 	 	 	 	 	 	
Long-term debt, net	 	$	412,983	 	$	468,828	 	

 	 	December 31, 2019	 	December 31, 2018	 	
 	 	 	 	 	Unamortized	 	 	 	 	Unamortized	 	
 	 	 	 	 	Debt Issuance	 	 	 	 	Debt Issuance	 	
 	    	Principal	    	Cost	    	Principal	    	Cost	 	
$495 Million Credit Facility	 	$	395,724	 	$	11,642	 	$	445,000	 	$	14,423	 	
$108 Million Credit Facility	 	 	100,100	 	 	1,452	 	 	106,420	 	 	1,849	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total debt	 	$	495,824	 	$	13,094	 	$	551,420	 	$	16,272	 	
 
As of December 31, 2019 and 2018, $13,094 and $16,272 of deferred financing costs, respectively, were presented as a direct deduction within the outstanding debt balance in the Company’s Consolidated Balance Sheets.  Amortization expense for deferred financing costs for the years ended December 31, 2019, 2018 and 2017 was $3,788,  $3,035 and $2,325, respectively.  This amortization expense is recorded as a component of Interest expense in the Consolidated Statements of Operations.
 
Effective June 5, 2018, the portion of the unamortized deferred financing costs for the $400 Million Credit Facility and 2014 Term Loan Facilities that was identified as a debt modification, rather than an extinguishment of debt, is being amortized over the life of the $495 Million Credit Facility in accordance with ASC 470-50.  During the year ended December 31, 2018, the Company paid $2,962 of debt extinguishment costs in relation to the refinancing of the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities with the $495 Million Credit Facility. 
 
On November 5, 2019, the Company entered into amendments with its lenders to the dividend covenants of the credit agreements for the $495 Million Credit Facility and the $108 Million Credit Facility.  Under the terms of these two facilities as so amended, dividends or repurchases of our stock are subject to customary conditions.  The Company may pay dividends or repurchase stock under these facilities to the extent its total cash and cash equivalents are greater than $100,000 and 18.75% of our total indebtedness, whichever is higher; if the Company cannot satisfy this condition, the Company is subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter, for which purpose the full commitment of up to $35,000 of the scrubber tranche under the $495 Million Credit Facility is assumed to be drawn.
 
$108 Million Credit Facility
 
On August 14, 2018, the Company entered into a five-year senior secured credit facility (the “$108 Million Credit Facility”) with Crédit Agricole Corporate & Investment Bank (“CACIB”), as Structurer and Bookrunner, CACIB and Skandinaviska Enskilda Banken AB (Publ) as Mandate Lead Arrangers, CACIB as Administrative Agent and as Security Agent, and the other lenders party thereto from time to time.  The Company has used proceeds from the $108 Million Credit Facility to finance a portion of the purchase price for the six vessels, including four Capesize Vessels and two Ultramax vessels, which were delivered to the Company during the three months ended September 30, 2018 (refer to Note 4 —  Vessel Acquisitions and Dispositions).  These six vessels also serve as collateral under the $108 Million

F-26

Table of Contents
Credit Facility.  The Company drew down a total of $108,000 during the third quarter of 2018, which represents 45% of the appraised value of the six vessels.
 
As of December 31, 2019, there was no availability under the $108 Million Credit Facility.  Total debt repayments of $6,320 and $1,580 were made during the years ended December 31, 2019 and 2018, respectively, under the $108 Million Credit Facility.  There were  no debt repayments made during the year ended December 31, 2017.  As of December 31, 2019 and 2018, the total outstanding net debt balance was $98,648 and $104,571, respectively.
 
The $108 Million Credit Facility provides for the following key terms:
 
	·		The final maturity date of the $108 Million Credit Facility is August 14, 2023.	
 
	·		Borrowings under the $108 Million Credit Facility bear interest at London Interbank Offered Rate (“LIBOR”) plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months EBITDA.	
 
	·		Scheduled amortization payments under the $108 Million Credit Facility reflect a repayment profile whereby the facility shall have been repaid to nil when the average vessel aged of the collateral vessels reaches 20 years.  Based on this, the required repayments are $1,580 per quarter commencing on December 31, 2018, with a final balloon payment on the maturity date.	
 
	·		Mandatory prepayments are to be applied to remaining amortization payments pro rata, while voluntary prepayments are to be applied to remaining amortization payments in order of maturity.	
 
	·		Pursuant to the November 5, 2019 amendment, the Company may pay dividends or repurchase stock to the extent the Company’s total cash and cash equivalents are greater than $100,000 and 18.75% of its total indebtedness, whichever is higher; if the Company cannot satisfy this condition, the Company is subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment or stock repurchase if the collateral maintenance test ratio is 200% or less for such quarter.	
 
	·		Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants (including a collateral maintenance test) and other customary conditions.	
 
	·		Key financial covenants are substantially similar to those under the Company’s $495 Million Credit Facility and include:	
 
	·		minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness;	
 
	·		minimum working capital, with consolidated current assets (excluding restricted cash) minus consolidated current liabilities (excluding the current portion of long-term indebtedness) to be not less than zero;	
 
	·		debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and	
 
	·		collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the $108 Million Credit Facility.	
 
As of December 31, 2019, the Company was in compliance with all of the financial covenants under the $108  Million Credit Facility.

F-27

Table of Contents

The following table sets forth the scheduled repayment of the outstanding principal debt of $100,100 at December 31, 2019 under the $108 Million Credit Facility:

Year Ending December 31, 	    	Total	 	
 	 	 	 	 	
2020	 	$	6,320	 	
2021	 	 	6,320	 	
2022	 	 	6,320	 	
2023	 	 	81,140	 	
 	 	 	 	 	
Total debt	 	$	100,100	 	
 
$495 Million Credit Facility
 
On May 31, 2018, the Company entered into a five-year senior secured credit facility for an aggregate amount of up to $460,000 with Nordea Bank AB (publ), New York Branch (“Nordea”), as Administrative Agent and Security Agency, the various lenders party thereto, and Nordea, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S as Bookrunners and Mandated Lead Arrangers.  Deutsche Bank AG Filiale Deutschlandgeschäft, and CTBC Bank Co. Ltd. are Co-Arrangers under this facility.  On June 5, 2018, proceeds of $460,000 under this facility were used, together with cash on hand, to refinance all of the Company’s existing credit facilities (the $400 Million Credit Facility, $98 Million Credit Facility and 2014 Term Loan Facilities. as defined below) into one facility, and pay down the debt on seven of the Company’s oldest vessels, which have been identified for sale. 
 
On February 28, 2019, the Company entered into an Amendment and Restatement Agreement (the “Amendment”) for this credit facility (the “$495 Million Credit Facility”) with Nordea Bank AB (publ), New York Branch  (“Nordea”), as Administrative Agent and Security Agent, the various lenders party thereto, and Nordea, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S  as Bookrunners and Mandated Lead Arrangers.  The Amendment provides for an additional tranche up to $35,000 to finance a portion of the acquisitions, installations, and related costs for scrubbers for 17 of the Company’s Capesize vessels.  On August 28, 2019 and September 23, 2019, the Company made total drawdowns of $9,300 and $12,200, respectively, under the $35 Million tranche of the $495 Million Credit Facility.
 
On November 15, 2019, the Company utilized $6,880 of the proceeds from the sale of the Genco Challenger and Genco Champion which were sold during the fourth quarter of 2019 as a loan prepayment under the $495 Million Credit Facility.  Additionally, on April 15, 2019, the Company utilized $4,947 of the proceeds from the sale of the Genco Cavalier that was classified as restricted cash as of December 31, 2018 as a loan prepayment under the $495 Million Credit Facility.  Under the terms of the $495 Million Credit Facility, the amount received from the proceeds of the sale of a collateralized vessel can be used towards the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility.  However, since a replacement vessel was not added as collateral within the 180 day period stipulated in the $495 Million Credit Facility, the Company was required to utilize the proceeds as a loan prepayment. 
 
On May 10, 2019 and July 5, 2019, the Company prepaid $15,000 for the amortization payment originally scheduled for June 30, 2019 and September 30, 2019, respectively.  As the prepayment amounts exceeded the revised scheduled quarterly amortization payment, the excess payment was applied to the next scheduled quarterly amortization payment due as per the repayment schedule.
 
As of December 31, 2019, there was $12,525 of availability under the $495 Million Credit Facility.  Total debt repayments of $70,776 and $15,000 were made during the years ended December 31, 2019 and 2018, respectively, under the $495 Million Credit Facility.  There were no debt repayments made during the year ended December 13, 2017.  As of

F-28

Table of Contents
December 31, 2019 and December 31, 2018, the total outstanding net debt balance was $384,082 and $430,577, respectively.
 
The $495 Million Credit Facility provides for the following key terms in relation to the $460,000 tranche:
 
	·		The final maturity date is May 31, 2023.	
 
	·		Borrowings bear interest at LIBOR plus 3.25% through December 31, 2018 and LIBOR plus a range of 3.00% and 3.50% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months EBITDA.  Original scheduled amortization payments were  $15,000 per quarter commencing on December 31, 2018, with a final payment of $190,000 due on the maturity date.  As a result of the loan prepayments for the vessel sales as noted above, scheduled amortization payments were recalculated in accordance with the terms of the facility.  Scheduled amortization payments were revised to $14,321 which commenced on December 30, 2019, with a final payment of $188,049 due on the maturity date.	
 
	·		Scheduled amortization payments may be recalculated upon the Company’s request based on changes in collateral vessels, prepayments of the loan made as a result of a collateral vessel disposition as part of the Company’s fleet renewal program, or voluntary prepayments, subject in each case to a minimum repayment profile under which the loan will be repaid to nil when the average age of the vessels serving as collateral from time to time reaches 17 years.  Mandatory prepayments are applied to remaining amortization payments pro rata, while voluntary prepayments are applied to remaining amortization payments in order of maturity.	
 
	·		Acquisitions and additional indebtedness are allowed subject to compliance with financial covenants, a collateral maintenance test, and other customary conditions.	
 
The $495 Million Credit Facility provides for the following key terms in relation to the $35,000 tranche:
 
	·		The final maturity date is May 31, 2023.	
 
	·		Borrowings under the tranche may be incurred pursuant to multiple drawings on or prior to March 30, 2020 in minimum amounts of $5,000 and may be used to finance up to 90% of the scrubber costs noted above.	
 
	·		Borrowings under the tranche will bear interest at LIBOR plus 2.50% through September 30, 2019 and LIBOR plus a range of 2.25% to 2.75% thereafter, dependent upon the Company’s ratio of total net indebtedness to the last twelve months’ EBITDA.	
 
	·		The tranche is subject to equal consecutive quarterly repayments commencing on the last day of the fiscal quarter ending March 31, 2020 in an amount reflecting a repayment profile whereby the loans shall have been repaid after four years calculated from March 31, 2020. Assuming that the full $35,000 is borrowed, each quarterly repayment amount was originally scheduled to be equal to $2,500.  However, as a result of the loan prepayments for the vessel sales as noted above, the availability under the $35,000 tranche was reduced to $34,025.  Assuming that the full $34,025 is borrowed, scheduled quarterly repayments would be approximately $2,430 commencing March 31, 2020. 	
 
The $495 Million Credit Facility provides for the following key terms:
 
	·		Pursuant to the November 5, 2019 amendment, the Company may pay dividends or repurchase stock to the extent the Company’s total cash and cash equivalents are greater than $100,000 and 18.75% of the Company’s total indebtedness, whichever is higher; if the Company cannot satisfy this condition, the Company is subject to a limitation of 50% of consolidated net income for the quarter preceding such dividend payment if the collateral maintenance test ratio is 200% or less for such quarter, with the full commitment of up to $35,000 of the scrubber tranche assumed to be drawn.	

F-29

Table of Contents

	·		Collateral vessels can be sold or disposed of without prepayment of the loan if a replacement vessel or vessels meeting certain requirements are included as collateral within 120 days of such sale or disposition.  On February 13, 2019, the Company entered into an amendment with its lenders to extend this period to 180 days. In addition:	
 
	·		the Company must be in compliance with the collateral maintenance test;	
 
	·		the replacement vessels must become collateral for the loan; and either	
 
	·		the replacement vessels must have an equal or greater appraised value that the collateral vessels for which they are substituted, or	
 
	·		ratio of the aggregate appraised value of the collateral vessels (including replacement vessels) to the outstanding loan amount after the collateral disposition (accounting for any prepayments of the loan by the time the replacement vessels become collateral vessels) must equal or exceed the aggregate appraised value of the collateral vessels to the outstanding loan before the collateral disposition.	
 
	·		Key financial covenants include:	
 
	·		minimum liquidity, with unrestricted cash and cash equivalents to equal or exceed the greater of $30,000 and 7.5% of total indebtedness (no restricted cash is required);	
 
	·		minimum working capital, with consolidated current assets (excluding restricted cash) minus consolidated current liabilities (excluding the current portion of long-term indebtedness) to be not less than zero;	
 
	·		debt to capitalization, with the ratio of total indebtedness to total capitalization to be not more than 70%; and	
 
	·		collateral maintenance, with the aggregate appraised value of collateral vessels to be at least 135% of the principal amount of the loan outstanding under the $495 Million Credit Facility.	
 
