Diana Shipping plans to refinance a tranche of its debt next year and will sell at least two more of its older bulkers in the coming months.
During its quarterly earnings call on Monday, the New York-listed bulker owner said that in early 2021 it will start to draw up refinancing plans for debt maturities scheduled for 2022 and beyond.
Diana has around $108m of debt repayments due in 2022, including $42m of scheduled maturities with Nordea that can be extended by two years at Diana's option.
Management said during the call that this option will "most probably" be exercised.
"Our main target now ... is that we are going to try to bring forward everything that we have for 2023," Ioannis Zafirakis, Diana's interim chief financial officer and treasurer, said.
"I know that someone might consider 2023 as being far away, but you know how we operate. We will try to make it better and we will start from the beginning of next year."
Before any refinancing takes place, Diana's pro-forma debt repayments are estimated at $65m to $70m for 2022, according to Clarksons Platou Securities analyst Omar Nokta.
"Given Diana's success earlier this year in refinancing maturities scheduled for 2020 and 2021, along with its track record and healthy overall leverage profile, we expect positive results on its refinancing efforts," he said in a research note on Monday.
"Included in 2023 maturities are its $100m 9.5% Norwegian bonds that may be refinanced as well though these are not due until September 2023."
Diana has only $10m of debt scheduled to amortise this quarter and $40m in total amortisation due in 2021.
More vessel sales to come
Diana's management team said during the call that the company would continue to sell older vessels, but has not yet decided which ones.
"Definitely we're talking about one or two vessels to be sold in the next quarter," chairman Simeon Palios told analysts.
Diana recorded a $14.6m net loss attributed to common stockholders for the three-month period, including a $6.8m impairment loss from the sale of two vessels.
In the previous quarter, it booked a $12.2m net loss attributed to common stockholders, which included a $2.6m impairment charge.
Diana agreed to sell its 174,200-dwt capesize Sideris GS (built 2006) and the 74,400-dwt panamax Coronis (built 2006) during the third quarter, which resulted in the impairment.
Time charter revenue was $42.3m for the third quarter, 21% below its earnings of $53.5m during the same period of 2019.
Diana said the fall was down to the decrease in ownership days, resulting from the sale of eight bulkers since the start of 2019, as well as to lower average time charter rates earned by its trading vessels.
The company will take a "defensive position" with the cash on its balance sheet, he continued, in response to a question from Jefferies analyst Randy Giveans.
"The first option of ours that we are considering is to keep the money aside," Palios said.
"The second option is to buy back part of our bond; the third option is to buy back our shares; and the fourth option is to buy more vessels."
Analyst reaction
The company repurchased $8m of its outstanding senior unsecured 9.5% bonds in July.
Diana's third-quarter results just missed analysts' estimates, primarily due to lower revenues and higher general and administrative (G&A) expenses.
The shipowner reported a loss per share of $0.09. The analyst consensus had expected a $0.07 loss per share.
Likewise, Diana's third-quarter Ebitda of $8.1m undershot the consensus figure of $12.5m.
G&A costs totalled $25.7m during the first nine months of 2020, $5m more than in the same period in 2019, which Diana said was due to the accelerated vesting of restricted shares for two board members who have left the company.
Outlook
This came as part of the company's restructuring and separation from its affiliate Performance Shipping, previously known as Diana Containerships, which now specialises in aframax tankers.
Analysts struck a cautiously bullish tone in research notes published after the call.
"The shares trade below NAV [net asset value], which comes as no surprise given the prevailing market but we believe Diana has the tools to bridge the valuation gap," Nokta said in Monday's note.
"We expect asset sales to strengthen its balance sheet further while refinancing debt maturities will offer even more flexibility."
Jefferies has increased its earnings-per-share estimates for the fourth quarter and 2021, "based on our reduced depreciation and interest expense expectations", as well as a positive spot market, a note said on Monday.
Clarksons Platou Securities has Diana's stock rated as a "Buy", while Jefferies has designated it as a "Hold".
