Earnings Call Transcript - GSL Q4 2020

Operator, Operator

Thank you for joining us for the Global Ship Lease Q4 2020 Earnings Conference Call. I will now turn the call over to Ian Webber, our CEO. Please proceed.

Ian Webber, CEO

Thank you very much. Good morning, good afternoon, everybody, and welcome to the Global Ship Lease Fourth Quarter 2020 Earnings Conference Call. The slides that accompany today's presentation are available on our website, www.globalshiplease.com. In those slides, Slide 2 and 3, as usual, remind you that today's call may include forward-looking statements that are based on current expectations and assumptions and are, by their nature, inherently uncertain and outside of the company's control. Actual results may differ materially from these forward-looking statements due to many factors, including those described in the Safe Harbor section of the slide presentation. We also draw your attention to the Risk Factors section of our most recent annual report on Form 20-F, which is for 2019 and was filed with the SEC on April 2, 2020. You can obtain this via our website or via the SEC's. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements. For reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP, you should refer to the earnings release that we issued this morning, which is also available on our website. As usual, I'm joined by our Executive Chairman, George Youroukos; our Chief Financial Officer, Tassos Psaropoulos; and our Chief Commercial Officer, Tom Lister. George will begin the call with some high-level commentary and an update on our current areas of focus. And then Tassos, Tom, and I will take you through our recent achievements, quarterly results, current market environment, and our financials. After that, we'll be pleased to take your questions. So turning now to Slide 4, I'll pass the call over to George.

George Youroukos, Executive Chairman

Thank you, Ian, and good morning or good afternoon to you all. Through the second half of 2020 and into 2021, we have taken action to capitalize on the amazing bull container market in ways that will benefit the company for years to come. Our liner operator customers, our charters, have shown impressive capacity discipline during 2020, which is a real game changer that has helped them to deliver incredible results despite the challenges of COVID. From the third quarter 2020, the lines have increasingly found themselves short of containership capacity in the face of a rapid rebound of containerized freight demand. That shortage has been compounded by severe port congestion, particularly on the U.S. West Coast and in China, and the already tight vessel supply that preceded the onset of COVID. This combination of factors has driven up charter rates and has enabled us to lock in value by securing charters across our fleet of low slot cost, high reefer capacity, fuel- and emission-efficient containerships at rates and durations well beyond what has been available in recent years. On the back of adding contract cover at higher rates and our ongoing focus on deleveraging, which the rating agencies have acknowledged with ratings upgrades, we were able to achieve the major goal of refinancing our 2022 notes on significantly improved terms. Having eliminated the restrictive covenants that had previously constrained our ability to pursue the full range of attractive market opportunities or to share the proceeds of those efforts with our shareholders, we moved quickly to initiate a sustainable quarterly dividend of $0.12 per quarter for Class A common shares and also announced an agreement to add further 7 vessels to our fleet in a transaction that will immediately be accretive, has strong downside protection and is estimated to add approximately $19 million to annual net income based on today's LIBOR, representing an increase of nearly 40% compared to normalized net income for the year ended December 2020. As we now pass through a period of the year that would typically see pronounced seasonal weakness post-December holidays and around Chinese New Year, we are pleased to see almost unprecedented resilience and continue to see a highly supportive environment. This is driven by both a sustained high level of containership demand and a restricted near-term supply of ships. This strength is further reinforced by the midterm by a negligible order book for midsize and smaller vessels, which is constrained in significant part by uncertainty over future fuel and propulsion technologies. These factors point to highly supportive supply-side fundamentals through, at the very least, the medium term. With a strengthened financial foundation, a highly in-demand fleet, and substantial momentum in unlocking value for our shareholders, we believe that GSL is well placed to continue executing our accretive growth strategy, taking full advantage of the attractive opportunities ahead of us whilst also improving the resilience, flexibility and cost effectiveness of our balance sheet. With that, I will turn the call to Ian.