	·		Collateral includes the current vessels in the Company’s fleet other than the seven oldest vessels in the fleet which have been identified for sale, collateral vessel earnings and insurance, and time charters in excess of 24 months in respect of the collateral vessels.	
 
As of December 31, 2019, the Company was in compliance with all of the financial covenants under the $495 Million Credit Facility.
 
The following table sets forth the scheduled repayment of the outstanding principal debt of $395,724 at December 31, 2019 under the $495 Million Credit Facility:

Year Ending December 31, 	    	Total	 	
 	 	 	 	 	
2020	 	$	63,427	 	
2021	 	 	63,427	 	
2022	 	 	63,427	 	
2023	 	 	205,443	 	
 	 	 	 	 	
Total debt	 	$	395,724	 	

F-30

Table of Contents

$400 Million Credit Facility
 
On November 10, 2016, the Company entered into a senior secured term loan facility, the $400 Million Credit Facility, in an aggregate principal amount of up to $400,000 with Nordea Bank Finland plc, New York Branch, Skandinaviska Enskilda Banken AB (publ), DVB Bank SE, ABN AMRO Capital USA LLC, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG Filiale Deutschlandgeschäft, Crédit Industriel et Commercial and BNP Paribas.  On November 15, 2016, the proceeds under the $400 Million Credit Facility were used to refinance six of the Company’s prior credit facilities.  The $400 Million Credit Facility was collateralized by 45 of the Company’s vessels and at December 31, 2016, required the Company to sell five remaining unencumbered vessels, which were sold during the year ended December 31, 2017.  On November 14, 2016, the Company borrowed the maximum available amount of $400,000. 
 
The $400 Million Credit Facility had a maturity date of November 15, 2021 and the principal borrowed under the facility bore interest at LIBOR for an interest period of three months plus a margin of 3.75%.  The Company had the option to pay 1.50% of such rate in-kind (“PIK interest”) through December 31, 2018, of which was payable on the maturity date of the facility.  The Company opted to make the PIK interest election through September 29, 2017. As of December 31, 2019 and 2018, the Company did not have any PIK interest recorded.  The $400 Million Credit Facility originally had scheduled amortization payments of (i) $100 per quarter through December 31, 2018, (ii) $7,610 per quarter from March 31, 2019 through December 31, 2020, (iii) $18,571 per quarter from March 31, 2021 through September 30, 2021 and (iv) $282,605 upon final maturity on November 15, 2021, which did not include PIK interest.   Pursuant to the credit facility agreement, upon the payment of any excess cash flow to the lenders (see below), the scheduled repayments were adjusted to reflect the reduction of future amortization amounts. 
 
There was no collateral maintenance testing for the $400 Million Credit Facility prior to June 30, 2018.  Thereafter, there was to be required collateral maintenance testing with a gradually increasing threshold calculated as the value of the collateral under the facility as a percentage of the loan outstanding as follows: 105% from June 30, 2018 to December 30, 2018, 115% from December 31, 2018 to December 30, 2020 and 135% thereafter. 
 
The $400 Million Credit Facility required the Company to comply with a number of covenants substantially similar to those in the Company’s other credit facilities, including financial covenants related to debt to total book capitalization, minimum working capital, minimum liquidity, and dividends; collateral maintenance requirements (as described above); and other customary covenants.  The Company was required to maintain a ratio of total indebtedness to total capitalization of not greater than 0.70 to 1.00 at all times.  Minimum working capital as defined in the $400 Million Credit Facility was not to be less than $0 at all times.  The $400 Million Credit Facility had minimum liquidity requirements at all times for all vessels in its fleet of (i) $250 per vessel to and including December 31, 2018, (ii) $400 per vessel from January 1, 2019 to and including December 31, 2019 and (iii) $700 per vessel from January 1, 2020 and thereafter. The Company was prohibited from paying dividends without lender consent through December 31, 2020.  The Company was able to establish non-recourse subsidiaries to incur indebtedness or make investments, but it was restricted from incurring indebtedness or making investments (other than through non-recourse subsidiaries).  Excess cash from the collateralized vessels under the $400 Million Credit Facility was subject to a cash sweep.  The cash flow sweep was 100% of excess cash flow through December 31, 2018, 75% through December 31, 2020 and the lesser of 50% of excess cash flow or an amount that would reflect a 15-year average vessel age repayment profile thereafter; provided no prepayment under the cash sweep was required from the first $10,000 in aggregate of the prepayments otherwise required under the cash sweep.  During the years ended December 31, 2019 and 2018, the Company repaid $0 and $15,428, respectively, for the excess cash flow sweep.
 
There were no debt repayments made during the year ended December 31, 2019 under the $400 Million Credit Facility.  Total debt repayments of $404,941 (which includes $5,341 of PIK interest) and $400 were made during the years ended December 31, 2018 and 2017, respectively, under the $400 Million Credit Facility. 
 
On June 5, 2018, the $400 Million Credit Facility was refinanced with the $495 Million Credit Facility; refer to the “$495 Million Credit Facility” section above.  At December 31, 2019 and 2018, there was no outstanding debt under the $400 Million Credit Facility.

F-31

Table of Contents

$98 Million Credit Facility
 
On November 4, 2015, thirteen of the Company’s wholly-owned subsidiaries entered into a Facility Agreement, by and among such subsidiaries as borrowers (collectively, the “Borrowers”); Genco Holdings Limited, a newly formed direct subsidiary of Genco of which the Borrowers are direct subsidiaries (“Holdco”); certain funds managed or advised by Hayfin Capital Management, Breakwater Capital Ltd, or their nominee, as lenders; and Hayfin Services LLP, as agent and security agent (the “$98 Million Credit Facility”).  The Borrowers borrowed the maximum available amount of $98,271 under the facility on November 10, 2015.
 
Borrowings under the facility were available for working capital purposes.  The facility had a final maturity date of September 30, 2020, and the principal borrowed under the facility bore interest at LIBOR for an interest period of three months plus a margin of 6.125% per annum.  The facility had no fixed amortization payments for the first two years and fixed amortization payments of $2,500 per quarter thereafter.  To the extent the value of the collateral under the facility is 182% or less of the loan amount outstanding, the Borrowers were to prepay the loan from earnings received from operation of the thirteen collateral vessels after deduction of the following amounts:  costs, fees, expenses, interest, and fixed principal repayments under the facility; operating expenses relating to the thirteen vessels; and the Borrowers’ pro rata share of general and administrative expenses based on the number of vessels they own.
 
The Facility Agreement requires the Borrowers and, in certain cases, the Company and Holdco to comply with a number of covenants substantially similar to those in the other credit facilities of Genco and its subsidiaries, including financial covenants related to maximum leverage, minimum consolidated net worth, minimum liquidity, and dividends; collateral maintenance requirements; and other customary covenants. The Company was prohibited from paying dividends under this facility until December 31, 2018. Following December 31, 2018, the amount of dividends the Company could pay was limited based on the amount of the repayment of at least $25,000 of the loan under such facility, as well as the ratio of the value of vessels and certain other collateral pledged under such facility.  The Facility Agreement includes usual and customary events of default and remedies for facilities of this nature. 
 
Borrowings under the facility were secured by first priority mortgage on the vessels owned by the Borrowers, namely the Genco Constantine, the Genco Augustus, the Genco London, the Genco Titus, the Genco Tiberius, the Genco Hadrian, the Genco Knight, the Genco Beauty, the Genco Vigour, the Genco Predator, the Genco Cavalier, the Genco Champion, and the Genco Charger, and related collateral.  Pursuant to the Facility Agreement and a separate Guarantee executed by the Company, the Company and Holdco were acting as guarantors of the obligations of the Borrowers and each other under the Facility Agreement and its related documentation.
 
On November 15, 2016, the Company entered into an Amending and Restating Agreement which amended and restated the credit agreements and the guarantee for the $98 Million Credit Facility (the “Restated $98 Million Credit Facility”).  The Restated $98 Million Credit Facility provided for the following: reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility, except the minimum liquidity amount for the collateral vessels under this facility was $750 per vessel, which was reflected as restricted cash; netting of certain amounts against the measurements of the collateral maintenance covenant, which remained in place with a 140% value to loan threshold; a portion of amounts required to be maintained under the minimum liquidity covenant for this facility may, under certain circumstances, have been used to prepay the facility to maintain compliance with the collateral maintenance covenant; elimination of the original maximum leverage ratio and minimum net worth covenants; and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to those provided for in the $400 Million Credit Facility.  The minimum working capital and the total indebtedness to total capitalization were the same as the $400 Million Credit Facility. 
 
There were no debt repayments made during the year ended December 31, 2019 under the $98 Million Credit Facility.  Total debt repayments of $93,939 and $1,332 were made during the years ended December 31, 2018 and 2017, respectively. 

F-32

Table of Contents

On June 5, 2018, the $98 Million Credit Facility was refinanced with the $495 Million Credit Facility; refer to the “$495 Million Credit Facility” section above.  At December 31, 2019 and 2018, there was no outstanding debt under the $98 Million Credit Facility.
 
2014 Term Loan Facilities
 
On October 8, 2014, Baltic Trading and its wholly-owned subsidiaries, Baltic Hornet Limited and Baltic Wasp Limited, each entered into a loan agreement and related documentation for a credit facility in a principal amount of up to $16,800 with ABN AMRO Capital USA LLC and its affiliates (the “2014 Term Loan Facilities”) to partially finance the newbuilding Ultramax vessel that each subsidiary acquired, namely the Baltic Hornet and Baltic Wasp, respectively.  Amounts borrowed under the 2014 Term Loan Facilities were not allowed to be reborrowed.  The 2014 Term Loan Facilities had a ten-year term, and the facility amount was the lowest of 60% of the delivered cost per vessel, $16,800 per vessel, and 60% of the fair market value of each vessel at delivery.  The 2014 Term Loan Facilities were insured by the China Export & Credit Insurance Corporation (Sinosure) in order to cover political and commercial risks for 95% of the outstanding principal plus interest, which was recorded in deferred financing fees.  Borrowings under the 2014 Term Loan Facilities bore interest at the three or six-month LIBOR rate plus an applicable margin of 2.50% per annum.  Borrowings were to be repaid in 20 equal consecutive semi-annual installments of 1/24 of the facility amount plus a balloon payment of 1/6 of the facility amount at final maturity.  Principal repayments commenced six months after the actual delivery date for each respective vessel.
 
Borrowings under the 2014 Term Loan Facilities were secured by liens on the vessels acquired with borrowings under these facilities, namely the Baltic Hornet and Baltic Wasp, and other related assets. The Company guaranteed the obligations of the Baltic Hornet and Baltic Wasp under the 2014 Term Loan Facilities.
 
On November 15, 2016, the Company entered into Supplemental Agreements with lenders under our 2014 Term Loan Facilities which, among other things, amended the Company’s collateral maintenance covenants under the 2014 Term Loan Facilities to provide that such covenants would not be tested through December 30, 2017 and the minimum collateral value to loan ratio was 100% from December 31, 2017, 105% from June 30, 2018, 115% from December 31, 2018 and 135% from December 31, 2019.  These Supplemental Agreements also provided for certain other amendments to the 2014 Term Loan Facilities, which included reductions in the minimum liquidity requirements consistent with the $400 Million Credit Facility and restrictions on incurring indebtedness, making investments (other than through non-recourse subsidiaries) or paying dividends, similar to the $400 Million Credit Facility. Additionally, the minimum working capital required was the same as the $400 Million Credit Facility.  Lastly, the maximum leverage requirement was equivalent to the debt to total capitalization requirement in the $400 Million Credit Facility.
 
There were no debt repayments made during the year ended December 31, 2019 under the 2014 Term Loan Facilities.  Total debt repayments of $25,544 and $2,763 were made during the years ended December 31, 2018 and 2017, respectively, under the 2014 Term Loan Facilities. 
 
On June 5, 2018, the 2014 Term Loan Facilities were refinanced with the $495 Million Credit Facility; refer to the “$495 Million Credit Facility” section above.  At December 31, 2019 and 2018, there was no outstanding debt under the 2014 Term Loan Facilities. 
 
Interest rates
 
The following tables set forth the effective interest rate associated with the interest expense for the Company’s debt facilities noted above, including the costs associated with unused commitment fees, if applicable. The following tables also include the range of interest rates on the debt, excluding the impact of unused commitment fees, if applicable:

 	 	For the Years Ended December 31,	 	
 	    	2019	 	2018	 	2017	 	  	
Effective Interest Rate 	 	5.31	%  	5.71	%  	5.29	%  	  	
Range of Interest Rates (excluding unused commitment fees) 	 	4.05 % to 5.76	%  	3.83 % to 8.43	%  	3.36 % to 7.82	%  	  	

F-33

Table of Contents

Letter of credit
 
In conjunction with the Company entering into a long-term office space lease (See Note 13 — Leases), 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 at a fee of 1% per annum.  During September 2015, the Company replaced the unsecured letter of credit with DnB NOR Bank with an unsecured letter of credit with Nordea Bank Finland Plc, New York and Cayman Island Branches (“Nordea”) in the same amount at a fee of 1.375% per annum.  The letter of credit outstanding was $300 as of December 31, 2019 and 2018 at a fee of 1.375% per annum.  The letter of credit is cancelable on each renewal date provided the landlord is given 30 days minimum notice.  As of December 31, 2019 and 2018, the letter of credit outstanding has been securitized by $315 that was paid by the Company to Nordea during the year ended December 31, 2015.  These amounts have been recorded as restricted cash included in total noncurrent assets in the Consolidated Balance Sheets as of December 31, 2019 and 2018.
 
