Star Bulk Carriers Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 13, 2024

Key Takeaways

  • In Q4, Star Bulk delivered adjusted EBITDA of $114 million and declared a $0.45 per share dividend, marking over $1.1 billion in dividends and $400 million in buybacks returned since mid-2021.
  • The pending merger with Eagle Bulk will create a 167-vessel dry bulk leader with Star Bulk shareholders owning ~71%, expected to close in early April 2024.
  • The company sold 17 older vessels for $366 million and ordered five eco-efficient Kamsarmax newbuilds, reducing its fleet’s average age to 10.5 years across 122 ships.
  • Star Bulk forecasts limited net fleet growth of 2–2.5% amid low orderbook levels (8.5%) and supply-constraining factors like Panama/Red Sea inefficiencies and stricter emissions rules, supporting freight rates.
  • On ESG, Star Bulk co-founded the Maritime Emissions Reduction Center, maintained a “B” rating in the Carbon Disclosure Project, and ensured compliance with EU ETS and CSRD regulations.
AI Generated. May Contain Errors.
Earnings Conference Call
Star Bulk Carriers Q4 2023
00:00 / 00:00

There are 9 speakers on the call.

Operator

Thank you for standing by, ladies and gentlemen, and welcome to Star Bulk Carriers' Conference Call on the Q4 2023 Financial Results. We have with us Mr. Petros Pappas, Chief Executive Officer Mr. Haynes Norton, President Mr. Simos Peru and Mr.

Operator

Christos Beguellaris, Co Chief Financial Officers Mr. Nikos Resco, Chief Operating Officer and Mrs. Jaros Plata Tohnacki, Chief Strategy Officer of the company. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session.

Operator

I must advise you that this conference is being recorded today. We will now pass the floor over to your speakers today, Mr. Sparrow. Please go ahead, sir.

Speaker 1

Thank you, operator. I'm Simo Spirit, Co Chief Financial Officer of Star Bulk Carriers, And I would like to welcome you to our conference call regarding our financial results for the Q4 of 2023. Before we begin, I kindly ask you to take a moment to read the Safe Harbor statement on slide number 2 of our presentation. In today's presentation, we will go through our Q4 results, financings and share buybacks, A short update on the Eagle Bulk transaction, fleet developments and operations, the latest on the ESG front and our views on industry fundamentals before opening up for questions. Let us now turn to slide number 3 of the presentation for a summary of our 4th quarter 2023 Highlights.

Speaker 1

Net income for the Q4 amounted to approximately 40,000,000 and adjusted net income of approximately $64,000,000 Adjusted EBITDA was $114,000,000 for the quarter. For the Q4, as per our existing dividend policy, we declared a dividend per share of $0.45 with record date as of March 12, 2024. Since June 2021, We have returned to shareholders $1,100,000,000 in dividend distributions and over $400,000,000 in share buybacks. Our total cash today stands at $312,000,000 pro form a for the delivery of Our 4 remaining sold vessels and the repayment of their respective debt as well as the bridge facility.

Speaker 2

Meanwhile, our

Speaker 1

pro form a total debt stands at approximately 1,121,000,000 translating in a pro form a net debt of approximately $800,000,000 On the top right of the page, You will see our daily figures per vessel for the quarter. Our time charter equivalent rate was $18,296 per vessel per day. Our combined daily OpEx and net cash G and A expenses per vessel per day amounted to $6,081 Therefore, our TCE Less OpEx and G and A is approximately $12,215 per day per vessel. Looking towards fleet renewal, in the last 12 months, we have agreed to sell 17 vessels With an average age of 13.7 years and received insurance proceeds from 1 vessel, which was declared as a constructive total loss. Total gross proceeds from these vessels were 366,000,000 During the Q4, we completed a $380,000,000 repurchase of 20,000,000 shares from Oaktree Capital.

