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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | FINANCE LEASES At December 31, 2023, the Company's fleet includes three vessels (Bulk Xaymaca, Bulk Destiny, and Bulk Trident) financed under sale and leaseback financing arrangements accounted for as finance leases in accordance with ASC 840, prior to adoption of ASC 842 on January 1, 2019. Bulk Spirit, Bulk Friendship, Bulk Courageous, Bulk Concord, Nordic Nuluujaak, Nordic Qinngua, Nordic Sanngijuq and Nordic Siku are under finance leases in accordance with ASC 842. These leases are secured by the assignment of earnings and insurances and by guarantees of the Company. The Company will own these vessels at the end of lease term. Bulk Trident Bareboat Charter Agreement dated June 7, 2018 The selling price of the m/v Bulk Trident was $13.0 million and the fair value was estimated to be the same. The Company simultaneously leased the vessel back from the buyer. The minimum lease payments fluctuate based on three-month LIBOR and are payable monthly over the eight-year lease term. The lessor has transitioned from 3-month LIBOR to 3-month SOFR starting from July 1, 2023. The Company has the option to purchase the vessel at the end of the third year of the lease or thereafter, or in the case of default by the lessor, at any time during the lease term. The Company will own this vessel at the end of the lease term. On October 6, 2023, the Company exercised its purchase option on the m/v Bulk Trident lease for approximately $4.6 million, and the transaction was completed on November 14, 2023. Bulk PODS Bareboat Charter Agreement dated August 1, 2018 The selling price of the m/v Bulk PODS was $14.8 million and the fair value was estimated to be the same. The Company simultaneously leased the vessel back from the buyer. The minimum lease payments fluctuate based on three-month LIBOR and are payable monthly over the eight-year lease term. The lessor has transitioned from 3-month LIBOR to 3-month SOFR starting from July 1, 2023. The Company has the option to purchase the vessel at the end of the third year of the lease or thereafter, or in the case of default by the lessor, at any time during the lease term. Interest is floating at SOFR plus 1.96% (7.33% including the margin, at December 31, 2023). The Company will own this vessel at the end of the lease term. The m/v Bulk Pods was renamed to m/v Bulk Xaymaca in February of 2022. Bulk Spirit Bareboat Charter Agreement dated March 7, 2019 In February 2019, the Company acquired the m/v Bulk Spirit for $13.0 million, which is the estimated fair value and simultaneously entered into a failed sale and leaseback of the vessel. The Company determined that the transfer of the vessel to the lessor was not a sale in accordance with ASC 606, because control of the vessel was not transferred to the lessor. The lease is classified as finance lease in accordance with ASC 842, because the lease transfers ownership of the vessel to the Company by the end of the lease term. The minimum lease payments include interest at 5.10% for the first five years. Interest fluctuates based on the three-month LIBOR for the remaining three years of the eight-year lease term. The Company has the option to purchase the vessel at the end of the second year of the lease or thereafter, or in the case of default by the lessor, at any time during the lease term. The Company is obligated to repurchase the vessel at the end of the lease term. A balloon payment of $3.9 million is due with the final lease payment in March 2027. This lease is secured by the assignment of earnings and insurances and by a guarantee of the Company. Bulk Friendship Bareboat Charter Agreement dated May 14, 2019 In September 2019, the Company acquired the m/v Bulk Friendship for $14.1 million, which is the estimated fair value and simultaneously entered into a failed sale and leaseback of the vessel. The Company determined that the transfer of the vessel to the lessor was not a sale in accordance with ASC 606, because control of the vessel was not transferred to the lessor. The lease is classified as finance lease in accordance with ASC 842, because the lease includes a fixed price purchase option, which the Company expects to exercise at the end of the lease term. The minimum lease payments include imputed interest at 5.29%. The Company