Aristides Pittas - Chairman of the Board, President, Chief Executive Officer Tasos Aslidis - Chief Financial Officer, Treasurer, Director

Donald Bogden - Wells Fargo

Thank you for standing by, ladies and gentlemen and welcome to the Euroseas' conference call on the third quarter 2016 financial results. We have with us Mr. Aristides Pittas, Chairman and Chief Executive Officer and Mr. Tasos Aslidis, Chief Financial 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 Instructions]. I must advise you that the conference is being recorded today, Thursday, November 10, 2016. Please be reminded that the company announced their results with a press release that has been publicly distributed. Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, Euroseas will be making forward-looking statements. These statements are within the meaning of the federal securities laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. I kindly draw your attention to slide number two of the webcast presentation, which has the full forward-looking statement and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. And now I would like to pass the floor to Mr. Pittas. Please go ahead, sir.

Good morning and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis, our CFO. The purpose of today's call is to discuss our financial results for the three and nine months period ended September 30, 2016. Let's turn to slide three of our presentation for our financial results overview, starting with the third quarter of 2016 located on the left hand side of the table. We reported total net revenues of $7.2 million. Net loss for the period was $4.6 million, while net loss attributable to common shareholders was $5 million. The difference being the $0.4 million of dividends and the Series B preferred shares. Adjusted net loss attributable to common shareholders for the period was $3.3 million or $0.40 per share basic and diluted. Adjusted EBITDA for the third quarter was $0.3 million. The results for the third quarter of 2016 include $1.8 million loss on the termination of second Ultramax newbuilding contract and a $700,000 loss on our investment in the Euromar joint venture. Moving to the right hand side of the table to go over our first nine months 2016 results. We reported total net revenues of $21.1 million. Net loss for the period was $26.6 million, while net loss attributable to common shareholders was $27.9 million. The difference again being the$1.3 million of dividends and the Series B preferred shares. Adjusted net per share loss attributable to common shareholders for the period was $10.5 million or $1.29 per share basic and diluted. Adjusted EBITDA for the first nine months of 2016 was negative $0.8 million. The results for the first nine months of 2016 include $3.2 million loss on termination of the two Ultramax newbuilding contracts and the $14 million impairment of our investment in the Euromar joint venture. During the last year and despite the poor markets, we have managed to improve the prospects for the company. This was come about through the successful outcome of our efforts to cancel a big part of our newbuilding program and the amicable restructurings and financings of our loans. Our short-term liquidity, till we receive the refund guaranties from Dayang shipyard is somewhat strained. [AUDIO GAP] Enhance shareholder value. Please turn to slide four to discuss operational highlights for the quarter. The Aegean Express, a 1997-built 1,439 teu fully cellular containership purchased in the second quarter of this year for $3 million was delivered to us on September 29. Subsequently, we also extended its charter at $6,300 per day till at least March 2017. We remind you that this vessel was bought using the cash proceeds from the sale of our Cpt. Costas, built 1992 plus only $300,000. Thus with only $300,000 extra payment, we got a five year younger vessel. Other operational highlights include the completion of the drydocking of the Monica, which was subsequently chartered till December 2016 at $4,500 at the position on voyage. Also, we took the decision to lay-up our containership Joanna, which has been idle in the Mediterranean since September 13. As we don't expect the market to improve before end March 2017, we will be saving on costs. We expect about 250,000 deactivation and reactivation cost plus $1,100 per day while in lay-up. We have also extended the charters of our Ninos. I remind you this is a 1990-built vessel, 27 years old nearly. And the Kuo Hsiung, a 1993-built vessel. Both were chartered at $7,000 per day. Our bulkers recent fixtures include the Eleni P for 25 days at $7,500 per day, the Monica P for 80 days at its position on voyage at $4,500 a day and the Pantelis for a 90 day trip at $6,800 per day. All these fixtures indicate a strengthening market. Turning to slide five. We want to update your on our newbuilding program developments. We already announced that we have canceled our two Ultramax newbuilding contracts with Yangzhou Dayang Shipbuilding Company due to excessive delays in the construction of the vessels. We are in arbitration to recover about $18 million, $17 million of which are secured by refund guaranties. The process should last for about another nine months. At the same time, we are also discussing with the yard about a potential commercial settlement. For our remaining newbuilding contract, the second Kamsarmax vessel, we signed a contract addendum with the yard agreeing to a new delivery date in Q1 2018 or a conversion of the contract to a different vessel type or to use the payment already effected to acquire a different vessel from the yard. In addition, we have got the option to cancel the shipbuilding contract by the end of December 2016 with no extra payments penalty. On slide six, you will find our fleet as of today that includes the optional Kamsarmax newbuilding. In total, its 13 vessels, six drybulk and seven containerships. On slide seven, you can see the Euromar fleet, our joint venture with Eton Park and Rhone Capital. Euromar has a fleet of seven intermediate and two handysize container vessels between 1,700 and 3,100 teu and one post Panamax vessel of 5,600 teu. We remind you that Euroseas owns 14% of this venture and holds $4.4 million in preferred equity plus a further $4 million commitment to be invested as preferred equity at Euromar's option. Euromar's cash position at the end of Q3 2016 was $14.8 million. Let's move to slide nine for a brief overview of the market. After hitting a low 290 points in February, the BDI increased to 612 points at the start of Q3 and ended at 875 points by September 30. As of November 9, the BDI stood at 954, more than three times where it was in the beginning of the year. The BALTIC Panamax spot rate averaged $3,000, approximately in Q1, $4,900 in Q2 and $5,700 in Q3. Similarly BALTIC Supramax spot rates averaged $3,800 in Q1, $5,800 in Q2 and $7,000 in Q3. Currently, the BALTIC spot rates stand at $13,300 for Capes, $7,400 for Panamaxes and $7,350 for Supramaxes. One year time charter rates also increased slightly for all segments. The January average for Capes was $5,250 per day. They rose to $8,750 in the month of October. Panamaxes was $5,370 in January and rose to $7,000 per day in