Speaker 1

The shares were repurchased and subsequently canceled. The Oaktree share buyback was funded from vessel sale proceeds of $254,000,000 plus $76,000,000 of new debt financing, $13,000,000 of proceeds from the ATM and $38,000,000 cash released from the minimum cash threshold of $2,100,000 per vessel for the 18 vessels that have been sold. Slide 4 graphically illustrates the changes in the company's cash balance during the Q4. We started the quarter with $302,000,000 in cash and generated positive cash flow from operating activities of $88,600,000 After including Sales process and repayments, CapEx payments for ESD and ballast water treatment system installations, The Q3 dividend payment, the Oaktree serial repurchases and ATM issuances, We arrived at a cash and cash equivalent balance of $282,000,000 at the end of the quarter. This figure includes a $20,000,000 adjustment as this amount was released from the vessel sales and went against the financing of the O3 share buyback.

Speaker 1

Slide 5 illustrates a summary of the recently announced Eagle Bulk transaction. We have been working closely with the Eagle Bulk team and our lawyers to be able to complete the merger in early April 2024. This transaction will create a global leader in drybulk shipping with a large, diversified and scrubber fitted fleet of 167 vessels. This is a non stop transaction on NAV to NAV basis With a combined market cap of approximately $2,600,000,000 Eagle's shareholders We received 2.6211 shares of Star Bulk per share of Eagle. Star Bulk shareholders will own approximately 71%, and Needle shareholders will own approximately 29% of the combined entity.

Speaker 1

Since the deal was announced, we filed with the SEC and F-four registration statement with respect to the shares of Star Bulk's common stock to be issued to Eagle's shareholders pursuant to the Eagle Merchant Agreement, which became effective on February 12, 2024. The Board of Directors of Eagle fixed February 12, 2024 as the record date for the determination of Eagle's shareholders entitled to receive notice of and vote at the Eagle Special Meeting. The Eagle Special Meeting will be held on April 5, 2024. Subject to Eagle's shareholder approval and We expect that the deal merger will close shortly thereafter. I will now pass the floor to our COO, Nikos Rescos, to talk about our operational performance and an update on our fleet renewal and CapEx update.

Speaker 2

Thank you, Simo. Please turn to Slide 6, where we provide an operational update. Operating expenses, excluding non recurring expenses, were $4,977 for Q4 2023. Net cash G and A expenses were $11.04 per vessel per day for the same period. In addition, we continue to rate at the top amongst our listed peers in terms of Rideship Safety Score.

Speaker 2

Please turn to Slide 7 for an update on our fleet sales and our recent newbuilding orders. In December, We entered into additional 3 firm shipbuilding contracts with Kingdau Shipyard with the construction of 82,000 Khamshornach shipbuilding vessels Our competitive price levels have increased the size of our order from 2 to 5 vessels. The vessels are being built in China to high specification, including the latest fuel efficient engine coming into production in 2024, A sharp generator reducing the energy requirements whilst at sea and now threat marine power provisions. The above measures and show best in class fuel consumptions and emissions. On the vessel sales front, we continue disposing our vessels opportunistically at historically attractive levels, having agreed during Q4 to sell 7 vessels for total gross proceeds of $122,000,000 reducing our average fleet age and improving overall fleet efficiency.

Speaker 2

During Q1, we agreed to sell another 2 case sized vessels, the Big Bang and the Pantacruel, for total gross proceeds of $36,300,000 Furthermore, we took delivery of 2 out of the 6 long term charter in eco vessels that will be delivered to us throughout 2024, and specifically, at Tumasi Zuzhou CamsoMax and at Tumasi Sabu Ultramax. Considering the aforementioned changes in our fleet mix, we operate 1 of the largest drybulk fleets amongst U. S. And European listed peers with 122 vessels on a fully delivered basis with an average age of 10.5 years. Slide 8 provides a fleet update and some guidance around our future drydock and the relevant total of hire days.

Speaker 2

On the top right of the page, we provide a CapEx schedule illustrating our newbuilding CapEx and vessel energy efficiency upgrade expenses, with 100 percent of our fleet now being ballast water treatment systems fitted. Our expected drydock expense for 2024 is estimated at $30,500,000 for the dry docking of 40 vessels. In total, we expect to have approximately 950 off hire days for the same period. Based on our latest construction schedule, our newbuilding vessels are expected to be delivered in Q4 2025, Q2 and Q3 2026. In line with EXICIL regulations, We will continue investing and upgrading our fleet with the latest operational technologies available, aimed in improving our fuel consumption in reducing our environmental footprint, further enhancing the commercial attractiveness of the Star Bulk fleet.