Ian Webber, CEO

Thank you, George. Before moving on from Slide 4, I'd like to emphasize a couple of key numbers on the right-hand side. Firstly, adjusted EBITDA for the year of $161.7 million is up by $4.7 million on 2019. Secondly, adjusted earnings per share for the year is $1.60, a base upon which we will continue to build with accretive earnings from the 7 ships which will be delivered to us during the second and third quarters of this year. And I'll come back to them later on. The next slide, Slide 5, summarizes some of the key milestones we've hit since the beginning of 2020 in our continuing efforts to build value. Commercially and operationally, we've kept our people safe and the ships running with negligible downtime despite the challenges of COVID. We have secured 22 new charters for our existing fleet in a rising market since the 1st of July 2020, adding approximately $265 million of contracted revenue and $177 million of adjusted EBITDA. And as you know, we've agreed to purchase 7 ships, 7 6,000 TEU ships with a minimum of 3- and a maximum of 5-year charters attached, which had another $95 million of adjusted EBITDA over the firm periods of those charters to 3 years. All in all, as of December 31, 2020, we have $893 million of contracted revenue spread out over a 2.5-year period. And I'll come back on to this on to the next slide. Financially, we strengthened our credit profile with a net debt to adjusted EBITDA at the end of 2020 of 4.3x. Moody's rate us B2+, and Standard & Poor's rate us B+ stable. We refinanced in January our expensive and inflexible 9 7/8% notes due 2022 with a facility allowing us much more freedom, reducing debt service by approximately $15 million a year and extending maturity to 2026. Our preferred and unsecured 2024 notes ATMs, at-the-market offerings, have been active on an opportunistic basis, allowing us to raise a total of nearly $61 million of cheaper, nondilutive unsecured capital since the beginning of 2020. We've used this to reduce our expensive debt, both now the fully refinanced 2022 notes. And in February 2021, so very recently, we repaid approximately $12 million, about 1/3 of one of our expensive pieces of junior debt, which cost us 10%. Having eliminated these expensive and restrictive 2022 notes, we continue to work on addressing our June 2022 maturities, of which around $134 million was outstanding at the year-end and further reducing the expense of 10% or so junior debt due in September 2024. A few weeks ago, we raised over $72 million gross of common equity to fund accretive growth of precisely results that we're already delivering. Strategically, we've also published our first ESG report, which has helped us to articulate the close alignment between our ESG and our commercial strategies. We've expanded our sell-side analyst coverage; and announced, as George said, a dividend of $0.12 per common share per quarter from the first quarter of this year, 2021, which, in addition to returning value to our existing shareholders, we anticipate will also help broaden our investor base. Moving to Slide 6. You can see our charter contract cover, the principal driver of our day-to-day business. The detail is broken out on our website and also included in our earnings release, but I'll make a few bigger picture points here. The blue bars represent contract cover. The dark blue bars to the right show new charters, which have been agreed since July 2020. And hopefully, you can see that the charters agreed in the second quarter of 2020 are low in terms of rates, and it's not coincidental that we only fix those charters for short durations. On the other hand, those charters agreed more recently have seen significant increases. For example, the top 10 or so vessels in the table, we're fixing in the second quarter last year at between $6,500 per day and $8,000 a day. But they're now seeing market rates in the high teens and for longer periods. For larger midsized ships, the improvement is even more dramatic. Panamax ships, such as the Dolphin II, about 1/3 of the way down the page, that we're fixing earlier in 2020 at $7,000 a day barely covering OpEx, are now fixing at rates in the high 20s. And we've just fixed one of our 5,900 TEU Post-Panamax vessels, the Ian H, for over 3 years at $32,500 a day, up from a rate of $14,500 a day. Substantial improvements. The list goes on. As I mentioned earlier, we've taken advantage of these firm markets to lock in 22 new charters or extensions, adding $265 million of contracted revenue. These are all at increasingly attractive rates and durations and all over the last 8 months or so. And when you think about what these increased rates actually mean for GSL, please bear in mind that operating costs, crew, maintenance, lubricating oil, insurance, those sorts of things, is largely fixed. And the fuel cost for a ship on time charter is borne by the charter. So any increase in contracted charter rates falls straight to our bottom line, improving both our financial results and our cash flows. I'm pleased to say that we have around a dozen ships coming open within the balance of 2021 to take further advantage of this great market. Complementing near-term prospects and providing protection to the downside, we have over $890 million of contracted revenue for 2.5 years of TEU weighted forward cover. This provides us with great visibility on cash flows and a strong base from which to further develop the company and which gives us the confidence to introduce the quarterly dividend for our common shareholders.

