FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of December 2006
DIANA SHIPPING INC.
(Translation of registrant's name into English)
Commission File Number: 001-32458
Diana Shipping Inc.
Pendelis 16
175 64 Palaio Faliro
Athens, Greece
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [_]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): ___
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)7: ___
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): ________.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached to this Report on Form 6-K as Exhibit 1 are the results of
operations of Diana Shipping Inc. for the nine months ended September 30, 2006.
This Report on Form 6-K is hereby incorporated by reference into the
registration statement of Form F-3 filed on December 13, 2006.
Exhibit 1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis should be read in
conjunction with our unaudited interim consolidated financial statements and
their notes included herein.
Results of Operations
For the nine months ended September 30, 2006 compared to nine months ended
September 30, 2005
Voyage and Time Charter Revenues increased by $1.8 million, or 2%, to $80.9
million in the nine months ended September 30, 2006, compared to $79.1 million
for the same period in 2005. The increase is attributable to the increase in the
number of vessels in the fleet after the acquisition of the Erato and the Thetis
in November 2005, the acquisition of the Coronis and the Naias in January and
August 2006 and the full operation in 2006 of the Pantelis SP, the Calipso and
the Clio. This increase was partly offset by declining hire rates in 2006
compared to the same period of 2005.
Voyage Expenses decreased by $0.9 million, or 17%, to $4.3 million in the nine
months ended September 30, 2006 compared to $5.2 million for the same period in
2005. The decrease in voyage expenses is attributable to the decrease in
commissions in the nine months ended September 30, 2006 compared to the same
period of 2005 due to the elimination of commissions charged by the management
company after April 1, 2006. This decrease was partly offset by an increase in
commissions which resulted from increased revenues.
Operating Expenses increased by $5.6 million, or 52%, to $16.3 million in the
nine months ended September 30, 2006 compared to $10.7 million for the same
period in 2005. The increase in operating expenses is attributable to the
increased ownership days(1) resulting from the addition of new vessels to our
fleet and increased stores and spares, repairs and crew costs.
----------
(1) Ownership days are the aggregate number of days in a period during which
each vessel in our fleet has been owned by us. Ownership days are an
indicator of the size of our fleet over a period and affect both the amount
of revenues and the amount of expenses that we record during a period.
Depreciation and Amortization of Deferred Charges increased by $5.0 million, or
71%, to $12.0 million for the nine months ended September 30, 2006, compared to
$7.0 million for the same period in 2005. This increase is the result of the
increase in the number of vessels in our fleet and the increase in the number of
vessels performing drydock and special surveys.
Management Fees decreased by $0.6 million, or 50%, to $0.6 million for the nine
months ended September 30, 2006 compared to $1.2 million in the same period of
2005. The decrease is due to the elimination of management fees after the
acquisition of the fleet manager. However, due to this acquisition General and
Administrative Expenses during the nine months ended September 30, 2006
increased by $2.4 million to $4.4 million compared to $2.0 million in the same
period in 2005.
Interest and Finance Cost increased by 0.4 million, or 18% ,to $2.6 million
during the nine months ended September 30, 2006 compared $2.2 million for the
same period in 2005. This increase is attributable to an increase in interest
costs for long term debt and leased property and was partly offset by a decrease
in amortization of finance charges.
Acquisition of Fleet Manager
On April 1, 2006, the Company acquired 100% of the issued and outstanding
shares of Diana Shipping Services S.A. ("DSS"), the management company, for a
cash consideration of $20 million. The purchase price was financed with funds
drawn under the revolving credit facility with RBS. The Company recorded the
acquisition at historical cost under a method similar to a pooling of interests,
due to the fact that in February 2005, the date the agreement to acquire DSS was
originally signed, DSS and the Company were under common control. The purchase
price in excess of DSS's historical book value at the date of acquisition of
$20.3 million was considered a preferential deemed dividend and reduced net
income available to common stockholders for the period.
Cash Flow
Net Cash Provided By Operating Activities
Net cash provided by operating activities decreased by $0.9 million, or 2%,
to $56.8 million for the nine months ended September 30, 2006 compared to $57.7
million for the same period in 2005. This decrease is primarily due to decreased
time charter rates during the 2006 period, which was partially offset by the
increase in revenues due to the enlargement of our fleet.
Net Cash Used In Investing Activities
Net cash used in investing activities was $95.8 million for the nine months
ended September 30, 2006, representing the balance of the purchase price and
additional predelivery expenses in connection with our acquisition of the
Coronis and the Naias and an advance of $18.2 million paid for the acquisition
of our Capesize dry bulk carrier, the Sideris GS, which is expected to be
delivered in late November 2006. For the nine months ended September 30, 2005
net cash used in investing activities was $91.5 million, representing the
balance of the acquisition price and additional construction costs of the
Pantelis, the Calipso and the Clio and a 10% advance paid with respect to the
acquisition of the Thetis.
Net Cash Provided By Financing Activities
Net cash provided by financing activities was $26.1 million for the nine
months ended September 30, 2006, consisting of $98.1 million drawn under our
revolving credit facility for the acquisition of the Coronis and the Naias in
January and August 2006 and the acquisition of our fleet manager in April 2006;
$71.4 million of debt repayment; $52.3 million of dividends paid; $71.7 million
of net proceeds from our secondary public offering in June 2006 and $19.7
million of net consideration paid for the acquisition of our fleet manager,
which represents the consideration of $20 million paid, net of $0.3 million of
cash acquired in the transaction. For the same period of 2005, net cash provided
by financing activities was $62.0 million consisting of $76.0 million of
indebtedness drawn for the acquisition of the Pantelis SP and the Calipso;
$194.0 million net proceeds from our initial public offering in March 2005;
$168.7 million for repayment of principal and interest of our outstanding
indebtedness during the period; $38.8 million of cash dividends paid to
stockholders (before and after our initial public offering); $1.2 million of
financing costs relating to our credit facility and $0.8 million of restricted
cash that was made available due to repayment in full of all outstanding loans.
DIANA SHIPPING INC.