Speaker 2

Regarding our energy saving devices program, We have completed and tested retrofits of 31 vessels, with 16 more to follow for retrofit by the end of 2024. The above numbers are based on current estimates around drybulk, aerospace planning, vessel employment and yard capacity. Finally, we are working together with Eagle Management towards a seamless integration of the Ship Management Platforms from April 2024 onwards should the merger receive shareholder approval. I will now pass the floor to our Chief Strategy Officer, Harris Plakadonaki, for an ESG update.

Speaker 3

Thank you, Nikos. Please turn to Slide 9, where we highlight our continued leadership on the ESG front. Star Bulk, along with 4 other leading ship owners in Greece, have joined the Loews Register Foundation in establishing the Maritime Emissions Reduction Center, an Athens based nonprog organization. The center We support the development and adoption of new and existing solutions to reduce greenhouse gas emissions of the global fleet while fostering the collaboration among maritime value chain stakeholders to safely navigate to net 0. For the 3rd year in a row, Star Bulk has participated in the carbon disclosure project, maintaining its core of B, We see the case of maturity of management level for taking coordination action on climate issues.

Speaker 3

This call Place Star Bulk above the industry average of B minus and also above the global average of C, which indicate awareness levels. On the regulatory front, Star Bulk has taken all necessary measures to prepare for and ensure compliance with the inclusion of shipping in the EU emissions trading scheme, which came into force on the 1st January 2024. We have also prepared to timely align our IFRS reporting with the EU's Corporate Sustainability Reporting Directive, which will apply for the first time in the 2024 financial year for reports published in 2025. During Q4 2023, we continued enhancing our employee engagement and well-being programs, increasing the retention rates of offshore employees. With regard to regulations, Star Bulk is continuing to invest to strengthen its communications and cybersecurity, including the deployment of high bandwidth Internet and next generation firewalls on Burbit's vessels.

Speaker 3

In December 2023, Star Bulk was granted the Sustainability Award as the Annual Old List Greek City Awards. I will now pass the call to our CEO, Petros Pappas, for a market update and his closing remarks.

Speaker 4

Thank you, Alex. Please turn to Slide 10 for a brief update of supply. During 2023, a total of 35 point 3,000,000 deadweight was delivered and 5,400,000 deadweight was sent to demolition for a net fleet growth of 29,900,000 deadweight or 3.1% year over year. Firm orders of $42,800,000 deadweight were placed during the year, with a newbuilding order book presently standing at a still low level of 8.5 percent of the fleet. Limited CPL capacity until late 2026, High sea building costs and future green propulsion uncertainty are keeping new orders under relative control.

Speaker 4

Furthermore, vessels above 20 15 years of age stand at 8.5% 20.6% of the fleet, respectively. While scrap prices have stabilized at elevated levels and should make demolition of oil waste and energy inefficient tonnage, a more attractive option during seasonal downturns over the next years. During the second half of the year, the average steaming speed of the drybulk fleet decreased to a new low of 10.95 knots due to downward pressures from inflated bunker costs and new environmental regulations. We expect The CII regulations to increasingly incentivize slow steaming, retrofits and to help Moderate supply over the next several years. Global port congestion adjusted lower over the last 2 years, and we expect that it will follow seasonal patterns from now on.

Speaker 4

In the short term, the combination of drought in Panama and Red Sea Tensions Has Led TO A Major Decrease of Canal Transits and IS Causing Inefficiencies That Are Candly Mitigated by the Seasonal Market Weakness. As a result of the above trends, nominal fleet growth is unlikely to exceed 2.5% per annum over the next few years. Let's now turn to Slide 11 for a brief update of demand. According to Clarksons, total dieback trade during 2023 is estimated to have by 4.4% in ton miles. Trade volumes during the 4th quarter increased by 6.2% year over year, supported by record coal and iron ore exports and a recovery of mine orebulk trade, while stronger Atlantic exports and inefficiencies have benefited ton miles.

