GENCO SHIPPING & TRADING LTD, 10-K filed on 2/24/2021
Annual Report
v3.20.4
Document and Entity Information - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Feb. 24, 2021
Jun. 30, 2020
Cover page.      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2020    
Document Transition Report false    
Entity File Number 001-33393    
Entity Registrant Name GENCO SHIPPING & TRADING LIMITED    
Entity Incorporation, State or Country Code 1T    
Entity Tax Identification Number 98-0439758    
Entity Address, Address Line One 299 Park Avenue    
Entity Address, Address Line Two 12th Floor    
Entity Address, City or Town New York    
Entity Address, State or Province NY    
Entity Address, Postal Zip Code 10171    
City Area Code 646    
Local Phone Number 443-8550    
Title of 12(b) Security Common Stock, par value $.01 per share    
Trading Symbol GNK    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Accelerated Filer    
Entity Small Business true    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 109.1
Entity Common Stock, Shares Outstanding   41,801,753  
Entity Central Index Key 0001326200    
Current Fiscal Year End Date --12-31    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Amendment Flag false    
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 143,872 $ 155,889
Restricted cash 35,492 6,045
Due from charterers, net of a reserve of $669 and $1,064, respectively 12,991 13,701
Prepaid expenses and other current assets 10,856 10,049
Inventories 21,583 27,208
Vessels held for sale 22,408 10,303
Total current assets 247,202 223,195
Noncurrent assets:    
Vessels, net of accumulated depreciation of $204,201 and $288,373, respectively 919,114 1,273,861
Vessels held for exchange 38,214  
Deferred drydock, net of accumulated amortization of $8,124 and $11,862 respectively 14,689 17,304
Fixed assets, net of accumulated depreciation and amortization of $2,266 and $2,154, respectively 6,393 5,976
Operating lease right-of-use assets 6,882 8,241
Restricted cash 315 315
Total noncurrent assets 985,607 1,305,697
Total assets 1,232,809 1,528,892
Current liabilities:    
Accounts payable and accrued expenses 22,793 49,604
Current portion of long-term debt 80,642 69,747
Deferred revenue 8,421 6,627
Current operating lease liabilities 1,765 1,677
Total current liabilities: 113,621 127,655
Noncurrent liabilities:    
Long-term operating lease liabilities 8,061 9,826
Contract Liability 7,200  
Long-term debt, net of deferred financing costs of $9,653 and $13,094, respectively 358,933 412,983
Total noncurrent liabilities 374,194 422,809
Total liabilities 487,815 550,464
Commitments and contingencies (Note 14)
Equity:    
Common stock, par value $0.01; 500,000,000 shares authorized; 41,801,753 and 41,754,413 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively 418 417
Additional paid-in capital 1,713,406 1,721,268
Accumulated deficit (968,830) (743,257)
Total equity 744,994 978,428
Total liabilities and equity $ 1,232,809 $ 1,528,892
v3.20.4
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current Assets:    
Due from charterers, reserve $ 669 $ 1,064
Noncurrent assets:    
Vessels, accumulated depreciation 204,201 288,373
Deferred drydock, accumulated amortization 8,124 11,862
Fixed assets, accumulated depreciation and amortization 2,266 2,154
Deferred financing costs, noncurrent $ 9,653 $ 13,094
Genco Shipping & Trading Limited shareholders' equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 500,000,000 500,000,000
Common stock, shares issued (in shares) 41,801,753 41,754,413
Common stock, shares outstanding (in shares) 41,801,753 41,754,413
v3.20.4
Consolidated Statements of Operations - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Revenues:      
Revenues $ 355,560 $ 389,496 $ 367,522
Operating expenses:      
Voyage expenses 156,985 173,043 114,855
Vessel operating expenses 87,420 96,209 97,427
Charter hire expenses 10,307 16,179 1,534
General and administrative expenses (inclusive of nonvested stock amortization expense of $2,026, $2,057 and $2,231, respectively) 21,266 24,516 23,141
Technical management fees 6,961 7,567 8,000
Depreciation and amortization 65,168 72,824 68,976
Impairment of vessel assets 208,935 27,393 56,586
Loss (gain) on sale of vessels 1,855 168 (3,513)
Total operating expenses 558,897 417,899 367,006
Operating loss (203,337) (28,403) 516
Other (expense) income:      
Other (expense) income (851) 501 367
Interest income 1,028 4,095 3,801
Interest expense (22,413) (31,955) (33,091)
Impairment of right-of-use asset   (223)  
Loss on debt extinguishment     (4,533)
Other expense (22,236) (27,582) (33,456)
Net loss $ (225,573) $ (55,985) $ (32,940)
Net loss per share-basic $ (5.38) $ (1.34) $ (0.86)
Net loss per share-diluted $ (5.38) $ (1.34) $ (0.86)
Weighted average common shares outstanding-basic 41,907,597 41,762,893 38,382,599
Weighted average common shares outstanding-diluted 41,907,597 41,762,893 38,382,599
Voyage      
Revenues:      
Revenues $ 355,560 $ 389,496 $ 367,522
v3.20.4
Consolidated Statements of Operations (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Consolidated Statements of Operations      
Nonvested stock amortization expenses $ 2,026 $ 2,057 $ 2,231