has the option to purchase the vessel at the end of the third year of the lease or thereafter, or in the case of default by the lessor, at any time during the lease term. In the event the Company has not exercised any of the purchase options during the term of the charter then the Company shall have a final purchase option to purchase the vessel at the end of the fifth year at a fixed price of $7.8 million. This lease is secured by the assignment of earnings and insurances and by a guarantee of the Company. Bulk Nordic Five Ltd. Amendment and Restatement of Bareboat Charter Agreement dated July 1, 2021 On July 6, 2021, the Company, through its wholly owned subsidiary, Bulk Nordic Five Ltd., and the existing lender agreed to amend and restate the original Bareboat Charter dated October 27, 2016. The amended agreement extends the lease maturity date to April 2028 with a purchase obligation of $6.95 million. The Company also fixed the interest rate through maturity at 3.97%. The bareboat charter party is secured by a first preferred mortgage on the m/v Bulk Destiny, the assignment of earnings, insurances and requisite compensation of the entity, and by guarantees of its shareholders. The Company will own this vessel at the end of the lease term. The lease contains a minimum liquidity requirement, positive working capital of the lessee and a collateral maintenance ratio clause which requires the fair market value of the vessel plus the net realizable value of any additional collateral previously provided, to remain above defined ratios. At December 31, 2023 and 2022, the Company was in compliance with these covenants. Bulk Courageous Corp Bareboat Charter Agreement dated April 8, 2021 In April 2021, the Company took delivery of the m/v Bulk Courageous for $16.5 million and simultaneously entered into a failed sale and leaseback of the vessel. The Company determined that the transfer of the vessel to the lessor was not a sale in accordance with ASC 606, because control of the vessel was not transferred to the lessor. The lease is classified as finance lease in accordance with ASC 842, because the lease includes a fixed price purchase obligation at the end of the lease term. The minimum lease payments fluctuate based on three-month LIBOR and are payable quarterly over the seven-year lease term. Interest is floating at three-month LIBOR plus 2.75%. On July 8th, 2021, the company fixed interest on the lease at 3.93%. The Company has the option to purchase the vessel in the case of default by the lessor, at any time during the lease term. The purchase obligation at the end of the lease term is at a fixed price of $3.6 million. This lease is secured by the assignment of earnings and insurances and by a guarantee of the Company. Bulk Concord Bareboat Charter Agreement dated January 27, 2022 In February 2022, the Company acquired the m/v Bulk Concord for $19.9 million, which is the estimated fair value, and simultaneously entered into a failed sale and leaseback of the vessel. The Company determined that the transfer of the vessel to the lessor was not a sale in accordance with ASC 606, because control of the vessel was not transferred to the lessor. The lease is classified as finance lease in accordance with ASC 842, because the lease includes a fixed price purchase option, which the Company expects to exercise at the end of the lease term. The minimum lease payments include imputed interest at 4.67%. The Company has the option to purchase the vessel at the end of the third year of the lease or thereafter, or in the case of default by the lessor, at any time during the lease term. In the event the Company has not exercised any of the purchase options during the term of the charter then the Company shall have a final purchase option to purchase the vessel at the end of the seventh year at a fixed price of $3.0 million. This lease is secured by the assignment of earnings and insurances and by a guarantee of the Company. Bulk Nordic Seven LLC, Bulk Nordic Eight LLC, Bulk Nordic Nine LLC and Bulk Nordic Ten LLC Bareboat Charter Agreements dated September 27, 2019 During 2021, the Company took delivery of four new post-Panamax dry bulk vessels and simultaneously entered into the failed sale and leasebacks of the vessels. These vessels are: 1) m/v Nordic Nuluujaak delivered on May of 2021 with a purchase price of $38.4 million, 