October. Supramaxes rose from $4,800 per day in January to $6,750 in October. As of November 9, time charter rates stood at about $9,000 for Capes, $7,300 Panamaxes and $6,500 for Supramaxes. Secondhand prices for vessels of about 10 years old have increased between 30% to 50% from the low seen at the start of the year. For vessels of around 15 years, they increased seemingly smaller at about 10%. No newbuilding orders were placed but there were some resales by owners who did not have capacity to pay for them or yards which have taken them over. These resales are at levels of $18 million to $19 million for Ultramaxes, $19 million to $20 million for Kamsarmaxes and $33 million to $34 for Capes. These levels are roughly 30% to 40% lower than the price they were originally ordered at. Turning to slide 10 and moving to containerships. Time charter rates in the first nine months of 2016 for vessels below 5,500 teu have dropped further and are in the region of $4,500 to $5,500 per day with the 1,500 to 1,700 teu vessels still earning the most. Secondhand prices dropped even further during the last quarter with 15 year old vessels below 3,000 teu valued at the scrap price, whilst for Panamaxes, where the biggest percentage of idle fleet exists, even 10 year old vessels have been scrapped. Newbuilding prices were stable, however activity was practically nonexistent in the last quarter. The idle fleet which have been falling from 1.55 million teus in March 2016 to about 900,000 teus in the summer peak season rose again to 1.2 million teu by the middle of September and continues to rise since then and has reached 1.59 million teu, 7.8% of the total fleet. Scrapping has accelerated in the past couple of months and we are heading for a record scrapping year for containers at about 650,000 teus. Turning to slide 11, you can review the drybulk age profile and order book delivery schedule. The delivery schedule for drybulk vessels in 2016 stood at a very significant 11.9% of the fleet for the full year. However, slippage and cancellations are running at record pace and only about half of the initial order book will be delivered as we had predicted from the start of the year. For 2017, the drybulk order book stands at just 4%, a very significant drop from 2016. Some of that will also be canceled or slipped into 2018, but on the other hand some of the 2016 slipped deliveries will get delivered in 2007. Nevertheless, deliveries in 2017 should be comfortably the lowest of the last 10 years. The 2018 order book is even less and barring any significant new orders which are not expected anyway due to the depressed market, the actual fleet could even slightly shrink during 2018. Please turn to slide 12. The container delivery schedule at the beginning of 2016 stood at 6.8% and was dominated by the larger vessels. Here again, cancellations and slippages will change the original estimate but less compared to the drybulk market as the contracts for containerships are usually more robust due to the better overall quality of both owners and yards involved. For 2017 and 2018, the order books slightly increased during the last few quarters and still some liner orders for larger vessels competing for optimal slot size replaced. As of now, the order book for 2017 and 2018 stands at 7.4% and 5.1% respectively. The retreating market should deter companies from placing new orders and even incentivize them to delay or cancel pre-agreed orders. The great majority of the order book is for large ships, but cascading is still happening. We have seen and we continue to see Panamaxes between 3,000 to 5,000 teu being displaced by the new larger ships in the longer routes, even more so now that the new Panama Canal Gateway has been opened. At the same time though, some of these larger ships have cascaded down to routes that were served by 1,000 to 3,000 teu ships. However we have, this year, seen a stabilization of this process with cheaper oil and size restrictions appearing to be putting a break in this cascade process. Please turn to slide 13 to have a very brief discussion of the world economy, which is a driver our business. While India's economy is showing to benefit from policy reforms, unfortunately the sentiment globally continues to disappoint. Brexit is still a key issue in the Eurozone and now that the U.S. presidential election has concluded, there are a number of key uncertainties that remain globally that we continue to closely follow. As usual, we list the positives we see. Following the impeachment of the former President, Dilma Rousseff, it seems that Brazil is on a reformist track. Growth prospects is Russia seem to be improving amongst rising commodity prices. And China seems to be avoiding a hard landing due to robust services growth. Companies are generally doing okay and most major financial markets are close to five-year highs. On the negative front though, there is the uncertain outcome of what Mr. Trump will drive the compass as U.S. President and his protectionist rhetoric doesn't seem promising for global trade. This protectionism which is gaining support in most advanced economies is also reflected in the start of the Brexit discussions scheduled to commence early next year. The optimism that existed in the stock markets seems to be stalling in part due to the all-time highs of the U.S. markets relative to the health of the world economy and in part due to investors worrying about overall world growth and therefore becoming more risk averse. The restricted monetary policy capacity in advanced economies and global deleveraging are also negative factors. The biggest worries of the more, however, are the regional conflicts and terrorism which continue to hinder confidence worldwide. Another concern is Europe's banking sector and the difficulties it may face to raise new funds. Also in the news is the likelihood of big cut in production for the first time in eight years, but there is still no final concrete deal in place. Oil prices have fallen since mid-October and it is interesting to see is this is enough to get the deal done. Slide 14 shows expectations of world GDP growth according to the IMF and also shipping demand growth. Projected world GDP in 2016 is expected to be 3.1%, the same as the previous quarter. China is expected by the IMF to grow by a healthy 6.6% in 2016, also the same as the last quarter. India is projected to grow by 7.6%, above the 7.4% of the previous quarter. The U.S. is now projected to grow by slightly lower rate of 1.6% from the 2.2% of the previous quarter, while Brazil is expected to have 3% negative growth in 2016 in line with the previous quarter. Also Russia now is expected to do better than previously expected at negative 0.8% from negative 1.2% in the previous quarter. Turning to shipping. Drybulk growth is projected by Clarkson is to be 0.9% in 2016 following the 0.5% growth projection in the previous quarter. We believe that the actual growth will be about 2%, driven by the much higher imports of China than originally envisioned. Containership trade, according to Clarkson, will show slightly less growth from what was expected during the previous quarter at 3.4%, down from 3.8%. Here we believe that the year will end with an even lower growth