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Long-term Debt

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Long-term Debt

11. Long-term Debt

Term Loans				Drawn Amount				December 31, 2019				2020
Issue Date/ Refinancing Date		Maturity Date
December 14, 2018		December 18, 2023			14,094,184				11,894,184				9,694,184
May 28, 2019		April 16, 2024			11,000,000				10,360,000				9,080,000
August 6, 2019		March 1, 2024			27,675,000				21,900,000				18,600,000
July 5, 2019		July 11, 2026			22,230,000				21,436,071				18,260,357
March 29, 2019		December 29, 2022			25,458,432				18,237,048				13,701,816
August 7, 2019		July 31, 2022			50,225,000				29,025,000				25,420,000
December 14, 2018		December 18, 2023			9,480,000				8,680,000				7,880,000
June 20, 2014		January 8, 2023			20,925,000				14,180,000				12,760,000
August 6, 2019		June 30, 2023			67,200,000				47,595,000				43,635,000
December 24, 2015		December 14, 2022			22,400,000				16,426,688				14,933,360
July 4, 2014		September 3, 2021			22,750,000				15,843,750				14,218,750
July 29, 2014		July 7, 2023			25,350,000				16,371,875				14,259,375
December 7, 2017		December 11, 2022			22,275,000				16,765,000				14,010,000
May 18, 2016		December 31, 2025			65,650,000				56,945,940				52,842,620
March 1, 2017		April 17, 2026			70,787,500				62,568,747				57,512,495
June 17, 2020		June 19, 2026			11,505,000				—				11,121,500
April 30, 2020		October 7, 2026			15,600,000				—				15,600,000
Total									368,229,303				353,529,457
Current portion of long-term debt									41,421,346				41,161,686
Long-term debt									326,807,957				312,367,771
Total debt									368,229,303				353,529,457
Current portion of deferred finance charges									685,790				613,794
Deferred finance charges non-current									1,560,055				1,118,450
Total deferred finance charges									2,245,845				1,732,244
Total debt									368,229,303				353,529,457
Less: Total deferred finance charges									2,245,845				1,732,244
Total debt, net of deferred finance charges									365,983,458				351,797,213
Less: Current portion of long-term debt, net of current portion of deferred finance charges									40,735,556				40,547,892
									325,247,902				311,249,321

On January 11, 2021, the Company entered into a term loan with a bank to refinance the existing term loan dated August 7, 2019. The new term loan is up to $25,000,000 and will be repayable in twenty consecutive quarterly installments, with the first installment commencing three months after the drawdown. Obligations with a maturity of less than one year relating to the previous loan amounting to $14,260,000, have been presented as long-term in accordance with US GAAP as the Company refinanced these obligations on a long-term basis through the term loan that the Company entered in January 2021 discussed above.

On January 19, 2021, the Company entered into a term loan with a bank to refinance the existing term loans dated July 4, 2014, June 20, 2014 and December 24, 2015. The new term loan is up to $45,000,000 and will be repayable in twenty eight consecutive quarterly installments, with the first installment commencing three months after the drawdown. Obligations with a maturity of less than one year relating to the previous loan amounting to $13,627,078, have been presented as long-term in accordance with US GAAP as the Company refinanced these obligations on a long-term basis through the term loan that the Company entered in January 2021 discussed above.

The above loans are generally repayable in quarterly or semi-annual installments and a balloon payment at maturity and are secured by first priority mortgages over the vessels involved, plus the assignment of the vessels’ insurances, earnings and operating and retention accounts with the lenders, and the guarantee of ship-owning companies, as owners of the vessels. The term loans contain financial covenants requiring the Company to ensure that:

• the aggregate market value of the mortgaged vessels at all times exceeds a certain percentage of the amounts outstanding as defined in the term loans, ranging from 120% to 135%,

• the leverage of the Company defined as Total Debt net of Cash should not exceed 80% of total market value adjusted assets,

• the Interest Coverage Ratio of the Company which is EBITDA (as defined in the loan agreements) to interest expense to be at all times greater than 2.5:1,

• at least a certain percentage of the Company is to always be owned by members of the Vafias family,

• the Company should maintain on a monthly basis a cash balance amounting to $1,308,971 representing a proportionate amount of the next instalment and relevant interest plus a minimum aggregate cash balance amounting to $12,015,820 in the earnings accounts with the relevant banks,

• dividends paid by the borrower will not exceed 50% of the Company’s free cash flow in any rolling 12 month period.

The interest rates on the outstanding loans as of December 31, 2020 are based on LIBOR plus a margin which varies from 2.15% to 3.00%. The average interest rates (including the margin) on the above outstanding loans for the applicable periods were:

Year ended December 31, 2018: 5.34%

Year ended December 31, 2019: 4.91%

Year ended December 31, 2020: 3.58%

Bank loan interest expense for the above loans for the years ended December 31, 2018, 2019 and 2020 amounted to $22,150,386, $19,999,902 and $12,116,941, respectively. Of these amounts, for the years ended December 31, 2018, 2019 and 2020, the amounts of nil, $97,620 and $168,344, respectively, were capitalized as part of advances paid for vessels under construction. Interest expense, net of interest capitalized, is included in interest and finance costs in the consolidated statements of operations. For the years ended December 31, 2018, 2019 and 2020, the amortization of deferred financing charges amounted to $858,582, $885,191 and $698,364, respectively, and is included in interest and finance costs in the consolidated statements of operations.

At December 31, 2020, the Company was in compliance with all of its debt financial covenants.

At December 31, 2020, an amount of $18,850,000 was available for drawdown under the above loans. The annual principal payments to be made, for the abovementioned loans, after December 31, 2020, and after taking into account the refinancing arrangements, are as follows:

December 31,		Amount
2021			41,161,686
2022			72,773,038
2023			65,392,513
2024			34,928,954
2025			53,314,974
Thereafter			85,958,292
Total			353,529,457

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- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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