Speaker 4

China drybulk imports increased by 12.2% despite weak macro sentiment and a struggling property sector. Gradual stimulus measures over the last year have investment on infrastructure and manufacturing, And higher exports have provided support for raw materials demand. On the other hand, dry bulk imports from the rest of the world declined by 2% as demand during the first half of twenty twenty three was affected by high energy and food costs related to the war in Ukraine and tightening monetary policy by Western Economies in the effort to fight inflation. During 2024, drybulk demand is projected to increase by 1% in tons, with the IMF upgrading its global GDP growth forecast to 3.1%. The Chinese economic recovery from 0 COVID policy is still at early stages and is expected to accelerate once the property market stabilizes and consumer confidence returns.

Speaker 4

Demand from the rest of the world is experiencing a strong recovery since September supported by declining energy, food and borrowing costs. Meanwhile, the year started with ton miles receiving strong support by geopolitical and Canal Inefficiencies. Iron ore trade expanded by 6.2% during 2023 and is projected to contract by 0.4% during 2024. China crude steel production increased by 0.9% during 2023 after 2 consecutive years of contraction supported by inflated steel product Exports. Domestic iron ore outputted stockpiles are moving higher, but still stand well below last year's levels.

Speaker 4

Crude steel production from the rest of the world declined by 1.2% during 2023, as the first half was affected by high energy costs and weak margins. Having said that, steel production ex China experienced a strong recovery during the Q4 and is expected to remain strong throughout 2024. Coal trade expanded by 6.9% during 2023 It is projected to contract by 1.4% during 2024. Global focus on energy security as inflated coal trade, while the resuppling of Russian exports has benefited ton miles. Chinese imports surged by an impressive 61% compared to 2022, external electricity increased by 6 0.4 percent, hydropower contracted by 4.9% and domestic coal production growth was limited to 4.3%.

Speaker 4

India is emerging as a leading coal importer, with electricity demand currently outpacing Grains trade contracted by 0.6% during 2023 and is projected to rebound by 2.9% during 2024. Grain trade was affected by decrease of exports from Argentina, the U. S. And Ukraine, while Brazil experienced record soybean and corn seasons that help fill the gap. Falling prices of agricultural commodities, better crop yields in North and South America, The recovery of Ukrainian volumes and increased demand from emerging economies are expected to inflate grain trade over the next years.

Speaker 4

Moreover, Panama Canal constraints this year will inflate on miles As historically, 25% of U. S. Exports are moving through the Canal. Minor bulk trade expanded by 3.7% during 2023 and is projected to by 3.9% during 2024. Minor bulk trade has the highest correlation to global GDP growth and is supported by improving global macroeconomic fundamentals.

Speaker 4

Atlantic steel shortages continue to incentivize specific exports in inflate backhaul trades. Furthermore, expanding West African bauxite exports Generate strong ton miles for Capesize vessels with Guinea exports up 24% during 2023. As a final comment, the outlook for the drybulk market remains positive due to favorable supply dynamics, geopolitically driven inefficiencies in trade and a recovery of demand supported by large global infrastructure Investment Needs for the World's Great Resolutions. Star Bulk expects to take advantage of the recent strength in the drybulk market, having mostly maintained its diverse scrubber fitted fleet in the spot market and will thus continue to create value for its shareholders. Without taking any more of your time, I will now pass the floor over to the operator to answer any questions you may have.

Operator

Thank Our first question is from Amit Mehrotra with Deutsche Bank. Please proceed.

Speaker 5

Thanks, operator. Hi, everybody. Good to talk to you all. I want to maybe start with the dividend expectations For the Q1, there's obviously a lot of moving parts in terms of year to date bookings and asset sales, asset acquisitions. You've been helpful in the past in kind of helping us calibrate directionally at least.

Speaker 5

Renu, if you can kind of Help us synthesize all those moving parts and what our expectations

Speaker 2

to be about the dividend for the Q1.

Speaker 6

We're thinking that might be a CFO question, but I mean, obviously, we don't give guidance

Speaker 7

on dividends.

Speaker 4

The Q1

Speaker 6

is not looking like that.