INDEX TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Consolidated Balance Sheets as of December 31, 2005 and September 30,
2006 (Unaudited)....................................................... F-2
Unaudited Consolidated Statements of Income for the nine months ended
September 30, 2005 and 2006............................................ F-3
Unaudited Consolidated Statements of Stockholders' Equity for the nine
months ended September 30, 2005 and 2006............................... F-4
Unaudited Consolidated Statements of Cash Flows for the nine months
ended September 30, 2005 and 2006...................................... F-5
Notes to Unaudited Interim Consolidated Financial Statements........... F-6
DIANA SHIPPING INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 AND SEPTEMBER 30, 2006 (UNAUDITED)
(Expressed in thousands of U.S. Dollars - except
for share and per share data)
December 31, September 30,
2005 2006
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 21,230 $ 8,410
Accounts receivable, trade 1,007 638
Inventories 872 1,176
Prepaid insurance and other 166 483
Prepaid charter revenue, current portion 3,322 2,659
------------- -------------
Total current assets 26,597 13,366
------------- -------------
FIXED ASSETS:
Advances for vessels under construction and
acquisitions and other vessel costs 4,221 18,209
Vessels 331,523 413,325
Accumulated depreciation (24,218) (35,568)
------------- -------------
Vessels' net book value 307,305 377,757
------------- -------------
Property and equipment, net -- 909
------------- -------------
Total fixed assets 311,526 396,875
------------- -------------
OTHER NON-CURRENT ASSETS:
Deferred charges, net 2,004 2,471
Prepaid charter revenue, non-current portion 1,822 -
------------- -------------
Total assets $ 341,949 $ 412,712
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ -- $ --
Accounts payable 1,590 2,839
Due to related companies 215 152
Accrued liabilities 1,685 1,699
Unearned revenue 1,106 2,098
Other current liabilities 71 71
------------- -------------
Total current liabilities 4,667 6,859
------------- -------------
LONG-TERM DEBT, net of current portion 12,859 39,454
------------- -------------
OTHER NON-CURRENT LIABILITIES 265 1,500
------------- -------------
COMMITMENTS AND CONTINGENCIES -- --
------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock, $0,01 par value; 25,000,000
shares authorized, none issued -- --
Common stock, $0.01 par value; 100,000,000
shares authorized; 45,000,000 and 53,050,000
issued and outstanding at December 31, 2005
and September 30, 2006 450 531
Additional paid-in capital 296,831 368,477
Retained earnings/(accumulated deficit) 26,877 (4,109)
------------- -------------
Total stockholders' equity 324,158 364,899
------------- -------------
Total liabilities and stockholders' equity $ 341,949 $ 412,712
============= =============
DIANA SHIPPING INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2006
(Expressed in thousands of U.S. Dollars - except
for share and per share data)
Nine months ended
September 30,
2005 2006
------------ ------------
REVENUES:
Voyage and time charter revenues $ 79,099 $ 80,917
EXPENSES:
Voyage expenses 5,189 4,327
Vessel operating expenses 10,668 16,263
Depreciation and amortization of deferred
charges 6,967 11,981
Management fees 1,245 572
Executive management services and rent 417 76
General and administrative expenses 2,030 4,399
Foreign currency gains (29) (78)
------------ ------------
Operating income 52,612 43,377
------------ ------------
OTHER INCOME (EXPENSES):
Interest and finance costs (2,162) (2,569)
Interest income 665 831
------------ ------------
Total other income (expenses), net (1,497) (1,738)
------------ ------------
Net income $ 51,115 $ 41,639
============ ============
Preferential deemed dividend $ -- $ (20,267)
------------ ------------
Net income available to common stockholders $ 51,115 $ 21,372
============ ============
Earnings per common share, basic and diluted $ 1.40 $ 0.44
============ ============
Weighted average number of common shares,
basic and diluted 36,554,945 48,342,308
============ ============
DIANA SHIPPING INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2006
(Expressed in thousands of U.S. Dollars - except for share and per share data)
Common Stock Appropriation Retained
------------------- Additional Of Earnings /
Comprehensive Par Paid-in Retained (Accumulated
Income # of Shares Value Capital Earnings Deficit) Total
------------- ----------- ----- ---------- ------------- ----------- --------
BALANCE, December 31, 2004 27,625,000 $ 276 $ 39,489 $ -- $ 19,287 $ 59,052
- Net income 51,115 -- -- -- -- 51,115 51,115
- Contribution to additional-paid in
capital -- -- 417 -- -- 417
- Issuance of common stock 12,375,000 124 193,852 -- -- 193,976
- Appropriation of retained earnings -- -- -- 15,850 (15,850) --
- Removal of restrictions on
appropriated retained earnings (15,850) 15,850 --
- Dividends declared and paid
($ 0.51 per share) -- -- -- -- (14,000) (14,000)
- Dividends declared and paid
($ 0.08 per share) (3,200) (3,200)
- Dividends declared and paid
($ 0.54 per share) (21,600) (21,600)
-------------
Comprehensive income $ 51,115 --
============= ----------- ----- --------- ------------- --------- --------
BALANCE, September 30, 2005 40,000,000 $ 400 $ 233,758 $ -- $ 31,602 265,760
=========== ===== ========= ============= ========= ========
BALANCE, December 31, 2005 45,000,000 $ 450 $ 296,831 $ -- $ 26,877 324,158
- Net income 41,639 -- -- -- -- 41,639 41,639
- Contribution to additional-paid in
capital -- -- 76 -- -- 76
- Issuance of common stock 8,050,000 81 71,570 -- -- 71,651
- Dividends declared and paid
($ 0.40 per share) -- -- -- -- (18,000) (18,000)
- Dividends declared and paid
($ 0.345 per share) -- -- -- -- (15,525) (15,525)
- Dividends declared and paid
($ 0.355 per share) -- -- -- -- (18,833) (18,833)
- Preferential deemed dividend -- -- -- -- (20,267) (20,267)
-------------
Comprehensive income $ 41,639
============= ----------- ----- --------- ------------- --------- --------
BALANCE, September 30, 2006 53,050,000 $ 531 $ 368,477 $ -- $ (4,109) 364,899
=========== ===== ========= ============= ========= ========
