Safe Bulkers, Inc. was formed on December 11, 2007 under the laws of the Republic of the Marshall Islands. Safe Bulkers’ common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “SB”. The Company’s series C preferred stock and series D preferred stock are listed on the NYSE, and trade under the symbols “SB.PR.C” and “SB.PR.D”, respectively. We are a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Our vessels transport major bulks, which include iron ore, coal and grain and minor bulks, which include bauxite, fertilizers and steel products. We or our Managers have offices in Monaco, Greece, Cyprus and Switzerland. Our fleet consists of dry bulk vessels of four sizes, namely Capesize vessels with carrying capacity of about 180,000 dwt; Post-Panamax vessels with carrying capacities of between 85,000 dwt and 100,000 dwt; Kamsarmax vessels with carrying capacities of between 80,000 dwt and 84,000 dwt; and Panamax vessels with carrying capacities of between 75,000 and 78,000 dwt. Owning vessels serving both major and minor bulk commodities, gives us diversified exposure across dry bulk trade flows. As of February 20, 2026, we have a fleet of 45 vessels, one of which is held for sale, with an average age of 10.5 years and aggregate capacity of 4.6 million deadweight tons (“dwt”) expressed in metric tons, each of which is equivalent to 1,000 kilograms, referring to the maximum weight of cargo and supplies that a vessel can carry. Eleven vessels in our fleet are eco-ships that were built after 2014, while 12 younger vessels, which were built in 2022 or later, meet the Phase 3 requirements of Energy Efficiency Design Index ("EEDI") related to the reduction of greenhouse gas ("GHG") emissions (''GHG -EEDI Phase 3'') as adopted by the International Maritime Organization ("IMO") and also comply with the latest nitrogen oxides ("NOx") Tier III emissions
regulation (''NOx-Tier III'') of International Convention for the Prevention of Pollution from Ships ("MARPOL"). In addition, we have entered into agreements for the acquisition of eight IMO GHG Phase 3 - NOx Tier III Kamsarmax class dry-bulk newbuilds, two of which are methanol dual-fueled. The methanol dual-fueled vessels are capable of operating with methanol and heavy fuel oil or marine gas oil. When powered by green methanol they can produce close to zero GHG emissions based on the life cycle assessment (''LCA'') methodology well-to-propeller (''WTP''). Four newbuilds on the Company's orderbook are scheduled to be delivered in 2026, two in 2027, one in 2028 and one in 2029.
(A) Reserved
(B) Capitalization and Indebtedness
Not applicable.
(C) Reasons for the Offer and Use of Proceeds
Not applicable.
(D) Risk Factors
SOME OF THE FOLLOWING RISKS RELATE PRINCIPALLY TO THE INDUSTRY IN WHICH WE OPERATE AND OUR BUSINESS IN GENERAL. OTHER RISKS RELATE PRINCIPALLY TO THE SECURITIES MARKET AND OWNERSHIP OF OUR COMMON STOCK, $0.001 PAR VALUE PER SHARE (“COMMON STOCK”), SERIES C CUMULATIVE REDEEMABLE PERPETUAL PREFERRED SHARES, PAR VALUE $0.01 PER SHARE, LIQUIDATION PREFERENCE $25.00 PER SHARE (“SERIES C PREFERRED SHARES”) AND SERIES D CUMULATIVE REDEEMABLE PERPETUAL PREFERRED SHARES, PAR VALUE $0.01 PER SHARE, LIQUIDATION PREFERENCE $25.00 PER SHARE (“SERIES D PREFERRED SHARES,” AND TOGETHER WITH THE SERIES C PREFERRED SHARES, THE “PREFERRED SHARES”), INCLUDING THE TAX CONSEQUENCES OF OWNERSHIP OF OUR COMMON STOCK AND PREFERRED SHARES. THE OCCURRENCE OF ANY OF THE RISKS OR EVENTS DESCRIBED IN THIS SECTION COULD SIGNIFICANTLY AND NEGATIVELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS OR THE TRADING PRICE OF OUR COMMON STOCK OR PREFERRED SHARES.
Risk Factor Summary
Investing in our securities involves a high degree of risk. Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, as well as other risks that we face, can be found below under the headings “Risks Inherent in Our Industry and Our Business,” and “Risks Relating to Our Common Stock and Preferred Shares,” and should be carefully considered, together with other information in this annual report before making an investment decision regarding our Common Stock and Preferred Shares.
Risks Inherent in Our Industry and Our Business
•Cyclicality and volatility may lead to reductions in the charter rates we are able to obtain, in vessel values and in our earnings, results of operations and available cash flow.
•A negative change in global economic and macroeconomic factors or regulatory conditions could reduce charter rates.
•An oversupply of drybulk vessel capacity may lead to reductions in charter rates and results of operations.
•The market value of drybulk vessels is highly volatile. A decrease of the market values of our vessels could cause us to incur an impairment loss or loss on sale and have an adverse effect on our results of operations.
•Drybulk industry is competitive, and we may not be able to compete successfully for charters with new entrants or established companies with greater resources.
•We are subject to complex regulations and liability, including anti-bribery, labor, environmental, international safety and anti-corruption laws that may require significant expenditures.
•Environmental regulations in relation to climate change and GHG emissions may increase operational and financial restrictions and environmental compliance costs and lead to environmental taxation schemes affecting more, less energy efficient vessels, reducing their trade and competitiveness and make certain vessels in our fleet obsolete, which may result in financial impacts on our results of operations.
•The long-term global shift to renewable energy, net-zero commitments and stricter environmental regulations, such as carbon taxes, may lead to declining global coal demand, reduce freight volumes, lower fleet utilization and charter rates,
affecting profitability and valuation of dry-bulk vessels, which may result in a material adverse effect on our business, cash flows, financial condition and results of operations.
•The production and adoption of maritime alternative fuels remains limited and may delay scale up as evolving regulations create uncertainty, slowing the required resource deployment, which could threaten the industry's ability to gain access to alternative fuels, delay the aligning of the maritime industry with global climate goals and meeting decarbonization targets on time and increase the risk of environmental penalties from 2025 onwards affecting our cash flows, financial condition and results of operations.
•The evolving landscape of ESG expectations from financial stakeholders including investors, charterers, lenders and societies leads to increased scrutiny with respect to our ESG policies and presents significant operational and reputational implications for our business.
•Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.
•Our vessels are exposed to operational risks that may not be adequately covered by our insurance to compensate us if we lose our vessels or they suffer significant damages or to compensate third parties for any damages to their property.
•World events, terrorist attacks, other international hostilities and potential disruption of shipping routes due to events outside of our control, including the war between Russia and Ukraine, the conflict in the Middle East, ongoing instability in Venezuela and Red Sea trade disruption (including attacks on ships by Houthi rebels), could negatively affect our results of operations and financial condition.
•Global risks, including geopolitical risks, affecting global trade,and supply chains, may impact maritime transport, may adversely affect global freight prices and could have a material adverse effect on our business.
•Changes in U.S. or Chinese port fee policies, including the potential reimposition of retaliatory charges on vessels linked to either country, may increase expenses and adversely affect our business, financial condition and results of operations.
•The outbreaks of epidemic and pandemic diseases, and the resulting disruptions to the Company and the international shipping industry could negatively affect our business, results of operations or financial condition.
•Acts of piracy and the potential disruption of shipping routes due to events outside of our control, including terrorist attacks and hostilities, could negatively affect our results of operations and financial condition.
•We rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber based attacks or network security breaches, our operations could be disrupted and our business negatively affected.
•Certain operational and technical risks of drybulk vessels could lead to an environmental disaster, affecting our business.
•Political uncertainty, including the potential imposition of new international tariffs, and an increase in trade protectionism could have a negative impact on our and our charterers’ business, and, in turn, could have a negative impact on our results of operations, financial condition and cash flows.
•Charterers may renegotiate or default on period time charters, which could reduce our revenues.
•The loss of one or more of our customers could have a material adverse effect on our business.
•We may have difficulty properly managing our planned growth through acquisitions of additional vessels.
•Failure to improve our operations and financial systems or recruit suitable employees as we expand our business, may affect our performance.
•Unless we set aside reserves for vessel replacement, at the end of a vessel’s useful life, our revenue will decline, which would adversely affect our cash flows and income.
•The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
•If we are unable to obtain additional financing on favorable terms, we may be unable to refinance our existing indebtedness and may not be able to finance a fleet replacement and expansion program in the future.
•Inflation pressures and the changes in central bank rates could lead to contraction for world economies and adversely affect dry-bulk world trade and freight markets, the cost of our capital, and may adversely impact our revenues and our indebtedness.
•We are and will be exposed to floating interest rates including those based on the Secured Overnight Financing Rate (“SOFR”), and may selectively enter into interest rate derivative contracts, which can result in higher than market interest rates and charges against our income. An increase in the SOFR could result in higher interest costs, and may adversely impact our indebtedness.
•Because we generate substantially all of our revenues in U.S. dollars but incur a material portion of our expenses in other currencies, including a part of our debt, exchange rate fluctuations could have a material adverse effect on our results of operations.
•Restrictive covenants and cross-default provisions in our existing and future financing agreements impose financial and other restrictions on us, and any breach of these covenants could result in the acceleration of our indebtedness and foreclosure on our vessels.
•The declaration and payment of dividends will always be subject to the discretion of our board of directors and our board of directors may not declare dividends in the future.
•We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to make dividend payments.
•We depend on our Managers to operate our business and our business could be harmed if our Managers fail to perform their services satisfactorily.
•Our chief executive officer also controls our Managers, which could create conflicts of interest between us and our Managers.
•Agreements between us and other affiliated entities may be challenged as less favorable than agreements that we could obtain from unaffiliated third parties.
•The provisions in our restrictive covenant arrangements with our chief executive officer and certain entities affiliated with him restricting their ability to compete with us may not be enforceable.
•We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law.
Risks Relating to Our Common Stock and Preferred Shares
•Our chief executive officer Polys Hajioannou is the Company's largest shareholder and his interests may be different from yours.
•Our status as a foreign private issuer within the rules promulgated under the Exchange Act exempts us from certain requirements of the SEC and NYSE.
•The market price of our Common Stock may be adversely affected by sales of substantial amounts of our Common Stock pursuant to a market equity offering program if our board of directors adopted such a program.
The following risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the securities market and ownership of our common shares. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results or the trading price of our common shares.
Risks Inherent in Our Industry and Our Business
The international drybulk shipping industry is cyclical and volatile, having reached historical highs in 2008 and historical lows in 2016. Cyclicality and volatility may lead to reductions in the charter rates we are able to obtain, in vessel values and in our earnings, results of operations and available cash flow.
The drybulk shipping industry exhibits inherent cyclicality with attendant market volatility fundamentally impacting charter rates, vessel values and profitability. The industry is cyclical in nature due to seasonal fluctuations, market adjustments in supply of and demand for drybulk vessels, global trade pattern shifts, vessel availability imbalances, tariffs and sanctions and trade disruptions. We expect this cyclicality and volatility in market rates to persist in the foreseeable future. Accordingly, there can be no assurance that the drybulk charter market will reach in the near future the levels previously experienced, particularly given the current confluence of geopolitical driven risks. The market could experience a downturn as a result of the war between Russia and Ukraine, the conflict in the Middle East, ongoing instability in Venezuela, China and Taiwan disputes, United States and China trade relations, instability between Iran and the West, and, the Red Sea trade disruption, or for other reasons such as a public health crisis resembling the 2019 Novel Coronavirus (“Covid-19”) and broader geopolitical tensions. Such events may impact the timing, magnitude, and characteristics of traditional market cycles and routes. For example, in 2008, the Baltic Dry Index (the “BDI”), an index published by the Baltic Exchange of shipping charter rates for key dry bulk routes, had reached an all-time high of 11,793, while in 2016, BDI had reached an all-time low of 290, and the low over the last 5 years was 393 on May 14, 2020 and the high over the last 5 years was 5,650 on October 7, 2021. During 2024 and 2025, BDI remained volatile, reaching an annual low of 976 on December 19, 2024 and an annual high of 2,419 on March 18, 2024, for 2024, and an annual low of 715 on January 30, 2025 and an annual high of 2,845 on December 3, 2025, for 2025. During 2026, BDI reached a low of 1,532 on January 15, 2026 and a high of 2,148 on January 30, 2026, from January 1, to February 20, 2026.
We charter some of our vessels in the spot charter market for periods up to three months and in the period charter market for longer periods. The spot market is highly competitive and volatile, while period time charter contracts of longer duration provide income at pre-determined rates over more extended periods of time. We are exposed to changes in spot charter market each time one of our vessels is completing a previously contracted charter, and we may not be able to secure period time charters at profitable levels. Furthermore, we may be unable to keep our vessels fully employed. Charter rates available in the market may be insufficient to enable our vessels to be operated profitably. A significant decrease in charter rates would adversely affect our profitability, cash flows, asset values and ability to pay dividends.
As of February 20, 2026, fourteen of our 45 owned drybulk vessels were deployed or scheduled to be deployed on period time charters of more than three months remaining term. In addition, we have entered into agreements for the acquisition of eight GHG-EEDI Phase 3 NOx-Tier III drybulk newbuilds, including two methanol dual-fueled, scheduled to be delivered four
in 2026, two in 2027, one in 2028 and one in 2029. As more vessels become available for employment, we may have difficulty entering into multi-year, fixed-rate time charters for our vessels, and as a result, our cash flows may be subject to volatility in the long-term. We may be required to enter into variable rate charters or charters linked to the Baltic Panamax Index or Baltic Capesize Index, as opposed to contracts based on fixed rates, which could result in a decrease in our cash flows and net income in periods when the market for drybulk shipping is depressed. If low charter rates in the drybulk market prevail during periods when we must replace our existing charters, it will have an adverse effect on our revenues, profitability, cash flows and our ability to comply with the financial covenants in our loan and credit facilities.
The factors affecting the supply and demand for drybulk vessels are outside of our control and are difficult to predict with confidence. As a result, the nature, timing, direction and degree of changes in industry conditions are also unpredictable.
Factors that influence demand for drybulk vessel capacity include:
•demand for and production of drybulk products;
•imposition of tariffs;
•changes in U.S. or Chinese port fee policies;
•supply of and demand for energy resources and commodities;
•global and regional economic and political conditions and developments, including armed conflicts such as the war between Russia and Ukraine, the Houthi attacks on merchant vessels in the region of the southern end of the Red Sea and the Gulf of Aden traveling through the Suez Canal towards the Mediterranean Sea and the conflict in the Middle East, natural or other disasters (including weather conditions), terrorist activities and strikes;
•environmental, climate and other regulatory developments;
•changes in use of renewable and alternative sources of energy;
•the location of regional and global exploration, the globalization of production and manufacturing facilities and the distance drybulk cargoes are to be moved by sea;
•changes in seaborne and other transportation patterns including shifts in the location of consuming regions for energy resources, commodities, and transportation demand for drybulk transportation;
•sanctions, embargoes, import and export restrictions, nationalizations and wars, including those arising as a result of the war between Russia and Ukraine and the conflict in the Middle East, and ongoing instability in Venezuela;
•trade disputes or the imposition of tariffs on various commodities or finished goods tariffs on imports and exports that could affect the international trade; and
•currency exchange rates.
Factors that influence the supply of drybulk vessel capacity include:
•the size of the newbuilding orderbook;
•availability of financing for new vessels and shipping activity;
•the number of newbuild deliveries, including slippage in deliveries, which, among other factors, relates to the number and ability of shipyards to deliver newbuilds by contracted delivery dates and the ability of purchasers to finance such newbuilds;
•the scrapping rate and the degree of recycling of older vessels, depending, amongst other things, on more stringent environmental regulations, scrapping rates and international scrapping regulations;
•port lockdowns for any reason, higher crew cost and travel restrictions imposed by governments around the world;
•port and canal congestion;
•the speed of vessel operation which may be influenced by several reasons including energy cost and environmental regulations;
•sanctions;
•the number of vessels that are in or out of service, delayed in ports for several reasons, laid-up, dry docked awaiting repairs or otherwise not available for hire, including due to vessel casualties;
•changes in environmental and other regulations that may limit the useful lives of vessels or effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage;
•ability of the Company to maintain ESG practices acceptable to customers, regulators and financing sources; and
•epidemics or pandemics such as Covid-19 and related factors.
Factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing, direction and degree of changes in industry conditions. We anticipate that the future demand for our drybulk vessels and, in turn, drybulk charter rates, will be dependent, among other things, upon economic growth in the world’s economies, any trade restrictions (including tariffs) between economies, any changes in port fee policies, seasonal and regional changes in demand, changes in the capacity of the global drybulk vessel fleet and the sources and supply of drybulk cargo to be transported by sea, the energy and fuel efficiency and age profile of the global dry bulk fleet, industry regulation particularly environmental laws and regulations, that may impose technological and additional regulatory requirements upon our vessels. However, new factors may emerge which we cannot foresee at this time and thus might not be able to adequately prepare for. A decline in demand for commodities transported in drybulk vessels or an increase in supply of drybulk vessels could cause a significant decline in charter rates, which could materially adversely affect our business, financial condition and results of operations. There can be no assurance as to the sustainability of future economic growth, if any, due to unexpected demand shocks.
A negative change in global economic or regulatory conditions, especially in the Asian region, which includes countries like China, Japan and India, could reduce drybulk trade and demand, which could reduce charter rates and have a material adverse effect on our business, financial condition and results of operations.