Speaker 1

And we have provided a figure of pro form a cash as of today, Haynes, Including the remaining deliveries for the 4 vessel sales, so it's $312,000,000 pro form a As of today, Amit, you should be only keeping As a minimum liquidity the $2,100,000 per vessel that we have On the water right now, so it's pro form a for the last four deliveries it's 110 vessels. Then you should add A figure of approximately $38,000,000 which is the dividend that we have just declared to be paid during The following day is for Q4. So roughly, you can see how what is the remaining excess cash as of today And make your projection for the remaining of the quarter. Yes.

Speaker 6

Got it. Okay. Working capital, Do we expect working capital to be a source or a case?

Speaker 1

More or less, it should be slightly negative.

Speaker 5

Okay. That's helpful. And we can follow-up on maybe more precise numbers later on. I guess the second question for me, obviously there's a lot of disruption in the Red Sea. I think there were some reports that Maybe a few of your vessels have been kind of under threat in that region.

Speaker 5

I mean, Hamish, Petros, like what do you guys think It's going to happen now. Obviously, we've seen container ship rates move higher. We've seen tanker rates move higher. Is there A synthetic reduction in capacity is occurring as you go dry bulk vessels go around the Cape of Good Hope. What are you seeing in terms of the latest for the dry bulk market in

Speaker 4

Hi, Amit. Okay. First of all, let me explain The situation about our company, we had 2 cases That's right. But legally, we could not do that because until that time, we did not know about the attacks to the Eagle Bulk and Genco vessels. And therefore, we got advice that we had to follow the charter party and Send the vessels through Suez.

Speaker 4

So the preferred vessel passed and was attacked three times. Yes, fortunately, it was not heard. Nobody on board nor the vessel. But while that was happening, the second vessel was already Passing swell, so we couldn't divert it. And that had to continue and it was attacked again.

Speaker 4

Going forward, we will not be passing Suez Canal anymore because we are Obviously, a target of the hoodies having being a Public company registered in the U. S. So that's that was I wanted to clarify this so that people know. Now, Let me give you a few examples. If you had a vessel In the U.

Speaker 4

S. Gulf, and you wanted to go to Qingdao in China, It will be a distance of like 10,000 miles. But if Panama Canal doesn't work For bulk carriers as it doesn't right now, you would have to go through Suez Canal, and that would be 14,100 miles, therefore 41% longer distance. And when and if you cannot do Suez Canal, then you have to go through the Cape, which is 15,400 miles. And therefore, it's 54% Longer than it would be through the Panama Canal.

Speaker 4

And then again, if you are in Rotterdam and you want to go to Chindau, If you go through Suez Canal, it would be 11,000 miles and through the Cape would be 14,300 miles, therefore, 30% longer. So, if in theory, no vessel passed Through SUEZ or Panama Canal and the voyage started in the U. S. Gulf or The continent, that would be like a 35% increase in miles, which basically is about between 10 15 days longer. So on trips that are 50 days long, they would become 60 Or 65 days longer.

Speaker 4

So, this is the worst possible situation. If you start from Brazil, it would you don't have a problem, you just go through the Cape. Or if you start more to the South, Same thing. If you are in the Mediterranean and you don't go through Suez Canal, it's even worse because you have to go to Gibraltar all the way around. Therefore, And because front hauls or back hauls are less Then the inter Atlantic and the inter Pacific or inter Indian Oceans trades.

Speaker 4

I would say that if both canals were totally closed, that would mean an increase in a decrease in supply of vessels of about 8%. This is not happening exactly. Of course, through Panama Canal, we're not going, but there's a lot of vessels that are going through Suez Canal. So, I would Venture to say that the effect right now on the supply is about For both canals, it would be about 3%, 4%. Sorry about the long explanation.

Speaker 5

Okay, that's very helpful. Thank you, Petros. I guess my last question and then I'll hand it over. I wanted to ask this to Hamish, because obviously Hamish you have a very deep corporate finance background. I guess I've just been amazed, if I look at over the last 5 years the way you guys have grown, I think you've added 55, 60 vessels Through ship per share deals that were actually struck below the public equity value of the company, Which is remarkable and obviously now you're adding this Eagle transaction.