DIANA SHIPPING INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2006
(Expressed in thousands of U.S. Dollars - except for share and per share
data)
September 30,
2005 2006
--------- ---------
Cash Flows from Operating Activities:
Net income $ 51,115 $ 41,639
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization of deferred charges 6,967 11,981
Executive management services and rent 417 76
Amortization and write off of financing costs 549 99
Recognition/(amortization) of free lubricants
benefit (18) (53)
(Increase) Decrease in:
Receivables (872) 369
Inventories (199) (304)
Prepayments and other (134) (184)
Prepaid charter revenue -- 2,485
Increase (Decrease) in:
Accounts payable 239 959
Due to related companies (283) 48
Accrued liabilities 347 (924)
Unearned revenue 310 992
Other non current liabilities -- 773
Dry dockings (774) (1,133)
--------- ---------
Net Cash provided by Operating Activities 57,664 56,823
--------- ---------
Cash Flows from Investing Activities:
Advances for vessels under construction and
acquisitions and other vessel costs (4,435) (18,209)
Vessel acquisitions (87,052) (77,581)
--------- ---------
Net Cash used in Investing Activities (91,487) (95,790)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from long-term debt 76,000 98,100
Proceeds from public offering, net of
related issuance costs 193,976 71,651
Decrease in restricted cash 789 --
Financing costs (1,200) (100)
Payments of long-term debt (168,716) (71,425)
Consideration paid for DSS acquisition, net -- (19,721)
Dividends paid (38,800) (52,358)
--------- ---------
Net Cash provided by Financing Activities 62,049 26,147
--------- ---------
Net increase (decrease) in cash and cash equivalents 28,226 (12,820)
Cash and cash equivalents at beginning of period 1,758 21,230
--------- ---------
Cash and cash equivalents at end of period $ 29,984 $ 8,410
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest payments, net of amounts capitalized $ 1,170 $ 1,438
========= =========
Non-cash financing activities:
Executive management services and rent $ 417 $ 76
========= =========
DIANA SHIPPING INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(Expressed in thousands of U.S. Dollars - except share and per share data,
unless otherwise stated)
1. Basis of Presentation and General Information:
The accompanying consolidated financial statements include the accounts of Diana
Shipping Inc. ("Diana") and its wholly-owned subsidiaries (collectively, the
"Company"). Diana was formed on March 8, 1999 as Diana Shipping Investment
Corp., under the laws of the Republic of Liberia. In February 2005, the
Company's articles of incorporation were amended. Under the amended articles of
incorporation, the Company was renamed Diana Shipping Inc. and was redomiciled
from the Republic of Liberia to the Republic of the Marshall Islands. In March
2005, December 2005 and June 2006 the Company completed its initial and two
secondary public offerings in the United States under the United States
Securities Act of 1933, as amended, the net proceeds of which amounted to
$193,976, $63,085 and $71,651, respectively.
The accompanying consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim
financial information. Accordingly, they do not include all the information and
notes required by U.S. generally accepted accounting principles for complete
financial statements. These consolidated financial statements have been prepared
on the same basis as the annual financial statements and, in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments considered necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for the periods
presented. Operating results for the nine months ended September 30, 2006 are
not necessarily indicative of the results that might be expected for the fiscal
year ending December 31, 2006.
The consolidated balance sheet as of December 31, 2005 has been derived from the
audited consolidated financial statements at that date, but does not include all
of the information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements.
The Company is engaged in the ocean transportation of dry bulk cargoes worldwide
through the ownership and operation of bulk carrier vessels and is the sole
owner of all outstanding shares of the following subsidiaries:
1.1 Shipowning companies incorporated in the Republic of Panama:
(a) Skyvan Shipping Company S.A. ("Skyvan"), owner of the Bahamas flag 75,311
dwt bulk carrier vessel "Nirefs", which was built and delivered in January
2001.
(b) Buenos Aires Compania Armadora S.A. ("Buenos"), owner of the Bahamas flag
75,247 dwt bulk carrier vessel "Alcyon", which was built and delivered in
February 2001.
(c) Husky Trading, S.A. ("Husky"), owner of the Bahamas flag 75,336 dwt bulk
carrier vessel "Triton", which was built and delivered in March 2001.
(d) Panama Compania Armadora S.A. ("Panama"), owner of the Bahamas flag 75,211
dwt bulk carrier vessel "Oceanis", which was built and delivered in May
2001.
(e) Eaton Marine S.A. ("Eaton"), owner of the Greek flag 75,106 dwt bulk
carrier vessel "Danae" (built in 2001), which was acquired in July 2003.
(f) Chorrera Compania Armadora S.A. ("Chorrera"), owner of the Greek flag
75,172 dwt bulk carrier vessel "Dione" (built in 2001), which was acquired
in May 2003.
(g) Cypres Enterprises Corp. ("Cypres"), owner of the Bahamas flag 73,630 dwt
bulk carrier vessel "Protefs" (Hull No. H2301), which was built and
delivered in August 2004.
(h) Darien Compania Armadora S.A. ("Darien"), owner of the Bahamas flag 73,691
dwt bulk carrier vessel "Calipso" (Hull No. H2303), which was built and
delivered in February 2005.
(i) Cerada International S.A ("Cerada"), owner of the Bahamas flag 169,883 dwt
bulk carrier vessel "Pantelis SP" (built in 1999), which was acquired in
February 2005.
(i) Texford Maritime S.A. ("Texford"), owner of the Bahamas flag 73,691 dwt
bulk carrier vessel "Clio" (Hull No. H2304), which was built and delivered
in May 2005.
(j) Urbina Bay Trading, S.A. ("Urbina"), owner of the Bahamas flag 74,444 dwt
bulk carrier vessel "Erato" (built in 2004), which was acquired in November
2005.
(k) Changame Compania Armadora S.A. ("Changame"), owner of the Bahamas flag
73,583 dwt bulk carrier vessel "Thetis" (built in 2004), which was acquired
in November 2005.