Global economic prospects for 2026 and 2027 as per the International Monetary Fund's (the “IMF”) latest projections in January 2026, indicate a moderate global Gross Domestic Product (the “GDP”) growth of 3.3% in 2026 and 3.2% in 2027, while inflation is expected to gradually normalize to 3.8% in 2026 and 3.4% by end of 2027. China's economy, a major driver of dry bulk market, is expected to grow at 4.5% in 2026 and 4.0% in 2027, with continued regulatory frameworks focusing on property sector stabilization and domestic consumption growth, while Japan's projected growth remains modest at 0.7% for 2026 and 0.6% for 2027, supported by monetary policy and structural reforms which the recent bond weakening shock in January 2026, might accelerate. India stands out with robust growth projections of 6.4% both for 2026 and for 2027, driven by infrastructure development and manufacturing sector expansion, though regulatory changes in environmental compliance could impact industrial output. We expect that a significant number of the port calls made by our vessels will involve the loading or discharging of raw materials in ports in the Asian region, particularly China, Japan and India. As a result, a negative change in economic or regulatory conditions in any Asian country, particularly China, Japan or India, can have a material adverse effect on our business, financial position and results of operations, as well as our future prospects, by reducing demand and, as a result, charter rates and affecting our ability to charter our vessels. If economic growth declines in China, Japan, India and other countries in the Asian region, or if the regulatory environment due to environmental initiates such as achieving carbon neutrality in these countries changes adversely for our industry, we may face decreases in such drybulk trade and demand.
According to the Dry Bulk Shipping Market Overview & Outlook of BIMCO in January 2026 (''BIMCO Jan 2026 DBO''), the dry bulk supply-demand balance will remain stable in 2026 and weaken in 2027. Ship demand is forecast to grow 2-3% in 2026 and 1-2% in 2027, while ship supply is expected to grow 2.5% in 2026 and 3% in 2027. The United States economy is forecast to grow at 2.4% in 2026 and 2.0% in 2027, with inflation expected to stabilize around 2.3%, while the European Union projects growth of 1.3% in 2026 and 1.4% in 2027, supported by recovering domestic demand. A slowdown in the United States economy or the economies of countries within the E.U. will likely adversely affect economic growth in China, Japan, India and other countries in the Asian region. Such an economic downturn in any of these countries could have a material adverse effect on our business, financial condition and results of operations. In recent years, China has pursued increased economic autonomy and continued reforms toward a market-oriented economy. However, several of these reforms, including pricing limit reforms and regulatory measures, remain evolving, experimental, or subject to reversal. Changes, revisions, or the abolition of such reforms, as well as shifts in China’s political, economic, or social policies, could negatively impact the level of imports into and exports from China. A decline in China’s imports or exports of goods could have a material adverse effect on our business, as a significant portion of our dry bulk trade is concentrated on key trade routes from Brazil and Australia to China, making dry bulk trade highly dependent on Chinese import and export activity. Chinese policy shifts regarding the national energy mix represent a material risk to the dry bulk market. Accelerated decarbonization targets, stricter environmental regulations, and increased support for renewable energy and alternative fuels could materially reduce China’s reliance on thermal coal, both through lower imports and constrained domestic production. Given China’s role as the world’s largest coal consumer and a key driver of seaborne dry bulk demand, any abrupt policy-driven adjustment could lead to a meaningful contraction in coal trade volumes, adversely impacting vessel utilization, freight rates, and overall dry bulk market balance. A
sustained decline in China’s exports driven by reduced global demand could lead to a slowdown in China’s construction sector, as demand for industrial, commercial, and manufacturing facilities weakens. Such a slowdown could reduce China’s demand for imported iron ore, directly affecting key dry bulk trade flows and may have a material adverse effect on our business, results of operations, and financial condition.
Furthermore, there is a rising threat of a Chinese financial crisis resulting from massive personal and corporate indebtedness and “trade wars.” Although the United States and China agreed an one-year truce trade agreement in late 2025, there is no assurance that the Chinese economy will not experience a significant contraction in the future. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through state plans and other measures. Notwithstanding economic reform, the Chinese government may adopt policies that favor domestic shipping companies which may hinder our ability to compete with them effectively. China has also promoted the construction of railway and highway transportation corridors in Asia, which could reduce the amount of goods transported by sea trade. This could have an adverse impact on our charterers’ business, operating results, and financial condition. Moreover, an economic slowdown in the economies of the European Union and other Asian countries may further adversely affect economic growth in China and elsewhere.
An oversupply of drybulk vessel capacity may lead to reductions in charter rates and results of operations.
The market supply of drybulk vessels has been increasing in terms of dwt, and the number of drybulk vessels on order as of December 31, 2025 was approximately 14.6% in terms of dwt, for Panamax to Post-Panamax class vessels and 12.5% for Capesize class vessels, as compared to the then-existing global drybulk fleet in terms of dwt, with the majority of new deliveries evenly spread through to 2028. As a result, the drybulk fleet continues to grow at an increased pace despite uncertainty around future environmental regulations. In addition, during periods when there are high expectations for charter market recovery, a large number of orders may be placed in shipyards, resulting in a further increase of newbuild orders and accordingly in the size of the global drybulk fleet. An oversupply of drybulk vessel capacity will likely result in a reduction of charter hire rates. We will be exposed to changes in charter rates with respect to our existing fleet and our remaining newbuild, depending on the ultimate growth of the global drybulk fleet. If we cannot enter into period time charters on acceptable terms, we may have to secure charters in the spot market, where charter rates are more volatile and revenues are, therefore, less predictable, or we may not be able to charter our vessels at all. In our current fleet, as of February 20, 2026, 33 vessels will be available for employment in the first half of 2026. If market conditions change or demand for dry bulk vessels declines, an oversupply of dry bulk carrier capacity could lead to prolonged periods of depressed charter rates. A material increase in the net supply of drybulk vessel capacity without corresponding growth in drybulk vessel demand could have a material adverse effect on our fleet utilization and our charter rates generally, and could, accordingly, materially adversely affect our business, financial condition and results of operations.
The market value of drybulk vessels is highly volatile, being related to charter market conditions, aging and environmental regulations including IMO vessel environmental classification based on GHG emissions. The market values of our vessels may significantly decrease which could cause us to breach covenants in our credit and loan facilities and our bond, and could have a material adverse effect on our business, financial condition and results of operations.
Our credit and loan facilities, which are secured by mortgages on our vessels, and our bond which is unsecured, require us to comply with collateral coverage ratios and satisfy certain financial and other covenants, including those that are affected by the market value of our vessels. The fair market values of drybulk vessels have generally experienced significant volatility within a short period of time and is dependent upon a number of factors. In recent years, the market prices for second-hand and newbuild drybulk vessels significantly declined in 2020 due to depressed market conditions as a result of Covid-19, recovered since then during the last three years, declined again since the second half of 2024, and have recovered during 2025 as a result of prevailing charter market conditions. Before that, in the previous years, the market prices for second-hand and newbuild drybulk vessels experienced very low levels in 2016, when vessel values were reduced in a short period of time due to depressed market conditions. The market value of our vessels fluctuates depending on a number of factors, including:
•general economic and market conditions affecting the shipping industry;
•changes in interest rates and inflationary pressures;
•prevailing level of charter rates;
•supply of and demand for vessels;
•general vessel's condition and vessel's specification;
•vessel environmental performance, including IMO environmental classification based on GHG emissions, environmental taxation and penalties;
•distressed asset sales, including newbuild contract sales below acquisition costs due to lack of financing during weak charter market conditions;
•lack of financing and limitations imposed by financial covenants affecting the market value of vessels ;
•competition from other shipping companies and other modes of transportation;
•configurations, types, sizes and ages of vessels;
•changes in governmental, environmental or other regulations that may limit the useful life of vessels; and
•technological advances in vessel design or equipment or otherwise.
We were in compliance with our covenants in our credit and loan facilities and our bond, in effect as of December 31, 2024 and December 31, 2025. If the market value of our vessels, or our newbuilds upon delivery to us, decline, we may breach some of the covenants contained in our credit and loan facilities and our bond, some of which may require the maintenance of a minimum percentage of fair market value of those vessels securing the facility against the principal outstanding amount of the loans under the facility or a maximum ratio of total liabilities to market value adjusted total assets or a minimum dollar market value adjusted net worth. If we do breach such covenants and we are unable to remedy or our lenders refuse to waive the relevant breach, our lenders could accelerate our indebtedness and foreclose on the vessels in our fleet securing those loan and credit facilities. As a result of cross-default provisions contained in our loan and credit facility agreements and our bond, this could in turn lead to additional defaults under our financing agreements and the consequent acceleration of the indebtedness under those agreements and the commencement of similar foreclosure proceedings by other lenders and our bondholders. If our indebtedness was accelerated in full or in part, it would be difficult for us to refinance our debt or obtain additional financing on favorable terms or at all and we could lose our vessels if our lenders foreclose their liens, which would adversely affect our ability to continue our business.
A significant decrease of the market values of our vessels could cause us to incur an impairment loss and could have a material adverse effect on our business, financial condition and results of operations.
We review for impairment our vessels on a quarterly basis and whenever events or changes in circumstances indicate that the carrying amount of the vessels may not be recoverable. Such indicators include declines in the fair market value of vessels, decreases in market charter rates, vessel sale and purchase considerations, fleet utilization, environmental and other regulatory changes in the drybulk shipping industry or changes in business plans or overall market conditions that may adversely affect cash flows. Our access to additional funds may be affected or we may be required to record an impairment charge in our consolidated financial statements with respect to our vessels and any such impairment charge resulting from a decline in the market value of our vessels or a decrease in charter rates may have a material adverse effect on our business, financial condition and results of operations. Our financial results may be similarly affected in the future if we record an impairment charge or sell vessels at a loss before we record an impairment adjustment. Conversely, if vessel values are increased at a time when we wish to acquire additional newbuild or secondhand vessels, the cost of such investments may increase causing us not to proceed with such investments, and this could adversely affect our business, results of operations, cash flow and financial condition.
See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Estimates—Impairment of Vessels” for more information.
Technological developments and new vessel environmental designs could reduce our earnings and the value of our vessels.
Determining factors for the useful life and revenue generation capacity of the vessels in our fleet are efficiency, environmental performance, operational flexibility and technological developments. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Environmental performance is related to IMO vessel classification based on GHG emission standards, environmental taxation and penalties which have been increasingly imposed on the relatively heavier consuming vessels in certain jurisdictions. In addition, speed limitations related to main engine power limitation, which aims to further reduce GHG emissions in the future, makes older vessels operationally unattractive. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The duration of a vessel’s useful life is related to its original design and construction, its maintenance, its environmental upgrades and the impact of the stress of operations. New vessels are generally more efficient since they generally consume less fuel and emit less GHG emissions. Therefore, new vessels are advantaged in relation to current and forthcoming regulations in relation to their environmental classification, taxes and penalties and operational performance. New vessels may also be more flexible, may have longer useful
lives than our vessels and may offer superior technological characteristics and improved working conditions for the crew. Competition from such advanced vessels could adversely affect the amount of charter hire payments we receive especially for our older vessels, the useful life and the resale value of our older vessels. Furthermore, we may be required to obtain certain permits or authorizations incurring compliance costs for older vessels which could have a material adverse effect on our business, financial condition and results of operations.
The international drybulk shipping industry is highly competitive, and we may not be able to compete successfully for charters with new entrants or established companies with greater resources.
We employ our vessels in an intensely competitive dry bulk market that is capital intensive and highly fragmented where we face substantial competition from both established operators and emerging market participants with lower operating costs. Competition arises primarily from other vessel owners, some of whom have substantially greater resources than we do. Competition for the transportation of drybulk cargo by sea is intense and depends on price, customer relationships, operating expertise, professional reputation and size, age, location and condition of the vessel. Due in part to the highly fragmented market and low barriers to entry, additional competitors with greater resources could enter the drybulk shipping industry and operate larger and more diverse fleets through consolidations or acquisitions, potentially leading to overcapacity and may be able to offer lower charter rates than we are able to offer, which could erode our market position by existing competitors or new market entrants and could have a material adverse effect on our fleet utilization and, accordingly, our results of operations.
Changes in labor laws and regulations, increase in the size of the global shipping fleet, collective bargaining negotiations and labor disputes, and potential challenges for crew availability as a result of increasing difficulty in workforce recruitment in certain markets due to various reasons, including the war between Russia and Ukraine and the conflict in the Middle East, and ongoing instability in Venezuela , could increase our crew costs and have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
Labor market dynamics, evolving maritime regulations, and global workforce challenges, as there is a limited supply of well-qualified and certified crew in the shipping industry, present significant operational and financial risks to our business, particularly regarding crew recruitment and retention for our officers on board our vessels, and associated costs. Moreover, growth in the global shipping fleet, combined with a constrained supply of qualified seafarers, has increased competition for skilled crew and placed upward pressure on crew costs. Sustained elevated crew costs, or further increases driven by ongoing inflation and rising wage levels, could adversely affect our results of operations. The international maritime labor landscape is experiencing significant changes, with stringent qualification requirements, and increasing pressure for improved working conditions and compensation packages, all of which could substantially further increase our crew-related operating expenses as we bear crewing costs under our charters. The growing shortage of qualified seafarers, particularly in senior officer positions, has been amplified by increased global fleet capacity, potentially leading to increased crew turnover rates. In addition, labor disputes or unrest, including work stoppages, strikes and/or work disruptions or increases imposed by collective bargaining agreements covering the majority of our officers on board our vessels could result in higher personnel costs and increased compensation requirements thus significantly affect our financial performance. Complex international regulations regarding crew working hours, rest periods, rising crew welfare expectations, including demands for improved internet connectivity and accommodation standards continue to evolve, requiring potential vessel modifications and operational adjustments that could increase our compliance costs and impact vessel utilization. Furthermore, while we do not have any Ukrainian, Russian, Israeli or Palestinian crew, the Company's vessels, currently do not sail in the Black Sea or the Red Sea and the Company otherwise conducts limited operations in Russia, Ukraine and the Middle East, the extent to which this will impact the Company’s future results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. Changes in labor laws and regulations, collective bargaining negotiations and labor disputes, and potential shortage of crew due to the war between Russia and Ukraine and in the Middle East, could potentially limit the available pool of qualified personnel, increase our training and compliance costs, and increase our crew costs, which may affect our operating margins, modify our traditional crew sourcing strategies and have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
We are subject to regulations and liability under environmental laws which may include marine pollution and illegal discharge of oily substances to the sea, and air pollution from vessels's operation, that require significant expenditures which can affect the ability and competitiveness of our vessels to trade, our results of operations and financial condition.
The global maritime industry faces unprecedented regulatory changes driven by climate change concerns, resulting in increasingly stringent GHG emissions controls and reporting requirements. These evolving regulations create significant operational, technical, and financial implications for vessel operators and owners. Our business and the operation of our vessels are regulated under international conventions, national, state and local laws and regulations in force in the jurisdictions in which our vessels operate, as well as in the country or countries of their registration, in relation to potential environmental impacts.
Regulations of vessels, particularly environmental regulations have become more stringent, including regulations related to marine pollution and illegal discharge of oily substances to the sea, BWTS implementation, exhaust gas emissions such as NOx, sulfur oxides ("SOx"), particulate matter, etc., as well as GHG emissions such as carbon dioxide ("CO2"), methane ("CH4"), etc. Some of those GHG emission regulations are expected to be further revised and become stricter in the future and associated with Emissions Trading Systems ("ETS") and penalties mechanisms imposed from 2025 onwards by the EU and other regional carbon pricing mechanisms presently developed by the IMO. As a result significant capital expenditures may be required on our vessels to keep them in compliance, and we may be required to pay increased prices for newbuild and secondhand vessels that meet these requirements.
See “Item 4. Information on the company. — B. Business Overview — Regulations: Safety and the Environment” for more information.
In addition, the heightened environmental, quality and security concerns of the public, regulators, insurance underwriters, financing sources and charterers may generally lead to additional regulatory requirements, including enhanced risk assessment and security requirements, greater inspection and safety requirements on all vessels in the marine transportation markets and possibly restrictions on the emissions of greenhouse gases from the operation of vessels. These requirements are likely to add incremental costs to our operations and the failure to comply with these requirements may affect the ability of our vessels to obtain and, possibly, collect on insurance or to obtain the required certificates for entry into the different ports where we operate. We could also incur material liabilities, including cleanup obligations and claims for natural resources, personal injury and property damages in the event that there is a release of petroleum or other hazardous materials from our vessels or otherwise in connection with our operations, including the misuse of oily water separator leading to illegal discharge overboard of oily substances to the sea. Violations of, or liabilities under, environmental regulations can result in substantial penalties, fines and other sanctions, including, in certain instances, seizure or detention of our vessels. Any such actual or alleged environmental laws regulations and policies violation, under negligence, willful misconduct or fault, could result in substantial fines, civil and/or criminal penalties or curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Events of this nature would have a material adverse effect on our business, financial condition and results of operations.
Environmental regulations in relation to climate change and GHG emissions legislation may increase operational and financial restrictions, and environmental compliance costs.
A number of countries and the IMO have adopted, or are considering the adoption of regulatory frameworks to reduce greenhouse gas emissions due to concern over the risk of climate change. These regulatory measures may include, among others, the adoption of cap and trade regimes, carbon taxes, increased efficiency standards and incentives or mandates for use of alternative fuels, i.e. fuels with lower CO2 footprint compared to fossil fuels and use of renewable energy. GHG reduction measures adopted, or further additional measures to be adopted by the IMO, EU and other jurisdictions for achieving 2030 goals have imposed and may impose additional operational and financial restrictions, carbon taxes or an emission trading system on less efficient vessels starting from 2023, gradually affecting younger vessels, even newbuilds after 2030, reducing their trade and competitiveness, increasing their environmental compliance costs, imposing additional energy efficiency investments, or even making such vessels obsolete. This or other developments may lead to environmental taxation affecting less energy efficient vessels, reduce their trade and competitiveness and make certain vessels in our fleet obsolete, which may result in financial impacts on our results of operations that we cannot predict with certainty at this time.This could have a material adverse effect on our business, financial condition and results of operations. Given the rapidly evolving nature of climate change regulations and potential future requirements under international agreements, regulatory frameworks, or international treaties and market-based measures to put a price on carbon emissions, we could incur additional capital expenditures and may be materially affected to the extent that climate change results in sea level changes or more intense weather events.