-

8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The fair values and carrying values of the Company’s financial instruments at December 31, 2019 and 2018 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.

 	 	December 31, 2019	 	December 31, 2018	 	
 	    	Carrying	    	 	 	    	Carrying	    	 	 	 	
 	    	Value	    	Fair Value	    	Value	    	Fair Value	 	
Cash and cash equivalents	 	$	155,889	 	$	155,889	 	$	197,499	 	$	197,499	 	
Restricted cash	 	 	6,360	 	 	6,360	 	 	5,262	 	 	5,262	 	
Floating rate debt	 	 	495,824	 	 	495,824	 	 	551,420	 	 	551,420	 	
 
The carrying value of the borrowings under the $495 Million Credit Facility and the $108 Million Credit Facility as of December 31, 2019 and 2018  approximate their fair value due to the variable interest nature thereof as each of these credit facilities represent floating rate loans.  Refer to Note 7 — Debt for further information regarding the Company’s credit facilities.  The $495 Million Credit Facility was utilized to refinance the $400 Million Credit Facility, $98 Million Credit Facility and 2014 Term Loan Facilities on June 5, 2018 and was subsequently amended on February 28, 2019 and November 5, 2019.  The carrying amounts of the Company’s other financial instruments at December 31, 2019 and 2018 (principally Due from charterers and Accounts payable and accrued expenses) approximate fair values because of the relatively short maturity of these instruments.
 
ASC Subtopic 820-10, “Fair Value Measurements & Disclosures” (“ASC 820-10”), applies to all assets and liabilities that are being measured and reported on a fair value basis.  This guidance enables the reader of the consolidated financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 requires significant management judgment. The three levels are defined as follows:
 
	·		Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.	
 
	·		Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.	
 
	·		Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.	

F-34

Table of Contents

Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short-term maturities. Floating rate debt is considered to be a Level 2 item as the Company considers the estimate of rates it could obtain for similar debt or based upon transactions amongst third parties.  Nonrecurring fair value measurements include vessel impairment assessments completed during the interim period and at year-end as determined based on third party quotes, which are based off of various data points, including comparable sales of similar vessels, which are Level 2 inputs.  During the year ended December 31, 2019, the vessel assets for five of the Company’s vessels were written down as part of the impairment recorded during the year ended December 31, 2019.  Additionally, during the year ended December 31, 2018, the vessels assets for ten of the Company’s vessels were written down as part of the impairment recorded during the year ended December 31, 2018.  Lastly, during the year ended December 31, 2017, the vessel assets for six of the Company’s vessels were written down as part of the impairment recorded during the year ended December 31, 2017.  The vessel held for sale as of December 31, 2019 was written down as part of the impairment recorded during the year ended December 31, 2019.  The vessel held for sale as of December 31, 2018 was written down as part of the impairment recorded during the year ended December 31, 2017 and there were no additional adjustments required as of December 31, 2018 when the held for sale criteria was met. Refer to “Impairment of long-lived assets” and “Vessels held for sale” sections in Note 2 — Summary of Significant Accounting Policies.    
 
Nonrecurring fair value measurements also include impairment tests conducted by the Company during the year ended December 31, 2019 of its operating lease right-of use asset.  The fair value determination for the operating lease right-of-use asset was based on third party quotes, which is considered a Level 2 input.  During the year ended December 31, 2019, the operating lease right-of-use asset was written down as part of the impairment of right-of-use asset recorded during the year ended December 31, 2019.  Refer to Note 13 — Leases. The Company did not have any Level 3 financial assets or liabilities during the years ended December 31, 2019 and 2018.
 
9 - PREPAID EXPENSES AND OTHER CURRENT ASSETS
 
Prepaid expenses and other current assets consist of the following:

 	    	December 31, 	    	December 31, 	 	
 	    	2019	    	2018	 	
Vessel stores	 	$	638	 	$	597	 	
Capitalized contract costs	 	 	1,952	 	 	2,289	 	
Prepaid items	 	 	2,870	 	 	3,426	 	
Insurance receivable	 	 	2,039	 	 	851	 	
Advance to agents	 	 	1,162	 	 	1,109	 	
Other	 	 	1,388	 	 	2,177	 	
Total prepaid expenses and other current assets	 	$	10,049	 	$	10,449	 	

F-35

Table of Contents

10 - FIXED ASSETS
 
Fixed assets consist of the following:

 	    	December 31, 	    	December 31, 	 	
 	    	2019	    	2018	 	
Fixed assets, at cost:	 	 	 	 	 	 	 	
Vessel equipment	 	$	7,288	 	$	2,873	 	
Furniture and fixtures	 	 	467	 	 	462	 	
Leasehold improvements	 	 	100	 	 	 —	 	
Computer equipment	 	 	275	 	 	236	 	
Total costs	 	 	8,130	 	 	3,571	 	
Less: accumulated depreciation and amortization	 	 	(2,154)	 	 	(1,281)	 	
Total fixed assets, net	 	$	5,976	 	$	2,290	 	

 
11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
Accounts payable and accrued expenses consist of the following:

 	    	December 31, 	    	December 31, 	 	
 	    	2019	    	2018	 	
Accounts payable	 	$	26,040	 	$	15,110	 	
Accrued general and administrative expenses	 	 	4,105	 	 	4,298	 	
Accrued vessel operating expenses	 	 	19,459	 	 	9,735	 	
Total accounts payable and accrued expenses	 	$	49,604	 	$	29,143	 	

 
12 – VOYAGE REVENUE
 
Total voyage revenue includes revenue earned on fixed rate time charters, spot market voyage charters, spot market-related time charters and vessel pools, as well as the sale of bunkers consumed during short-term time charters. For the years ended December 31, 2019, 2018 and 2017, the Company earned $389,496,  $367,522 and $209,698 of voyage revenue, respectively.  $2,325 of net profit sharing revenue was included in voyage revenue for the year ended December 31, 2017.  There was no profit sharing revenue earned during the years ended December 31, 2019 and 2018. 
 
On January 1, 2018, the Company adopted the revenue recognition guidance under ASC 606 (refer to Note 2 — Summary of Significant Accounting Policies) using the modified retrospective method applied to contracts that were not completed as of January 1, 2018.  The financial results for reporting periods beginning after January 1, 2018 are presented under the new guidance, while prior period amounts are not adjusted and will be continued to be reported under previous guidance. 
 
As a result of the adoption of the new revenue recognition guidance on January 1, 2018, the Company recorded a net increase to the opening retained deficit of $659 for the cumulative impact of adopting the new guidance.  The impact related primarily to the change in accounting for spot market voyage charters.  Prior to the adoption of the new guidance, revenue for spot market voyage charters was recognized ratably over the total transit time of the voyage, which previously commenced the latter of when the vessel departed from its last discharge port and when an agreement was entered into with the charterer, and ended at the time the discharge of cargo was completed at the discharge port.  As a result of the adoption of the new guidance, revenue for spot market voyage charters is now being recognized ratably over the total transit time of the voyage which now begins when the vessel arrives at the loading port and ends at the time the discharge of cargo is completed at the discharge port in accordance with ASC 606.  Spot market voyage charter agreements do not provide the charterers with substantive decision-making rights to direct how and for what purpose the vessel is used, therefore revenue from spot market voyage charters is not within the scope of ASC 842.  Additionally, the Company has identified that the contract fulfillment costs of spot market voyage charters consist primarily of the fuel

F-36

Table of Contents
consumption that is incurred by the Company from the latter of the end of the previous vessel employment and the contract date until the arrival at the loading port in addition to any port expenses incurred prior to arrival at the load port, as well as any charter hire expenses for third party vessels that are chartered-in.  The fuel consumption and any port expenses incurred prior to arrival at the load port during this period is capitalized and recorded in Prepaid expenses and other current assets in the Consolidated Balance Sheets and is amortized ratably over the total transit time of the voyage from arrival at the loading port until the vessel departs from the discharge port and expensed as part of Voyage Expenses.  Similarly, for any third party vessels that are chartered-in, the charter hire expenses during this period are capitalized and recorded in Prepaid expenses and other current assets in the Consolidated Balance Sheets and are amortized and expensed as part of Charter hire expenses. Refer also to Note 9 — Prepaid Expenses and Other Current Assets.  All of the revenue for spot market voyage charters that was included in Deferred revenue (contract liability) in the Consolidated Balance Sheet as of January 1, 2018 when ASC 606 was adopted has been recognized during the year ended December 31, 2018. 
 
During time charter agreements, including fixed rate time charters and spot market-related time charters, the charterers have substantive decision-making rights to direct how and for what purpose the vessel is used.  As such, the Company has identified that time charter agreements contain a lease in accordance with ASC 842.  During time charter agreements, the Company is responsible for operating and maintaining the vessels.  These costs are recorded as vessel operating expenses in the Consolidated Statements of Operations.  The Company has elected the practical expedient that allows the Company to combine lease and non-lease components under ASC 842 as the Company believes (1) the timing and pattern of recognizing revenues for operating the vessel is the same as the timing and pattern of recognizing vessel leasing revenue; and (2) the lease component, if accounted for separately, would be classified as an operating lease. 
 
Total voyage revenue recognized in the Consolidated Statements of Operations includes the following:

 	 	 	For the Year Ended	 	
 	 	 	December 31, 	 	
 	    	2019	 	2018	 	2017	 	
Lease revenue	 	$	108,096	 	$	168,392	 	$	181,249	 	
Spot market voyage revenue	 	 	281,400	 	 	199,130	 	 	28,449	 	
Total voyage revenues	 	$	389,496	 	$	367,522	 	$	209,698	 	

 
13 – LEASES
 
Effective April 4, 2011, the Company entered into a seven-year sub-sublease agreement for its main office in New York, New York.  The term of the sub-sublease commenced June 1, 2011, with a free base rental period until October 31, 2011. Following the expiration of the free base rental period, the monthly base rental payments were $82 per month until May 31, 2015 and thereafter were $90 per month until the end of the seven-year term.  Pursuant to the sub-sublease agreement, the sublessor was obligated to contribute $472 toward the cost of the Company’s alterations to the sub-subleased office space.  The Company has also entered into a direct lease with the over-landlord of such office space that commenced immediately upon the expiration of such sub-sublease agreement, for a term covering the period from May 1, 2018 to September 30, 2025; the direct lease provided for a free base rental period from May 1, 2018 to September 30, 2018.  Following the expiration of the free base rental period, the monthly base rental payments are $186 per month from October 1, 2018 to April 30, 2023 and $204 per month from May 1, 2023 to September 30, 2025.  For accounting purposes, the sub-sublease agreement and direct lease agreement with the landlord constitute one lease agreement. 
 
In addition, during October 2017 the Company entered into a lease for office space in Singapore that expired in January 2019.  A lease was signed for a new office space in Singapore effective January 17, 2019 for a three-year term.
 
Lastly, during July 2018, the Company entered into a lease for office space in Copenhagen, which commenced on July 1, 2018 and ended on April 30, 2019.  A lease was signed for a new office space in Copenhagen effective May 1, 2019 for a minimum period ending May 1, 2023.

F-37

Table of Contents

The Company adopted ASC 842 using the transition method on January 1, 2019 (refer to Note 2 — Summary of Significant Accounting Policies) and has identified these leases as operating leases.  Variable rent expense, such as utilities and escalation expenses, are excluded from the determination of the operating lease liability and the Company has deemed these insignificant.  The Company used its incremental borrowing rate as the discount rate under ASC 842 since the rate implicit in the lease cannot be readily determined.
 
On June 14, 2019, the Company entered into a sublease agreement for a portion of the leased space for its main office in New York, New York that commenced on July 26, 2019 and will end on September 29, 2025.  There was a free base rental period for the first four and a half months commencing on July 26, 2019.  Following the expiration of the free base rental period, the monthly base sublease income will be $102 per month until September 29, 2025.  The sublease income for the portion of the leased space is less than the lease payments due for the space, which has been identified as an indicator of impairment under ASC 360.  As such, the right-of-use asset for the subleased portion of the space was written down to its fair value during the second quarter of 2019 which resulted in $223 of impairment charges which has been recorded in Impairment of right-of-asset in the Consolidated Statements of Operations during the year ended December 31, 2019.  Sublease income is recorded net with the total operating lease costs in General and administrative expenses in the Consolidated Statements of Operations.  There was $72 of sublease income recorded during the year ended December 31, 2019.  There was no sublease income recorded for this sublease agreement during the years ended December 31, 2018 and 2017.
 
There was $1,884 of operating lease costs recorded during the year ended December 31, 2019 which was recorded in General and administrative expenses in the Consolidated Statements of Operations. 
 