(l) Vesta Commercial, S.A. ("Vesta"), owner of the Bahamas flag 74,381 dwt bulk
carrier vessel "Coronis" (Hull No. H1307A), which was built and delivered
in January 2006 (Note 7).
1.2. Subsidiaries incorporated in the Republic of the Marshall Islands:
(a) Ailuk Shipping Company Inc. ("Ailuk"), owner of the Marshall Islands' flag
73,546 dwt dry bulk carrier vessel "Naias" (built in 2006), which was
delivered in August 2006 (Note 7).
(b) Bikini Shipping Company Inc. ("Bikini"), has assumed from its original
buyers a shipbuilding contract for the construction of one 177,000 dwt dry
bulk carrier with Hull No. H1107, expected to be delivered in the second
quarter of 2010 (Note 6).
(c) Eniwetok Shipping Company Inc. ("Eniwetok"), has assumed from its original
buyers a shipbuilding contract for the construction of one 177,000 dwt dry
bulk carrier with Hull No. H1108, expected to be delivered in the second
quarter of 2010 (Note 6).
(d) Jaluit Shipping Company Inc. ("Jaluit"), has entered into a Memorandum of
Agreement to acquire a capesize dry bulk carrier (Hull No. H1026), to be
named Sideris GS. The vessel was built at the Shanghai Waigaoqiao
Shipbuilding Co., Ltd., in the People's Republic of China (Note 6). The
vessel was delivered in November 2006.
(e) Kili Shipping Company Inc. ("Kili"), was established in September 2006 and
is a wholly owned subsidiary of the Company. At September 30, 2006, Kili
did not have any operations.
(f) Knox Shipping Company Inc. ("Knox"), was established in September 2006 and
is a wholly owned subsidiary of the Company. At September 30, 2006, Knox
did not have any operations.
(g) Lib Shipping Company Inc. ("Lib"), was established in September 2006 and is
a wholly owned subsidiary of the Company. At September 30, 2006, Lib did
not have any operations.
(h) Majuro Shipping Company Inc. ("Majuro"), was established in September 2006
and is a wholly owned subsidiary of the Company. At September 30, 2006,
Majuro did not have any operations.
(i) Taka Shipping Company Inc. ("Taka"), was established in September 2006 and
is a wholly owned subsidiary of the Company. At September 30, 2006, Taka
did not have any operations.
1.3. Subsidiary incorporated in the United States of America:
Bulk Carriers (USA) LLC ("Bulk Carriers"), was established in September
2006, in the State of Delaware, USA, to act as the Company's authorized
representative in the United States.
1.4. Diana Shipping Services S.A. ("DSS"). On April 1, 2006, the Company
acquired 100% of the issued and outstanding shares of DSS, the management
company, for a cash consideration of $20,000. The purchase price was financed
with funds drawn under the revolving credit facility with Royal Bank of Scotland
(Note 10). The Company recorded the acquisition at historical cost under a
method similar to a pooling of interests, due to the fact that in February 2005,
the date the agreement to acquire DSS was originally signed, DSS and the Company
were under common control. The purchase price in excess of DSS's historical book
value at the date of acquisition of $20,267 is considered a preferential deemed
dividend and is reflected as a reduction in net income available to common
stockholders in the accompanying 2006 unaudited consolidated statement of
income.
DSS provides the Company and the vessels with management services, pursuant to
management agreements, for a fixed monthly fee of $15 per vessel and 2%
commission on all voyage and time charter revenues. Management fees charged by
DSS for the nine months ended September 30, 2005 and 2006 amounted to $1,245 and
$1,769, respectively. Commissions charged by DSS for the nine months ended
September 30, 2005 and 2006 amounted to $1,578 and $1,662, respectively.
Effective April 1, 2006 the Company's consolidated financial statements include
the financial position, cash flows and results of operations of DSS.
Accordingly, effective April 1, 2006, management fees of $1,197 and commissions
of $1,165 charged by DSS are eliminated in the consolidated financial statements
as intercompany transactions. Commissions charged by DSS up to March 31, 2006
are included in voyage expenses in the accompanying unaudited consolidated
statements of income. As at December 31, 2005 an amount of $164 was payable to
DSS and is included in due to related companies.
During the nine months ended September 30, 2005 and 2006, six charterers
individually accounted for 10% or more of the Company's voyage and time charter
revenues as follows:
Charterer 2005 2006
------------ ------- ------
A 27% 20%
B 13% 16%
C 13% -
D 13% -
E - 15%
F - 10%
2. Significant Accounting Policies adopted in the period and Recent Accounting
Pronouncements:
(a) Pension and retirement benefit obligations. Administrative employees are
covered by state-sponsored pension funds. Both employees and the Company
are required to contribute a portion of the employees' gross salary to the
fund. Upon retirement, the state-sponsored pension funds are responsible
for paying the employees retirement benefits and accordingly the Company
has no such obligation. Employer's contributions for the period from
acquisition of the management company to September 30, 2006 amounted to
$180.
(b) Employees' retirement and staff leaving indemnities. Administrative
personnel are entitled to an indemnity in case of dismissal or retirement
unless they resign or are dismissed with cause. The Company, as of the
acquisition date of DSS (April 1, 2006), recognized in the balance sheet
the estimated benefit obligation for the past service of DSS's employees,
which amounted to $736. The service cost for the period from April 1, 2006
to September 30, 2006 was estimated at $30 and the interest cost at $14 and
is included in general and administrative expenses in the accompanying 2006
unaudited consolidated statement of income. However, such costs are not
known until the end of the fiscal year. As at September 30, 2006, the
cumulative benefit obligation was estimated at $780 of which $44 is
included in accrued liabilities and $736 in other non-current liabilities
in the accompanying unaudited consolidated balance sheet.
(c) Property and equipment. The Company leases from a related party property
for office space, a warehouse and parking spaces, which was previously
owned by DSS, the management company. The sale and leaseback is accounted
for by the financing method and the property remains in the Company's
consolidated financial statements and is being depreciated on a
straight-line basis over the property's remaining useful life. The
estimated useful life of the property is 20 years and no residual value has
been estimated. Equipment consists of office furniture and equipment and
computer software and hardware. The useful life of the office furniture and
equipment is 5 years and of the computer software and hardware is 3 years.