of about 2.5%, driven primarily by the slow worldwide rate growth. For 2017, global growth is expected by the IMF to be stronger than this year, at 3.4%. China's growth is predicted to fall to 6.2% from today's 6.6%, Europe's to fall by 0.2% to 1.5% and India's to remain stable at the current high rate of 7.6%. The other markets should all post better growth rates than 2016. If that happens, drybulk and container trades could do better. But of course, this remains to be seen. Let's hope the IMF projections materialize this time. The last four years, though, indicate that actual world GDP has always lagged the IMF projections at the beginning of the respective year by between 0.1% to 0.5%. Assuming world GDP growing as projected by the IMF, we would think the drybulk and container trade could grow at roughly similar rates. Let's turn to slide 15 to summarize our outlook for the drybulk sector. Market fundamentals for 2016, after the worst first quarter in the history of drybulk shipping, have improved amidst very high scrapping and better-than-expected demand, especially for iron ore and coal. Whilst we would all love scrapping to continue at a similar pace in 2017, we will not see this happen if the market keeps on improving or even remains at current levels. It is good to know, though, that E if we see a softening of the market during the first half of next year, something not unlikely, scrapping would resume and help the adjustments. Unfortunately, the market is still fragile and uncertainty very high as China remains the main source of drybulk trade growth. Although its economy seems to be adjusting to a new norm of a lower growth rate, once it does with its iron ore and coal imports will have bearing on the market development. Iron ore is still the commodity with the greatest prospects despite the slower steel production that Chinese government has announced. It plans to limit steel production by shutting down excess capacity of 150 million tons by 2020. Additionally, it plans shut down coal mines of about 500 million tons capacity annually within the next three to five years. However, this is so far counterbalanced by increased iron ore and coal imports due to the shutdown of local and economical mines. So far this year, record iron ore imports of 10% into China were recorded. Similarly, coal imports also rose 10% year-over-year. With the significant increase of coal prices seen recently, China has relaxed restrictions it had previously imposed on its coal mines and local coal production is again increasing. The unpredictability of what the Chinese government decides weighs heavily on the future of demand for dry capital. For the time being, the record Chinese imports of iron ore and coal as well as solid grain imports and steel exports give great support to both larger and smaller vessels. India is also still looking good and coal trading into the country is strong despite the India government's medium-term aim for self-sufficiency by developing domestic mines. Please turn to slide 16. For containers, we expect demand to end up growing by about 2.5% in 2016, similar to 2015 at the lowest levels ever recorded, less than even the GDP growth. The container industry has matured and growth rates of a growing industry of 7% to 10% of the past decade are not there anymore. Coupled with the brakes that have been applied to globalization, we no longer expect to see growth rates in excess of GDP growth rate for the following few years. Thus., while supply demand should be balanced in 2016, the optimization that is brought about by the sinking number of container operator through mergers and bankruptcies is creating efficiency improvements that have worsened the chartering market. We expect a similar situation in 2017, looking more favorable for demand in 2018. In any event, the oversupply will be in the larger vessels, so there is some better hope for smaller vessels where new supply is significantly less than respective scrapping and trade growth. Developing trading patterns and cascading will determine the smaller vessels market. The Panamax vessels have been replaced by the bigger ships that have been delivered during the last few years are taking the biggest hits and the number of those that get scrapped, laid up or find employment in shorter routes needs to be closely monitored. For the time being, ordering has halted but any continuing strategic ordering of mega vessels from the various alliances, if they happen, will create further worries for 2018 onwards. This however currently seems very unlikely. No recovery though can be expected prior to the absorption of the idle fleet. Let's now turn to slide 18 to view our drybulk employment schedule. Our drybulk coverage for 2016 currently stands at about 83%. We are continuing the practice of employing our vessels in short-term contracts or index-linked charters in the expectation of the market improvement. Now let's urn to slide 19 for our containership employment schedule. We currently have about 77% coverage in 2016. As with our drybulk vessels, the strategy for our containerships has been to employ them on short-term employment in the anticipation of the market improvement except where we can earn more than $10,000 per day. Please turn to slide 20. Eurobulk, our manager, is continuing to keep our costs low. Our daily cost per vessel for Q3 2016 was in line with our budget and similar to previous years. The graph in this space compares daily costs excluding drydock since 2008 with our peers. Overall our cost remains amongst the lowest of the public shipping companies. For the third quarter of 2016, our operational utilization was 100% and our commercial fleet utilization was 96.7%. Let's turn to slide 21. The left side of this slide shows the evolution of time charter rates of Panamax drybulk ships and containers of 1,700 teus since 2001. Container rates are approaching lows last seen in 2010 and drybulk vessels, although after time lows of Q2 2016, are still at all-time lows. The right hand side of the slide shows the current vessel values in relation to historical prices. Drybulk prices have just moved above all-time low values which were established at the beginning of the year, whilst containership prices are currently setting new all-time lows. While shorter term market dynamics can result in even lower prices as many owners are forced to sell entirely due to liquidity issues or by the banks, we believe that we will see a fast improvement once people start to see some light at the end of the tunnel. This has already started happening in the drybulk sector. In any event, current valuations do not reflect the long-term revenue capacity of the vessels in either sector. Assuming that the analyst of IMF are right in predicting slightly stronger global GDP growth in 2017, we should be on track for market improvements in both markets once the current large order books get depleted within the next couple of years, provided of course the industry doesn't shoot itself in the foot again by starting to reorder new ships. This could happen within 2017 for drybulk and 2018 for containers. And with that, I want to pass the floor over to our CFO, Tasos Aslidis to take you through our current financials in more detail.