Supplemental Consolidated Balance Sheets information related to the Company’s operating leases as of December 31, 2019 is as follows:  

 	 	December 31, 	 	
 	 	2019	 	
Operating Lease:	 	 	 	 	
Operating lease right-of-use asset	 	$	8,241	 	
 	 	 	 	 	
Current operating lease liabilities	 	$	1,677	 	
Long-term operating lease liabilities	 	 	9,826	 	
Total operating lease liabilities	 	$	11,503	 	
 	 	 	 	 	
Weighted average remaining lease term (years)	 	 	5.75	 	
Weighted average discount rate	 	 	5.15	%	
 
Maturities of operating lease liabilities as of December 31, 2019 are as follows:

 	 	December 31, 	 	
 	 	2019	 	
2020	 	$	2,230	 	
2021	 	 	2,230	 	
2022	 	 	2,230	 	
2023	 	 	2,378	 	
2024	 	 	2,453	 	
Thereafter	 	 	1,839	 	
Total lease payments	 	 	13,360	 	
Less imputed interest	 	 	(1,857)	 	
Present value of lease liabilities	 	$	11,503	 	

F-38

Table of Contents

Maturities of operating lease liabilities as of December 31, 2018 are as follows:

 	 	December 31,	 	
 	 	2018	 	
2019	 	$	2,230	 	
2020	 	 	2,230	 	
2021	 	 	2,230	 	
2022	 	 	2,230	 	
2023	 	 	2,378	 	
Thereafter	 	 	4,292	 	
Total lease payments	 	 	15,590	 	
 
Supplemental Condensed Consolidated Cash Flow information related to leases are as follows:

 	 	For the	 	
 	 	Year Ended	 	
 	 	December 31, 	 	
 	 	2019	 	
Cash paid for amounts included in the measurement of lease liabilities:	 	 	 	 	
Operating cash flows from operating lease	 	$	2,230	 	
 
Under the previous leasing guidance under ASC 840, the Company had deferred rent at December 31, 2018 of $3,468.  Rent expense pertaining to this lease for the years ended December 31, 2018 and 2017 under ASC 840 was $1,808 during each year.
 
During the second quarter of 2018, the Company began chartering-in third-party vessels.  Under ASC 842, the Company is the lessee in these agreements.  The Company has elected the practical expedient under ASC 842 to not recognize right-of-use assets and lease liabilities for short-term leases.  During the year ended December 31, 2019, all charter-in agreements for third-party vessels were less than twelve months and considered short-term leases.  Refer to Note 2 — Summary of Significant Accounting Policies for the charter hire expenses recorded during the years ended December 31, 2019 and 2018 for these charter-in agreements.

 

 
 
14 - COMMITMENTS AND CONTINGENCIES
 
During the second half of 2018, the Company entered into agreements for the purchase of ballast water treatments systems (“BWTS”) for 42 of its vessels.  The cost of these systems will vary based on the size and specifications of each vessel and whether the systems will be installed in China during the vessels’ scheduled drydockings.  Based on the contractual purchase price of the BWTS and the estimated installation fees, the Company estimates the cost of the systems to be approximately $0.9 million for Capesize vessels, $0.6 million for Supramax vessels and $0.5 million for Handysize vessels. These costs will be capitalized and depreciated over the remainder of the life of the vessel.  The Company recorded $12,783 and $1,804 in Vessel assets in the Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018, respectively, related to BWTS additions.  
 
On December 21, 2018, the Company entered into agreements to install scrubbers on its 17 Capesize vessels.  The Company completed scrubber installation on 16 of its Capesize vessels during the year ended December 31, 2019 and the remaining one Capesize vessel on January 17, 2020. The cost of each scrubber varied according to the specifications of the Company’s vessels and technical aspects of the installation, among other variables.  These costs are being capitalized and depreciated over the remainder of the life of the vessel.  The Company recorded $41,270 and $428 in Vessel assets in the Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018, respectively,

F-39

Table of Contents
related to scrubber additions.  The Company has entered into an amendment to the $495 Million Credit Facility to provide financing to cover a portion of these expenses, refer to Note 7 — Debt for further information.
 
15 - SAVINGS PLAN
 
In August 2005, the Company established a 401(k) plan that is available to U.S. based 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 $1.17 for each dollar contributed up to the first six percent of each employee’s salary.  The matching contribution vests immediately.  For the years ended December 31, 2019, 2018 and 2017, the Company’s matching contributions to this plan were $399,  $380 and $385, respectively. 
 
16 - STOCK-BASED COMPENSATION

2014 Management Incentive Plan
 
On the Effective Date, pursuant to the Chapter 11 Plan, the Company adopted the Genco Shipping & Trading Limited 2014 Management Incentive Plan (the “MIP”). An aggregate of 966,806 shares of Common Stock were available for award under the MIP. Awards under the MIP took the form of restricted stock grants and three tiers of MIP Warrants with staggered strike prices based on increasing equity values.  The number of shares of common stock available under the Plan represented approximately 1.8% of the shares of post-emergence common stock outstanding as of the Effective Date on a fully-diluted basis. Awards under the MIP were available to eligible employees, non-employee directors and/or officers of the Company and its subsidiaries (collectively, “Eligible Individuals”). Under the MIP, a committee appointed by the Board from time to time (or, in the absence of such a committee, the Board) (in either case, the “Plan Committee”) may grant a variety of stock-based incentive awards, as the Plan Committee deems appropriate, to Eligible Individuals. The MIP Warrants are exercisable on a cashless basis and contain customary anti-dilution protection in the event of any stock split, reverse stock split, stock dividend, reclassification, dividend or other distributions (including, but not limited to, cash dividends), or business combination transaction. 
 
On August 7, 2014, pursuant to the MIP, certain individuals were granted MIP Warrants whereby each warrant can be converted on a cashless basis for the amount in excess of the respective strike price. The MIP Warrants were issued in three tranches for 238,066,  246,701, and 370,979 and have exercise prices,  as adjusted for the special dividend declared on November 5, 2019, of $247.01511 (the “$247.02 Warrants”), $273.89981 (the “$273.90 Warrants”) and $325.95317 (the “$325.95 Warrants”) per whole share, respectively. The fair value of each warrant upon emergence from bankruptcy was $7.22 for the $247.02 Warrants, $6.63 for the $273.90 Warrants and $5.63 for the $325.95 Warrants. The warrant values were based upon a calculation using the Black-Scholes-Merton option pricing formula. This model uses inputs such as the underlying price of the shares issued when the warrant is exercised, volatility, cost of capital interest rate and expected life of the instrument. The Company has determined that the warrants should be classified within Level 3 of the fair value hierarchy by evaluating each input for the Black-Scholes-Merton option pricing formula against the fair value hierarchy criteria and using the lowest level of input as the basis for the fair value classification. The Black-Scholes-Merton option pricing formula used a volatility of 43.91% (representing the six-year volatility of a peer group), a risk-free interest rate of 1.85% and a dividend rate of 0%.  The aggregate fair value of these awards upon emergence from bankruptcy was $54,436. The warrants vested 33.33% on each of the first three anniversaries of the grant date, with accelerated vesting upon a change in control of the Company.
 
For the years ended December 31, 2019, 2018 and 2017 the Company recognized amortization expense of the fair value of these warrants, which is included in General and administrative expenses, as follows:

 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	
 	 	2019	 	2018	 	2017	 	
General and administrative expenses	 	$	 —	 	$	 —	 	$	902	 	

F-40

Table of Contents

As of December 31, 2019 and 2018, there was no unamortized stock-based compensation for the warrants and all warrants were vested. The following table summarizes the unvested warrant activity for the year ended December 31, 2017: 

 	 	 	 	 	 	 	 	 	 	
 	 	For the Year Ended December 31,	 	
 	 	2017	 	
 	 	 	 	Weighted	 	Weighted	 	
 	 	 	 	Average	 	Average	 	
 	 	Number of	 	 Exercise	 	Fair	 	
 	    	Warrants	    	Price	 	Value	 	
Outstanding at January 1 - Unvested	 	713,122	 	$	303.12	 	$	6.36	 	
Granted	 	 —	 	 	 —	 	 	 —	 	
Exercisable	 	(713,122)	 	 	303.12	 	 	6.36	 	
Exercised	 	 —	 	 	 —	 	 	 —	 	
Forfeited	 	 —	 	 	 —	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31 - Unvested	 	 —	 	$	 —	 	$	 —	 	

The following table summarizes certain information about the warrants outstanding as of December 31, 2019:

Warrants Outstanding and Unvested,	 	Warrants Outstanding and Exercisable,	 	
December 31, 2019	 	December 31, 2019	 	
 	 	 	 	Weighted	 	 	 	 	 	 	Weighted	 	
 	 	Weighted	 	Average	 	 	 	Weighted	 	Average	 	
 	 	Average	 	Remaining	 	 	 	Average	 	Remaining	 	
Number of	 	Exercise	 	Contractual	 	Number of	 	Exercise	 	Contractual	 	
Warrants	    	Price	    	Life	    	Warrants	    	Price	    	Life	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 —	 	$	 —	 	 —	 	8,557,461	 	$	288.99	 	0.60	 	
 
As of December 31, 2019 and 2018, a total of 8,557,461 of warrants were outstanding. 
 
The nonvested stock awards granted under the MIP vested ratably on each of the three anniversaries of August 7, 2014.  The nonvested stock awards issued under the MIP have a grant date price that represents the stock price on that date. As of December 31, 2019 and 2018, all stock awards granted under the MIP were vested. 
 
The table below summarizes the Company’s nonvested stock awards for the year ended December 31, 2017 that were issued under the MIP:

 	 	 	 	 	 	 	
 	 	For the Year Ended December 31,	 	
 	 	2017	 	
 	 	 	 	Weighted	 	
 	 	Number of	 	Average Grant	 	
 	 	Shares	 	Date Price	 	
Outstanding at January 1	 	9,255	 	$	
200.00	 	
Granted	 	 —	 	 	 —	 	
Vested	 	(9,255)	 	 	200.00	 	
Forfeited	 	 —	 	 	 —	 	
 	 	 	 	 	 	 	
Outstanding at December 31	 	 —	 	$	 —	 	

F-41

Table of Contents

The total fair value of MIP restricted shares that vested during the years ended December 31, 2019, 2018 and 2017 was $0,  $0 and $106, respectively.  The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
 
For the years ended December 31, 2019, 2018 and 2017, the Company recognized nonvested stock amortization expense for the MIP restricted shares, which is included in General and administrative expenses, as follows:

 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	
 	 	2019	 	2018	 	2017	 	
General and administrative expenses	 	$	 —	 	$	 —	 	$	368	 	
 
The Company amortized these grants over the applicable vesting periods, net of anticipated forfeitures.  As of December 31, 2019 and 2018, there was no unrecognized compensation cost.
 
2015 Equity Incentive Plan
 
On June 26, 2015, the Company’s Board of Directors approved the 2015 Equity Incentive Plan for awards with respect to an aggregate of 400,000 shares of common stock (the “2015 Plan”).  Under the 2015 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 the Company’s officers, directors, employees, and consultants.  Awards may consist of stock options, stock appreciation rights, dividend equivalent rights, restricted (nonvested) stock, restricted stock units, and unrestricted stock.  As of December 31, 2019, the Company has awarded restricted stock units,  restricted stock and stock options under the 2015 Plan.
 
On March 23, 2017, the Board of Directors approved an amendment and restatement of the 2015 Plan.  This amendment and restatement increased the number of shares available for awards under the plan from 400,000 to 2,750,000, subject to shareholder approval; set the annual limit for awards to non-employee directors and other individuals as 500,000 and 1,000,000 shares, respectively; and modified the change in control definition.  The Company’s shareholders approved the increase in the number of shares at the Company’s 2017 Annual Meeting of Shareholders on May 17, 2017.
 
Stock Options 
   
On March 23, 2017, the Company issued options to purchase 133,000 of the Company’s shares of common stock to John C. Wobensmith, Chief Executive Officer and President, with an exercise price of $10.805 per share,  as adjusted for the special dividend declared on November 5, 2019.  One third of the options become exercisable on each of the first three anniversaries of October 15, 2016, with accelerated vesting upon a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date.  The fair value of each option was estimated on the date of the grant using the Black-Scholes-Merton pricing formula, resulting in a value of $6.41 per share, or $853 in the aggregate.  The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 79.80% (representing a blend of the Company’s historical volatility and a peer-based volatility estimate due to limited trading history since emergence from bankruptcy), a risk-free interest rate of 1.68%, a dividend yield of 0%, and expected life of 3.78 years (determined using the simplified method as outlined in Staff Accounting Bulletin 14 – Share-Based Payment (“SAB Topic 14”) due to lack of historical exercise data). 
 
On February 27, 2018, the Company issued options to purchase 122,608 of the Company’s shares of common stock to certain individuals with an exercise price of $13.365 per share, as adjusted for the special dividend declared on November 5, 2019.  One third of the options become exercisable on each of the first three anniversaries of February 27, 2018, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date.  The fair value of each option was estimated on the date of the grant using the Black-Scholes-Merton pricing formula, resulting in a value of $7.55 per share, or $926 in the aggregate.  The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 71.94% (representing a blend of the Company’s historical volatility and a peer-based volatility estimate due to limited trading history post recapitalization of the Company in November 2016), a risk-free interest rate of 2.53%, a dividend yield of 0%, and

F-42

Table of Contents
expected life of 4.00 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data). 
 
On March 4, 2019, the Company issued options to purchase 240,540 of the Company’s shares of common stock to certain individuals with an exercise price of $8.065 per share,  as adjusted for the special dividend declared on November 5, 2019.  One third of the options become exercisable on each of the first three anniversaries of March 4, 2019, with accelerated vesting that may occur following a change in control of the Company, and all unexercised options expire on the sixth anniversary of the grant date.  The fair value of each option was estimated on the date of the grant using the Black-Scholes-Merton pricing formula, resulting in a value of $3.76 per share, or $904 in the aggregate.  The assumptions used in the Black-Scholes-Merton option pricing formula are as follows: volatility of 55.23% (representing the Company’s historical volatility), a risk-free interest rate of 2.49%, a dividend yield of 0%, and expected life of 4.00 years (determined using the simplified method as outlined in SAB Topic 14 due to lack of historical exercise data). 
 