Although the EU FuelEU Maritime Regulation is already in force, the IMO’s decision to postpone the adoption of a Global Fuel Standard under its Net-Zero Framework by one year adds a layer of regulatory uncertainty. The delay increases the risk that the final GFS design, scope, and stringency may be materially revised, leaving shipowners and charterers with limited visibility on future compliance costs, fuel pathways, and fleet investment decisions, and potentially leading to a fragmented regulatory landscape with uneven impacts across trade routes.
See “Item 4. Information on the company. — B. Business Overview — Regulations: Safety and the Environment - Greenhouse Gas Regulation – United Nations Framework Convention on Climate Change” for more information.
In response to the above GHG environmental regulations, we monitor CO2 vessel emissions pursuant to the International Maritime Organization's fuel oil consumption Data Collection System (“IMO DCS”) and to the European Monitoring, Reporting and Verification Regulation (“EU-MRV”), assessing in parallel the applicability of relevant energy efficiency measures. Furthermore, we have pursued a fleet renewal strategy having entered into memoranda of agreement for the acquisition of 20 in total environmentally advanced dry-bulk GHG-EEDI Phase 3 NOx-Tier III compliant newbuilds, including two methanol dual fueled, with 12 already been delivered to us, four scheduled to be delivered in the remainder of 2026, two in 2027, one in 2028 and one in 2029.
The long-term global shift to renewable energy, net-zero commitments, cleaner energy adoption, and stricter environmental regulations, such as carbon taxes, pose significant risks to maritime coal transportation; coal being a major dry bulk commodity. Declining global coal demand could reduce freight volumes, lower fleet utilization and charter rates affecting profitability and valuation of dry-bulk vessels, which may result in a material adverse effect on our business, cash flows, financial condition and results of operations.
International agreements such as the Paris Agreement, coupled with carbon pricing mechanisms, are expected to limit coal consumption, especially in developed nations. Asia, particularly China and India, has been the dominant driver of global coal demand. Both countries have relied heavily on coal for industrial and energy production needs. Europe and the U.S. have seen a steady decline in coal demand due to the shift to renewable energy sources and cleaner alternatives. While Asian markets, particularly India and Southeast Asian countries, currently demonstrate robust demand growth, this growth may not fully offset future declines in other regions. The shift towards decarbonization as a result of global initiatives, such as the IMO's recently revised strategy of ambitious decarbonization targets aiming to reach net-zero GHG emissions by or around 2050, may adversely impact coal demand over the next 30 years. According to the world energy outlook released by the International Energy Agency's (the “IEA”), in the last quarter of 2025, global coal demand follows diverging paths across scenarios. In the Current Policies Scenario (CPS), coal demand remains broadly stable in the short term, before declining by around 10% by the mid-2030s, and only gradually thereafter, leaving coal demand in 2050 still roughly 20–25% below 2024 levels, reflecting continued reliance on coal in emerging market power generation and industry. Under the Stated Policies Scenario (STEPS), coal demand peaks before 2030, falling by approximately 20% by 2035 and by around 45% by 2050, driven by accelerating renewables deployment, electrification and fuel switching, particularly in China and advanced economies. In contrast, the Net Zero Emissions by 2050 (NZE) scenario implies a rapid structural decline as coal demand falls sharply already in the short term, drops by more than 55–60% by the mid-2030s, and is reduced by around 85–90% by 2050, leaving coal confined to a marginal role, largely limited to facilities equipped with carbon capture and a small number of hard-to-abate industrial applications. Nevertheless, fast-growing electricity use and concerns about electricity security underpinned a wave of coal plant approvals in China which gave the green light to almost 100 GW of new coal-fired plants in 2024, and India a further 15 GW, pushing global approvals to their highest level since 2015.
These global trends present material risks to the dry bulk shipping market, impacting freight rates, vessel valuations, and trade routes. Freight rate volatility may become more pronounced as shipowners compete for limited cargoes, leading to reduced profitability and increased margin pressures. Moreover, vessel asset prices may decline as demand softens, negatively affecting the resale value of dry bulk vessels. Prolonged coal demand contraction may also lead to impairment risks for vessel owners, especially those with older, or less energy and fuel efficient fleets, or limited cargo diversification strategies. Reduced export volumes may lead to underutilization of specific port infrastructures and decreased voyage distances, further dampening tonnage demand. The projected decline in global coal demand could materially adversely affect our business, financial condition, and results of operations.
The projected decline in coal transportation demand may lead to significant depreciation in the value of our vessels, materially impacting our ability to use our vessels as collateral for loans, resulting in potential covenant breaches under our future loan agreements, requiring additional capital expenditures to maintain competitiveness, thus reducing our long term flexibility in asset sales and fleet renewal strategies. Our business depends significantly on the global seaborne transportation of coal, which currently represented a significant part of our revenues earned and cargoes transferred. The expected downward pressure on freight rates as a result of a potential prolonged global coal demand contraction, could significantly reduce our operating revenues, impact our ability to service debt obligations and reduce available cash for fleet maintenance and modernization.
In response to the risk of declining global coal demand over the long term period, the Company has prioritized an ESG based strategic pivot, taking into account the capital-intensive nature of maritime assets and the long lead-time of fleet diversification, leading the Company i) to invest heavily in the acquisition of 20, environmentally advanced dry-bulk GHG-EEDI Phase 3 NOx-Tier III compliant newbuilds, including two methanol dual-fueled, ii) to environmentally upgrade investments on its existing fleet, including the application of ultra low friction paints and ducts installations and iii) to
implement an upgraded Integrated Management System (“IMS”) enhancing operational flexibility and compliance with evolving regulatory standards; all of which will create a competitive advantage compared to peer vessels.
While we are implementing strategies to address this risk, there can be no certainty that these measures will be successful in mitigating the impact of declining coal demand on our business. Our failure to effectively respond to these challenges could have a material adverse effect on our business, financial condition, and results of operations.
The production and adoption of maritime alternative fuels with low carbon intensity remains limited and may delay scale up as evolving regulations create uncertainty, slowing the required resource deployment, which could threaten the industry's ability to gain access to alternative fuels, delay the aligning of the maritime industry with global climate goals and meeting decarbonization targets on time and increase the risk of environmental costs and penalties from 2024 onwards, affecting our cash flows, financial condition and results of operations.
Although the principle "the Polluter pays" is applicable on all environmental based regulations and results in absorption of environmental costs and penalties by the charterers and subsequently by the end users, vessels that fail to adapt with such regulations may face increased environmental costs and penalties, which are related to their energy efficiency and the fuel used, (see “Item 4. Information on the company. — B. Business Overview. Environmental regulations" for more information) resulting in operational and financial disadvantages and loss in competitiveness.
Delays in the adoption, scaling of production, infrastructure, and supply chain of maritime alternative fuels could hinder the industry's ability to meet decarbonization targets, which may cause delays in the transition to low-carbon technology. This may create a disadvantage for early movers in their efforts to combat climate change and meet emissions reduction targets. The IMO’s recent decision to postpone the adoption of a Global Fuel Standard under its Net-Zero Framework by one year, within 2026, adds a layer of regulatory uncertainty. The delay increases the risk that the final GFS design, scope, and stringency may be materially revised, leaving shipowners and charterers with limited visibility on future compliance costs, fuel pathways, and fleet investment decisions, and potentially leading to a fragmented regulatory landscape with uneven impacts across trade routes. Our Company is an early mover, having order two methanol dual-fuel Kamsarmax newbuild vessels, able to operate with fossil fuels or alternative low carbon intensity fuels, with scheduled deliveries in the fourth quarter of 2026 and in the first quarter of 2027, targeting to mitigate the risk of increasing environmental costs and penalties during the transition period. Although the Company is undertaking substantial efforts to locate the required fuel quantities, if maritime alternative fuels with low carbon intensity are not timely produced, are produced in insufficient quantities, are not available worldwide where we trade, or are more expensive making their use uneconomical, our two dual-fuel Kamsarmax vessels will operate with fossil fuels loosing or limiting their designed operational, environmental and financial advantage.
Moreover, in response to the risk of limited production and availability of maritime alternative fuels, the Company is using various grades of biofuels suitable to compensate the carbon based penalties mechanisms from 2025 until 2030.
While we are implementing strategies to address these risks, there can be no certainty that these measures will be successful in mitigating the impact of a potential inability to be supplied with green methanol and biofuels in our business. Our failure to effectively respond to these challenges could have a material adverse effect on our business, financial condition, and results of operations.
The evolving landscape of ESG expectations from financial stakeholders including investors, charterers, lenders and societies leads to increased scrutiny with respect to our ESG policies and presents significant operational and reputational implications for our business.
Companies across all industries, including the shipping industry, are facing increased scrutiny relating to their ESG policies. Investor advocacy groups, proxy advisory firms, ESG rating agencies whose assessments can significantly influence investor perceptions and investment decisions, certain institutional investors, investment funds, charterers, lenders and other market participants are increasingly focused on corporate governance, climate change, sustainable energy practices, reduction of carbon footprint and promote ESG practices. Financial institutions, including banks, lessors, and institutional investors, are increasingly incorporating ESG metrics, criteria and performance standards into their lending, evaluation processes and investment decisions, potentially affecting our access to and cost of capital. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or the stock price of such a company could be materially and adversely affected. As a result, we may be required to implement more stringent ESG procedures or standards so
that we continue to have access to capital and our existing and future investors and lenders remain invested in us and make further investments in us.
Over the past few years, we have made publicly available our annual sustainability report where we present our environmental, social and governance strategy for the future, as well as the impact of our operations and business on society and the environment. Additionally, in November 2023, we announced the formation of an environmental, social and governance board committee (“ESG Committee”) consisting of six board members, four of whom are independent directors. The President of the Company has been assigned to lead the management team on ESG matters and report to the ESG Committee which is led by an independent director. The ESG Committee reviews the Company’s ESG performance and ensures governance oversight, by the Board of Directors, of the ESG strategy and implementation, consistent with the priorities outlined in the Company’s annual sustainability report, reflecting the heightened focus needed for the Company’s comprehensive ESG strategy, (see “Item 4. Information on the company. — B. Business Overview" for more information).
Furthermore, we maybe subject to evolving sustainability-related reporting requirements and regulations in the European Union, the United States and other jurisdictions, which may increase our compliance costs and affect our operations. In the EU, the Corporate Sustainability Reporting Directive (“CSRD”) requires certain companies to report sustainability and ESG information in their management reports, including a “double materiality” analysis of both impacts on the environment and the climate-related risks to their business. Most recently in December 2025, a provisional agreement was reached by the European Commission and European Parliament on the EU Omnibus I package significantly narrowing the CSRD scope. Under the finalized rules, mandatory sustainability reporting will apply only to EU entities with more than 1,000 employees and over €450 million in annual net turnover, as well as to non-EU entities with over €450 million in EU turnover and their EU subsidiaries or branches generating more than €200 million in the EU. Reporting requirements will be significantly simplified, sector-specific reporting will be voluntary. Due diligence obligations under the Corporate Sustainability Due Diligence Directive (“CSDDD”), will become applicable from 26 July 2029, applying only to very large EU entities with over 5,000 employees and more than €1.5 billion in turnover, and to non-EU entities meeting the same EU turnover threshold. Transition plans aligned with sustainability objectives will no longer be required. Although proposed amendments to the CSRD and the CSDDD may exclude companies with fewer than 1,000 or 5,000 employees, respectively, until such amendments are enacted, we may be required to implement processes to gather data, conduct materiality assessments, and prepare CSRD-compliant reports, which could be time-consuming and costly.
Similarly, in the U.S., the SEC has issued rules requiring public companies to disclose extensive climate-related information, including GHG emissions. These rules are currently subject to legal challenges and a stay, but if upheld, they would require to us to enhance and standardize climate-related disclosures and as an accelerated filer, to provide the enhanced climate-related disclosures in our annual reports as well as disclosure of Scope 1 and Scope 2 GHG emissions if they are material, including an independent attestation report, and as such compliance may require significant expenditures. In addition, the evolving nature of ESG reporting, voluntary standards, and disclosure requirements, together with emerging anti-ESG and anti-diversity, equity, and inclusion policies in the U,S., may subject us to additional compliance obligations, investigations, enforcement actions, or reputational harm. Actions that are viewed positively by some stakeholders may be criticized by others, potentially affecting our ability to attract capital, and compete effectively. These factors could materially and adversely affect our business, results of operations, cash flows, and financial condition.
However, in light of increased focus on ESG matters, there can be no certainty that we will manage to successfully meet society's expectations as to our proper role. We cannot assure that our ESG policies and practices will meet the evolving standards and expectations of our stakeholders. Any failure or perceived failure by us in this regard could have a material adverse effect on our reputation and on our business, share price, financial condition, or results of operations, including the sustainability of our business over time.
We are subject to complex laws and regulations, including international safety regulations and requirements imposed by our classification societies and the failure to comply with these regulations and requirements may subject us to increased costs and liability, may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.
We are subject to complex laws and regulations, such as international conventions, regulations and treaties, national laws, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates and financial assurances with respect to our operations. In addition, vessel classification societies also impose significant safety and other requirements on our vessels. Because such conventions, laws, and regulations are often revised, we may not be able to predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Compliance with regulations and laws could limit our ability to do
business or increase the cost of our doing business, which could have a material adverse effect on our business, results of operations, cash flows and financial condition and our available cash.
Our industry’s regulatory environment is becoming exponentially complex and includes regulations of the IMO, the United States, the European Union, China, India, Australia and other countries in which we operate. Such regulations include requirements set forth in the IMO’s International Safety Management (“ISM”) Code, the International Convention for the Prevention of Pollution from Ships of 1973 (“MARPOL”), the International Ship and Port Facility Security Code (“ISPS”), the United States Oil Pollution Act of 1990, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, the U.S. Clean Air Act, the U.S. Clean Water Act, the U.S. Marine Transportation Security Act of 2002 and others. In the foreseeable future we expect the trend of increasing regulatory compliance complexity to continue. For example, United States agencies and the IMO’s Maritime Safety Committee have adopted cyber security regulations which requires ship owners and managers to incorporate cyber risk management and security into their safety management.
The operation of our vessels is affected by the requirements set forth in the IMO ISM Code. Under the ISM Code, we are required to develop and maintain an extensive Safety Management System (“SMS”) that includes the adoption of a safety and environmental protection policy. Failure to comply with the ISM Code may subject us to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to, or detention in, certain ports. For example, the U.S. Coast Guard and E.U. authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and E.U. ports. Currently, each of the vessels in our current fleet is ISM Code-certified, but we may not be able to maintain such certification at all times. If we fail to maintain ISM Code certification for our vessels, we may also breach covenants in certain of our credit and loan facilities that require that our vessels be ISM Code-certified. If we breach such covenants due to failure to maintain ISM Code certification and are unable to remedy the relevant breach, our lenders could accelerate our indebtedness and foreclose on the vessels in our fleet securing those credit or loan facilities.See Item 4. Information on the Company-Business Overview-Environmental and Other Regulations for more information.
Increased inspection procedures, revised inspection age trigger and safety score changes, tighter import and export controls and survey requirements could increase costs, adversely affect the employment of our vessels and could have a material adverse effect on our business, financial condition, and results of operations.
International shipping is subject to various security and customs inspections and related procedures in countries of origin and destination. Inspection procedures can result in the seizure of our vessels, or the contents of our vessels, delays in the loading, offloading or delivery and the levying of customs duties, fines and other penalties against us. It is possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo impractical. Any such changes or developments may have a material adverse effect on our business, financial condition and results of operations. The hull and machinery of every commercial vessel must be certified as safe and seaworthy in accordance with applicable rules and regulations, and accordingly vessels must undergo regular surveys. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey or special survey, the vessel will be unable to trade between ports and will be unemployable and we would be in violation of certain covenants in our credit and loan facilities. This would also negatively impact our revenues.
RightShip is a global organization providing vetting, safety scoring and GHG rating on equal merits monitored by industry stakeholders. Rightship has lowered its vessel inspection age trigger from 14 to 10 years, with a phased rollout through 1 January 2027. This change, designed to improve safety in the dry bulk sector, subjects older vessels to more frequent inspections, increased scrutiny, and potential safety score downgrades. Vessels that do not undergo a valid Rightship inspection at the relevant age may see their safety score reduced to 2 out of 5, which could limit employment opportunities, reduce charter rates, or restrict access to certain trades, ports, or cargoes. As of February 20, 2026, we had 45 vessels in our fleet, one of which was held for sale, with an average age of 10.5 years, with 28 vessels above 10 years, 11 vessels above 15 years, two of which are reaching an age of 20 years. An increased number of our vessels compared to previous years, particularly those 10 years and above, may face increased maintenance, inspection, and compliance costs to maintain acceptable ratings. As Rightship ratings are widely used by charterers, cargo interests, and terminals, any stricter application of the revised age trigger or further methodology changes could accelerate the economic obsolescence of older dry bulk vessels and have a material adverse effect on our business, results of operations, cash flows, and financial condition. We may incur additional costs to ensure that our vessels maintain satisfactory RightShip ratings or otherwise comply with the standards required by our charterers. Although our vessels are generally expected to meet these standards, failure of any vessel to do so could limit our ability to operate that vessel and adversely affect our results of operations.
Our vessels are exposed to operational risks that may not be adequately covered by our insurance.