v3.20.4
Consolidated Statements of Comprehensive Loss - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Consolidated Statements of Comprehensive Loss      
Net loss $ (225,573) $ (55,985) $ (32,940)
Other comprehensive income 0 0 0
Comprehensive loss $ (225,573) $ (55,985) $ (32,940)
v3.20.4
Consolidated Statements of Equity - USD ($)
$ in Thousands
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Total
Balance at the beginning at Dec. 31, 2017 $ 345 $ 1,628,355 $ (654,332) $ 974,368
Increase (Decrease) in Shareholders' Equity        
Net loss     (32,940) (32,940)
Issuance of 7,015,000 shares of common stock 70 109,578   109,648
Issuance of shares of vested RSUs 1 (1)    
Nonvested stock amortization   2,231   2,231
Balance at the end at Dec. 31, 2018 416 1,740,163 (687,272) 1,053,307
Increase (Decrease) in Shareholders' Equity        
Net loss     (55,985) (55,985)
Issuance of shares of vested RSUs 1 (1)    
Cash dividends declared   (20,951)   (20,951)
Nonvested stock amortization   2,057   2,057
Balance at the end at Dec. 31, 2019 417 1,721,268 (743,257) 978,428
Increase (Decrease) in Shareholders' Equity        
Net loss     (225,573) (225,573)
Issuance of 47,341 shares of vested RSUs, net of forfeitures of 1,490 shares 1 (1)    
Cash dividends declared   (9,887)   (9,887)
Nonvested stock amortization   2,026   2,026
Balance at the end at Dec. 31, 2020 $ 418 $ 1,713,406 $ (968,830) $ 744,994
v3.20.4
Consolidated Statements of Equity (Parenthetical) - $ / shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Issuance of shares of RSUs (in shares)   109,943 97,466
Issuance of shares of RSUs, net (in shares) 47,341    
Forfeited (in shares) 1,490    
Dividends declared per share $ 0.235 $ 0.50  
Common Stock      
Issuance of stock (in shares)     7,015,000
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities:      
Net loss $ (225,573) $ (55,985) $ (32,940)
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 65,168 72,824 68,976
Amortization of deferred financing costs 3,903 3,788 3,035
Payment of PIK interest     (5,341)
Noncash operating lease expense 1,359 1,246  
Amortization of nonvested stock compensation expense 2,026 2,057 2,231
Impairment of right-of-use asset   223  
Impairment of vessel assets 208,935 27,393 56,586
Loss (gain) on sale of vessels 1,855 168 (3,513)
Loss on debt extinguishment     4,533
Insurance proceeds for protection and indemnity claims 569 494 303
Insurance proceeds for loss of hire claims 78   58
Change in assets and liabilities:      
Decrease (Increase) in due from charterers 710 8,605 (10,099)
Increase in prepaid expenses and other current assets (1,938) (789) (6,626)
Decrease (increase) in inventories 5,625 2,340 (14,215)
Decrease in other noncurrent assets     514
(Decrease) increase in accounts payable and accrued expenses (17,355) 13,172 2,571
Increase in deferred revenue 1,794 223 1,190
Decrease in operating lease liabilities (1,677) (1,592)  
Increase in deferred rent     880
Deferred drydock costs incurred (8,583) (14,641) (2,236)
Net cash provided by operating activities 36,896 59,526 65,907
Cash flows from investing activities:      
Purchase of vessels and ballast water treatment systems, including deposits (4,485) (13,960) (241,872)
Purchase of scrubbers (capitalized in Vessels) (10,973) (31,750)  
Purchase of other fixed assets (4,580) (4,714) (1,462)
Net proceeds from sale of vessels 56,993 26,963 44,330
Insurance proceeds for hull and machinery claims 484 612 3,629
Net cash provided by (used in) investing activities 37,439 (22,849) (195,375)
Cash flows from financing activities:      
Payment of debt extinguishment costs     (2,962)
Proceeds from issuance of common stock     110,249
Payment of common stock issuance costs   (105) (496)
Cash dividends paid (9,847) (20,877)  
Payment of deferred financing costs (462) (611) (11,845)
Net cash (used in) provided by financing activities (56,905) (77,189) 127,283
Net increase (decrease) in cash, cash equivalents and restricted cash 17,430 (40,512) (2,185)
Cash, cash equivalents and restricted cash at beginning of period 162,249 202,761 204,946
Cash, cash equivalents and restricted cash at end of period 179,679 162,249 202,761
Secured Debt | $133 Million Credit Facility      
Cash flows from financing activities:      
Proceeds from credit facility 24,000   108,000
Repayment of secured debt (9,160) (6,320) (1,580)
Secured Debt | $495 Million Credit Facility      
Cash flows from financing activities:      
Proceeds from credit facility 11,250 21,500 460,000
Repayment of secured debt $ (72,686) $ (70,776) (15,000)
Secured Debt | $400 Million Credit Facility      
Adjustments to reconcile net loss to net cash provided by operating activities:      
Payment of PIK interest     (5,341)
Cash flows from financing activities:      
Repayment of secured debt     (399,600)
Secured Debt | $98 Million Credit Facility      
Cash flows from financing activities:      
Repayment of secured debt     (93,939)
Secured Debt | 2014 Term Loan Facilities      
Cash flows from financing activities:      
Repayment of secured debt     $ (25,544)
v3.20.4
GENERAL INFORMATION
12 Months Ended
Dec. 31, 2020
GENERAL INFORMATION  
GENERAL INFORMATION