For the years ended December 31, 2019, 2018 and 2017, the Company recognized amortization expense of the fair value of these options, which is included in General and administrative expenses, as follows:

 	 	For the Years Ended December 31,	 	
 	 	2019	 	2018	 	2017	 	
General and administrative expenses	 	$	850	 	$	731	 	$	512	 	
 
Amortization of the unamortized stock-based compensation balance of $590 as of December 31, 2019 is expected to be expensed $431,  $142 and $17 during the years ended December 31, 2020, 2021 and 2022, respectively.  The following table summarizes the unvested option activity for the years ended December 31, 2019, 2018 and 2017:

F-43

Table of Contents

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Years Ended December 31,	 	 	
 	 	2019	 	2018	 	2017	 	 	
 	 	 	 	Weighted	 	Weighted	 	 	 	Weighted	 	Weighted	 	 	 	Weighted	 	Weighted	 	 	
 	 	Number	 	Average	 	Average	 	Number	 	Average	 	Average	 	Number	 	Average	 	Average	 	 	
 	 	of	 	Exercise	 	Fair	 	of	 	Exercise	 	Fair	 	of	 	Exercise	 	Fair	 	 	
 	    	Options	    	Price	    	Price	    	Options	    	Price	    	Price	    	Options	    	Price	    	Price	 	 	
Outstanding at January 1 - Unvested	 	166,942	 	$	13.01	 	 	7.25	 	88,667	 	$	11.13	 	 	6.41	 	 —	 	$	 —	 	 	 —	 	 	
Granted	 	240,540	 	 	8.33	 	 	3.76	 	122,608	 	 	13.69	 	 	7.55	 	133,000	 	 	11.13	 	 	6.41	 	 	
Exercisable	 	(85,203)	 	 	12.36	 	 	6.96	 	(44,333)	 	 	11.13	 	 	6.41	 	(44,333)	 	 	11.13	 	 	6.41	 	 	
Exercised	 	 —	 	 	 —	 	 	 —	 	 —	 	 	 —	 	 	 —	 	 —	 	 	 —	 	 	 —	 	 	
Forfeited	 	 —	 	 	 —	 	 	 —	 	 —	 	 	 —	 	 	 —	 	 —	 	 	 —	 	 	 —	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31 - Unvested	 	322,279	 	$	9.41	 	$	4.72	 	166,942	 	$	13.01	 	$	7.25	 	88,667	 	$	11.13	 	$	6.41	 	 	
 
The following table summarizes certain information about the options outstanding as of December 31, 2019, as adjusted for the special dividend declared on November 5, 2019:

 	 	 	Options Outstanding and Unvested,	 	Options Outstanding and Exercisable,	 	
 	 	 	December 31, 2019	 	December 31, 2019	 	
Weighted	 	 	 	 	 	 	Weighted	 	 	 	 	 	 	Weighted	 	
Average	 	 	 	Weighted	 	Average	 	 	 	Weighted	 	Average	 	
Exercise Price of	 	 	 	Average	 	Remaining	 	 	 	Average	 	Remaining	 	
Outstanding	 	Number of	 	Exercise	 	Contractual	 	Number of	 	Exercise	 	Contractual	 	
Options	    	Options	    	Price	    	Life	    	Options	    	Price	    	Life	 	
$	10.11	 	322,279	 	$	9.41	 	4.92	 	173,869	 	$	11.41	 	3.45	 	
 
As of December 31, 2019 and 2018, a total of 496,148 and 255,608 stock options were outstanding, respectively.
 
Restricted Stock Units
 
The Company has issued restricted stock units (“RSUs”) to certain members of the Board of Directors and certain executives and employees of the Company, which represent the right to receive a share of common stock, or in the sole discretion of the Company’s Compensation Committee, the value of a share of common stock on the date that the RSU vests.  As of December 31, 2019 and 2018,  326,247 and 216,304 shares, respectively, of the Company’s common stock were outstanding in respect of the RSUs.  Such shares will only be issued in respect of vested RSUs issued to directors when the director’s service with the Company as a director terminates.  Such shares of common stock will only be issued to executives and employees when their RSUs vest under the terms of their grant agreements and the amended 2015 Plan described above.  On May 17, 2017, 18,234 shares of common stock were issued to Eugene Davis, the former Chairman of the Audit Committee, in respect to vested RSUs following his departure from the Board.
 
The RSUs that have been issued to certain members of the Board of Directors generally vest on the date of the annual shareholders meeting of the Company following the date of the grant. In lieu of cash dividends issued for vested and nonvested shares held by certain members of the Board of Directors, the Company will grant additional vested and nonvested RSUs, respectively, which are calculated by dividing the amount of the dividend by the closing price per share of the Company’s common stock on the dividend payment date and will have the same terms as other RSUs issued to members of the Board of Directors.  The RSUs that have been issued to other individuals vest ratably on each of the

F-44

Table of Contents
three anniversaries of the determined vesting date.  The table below summarizes the Company’s unvested RSUs for the years ended December 31, 2019, 2018 and 2017:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	2019	 	2018	 	2017	 	
 	 	 	Weighted	 	 	 	Weighted	 	 	 	Weighted	 	
 	Number of	 	Average Grant	 	Number of	 	Average Grant	 	Number of	 	Average Grant	 	
 	RSUs	 	Date Price	 	RSUs	 	Date Price	 	RSUs	    	Date Price	 	
Outstanding at January 1	149,170	 	$	12.42	 	220,129	 	$	11.01	 	66,666	 	$	5.10	 	
Granted	140,914	 	 	8.50	 	51,704	 	 	14.84	 	317,595	 	 	11.05	 	
Vested	(127,988)	 	 	12.10	 	(122,663)	 	 	10.92	 	(164,132)	 	 	8.68	 	
Forfeited	 —	 	 	 —	 	 —	 	 	 —	 	 —	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31	162,096	 	$	9.26	 	149,170	 	$	12.42	 	220,129	 	$	11.01	 	
 
The total fair value of the RSUs that vested during the years ended December 31, 2019, 2018 and 2017 was $1,235,  $1,694 and $1,858, respectively. The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.    
 
The following table summarizes certain information of the RSUs unvested and vested as of December 31, 2019:

Unvested RSUs	 	Vested RSUs	 	
December 31, 2019	 	December 31, 2019	 	
 	 	 	 	Weighted	 	 	 	 	 	
 	 	Weighted	 	Average	 	 	 	Weighted	 	
 	 	Average	 	Remaining	 	 	 	Average	 	
Number of	 	Grant Date	 	Contractual	 	Number of	 	Grant Date	 	
RSUs	    	Price	    	Life	    	RSUs	    	Price	 	
162,096	 	$	9.26	 	1.67	 	422,223	 	$	11.47	 	
 
The Company is amortizing these grants over the applicable vesting periods, net of anticipated forfeitures.  As of December 31, 2019, unrecognized compensation cost of $613 related to RSUs will be recognized over a weighted-average period of 1.67 years.
 
For the years ended December 31, 2019, 2018 and 2017, the Company recognized nonvested stock amortization expense for the RSUs, which is included in General and administrative expenses as follows:

 	 	For the Years Ended December 31,	 	
 	 	2019	 	2018	 	2017	 	
General and administrative expenses	 	$	1,207	 	$	1,489	 	$	2,241	 	
 
Restricted Stock
 
Under the 2015 Plan, grants of restricted common stock issued to executives ordinarily vest ratably on each of the three anniversaries of the determined vesting date.  As of December 31, 2019, all restricted stock awards under the 2015 Plan were vested.  The table below summarizes the Company’s nonvested stock awards for the years ended December 31, 2018 and 2017 that were issued under the 2015 Plan:

F-45

Table of Contents

 
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For theYears Ended December 31,	
 	 	2018	 	2017	 	
 	 	 	 	Weighted	 	 	 	Weighted	 	
 	 	Number of	 	Average Grant	 	Number of	 	Average Grant	 	
 	 	Shares	 	Date Price	    	Shares	 	Date Price	 	
Outstanding at January 1	 	6,802	 	$	5.20	 	13,605	 	$	5.20	 	
Granted 	 	 —	 	 	 —	 	 —	 	 	 —	 	
Vested 	 	(6,802)	 	 	5.20	 	(6,803)	 	 	5.20	 	
Forfeited 	 	 —	 	 	 —	 	 —	 	 	 —	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31	 	 —	 	$	 —	 	6,802	 	$	5.20	 	
 
The total fair value of shares that vested under the 2015 Plan during the years ended December 31, 2018 and 2017 was $60  and $71, respectively.  The total fair value is calculated as the number of shares vested during the period multiplied by the fair value on the vesting date.
 
For the years ended December 31, 2019, 2018 and 2017, the Company recognized nonvested stock amortization expense for the 2015 Plan restricted shares, which is included in General and administrative expenses, as follows:

 	 	For the Years Ended December 31,	 	
 	 	2019	 	2018	 	2017	 	
General and administrative expenses	 	$	 —	 	$	11	 	$	30	 	

 
17 - 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 effect on the Company, its financial condition, results of operations or cash flows.

F-46

Table of Contents

18 - 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. 

 	 	2019	 	
 	 	Quarter Ended (2)	 	
(In thousands, except share and per share amounts)	    	March 31, 	    	June 30, 	    	September 30, 	    	December 31, 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage Revenues	 	$	93,464	 	$	83,550	 	$	103,776	 	$	108,705	 	
Operating (loss) income	 	 	(882)	 	 	(27,309)	 	 	(7,772)	 	 	7,560	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	 	(7,801)	 	 	(34,476)	 	 	(14,591)	 	 	882	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) earnings per share - basic (1)	 	$	(0.19)	 	$	(0.83)	 	$	(0.35)	 	$	0.02	 	
Net (loss) earnings per share - diluted (1)	 	$	(0.19)	 	$	(0.83)	 	$	(0.35)	 	$	0.02	 	
Dividends declared per share	 	$	 —	 	$	 —	 	$	 —	 	$	0.50	 	
Weighted average common shares outstanding - basic	 	 	41,726,106	 	 	41,742,301	 	 	41,749,200	 	 	41,832,942	 	
Weighted average common shares outstanding - diluted	 	 	41,726,106	 	 	41,742,301	 	 	41,749,200	 	 	41,989,553	 	

 	 	2018	 	
 	 	Quarter Ended (2)	 	
(In thousands, except share and per share amounts)	 	March 31, 	 	June 30, 	 	September 30, 	 	December 31, 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Voyage Revenues	 	$	76,916	 	$	86,157	 	$	92,263	 	$	112,185	 	
Operating (loss) income	 	 	(48,398)	 	 	10,851	 	 	12,089	 	 	25,972	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income	 	 	(55,813)	 	 	(1,120)	 	 	5,708	 	 	18,283	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) earnings per share - basic (1)	 	$	(1.61)	 	$	(0.03)	 	$	0.14	 	$	0.44	 	
Net (loss) earnings per share - diluted (1)	 	$	(1.61)	 	$	(0.03)	 	$	0.14	 	$	0.44	 	
Weighted average common shares outstanding - basic	 	 	34,577,990	 	 	35,516,058	 	 	41,618,187	 	 	41,704,296	 	
Weighted average common shares outstanding - diluted	 	 	34,577,990	 	 	35,516,058	 	 	41,821,008	 	 	41,792,956	 	

	(1)		Amounts may not total to annual loss because each quarter and year are calculated separately based on basic and diluted weighted-average common shares outstanding during that period.	
 
	(2)		Amounts may not total to annual amounts for the years ended December 31, 2019 and 2018 as reported in the Consolidated Statements of Operations due to rounding.	

 
 
 19 - SUBSEQUENT EVENTS
 
On February 24, 2020, the Board of Directors determined to dispose of the Company’s ten Handysize vessels; the Baltic Hare, the Baltic Fox, the Baltic Wind, the Baltic Cove, the Baltic Breeze, the Genco Ocean, the Genco Bay, the Genco Avra, the Genco Mare and the Genco Spirit, at times and on terms to be determined in the future.  Given this decision, and that the estimated future undiscounted cash flows for each of these older vessels did not exceed the net

F-47

Table of Contents
book value for each vessel, we have adjusted the values of these older vessels to their respective fair market values during the first quarter of 2020 which will result in an impairment loss.  
 
On February 25, 2020, the Company announced a regular quarterly dividend of $0.175 per share to be paid on or about March 16, 2020, to shareholders of record as of March 6, 2020.  The aggregate amount of the dividend is expected to be approximately $7,400, which the Company anticipates will be funded from cash on hand at the time the payment is to be made.
 
On February 25, 2020, the Company’s Board of Directors awarded grants of 173,749 RSUs and options to purchase 344,568 shares of the Company’s stock at an exercise price of $7.06 to certain individuals under the 2015 Plan.  The awards generally vest ratably in one-third increments on the first three anniversaries of February 25, 2020.
 