The operation of any vessel includes risks such as weather conditions, mechanical failure, collision, fire, contact with floating objects, cargo or property loss or damage and business interruption due to political circumstances in countries, piracy, terrorist and cyber terrorist attacks, armed hostilities and labor strikes. Such occurrences could result in death or injury to persons, loss, damage or destruction of property or environmental damage, delays in the delivery of cargo, loss of revenues from or termination of charter contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates and damage to our reputation and customer relationships generally.
We may not be adequately insured against all risks and our insurers may not pay particular claims. With respect to war risks insurance, which we usually obtain for certain of our vessels making port calls in designated war zone areas, such insurance may not be obtained prior to one of our vessels entering into an actual war zone, which could result in that vessel not being insured. Even if our insurance coverage is adequate to cover our losses, we may not be able to timely obtain a replacement vessel in the event of a loss. Under the terms of our credit facilities, we will be subject to restrictions on the use of any proceeds we may receive from claims under our insurance policies. Furthermore, in the future, we may not be able to maintain or obtain adequate insurance coverage at reasonable rates for our fleet. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage for tort liability. Our insurance policies also contain deductibles, limitations and exclusions which, although we believe are standard in the shipping industry, may nevertheless increase our costs in the event of a claim or decrease any recovery in the event of a loss. If the damages from a catastrophic oil spill or other marine disaster exceed our insurance coverage, the payment of those damages could have a material adverse effect on our business and could possibly result in our insolvency.
In general, we do not carry loss of hire insurance. Occasionally, we may decide to carry loss of hire insurance when our vessels are trading in areas where a history of piracy has been reported. Loss of hire insurance covers the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking or unscheduled repairs due to damage to the vessel. Accordingly, any loss of a vessel or any extended period of vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business, financial condition and results of operations.
World events, terrorist attacks, other international hostilities and potential disruption of shipping routes due to events outside of our control, including the war between Russia and Ukraine, the conflict in the Middle East, ongoing instability in Venezuela,and Red Sea trade disruption, (including the attacks on ships by Houthi rebels), could negatively affect our results of operations and financial condition.
We conduct most of our operations outside of the U.S. and our business, results of operations, cash flows, financial condition and ability to pay dividends, if any, in the future may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political conflicts, including the current instability in the Middle East, North Africa and other countries and geographic areas, terrorist or other attacks and war or international hostilities. Terrorist attacks and the continuing response of the U.S. and others to these attacks, as well as the threat of future terrorist attacks around the world, continues to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. Continuing conflicts and recent developments in the Middle East and North Africa, the escalation of war between Russia and Ukraine, the trade disruption in the Red Sea and the presence of U.S. or other armed forces in Red Sea, Iraq, Syria, Afghanistan and various other regions, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic and geopolitical instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. In the past, political conflicts have also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. These types of attacks have also affected vessels trading in regions such as the Black Sea, South China Sea and the Gulf of Aden off the coast of Somalia. The IMO’s council sessions, addressed the impacts on shipping and seafarers, as a result of the war in the Black Sea and the Sea of Azov. The IMO called for the need to preserve the integrity of maritime supply chains and the safety and welfare of seafarers and any spillover effects of the military action on global shipping, logistics and supply chains, in particular the impacts on the delivery of commodities and food to developing nations and the impacts on energy supplies. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs.
The war between Russia and Ukraine, which commenced in February 2022 and is still ongoing, has disrupted supply chains and caused instability and significant volatility in the global economy. Much uncertainty remains regarding the global impact of the war in Ukraine, and it is possible that such instability, uncertainty and resulting volatility could significantly
increase our costs and adversely affect our business, including our ability to secure charters and financing on attractive terms, and as a result, adversely affect our business, financial condition, results of operation and cash flows.
The conflict in the Middle East, which commenced in October 2023, has caused significant political and social unrest in Israel, Gaza, and the surrounding areas. During the conflict, there were growing hostilities along Israel’s northern border with Lebanon (with the Hezbollah terrorist organization) and on other fronts from various extremist groups in the region, such as various rebel militia groups in Syria and Iraq. In addition, the Houthi movement, which controls parts of Yemen, launched attacks on Israeli-controlled or owned ships in the Red Sea, resulting in widespread rerouting of cargo ships and some shipping companies ceasing shipments to Israel. Although a ceasefire between Israel and Hamas took effect in October 2025, there is no assurance that this agreement will be upheld. Military activity and hostilities continue to exist at varying levels of intensity, and the situation in the Middle East remains volatile, with the potential for escalation into a broader regional conflict. While our vessels currently do not sail in the Red Sea, we will continue to monitor the situation to assess whether the trade disruption could have any impact on our operations or financial performance. It is currently not possible to predict the duration or severity of the ongoing conflicts or their effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations, interrupt our sources and availability of supply and hamper our ability to raise additional funds or sell our securities, among other possible negative effects.
As a result of the war between Russia and Ukraine, Switzerland, the US, the EU, the UK and others have announced unprecedented levels of sanctions and other measures against Russia and certain Russian entities and nationals. Such sanctions against Russia may adversely affect our business, financial condition, results of operation and cash flows. The ongoing war could result in the imposition of further economic sanctions against Russia, with uncertain impacts on the drybulk market and the world economy. While we do not have any Ukrainian, Russian, Israeli or Palestinian crew, our vessels currently do not sail in the Black Sea or the Red Sea and we otherwise conduct limited operations in Russia, Ukraine, and Israel, it is possible that the war in Ukraine and the conflicts in the Middle East and Venezuela including any increased shipping costs, disruptions of global shipping routes, any impact on the global supply chain and any impact on current or potential customers caused by these events, could adversely affect our operations or financial performance.
Global risks to the supply chains, including geopolitical risks, which impact maritime transport, may adversely affect global freight prices and could
have a material adverse effect on our business.
During fiscal year 2025, a confluence of factors caused disruptions to international shipping, increasing costs and delaying shipments. Attacks on ships entering the Red Sea en route to the Suez Canal, an important waterway for vessels moving between Asia and the United States, by Houthi rebels in Yemen, forced ships to take longer routes. In 2024, drought conditions materially reduced capacity in the Panama Canal. While operations have largely normalized, residual constraints remain, and future water-level variability and climate-related risks could again limit canal transits.These disruptions could generate new risks to the supply chain and corresponding increases in freight prices, which could have a material adverse effect on our business,financial condition and results of operations. Furthermore, the world has become more unstable, multi-polarized, multi-latteral with trade protectionism risks that can substantial challenge and transform the existing supply chains, which could have a material adverse effect on our business.
Changes in U.S. or Chinese port fee policies, including the potential reimposition of retaliatory charges on vessels linked to either country, may increase expenses and adversely affect our business, financial condition and results of operations.
In October of 2025, the United States Trade Representative (“USTR”) put forward significant trade actions under Section 301 of the Trade Act of 1974, with the stated aim of addressing China’s dominance in the maritime, logistics, and shipbuilding industries. These actions had the potential to increase port fees and therefore the overall voyage expenses for ships calling at U.S. ports. These actions generally included a fee targeting Chinese owners and operators for each instance a vessel owned or operated by a Chinese entity enters a U.S. port. In response to the USTR imposed port fees, China imposed retaliatory port fees on vessels linked to U.S. ownership while exempting Chinese-built vessels. However, on November 1, 2025, as part of broader trade negotiations between the two countries, both U.S. and China port fees have reportedly been suspended for one year. Given the potential magnitude of these port-related fees and the many uncertainties surrounding their implementation, it is not possible at this time to fully predict the ultimate financial impact. Should the port fees be reimposed in a manner that applies to our vessels in any material respect, this could significantly reduce our profitability, negatively impact our ability to compete effectively, and materially and adversely affect our operations and financial results.
The outbreak of public health threats and epidemics or pandemics and the resulting disruptions to the international shipping industry, could negatively affect our business, financial performance and our results of operations.
As of May 2023, the World Health Organization declared that Covid-19 no longer constituted a public health emergency of international concern, indicating a transition to long-term management of the pandemic. Covid-19 has affected our industry, see “Item 4. Information on the company. — B. Business Overview — Corona Virus Outbreak” for more information. Should an outbreak of public health threats and epidemics or pandemics occur and similar restrictive measures are adopted for their control, global disruptions to the international shipping industry and delays may be expected in relation to the deliveries of our newbuilds and our newbuild program, which could negatively affect our business, financial performance, results of operations and our financial condition. Moreover, the effects of restrictions of a pandemic or epidemic on our operations, including travel restrictions, restrictions in vessels' port calls and restrictions and extended periods of remote work arrangements, could strain our business continuity plans, may introduce trade disruptions and operational risks, including but not limited to cybersecurity risks, and impair our ability to manage our business. The length and severity of epidemics and pandemics and their disruptions, such as the impact of any new outbreaks or new variants that may emerge and measures taken in response thereto may negatively impact our business, financial performance and operating results and could have a material adverse effect on our business, results of operations, cash flows, financial condition, value of our vessels, and our ability to pay dividends.
Acts of piracy on ocean-going vessels may increase in frequency, which could adversely affect our business.
Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean, Sulu Sea, Celebes Sea, in the Gulf of Guinea and in the Gulf of Aden off the coast of Somalia. Although the frequency of sea piracy worldwide has generally decreased since 2013, sea piracy incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Sulu Sea and the Gulf of Guinea, and the Strait of Malacca, with drybulk vessels and tankers particularly vulnerable to such attacks. Acts of piracy could result in harm or danger to the crews that man our vessels. Following attacks on merchant vessels in the region of the Gulf of Aden at the southern end of the Red Sea, there is disruption in the maritime trade towards the Mediterranean Sea through the Suez-Canal. As a result we have diverted our fleet from sailing in this specific region. While our vessels currently do not sail in the Red Sea, we will continue to monitor the situation to assess whether the trade disruption could have any impact on our operations or financial performance.
If these piracy attacks occur in regions in which our vessels are deployed that insurers characterized as “war risk” zones or Joint War Committee “war and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including the employment of onboard security guards, could increase in such circumstances. Furthermore, while we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and withhold charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for a certain number of days and is therefore entitled to cancel the charter party, a claim that we would dispute. We may not be adequately insured to cover losses from these incidents and from acts of terrorism, piracy, regional conflicts and other armed actions, which could have a material adverse effect on us. In addition, any detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition and earnings.
The operation of drybulk vessels has certain unique operational and technical risks which include mechanical failure, collision, property loss, cargo loss or damage as well as personal injury, illness and loss of life and could lead to an environmental disaster; failure to adequately maintain our vessels or address such risks could have a material adverse effect on our business, financial condition and results of operations.
The operation of a drybulk vessel has certain unique operational and technical risks which include mechanical failure, collision, property loss, cargo loss or damage as well as personal injury, illness and loss of life and could lead to an environmental disaster. Drybulk vessels may develop unexpected mechanical and operational problems due to several reasons including improper maintenance and weather conditions. We operate certain of our vessels using VLSFO, some of which, under certain conditions, may cause loss of the vessel’s main engine power with severe results that can lead to collision and loss of a vessel.
Furthermore, the operation of a drybulk vessel may create risks. For example the cargo itself and its interaction with the vessel may create operational risks as by their nature, drybulk cargoes are often heavy, dense and easily shifted, and they may react badly to water exposure. In addition, drybulk vessels are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold) and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to treatment during unloading procedures or with steel plate diminution may be more susceptible to hull breach while at sea which may lead to the flooding of the vessel’s holds. If a drybulk vessel suffers
flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel’s bulkheads, leading to the loss of a vessel. If our vessels suffer damage, they will need to be repaired at a drydocking facility for a substantial period and for unpredictable costs, interrupting our cash flow, that may not be fully covered by insurance. Space at drydocking facilities is sometimes limited, and not all drydocking facilities are conveniently located. If we do not adequately maintain our vessels or address such operational and technical risks, we may be unable to prevent these events. The total loss or damage of any of our vessels or cargoes could harm our reputation as a safe and reliable vessel owner and operator. The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.
Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.
Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel, or other assets of the relevant vessel-owning company, for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting or attaching a vessel through judicial or foreclosure proceedings. The arrest or attachment of one or more of our vessels, or other assets of the relevant vessel-owning company or companies, could cause us to default on a charter, breach covenants in certain of our credit facilities, interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert “sister ship” liability against one vessel in our fleet for claims relating to another of our vessels.
Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.
A government could requisition one or more of our vessels for title or for hire. Requisition for title occurs when a government takes control of a vessel and becomes its owner, while requisition for hire occurs when a government takes control of a vessel and effectively becomes its charterer at dictated charter rates. Generally, requisitions occur during periods of war or emergency, although governments may elect to requisition vessels in other circumstances. Even if we would be entitled to compensation in the event of a requisition of one or more of our vessels, the amount and timing of payment would be uncertain. Government requisition of one or more of our vessels may cause us to breach covenants in certain of our credit facilities, and could have a material adverse effect on our business, financial condition and results of operations.
We rely on information technology, and if we are unable to protect against service interruptions, data corruption, cyber based attacks or network security breaches, our operations could be disrupted and our business could be negatively affected.
In the ordinary course of business, we rely on information technology networks and systems to process, transmit, and store electronic information and to manage or support a variety of business processes and activities. Our information systems and networks could become targeted and attacked by individuals or organized groups. Our vessels also rely on information systems for a significant part of their operations, including for parts of their navigation, propulsion, power control, communications, provision of services, machinery management, and cargo operations. Safety measures are in place to secure our vessels and on our on shore operations against cyber-security attacks and disruptions to their information systems. These measures may not adequately detect, prevent and remediate security breaches from constantly evolving and increasingly sophisticated threats and attacks. A cyber attack could materially and adversely affect our business operations, financial condition, results of operations and cash flows and our reputation. In addition, cyber attacks could lead to potential unauthorized access to our systems targeting ransomware, data theft, loss and corruption, disclosure of proprietary or confidential information or, personal data. Cyber attacks on our vessels may also lead to potential unauthorized access to, or service interruptions, denial or manipulation of the navigational systems of our vessels, which could result in hazardous accidents. There is no assurance that we will not experience these service interruptions or cyber attacks in the future. Further, as the methods of cyber attacks continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures, or to investigate and remedy any vulnerabilities to cyber attacks. We maintain cybersecurity insurance, however, such insurance is subject to coverage limits, exclusions, and deductibles and may not cover all losses or liabilities arising from a cybersecurity incident or the aforementioned risks to our information technology. A cyber attack could also lead to litigation, fines, other remedial action, heightened regulatory scrutiny and reputational damage. In addition, our remediation efforts may not be successful, and we may not have adequate insurance to cover these losses. These information technology systems, some of which are managed by third parties, may be susceptible to damage, disruptions or shutdowns, hardware or software failures, power outages, computer viruses, cyber attacks, telecommunication failures, user errors or catastrophic events. Risks and vulnerabilities can also arise out of inadequacies in design, integration and/or maintenance of information technology systems, as well as lapses in cyber discipline. Furthermore, as of May 25, 2018, data breaches on personal data, as defined in the European General Data Protection Regulation, could lead to administrative fines up to €20 million or up to 4% of the total worldwide annual turnover of the company, whichever is greater. Our information technology systems are becoming increasingly integrated, so damage,
disruption or shutdown to the system could result in a more widespread impact. If our information technology systems suffer severe damage, disruption or shutdown, and our business continuity plans do not effectively become aware, recognize, detect and resolve the issues in a timely manner, our operations could be disrupted and our business and reputation could be negatively affected. The unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could severely disrupt our business continuity and could have a material adverse effect on our business, results of operations, cash flows and financial condition.
In July 2023, the U.S. Securities and Exchange Commission adopted rules requiring registrants to disclose material cybersecurity incidents on a timely basis, as well as to provide enhanced disclosure regarding cybersecurity risk management, strategy, and governance. Failure to comply with these disclosure requirements may subject us to SEC enforcement actions, including injunctive relief, monetary penalties, and other sanctions. Compliance with these rules requires the implementation of additional internal controls, monitoring systems, policies, and procedures, which could result in significant incremental costs. Moreover, the disclosure of cybersecurity incidents, whether or not such incidents ultimately result in material financial losses, may increase reputational risk, lead to adverse publicity, and negatively affect investor confidence, which could, in turn, have a material adverse effect on our business, results of operations, and financial condition. Further, the information technology systems we and our vendors use are vulnerable to outages, breakdowns or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war, and telecommunication and electrical failures. For example, in July 2024, a software update by CrowdStrike Holdings, Inc. (“CrowdStrike”), a cybersecurity technology company, caused widespread crashes of Windows systems into which it was integrated. Although we have not experienced any material impacts as a result of the CrowdStrike software update, we could in the future experience similar third-party software-induced interruptions to our operations, which would adversely affect our business, results of operations and financial condition.
Recent action by the IMO’s Maritime Safety Committee and U.S. agencies indicate that cyber security regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cyber security threats. This might cause other companies to cultivate additional procedures for monitoring cyber security, which could require additional expenses and/or capital expenditures. However, the impact of such regulations is difficult to predict at this time.
Political uncertainty including the potential imposition of new international tariffs, and an increase in trade protectionism could have a negative impact on our charterers’ business and, in turn, could have a negative impact on our results of operations, financial condition and cash flows.