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, 2020, 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.”

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus strain, or COVID-19, to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, working from home, supply chain logistical changes, and closure of non-essential businesses. This has led to a significant slowdown in overall economic activity levels globally and a decline in demand for certain of the raw materials that our vessels transport.

At present, it is not possible to ascertain any future impact of COVID-19 on the Company’s operational and financial performance, which may take some time to materialize and may not be fully reflected in the results for 2020.  However, an increase in the severity or duration or a resurgence of the COVID-19 pandemic and the timing of wide-scale vaccine distribution could have a material adverse effect on the Company’s business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and the Company’s ability to pay dividends. 

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.

Other General Information

As of December 31, 2020, 2019 and 2018, the Company’s fleet consisted of 47, 55 and 59 vessels, respectively.

Below is the list of Company’s wholly owned ship-owning subsidiaries as of December 31, 2020:

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 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 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 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 Lorraine Limited

 

Genco Lorraine

 

53,417

 

7/29/10

 

2009

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

Genco Magic Limited

Genco Magic

63,446

12/23/20

2014

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

2009

Baltic Panther Limited

Baltic Panther

53,350

4/29/10

2009

Baltic Cougar Limited

 

Baltic Cougar

 

53,432

 

5/28/10

2009

Baltic Bear Limited

 

Baltic Bear

 

177,717

 

5/14/10

2010

Baltic Wolf Limited

 

Baltic Wolf

 

177,752

 

10/14/10

2010

Baltic Cove Limited

 

Baltic Cove

 

34,403

 

8/23/10

2010

Baltic Fox Limited

 

Baltic Fox

 

31,883

 

9/6/13

2010

Baltic Hare Limited

 

Baltic Hare

 

31,887

 

9/5/13

2009

Baltic Hornet Limited

 

Baltic Hornet

 

63,574

 

10/29/14

2014

Baltic Wasp Limited

 

Baltic Wasp

 

63,389

 

1/2/15

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.
v3.20.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 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 Revenues for further discussion.

 

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, 2020, 2019 and 2018 is not material.

Revenue for spot market voyage charters is 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.

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. Refer to Note 12 — Voyage Revenues for further discussion of the accounting for fuel expenses for spot market voyage charters. 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 ($697), ($829) and $3,000 during the years ended December 31, 2020, 2019 and 2018, 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, 2020 and 2019, the Company had a reserve of $669 and $1,064, respectively, against the due from charterers balance and an additional accrual of $358 and $577, 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 that are stated at the lower of cost and net realizable value. 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.

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 $10,307, $16,179 and $1,534 of charter hire expenses during the years ended December 31, 2020, 2019 and 2018, 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, 2020, 2019 and 2018 was $58,008, $66,351 and $64,012, 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

The Company’s Board of Directors has approved a strategy of divesting specifically identified older, less fuel-efficient vessels as part of a fleet renewal program to streamline and modernize the Company’s fleet.

On November 3, 2020, November 27, 2020 and November 30, 2020, the Company entered into agreements to sell the Baltic Panther, the Baltic Hare and the Baltic Cougar, respectively. The relevant vessel assets have been classified as held for sale in the Consolidated Balance Sheet as of December 31, 2020. The Baltic Panther, the Baltic Hare and the Baltic Cougar were sold on January 4, 2021, January 15, 2021 and February 24, 2021, respectively. Refer to Note 4 — Vessel Acquisitions and Dispositions for details of the agreements.

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 was sold on March 5, 2020. Refer to Note 4 — Vessel Acquisitions and Dispositions for details of the agreement.

Vessels held for exchange

The vessel assets for the remaining five vessels to be exchanged as part of an agreement entered into by the Company on December 17, 2020 have been classified as vessels held for exchange in the Consolidated Balance Sheet as of December 31, 2020 in the amount of $38,214, after recognition of impairment. This includes the vessel assets for the Baltic Cove, the Baltic Fox, the Genco Avra, the Genco Mare and the Genco Spirit. These vessels were exchanged during the first quarter of 2021. Refer to Note 4 — Vessel Acquisitions and Dispositions for details of the agreement and Note 19 — Subsequent Events.

Contract liability

The Company has recorded a contract liability of $7,200 as of December 31, 2020 which is related to the timing of the exchange of vessels pursuant to the agreement entered into by the Company on December 17, 2020 to exchange six of the Company’s Handysize vessels for three Ultramax vessels owned by the counterparty. As of December 31, 2020, the Company completed the exchange of one of its Handysize vessels, the Genco Ocean, for one Ultramax vessel, the Genco Magic. The $7,200 contract liability represents the excess of fair value of the vessels received as of December 31, 2020 over the fair value of the vessel contributed to the counterparty. The exchange of the remainder of the vessels under the agreement were completed during the first quarter of 2021. Refer to Note 4 — Vessel Acquisitions and Dispositions for details of the agreement and Note 19 — Subsequent Events.

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, 2020, 2019 and 2018 was $1,562, $989 and $335, respectively.

Deferred drydocking costs

The Company’s vessels are required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that cannot be performed while the vessels are operating. The Company 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, 2020, 2019 and 2018 was $5,598, $5,484 and $4,629, 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, 2020, 2019 and 2018, the Company recorded $208,935, $27,393 and $56,586, 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.