Speaker 5

So the promise of this Star Bulk becoming a platform through this low debt structure is coming to fruition. And I guess The only question I had is, is there a certain amount of size where you guys just become too big to manage Or can this thing continue depending on the opportunities that present itself. So, Amit, I was wondering if you could answer that question and then Also kind of are you seeing greater interest because it becomes a little bit of the snowball effect where more and more of these come get done, More and more

Speaker 7

of these deals get done, maybe more and more come to

Speaker 5

you as well, if you could talk about that.

Speaker 6

Well, I mean, first of all, from your lips to God's ears, This is how we would love to have everything work out. First of all, let's get the Eagle deal done first before worrying about what to do next. There's a little bit of not wanting to bite off more than we can chew. And we do need to integrate EVO properly and make Sure, we keep the best of both companies before we start looking for follow on deals. But look, I don't think there is a specific level at which the company is too big to manage.

Speaker 6

We are a pretty small company compared to, say, a large airline for a large container line. And those companies are quite well managed. And I think Nikos Rezkos may have something to say about our ability to manage a fleet of 2 or 4 times the size. But if a container line or an airline can do it, I think we can do it. And we haven't seen an increase in interest yet, but I think It's reasonable to think we might once the Eagle deal is closed.

Speaker 5

Okay. All right. Thank you. Congrats on all your success everybody. Appreciate it.

Speaker 8

Thanks Amit.

Operator

Our next question is from Omar Nachta with Jefferies. Please proceed.

Speaker 7

Thank you. Hey, guys. Good morning or sorry, good afternoon. Yes, I just wanted to touch on a couple of missed questions in the back and forth you had and then also Patros, in some of your opening comments just discussing the market, clearly 4Q was a bit stronger than a lot of us were thinking going into the quarter. And then far, 1Q is averaging quite a bit better definitely than last year, but also your bookings to date are higher here in 1Q versus 4Q.

Speaker 7

So Just wanted to ask, you mentioned that the disruptions that are going on in the Red Sea and the Panama Canal have maybe smoothed out a bit of The 1Q decline that we normally would see. Obviously, that seems like it's a main or it's a big piece of what's happening, but is there also Something else happened. Is there a demand story that's driving this as well? Or do you attribute what we're seeing in the market here really just due to the disruption?

Speaker 4

Hi, Omar. First of all, I should also add the effect that The Ukraine war is having in the market because Russia cannot Does not export anymore to closer destinations in Europe, but they have to export towards China and India. And therefore, that also has an effect. So all these Along with the Panama Canal and the Red Sea, these 3 inefficiencies are creating a major positive for shipping, and they are affecting the market during a quarter that would otherwise be slower. But Overall, I would say that, first of all, I think that these This will continue to exist.

Speaker 4

I don't see them going away very soon. It will have to be several months or even years before we go back to normality. So I think they will continue to support The market for a while. Apart from that, we see a strong U. S.

Speaker 4

Economy, a strong Indian economy, we believe that China will support its economy going forward, and this is very important because during 2023, it was China single handedly that supported the trade. I think that They increased their imports by about 280,000,000 tons, where the rest of the world was actually negative. So, we think China will continue because they have not yet accomplished their goals. Along with U. S.

Speaker 4

And Indian Economies, We think that the rest of the world starts to recover as well. And don't forget the environmental regulations. These are going to affect supply. There's no question about that. And on top of that, We have a relatively low order book at 8.5%.

Speaker 4

You will be seeing influx of vessels of about 3% to 3.5% every year. We think up to now, there hasn't been much scrapping because the markets are decent, but in the future, they will have to Scrub more. So, with a 3%, 3.5% influx and Scrapping about 1%, 1.5%. We may be seeing 2% to 2.5% Need for demand, and already just inefficiencies cover that And go even further than that. So personally, I see for these reasons, I see a strong market during 'twenty four and most probably 'twenty five as well.

Speaker 7

Great. Thank you, Petros, for that detail. And then maybe just wanted to switch gears just on the other Topic or one of the topics being the dividend. And I think Amit was mentioning, clearly that's been Happening, which is that you become a bit more dynamic in terms of managing the fleet. It was much easier for me or for us We had those 128 ships and it was fairly static and so it was very easy for us to model the dividend.