2) m/v Nordic Qinngua delivered on June of 2021 with a purchase price of $38.4 million, 3) m/v Nordic Sanngijuq delivered on September of 2021 with a purchase price of $37.9 million, and 4) m/v Nordic Siku delivered on November of 2021 with a purchase price of $37.9 million. The Company determined that the transfers of these vessels to the lessor were not sales in accordance with ASC 606, because control of the vessels were not transferred to the lessor. These leases are classified as finance leases in accordance with ASC 842, because these leases include a fixed price purchase obligation at the end of the lease term. The lease agreements obligate the Company to sell the vessels upon completion of construction at the lesser of approximately $32 million or 85% of fair market value at closing. Following the sales, the Company was obligated to charter the vessels from the buyer under a bareboat charter for a period of 15 years from the date of delivery with a fixed purchase price of $2.5 million each at the end of lease term. The minimum lease payments fluctuate based on three-month LIBOR and are payable monthly over the fifteen-year lease term. The lessor has transitioned from 3-month LIBOR to 3-month SOFR starting from July 1, 2023. Interest is floating at three-month SOFR plus 3.81% (9.16% including the margin, at December 31, 2023). The Company has the option to purchase these vessels starting in year 5 at 101% of then outstanding principal. These leases are secured by the assignment of earnings and insurances and by a guarantee of the Company. Finance lease consists of the following as of December 31, 2023:
|  | December 31, 2023 |  | December 31, 2022 |  | Interest Rate (%) (1) |  | Maturity Date
|  | (unaudited) |  |  |  |  |  |
Bulk PODS Ltd. |  | $ | 4,763,020 |  |  | $ | 6,606,770 |  |  | 7.33 | % |  | December 2027
Bulk Trident Ltd. (4) |  | — |  |  | 5,551,836 |  |  |  |  | Paid in full in November 14, 2023
Bulk Spirit Ltd. |  | 7,486,979 |  |  | 8,627,604 |  |  | 5.10 | % |  | February 2027
Bulk Nordic Five Ltd. (2) |  | 11,595,861 |  |  | 13,142,885 |  |  | 3.97 | % |  | April 2028
Bulk Friendship Corp. (2) |  | 8,471,002 |  |  | 9,507,875 |  |  | 5.29 | % |  | September 2024
Bulk Nordic Seven LLC (3) |  | 28,482,063 |  |  | 30,100,318 |  |  | 7.06 | % |  | May 2036
Bulk Nordic Eight LLC(3) |  | 28,473,392 |  |  | 30,088,514 |  |  | 7.06 | % |  | June 2036
Bulk Nordic Nine LLC(3) |  | 28,591,644 |  |  | 30,163,750 |  |  | 7.06 | % |  | September 2036
Bulk Nordic Ten LLC(3) |  | 28,712,632 |  |  | 30,276,595 |  |  | 7.06 | % |  | November 2036
Bulk Courageous Corp. (2) |  | 9,000,000 |  |  | 10,200,000 |  |  | 3.93 | % |  | April 2028
Phoenix Bulk 25 Corp. (2) |  | 12,097,410 |  |  | 13,645,990 |  |  | 4.67 | % |  | February 2029
Total |  | $ | 167,674,003 |  |  | $ | 187,912,137 |  |  |  |  |
Less: unamortized issuance costs, net |  | (2,437,012) |  |  | (3,033,123) |  |  |  |  |
|  | $ | 165,236,991 |  |  | $ | 184,879,014 |  |  |  |  |
Less: current portion |  | (21,970,124) |  |  | (16,365,075) |  |  |  |  |
Secured long-term debt, net |  | $ | 143,266,867 |  |  | $ | 168,513,939 |  |  |  |  |
(1)As of December 31, 2023 including the effect of interest rate cap if any. (2)Interest rates on the loan facilities are fixed. (3)The Company entered into an interest rate cap through Q2 of 2026 and Q4 2026 which caps the LIBOR rate at 3.25%. On July 31, 2023, the Company transitioned from the LIBOR rate to secured overnight financing rate ("SOFR"). (4)On October 6, 2023, the Company exercised its purchase option on the m/v Bulk Trident lease for approximately $4.6 million, and the transaction was completed on November 14, 2023. Future minimum lease payments under finance leases with initial or remaining terms in excess of one year at December 31, 2023 were:
| Year ending December 31, |  |
2024 | $ | 34,985,770 |  |  |
2025 | 25,366,510 |  |  |
2026 | 23,877,184 |  |  |
2027 | 24,796,131 |  |  |
2027 | 29,434,485 |  |  |
Thereafter | 114,985,465 |  |  |
Total minimum lease payments | $ | 253,445,545 |  |  |
Less amount representing interest | 85,771,542 |  |  |
Present value of minimum lease payments | 167,674,003 |  |  |
Less current portion | (21,970,124) |  |  |
Less issuance costs | $ | (2,437,012) |  |  |
Long-term portion | $ | 143,266,867 |  |  |

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