Our operations expose us to the risk that increased trade protectionism from China, other countries in the Asian region, the United States, the EU, Australia or other nations will adversely affect our business. If the global recovery is undermined by downside risks and the economic downturn returns, or if the regulatory environment otherwise dictates, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing the demand for shipping. During the last six years trade relations between the U.S and China became increasingly tense. In April 2025, the Trump administration imposed a baseline 10% tariff on imports from all nations importing goods to the United States, with that baseline supplemented in certain cases by additional tariffs that vary by nation, product or industry. Retaliatory tariffs on U.S. goods have been imposed by, among others, China and Canada. On July 28, 2025, the Trump administration announced a trade agreement with the European Union that included a 15% tariff on most imports from the European Union. While tariffs with certain countries have been temporarily reduced or paused, the imposition of tariffs generally has historically led to increased trade and political tensions between the United States and other countries in the international community. The continuation or resumption of such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States, the extent, depth and duration and effect of which on the global dry bulk trade cannot be presently assessed. Such an escalation of the trade war could impact our results of operations, financial condition and cash flows.
Seasonal fluctuations in industry demand could have a material adverse effect on our business, financial condition and results of operations and the amount of available cash with which we can pay dividends.
We operate our vessels in markets that have historically exhibited seasonal variations in demand and, as a result, in charter rates. Seasonality is related to several factors and may result in quarter-to-quarter volatility in our results of operations, which could affect the amount of dividends, if any, that we may pay to our shareholders. This seasonality may result in quarter-to-quarter volatility in our operating results for vessels trading in the spot market. For example, the market for marine drybulk transportation services and vessel capacity is typically stronger in the fall months in anticipation of increased consumption of coal and other raw materials in the northern hemisphere during the winter months and the grain export season from North America. Similarly, the market for marine drybulk transportation services is typically stronger in the spring months in anticipation of the South American grain export season due to increased distance traveled by vessels to their end destination known as ton mile effect, as well as increased coal imports in parts of Asia due to additional electricity demand for cooling
during the summer months. Demand for marine drybulk transportation services is typically weaker at the beginning of the calendar year and during the summer months. In addition, unpredictable weather patterns during these periods tend to disrupt vessel scheduling and supplies of certain commodities. This seasonality could have a material adverse effect on our business, financial condition and results of operations.
Charterers may renegotiate or default on period time charters, which could reduce our revenues and have a material adverse effect on our business, financial condition and results of operations.
The ability and willingness of each of our counterparties to perform its obligations under a period time charter agreement with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the drybulk shipping industry and the overall financial condition of the counterparties. If we enter into period time charters with charterers when charter rates are high and charter rates subsequently fall significantly, charterers may seek to renegotiate financial terms or may default on their obligations. Additionally, charterers may attempt to bring claims against us based on vessel performance or cargo loading or unloading operations, seeking to renegotiate financial terms or avoid payments. Also, our charterers may experience financial difficulties due to prevailing economic conditions or for other reasons, and as a result may default on their obligations. In past years, the industry experienced numerous incidents of charterers renegotiating their charters or defaulting on their obligations thereunder. In December 2020, we agreed to the early termination of an existing charter of a Capesize-class vessel at the request of the charterer which was contractually due to expire in January 2024. In exchange for the early redelivery of the vessel, the charterer paid us cash compensation of $8.1 million. The vessel was subsequently deployed under a new period time charter with a different charterer for a duration of 12 to 14 months at a gross daily charter rate linked to the 5 TC Baltic Exchange Capesize Index ("BCI-180 5TC'') times 119%. As of February 20, 2026, we had not received any additional notice of early redelivery or termination from any of our charters. If a charterer defaults on a charter, we will, to the extent commercially reasonable, seek the remedies available to us, which may include arbitration or litigation to enforce the contract, although such efforts may not be successful. Should a charterer default on a period time charter, we may have to enter into a charter at a lower charter rate, which would reduce our revenues. If we cannot enter into a new period time charter, we may have to secure a charter in the spot market, where charter rates are volatile and revenues are less predictable. It is also possible that we would be unable to secure a charter at all, which would also reduce our revenues, and could have a material adverse effect on our business, financial condition, results of operations, loan and credit facility covenants and cash flows.
We depend on a limited number of customers for a large part of our revenues and the loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations.
We expect to derive a significant part of our revenues from a limited number of customers. During the year ended December 31, 2025, one of our charterers each accounted for more than 10% of our revenues and in previous periods some of our charterers each accounted for more than 10% of our revenues. We could lose a customer for many different reasons, including:
•a failure of the customer to make charter payments because of its financial inability, disagreements with us or otherwise;
•the customer’s termination of its charters because of our non-performance, including serious deficiencies with the vessels we provide to that customer or prolonged periods of off-hire;
•a prolonged force majeure event that affects the customer may prevent us from performing services for that customer, i.e., damage to or destruction of relevant production facilities and war or political unrest; and
•sanctions, imposition of tariffs, blacklisting or the other reasons discussed in this section.
If we lose a key customer, we may be unable to obtain period time charters on comparable terms with charterers of comparable standing or may have increased exposure to the volatile spot market, which is highly competitive and subject to significant price fluctuations. We would not receive any revenues from a vessel while it remained unchartered, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition, insure it and service any indebtedness secured by such vessel. The loss of any of our key customers, a decline in payments under our charters or the failure of a key customer to perform under its charters with us could have a material adverse effect on our business, financial condition and results of operations.
When our contracts expire, we may not be able to successfully replace them. Our growth and our capacity to replace them depends on our ability to expand relationships with existing customers and obtain new customers, for which we will face substantial competition from new entrants and established companies with significant resources.
Time-charter contracts provide income at pre-determined rates over short or more extended periods of time. However, the process for obtaining new time charters especially longer term time charters is highly competitive and generally involves a lengthy, intensive and continuous screening and vetting process and the submission of competitive bids. In addition to the quality, age and suitability of the vessel, longer term shipping contracts tend to be awarded based upon a variety of other factors relating to the vessel operator, including:
•the operator’s environmental, health and safety record;
•compliance with the IMO standards and regulatory industry standards;
•shipping industry relationships, reputation for customer service, technical and operating expertise;
•shipping experience and quality of ship operations, including cost-effectiveness;
•quality, experience and technical capability of crews; and
•willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events.
As a result of these factors we may be unable to expand our relationships with existing customers or obtain new customers for our charters on a profitable basis, if at all, therefore, when our contracts including our long-term charters expire, we cannot assure you that we will be able to replace them promptly or at all or at rates sufficient to allow us to operate our business profitably, to meet our obligations, including payment of debt service to our lenders, or to pay dividends. Our ability to renew the charter contracts on our vessels on the expiration or termination of our current charters, or, on vessels that we may acquire in the future, the charter rates receivable under any replacement charter contracts, will depend upon, among other things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for the transportation of commodities. During periods of market distress when long-term charters may be renewed at rates at or below operating costs, we may not choose to charter our vessels for longer terms particularly if doing so would create an ongoing negative cash flow during the period of the charter. We may instead choose to employ our vessels in the spot market for short periods, or in index-linked charters, or be forced to idle our vessels, or lay them up, or scrap them depending on market conditions and outlook at the time those vessels become available for charter.
However, if we are successful in employing our vessels under longer-term time charters, our vessels will not be available for trading in the spot market during an upturn in the market cycle, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitable charter contracts, our results of operations and operating cash flow could be materially adversely affected.
We have adopted an anti-bribery policy consistent with the provisions of the FCPA and anti-bribery legislation in other jurisdictions. Actual or alleged violations of these policies could result in damage of our reputation, sanctions, criminal penalties, imprisonment, civil action and fines, which could have an adverse effect on our business.
We operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted policies consistent and in full compliance with the FCPA and anti-bribery legislation in other jurisdictions. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including the FCPA. Any such violation and failure to comply with the FCPA and other anti-corruption laws could result in substantial fines, sanctions, civil and/or criminal penalties or curtailment of operations in certain jurisdictions, charter terminations and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Moreover, the dynamic and complex nature of international sanctions regimes creates significant compliance challenges in maritime operations. We cannot provide absolute assurance that our vessels or our customers will not inadvertently engage in transactions without our knowledge or consent, potentially exposing us to sanctions violations, which could result in significant monetary penalties, reputational damage, adverse effects on our business relationships, restrictions on
our ability to secure financing and vessel seizures or detentions which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We may have difficulty properly managing our planned growth through acquisitions of additional vessels.
As of February 20, 2026, we intend to continue our fleet renewal strategy having entered into contracts for the acquisition of eight environmentally advanced Japanese and Chinese dry-bulk GHG-EEDI Phase 3 NOx-Tier III compliant newbuilds, including two methanol dual fueled, scheduled to be delivered four in 2026, two in 2027, one in 2028 and one in 2029. We may contract additional newbuild vessels or make selective acquisitions of additional second-hand vessels. Our future growth will primarily depend on our ability to identify, locate and acquire suitable vessels, including newbuilding slots at shipyards at attractive prices, enlarge our customer base, operate and supervise any newbuilds we may order and obtain required debt or equity financing on acceptable terms.
A delay in the delivery to us of any such vessel, or the failure of the shipyard to deliver a vessel at all, could cause us to breach our obligations under a related charter and could adversely affect our earnings. In addition, the delivery of any of these vessels with substantial defects could have similar consequences.
A shipyard could fail to deliver a newbuild on time or at all because of:
•work stoppages or other hostilities, political, economic or other disturbances that disrupt the operations of the shipyard, including as a result of outbreak of public health threats;
•quality or engineering problems;
•bankruptcy or other financial crisis of the shipyard;
•a backlog of orders at the shipyard;
•disputes between the Company and the shipyard regarding contractual obligations;
•weather interference or catastrophic events, such as major earthquakes or fires;
•our requests for changes to the original vessel specifications; or
•shortages of or delays in the receipt of necessary construction materials, such as steel, or equipment, such as main engines, electricity generators and propellers.
A third-party seller could fail to deliver a second-hand vessel on time or at all because of:
•bankruptcy or other financial crisis of the third-party seller;
•quality or engineering problems;
•disputes between the Company and the third-party seller regarding contractual obligations; or
•weather interference or catastrophic events, such as major earthquakes or fires.
In addition, we may seek to terminate or novate a vessel acquisition contract due to market conditions, financing limitations or other reasons. The outcome of contract termination or novation negotiations may require us to forego deposits on construction or acquisition, as applicable, and pay additional cancellation fees. In addition, where we have already arranged a future charter with respect to the terminated contract, we may incur liabilities to such charter counterparty depending on the terms of such charter.
During periods in which charter rates are high, vessel values generally are high as well, and it may be difficult to consummate vessel acquisitions or enter into newbuild contracts at favorable prices. During periods when charter rates are low, we may be unable to fund the acquisition of vessels, whether through lending or cash on hand. In addition, we may not receive a favorable return on our investments, incur losses therefrom, or our investments may become impaired which could adversely impact our business, financial condition and results of operations. We cannot give any assurance that we will be successful in executing our growth plans, obtain appropriate financings on a timely basis or on terms we deem reasonable or acceptable or that we will not incur significant expenses and losses in connection with our future growth. For these reasons, we may be unable to execute our growth plans or avoid significant expenses and losses in connection with our future growth efforts.
As we expand our business, we will need to improve or expand our operations and financial systems, staff and crew; if we cannot improve these systems or recruit suitable employees, our performance may be adversely affected.
Our current operating and financial systems may not be adequate as we implement our plan to expand the size of our fleet, and our Managers’ attempts to improve those systems may be ineffective. In addition, as we expand our fleet, we will have to rely on our Managers to recruit additional seafarers and shoreside administrative and management personnel. Our Managers may not be able to continue to hire suitable employees or a sufficient number of employees as we expand our fleet. If our Managers’ unaffiliated crewing agents encounter business or financial difficulties, we may not be able to adequately staff our vessels. We may also have to increase our customer base to provide continued employment for most of our new vessels. The number of employees that perform services for us and our current operating and financial systems may not be adequate as we implement our plan to renew and expand our fleet size in the dry bulk sector, and we may not be able to effectively hire more employees or adequately improve those systems. If we are unable to operate our financial systems, our Managers are unable to operate our operations systems effectively or identify, recruit, train and retain qualified and suitable employees and crew in sufficient numbers to manage and operate our growing business and fleet or we are unable to retain key personnel, increase our customer base as we expand our fleet, our performance may be adversely affected.
Unless we set aside reserves for vessel replacement, at the end of a vessel’s useful life, our revenue will decline, which would adversely affect our cash flows and income.
As of February 20, 2026, we had 45 vessels in our fleet, one of which was held for sale, with an average age of 10.5 years, with 11 vessels above 15 years, two of which are reaching an age of 20 years. Unless we maintain cash reserves for vessel replacement, we may be unable to replace the vessels in our fleet upon the expiration of their useful lives. We estimate the useful life of our vessels to be 25 years from the date of built. Changes in environmental and other regulations and technological advances may limit the useful lives of vessels, decrease their resale or residual value or their utilization and profitability during the remainder of their useful lives. Our cash flows and income are dependent on the revenues we earn by chartering our vessels to customers. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, financial condition and results of operations will be materially adversely affected. Any reserves set aside for vessel replacement would not be available for other cash needs or dividends.
Our ability to obtain financing on favorable terms due to the unavailability of debt and equity capital and the deterioration of the global banking markets may adversely impact our business. If economic conditions globally continue to be volatile, it could impede our operations.
Although capital markets have improved since 2008, when banks and other financial institutions active in the shipping industry became increasingly unwilling to provide credit, the shipping industry remains negatively affected by the scarcity of credit and the cost of financing has increased. Relatively weak global economic conditions have had and may continue to have a number of adverse consequences for dry bulk and other shipping sectors, including, among other things the limited financing for vessels. Financing institutions have increased interest rate margins or even ceased funding for certain shipping companies. Furthermore, vessels older than 15 years old may not be financed by banks and other financial institutions at all and the widespread loan covenant defaults, bankruptcy declaration by certain vessel operators, vessel owners, shipyards and charterers has limited the availability of financing for new vessels or refinancing for existing debt agreements. Any deterioration of the global banking markets may decrease the availability of financing or refinancing on acceptable terms when needed, and we may be unable to meet our debt obligations as they become due. Any adverse developments in relation to trade wars, the war between Russia and Ukraine, the conflict in the Middle East, or ongoing instability in Venezuela may affect credit markets globally and increase volatility of global economic conditions which could impede our results of operations and financial condition.
If we are unable to obtain additional secured indebtedness, we may be unable to refinance our existing indebtedness and may not be able to finance a fleet replacement and expansion program in the future, any of which would have a material adverse effect on our business, financial condition and results of operations.
Global financial markets and economic conditions have been volatile. Future financing and investing activities may involve refinancing of certain existing debt near or upon maturity and the financing of future fleet replacement and expansion. Our ability to refinance existing indebtedness, or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering, including the actual or perceived credit quality of our charterers and the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial markets and contingencies and uncertainties that are beyond our control. We may face liquidity issues if conditions in the dry bulk market worsen for a prolonged period and cause us to fail to comply with the terms of our debt agreements which could adversely affect our business. A significant reduction in cash generated from operations, or the loss of access to existing or new financing sources, could materially and adversely affect our ability to meet our obligations and sustain operations. To the extent that we are unable to enter into new credit facilities and obtain such additional secured indebtedness on terms acceptable to us, we will need to find alternative financing. In addition, we may also be liable for other
damages for breach of contract. A failure to satisfy our financial commitments could result in the acceleration of our indebtedness and foreclosure on our vessels. Such events, if they occurred, would adversely affect our business, financial condition and results of operations.
The aging of our fleet may affect the ability of our older vessels to trade and may result in increased operating costs in the future, which could adversely affect our ability to operate such vessels profitably.
As of February 20, 2026, the average age of the vessels in our current fleet was 10.5 years and 11 vessels were over 15 years old. In general, demand for vessels over 15 years old may decrease, especially with the increasingly more stringent environmental regulations. Older vessels may become less fuel and energy efficient and will not be as advanced as more recently constructed vessels due to improvements in design and engine technology. Rates for cargo insurance, paid by charterers, also increase with the age of a vessel, making older vessels less desirable to charterers. Newbuild drybulk vessels may be more energy efficient and competition from these newbuilds could adversely affect the tradeability and the resale value of our older vessels. Furthermore, large established charterers with whom we are doing business may introduce vessel age trading limitations earlier than the 25 year useful life.
In addition, the cost to maintain a vessel in good operating condition increases with the age of the vessel. Vessels older than 15 years require dry-docking every 2-3 year intervals compared to 5 year intervals up to that age. The required steel renewals which increase considerably the cost of a dry-docking due to steel plate diminution may affect the operating costs mainly after the age of 20 years. Governmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage, which could adversely affect our ability to operate our vessels profitably. As our vessels age, market conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.
Due to our lack of vessel diversification, supply chain issues and adverse developments in the drybulk transportation business could adversely affect our business, financial condition and operating results.
We derive all our revenues exclusively from our business operations in the drybulk transportation industry, unlike other shipping companies which may have LNG carriers, tankers and container vessels. Since we depend exclusively on the transport of drybulk, an adverse market development in the drybulk sector of the transportation industry, such as the reduction of coal trade due to environmental concerns, decrease of iron ore trade due to less demand for steel products, or the disruption of the grains trade due to war in Ukraine could therefore have a stronger impact on our business, results of operations, cash flows and financial condition, than if we had multiple sources of revenues, lines of businesses or types of assets.
We are and will be exposed to floating interest rates and may selectively enter into interest rate derivative contracts, which can result in higher than market interest rates and charges against our income.