Depreciation is calculated on a straight-line basis.
(d) Recent Accounting Pronouncements: On September 15, 2006 the FASB issued,
FASB Statement No. 157 on fair value measurement. The standard provides
guidance for using fair value to measure assets and liabilities. The
standard also responds to investors' requests for expanded information
about the extent to which, companies measure assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair
value measurements on earnings. The standard applies whenever other
standards require (or permit) assets or liabilities to be measured at fair
value. The standard does not expand the use of fair value in any new
circumstances. Under the standard, fair value refers to the price that
would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants in the market in which the
reporting entity transacts. The standard clarifies the principle that fair
value should be based on the assumptions market participants would use when
pricing the asset or liability. In support of this principle, the standard
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. The fair value hierarchy gives the highest
priority to quoted prices in active markets and the lowest priority to
unobservable data, for example, the reporting entity's own data. Under the
standard, fair value measurements would be separately disclosed by level
within the fair value hierarchy. Statement 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. Early adoption is permitted. The
Company will adopt this pronouncement beginning in fiscal year 2008. The
adoption of the standard is not expected to have a material effect on the
Company's financial position or results of operations.
3. Transactions with Related Parties:
(a) Altair Travel S.A. ("Altair"): The Company uses the services of an
affiliated travel agent, Altair, which is controlled by the Company's CEO
and Chairman. Travel expenses for the nine months ended September 30, 2005
and 2006 amounted to $490 and $658, respectively, and are mainly included
in vessel operating expenses and general and administrative expenses in the
accompanying unaudited consolidated statements of income. Effective April
1, 2006 the Company also pays Altair rent for parking spaces and a
warehouse leased by DSS in January 2006, amounting to Euro 11,000 per annum
plus taxes. Rent paid for the period from the acquisition of DSS, on April
1, 2006, to September 30, 2006 amounted to $8. No amounts were payable to
or receivable from Altair at December 31, 2005. At September 30, 2006 an
amount of $97 was payable to Altair and is included in due to related
companies in the accompanying unaudited consolidated balance sheet.
(b) Fortis Bank ("Fortis") ultimate shareholder of Zoe S. Company Ltd. ("Zoe"):
On December 30, 2002, a share purchase and subscription agreement was
signed by Zoe, Ironwood Trading Corp. (the then sole shareholder of the
Company), certain executives (including Mr. Simeon Palios) and the Company.
Under the terms of this agreement, Zoe acquired from Ironwood Trading Corp.
50% of the then issued and outstanding common share capital of the Company
for a fixed sum, and in September 2004, sold 25% of its common stock to
Corozal Compania Naviera SA, ("Corozal"), a company controlled by Mr.
Simeon Palios. In February 2005, the agreement was amended, so as to
facilitate the Company's initial public offering and was terminated on its
closing in March 2005. As at December 31, 2005 and September 30, 2006, Zoe
owned 5,050,000 shares representing 11.22% and 9.52%, respectively, of the
Company's outstanding common stock.
Fortis, through Fortis Securities LLC, an affiliate of Fortis Bank
(Nederland) N.V., was an underwriter in the Company's initial public
offering in March 2005 and the secondary offering in December 2005 and
received a total of $1,659 in underwriting commissions in 2005 in
connection with both offerings.
In September 2006, the Company accepted a commitment letter from Fortis
Bank for a secured term loan of up to $62,000, to provide pre-delivery
financing for the acquisition of the two capesize dry bulk carriers, the
Company has agreed to purchase (Notes 1.2(b), 1.2(c), 6 and 10).
(c) Universal Shipping and Real Estates Inc. ("Universal"). Universal is a
company controlled by the Company's CEO and Chairman. In January 2006, DSS
entered into a lease agreement with Universal for the lease of office
space, a warehouse and parking spaces (see also Notes 2(c) and 9). As of
April 1, 2006, the Company pays rent to Universal amounting to Euro 236,000
per annum plus stamp duty. Rent expense for the period from the acquisition
of DSS to September 30, 2006 amounted to $158 of which the amount of $84
relating to the lease expense for the property sold and leased back by DSS
(Note 9) is included in interest and finance costs and the remainder in
general and administrative expenses in the accompanying 2006 unaudited
consolidated statement of income. No amounts were payable to or receivable
from Universal as at September 30, 2006.
4. Inventories:
The amounts shown in the accompanying consolidated balance sheets are analyzed
as follows:
December 31, 2005 September 30, 2006
----------------- ------------------
Lubricants .............. 686 962
Victualling ............. 186 214
----------------- ------------------
Total ............. 872 1,176
================= ==================
5. Prepaid Charter Revenue
The amounts shown in the accompanying consolidated balance sheets as of December
31, 2005 and September 30, 2006 reflect an asset recognized by the Company
pursuant to the acquisition of the vessel Thetis. The vessel, upon her delivery
on November 28, 2005, was placed on an existing time charter contract assumed
from its previous owners through arrangements with the respective charterer. The
contract, which expires between July and September 2007, is at the rate of $25
per day, gross of commissions. The Company, upon delivery of the vessel,
evaluated the charter contract assumed and recognized an asset of $5,443
representing the excess of the fair value of the charter contract assumed over
the then fair value of such charter at current market rates with the balance of
the total contract price allocated to the vessel's purchase price. As of
December 31, 2005 and September 30, 2006, the unamortized balance of the asset
amounted to $5,144 and $2,659, respectively and is reflected in prepaid charter
revenue in the accompanying consolidated balance sheets. The amortization for
the nine months ended September 30, 2006 amounted to $2,485 and is included as a
reduction of voyage and time charter revenues in the accompanying 2006 unaudited
consolidated statement of income.
6. Advances for Vessels Construction and Acquisition and Other Vessel Costs:
The amount shown in the accompanying unaudited consolidated balance sheet as at
September 30, 2006 reflects an advance payment (20% of the purchase price) made
by the Company to the sellers of the vessel Sideris GS., plus expenses. The
Company agreed to acquire the 174,187 dwt dry bulk carrier on September 7, 2006
for the purchase price of $91,000. The vessel was delivered to the Company in
November 2006 (Note 13(d)).