Speaker 7

Given the buybacks, I guess just in general with you being a bit more active on the fleet front, you're seemingly perhaps more transaction oriented. Any Sort of thoughts on tweaking the dividend policy to a percentage of earnings payouts? Or do you like, say, the strategic honesty or clarity Just the ending cash balance approach. I think we value

Speaker 6

the fact that You can't get it wrong if it ends up depending on cash on your balance sheet that you have. A percentage of any other quantity could Somehow, due to some unanticipated events, not match up with cash that you actually have. So I think you do like this formulation. I feel your pain As far as forecasting is.

Speaker 1

Omar, this is Simos. Just to reiterate again what I said before to Amit. We gave a figure of our cash balance pro form a today as of the delivery of the last for vessels to be delivered within the following months. This is 312,000,000 On purpose we said that we are releasing the $2,100,000 for minimum cash threshold for the 7 the 18 vessels that have been sold. So you may assume that after the delivery of The last vessel, all the proceeds of the sales are used for the financing of the 2 blocks that we have acquired during the Q4 and the repayment of the bridge facility.

Speaker 1

So the $312,000,000 cash Pro form a that we have as of today is the net cash, net of any sale proceeds. And it includes only the $2,100,000 threshold For the remaining 110 vessels, the $38,000,000 of cash that we will distribute as a dividend for the 4th quarter And any cash above this is potentially the dividend free cash for the Q1. So you may start modeling out of this balance the dividend for the Q1.

Speaker 7

Okay, got it. Yes, thanks Christos for that color. We'll do that. And also thank you Hamish That's all. And then Petros.

Speaker 7

Thanks, Ed. That's it for me.

Speaker 6

Very welcome. Thanks, Omar.

Operator

Our final question The question is from Nathan Ho with Bank of America. Please proceed.

Speaker 8

Hey, good afternoon, team. I think I'd like to just maybe follow-up a little bit more on the fleet strategy, especially post acquisition. How we should be thinking about your fleet size over 2024 2025. Obviously, a pretty significant expansion, but still, like I think nearly 30% of your current fleet, Approximately 15 years and older, how much of a focus is it to source additional vessel sale opportunities from here?

Speaker 6

Well, I think we are going to be focused on growth as well as fleet renewal. So I think that the fleet is probably going to be Quite dynamic

Speaker 7

for a while.

Speaker 6

Basically because We do need to make sure that we sell older vessels at the appropriate time And that we buy newer vessels at the appropriate time. And that we Entering to business combinations that are attractive to our shareholders. So, I don't see us sort of sitting back and relaxing. We do, as I said, have to Make sure we do a good job integrating Eagle, but hopefully that will not take all of 2024.

Speaker 8

Got it. Got it. Okay. That's helpful. And maybe just a follow-up on both Omar and Amit's questions regarding the Red Sea.

Speaker 8

How has your conversations with some of the P and I clubs and insurers been surrounding insuring charters through the Suez Canal now? Has that been do you see that as like a significant capacity restraint moving forward for, say, other carriers from an economic standpoint to transit across. Thanks.

Speaker 4

Up to a couple of weeks ago, the cost had not gone up that much. Right now, it's gone up a little bit. We are very well covered at relatively low rates. But as I said, we won't be going through trade seesaw doesn't apply anymore. For whoever does, I suppose that the more vessels that are hit, the higher the insurance rates that will be asked by the insurers.

Speaker 4

But overall, the cargo has to go to its destination, and it's a matter of calculation. So let's say, Guy starts from the continent with a charter with As chartered the vessel, he will have to calculate whether it pays off to go through the Cape or through the Suez Canal. As far as with the Suez Canal, you will also have to take into account The potential risks, but just looking at the cost, it's going to be, let's say, 11 days longer through the Cape. So he will have to pay higher and bunkers for 11 days, but through Suez Canal, he will have to pay for The cost of the Canal plus the insurance. So as the insurance increases, It's possible, but at the end of the day, it won't make much difference whether it goes through the Cape or through SUEZ.

Speaker 8

Got it. Perfect. Thanks again. That's really helpful. Thank you.

Operator

We have reached the end of our question and answer session. I would like I'll turn the conference back over to management for closing remarks.

Speaker 4

No remarks, operator. Thank you very much.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

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