When the Company performs its analysis of the anticipated undiscounted future net cash flows, the Company utilizes various assumptions based on historical trends. Specifically, the Company utilizes 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 during which the Company’s vessels are not fixed on time charters or spot market voyage charters, the Company utilizes an estimated daily time charter equivalent for the vessels’ unfixed days based on the most recent ten year historical one-year time charter average.  In addition, the Company considers the current market rate environment and, if necessary, will adjust its estimates of future undiscounted cash flows to reflect the current rate environment. The projected undiscounted future net 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 required 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 the Company’s depreciation policy.

On January 22, 2021, the Company entered into an agreement to sell the Genco Lorraine, a 2009-built Supramax vessel, to a third party for $7,950 less a 2.5% commission payable to a third party. Additionally, on January 25, 2021, the Company entered into an agreement to sell the Baltic Leopard, a 2009-built Supramax vessel, to a third party for $8,000 less a 2.0% commission payable to a third party. As the undiscounted cash flows, including the net sales price, did not exceed the net book value of the Genco Lorraine and Baltic Leopard as of December 31, 2020, the vessels values for the Genco Lorraine and Baltic Leopard were adjusted to their net sales prices of $7,751 and $7,840 as of December 31, 2020, respectively. This resulted in an impairment loss of $404 and $399 for the Genco Lorraine and Baltic Leopard, respectively, during the year ended December 31, 2020.

As of December 31, 2020, the Company determined that the expected estimated future undiscounted cash flows for nine of its Supramax vessels, the Genco Aquitaine, the Genco Ardennes, the Genco Auvergne, the Genco Bourgogne, the Genco Brittany, the Genco Hunter, the Genco Languedoc, the Genco Pyrenees and the Genco Rhone, did not exceed the net book value of these vessels. The Company adjusted the carrying value of these vessels to their respective fair market values as of December 31, 2020 which resulted in an impairment loss of $67,200 during the year ended December 31, 2020.

On December 17, 2020, the Company entered into an agreement to acquire three Ultramax vessels in exchange for six of our Handysize vessels. The six Handysize vessels include the Genco Ocean, the Baltic Cove and the Baltic Fox, all 2010-built Handysize vessels, and the Genco Avra, the Genco Mare and the Genco Spirit, all 2011-built Handysize vessels. The values for these six Handysize vessels were adjusted to their total fair market value of $46,000 as of the date of the agreement less a 1.0% commission payable to a third party which resulted in an impairment loss of $4,647 during the year ended December 31, 2020.

On November 30, 2020, the Company entered into an agreement to sell the Genco Cougar, a 2009-built Supramax vessel, to a third party for $7,600 less a 3.0% commission payable to a third party. Therefore, the vessel value

for the Baltic Cougar was adjusted to its net sales price of $7,372 as of December 31, 2020. This resulted in an impairment loss of $790 during the year ended December 31, 2020.

On November 27, 2020, the Company entered into an agreement to sell the Baltic Hare, a 2009-built Handysize vessel, to a third party for $7,750 less a 2.0% commission payable to a third party. Therefore, the vessel value for the Baltic Hare was adjusted to its net sales price of $7,595 as of December 31, 2020. This resulted in an impairment loss of $769 during the year ended December 31, 2020.

On November 3, 2020, the Company entered into an agreement to sell the Baltic Panther, a 2009-built Supramax vessel, to a third party for $7,510 less a 3.0% 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, 2020, the vessel value for the Baltic Panther was adjusted to its net sales price of $7,285 as of September 30, 2020. This resulted in an impairment loss of $3,713 during the year ended December 31, 2020.

On October 16, 2020, the Company entered into an agreement to sell the Genco Loire, a 2009-built Supramax vessel, to a third party for $7,650 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, 2020, the vessel value for the Genco Loire was adjusted to its net sales price of $7,497 as of September 30, 2020. This resulted in an impairment loss of $3,408 during the year ended December 31, 2020.

On September 30, 2020, the Company determined that the expected estimated future undiscounted cash flows for three of its Supramax vessels, the Genco Lorraine, the Baltic Cougar and the Baltic Leopard, did not exceed the net book value of these vessels as of September 30, 2020. The Company adjusted the carrying value of these vessels to their respective fair market values as of September 30, 2020. This resulted in an impairment loss of $7,963 during the year ended December 31, 2020.

On September 25, 2020, the Company entered into an agreement to sell the Baltic Jaguar, a 2009-built Supramax vessel, to a third party for $7,300 less a 3.0% commission payable to a third party. Therefore, the vessel value for the Baltic Jaguar was adjusted to its net sales price of $7,081 as of September 30, 2020. This resulted in an impairment loss of $4,140 during the year ended December 31, 2020.

On September 17, 2020, the Company entered in an agreement to sell the Genco Normandy, a 2007-built Supramax vessel, to a third party for $5,850 less a 2.0% commission payable to a third party. Therefore, the vessel value for the Genco Normandy was adjusted to its net sales price of $5,733 as of September 30, 2020. This resulted in an impairment loss of $2,679 during the year ended December 31, 2020.

At March 31, 2020, the Company determined that the expected estimated future undiscounted cash flows for four of its Supramax vessels, the Genco Picardy, the Genco Predator, the Genco Provence and the Genco Warrior, did not exceed the net book value of these vessels as of March 31, 2020. The Company adjusted the carrying value of these vessels to their respective fair market values as of March 31, 2020. This resulted in an impairment loss of $27,055 during the year ended December 31, 2020.