On February 3, 2020, the Company entered into an agreement to sell the Genco Charger, a 2005-built Handysize vessel, to a third party for $5,150 less a 1.0% commission payable to a third party.  The sale of the Genco Charger was completed on February 24, 2020.  Refer to Note 2 — Summary of Significant Accounting Policies regarding the impairment recorded for this vessel during the year ended December 31, 2019.  This vessel served as collateral under the $495 Million Credit Facility; therefore, $3,471 of the net proceeds received from the sale will remain classified as restricted cash for 180 days following the sale date.  The amount can be used towards a loan prepayment under the facility or for the financing of a replacement vessel or vessels meeting certain requirements and added as collateral under the facility.  If such a replacement vessel is not added as collateral within such 180 day period, the Company will be required to use the proceeds as a loan prepayment. 

 

F-48

Table of Contents

ITEM 9A. CONTROLS AND PROCEDURES
 
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
 
Under the supervision and with the participation of our management, including our Chief Executive Officer and President and our Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in  Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this Report. Based upon that evaluation, our Chief Executive Officer and President and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2019.
 
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 consolidated financial statements for external purposes in accordance with generally accepted accounting principles.
 
Our internal control over financial reporting includes those policies and procedures that:
 
	·		pertain 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 consolidated 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 consolidated 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, 2019.  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 (2013).  Based on our assessment and those criteria, our management believes that we maintained effective internal control over financial reporting as of December 31, 2019.
 
Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on the Company’s internal control over financial reporting.  The attestation report is included on page 78 - 79 of this report.
 
CHANGES IN INTERNAL CONTROLS
 
There have been no changes in our internal controls over financial reporting (as such term defined in Rules 13a‑15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter of 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

77

Table of Contents

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
Genco Shipping & Trading Limited
 
Opinion on Internal Control over Financial Reporting
 
We have audited the internal control over financial reporting of Genco Shipping & Trading Limited and subsidiaries (the “Company”) as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
 
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated February 27, 2020 expressed an unqualified opinion on those consolidated financial statements.
 
Basis for Opinion
 
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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audit in accordance with the standards of the PCAOB. 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.
 
Definition and Limitations of Internal Control over Financial Reporting
 
A company’s internal control over financial reporting is a process 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. 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.

78

Table of Contents

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 inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP	
 
New York, New York	
February 27, 2020	

PART III
 
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Information regarding our directors and executive officers is incorporated by reference to the text under the headings “Election of Directors” and “Management” set forth in our Proxy Statement for our 2020 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2019 (the “2019 Proxy Statement”)  Information relating to our Code of Conduct and Ethics and to compliance with Section 16(a) of the 1934 Act is incorporated by reference to the text set forth in the 2020 Proxy Statement under the heading “Corporate Governance”.
 
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 is incorporated by reference to the text set forth in the 2020 Proxy Statement under the heading “Executive Compensation.”
 
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 incorporated by reference to the text set forth in the 2020 Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management.”
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Information regarding certain of our transactions and director independence is incorporated by reference to the text set forth in the 2020 Proxy Statement under the heading “Certain Relationships and Related Transactions” and “Director Independence.”
 
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
Information regarding our accountant fees and services is incorporated by reference to the text set forth in the 2020 Proxy Statement under the heading “Ratification of Appointment of Independent Auditors.”

79

Table of Contents

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:	
 	 	
 	The Exhibit Index attached to this report is incorporated into this Item 15 by reference.	

 

80

Table of Contents

EXHIBIT INDEX
 	 	 	
Exhibit	 	Document	
 	 	 	
2.1	 	Confirmation Order, dated July 2, 2014.(1)	
 	 	 	
2.2	 	First Amended Prepackaged Plan of Reorganization of the Debtors Pursuant to Chapter 11 of the Bankruptcy Code.(1)	
 	 	 	
2.3	 	Agreement and Plan of Merger, dated as of April 7, 2015, by and among Genco Shipping & Trading Limited, Poseidon Merger Sub Limited and Baltic Trading Limited.(2)	
 	 	 	
2.4	 	Stock Purchase Agreement, dated as of April 7, 2015, by and between Genco Shipping & Trading Limited and Baltic Trading Limited.(2)	
 	 	 	
2.5	 	Amendment No. 1 to Agreement and Plan of Merger, dated as of June 10, 2015, by and among Genco Shipping & Trading Limited, Poseidon Merger Sub Limited and Baltic Trading Limited.(3)	
 	 	 	
3.1	 	Second Amended and Restated Articles of Incorporation of Genco Shipping & Trading Limited.(4)	
 	 	 	
3.2	 	Articles of Amendment to Genco Shipping & Trading Limited Second Amended and Restated Articles of Incorporation, dated July 17, 2015.(5)	
 	 	 	
3.3	 	Articles of Amendment to Second Amended and Restated Articles of Incorporation of Genco Shipping & Trading Limited, dated July 7, 2016.(6)	
 	 	 	
3.4	 	Articles of Amendment to Second Amended and Restated Articles of Incorporation of Genco Shipping & Trading Limited, dated January 4, 2017.(7)	
 	 	 	
3.5	 	Certificate of Designations of Rights, Preferences and Privileges of Series A Preferred Stock of Genco Shipping & Trading Limited, dated as of November 14, 2016.(8)	
 	 	 	
3.6	 	Amended and Restated By-Laws of Genco Shipping & Trading Limited, dated as of July 9, 2014.(4)	
 	 	 	
3.7	 	Amendment to Amended and Restated By-Laws, dated June 4, 2018.(9)	
 	 	 	
4.1	 	Form of Specimen Stock Certificate of Genco Shipping & Trading Limited.(4)	
 	 	 	
4.2	 	Form of Specimen Warrant Certificate of Genco Shipping & Trading Limited.(4)	
 	 	 	
4.3	 	Description of Genco Shipping & Trading Limited’s Common Stock.(*)	
 	 	 	
10.1	 	Letter Agreement dated September 21, 2007 between Genco Shipping & Trading Limited and John C. Wobensmith.(10)	
 	 	 	
10.2	 	Letter Agreement dated June 23, 2014 between Genco Shipping & Trading Limited and John C. Wobensmith.(11)	
 	 	 	
10.3	 	Warrant Agreement, dated as of July 9, 2014, between Genco Shipping & Trading Limited and Computershare Inc., as Warrant Agent.(4)	
 	 	 	
10.4	 	Genco Shipping & Trading Limited 2014 Management Incentive Plan.(12)	
 	 	 	
10.5	 	Restricted Stock Grant Agreement dated as of August 7, 2014 between Genco Shipping & Trading Limited and John C. Wobensmith.(13)	

81

Table of Contents

Exhibit	 	Document	

10.6	 	Warrant Certificate No. W-4 dated as of August 7, 2014 and issued to John C. Wobensmith.(13)	
 	 	 	
10.7	 	Warrant Certificate No. W-5 dated as of August 7, 2014 and issued to John C. Wobensmith.(13)	
 	 	 	
10.8	 	Warrant Certificate No. W-6 dated as of August 7, 2014 and issued to John C. Wobensmith.(13)	
 	 	 	
10.9	 	Restricted Stock Grant Agreement dated as of August 7, 2014 between Genco Shipping & Trading Limited and Apostolos Zafolias.(14)	
 	 	 	
10.10	 	Restricted Stock Grant Agreement dated as of August 7, 2014 between Genco Shipping & Trading Limited and Joseph Adamo.(14)	
 	 	 	
10.11	 	Warrant Certificate No. W-22 dated as of August 7, 2014 and issued to Apostolos Zafolias.(14)	
 	 	 	
10.12	 	Warrant Certificate No. W-23 dated as of August 7, 2014 and issued to Apostolos Zafolias.(14)	
 	 	 	
10.13	 	Warrant Certificate No. W-24 dated as of August 7, 2014 and issued to Apostolos Zafolias.(14)	
 	 	 	
10.14	 	Warrant Certificate No. W-31 dated as of August 7, 2014 and issued to Joseph Adamo.(14)	
 	 	 	
10.15	 	Warrant Certificate No. W-32 dated as of August 7, 2014 and issued to Joseph Adamo.(14)	
 	 	 	
10.16	 	Warrant Certificate No. W-33 dated as of August 7, 2014 and issued to Joseph Adamo.(14)	
 	 	 	
10.17	 	Letter Agreement dated April 30, 2015 between Genco Shipping & Trading Limited and John C. Wobensmith.(15)	
 	 	 	
10.18	 	Genco Shipping & Trading Limited Amended and Restated 2015 Equity Incentive Plan.(19)	
 	 	 	
10.19	 	Form of Director Restricted Stock Unit Agreement dated as of July 13, 2015.(16)	
 	 	 	
10.20	 	Form of Director Restricted Stock Unit Agreement dated as of July 29, 2015.(16)	
 	 	 	
10.21	 	Restricted Stock Grant Agreement dated as of February 17, 2016 between Genco Shipping & Trading Limited and John C. Wobensmith.(17)	
 	 	 	
10.22	 	Purchase Agreement, dated as of October 4, 2016, by and among Genco Shipping & Trading Limited and funds or related entities managed by Centerbridge Partners, L.P. or its affiliates.(18)	
 	 	 	
10.23	 	Purchase Agreement, dated as of October 4, 2016, by and among Genco Shipping & Trading Limited and funds or related entities managed by Strategic Value Partners, LLC or its affiliates.(18)	
 	 	 	
10.24	 	Purchase Agreement, dated as of October 4, 2016, by and among Genco Shipping & Trading Limited and funds managed by affiliates of Apollo Global Management, LLC.(18)	
 	 	 	
10.25	 	Separation Agreement, dated as of October 13, 2016, by and between Genco Shipping & Trading Limited and Peter C. Georgiopoulos.(18)	
 	 	 	
10.26	 	Release Agreement, dated as of October 13, 2016, by and between Genco Shipping & Trading Limited and Peter C. Georgiopoulos.(18)	

82

Table of Contents

Exhibit	 	Document	

10.27	 	Purchase Agreement, dated as of October 27, 2016, by and between Genco Shipping & Trading Limited and the parties listed as Investors therein.(18)	
 	 	 	
10.28	 	Escrow Agreement, dated as of October 27, 2016, by and between Genco Shipping & Trading Limited and Wilmington Trust, National Association.(18)	
 	 	 	
10.29	 	Senior Secured Term Loan Facility, dated November 10, 2016, by and among Genco Shipping & Trading Limited, Nordea Bank Finland plc, New York Branch, as administrative agent, Skandinaviska Enskilda Banken AB (publ), DVB Bank SE, ABN AMRO Capital USA LLC, Crédit Agricole Corporate and Investment Bank, Deutsche Bank AG Filiale Deutschlandgeschäft, Crédit Industriel et Commercial, BNP Paribas, and Nordea Bank Finland plc, New York Branch, as bookrunners and lead arrangers, in an aggregate principal amount of up to $400,000,000 (the “New $400 Million Facility”)(19)	
 	 	 	
10.30	 	Amending and Restating Agreement, dated November 15, 2016, by and among Genco Shipping & Trading Limited, the borrowers and financial institutions listed therein, Genco Holdings Limited,  and Hayfin Services LLP, as agent and security agent.(19)	
 	 	 	
10.31	 	Registration Rights Agreement, dated November 15, 2016, by and among Genco Shipping & Trading Limited and the parties identified as holders therein.(19)	
 	 	 	
10.32	 	Amended and Restated Registration Rights Agreement, dated November 15, 2016, by and among Genco Shipping & Trading Limited and the parties identified as holders therein.(19)	
 	 	 	
10.33	 	Letter Agreement dated March 23, 2017 between Genco Shipping & Trading Limited and John C. Wobensmith.(19)	
 	 	 	
10.35	 	Letter Agreement dated August 7, 2019 between Genco Shipping & Trading Limited and John C. Wobensmith.(20)	
 	 	 	
10.36	 	Restricted Stock Unit Agreement dated March 23, 2017 between Genco Shipping & Trading Limited and John C. Wobensmith.(19)	
 	 	 	
10.37	 	Option Grant to John C. Wobensmith dated March 23, 2017.(19)	
 	 	 	
10.38	 	Restricted Stock Unit Agreement dated February 27, 2018 between Genco Shipping & Trading Limited and Arthur L. Regan.(21)	
 	 	 	
10.39	 	Restricted Stock Unit Agreement dated February 27, 2018 between Genco Shipping & Trading Limited and John C. Wobensmith.(21)	
 	 	 	
10.40	 	Restricted Stock Unit Agreement dated February 27, 2018 between Genco Shipping & Trading Limited and Apostolos Zafolias.(21)	
 	 	 	
10.41	 	Option Agreement dated February 27, 2018 between Genco Shipping & Trading Limited and Arthur L. Regan.(21)	
 	 	 	
10.42	 	Option Agreement dated February 27, 2018 between Genco Shipping & Trading Limited and John C. Wobensmith.(21)	
 	 	 	
10.43	 	Option Agreement dated February 27, 2018 between Genco Shipping & Trading Limited and Apostolos Zafolias.(21)	

83

Table of Contents

Exhibit	 	Document	

10.44	 	Restricted Stock Unit Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and Arthur L. Regan.(22)	
 	 	 	
10.45	 	Restricted Stock Unit Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and John C. Wobensmith.(22)	
 	 	 	
10.46	 	Restricted Stock Unit Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and Apostolos Zafolias.(22)	
 	 	 	
10.47	 	Restricted Stock Unit Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and Joseph Adamo.(22)	
 	 	 	
10.48	 	Option Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and Arthur L. Regan.(22)	
 	 	 	
10.49	 	Option Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and John C. Wobensmith.(22)	
 	 	 	
10.50	 	Option Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and Apostolos Zafolias.(22)	
 	 	 	
10.51	 	Option Agreement dated March 4, 2019 between Genco Shipping & Trading Limited and Joseph Adamo.(22)	
 	 	 	
10.52	 	Up to US$460,000,000 Senior Secured Credit Agreement dated May 31, 2018, by and among Genco Shipping & Trading Limited as Borrower, the lenders party thereto from time to time, Nordea Bank AB (publ), New York Branch, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Capital USA LLC, DVB Bank SE, Crédit Agricole Corporate & Investment Bank, and Danish Ship Finance A/S, as Bookrunners and as Mandated Lead Arrangers, and Nordea Bank AB (publ), New York Branch as Administrative Agent (the “$460 Million Credit Agreement”).(9)	
 	 	 	