Thank you very much Aristides. Good morning from me as well, ladies and gentlemen. As usual, I will now provide you with a brief overview of our financial statements for the three and nine month periods ended September 30, 2016. For that, let's turn to slide 23 and first take a look at our results for the third quarter of 2016 in comparison with the same period of last year. I will repeat here some of the same figures that Aristides gave you in the beginning of the presentation. The results for the third quarter of 2016 reflect the continued depressed state of the drybulk and containership shipping markets. For the period, we reported total net revenues of $7.2 million representing a 36.1% decline over total net revenues of $11.3 million during the third quarter of last year. We reported net loss for the period of $4.6 million and a net loss attributable to common shareholders of $5 million as compared to a net loss of $1.4 million and $12.8 million, respectively for the third quarter of 2015. As Aristides mentioned earlier, the difference between net loss and net loss attributable to common shareholders is $0.4 million and accounts for the dividends we paid to our Series B preferred shares in the third quarter of 2016. This preferred dividend can be paid out at our option either in cash or in kind and we have elected to pay in kind for the last 11 quarters. The results for the third quarter of 2016 among others include an $1.8 million loss on termination of a newbuilding contract. Basic and diluted loss per share attributable to common shareholders for the third quarter of 2016 was $0.61 compared to basic and diluted loss per share $0.29 for the third quarter of 2015. Excluding the effect on the loss attributable to common shareholders of the unrealized and realized loss on derivatives and the loss on termination of a newbuilding contract, the adjusted net loss per share attributable to common shareholders for the quarter ended September 30, 2016 would have been $0.40 basic and diluted compared to a net loss of $0.26 basic and diluted for the same quarter of last year. Adjusted EBITDA for the third quarter of 2016 was $0.3 million compared to $2 million adjusted EBITDA achieved during the same period of 2015. Let's now discuss the results for the first nine months of 2016. For the first nine months of this year, we reported total net revenues of $21.1 million representing a 26.9% decrease over total net revenues of $28.9 million during the same period nine months of 2016. We reported a net loss for the period of $26.6 million and a net loss attributable to common shareholders of $27.9 million as compared to net loss of $10.1 million and$11.3 million respectively for the first nine months of 2016. Again the difference between net loss and net loss attributable to common shareholders is the $1.3 million and $12.2 million respectively that reflect the dividends we paid to our Series B preferred shares. The results of the first nine months of 2016 amongst other items include a $0.2 million loss on derivatives, a $3.2 million loss on termination of two newbuilding contracts and a $14 million impairment of our investment in our Euromar joint venture. Basic and diluted loss per share attributable to common shareholders for the first nine months of 2016 was $3.43 compared to basic and diluted loss per share of $1.92 for the first nine months of 2016. Again, excluding the effect on the loss attributable to common shareholders for the first nine months of this year of the unrealized and realized loss on derivatives, the loss on termination of two newbuilding contracts, the gain on sale of a vessel and the impairment of investment in our joint venture, the adjusted net loss per share for the nine-month period ended September 30, 2016 [AUDIO GAP] Am I still heard? Hello?