On February 24, 2020, the Board of Directors determined to dispose of the Company’s following 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 revised estimated future undiscounted cash flows for each of these older vessels did not exceed the net book value for each vessel given the estimated probabilities of whether the vessels will be sold, the Company adjusted the values of these older vessels to their respective fair market values during the three months ended March 31, 2020. Subsequent to February 24, 2020, the Company has entered into agreements to sell three of these vessels during the three months ended March 31, 2020, namely the Baltic Wind, the Baltic Breeze and the Genco Bay, which were adjusted to their net sales price. This resulted in an impairment loss of $85,768 during the year ended December 31, 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.   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.

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.

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. 

 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. 

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 impairment loss of $4,401 during the year ended December 31, 2019.  

 

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.  

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.

Refer to Note 4 — Vessel Acquisitions and Dispositions for further detail regarding the sale of the aforementioned vessels. 

Loss (gain) on sale of vessels

During the years ended December 31, 2020, 2019 and 2018, the Company recorded net (losses) gains of ($1,855), ($168) and $3,513, respectively, related to the sale of vessels. The ($1,855) net loss recognized during the year ended December 31, 2020 related primarily to the sale of the Genco Charger, the Genco Thunder, the Baltic Wind, the Baltic Breeze, the Genco Bay, the Baltic Jaguar, the Genco Loire, the Genco Normandy and the Genco Ocean. The ($168) net loss recognized during the year ended December 31, 2019 related primarily to the sale of the Genco Challenger, the Genco Champion and the 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. 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 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 Statements 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, 

    

2020

    

2019

 

Cash and cash equivalents

 

$

143,872

 

$

155,889

Restricted cash - current

35,492

6,045

Restricted cash - noncurrent

 

315

 

315

Cash, cash equivalents and restricted cash

 

$

179,679

 

$

162,249

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.

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, 2020, 2019 and 2018. 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 years ended December 31, 2020, 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 years ended December 31, 2020, 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 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, 2020, 2019 and 2018, 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, 2019 and 2020. During the years ended December 31, 2020, 2019 and 2018, Genco Shipping A/S recorded $407, $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 166, 170 and 182 customers during the years ended December 31, 2020, 2019 and 2018.

For the years ended December 31, 2020, 2019 and 2018, there were no customers that individually accounted for more than 10% of voyage revenues.

As of December 31, 2020 and 2019, the Company maintains all of its cash and cash equivalents with five and four financial institutions, respectively. None of the Company’s cash and cash equivalents balance is covered by insurance in the event of default by these financial institutions.

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, 2020 and 2019 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 March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).” ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This ASU is effective for adoption at any time between March 12, 2020 and December 31, 2022. The Company is currently evaluating the impact of this adoption on its consolidated financial statements and related disclosures. 

In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework: Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”),” which changes 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 June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses" ("ASU 2016-13"). ASU 2016-13 amends the current financial instrument impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 was effective on January 1, 2020, with early adoption permitted.  The Company adopted ASU 2016-13 during the first quarter of 2020 and it did not have a material impact on the Company’s consolidated financial statements.

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 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 revenues for additional information regarding the adoption of ASC 842 from a lessor perspective.

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 accumulated 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 Revenues for further discussion of the financial impact on the Company’s consolidated financial statements.

v3.20.4
CASH FLOW INFORMATION
12 Months Ended
Dec. 31, 2020
CASH FLOW INFORMATION  
CASH FLOW INFORMATION

3 - CASH FLOW INFORMATION

For the year ended December 31, 2020, 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 $857 for the Purchase of vessels and ballast water treatment systems, including deposits, $5 for the Purchase of scrubbers, $142 for the Purchase of other fixed assets and $99 for the Net proceeds from sale of vessels. For the year ended December 31, 2020, the Company had non-cash financing activities not included in the Consolidated Statement of Cash Flows for items included in Accounts payable and accrued expense consisting of $114 for Cash dividends paid.

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.

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.

During the year ended December 31, 2020, the Company made a reclassification of $22,408 from Vessels, net of accumulated depreciation to Vessels held for sale as the Company entered into agreements to sell the Baltic Panther, the Baltic Hare and the Baltic Cougar prior to December 31, 2020. Additionally, during the year ended December 31, 2020, the Company made a reclassification of $38,214 from Vessels, net of accumulated depreciation to Vessels held for exchange as the Company entered into an agreement to exchange the Baltic Cove, the Baltic Fox, the Genco Avra, the Genco Mare and the Genco Spirit prior to December 31, 2020. Refer to Note 4 — Vessel Acquisitions and Dispositions.

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 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, 2020, 2019 and 2018, cash paid for interest, excluding the PIK interest paid as a result of the refinancing of the $400 Million Credit Facility, was $18,420, $28,376 and $30,167, respectively. Refer to Note 7 — Debt.

During the years ended December 31, 2020, 2019 and 2018, there was no cash paid for income taxes.

On July 15, 2020, the Company issued 42,642 restricted stock units to certain members of the Board of Directors. The aggregate fair value of these restricted stock units was $255.

On February 25, 2020, the Company issued 173,749 restricted stock units and options to purchase 344,568 shares of the Company’s stock at an exercise price of $7.06 to certain individuals. The fair value of these restricted stock units and stock options were $1,227 and $693, respectively.

On May 15, 2019, the Company issued 29,580 restricted stock units to certain members of the Board of Directors.  These restricted stock units vested on July 15, 2020. 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.