On September 13, 2006, the Company entered into agreements with unrelated third
parties to assume two shipbuilding contracts dated March 30, 2006, for the
construction of two 177,000 dwt Capesize dry bulk carriers with Hull No. H1107
and H1108 for the price of $60,200 each. The vessels will be constructed by the
China Shipbuilding Trading Company Ltd. and Shanghai Waigaoqiao Shipbuilding Co.
Ltd. (collectively the "Builders") and are expected to be delivered to the
Company in the second quarter of 2010. As at September 30, 2006, no amounts were
paid in relation to these shipbuilding contracts (Note 13(b)).
7. Vessels:
The amounts in the accompanying consolidated balance sheets are analyzed as
follows:
Vessel Accumulated Net Book
Cost Depreciation Value
-------- ------------ --------
Balance, December 31, 2005 ............... 331,523 (24,218) 307,305
- Transfers from advances for vessels
under construction and acquisitions
and other vessel costs ................. 4,221 -- 4,221
- Vessel acquisitions .................... 77,581 -- 77,581
- Depreciation ........................... -- (11,350) (11,350)
-------- -------- --------
Balance, September 30, 2006 .............. 413,325 (35,568) 377,757
======== ======== ========
In October 2005, the Company entered into an agreement with an unrelated third
party company to acquire a Panamax dry bulk carrier, the 74,381 dwt Coronis, for
a total consideration of $42,000. The vessel, at the time the agreement was
concluded, was under construction at the Hudong Shipyard in China. As part of
the Memorandum of Agreement, the Company concluded a time charter agreement with
a company related to the seller of the vessel, commencing upon the vessel's
delivery, for a period of minimum 11 to maximum 13 months at the charterer's
option, at the rate of $21 per day, gross of commissions. As of December 31,
2005, the Company had made an advance payment (10% of the purchase price) of
$4,200 plus expenses, while the remaining balance of $37,800 was paid upon
delivery of the vessel in January 2006. The Company incurred additional
pre-acquisition costs, which amounted to $138 and are included in the vessel's
cost.
In June 2006, the Company entered into a Memorandum of Agreement with an
unrelated third party company to acquire the 73,546 dwt Panamax dry bulk
carrier, the Naias, for the purchase price of $39,600. As part of the Memorandum
of Agreement, the Company concluded a time charter agreement with a company
related to the seller of the vessel, commencing upon the vessel's delivery, for
a period of minimum 11 to maximum 13 months at the charterer's option, at the
rate of $21 per day, net of commissions. Upon signing of the agreement, the
Company paid a 10% advance and on the vessel's delivery in August 2006 the 90%
balance of the purchase price amounting to $35,640. The Company incurred
additional pre-acquisition costs, which amounted to $64 and are included in the
vessel's cost.
All Company's vessels, with the exception of the Coronis and the Naias, having a
total carrying value of $297,257 as of September 30, 2006, have been provided as
collateral to secure the revolving credit facility discussed in Note 10. As of
September 30, 2006, all vessels were operating under time charters, the last of
which expires in January 2008.
8. Deferred Charges:
The amounts in the accompanying consolidated balance sheets are analyzed as
follows:
Financing Drydock
Costs Costs Total
--------- ------- -----
Balance, December 31, 2005 .................... 1,116 888 2,004
- Additions ................................... 100 1,133 1,233
- Amortization ................................ (99) (587) (686)
- Financing costs presented as a
contra to debt .............................. (80) -- (80)
--------- ------- -----
Balance, September 30, 2006 ................... 1,037 1,434 2,471
========= ======= =====
Financing costs represent fees paid to the lenders relating to the $230 million
secured revolving credit facility signed in February 2005 with the Royal Bank of
Scotland. Additions to financing costs represent fees paid to the bank for the
amendment of the agreement to extend the facility amount to $300 million (Note
10). Financing costs presented as a contra to debt represent the portion of
financing fees relating to the outstanding portion of long-term debt.
Additions to deferred drydock cost represent expenditures incurred for the
drydocking of the vessels Danae, Triton and Oceanis, which were completed in
January, February and April 2006, respectively.
The amortization of loan financing costs is included in interest and finance
costs in the accompanying unaudited consolidated statements of income and the
amortization of drydock costs is included in depreciation and amortization of
deferred charges in the accompanying unaudited consolidated statements of
income.
9. Property and equipment, net:
The amount shown in the accompanying 2006 unaudited consolidated balance sheet
is analyzed as follows:
Furniture and
Property Equipment Total
-------- ------------- -----
Balance, December 31, 2005 ............... -- -- --
- Additions as a result of DSS
acquisition ............................ 890 40 930
- Other Additions ........................ -- 23 23
- Depreciation ........................... (32) (12) (44)
Balance, September 30, 2006 .............. 858 51 909
======== ============= =====
In December 2005, DSS sold its property consisting of office space, a warehouse
and parking spaces to Universal (Note 3(c)) for a sale price of $515. In January
2006, DSS entered into a lease agreement with Universal to lease back the
property sold, as well as additional office space owned by Universal, for a
period of three years and for the monthly rent of Euro 19,700 plus stamp duty
adjusted each year by the reported inflation rate plus 3%. The lease agreement
does not include terms for renewal at the end of the lease term. DSS has
provided Universal a security deposit equal to one monthly rent. This security
deposit will be released to the lessee at the end of the lease term reduced by
any amounts retained for damages to the property, if any. The lessee is
responsible for the maintenance of the property. On December 1, 2006, DSS and
Universal entered into a new agreement in order to cancel part of the lease
(Note 13(e)).
The sale and subsequent leaseback of the property has been accounted for by the
financing method. As a result, DSS continues to carry the property sold and
leased back as an asset and depreciates it until expiration of the lease
agreement. The purchase price was recorded in financing obligations and is
included in other non-current liabilities in the accompanying 2006 unaudited
consolidated balance sheet. As at September 30, 2006 financing obligations
amounted to $553 and was increased by an amount of $37 of interest expense which
is included in interest and finance costs in the accompanying 2006 unaudited
consolidated statement of income. Upon expiration of the lease agreement, such
finance obligation will be de-recognized from the balance sheet along with the
net book value of the property.