The loans under our credit facilities and sale and leaseback financings are generally advanced at a floating rate based on SOFR plus a margin, which is volatile and can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. Between 2022 and 2023, three-month SOFR increased from 0.05% to 5.38% and between 2024 and 2025 three-month SOFR decreased from 5.38% to 3.719%. In order to manage our exposure to changes in the general level of interest rates and market interest rate fluctuations, we may, from time to time, use interest rate derivatives to effectively fix certain of our floating rate debt obligations. As of February 20, 2026, we have entered into derivative contracts to economically hedge our exposure to interest rate risk, and we may enter into additional derivative contracts in the future. We effectively hedged the interest rate exposure of 12% of our loans outstanding as of December 31, 2025, which bear interest at SOFR. Our financial condition could be materially adversely affected at any time that we have not entered into interest rate hedging arrangements to hedge our exposure to the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future. Moreover, entering into hedging arrangements is inherently risky and even if we have entered into such arrangements, our hedging strategies may not be effective and we may incur substantial losses. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives, while adverse movements in interest rate derivatives may require us to post cash as collateral for margin calls, which may impact our liquidity.
Because we generate substantially all of our revenues in U.S. dollars but incur a material portion of our expenses in other currencies, including our management fees, and also incur a material portion of our indebtedness and our capital expenditure requirements in other currencies, exchange rate fluctuations could have a material adverse effect on our business, financial condition and results of operations.
We generate substantially all of our revenues in U.S. dollars, but in 2025 we incurred approximately 21.8% of our vessel operating expenses in currencies other than the U.S. dollar, of which 55.9% was denominated in Euros. In addition, we incurred the majority of our management fees in Euros, and this will continue in the future. In February 2022, one of our subsidiaries issued a non-amortising unsecured bond in the amount of €100,000,000, which is listed in the Athens Stock Exchange (the
"Bond"). The Bond is guaranteed by us and pays a coupon of 2.95% on a semi-annual basis. It matures in February 2027 and may be redeemed at our option in part or in full after February 2024, subject to the payment of a premium ranging from 1.5% to 0.5% of the redeemed amount depending on the timing of the redemption. As of February 20, 2026, we had entered into arrangements to counterbalance the currency risk arising from the Bond redemption for 55% of the outstanding amount, while we had not entered into any arrangements to counterbalance the currency risk arising from the coupon payments. As of December 31, 2025, all of our secured indebtedness, as well as the amounts due under the contracts for the acquisition of the newbuild vessels currently in our orderbook, were denominated in U.S. dollars. We have historically entered into shipbuilding contracts and purchase of vessels whereby part of the contract price was payable in Japanese yen and Singapore dollars. Also, new credit facilities and financing agreements, purchase of vessels or newbuild contracts may be denominated in or permit conversion into currencies other than the U.S. dollar. The use of different currencies could lead to fluctuations in our net income due to changes in the value of the U.S. dollar relative to other currencies, in particular the Euro and the Japanese yen. We have only partially hedged our overall currency exposure, and, as a result, our results of operations and financial condition, denominated in U.S. dollars, and our ability to pay dividends, could suffer.
Inflation pressures across the world economies and the changes in central bank rates could lead to subpar economic growth, declining market conditions and eventually contraction for a number of emerging and advanced economies, hamper the fragile recovery of world economies and could adversely affect dry-bulk world trade and freight markets, the cost of our capital, financing, loan and credit facilities and the cost of our overall indebtedness which could have a material adverse effect on our business, financial condition and results of operations.
The world economy is facing a number of challenges related to geopolitical tensions such as the Ukraine-Russia war, the Israeli-Gaza strip war, the disruption of trade in the Red Sea and others, which could lead to further large scale disruptions in the supply chains, energy and commodity markets and subsequently to a high inflation environment. Global economic prospects for 2026 and 2027 as per the IMF latest projections indicate a gradual normalization of inflation from an estimated 6.8% in 2023 (annual average), 5.8% in 2024 to 4.1% in 2025, 3.8% in 2026 and 3.4% in 2027, as forecasted in the January 2026 World Economic Outlook of the International Monetary Fund. Between 2022 and 2023, three-month SOFR increased from 0.05% to 5.38% and between 2024 and 2025, three-month SOFR decreased from 5.38% to 3.71%. Between 2022 and 2023, the European Central Bank raised interest rates from 0% to 4.5% and between 2024 and 2025, implemented a rate cut from 4.5% to 2.15%, responding to declining inflation and moderating economic growth in the Eurozone as economic activity remained subdued, aiming to support growth and ensure price stability. It is difficult to predict the future of interest rates, but changes in interest rates by both central banks could lead to subpar economic growth. These rate changes have significantly impacted borrowing costs and influenced global financial markets, particularly affecting shipping finance and vessel valuations.
As a result, global economic conditions and global financial markets have been, and continue to be, volatile and certain countries may face recession and uncertainty surrounding the potential for continued economic growth, which could lead to reduced demand for transportation of dry-bulk commodities and reduced charter rates. Global growth is projected to remain resilient at an estimated rate of 3.3% in 2026 and 3.2% for 2027, according to recent forecasts from the International Monetary Fund January 2026 World Economic Outlook forecast.
Concerns over geopolitical issues including the perception of an fragile truce in the trade war and acts of war in multiple regions, including Russia, Iran, North Korea, Ukraine, Israel, Palestine and Syria, have contributed to increased volatility and potentially tighter economic conditions introducing new layers of uncertainty and disrupting the global economy through their impact on financial markets. Tighter monetary conditions and lower growth expectation or recession as a result of the inflationary environment could potentially affect the financial and debt stability.We cannot predict how long the current global inflationary conditions and high interest rates will last or whether central banks may decide to further reduce rates in 2026. Persistent industry-wide inflationary pressures and higher for longer interest rates may affect the shipping industry in general and dry-bulk shipping specifically and could adversely affect our business and financial results by reducing our revenue due to low freight market conditions, increasing the costs of financing, loan and credit facilities, the cost of our operating expenses including our crew cost and our overall indebtedness, which could have a material adverse effect on our business, financial condition and results of operations.
Restrictive covenants in our existing credit facilities and financing agreements including our Bond, impose, and any future credit facilities and financing agreements will impose, financial and other restrictions on us, and any breach of these covenants could result in the acceleration of our indebtedness and foreclosure on our vessels.
We have substantial indebtedness and as of December 31, 2025, we had $548.6 million outstanding under our credit facilities and financing agreements.
Our existing credit facilities and financing agreements impose, and any future credit facility and financing agreement will impose, operating and financial restrictions on us. These restrictions generally limit our ability to, among other things:
•pay dividends if an event of default has occurred and is continuing or would occur as a result of the payment of such dividend;
•enter into certain long-term charters without the lenders’ consent;
•incur additional indebtedness, including through the issuance of guarantees;
•change the flag, class or management of the vessel mortgaged under such facility or terminate or materially amend the management agreement relating to such vessel;
•create liens on their assets;
•make loans;
•make investments;
•make capital expenditures;
•undergo a change in ownership or control or permit a change in ownership and control of our Managers;
•sell the vessel mortgaged under such facility; and
•change our chief executive officer.
Therefore, we may need to seek permission from our lenders in order to engage in some corporate actions. Our lenders’ interests may be different from ours, and we cannot guarantee that we will be able to obtain our lenders’ permission when needed. This may limit our ability to pay dividends to our shareholders, finance our future operations or pursue business opportunities.
Certain of our existing credit facilities require our subsidiaries to maintain financial ratios and satisfy financial covenants. Depending on the credit facility, certain of our subsidiaries are subject to financial ratios and covenants requiring that these subsidiaries:
•ensure that the market value of the vessel mortgaged under the applicable credit facility, determined in accordance with the terms of that facility, does not fall below 105%, 112%, 120%, 125% or 135%, as the case may be (the “Minimum Value Covenant”);
•maintain at all times a minimum cash balance per vessel with the respective lender from $200,000 to $500,000 as the case may be; and
•ensure that we comply with certain financial covenants under the guarantees described below.
In addition, under our loan agreements or under guarantees we have entered into with respect to certain of our subsidiaries’ credit facilities including our Bond, we are subject to financial covenants. Depending on the facility, these financial covenants include the following as of February 20, 2026:
•our total consolidated liabilities divided by our total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets), must not exceed 85% (the “Consolidated Leverage Covenant”);
•our total consolidated assets (based on the market value of all vessels owned or leased on a finance lease taking into account their employment, and the book value of all other assets) less our total consolidated liabilities must not be less than $150 million (the “Net Worth Covenant”);
•our ratio of its EBITDA over consolidated interest expense must not be less than 2.0:1, on a trailing 12 months’ basis (the “EBITDA Covenant”);
•a minimum of 30% or 35%, as the case may be, of our voting and ownership rights shall remain directly or indirectly beneficially owned by the Hajioannou family for the duration of the relevant credit facilities and in the case of one facility, Polys Hajioannou is required to beneficially hold a minimum of 20% of the voting and ownership rights (the “Control Covenant”); and
•payment of dividends is subject to no event of default having occurred and be continuing or would occur as a result of the payment of such dividends.
Non-compliance with these covenants, whether due to market downturns, operational challenges, or financial underperformance, could constitute a breach of the terms of our financing arrangements and could lead to defaults under our secured credit facilities. In such cases, our lenders may exercise their rights to accelerate the maturity of our outstanding debt obligations, demanding immediate repayment of the principal and any accrued interest. Failure to satisfy these repayment demands could result in the enforcement of security interests by the lenders, including foreclosure on the vessels securing our credit facilities. Foreclosure on our vessels would significantly impair our ability to generate revenue, disrupt our operations, and diminish our asset base. Additionally, the loss of key vessels could undermine our market position, negatively affect customer relationships, and hinder our ability to secure future charter contracts. As a result, such enforcement actions could materially and adversely impact our financial condition, operational performance, and overall business stability, potentially leading to long-term financial distress or insolvency.
The declaration and payment of dividends will always be subject to the discretion of our board of directors and will depend on a number of factors. Our board of directors may not declare dividends in the future.
In March 2022, we declared and paid a cash dividend of $0.05 per share of Common Stock, and have since declared and paid quarterly consecutive cash dividends, each of $0.05 per share of Common Stock. The declaration and payment of future dividends, if any, will always be subject to the discretion of the board of directors of the Company. There is no guarantee that the Company’s board of directors will determine to issue cash dividends in the future. The timing and amount of any dividends declared will depend on, among other things: (i) the Company’s earnings, fleet employment profile, financial condition and cash requirements and available sources of liquidity; (ii) decisions in relation to the Company’s growth, fleet renewal and leverage strategies; (iii) provisions of Marshall Islands and Liberian law governing the payment of dividends; (iv) restrictive covenants in the Company’s existing and future debt instruments; and (v) global economic and financial conditions. Therefore, we might not continue paying dividends on our shares of Common Stock in the future.
There may be a high degree of variability from period to period in the amount of cash, if any, that is available for the payment of dividends based upon, among other things:
•the rates we obtain from our charters as well as the rates obtained upon the expiration of our existing charters;
•the level of our operating costs;
•the level of our general and administrative costs;
•the number of unscheduled off-hire days and the timing of, and number of days required for, scheduled drydocking of our ships;
•vessel acquisitions and related financings;
•level of indebtedness;
•restrictions in our loan and credit facilities and in any future debt facilities;
•prevailing global and regional economic and political conditions;
•the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business;
•the amount of cash reserves established by our board of directors; and
•restrictions under Marshall Islands and Liberian law.
We may incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distribution as dividends, if any. Our growth and fleet renewal strategies contemplate that we will finance the acquisition of our contracted newbuilds or selective acquisitions of second-hand vessels through a combination of cash on hand, our operating cash flow and debt financing or equity financing. If financing is not available to us on acceptable terms, our board of directors may decide to finance or refinance such acquisitions with a greater percentage of cash from operations to the extent available, which would reduce or even eliminate the amount of cash available for the payment of dividends. We may also enter into other agreements that will restrict our ability to pay dividends.
Our financing arrangements impose a number of restrictions on our ability to pay dividends, and we may not be able to pay dividends even though we have an established dividend policy. Under the terms of certain of our existing credit facilities, we are not permitted to pay dividends if an event of default has occurred and is continuing or would occur as a result of the payment of such dividend. We expect that any future credit facilities will also have restrictions on the payment of dividends. In
addition, cash dividends on our Common Stock are subject to the priority of dividends on the 804,950 outstanding shares of Series C Preferred Shares and 3,195,050 outstanding shares of Series D Preferred Shares as of December 31, 2025.
The laws of the Republic of Liberia and of the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, generally prohibit the payment of dividends other than from surplus or net profits, or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. Our subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us. In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit and loan facilities, we are subject to financial and other covenants, which may limit our ability to pay dividends. We also may not have sufficient surplus or net profits in the future to pay dividends.
The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items. We may incur other expenses or liabilities that could reduce or eliminate the cash available for distribution as dividends. As a result of these and the other factors mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income.
We are a holding company and we depend on the ability of our subsidiaries to distribute funds to us in order to make dividend payments.
We are a holding company and our subsidiaries, which are all wholly-owned by us, conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our wholly-owned subsidiaries and cash and cash equivalents held by us. As a result, our ability to satisfy our financial obligations and to make dividend payments depends on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by a claim or other action by a third party, including a creditor, and the laws of the Republic of Liberia, the Republic of the Marshall Islands where our vessel-owning subsidiaries are incorporated, and of the Republic of Cyprus, where one of our subsidiaries, the holding company of four of our vessel-owning subsidiaries, is incorporated, which regulate the payment of dividends by companies. We do not intend to obtain funds from other sources to pay dividends. If we are unable to obtain funds from our subsidiaries, our board of directors may exercise its discretion not to declare or pay dividends. Furthermore, certain of our outstanding financing arrangements restrict the ability of some of our subsidiaries to pay us dividends under certain circumstances, such as if an event of default exists.
We depend on our Managers to operate our business and our business could be harmed if our Managers fail to perform their services satisfactorily.
Pursuant to our management agreements with our Managers (the “Management Agreements”), our Managers provide us with technical, administrative and commercial services (including vessel maintenance, crewing, purchasing, shipyard supervision, insurance, assistance with regulatory compliance, financial services and office space) and our executive officers. Our operational success depends significantly upon our Managers’ satisfactory performance of these services. Our business would be harmed if our Managers failed to perform these services satisfactorily. In addition, if either of the Management Agreements were to be terminated, expire or if their terms were to be altered, our business could be adversely affected, as we may not be able to immediately replace such services, and even if replacement services were immediately available, the terms offered could be less favorable than those under our Management Agreements.
Our ability to compete for and enter into charters and to expand our relationships with our existing charterers will depend largely on our relationship with our Managers and their reputation and relationships in the shipping industry. If our Managers suffer material damage to their reputation or relationships, it may harm our ability to:
•renew existing charters upon their expiration;
•obtain new charters;
•successfully interact with shipyards during periods of shipyard construction constraints;
•obtain financing on commercially acceptable terms;
•maintain satisfactory relationships with our charterers and suppliers; and
•successfully execute our business strategies.
If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, financial condition and results of operations.Although we may have rights against our Managers if they default on their obligations to us, investors in us will have no recourse against our Managers. The failure of our Managers to perform their
obligations could materially and adversely affect our business, results of operations, cash flows, financial condition and ability to pay dividends
Our Managers are permitted to provide certain management services to affiliates and third parties under the specific restrictions of our Management Agreements. Although our Managers are required to provide preferential treatment to our vessels with respect to chartering arrangements under the Management Agreements, our Managers’ time and attention may be diverted from the management of our vessels in such circumstances. Further, we will need to seek approval from our lenders to change our Managers.
Management fees are payable to our Managers regardless of our profitability, which could have a material adverse effect on our business, financial condition and results of operations.
Pursuant to our Management Agreements, we pay our Managers a daily ship management fee of €950 per vessel and Safe Bulkers Management Monaco an annual ship management fee of €5.0 million for providing commercial, technical and administrative services (see the section entitled “Item 5. Operating and Financial Review and Prospects - A. Operating Results - General and Administrative Expenses” for more information). In addition, we pay our Managers certain commissions and fees with respect to vessel purchases, sales and newbuilds. The management fees do not cover expenses such as voyage expenses, vessel operating expenses, maintenance expenses, crewing costs, insurance premiums, commissions and certain company administration expenses such as directors’ and officers’ liability insurance, legal and accounting fees and other similar company administration expenses, which are reimbursed or paid by us. The management fees are payable whether or not our vessels are employed, and regardless of our profitability, and we have no ability to require our Managers to reduce the management fees if our profitability decreases, which could have a material adverse effect on our business, financial condition and results of operations. The latest expiration date of the Management Agreements with our Managers is May 2027. We expect to enter into new agreements with the Managers upon their expiration; however, the terms upon which the new management agreements will be entered into are unknown at this time and may be less favorable to the Company than those currently in place.
All of our Managers are privately held companies, and there is little or no publicly available information about them; an investor could have little advance warning of problems affecting our Managers that could have a material adverse effect on us.
The ability of our Managers to continue providing services for our benefit will depend in part on their own financial strength. Circumstances beyond our control could impair our Managers’ financial strength. Because our Managers are privately held, it is unlikely that information about their financial strength would become public or available to us prior to any default by our Managers under the Management Agreements. As a result, we may, and our investors might, have little advance warning of problems that affect our Managers, even though those problems could have a material adverse effect on us.
Our chief executive officer also controls our Managers, which could create conflicts of interest between us and our Managers.