Refer to Note 16 — Stock-Based Compensation for further information regarding the aforementioned grants.

v3.20.4
VESSEL ACQUISITIONS AND DISPOSITIONS
12 Months Ended
Dec. 31, 2020
VESSEL ACQUISITIONS AND DISPOSITIONS  
VESSEL ACQUISITIONS AND DISPOSITIONS

4 - VESSEL ACQUISITIONS AND DISPOSITIONS

Vessel Exchange

On December 17, 2020, the Company entered into an agreement to acquire three Ultramax vessels in exchange for six Handysize vessels for a fair value of $46,000 less a 1.0% commission payable to a third party. The Genco Magic, a 2014-built Ultramax vessel, and the Genco Vigilant and the Genco Freedom, both 2015-built Ultramax vessels, were delivered to the Company on December 23, 2020, January 28, 2021 and February 20, 2021, respectively. The Genco Ocean, the Baltic Cove and the Baltic Fox, all 2010-built Handysize vessels, were delivered to the buyers on December 29, 2020, January 30, 2021 and February 2, 2021, respectively. The Genco Spirit, the Genco Avra and the Genco Mare, all 2011-built Handysize vessels, were delivered to the buyers on February 15, 2021, February 21, 2021 and February 24, 2021, respectively. As of December 31, 2020, the vessel assets for the Baltic Cove, the Baltic Fox, the Genco Avra, the Genco Mare and the Genco Spirit have been classified as held for exchange in the Consolidated Balance Sheet.

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 $133 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 $133 Million Credit Facility to finance the purchase.

Vessel Dispositions

During November 2020, the Company entered into agreements to sell the Baltic Cougar, the Baltic Hare and the Baltic Panther. These vessels have been classified as held for sale in the Consolidated Balance Sheet as of December 31, 2020. The sale of the Baltic Hare, Baltic Panther and Baltic Cougar were completed on January 15, 2021, January 4, 2021 and February 24, 2021, respectively.

During the fourth quarter of 2020, the Company completed the sale of the Genco Bay, the Baltic Jaguar, the Genco Loire and the Genco Normandy on October 1, 2020, October 16, 2020, November 18, 2020 and December 8, 2020, respectively. During the third quarter of 2020, the Company completed the sale of the Baltic Wind and Baltic Breeze on July 7, 2020 and July 31, 2020, respectively. During the first quarter of 2020, the Company completed the sale of the Genco Charger and Genco Thunder on February 24, 2020 and March 5, 2020, respectively.

On September 25, 2019, the Company entered into an agreement to sell the Genco Thunder. The vessel assets have been classified as held for sale in the Consolidated Balance Sheets as of December 31, 2019.

 

As of December 31, 2020, the Genco Normandy, Genco Loire, Baltic Jaguar, Genco Bay, Baltic Breeze, Baltic Wind, Genco Thunder and Genco Charger served as collateral under the $495 Million Credit Facility; therefore $35,492 of the net proceeds received from the sale of these vessels will remain classified as restricted cash for 360 days following the respective sale dates, which has been reflected as restricted cash in the Consolidated Balance Sheet as of December 31, 2020. Refer to Note 7 — Debt for amendment to the $495 Million Credit Facility.

During the fourth quarter of 2019, the Company completed the sale of the Genco Challenger, the Genco Champion and Genco Raptor on October 10, 2019, October 21, 2019 and December 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. Additionally, the Genco Raptor served as collateral under the $495 Million Credit Facility. As of December 31, 2019, a total amount of $6,045 was reflected as restricted cash in the Consolidated Balance Sheet for the Genco Raptor. The Company made a $6,045 loan prepayment for the Genco Raptor on December 7, 2020 pursuant to the terms of the $495 Million Credit Facility. These amounts can 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 is not added as collateral within such 360 day period, the Company will be required to use the proceeds as a loan prepayment.  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 completed on January 28, 2019. 

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 was required to be used as a loan prepayment under the $495 Million Credit Facility which was made on April 15, 2019. Refer to Note 7 — Debt for further information. 

 

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 did 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. 

Refer to the “Impairment of vessel assets” and the “Loss (gain) on sale of vessels” sections in Note 2 — Summary of Significant Accounting Policies for discussion of impairment expense and the loss (gain) on sale of vessels recorded during the years ended December 31, 2020, 2019 and 2018 for the aforementioned vessels.

v3.20.4
NET LOSS PER SHARE
12 Months Ended
Dec. 31, 2020
NET LOSS PER SHARE  
NET LOSS PER SHARE

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 298,834, 162,096 and 149,170 shares of

restricted stock and restricted stock units excluded from the computation of diluted net loss per share during the years ended December 31, 2020, 2019 and 2018, respectively, because they were anti-dilutive. There were 837,338, 496,148 and 255,608 stock options excluded from the computation of diluted net loss per share during the years ended December 31, 2020, 2019 and 2018, 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. All MIP Warrants during the years ended December 31, 2020, 2019 and 2018 were excluded from the computation of diluted net loss per share because they were anti-dilutive. The MIP Warrants expired on August 7, 2020. There were 3,936,761 equity warrants excluded from the computation of diluted net loss per share during the years ended December 31, 2020, 2019 and 2018 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,

 

2020

    

2019

  

2018

 

Common shares outstanding, basic:

Weighted-average common shares outstanding, basic

41,907,597

 