Please go ahead. You are still connected.

I am repeating the last sentence. Excluding the effect on the loss attributable to common shareholders for the first nine months of 2016 of the unrealized and realized loss on derivatives, the loss on termination of two newbuilding contracts, the gain on sale of a vessel and the impairment of our investment in our Euromar joint venture, the adjusted net loss per share attributable to common shareholders for the nine-month period ended September 30, 2016 would have been $1.29 compared to a loss of $1.85 basic and diluted for the same period of last year. Adjusted EBITDA for the first nine months of 2016 was negative $0.8 million compared to a positive $0.1 million achieved during the first nine months of last year. Let's now move to slide 24. In this slide, we provide you with our fleet performance for the three and nine month periods ended September 30, 2016. As always in comparison to the same periods of last year. Let's start with our fleet utilization rate. We have broken down the presentation for our utilization rate in commercial and operational we do like every quarter. For the third quarter of this year, we reported a 96.7% commercial utilization rate and 100% operational utilization rate as compared to a 98% commercial and 99.1% operational utilization rate for the same period of last year. I want to remind you that our utilization rate calculation does not include vessels in scheduled drybulk or scheduled repairs during the reporting periods. The third quarter of this year, we operated 11 vessels and we set a time charter equivalent rate of $7,737 per vessel per day, representing almost a 13.5% decrease compared to the time charter of $8,929 per vessel per day that we had during the same periods of 2015, a period during which we operated 15 vessels. Total operating expenses including management fees, G&A but excluding drydocking costs, were $5,838 per vessel per day for the third quarter of 2016 compared to $5,846 per vessel per day for the same period of last year. Overall, we believe we continue to maintain one of the lowest operating cost structures amongst our public peers and we think this is one of our competitive advantages in the business. Let's look now at the bottom of this table to our daily cash flow breakeven levels presented here on a per vessel per day basis. For the third quarter of 2016, we reported an operating cash flow breakeven level including loan repayments, but before any balloon repayments, we did not see anyway, of $8,211 per vessel per day as compared to $8,225 per vessel per day that we had during the third quarter of 2016. Let's turn our attention now to the first nine months of this year on the right side of the slide. For the nine-month period ended September 30, 2016, we reported a 95.8% commercial utilization rate and a 99.8% operational utilization rate, compared to 97.1% commercial and 99.6% operational utilization rate for the same periods of 2015. In the first nine months of 2016, we operated an average of 11.33 vessels, set an average time charter equivalent rate of $7,220 per vessel per day, representing about a 4% decrease compared to the time charter equivalent of $7,529 per vessel per day that we had during the first nine months of last year, a period during which we operated 15 vessels. Total operating expense, again for the nine-month period, including management fees, G&A but again without drydocking cost, were $6,011 per vessels per day compared to $6,175 per vessel per day for the same periods of 2015, representing a decline of close to 3%. Let's now look again at the bottom of the table to our daily cash flow breakeven levels presented here again on a per vessel per day basis. For the first nine months period of this year, we reported an operating cash flow breakeven level, again including loan repayments, but before any balloon payments, of $8,298 per vessel per day compared to $8,539 per vessel per day for the same nine-month period of 2015. Moving now to slide 25. This slide shows on the right hand side our cash flow breakeven levels over the next 12 months and for the left part of the slide, our scheduled debt repayments including scheduled balloon repayments over the next five years. We have managed to improve the liquidity of the company by restructuring or refinancing some of our loans during 2016. As of today, we have only a $6.4 million balloon coming due in the fourth quarter of 2016 for which are currently negotiating an extension with the bank. After that, our next major balloon payment is not before 2019 when we have balloon payments of about $17 million. Our loan repayments over the next 12 months, assuming the extension of the balloon I mentioned earlier, amount to approximately $1,650 per vessel per day contribution to our cash flow breakeven level as you can see on the table on the right part of the slide. If we make assumptions about the rest of our operating items, like the operating expenses, G&A, interest and drydocking, we will come up with an expected operating cash flow level for the next 12 months of about $8,550 per vessel per day again without any balloon payments included, which if included would add about $750 to the cash flow breakeven level for the period. And with that, let me turn the floor back to Aristides.