Our chief executive officer, Polys Hajioannou, controls both of our Managers. Polys Hajioannou, directly and through entities controlled by him, owns approximately 47.32% of our outstanding Common Stock as of February 20, 2026 (see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” for more information). These relationships could create conflicts of interest between us, on the one hand, and our Managers, on the other hand. These conflicts may arise in connection with the chartering, purchase, sale and operation of the vessels in our fleet versus vessels owned or chartered-in by other companies affiliated with our Managers or our chief executive officer. To the extent we elect not to exercise our right of first refusal with respect to any drybulk vessel that may be acquired by companies affiliated with our chief executive officer, such companies could acquire and operate such drybulk vessels in competition with us. In addition, although under our Management Agreements our Managers will be required to first provide us any chartering opportunities in the drybulk sector, our Managers are not prohibited from giving preferential treatment in other areas of its management to vessels that are beneficially owned by related parties. In addition, under our restrictive covenant arrangements with Mr. Hajioannou and certain entities affiliated with him, he and such entities may own, operate or finance a maximum of eight drybulk vessels on the water at any one time or enter into an unlimited number of contracts with shipyards for newbuild drybulk vessels as part of his estate or family planning. Any such drybulk vessels are not required to be managed by either of our Managers, and Mr. Hajioannou and his related entities are not required to first provide chartering opportunities to us with respect to such vessels. Additionally, our restrictive covenant arrangements permit Mr. Hajioannou to acquire up to a 35% ownership stake in any Minority Invested Business (as defined below) developed from a permitted acquisition, subject to certain requirements, including a commitment that, unless approved by the majority of our independent directors, no drybulk vessels owned by such Minority Invested Business will be managed by either of our Managers or any other person or entity in which Mr. Hajioannou has an ownership interest. These conflicts of interest may have an adverse effect on our business, financial condition and results of operations.
While we adhere to high standards of evaluating related party transactions, agreements between us and other affiliated entities may be challenged as less favorable than agreements that we could obtain from unaffiliated third parties.
We have entered into various transactions with Mr. Hajioannou, our Chairman and Chief Executive Officer, and entities controlled by and/or affiliated with Mr. Hajioannou. For example, in 2017, we sold one drybulk vessel to an entity owned by Mr. Hajioannou. While we believe this transaction was properly evaluated and approved by an independent special committee of our board of directors, certain terms related to the transaction, including price, may be challenged to be on terms that are less favorable to us than terms that would have otherwise been agreed upon with unaffiliated third-parties. Future transactions with Mr. Hajioannou and entities controlled by and/or affiliated with Mr. Hajioannou may undergo scrutiny by our shareholders, the media or others and result in a challenge of the terms associated with any such transaction.
Our business depends upon certain employees who may not necessarily continue to work for us; if such employees were no longer to be affiliated with us, our business, financial condition and results of operation could suffer.
Our future success depends, to a significant extent, upon the experience and industry knowledge of our chief executive officer, Polys Hajioannou, and certain other members of our senior management and of our Managers. Polys Hajioannou has substantial experience in the drybulk shipping industry and for over 30 years has worked with us, our Managers and their predecessor. He and other members of our senior management and of our Managers manage our business and their performance is crucial to the execution of our business strategies and to the growth and development of our business. If these individuals were no longer to be affiliated with us or our Managers, or if we were to otherwise cease to receive advisory services from them, we may be unable to recruit other employees with equivalent talent and experience, and our business and financial condition could suffer. In addition, no assurance can be given that we will be able to attract or retain key management personnel and other key employees. We do not maintain, and do not intend to maintain, “key man” life insurance on any of our executive officers.
The provisions in our restrictive covenant arrangements with our chief executive officer and certain entities affiliated with him restricting their ability to compete with us, like restrictive covenants generally, may not be enforceable.
Our chief executive officer, Polys Hajioannou, and certain entities affiliated with him have entered into restrictive covenant agreements with us under which they are precluded from competing with us during either (i) with respect to Polys Hajioannou, the term of his service with us as executive and director and for one year thereafter, or (ii) with respect to entities affiliated with Polys Hajioannou, during the term of the Management Agreements and for one year following the termination of our Management Agreements, in each case subject to certain exceptions. Courts generally do not favor the enforcement of such restrictions, particularly when they involve individuals and could be construed as infringing on such individuals’ ability to be employed or to earn a livelihood. Our ability to enforce these restrictions, should it ever become necessary, will depend upon the circumstances that exist at the time enforcement is sought. A court may not enforce the restrictions as written by way of an injunction and we may not necessarily be able to establish a case for damages as a result of a violation of the restrictive covenants.
Our vessels may call on ports located in Iran, which is identified by the United States government as a state sponsor of terrorism and are subject to United States economic sanctions, which could be viewed negatively by investors and adversely affect the trading price of our Common Stock and Preferred Shares.
The United States, the European Union, the United Nations and other governments and their agencies impose sanctions and embargoes on certain countries and maintain lists of countries, individuals or entities they consider to be state sponsors of terrorism, involved in prohibited development of certain weapons or engaged in human rights violations. From time to time, vessels in our fleet have called and/or may call on ports located in countries identified by the United States government as state sponsors of terrorism and subject to United States economic sanctions. From January 1, 2022 through December 31, 2022, no vessels in our fleet made any calls on ports in Iran out of a total of 690 calls made on worldwide ports. From January 1, 2023 through December 31, 2023, no vessels in our fleet made any calls on ports in Iran out of a total of 809 calls made on worldwide ports. From January 1, 2024 through December 31, 2024, no vessels in our fleet made any calls on ports in Iran out of a total of 842 calls made on worldwide ports. From January 1, 2025 through December 31, 2025, no vessels in our fleet made any calls on ports in Iran out of a total of 830 calls made on worldwide ports. Iran is identified by the United States government as a state sponsor of terrorism. We will continue to monitor the economic sanctions in Syria following the recent collapse of Bashar al-Assad’s regime. Although these designations and controls do not prevent our vessels from making calls on ports in these countries, potential investors could view such port calls negatively, which could adversely affect our reputation and the market for our Common Stock. Investor perception of the value of our Common Stock may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries.
Our policy is for our vessels to avoid making calls on ports in Iran unless the charterer represents to us that the cargo is not in contravention with any E.U., U.S. or United Nation sanctions and the export of such cargo has been authorized by the Office of Foreign Assets Control of the U.S. Department of the Treasury.
If our vessels call on ports located in countries that are subject to sanctions and embargoes imposed by the U.S. or other governments, it could adversely affect our reputation and the market for our shares. From time to time, on charterers’ instructions, our vessels may call on ports located in countries subject to certain sanctions and embargoes identified as state sponsors of terrorism. Sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. In addition, charterers and other parties that we have previously entered into contracts with regarding our vessels may be affiliated with persons or entities that are now or may become the subject of sanctions imposed by the U.S. government, the E.U. and/or other international bodies. If we determine that such sanctions require us to terminate existing or future contracts to which we, or our subsidiaries, are party or if we are found to be in violation of such sanctions, we may suffer reputational harm and our results of operations may be adversely affected. Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretation. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business and could result in some investors deciding, or being required, to divest their interest, or not to invest, in our securities. For example, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. Additionally, some investors may decide to divest their interest, or not to invest, in our company simply because we do business with companies that do business in sanctioned countries. The determination by these investors not to invest in, or to divest, our shares may adversely affect the price at which our shares trade. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn result in liability for the Company or negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third-parties that are unrelated to those countries or entities controlled by their governments.
See “Item 4. Information on the Company—B. Business Overview—Disclosure of activities pursuant to Section 13(r) of the U.S. Securities Exchange Act of 1934” for more information.
We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law; therefore, you may have more difficulty protecting your interests than shareholders of a U.S. corporation.
Our corporate affairs are governed by our articles of incorporation, our bylaws and by the Marshall Islands Business Corporations Act (“BCA”). The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors under the laws of the Republic of the Marshall Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial precedent in existence in certain United States jurisdictions. The rights of shareholders of companies incorporated in the Republic of the Marshall Islands may differ from the rights of shareholders of companies incorporated in the United States. While the BCA provides that it is to be interpreted according to the non-statutory laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Republic of the Marshall Islands and we cannot predict whether Marshall Islands courts would reach the same conclusions as United States courts. Thus, you may have more difficulty in protecting your interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a United States jurisdiction which has developed a more substantial body of case law in the corporate law area. Additionally, the Republic of the Marshall Islands does not have a legal provision for bankruptcy or a general statutory mechanism for insolvency proceedings. As such, any bankruptcy action involving the Company would have to be initiated outside of the Marshall Islands, and our shareholders and creditors may experience delays in their ability to recover their claims after any such insolvency or bankruptcy.
It may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.
We are incorporated under the laws of the Republic of the Marshall Islands, and our Managers’ business is operated primarily from their offices in Cyprus, Greece and Monaco. In addition, a majority of our directors and officers are or will be
non-residents of the United States, and all of our assets and a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under the securities laws or otherwise. You may also have difficulty enforcing, both within and outside of the United States, judgments you may obtain in the United States courts against us or these persons in any action, including actions based upon the civil liability provisions of United States federal or state securities laws. There is also substantial doubt that the courts of the Republic of the Marshall Islands, the Republic of Cyprus or Greece would enter judgments in original actions brought in those courts predicated on United States federal or state securities laws.
We may be subject to lawsuits for damages and penalties.
The nature of our business exposes us to the risk of lawsuits for damages or penalties relating to, among other things, personal injury, property casualty and environmental contamination. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. We expect that these claims would be covered by insurance, subject to customary deductibles. However, such claims, even if lacking merit, defending against them could result in the expenditure of significant financial and managerial resources.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
Under some jurisdictions, vessels used for the conveyance of illegal drugs could subject the vessels to forfeiture to the government of such jurisdiction. Vessels in our fleet may call in ports in South America and other areas where smugglers, during vessel operations, and without our knowledge, may attempt to hide drugs and other contraband on those vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any member of the vessels' crew, we may face governmental or other regulatory claims, restrictions or penalties which could have an adverse effect on our reputation, our business, results of operations, cash flows and financial condition.
Regulatory and legal risks as a result of our global operations could have a material adverse effect on our business, results of operations and financial conditions.
Our global operations increase both the number and the level of complexity of U.S. or foreign laws and regulations applicable to us. These laws and regulations include international labor laws; U.S. laws such as the FCPA and other laws and regulations established by the Office of Foreign Assets Control; local laws such as the U.K. Bribery Act 2010; data privacy requirements like the European General Data Protection Regulation, enforceable as of May 25, 2018; and the E.U.-U.S. Privacy Shield Framework, adopted by the European Commission on July 12, 2016. We may inadvertently breach some provisions of those laws and regulations which could result in cease of business activities, criminal sanctions against us, our officers or our employees, fines and materially damage our reputation. In addition, detecting, investigating and resolving such cases of actual or alleged violations may be expensive and time consuming for our senior management.
Risks Relating to Our Common Stock and Preferred Shares
Polys Hajioannou, the largest shareholder of the Company, is able to significantly influence the outcome of matters on which our shareholders are entitled to vote and its interests may be different from yours.
As of February 20, 2026, Polys Hajioannou owned or controlled approximately 47.32%, of our outstanding Common Stock (see “Item 7. Major Shareholders and Related Party Transactions – A. Major Shareholders” for more information). Polys Hajioannou is the largest shareholder of the Company and is able to significantly influence the outcome of matters on which our shareholders are entitled to vote, including the election of our entire board of directors and other significant corporate actions including mergers, sales of assets or other similar transactions. The interests of Polys Hajioannou, in some circumstances, may be different from yours.
Our status as a foreign private issuer within the rules promulgated under the Exchange Act exempts us from certain requirements of the SEC and NYSE.
We are a “foreign private issuer” within the rules promulgated under the Exchange Act. Under the NYSE listing rules, a foreign private issuer may elect to comply with the practice of its home country and to not comply with certain NYSE corporate governance requirements, including the requirements that (a) a majority of the board of directors consist of independent directors, (b) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (c) a compensation committee be
established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (d) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken and (e) the obligation to obtain shareholder approval in connection with certain issuances of authorized stock or the approval of, and material revisions to, equity compensation plans. Moreover, we are not required to comply with certain requirements of the SEC that domestic issuers are required to comply with, including (a) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K, (b) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (c) the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information and (d) the sections of the Exchange Act establishing insider liability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of the issuer’s equity securities within less than six months). Therefore, you will not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements or SEC requirements.
For example, in reliance on the foreign private issuer exemption to the NYSE listing rules, a majority of our board of directors may not consist of independent directors; our board’s approach may therefore be different from that of a board with a majority of independent directors, and as a result, the management oversight of our Company may be more limited than if we were subject to the NYSE listing rules. Because of these exemptions, investors are not afforded the same protections or information generally available to investors holding shares in public companies organized in the U.S.
See “Item 16G. Corporate Governance” for more information.
Future sales of our Common Stock could cause the market price of our Common Stock to decline and our existing shareholders may experience significant dilution.
We may issue additional shares of our Common Stock in the future and our shareholders may elect to sell large numbers of shares held by them from time to time, subject to applicable restrictions and limitations under Rule144 of the Securities Act.
In April 2011, we issued and sold 5,000,000 shares of Common Stock in a public offering. The gross proceeds of the April 2011 public offering were approximately $42.0 million. In March 2012, we issued and sold 5,750,000 shares of Common Stock in a public offering. The gross proceeds of the March 2012 public offering were approximately $37.4 million. In November 2013, we issued and sold 5,750,000 shares of Common Stock in a public offering. Concurrently with that public offering, we issued and sold 1,000,000 shares of Common Stock to an entity associated with our chief executive officer, Polys Hajioannou, in a private placement. The gross proceeds of the November 2013 public offering and private placement were approximately $50.2 million. In December 2016, we issued and sold 15,640,000 shares of Common Stock in a public offering, in which an entity associated with Polys Hajioannou purchased 2,727,272 shares of Common Stock. The gross proceeds of the December 2016 public offering were approximately $17.2 million. In April 2017, we completed an exchange offer (the “Exchange Offer”) for our Series B Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (“Series B Preferred Shares”), in which we issued an additional 2,212,508 shares of Common Stock to holders of Series B Preferred Shares who tendered such preferred shares in the Exchange Offer.
In November 2018, one of our subsidiaries entered into a memorandum of agreement with an unaffiliated seller to acquire a Japanese-built, dry-bulk Post-Panamax class resale newbuild vessel. We had the option to finance up to 50% of the purchase price of the vessel through the issuance of our Common Stock to the seller. In November 2018, November 2019 and April 2020, we exercised our option and issued 1,441,048, 3,963,964 and 2,951,699 shares of our Common Stock respectively to the seller, to finance the first installment of $3.3 million, the second installment of $6.6 million and part of the third installment of $3.3 million, respectively of the purchase price of the vessel.
Sales of a substantial number of shares of our Common Stock in the public market, or the perception that these sales could occur, may depress the market price for our Common Stock. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.
Our existing shareholders may also experience significant dilution in the future as a result of any future offering.
We also entered into a registration rights agreement in connection with our initial public offering with Vorini Holdings Inc., one of our principal shareholders, pursuant to which we have granted it and certain of its transferees the right, under certain circumstances and subject to certain restrictions, to require us to register under the Securities Act of 1933, as amended (the “Securities Act”), shares of our Common Stock held by them. Under the registration rights agreement, Vorini Holdings Inc. and certain of its transferees have the right to request us to register the sale of shares held by them on their behalf and may require us to make available shelf registration statements permitting sales of shares into the market from time to time over an
extended period. In addition, those persons have the ability to exercise certain piggyback registration rights in connection with registered offerings initiated by us. Registration of such shares under the Securities Act would, except for shares purchased by affiliates, result in such shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of such registration.
The market price of our Common Stock may be adversely affected by sales of substantial amounts of our Common Stock sale offerings.
In 2020 and 2021, the Company sold its Common Stock through an at the market offering program (“ATM”) , which was terminated by the Company on May 8, 2023. In August 2024, the Company also filed a Registration Statement on Form F-3 with the SEC. While the Company does not presently have an ATM program, our board of directors could adopt an ATM program in the future dependent upon market conditions.
Subject to certain limitations in a typical sales agreement for an ATM program and compliance with applicable law, we would have the discretion to deliver notices to the sales agent at any time throughout the term of the sales agreement. The number of shares that would be sold by the sales agent after delivering a notice would fluctuate based on the market price of the shares of Common Stock during the sales period and limits we set with the sales agent. Because the sales of the shares offered hereby would be made directly into the market or in negotiated transactions, the prices which we sell these shares will vary and these variations may be significant. Purchasers of the shares we sell, as well as our existing shareholders, would experience significant dilution if we sell shares at prices significantly below the price at which they invested. Furthermore, all of our shares of Common Stock sold in the potential offering would be freely tradable without restriction or further registration under the Securities Act. As a result of this potential offering, a substantial number of our shares of Common Stock may be sold in the public market or may cause the perception that these sales could occur, either of, which may cause the market price of our Common Stock to decline. If the board of directors did approve a new ATM Program and the Company issued new shares under such program, this could make it more difficult for you to sell your shares of Common Stock at a time and price that you deem appropriate and could impair our ability to raise capital through the sale of additional equity securities.
We may adopt additional share repurchase programs which may affect the market for our Common Stock and Preferred Shares, including affecting our share price or increasing share price volatility.