41,762,893

38,382,599

Common shares outstanding, diluted:

Weighted-average common shares outstanding, basic

41,907,597

 

41,762,893

38,382,599

Dilutive effect of warrants

 

Dilutive effect of stock options

Dilutive effect of restricted stock awards

 

Weighted-average common shares outstanding, diluted

41,907,597

 

41,762,893

38,382,599

v3.20.4
RELATED PARTY TRANSACTIONS
12 Months Ended
Dec. 31, 2020
RELATED PARTY TRANSACTIONS  
RELATED PARTY TRANSACTIONS

6 - RELATED PARTY TRANSACTIONS

During the years ended December 31, 2020, 2019 and 2018, the Company did not identify any related party transactions.

v3.20.4
DEBT
12 Months Ended
Dec. 31, 2020
DEBT  
DEBT

7 - DEBT

Long-term debt consists of the following:

December 31, 

December 31, 

    

2020

    

2019

 

Principal amount

 

$

449,228

 

$

495,824

Less: Unamortized debt financing costs

 

(9,653)

 

(13,094)

Less: Current portion

 

(80,642)

 

(69,747)

Long-term debt, net

 

$

358,933

 

$

412,983

December 31, 2020

December 31, 2019

Unamortized

Unamortized

Debt Issuance

Debt Issuance

    

Principal

    

Cost

    

Principal

    

Cost

 

$495 Million Credit Facility

$

334,288

$

8,222

$

395,724

$

11,642

$133 Million Credit Facility

114,940

1,431

100,100

1,452

Total debt

$

449,228

 

$

9,653

$

495,824

 

$

13,094

As of December 31, 2020 and 2019, $9,653 and $13,094 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, 2020, 2019 and 2018 was $3,903, $3,788 and $3,035, 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 $133 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.

 

$133 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

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.

On June 11, 2020, the Company entered into an amendment and restatement agreement to the $108 Million Credit Facility which provided for a revolving credit facility of up to $25,000 (the “Revolver”) for general corporate and working capital purposes (as so amended, the $133 Million Credit Facility”). On June 15, 2020, the Company drew down $24,000 under the Revolver.

The $133 Million Credit Facility provides for the following key terms in relation to the $108,000 tranche:

The final maturity date is August 14, 2023.

Borrowings 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 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.

The $133 Million Credit Facility provides for the following key terms in relation to the $25,000 Revolver tranche:

The final maturity date of the Revolver is August 14, 2023.

Borrowings under the Revolver may be incurred pursuant to multiple drawings on or prior to July 1, 2023 in minimum amounts of $1,000

Borrowings under the Revolver will bear interest at LIBOR plus 3.00%

The Revolver is subject to consecutive quarterly commitment reductions commencing on the last day of the fiscal quarter ending September 30, 2020 in an amount equal to approximately $1.9 million each quarter.

Borrowings under the Revolver are subject to a limit of 60% for the ratio of outstanding total term and revolver loans to the aggregate appraised value of collateral vessels under the $133 Million Credit Facility.

The $133 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 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 $133 Million Credit Facility.

As of December 31, 2020, there was no availability under the $133 Million Credit Facility. Total debt repayments of $9,160, $6,320 and $1,580 were made during the years ended December 31, 2020, 2019 and 2018, respectively, under the $133 Million Credit Facility. As of December 31, 2020 and 2019, the total outstanding net debt balance was $113,509 and $98,648, respectively.

As of December 31, 2020, the Company was in compliance with all of the financial covenants under the $133 Million Credit Facility.

The following table sets forth the scheduled repayment of the outstanding principal debt of $114,940 as of December 31, 2020 under the $133 Million Credit Facility:

Year Ending December 31, 

    

Total

 

2021

$

14,000

2022

14,000

2023

 

86,940

Total debt

$

114,940

$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) 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, September 23, 2019 and March 12, 2020, the Company made total drawdowns of $9,300, $12,200 and $11,250, respectively, under the $35 Million tranche of the $495 Million Credit Facility.

On December 7, 2020, the Company utilized $6,045 of the proceeds from the sale of the Genco Raptor which was classified as restricted cash as of December 31, 2019 as a loan prepayment under 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 period stipulated in the $495 Million Credit Facility which was revised as noted below, the Company was required to utilize the proceeds as a loan prepayment. 

On December 17, 2020, the Company entered into an amendment to the $495 Million Credit Facility that allowed the Company to enter into a vessel transaction in which the Company agreed to acquire three Ultramax vessels in exchange for six of the Company’s Handysize vessels. Refer to Note 4 — Vessel Acquisitions and Dispositions.

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 $182,440 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.  The Company drew down $32,750 and, as a result of the loan prepayments for the vessel sales as noted above, scheduled quarterly amortization repayments were revised to $2,339 which commenced on March 31, 2020, with a final payment of $1,904 due on the maturity date. 

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.

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 and June 5, 2020, the Company entered into amendments with its lenders to extend this period to 180 days and 360 days, respectively. 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, 2020, there was no availability under the $495 Million Credit Facility. Total debt repayments of $72,686, $70,776 and $15,000 were made during the years ended December 31, 2020, 2019 and 2018, respectively, under the $495 Million Credit Facility. As of December 31, 2020 and December 31, 2019, the total outstanding net debt balance was $326,066 and $384,082, respectively.