Thank you Tasos. I would now like to open up the floor for any questions we might have.

[Operator Instructions]. Your first question comes from the line of Donald Bogden from Wells Fargo. Please ask your question.

Good morning gentlemen and thank you for taking my question. My first question is on your current cash balance. How do you think about that moving forward given expectations that the market is going to remain within range of current levels? And would you consider further asset sales for liquidity?

Good question. The cash flow this quarter and cash flow is quite delicate. We think that we should be able to withstand this period till we get the refund guaranties from the shipyards. That is about $18 million. So obviously this would give the company tremendous runway under even more difficult circumstances. So we might need to bring couple of million dollars during this period and we are looking at various ways of doing that.

Okay. Thank you for that. And just a follow-up, you had walked through the amortization schedule earlier, $6.4 million in Q4 that you are current negotiating with your bank for an extension and if I got you correctly, there is no major balloon payments till 2019 after that? So there is no amortization at 2017 and 2018?

There is amortization. There is $3.2 million of balloon payment, there is one balloon basically, that is due in 2018 and a smaller one of $1.1 million balloon that is due in 2017.

Okay. Great.

If you look at slide 25, I think there is quite graphic presentation of the balloons and the repayments.

Okay. Well, thank you. That is good color. Yes?

However, let me add that when the time comes for the balloon payments, we are very comfortable that we should be able to extend those further, if needed because the vessels at that time, it's more of a scrap related loan that is still outstanding and usually the banks are there to extend this quite easily.

Right. That makes sense. All right. Well, thank you for the market color, gentlemen.

Okay. Thanks.

[Operator Instructions]. We appear to have no other questions at this time. Please continue.

Well, thank you all for attending our conference call. We will be again with you in about three months time for the end of year conference call. Thank you.

Thanks everybody.

That does conclude the conference for today. Thank you for participating. You may all disconnect.