10. Long-term Debt:
The amount of long-term debt shown in the accompanying consolidated balance
sheets is analyzed as follows:
December 31, September 30,
2005 2006
------------ -------------
Balance under the revolving credit facility ... 12,925 39,600
Less related deferred financing costs ......... (66) (146)
------------ -------------
Total ......................................... 12,859 39,454
Less: Current portion ......................... -- --
------------ -------------
Long-term portion ............................. 12,859 39,454
============ =============
Revolving Credit Facility: In February 2005, the Company entered into an
agreement with the Royal Bank of Scotland for a $230 million secured revolving
credit facility, to finance the acquisition of additional dry bulk carrier
vessels or cellular container ships, the acquisition of DSS (Note 1.4) and for
working capital. On May 24, 2006, the Company entered into an amended agreement
to extend the facility amount to $300 million. Pursuant to the amended agreement
the Company is permitted to borrow amounts up to the facility limit, provided
that certain pre-conditions are satisfied and that borrowings do not exceed 75%
of the aggregate value of the mortgaged vessels. The maturity of the credit
facility is ten years and the interest rate on amounts drawn is at LIBOR plus a
margin.
The amended facility is available in full for six years (instead of five years)
from May 24, 2006, the new availability date. At the end of the sixth year it
will be reduced by $15 million (instead of $20 million) and over the remaining
period of four years will be reducing in semiannual amounts of $15 million
(instead of $13.5 million) with a final reduction of $165 million (instead of
$75 million) together with the last semi annual reduction.
In January and May 2006, the Company drew down an amount of $38,500 and $20,000,
respectively under the revolving credit facility with the Royal Bank of
Scotland, to fund the balance of the purchase price of the Coronis acquired on
January 25, 2006 and for working capital purposes (Note 7) and the purchase
price of DSS acquired on April 1, 2006 (Note 1.4). In June 2006, the Company
repaid the full outstanding balance as of that date, amounting to $71,425 plus
interest, with the proceeds of the secondary public offering completed in June
2006 (Note 12).
As at September 30, 2006 a principal amount of $39,600 was outstanding under the
revolving credit facility, relating to a draw down on August 9, 2006 to fund the
total purchase price of the vessel Naias, which was delivered on August 11, 2006
(Note 7).
The credit facility is secured by a first priority or preferred ship mortgage on
all vessels in the fleet excluding the Coronis and the Naias, assignment of all
freights, earnings, insurances and requisition compensation. The lenders may
also require additional security in the future in the event the Company breaches
certain covenants under the credit facility, as described below.
The credit facility contains covenants including restrictions as to changes in
management and ownership of the vessels, additional indebtedness, as well as
minimum requirements regarding hull cover ratio (vessels' market values at least
120% of the outstanding balance of the credit facility), minimum liquidity of
$400 per each vessel in the fleet unless the available credit facility for
working capital exceeds this amount and other financial covenants. Furthermore,
the Company is not permitted to pay any dividends that would result in a breach
of the financial covenants.
On the undrawn portion of the facility the Company pays commitment fees, which
for the nine months ended September 30, 2005 and 2006 amounted to $424 and $504,
respectively and are included in interest and finance costs in the accompanying
unaudited consolidated statements of income.
Total interest incurred on long-term debt for the nine months ended September
30, 2005 and 2006 amounted to $1,155 and $1,790, respectively. Of the above
amounts, $122 and $0 were capitalized as part of the vessel cost for advances
paid for vessels under construction for the nine months ended September 30, 2005
and 2006, respectively. Interest expense on long-term debt, net of interest
capitalized, is included in interest and finance costs in the accompanying
unaudited consolidated statements of income.
Secured term loan facility: In September 2006, the Company, acting as the
Corporate Guarantor accepted, on behalf of its subsidiaries Eniwetok and Bikini
(the "Borrowers") a commitment letter from Fortis Bank for a loan of up to
$62,000 to partially fund the construction cost of the two 177,000 dwt Capesize
dry bulk carriers discussed in Note 6. The loan will be drawn in four advances
for each vessel according to the payment schedule provided in the ship-building
contracts discussed in Note 6, and on the drawn amounts will bear interest at
LIBOR plus a margin. The loan will be secured by a first priority assignment of
the refund guarantees (guarantees issued from the builders' bank, in favour of
the Company, on behalf of the Builders), a first priority assignment of the
Borrowers' rights under the shipbuilding contracts, a corporate guarantee and
will contain covenants and financial covenants relating to Corporate Guarantor.
11. Contingencies:
Various claims, suits, and complaints, including those involving government
regulations and product liability, arise in the ordinary course of the shipping
business. In addition, losses may arise from disputes with charterers, agents,
insurance and other claims with suppliers relating to the operations of the
Company's vessels. Currently, management is not aware of any such claims or
contingent liabilities, which should be disclosed, or for which a provision
should be established in the accompanying unaudited interim consolidated
financial statements.
The Company accrues for the cost of environmental liabilities when management
becomes aware that a liability is probable and is able to reasonably estimate
the probable exposure. Currently, management is not aware of any such claims or
contingent liabilities, which should be disclosed, or for which a provision
should be established in the accompanying interim consolidated financial
statements. Up to $1 billion of the liabilities associated with the individual
vessels' actions, mainly for sea pollution, are covered by the Protection and
Indemnity (P&I) Club insurance.
12. Common Stock and Additional Paid-In Capital:
(a) Preferred stock and common stock: Under the amended articles of
incorporation in February 2005, discussed in Note 1, the Company's
authorized capital stock consists of 100,000,000 shares (all in registered
form) of common stock, par value $0.01 per share and of 25,000,000 shares
(all in registered form) of preferred stock, par value $0.01 per share. The
holders of the common shares are entitled to one vote on all matters
submitted to a vote of stockholders and to receive all dividends, if any.