As of December 31, 2020, 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 $334,288 as of December 31, 2020 under the $495 Million Credit Facility:

Year Ending December 31, 

    

Total

2021

$

66,642

2022

66,642

2023

201,004

Total debt

$

334,288

Prior Credit Facilities

On June 5, 2018, the $495 Million Credit Facility was used to refinance the Company’s prior credit facilities, the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities. Total debt repayments of $404,941 (which includes $5,341 of PIK interest), $93,939 and $25,544 were made during the year ended December 31, 2018 under the $400 Million Credit Facility, the $98 Million Credit Facility and the 2014 Term Loan Facilities, respectively. As of December 31, 2020 and 2019, there was no outstanding debt under these prior credit 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,

    

2020

2019

2018

Effective Interest Rate

3.71

%  

5.31

%  

5.71

%  

Range of Interest Rates (excluding unused commitment fees)

2.65 % to 3.50

%  

4.05 % to 5.76

%  

3.83 % to 8.43

%  

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, 2020 and 2019 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, 2020 and 2019, 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, 2020 and 2019.

v3.20.4
FAIR VALUE OF FINANCIAL INSTRUMENTS
12 Months Ended
Dec. 31, 2020
FAIR VALUE OF FINANCIAL INSTRUMENTS  
FAIR VALUE OF FINANCIAL INSTRUMENTS

8 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values and carrying values of the Company’s financial instruments as of December 31, 2020 and 2019 which are required to be disclosed at fair value, but not recorded at fair value, are noted below.

December 31, 2020

December 31, 2019

    

Carrying

    

    

Carrying

    

 

    

Value

    

Fair Value

    

Value

    

Fair Value

 

Cash and cash equivalents

$

143,872

$

143,872

$

155,889

$

155,889

Restricted cash

 

35,807

 

35,807

 

6,360

 

6,360

Principal amount of floating rate debt

 

449,228

 

449,228

 

495,824

 

495,824

The carrying value of the borrowings under the $495 Million Credit Facility and the $133 Million Credit Facility as of December 31, 2020 and 2019 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 carrying amounts of the Company’s other financial instruments as of December 31, 2020 and 2019 (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.

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 years ended December 31, 2020, 2019 and 2018, the vessels assets for 30, five and ten of the Company’s vessels, respectively, were written down as part of the impairment recorded during the years ended December 31, 2020, 2019 and 2018, respectively.   The vessels held for sale and vessels held for exchange as of December 31, 2020 and 2019 were written down as part of the impairment recorded during the years ended December

31, 2020 and 2019, respectively. Refer to “Impairment of long-lived assets,” “Vessels held for sale” and “Vessels held for exchange” sections in Note 2 — Summary of Significant Accounting Policies.  

Nonrecurring fair value measurements also include impairment tests conducted by the Company during the years ended December 31, 2020 and 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, 2020, there was no impairment of the operating lease right-of-use assets. 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 as of December 31, 2020 and 2019.

v3.20.4
PREPAID EXPENSES AND OTHER CURRENT ASSETS
12 Months Ended
Dec. 31, 2020
PREPAID EXPENSES AND OTHER CURRENT ASSETS  
PREPAID EXPENSES AND OTHER CURRENT ASSETS

9 - PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

    

December 31, 

    

December 31, 

    

2020

    

2019

 

Vessel stores

$

501

$

638

Capitalized contract costs

1,669

1,952

Prepaid items

 

2,998

 

2,870

Insurance receivable

 

1,917

 

2,039

Advance to agents

1,466

1,162

Other

 

2,305

 

1,388

Total prepaid expenses and other current assets

$

10,856

$

10,049

v3.20.4
FIXED ASSETS
12 Months Ended
Dec. 31, 2020
FIXED ASSETS  
FIXED ASSETS

10 - FIXED ASSETS

Fixed assets consist of the following:

    

December 31, 

    

December 31, 

    

2020

    

2019

 

Fixed assets, at cost:

Vessel equipment

$

6,188

$

7,288

Furniture and fixtures

 

443

 

467

Leasehold improvements

1,369

100

Computer equipment

 

659

 

275

Total costs

 

8,659

 

8,130

Less: accumulated depreciation and amortization

 

(2,266)

 

(2,154)

Total fixed assets, net

$

6,393

$

5,976

v3.20.4
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
12 Months Ended
Dec. 31, 2020
ACCOUNTS PAYABLE AND ACCRUED EXPENSES.  
ACCOUNTS PAYABLE AND ACCRUED EXPENSES

11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

    

December 31, 

    

December 31, 

    

2020

    

2019

 

Accounts payable

$

11,864

$

26,040

Accrued general and administrative expenses

 

3,258

 

4,105

Accrued vessel operating expenses

 

7,671

 

19,459

Total accounts payable and accrued expenses

$

22,793

$

49,604

v3.20.4
VOYAGE REVENUE
12 Months Ended
Dec. 31, 2020
VOYAGE REVENUE  
VOYAGE REVENUE

12 – VOYAGE REVENUES

Total voyage revenues includes revenue earned on fixed rate time charters, spot market voyage charters and spot market-related time charters, as well as the sale of bunkers consumed during short-term time charters. For the years ended December 31, 2020, 2019 and 2018, the Company earned $355,560, $389,496 and $367,522 of voyage revenue, respectively.

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. 

 

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 accumulated 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 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.

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 Years Ended

December 31, 

    

2020

2019

2018