10.53	 	Form of Director Restricted Stock Unit Agreement dated as of May 15, 2019.(*)	
 	 	 	
10.54	 	Amendment to Restricted Stock Unit Agreements Pursuant to the Genco Shipping & Trading Limited 2015 Equity Incentive Plan.(*)	
 	 	 	
10.55	 	Up to US$108,000,000 Senior Secured Credit Agreement dated August 14, 2018, by and among Genco Shipping & Trading Limited as Borrower, the lenders party thereto from time to time, Crédit Agricole Corporate & Investment Bank, as Structurer and Bookrunner, Crédit Agricole Corporate & Investment Bank and Skandinaviska Enskilda Banken AB (Publ) as Mandated Lead Arrangers and Crédit Agricole Corporate & Investment Bank, as Administrative Agent and as Security Agent. (23)	
 	 	 	
10.56	 	Amendment and Restatement Agreement dated as of February 28, 2019 by and among Genco Shipping & Trading Limited as Borrower, the Subsidiary Guarantors party thereto, the Delayed Draw Term Loan Lenders party thereto, the other Lenders party thereto, and Nordea Bank ABP, New York Branch, as Mandated Lead Arranger, Bookrunner, Administrative Agent, and Security Agent, pertaining to the $460 Million Credit Agreement.(24)	
 	 	 	
10.57	 	Second Amendment to Amended and Restated Credit Agreement, dated as of November 5, 2019, by and among Genco Shipping & Trading Limited, the Subsidiary Guarantors party thereto, the Lenders party thereto, and Nordea Bank ABP, New York Branch, as Administrative Agent and Security Agent.(25)	

84

Table of Contents

Exhibit	 	Document	

10.58	 	Second Amendment to Amended and Restated Credit Agreement, dated as of November 5, 2019, by and among Genco Shipping & Trading Limited, the Subsidiary Guarantors party thereto, the Lenders party thereto, and Crédit Agricole Corporate And Investment Bank, as Administrative Agent and Security Agent.(25)	
 	 	 	
10.59	 	Genco Annual Incentive Plan adopted March 4, 2019.(24)	
 	 	 	
21.1	 	Subsidiaries of Genco Shipping & Trading Limited.(*)	
 	 	 	
23.1	 	Consent of Independent Registered Public Accounting Firm.(*)	
 	 	 	
31.1	 	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.(*)	
 	 	 	
31.2	 	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended.(*)	
 	 	 	
32.1	 	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.(*)	
 	 	 	
32.2	 	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.(*)	
 	 	 	
101	 	The following materials from Genco Shipping & Trading Limited’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2019 and 2018, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.(*)	

(*)   Filed herewith.
 
	(1)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 7, 2014.	
 
	(2)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on April 8, 2015.	
 
	(3)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on June 10, 2015.	
 
	(4)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 15, 2014.	
 
	(5)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 17, 2015.	
 
	(6)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on July 7, 2016.	
 
	(7)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on January 4, 2017.	
 
	(8)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on November 15, 2016.	

85

Table of Contents

	(9)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on June 5, 2018.	
 
	(10)		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.	
 
	(11)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on June 27, 2014.	
 
	(12)		Incorporated by reference to Genco Shipping & Trading Limited’s Registration Statement on Form S-8, filed with the Securities and Exchange Commission on August 7, 2014.	
 
	(13)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q filed with the Securities and Exchange Commission on November 17, 2014.	
 
	(14)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K filed with the Securities and Exchange Commission on November 17, 2014.	
 
	(15)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K, filed with the Securities and Exchange Commission on May 4, 2015.	
 
	(16)		Incorporated by reference to Genco Shipping & Trading Limited’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, filed with the Securities and Exchange Commission on November 13, 2015.	
 
	(17)		Incorporated by reference to Genco Shipping & Trading Limited’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016, filed with the Securities and Exchange Commission on May 10, 2016.	
 
	(18)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q, filed with the Securities and Exchange Commission on November 4, 2016.	
 
	(19)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2017.	
 
	(20)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q, filed with the Securities and Exchange Commission on August 9, 2019.	
 
	(21)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q filed with the Securities and Exchange Commission on May 9, 2018.	
 
	(22)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q, filed with the Securities and Exchange Commission on May 9, 2019.	
 
	(23)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 8-K filed with the Securities and Exchange Commission on August 15, 2018.	
 
	(24)		Incorporated by reference to Genco Shipping & Trading Limited’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on March 5, 2019.	
 
	(25)		Incorporated by reference to Genco Shipping & Trading Limited’s Report on Form 10-Q, filed with the Securities and Exchange Commission on November 7, 2019.	

86

Table of Contents

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 27, 2020.

 	GENCO SHIPPING & TRADING LIMITED	
 	 	 	 	
 	By:	/s/ John C. Wobensmith	
 	 	Name:	John C. Wobensmith	
 	 	Title:	Chief Executive Officer and President (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 27, 2020.

SIGNATURE	 	TITLE	
 	 	 	
/s/ John C. Wobensmith	 	CHIEF EXECUTIVE OFFICER AND PRESIDENT	
John C. Wobensmith	 	(PRINCIPAL EXECUTIVE OFFICER)	
 	 	 	
/s/ Apostolos Zafolias	 	CHIEF FINANCIAL OFFICER	
Apostolos Zafolias	 	(PRINCIPAL FINANCIAL OFFICER)	
 	 	 	
/s/ Joseph Adamo	 	CHIEF ACCOUNTING OFFICER	
Joseph Adamo	 	(PRINCIPAL ACCOUNTING OFFICER)	

/s/ Arthur L. Regan	 	INTERIM EXECUTIVE CHAIRMAN OF THE BOARD
AND DIRECTOR	
Arthur L. Regan	 	 	
 	 	 	
/s/ James G. Dolphin	 	DIRECTOR	
James G. Dolphin	 	 	
 	 	 	
/s/ Kathleen C. Haines	 	DIRECTOR	
Kathleen C. Haines	 	 	
 	 	 	
/s/ Daniel Y. Han	 	DIRECTOR	
Daniel Y. Han	 	 	
 	 	 	
/s/ Kevin Mahony	 	DIRECTOR	
Kevin Mahony	 	 	
 	 	 	
/s/ Christoph Majeske	 	DIRECTOR	
Christoph Majeske	 	 	
 	 	 	
/s/ Basil G. Mavroleon	 	DIRECTOR	
Basil G. Mavroleon	 	 	
 	 	 	
/s/ Jason Scheir	 	DIRECTOR	
Jason Scheir	 	 	
 	 	 	
/s/ Bao D. Truong	 	DIRECTOR	
Bao D. Truong	 	 	

87

Exhibit 4.3
Description of Genco Shipping & Trading Limited’s Common Stock
Registered under Section 12 of the Securities Exchange Act of 1934, as Amended
The following is a description of the common stock of Genco Shipping & Trading Limited and certain provisions of Business Corporations Act of the Republic of the Marshall Islands, or the BCA, that may be applicable to our stockholders. This description is subject to and qualified in its entirety by reference to our Second Amended and Restated Articles of  Incorporation and our Amended and Restated By-Laws, together with the amendments to each of them, all of which are incorporated by reference to Exhibits 3.1, 3.2, 3.3, 3.4, 3.6, and 3.7, respectively, to this Annual Report on Form 10-K, and to the provisions of the BCA. We encourage you to read such documents and the applicable provisions of the BCA for additional information.
Authorized Capitalization
Under our Second Amended and Restated Articles of Incorporation, as amended, our authorized capital stock consists of 500,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. There are no shares of preferred stock outstanding.
Common Stock
Voting Rights
Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of shareholders. Except as required by law and by the terms of any series of preferred stock designated by the board of directors pursuant to our second amended and restated articles of incorporation, as amended, our common stock has the exclusive right to vote for the election of directors and for all other purposes. Our common stock votes together as a single class.
Dividends
Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive, ratably, all dividends, if any, declared by our board of directors out of funds legally available for dividends.
Liquidation Rights
Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of our common stock will be entitled to receive, pro rata, our remaining assets available for distribution.

Other Rights
Holders of our common stock do not have conversion, redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of our common stock are subject to the rights of the holders of any shares of our preferred stock that we may issue in the future.
Limitations on Liability and Indemnification of Officers and Directors
The BCA authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their shareholders for monetary damages for breaches of directors' fiduciary duties. Our Second Amended and Restated Articles of Incorporation include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by applicable law.
Our Second Amended and Restated Articles of Incorporation and our Amended and Restated Bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by applicable law. We are also expressly authorized, under our amended and restated bylaws, to advance certain expenses (including attorneys' fees and disbursements and court costs) to our directors and officers and carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.
The limitation of liability and indemnification provisions in our second amended and restated articles of incorporation and our amended and restated bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Anti-takeover Effects of Certain Provisions of Our Second Amended and Restated Articles of Incorporation and Amended and Restated Bylaws
Several provisions of our second amended and restated articles of incorporation and amended and restated 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 us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of us 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.
Election of Directors
Our second amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our amended and restated bylaws require parties other than our board of directors to give advance written notice of nominations for the election of directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Limited Actions by Shareholders
Our second amended and restated articles of incorporation and our amended and restated 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 second amended and restated articles of incorporation and our amended and restated bylaws provide that, subject to certain exceptions, our Chairman, President, or Secretary at the direction of the board of directors or our Secretary at the request in writing by any one or more shareholders that hold, in the aggregate, at least a majority of the outstanding registered shares of the

-2-

Corporation entitled to vote may call special meetings of our shareholders. The business transacted at the special meeting is limited to the purposes stated in the notice.
Advance Notice Requirements for Shareholder Proposals and Director Nominations
Our amended and restated 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 120 days nor more than 150 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. Our amended and restated 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.

-3-

Exhibit 10.53
RESTRICTED STOCK UNIT AGREEMENT
PURSUANT TO THE
GENCO SHIPPING & TRADING LIMITED 2015 EQUITY INCENTIVE PLAN
*  *  *  *  *
Participant:      ________________________
Grant Date:      May 15, 2019
Number of Restricted Stock Units granted:  9,860
*  *  *  *  *
WHEREAS, this Restricted Stock Unit Award Agreement (this “Award Agreement”), dated as of the Grant Date specified above, is entered into by and between Genco Shipping & Trading Limited, a Marshall Islands corporation (the “Company”), and the Participant specified above, pursuant to the Genco Shipping & Trading Limited 2015 Equity Incentive Plan (the “Plan”); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Restricted Stock Units (“RSUs”) provided herein to the Participant.
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1.         Incorporation by Reference; Plan Document Receipt.
This Award Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the grant of the RSUs hereunder), all of which terms and provisions are made a part of and incorporated in this Award Agreement as if they were each expressly set forth herein, provided that any subsequent amendment of the Plan shall not adversely affect Participant’s rights under this Award Agreement without the Participant’s written consent to such amendment.  The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content.  In the event of any conflict between the terms of this Award Agreement and the terms of the Plan, the terms of the Plan shall control.  The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board of Directors in respect of the Plan, this Award Agreement and the RSUs shall be final and conclusive.  Any capitalized term not defined in this Award Agreement shall have the same meaning as is ascribed thereto in the Plan.