(b) Additional paid-in capital: The amounts shown in the accompanying
consolidated balance sheets, as additional paid-in capital, represent (i)
payments made by the stockholders at various dates to finance vessel
acquisitions in excess of the amounts of bank loans obtained and advances
for working capital purposes, (ii) payments made by the stockholders in
excess of the par value of common stock purchased by them and (iii) the
value of executive management services provided through the management
agreement with DSS to the Company until consummation of the initial public
offering in March 2005, as well as the value of the lease expense for the
office space and of the secretarial services that have been provided to the
Company at no additional charge by DSS until its acquisition by the
Company.
The value of the executive management services (until consummation of the
Company's initial public offering in March 2005) and rent (until
acquisition of DSS in April 2006) for the nine months ended September 30,
2005 and 2006, amounted to $417 and $76, respectively, and is separately
reflected in the accompanying unaudited consolidated statements of income.
The value of the services was determined by reference to the amounts of the
employment agreements signed between the Company and its executives. The
value of the rent for the free office space was determined by reference to
the lease agreement between DSS and Universal, which acquired the office
space previously owned by DSS.
(c) Secondary public offering: In June 2006 the Company completed an additional
secondary public offering in the United States under the United States
Securities Act of 1933, as amended, and issued 8,050,000 shares of common
stock with par value $0.01 per share. The net proceeds of the secondary
public offering amounted to $71,651.
(d) Dividends and preferential deemed dividend: During the nine months ended
September 30, 2006, the Company paid dividends of $52,358, from its results
of operations during the fourth quarter of 2005 and the first and second
quarter of 2006. In addition, upon acquisition of DSS the purchase price
paid in excess of DSS's historical book value amounting to $20,267 was
considered a preferential deemed dividend and decreased the net income
available to common stockholders for the nine months ended September 30,
2006.
(e) Incentive plan: In February 2005, the Company adopted an equity incentive
plan which entitles the Company's officers, key employees and directors to
receive options to acquire the Company's common stock. A total of 2,800,000
shares of common stock are reserved for issuance under the plan. The plan
is administered by the Company's Board of Directors. Under the terms of the
plan, the Company's Board of Directors will be able to grant new options
exercisable at a price per share to be determined by the Company's Board of
Directors. No options will be exercisable until at least two years after
the closing of the initial public offering discussed above. Any shares
received on exercise of the options will not be able to be sold until three
years after the closing of the initial public offering. All options will
expire 10 years from the date of grant. The plan will expire 10 years from
the closing of the initial public offering. As of September 30, 2006, no
options were granted under the plan.
13. Subsequent Events:
(a) Declaration of dividends: On November 7, 2006, the Company declared
dividends amounting to $21,220, or $0.40 per share, payable on or about
November 30, 2006 to stockholders of record as of November 22, 2006.
(b) New facility agreement: On November 6, 2006 the Company, acting as the
Corporate Guarantor, through its subsidiaries Eniwetok and Bikini (the
"Borrowers"), entered into a facility agreement with Fortis Bank (Notes 3
and 10) for a loan of up to $60,200 and a guarantee facility of up to
$36,451, each to be used for the purpose of financing and guaranteeing the
payment of part of the construction and acquisition cost of two 177,000 dwt
Capesize dry bulk carriers, expected to be delivered to the Company in the
second quarter of 2010 (Note 6). The loan facility will be available in
advances, according to the payment schedule provided in the ship-building
contracts, until December 30, 2010 (the termination date) and such advances
will be repaid in full at the earlier of the repayment date (December 31,
2010) or the delivery of each vessel. The guarantee facility will be
available until December 31, 2010.
The loan will bear interest at LIBOR plus a margin and commitment fees of
0.10% on the undrawn portion of the loan. The bank guarantee will bear
guarantee commission. An arrangement fee of $60 was paid upon signing the
agreement. The loan is secured with a corporate guarantee, pre-delivery
security assignments, an account pledge, a refund guarantee assignment
consents and acknowledgements, a contract assignment consents and
acknowledgements.
On November 29, 2006 the Company drew down an amount of $24,080 under the
facility agreement in order to fund the first installment for the
constructions of the two Capesize dry bulk carriers.
(c) Acceptance of offer letter for a new facility agreement: On November 23,
2006 the Company accepted an offer letter from the Royal Bank of Scotland
for a loan facility of up to $200 million to be used for the purchase of
vessels or shipping companies. The drawdown of this facility is subject to
previous full utilization of the existing revolving credit facility (Note
10). The facility will be available for a period of 364 days from the First
Availability Date (latest by December 31, 2006) and will bear interest at
LIBOR plus a margin. An arrangement fee of $100 will be payable upon
signing of the agreement, latest by December 31, 2006, after which if the
agreement is not signed, the offer will lapse notwithstanding its
acceptance.
(d) Delivery of vessel and drawdown of loan: On November 27, 2006, the Company
drew down an amount of $75 million under the revolving credit facility with
the Royal Bank of Scotland, to fund part of the purchase price of the
Capesize dry bulk carrier Sideris GS (Note 6), which was delivered to the
Company on November 28, 2006.
(e) Amended and new rent agreements: On December 1, 2006 DSS and Universal
entered into an agreement in order to reduce the office space leased by DSS
to one floor (instead of two) and respectively the monthly rental and
guarantee amount. According to the amended agreement, effective December 1,
2006, the monthly rental was reduced to Euro 11,187 or Euro 134,244 per
year, plus stamp duty. In addition, DSS entered into a new rental agreement
with Diana Shipping Agencies S.A., a company also controlled by the
Company's CEO and Chairman, in order to lease office space in the same
building for the monthly rent of Euro 8,000 or Euro 96,000 per year plus
stamp duty, adjusted annually. The new lease duration is 25 months
commencing on December 1, 2006. The Company also paid a guarantee amount
equal to one monthly rental, being returnable at the end of the lease term.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DIANA SHIPPING INC.
(registrant)
Dated: December 13, 2006 By: /s/ Anastassis Margaronis
-------------------------
Anastassis Margaronis
President
SK 23159 0002 730251