George Youroukos, Executive Chairman

This brings us to Slide 7, which provides more detail on the 7 ships that we've contracted to purchase, clearly illustrating our value-accretive growth strategy. In short, firstly, we focus on existing ships with charters attached or arranged in tandem with the purchase, which are immediately accretive to cash flows rather than new buildings for when there could be a 2- to 3-year wait during which you have to finance the build before they come online and generating any cash flows from charters. We expect these 7 ships to add approximately $29 million to annual adjusted EBITDA. We're risk-averse. We look for good returns right out of the gate on assets with low economic depreciation, limited residual value risk, and a compelling upside potential. These 7 ships fit the bill perfectly. They have at least 3 years of contract cover, deliver a purchase price to adjusted EBITDA multiple of 4x, push net income and earnings per share up significantly and have good downside cover with a scrap value equivalent to about 60% of the purchase price. Thirdly, the ESG and economic trends of our strategy are well aligned. Our view is to take a full life cycle approach to the carbon footprint of ships. This means considering the footprints associated with building and recycling ships as well as operating. We believe that it only makes sense to build new ships when we and the industry in general know how they're going to be powered on a sustainable basis. Until then, we believe it's better to optimize and, where possible, extend the economic life of existing ships, such as the 7 we've just purchased. Fourthly, we look to stay flexible and agile. We aim for attractive investment returns within 5 years or less, allowing us to adjust our strategy to the evolving decarbonization environment. Our aim is to position GSL to be legacy problem-free and with a strong cash position to be able to capitalize on the next-generation green technologies as they crystallize over the coming decade.

Thomas Lister, Chief Commercial Officer

Thanks, Ian. Hello, everyone. If you could all please turn now to Slide 9. As both George and Ian alluded to earlier, even during the depth of the downturn during the second quarter of 2020, the liner companies, our customers, were making good money, thanks to a quick response in imposing strong capacity discipline. So although 2019 was considered to be a pretty good year, you can see from the boxes at the bottom right that liners' 2020 results are way up on those 2019 results. As an illustration, freight rates driving our customers' revenue from China to the U.S. are at a 10-year record high. So our counterparties are in good shape. Turning to the next slide, Slide 10. You can see that supply-side trends are all moving in the right direction. Idle capacity is down sharply from around 12% during the worst of the second quarter of 2020 to 1.1% in February of this year, which is pretty close to full employment during what is traditionally the slack season around Chinese New Year. But let's wind things back to the first part of the year when conditions were challenging. Here, the big takeaway is that, as I just mentioned, liner operators have shown extraordinary capacity discipline. In fact, almost 70% of capacity held idle in the first 8 months or so of 2020 was owned and controlled by the liner operators themselves. In other words, the lines were idling their own ships rather than trying to keep them running and fill them at any cost. This is unprecedented, I would say. And crucially, the lines have seen that it is a powerful moneymaking tool at their disposal. So a genuine game changer. As a footnote to this slide, the big ship recycling facilities, which were closed to much of the second quarter are now open and active, allowing scrap prices to rebound or maybe more accurate to say, to normalize accordingly. But frankly, with earnings where they are in the charter market, very few people are currently scrapping containerships. On Slide 11, you can see that the supply side fundamentals are highly supportive for the ship sizes we're focused on, which are the size segments sitting within the red boxes for the 2 charts. Net fleet growth over the last few years has been negligible and even negative. And the order book pipeline is almost empty for the sizes we focus on. So the overall global order book-to-fleet ratio stands at a little over 10%, which is very low by historical standards and includes all of the ships coming onto the water over the next 2 to 3 years. And the picture for the sizes we're interested in, which is 2,000 to 10,000 TEU broadly, is even better but only 1.4%. Best of all, however, is the order book for our core midsized Post-Panamax segment, which is effectively 0. That's the area that is ringed in red. And uncertainty regarding the next generation of green fuels and propulsion technology is putting a serious damper on ordering activity for these long-lived assets, as Ian has already mentioned. So what's all this done for earnings in the sector? For the answer to this, please turn to Slide 12. And as you can see here, the charter market is red hot, with rates up anywhere from 1.8x to almost 3.4x where they were at 2Q 2020 loads. The chart, which shows how rates have developed for various key sizes in the liquid charter market tells its own story, with rates now above pre-COVID levels; and as happened during 2019, the way is being led by the midsized Post-Panamax ships with rate uplifts then flowing down to the smaller sizes as each larger size segment in the midsize and smaller peer group sells out.