1

2.         Grant of Restricted Stock Unit Award.
The Company hereby grants to the Participant, as of the Grant Date specified above, the number of RSUs specified above.  Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Award Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason.  The Participant shall not have the rights of a stockholder in respect of the shares of Common Stock underlying this Award until such shares of Common Stock are delivered to the Participant in accordance with Section 4.
3.         Vesting.
(a)        General.  Except as otherwise provided in this Section 3 or in the Plan, RSUs subject to this Award shall vest at 12:01 a.m. on the earlier of the date of the first Annual Meeting of Shareholders of the Company following the date of grant and the date that is fourteen months after the date of grant, provided that the Participant is a Director as of such date.
(b)        Termination of Service.  Upon a termination of service as a Director, other than due to death or Disability, all unvested RSUs shall immediately terminate and be forfeited.
(c)        Termination Due to Death or Disability.  Upon a termination of Participant’s service as a Director due to the Participant’s death or Disability, then the Participant’s then outstanding and unvested RSUs shall immediately vest in full as of the date of such termination.
4.   Delivery of Shares.
(a)        Within 30 days of the Participant’s termination of service as a Director, the Participant shall be issued one share of Common Stock for each vested RSU, provided that the Participant may not determine when during such 30-day period the shares of Common Stock shall be issued.
(b)        Blackout Periods.  Notwithstanding the above, if the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section (a) hereof, such distribution shall instead be made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) the later of (1) the last day of the calendar year in which the Participant terminated service as a Director and (2) the end of the 30-day period set forth in Section 4(a).
5.         Dividends and Other Distributions.
The Participant shall be entitled to receive payments equal to all dividends and other distributions paid with respect to the shares of Common Stock underlying the RSUs, and any such amounts will be paid in the same amount and form (cash or non-cash) as that paid directly to holders of shares of Common Stock, provided that such dividends or other distributions will be subject to the same vesting requirements as the underlying RSUs, and shall be paid at the same time the related shares of Common Stock are delivered pursuant to Section 4, and any such amounts with respect to unvested RSUs shall be placed into escrow until such time as the shares

2

for the related RSUs are issued and delivered or the underlying RSUs are forfeited; provided, further, that if any such amounts are paid in shares of Common Stock with respect to unvested RSUs, the shares of Common Stock shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the RSUs with respect to which they were paid.
6.         Non‑transferability.
The RSUs, and any rights or interests therein, (i) shall not be sold, exchanged, transferred, assigned or otherwise disposed of in any way at any time by the Participant (or any beneficiary of the Participant), other than by testamentary disposition by the Participant or by the laws of descent and distribution, (ii) shall not be pledged or encumbered in any way at any time by the Participant (or any beneficiary of the Participant) and (iii) shall not be subject to execution, attachment or similar legal process.  Any attempt to sell, exchange, pledge, transfer, assign, encumber or otherwise dispose of the RSUs, or the levy of any execution, attachment or similar legal process upon the RSUs, contrary to the terms of this Award Agreement and/or the Plan, shall be null and void and without legal force or effect.
7.         Entire Agreement; Amendment.
This Award Agreement and the Plan the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter.  The Committee shall have the right, in its sole discretion, to modify or amend this Award Agreement from time to time in accordance with and as provided in the Plan, but not in any manner or to any extent that would be adverse to the Participant without the Participant’s written consent at the time.  This Award Agreement may also be modified or amended by a writing signed by both the Company and the Participant.  The Company shall give written notice to the Participant of any such mutually-agreed-on modification or amendment of this Award Agreement as soon as practicable after the adoption thereof by the Company.
8.         Acknowledgment of Participant.
This award of RSUs does not entitle Participant to any benefit other than that granted under this Award Agreement.  Any benefits granted under this Award Agreement are not part of the Participant’s ordinary compensation, and shall not be considered as part of such compensation in the event of severance, redundancy or resignation.  Participant understands and accepts that the benefits granted under this Award Agreement are entirely at the discretion of the Company and that the Company retains the right to amend or terminate this Award Agreement and the Plan at any time, at its sole discretion and without notice, but not in any manner or to any extent that would be adverse to the Participant without the Participant’s written consent at the time.
9.         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

3

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 Securities Act of 1933, as amended 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.
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 Award 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 Award Agreement, or any waiver on the part of any party or any provisions or conditions of this Award 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.       Governing Law.  This Award Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to the principles of conflict of laws thereof.
12.       No Right to Continued Service.  Nothing in this Award Agreement shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment or service at any time, for any reason and with or without cause.
13.       Notices.  Any notice which may be required or permitted under this Award Agreement shall be in writing, and shall be delivered in person or via facsimile transmission, overnight courier service or certified mail, return receipt requested, postage prepaid, properly addressed as follows:
(a)        If such notice is to the Company, to the attention of the President of the Company or at such other address as the Company, by notice to the Participant, shall designate in writing from time to time.
(b)        If such notice is to the Participant, at his/her address as shown on the Company’s records, or at such other address as the Participant, by notice to the Company, shall designate in writing from time to time.

4

14.       Compliance with Laws.  This issuance of RSUs (and the shares of Common Stock underlying the RSUs) pursuant to this Award Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the 1933 Act, the Securities Exchange Act of 1934 and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto.  The Company shall not be obligated to issue these RSUs or any of the shares of Common Stock pursuant to this Award Agreement if any such issuance would violate any such requirements.
15.       Binding Agreement; Assignment.  This Award Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except as provided by Section 5 hereof) any part of this Award Agreement without the prior express written consent of the Company.  The Company may not assign any portion of this Award Agreement without the prior written consent of the Participant except as otherwise provided in the Plan.
16.       Counterparts.  This Award Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
17.       Headings.  The titles and headings of the various sections of this Award Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Award Agreement.
18.       Further Assurances.  Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Award Agreement and the Plan and the consummation of the transactions contemplated thereunder.
19.       Severability.  The invalidity or unenforceability of any provisions of this Award Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Award Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Award Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
[Remainder of Page Intentionally Left Blank]

5

IN WITNESS WHEREOF, the parties hereto have executed this Award Agreement as of the date first written above.

 	 	 	
 	GENCO SHIPPING & TRADING LIMITED	

 	By:	 	
 	 	 	
 	Name:	 	
 	 	 	
 	Title:	 	

 	PARTICIPANT	

 	 	
 	Name:	 	

6

Exhibit 10.54
AMENDMENT TO RESTRICTED STOCK UNIT AGREEMENTS
PURSUANT TO THE
GENCO SHIPPING & TRADING LIMITED 2015 EQUITY INCENTIVE PLAN
Participant:      _________________
 
Grant Date(s):	 	
Number(s) of Restricted Stock Units granted:	 	
 
This Amendment to Restricted Stock Unit Award Agreements (this  “Amendment”) is entered into by and between Genco Shipping & Trading Limited, a Marshall Islands corporation (the “Company”) and the Participant specified above as of December 4, 2019.  Capitalized terms used but not defined herein shall have the respective meanings assigned to such terms in the Award Agreements (as defined below).
WHEREAS, the Company and the Participant are parties to one or more Restricted Stock Unit Agreements identified above (the “Award Agreements”) pursuant to the Genco Shipping & Trading Limited 2015 Equity Incentive Plan (the “Plan”); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to amend the Award Agreements as set forth herein; and
WHEREAS, the Company and the Participant each desire to amend the Award Agreements as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
Section 5 of each Award Agreement is hereby amended and restated in its entirety as follows:
5.         Dividends and Other Distributions.
The Participant shall be entitled to receive payments equal to all dividends and other distributions paid with respect to the shares of Common Stock underlying the RSUs.  Any such amounts that are payable in cash shall instead constitute an amount of additional RSUs equal to the amount of such dividend or distribution divided by the closing price of a share of Common Stock on the date that such dividend or distribution is paid to holders of Common Stock.  The terms of such additional RSUs shall be the same as the underlying RSUs, including with respect to the vesting requirements as set forth in Section 3 hereof, time of payment as set forth in Section 4 hereof, and dividends as set forth in this Section 5, If any such amounts are paid in shares of Common Stock with respect to unvested RSUs, the shares of Common Stock shall be reserved by the

Company and shall be subject to the same restrictions on transferability and forfeitability as the RSUs with respect to which they were paid.
Except as expressly amended hereby, each Award Agreement shall remain in full force and effect.
[Remainder of Page Intentionally Left Blank]

2

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.

 	GENCO SHIPPING & TRADING LIMITED	

 	By:	 	
 	Name:	John C. Wobensmith	
 	Title:	Chief Executive Officer and President	

 	PARTICIPANT	

 	 	
 	Name:	 	

3

Exhibit 21.1
 
Subsidiaries of the Company
 
The following is a list of the Company’s significant subsidiaries as of February 27, 2020,

Name of Significant Subsidiary	    	Jurisdiction of
Incorporation	    	Portion of
Ownership
Interest	 	
 	 	 	 	 	 	
Genco Beauty Limited	 	Marshall Islands	 	100 	%	
Genco Knight Limited	 	Marshall Islands	 	100 	%	
Genco Vigour Limited	 	Marshall Islands	 	100 	%	
Genco Prosperity Limited	 	Marshall Islands	 	100 	%	
Genco Success Limited	 	Marshall Islands	 	100 	%	
Genco Wisdom Limited	 	Marshall Islands	 	100 	%	
Genco Progress Limited	 	Marshall Islands	 	100 	%	
Genco Explorer Limited	 	Marshall Islands	 	100 	%	
Genco Reliance Limited	 	Marshall Islands	 	100 	%	
Genco Ship Management LLC	 	Delaware	 	100 	%	
Genco Muse 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 	%	
Genco Cavalier LLC	 	Marshall Islands	 	100 	%	
Genco Raptor LLC	 	Marshall Islands	 	100 	%	
Genco Thunder LLC	 	Marshall Islands	 	100 	%	
Genco Bay Limited	 	Marshall Islands	 	100 	%	
Genco Ocean Limited	 	Marshall Islands	 	100 	%	
Genco Avra Limited	 	Marshall Islands	 	100 	%	
Genco Mare Limited	 	Marshall Islands	 	100 	%	
Genco Spirit Limited	 	Marshall Islands	 	100 	%	
Genco Aquitaine Limited	 	Marshall Islands	 	100 	%	
Genco Ardennes Limited	 	Marshall Islands	 	100 	%	
Genco Auvergne Limited	 	Marshall Islands	 	100 	%	
Genco Bourgogne Limited	 	Marshall Islands	 	100 	%	
Genco Brittany Limited	 	Marshall Islands	 	100 	%	
Genco Languedoc Limited	 	Marshall Islands	 	100 	%	

 	 	 	 	 	 	
Name of Significant Subsidiary	    	Jurisdiction of
Incorporation	    	Portion of
Ownership
Interest	 	
Genco Loire Limited	 	Marshall Islands	 	100 	%	
Genco Lorraine Limited	 	Marshall Islands	 	100 	%	
Genco Normandy Limited	 	Marshall Islands	 	100 	%	
Genco Picardy Limited	 	Marshall Islands	 	100 	%	
Genco Provence Limited	 	Marshall Islands	 	100 	%	
Genco Pyrenees Limited	 	Marshall Islands	 	100 	%	
Genco RE Investments LLC	 	Marshall Islands	 	100 	%	
Genco Rhone Limited	 	Marshall Islands	 	100 	%	
Genco Defender Limited	 	Marshall Islands	 	100 	%	
Genco Liberty Limited	 	Marshall Islands	 	100 	%	
Genco Columbia Limited	 	Marshall Islands	 	100 	%	
Genco Endeavour Limited	 	Marshall Islands	 	100 	%	
Genco Resolute Limited	 	Marshall Islands	 	100 	%	
Genco Weatherly Limited	 	Marshall Islands	 	100 	%	
Genco Holdings Limited	 	Marshall Islands	 	100 	%	
Genco Shipping Pte. Limited	 	Singapore	 	100 	%	
Genco Shipping A/S	 	Denmark	 	100 	%	
Baltic Trading Limited	 	Marshall Islands	 	100 	%	
Baltic Bear Limited	 	Marshall Islands	 	100 	%	
Baltic Breeze Limited	 	Marshall Islands	 	100 	%	
Baltic Cougar Limited	 	Marshall Islands	 	100 	%	
Baltic Cove Limited	 	Marshall Islands	 	100 	%	
Baltic Fox Limited	 	Marshall Islands	 	100 	%	
Baltic Hare Limited	 	Marshall Islands	 	100 	%	
Baltic Hornet Limited	 	Marshall Islands	 	100 	%	
Baltic Jaguar Limited	 	Marshall Islands	 	100 	%	
Baltic Leopard Limited	 	Marshall Islands	 	100 	%	
Baltic Lion Limited	 	Marshall Islands	 	100 	%	
Baltic Mantis Limited	 	Marshall Islands	 	100 	%	
Baltic Panther Limited	 	Marshall Islands	 	100 	%	
Baltic Scorpion Limited	 	Marshall Islands	 	100 	%	
Baltic Tiger Limited	 	Marshall Islands	 	100 	%	
Baltic Wasp Limited	 	Marshall Islands	 	100 	%	
Baltic Wind Limited	 	Marshall Islands	 	100 	%	
Baltic Wolf Limited	 	Marshall Islands	 	100 	%	

Exhibit 23.1
 
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
We consent to the incorporation by reference in Registration Statement Nos. 333-226016, 333-215438, and 333-206023 on Form S-3, and Registration Statement Nos. 333-218042, 333-205641 and 333-197923 on Form S-8 of our reports dated February 27, 2020, relating to the consolidated financial statements of Genco Shipping & Trading Limited and subsidiaries, and the effectiveness of Genco Shipping & Trading Limited and subsidiaries’ 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, 2019.

 	 	
/s/ Deloitte & Touche LLP	 	
New York, New York
February 27, 2020

Exhibit 31.1
 
CERTIFICATION
 
I, John C. Wobensmith, certify that:
 
1.        I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2019 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 27, 2020	Title:      Chief Executive Officer and President 	

Exhibit 31.2
 
CERTIFICATION
 
I, Apostolos Zafolias, certify that:
 
1.        I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2019 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/ Apostolos Zafolias	
 	 	Name:     Apostolos Zafolias	
Date:    February 27, 2020	Title:       Chief Financial Officer	

Exhibit 32.1
 
Chief Executive Officer Certification
 
In connection with Genco Shipping & Trading Limited’s (the “Company”) Annual Report of on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and 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 27, 2020	/s/ John C. Wobensmith	
 	 	Name:    John C. Wobensmith	
 	 	Title:      Chief Executive Officer and 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.  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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 fiscal year ended December 31, 2019, 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 27, 2020	/s/ Apostolos Zafolias	
 	 	Name:     Apostolos Zafolias	
 	 	Title:       Chief Financial Officer	
 
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.  A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.