The Company may, from time to time, repurchase Common Stock or Preferred Shares in the open market, in privately negotiated transactions or otherwise, depending upon several factors, including market and business conditions, the trading price of our Common Stock and other investment opportunities. The repurchase programs may be limited, suspended or discontinued at any time without prior notice. In June 2019, we announced a share repurchase program under which we could, from time to time, purchase up to 5,000,000 shares of Common Stock in the aggregate on the open market. In March 2020, we expanded such share repurchase program to provide for the repurchase of an additional 1,500,000 shares of Common Stock on the open market. In March 2020, we announced a preferred share repurchase program under which we could, from time to time, purchase up to 100,000 shares of each of our Series C Preferred Shares and Series D Preferred Shares on the open market. Additionally, in March 2022, we issued a notice of redemption of 1,492,554 of the outstanding Series C Preferred Shares. The redemption was completed on April 29, 2022, at a redemption price of $25.00 per Series C Preferred Share in the amount of $37.3 million plus all accumulated and unpaid dividends to, but excluding, the redemption date, of $0.7 million. Following the redemption, there were 804,950 Series C Preferred Shares outstanding, as of December 31, 2022, as of December 31, 2023, as of December 31, 2024 and as of December 31, 2025. In June 2022, we authorized a program under which we could, from time to time, purchase up to 5,000,000 shares of Common Stock in the aggregate on the open market. In March 2023, we expanded such share repurchase program to provide for the repurchase of an additional 5,000,000 shares of Common Stock on the open market, up to a total of 10,000,000 shares of Common Stock, all of which had been repurchased and canceled. In May 2023, we authorized a program under which we could, from time to time, purchase up to 5,000,000 shares of Common Stock in the aggregate on the open market. In July 2023, the Company terminated the program, having repurchased and canceled an amount of 139,891 shares of Common Stock. In November 2023, we authorized an additional repurchase program for up to 5,000,000 shares of Common Stock. In April 2024, the Company terminated the program, having repurchased and canceled an amount of 4,860,953 shares of Common Stock. In November 2024, we authorized an additional repurchase program for up to 5,000,000 shares of Common Stock. In December 2024, the Company terminated the program, having repurchased and canceled an amount of 1,488,690 shares of Common Stock. In February 2025, we authorized a repurchase program for up to 3,000,000 shares of Common Stock, all of which had been repurchased and canceled. In December 2025, we authorized an additional repurchase program for up to 10,000,000 shares of Common Stock. The program supersedes any prior repurchase program of the Company. As of February 20, 2026, the Company had repurchased and cancelled an amount of 91,443 shares of Common Stock under the repurchase program.
There is no guarantee of a continuing public market for you to resell our common or preferred stock.
Our Common Stock and Preferred Shares trade on the NYSE. We cannot assure you that an active and liquid public market for our Common Stock or Preferred Shares will continue, which would likely have a negative effect on the price of our Common Stock or Preferred Shares, as applicable, and impair your ability to sell or purchase our Common Stock or Preferred Shares, as applicable, when you wish to do so.
If our Common Stock falls below the continued listing standard of $1.00 per share or otherwise fails to satisfy any of the NYSE continued listing requirements, and if we are unable to cure such deficiency during any subsequent cure period, our Common Stock could be delisted from the NYSE. If our Common Stock ultimately were to be delisted for any reason, we could face significant material adverse consequences, including:
•limited availability of market quotations for our Common Stock;
•a limited amount of news and analyst coverage for us;
•a decreased ability for us to issue additional securities or obtain additional financing in the future;
•limited liquidity for our shareholders due to thin trading;
•loss of preferential tax rates for dividends received by certain non-corporate U.S. holders, loss of “mark-to-market” election by U.S. Holders in the event we are treated as a ''passive foreign investment company'', and loss of our tax exemption under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”); and
•cause a default under certain senior secured credit facilities.
We have adopted a shareholders rights plan which could make it more difficult for a third-party to acquire us while the plan remains in effect.
We have in effect a shareholders rights plan that is intended to enable all shareholders to realize the long-term value of their investment in the Company and to protect against any person or group from gaining control of the Company through coercive or otherwise unfair takeover tactics. The shareholders rights plan is not intended to deter offers that are fair and otherwise in the best interests of the Company’s shareholders. In connection with the Company’ s adoption of the shareholders rights plan, the Company declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of our Common Stock. The Rights will be exercisable on the earlier of (1) the tenth day after the public announcement that a person or group acquires ownership of 10% or more of the Company’s Common Stock without the approval of the board of directors or (2) the tenth business day (or such later date as determined by the board of directors) after a person or group announces a tender or exchange offer which would result in that person or group holding 10% or more of the Company’s Common Stock. Polys Hajioannou, the Company’s Chairman and chief executive officer, and his brother Nicolaos Hadjioannou are excluded persons for purposes of the shareholders rights plan and shares of our Common Stock held by Mr. Hajioannou or Mr. Hadjioannou and entities controlled by and/or affiliated or associated with Mr. Hajioannou or Mr. Hadjioannou or members or their respective families are not subject to the restrictions of the shareholders rights plan.
The Rights also become exercisable if a person or group that already beneficially owns 10% or more of our Common Stock (other than one or more of the excluded persons described above) acquires any additional shares of our Common Stock without the approval of the board of directors. If the Rights become exercisable, all Rights holders (other than the person or group triggering the Rights) will be entitled to acquire certain of our securities at a substantial discount. The Rights may substantially dilute the stock ownership of a person or group attempting to take over our company without the approval of the board of directors, and the rights plan could make it more difficult for a third-party to acquire our company or a significant percentage of our outstanding shares of Common Stock, without first negotiating with the board of directors.
Anti-takeover provisions in our organizational documents and Management Agreements could make it difficult for our shareholders to replace or remove our current board of directors and together with our adoption of a shareholders rights plan could have the effect of discouraging, delaying or preventing a merger or acquisition, which could adversely affect the market price of the shares of our Common Stock.
Several provisions of our articles of incorporation and bylaws could make it difficult for our shareholders to change the composition of our board of directors in any one year, preventing them from changing the composition of our management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that shareholders may consider favorable. These provisions:
•authorize our board of directors to issue “blank check” preferred stock without shareholder approval;
•provide for a classified board of directors with staggered, three-year terms;
•prohibit cumulative voting in the election of directors;
•authorize the removal of directors only for cause;
•prohibit shareholder action by written consent unless the written consent is signed by all shareholders entitled to vote on the action;
•establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by shareholders at shareholder meetings; and
•provide that special meetings of our shareholders may only be called by the chairman of our board of directors, chief executive officer or a majority of our board of directors.
Pursuant to our shareholders rights plan any person that attempts to acquire us without the approval of our board of directors may have their shareholdings substantially diluted.
Each Manager may terminate the applicable Management Agreement prior to the end of its term if there is a change in directors after which at least one of the members of our board of directors is not a continuing director. “Continuing directors” means, as of any date of determination, any member of our board of directors who was (a) a member of our board of directors on May 29, 2018 or (b) nominated for election or elected to our board of directors with the approval of a majority of the directors then in office who were either directors on May 29, 2018 or whose nomination or election was previously so approved. In the event that either Management Agreement is so terminated, the Company shall pay to Safe Bulkers Management an amount in cash equal to the Management Fees paid or payable to either Manager, in the aggregate, during the 36 months preceding the applicable termination.
These anti-takeover provisions, including the provisions of our shareholders rights plan, could substantially impede the ability of public shareholders to benefit from a change in control and, as a result, may adversely affect the market price of our Common Stock and your ability to realize any potential change of control premium.
The amount of cash we have available for dividends on or to redeem our Preferred Shares will not depend solely on our profitability.
The actual amount of cash we will have available for dividends or to redeem our Preferred Shares will depend on many factors, including the following:
•changes in our operating cash flow, capital expenditure requirements, working capital requirements and other cash needs;
•restrictions under our existing or future credit facilities or any future debt securities, including existing restrictions under our existing credit facilities on our ability to pay dividends if an event of default has occurred and is continuing or if the payment of the dividend would result in an event of default and restrictions on our ability to redeem securities;
•the amount of any cash reserves established by our board of directors; and
•restrictions under the laws of the Republic of the Marshall Islands, which generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares) or while a company is insolvent or would be rendered insolvent by the payment of such a dividend.
The amount of cash we generate from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items, and our board of directors in its discretion may elect not to declare any dividends. As a result of these and the other factors mentioned above, we may pay dividends during periods when we record losses and may not pay dividends during periods when we record net income.
The laws of the Republic of Liberia and of the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, generally prohibit the payment of dividends other than from surplus or net profits, or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. Our subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us. In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit facilities, we are subject to financial and other covenants, which may limit our ability to pay dividends and redeem the Preferred Shares. These and future agreements may limit our ability to pay dividends on and to redeem the Preferred Shares. We also may not have sufficient surplus or net profits in the future to pay dividends.
Our Preferred Shares represent perpetual equity interests, they are subordinate to our debt and your interests could be diluted by the issuance of additional preferred shares, including additional Preferred Shares and by other transactions.
The Preferred Shares represent perpetual equity interests in us and, unlike our indebtedness, will not give rise to a claim for payment of a principal amount at a particular date. As a result, holders of the Preferred Shares may be required to bear the financial risks of an investment in the Preferred Shares for an indefinite period of time. Our Preferred Shares are subordinate to all of our existing and future indebtedness and to any other senior securities we may issue in the future with respect to assets available to satisfy claims against us. Each series of our Preferred Shares rank pari passu with one another and any class or series of capital stock established after the original issue date of such preferred shares that is not expressly subordinated or senior to such preferred shares as to the payment of dividends and amounts payable upon liquidation, dissolution or winding up. As of December 31, 2025, we had aggregate debt outstanding of $548.6 million, of which $44.8 million payable within the next 12 months. Our existing indebtedness restricts, and our future indebtedness may include restrictions on, our ability to pay dividends on or redeem preferred shares. In March 2022, we issued a notice of redemption of 1,492,554 of the outstanding Series C Preferred Shares. The redemption was completed on April 29, 2022, at a redemption price of $25.00 per Series C Preferred Share in the amount of $37.3 million plus all accumulated and unpaid dividends to, but excluding, the redemption date, of $0.7 million. Following the redemption, there were 804,950 Series C Preferred Shares outstanding, as of December 31, 2025. Our articles of incorporation currently authorize the issuance of up to 20,000,000 shares of blank check preferred stock, par value $0.01 per share, of which, as of December 31, 2025, 804,950 shares of Series C Preferred Shares and 3,195,050 shares of Series D Preferred Shares were issued and outstanding. Of the blank check preferred stock, 1,000,000 shares have been designated Series A Participating Preferred Stock in connection with our adoption of a shareholders rights plan as described under “Item 10. Additional Information—B. Articles of Incorporation and Bylaws—Shareholders Rights Plan.” The issuance of additional preferred shares on a parity with or senior to the Preferred Shares would dilute the interests of holders of such shares, and any issuance of preferred shares senior to such preferred shares or of additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on our Preferred Shares.
The liquidation preference amount on our Preferred Shares is fixed and Preferred shareholders will have no right to receive any greater payment regardless of the circumstances.
The payment due upon a liquidation to holders of any series of our Preferred Shares is fixed at the redemption preference of $25.00 per share plus accumulated and unpaid dividends to the date of liquidation. If, in the case of our liquidation, there are remaining assets to be distributed after payment of this amount, you will have no right to receive or to participate in these amounts. Furthermore, if the market price for our Preferred Shares is greater than the liquidation preference, Preferred shareholders will have no right to receive the market price from us upon our liquidation.
Holders of Preferred Shares have extremely limited voting rights.
The voting rights of holders of Preferred Shares are extremely limited. Our Common Stock is the only class or series of our shares carrying full voting rights. Holders of Preferred Shares have no voting rights other than the ability (voting together as a class with all other classes or series of preferred stock upon which like voting rights have been conferred and are exercisable, including all of the Preferred Shares), subject to certain exceptions, to elect one director if dividends for six quarterly dividend periods (whether or not consecutive) payable on our Preferred Shares are in arrears and certain other limited protective voting rights.
Our ability to pay dividends on and to redeem our Preferred Shares is limited by the requirements of the laws of the Republic of the Marshall Islands, the laws of the Republic of Liberia and existing and future agreements.
The laws of the Republic of Liberia and of the Republic of the Marshall Islands, where our vessel-owning subsidiaries are incorporated, generally prohibit the payment of dividends other than from surplus or net profits, or while a company is insolvent or would be rendered insolvent by the payment of such a dividend. Our subsidiaries may not have sufficient funds, surplus or net profits to make distributions to us. In addition, under guarantees we have entered into with respect to certain of our subsidiaries’ existing credit facilities, we are subject to financial and other covenants, which may limit our ability to pay dividends and redeem the Preferred Shares. These and future agreements may limit our ability to pay dividends on and to redeem the Preferred Shares. We also may not have sufficient surplus or net profits in the future to pay dividends.
As a Marshall Islands corporation, and with certain of our subsidiaries organized under the laws of the Marshall Islands and other offshore jurisdictions, our corporate structure and operations are subject to economic substance laws and related regulatory requirements, compliance with which could affect our business and operating results.
The Marshall Islands has enacted economic substance legislation with which we and our subsidiaries may be required to comply. While we currently believe that we and our subsidiaries are in compliance with applicable economic substance requirements, such requirements are subject to change, reinterpretation, and evolving enforcement practices. In addition, changes to our business, operating profile, or group structure could result in unanticipated noncompliance. Any failure to comply with applicable economic substance laws or related reporting obligations could result in the imposition of fines, financial or administrative penalties, enhanced monitoring or audits, spontaneous exchange of information with foreign tax authorities, or other regulatory actions, including, in certain circumstances, the striking off or dissolution of a non-compliant entity. The occurrence of any of the foregoing could disrupt our operations and could have a material adverse effect on our business, financial condition, cash flows, and results of operations.
In addition, the Council of the European Union periodically assesses jurisdictions based on tax transparency, fair taxation, governance, and the existence of real economic activity, and may classify jurisdictions as cooperative, under observation (“gray list”), or non-cooperative (“blacklist”). As of October 17, 2023, the Republic of the Marshall Islands has been designated as a cooperative jurisdiction for tax purposes. However, we cannot predict whether the Marshall Islands may be reclassified in the future, how quickly EU authorities would respond to any legislative or regulatory developments in the Marshall Islands or other relevant jurisdictions, or how EU financial institutions, lenders, charterers, insurers, or other counterparties would react during any period in which we or our subsidiaries remain organized in jurisdictions that are classified as non-cooperative. If the Marshall Islands were to be included on the EU list of non-cooperative jurisdictions in the future, and if defensive measures, sanctions, or other tax, financial, or regulatory restrictions were adopted by one or more EU Member States, or if additional economic substance requirements were imposed or enforced by the Marshall Islands, our access to financing, commercial relationships, operational flexibility, and overall business could be adversely affected, which could have a material adverse effect on our business, financial condition, and results of operations.
Tax Risks
In addition to the following risk factors, you should read “Item 10. Additional Information—E. Tax Considerations—Marshall Islands Tax Considerations,” “Item 10. Additional Information—E. Tax Considerations—Liberian Tax Considerations,” and “Item 10. Additional Information —E. Tax Considerations—United States Federal Income Tax Considerations” for a more complete discussion of expected material Marshall Islands, Liberian and United States federal income tax consequences of owning and disposing of our Common Stock and Preferred Shares.
We may earn shipping income that will be subject to United States income tax, thereby reducing our cash available for distributions to you.
Under United States tax rules, 50% of our gross income attributable to shipping that begins or ends in the United States may be subject to a 4% United States federal income tax (without allowance for deductions). The amount of this income may fluctuate, and we may not qualify for any exemption from this United States tax. Many of our charters contain provisions that obligate the charterers to reimburse us for this 4% United States tax. To the extent we are not reimbursed by our charterers, the 4% United States tax will decrease our cash that is available for dividends.
For a more complete discussion, see the section entitled “Item 10. Additional Information—Tax Considerations—E. United States Federal Income Tax Considerations—Taxation of Operating Income in General.”
United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse United States federal income tax consequences to United States investors.
We are an international company that conducts business throughout the world. Tax laws and regulations are highly complex and subject to interpretation. A non-United States corporation will generally be treated as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes if either (a) at least 75% of its gross income for any taxable year consists of certain types of “passive income” or (b) at least 50% of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income.” United States investors in a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC,
the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC. In particular, United States investors who are individuals would not be eligible for preferential tax rates otherwise applicable to qualified dividends.
Based on our current operations and anticipated future operations, the composition of our income and assets, and the value of our assets, we believe that it is more likely than not that we were not a PFIC for the most recently ended taxable year and expect that it is more likely than not that we will not be a PFIC for our current taxable year or in the foreseeable future. In this regard, we intend to treat gross income we derive or are deemed to derive from our period time chartering activities as services income, rather than rental income. Accordingly, we do not expect our income from our period time chartering activities to constitute “passive income,” and we do not expect the assets we own and operate in connection with the production of that income to constitute passive assets.
There are legal uncertainties involved in this determination. In Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), the United States Court of Appeals for the Fifth Circuit held that, contrary to the position of the United States Internal Revenue Service, or the “IRS,” in that case, and for purposes of a different set of rules under the Code, income received under a period time charter of vessels should be treated as rental income rather than services income. If the reasoning of the Fifth Circuit in this case were extended to the PFIC context, the gross income we derive or are deemed to derive from our period time chartering activities would be treated as rental income, and we would probably be a PFIC. The IRS has stated that it disagrees with the holding in Tidewater and has specified that income from period time charters should be treated as services income. However, the IRS’ statement with respect to the Tidewater decision was an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers. In light of these authorities, the IRS or a United States court may not accept the position that we are not a PFIC, and there is a risk that the IRS or a United States court could determine that we are a PFIC. Moreover, because a determination of whether a company is a PFIC must be made annually after the end of each taxable year and our PFIC status for each taxable year will depend on facts, including the composition of our income and assets and the value of our assets (which may be determined in part by reference to the market value of our Common Stock and Preferred Shares) at such time, there can be no assurance that the Company will not be a PFIC for the current or any future taxable year. We may constitute a PFIC for a future taxable year if there were to be changes in our assets, income or operations.
If the IRS were to find that we are or have been a PFIC for any taxable year, our U.S. Holders (as defined in the section entitled “Item 10. Additional Information—Tax Considerations—E.United States Federal Income Tax Considerations—U.S. Holders” would face adverse United States tax consequences. See “Item 10. Additional Information—E. “Tax Considerations—United States Federal Income Tax Considerations— U.S. Holders” for a more comprehensive discussion of the United States federal income tax consequences to United States investors if we are treated as a PFIC.