Anastasios Psaropoulos, CFO

Thank you, Tom. Slides 13, 14 and 15 show our unaudited pro forma consolidated balance sheet, statement of operations and statements of cash flow based on the fourth quarter 2020. Rather than going through every line item, let me point out a few key items. We generated revenue of $70 million during the fourth quarter of 2020 and $282.8 million for the full year. Our adjusted EBITDA was $38.8 million for the quarter and $161.7 million for the year. Adjusted EBITDA for the quarter was down a little compared to the third quarter as we had to catch up on crew rotations and ship supplies delayed by COVID earlier in the year. OpEx for the year at $6,410 per day is broadly as expected. Forced reductions early in the year due to COVID were caught up in the later part of the year as mentioned before. Adjusted EBITDA was up by $4.7 million for 2020 year-on-year. Our finance expenses have reduced by approximately 13% due to amortization, lower LIBOR and an overall cheaper blended cost of our debt. The refinance of our 2022 notes completed at the beginning of this current year will help to further compress debt service costs going forward. Our normalized net income was $11.3 million for the quarter and $49.1 million for the year. Our liquidity is strong. As of December 31, 2020, we had $92.3 million of cash on our balance sheet. And that's before the $72 million equity raise in January 2021, with some of the proceeds we're putting to work on the equity portion of the 7 ships we have contracted to purchase. We will also keep you posted on the financing of those ships and their delivery schedule as it firms up in the second quarter and third quarter of this year. I won't detail them now, but we have included on Slides 16 and 17 our adjusted EBITDA and operating cash flow calculator, along with comprehensive CapEx guidance to aid in your modeling. On Slide 16, I want to point out that we have added additional reference data on charter rates to the table on the right side. Previously, we provided 10-year and 15-year historical average rates as useful benchmarks for modeling. However, the current booming charter market has left these rates behind. Therefore, we have included a column showing the current market rates for short-term charters, which are defined as up to 12 months. Rates for longer charters, which we emphasize, tend to be lower than short-term rates. This makes sense, as longer periods imply lower risk, and lower risk typically corresponds to lower rates. On Slide 18, I would like to highlight a couple of additional points: our continued progress in diversifying our portfolio of high-quality charters and also the diversification of our lenders. As some of you will know, initially way back in 2007 and 2008, all of our fleet was on long-term charter to CMA CGM as we were created by them as a sale and leaseback spin-off. Following some early steps to diversify the customer base in old GSL, the merger between Poseidon and GSL in late 2018 accomplished significant and immediate additional diversification, which has continued. Since that time, we have continued to sign charters with a diverse set of top-tier counterparties while also maintaining strong working relationships with CMA CGM, who now account for approximately half of our 2020 charter revenue. To the right, you can see our diverse sources of debt capital. I won't go through these one by one, but you will recognize a wide range of leading banks and other finances from around the world. And the long and the short of it is that our credit metrics continue to strengthen, with net debt-to-EBITDA down to 4.3 at year-end. Furthermore, on the far right of the slide, we show the composition of our shareholder base as of December 31, 2020, adjusted for the conversion of our Series C preferred to common equity and for our recent equity raise, both of which took place in January 2021. The main takeaway here is that our free float continues to grow, both in absolute terms and proportionately.

George Youroukos, Executive Chairman

Thank you, Tassos. Here is the 30-second summary. First, we've got great forward contract cover, $893 million spread out over an average of 2.5 years, generating cash, which gives us a resilient business, which has been successfully stress tested by the COVID crisis. With a number of charter renewals due in the coming months, we have additional upside potential from the strong charter market. And as we have already demonstrated, it's a great platform to pursue growth. Second, our balance sheet is strong. At December 31, 2020, we had $92.3 million of cash. And subsequent to the year-end, we raised approximately $67.8 million net of fresh equity, which provides us with resources for growth. Both Moody's and S&P recently recognized our strengthening credit profile and the supportive market fundamentals, upgrading our ratings accordingly. We have no material debt maturities before mid-2022, and we have demonstrated access to multiple sources of capital always proactively. Third, we believe strongly that our fleet sits in the sweet spot by size and specification. Our fleet has high operational flexibility and high reefer capacity with low cost and low emissions per cargo slot, all of which generate increased demand from charters. Fourth and maybe most importantly, the supply side fundamentals for midsize and smaller ships are phenomenally attractive and, we believe, sustainable. Idle capacity is currently so low that it effectively represents full utilization. And net growth of the global fleet is expected to be negligible or even negative for some time as the order book is so low. The market has proven more resilient than many expected during the COVID downturn. Our customers are making significant profits, and rates in the charter market have rebounded to exceed pre-COVID heights. Against this backdrop, our strategic priorities are the following: continue to keep people safe, both at sea and on shore; continue to optimize our balance sheet while also providing value to shareholders in the form of a dividend; generate value-accretive growth. Thank you all for listening to our prepared remarks, which I hope have given you a good feel for the opportunities we see and how we plan to continue to build value going forward. We'll now turn the floor over to you for Q&A.

Operator, Operator

Our first question comes from Randy Giveans from Jefferies.

Randall Giveans, Analyst

All right. So in terms of your chartering strategy, looking at Slide 6, shows you have a handful of vessels with charters expiring here in the coming months. So I guess two questions around that. How soon in advance of these charter expiries will you likely book the next charter? And how will you balance kind of maximizing rate versus maximizing duration?

George Youroukos, Executive Chairman

Tom, you want to talk about this?

Thomas Lister, Chief Commercial Officer

Sure. Randy, okay, so our chartering strategy. We've got roughly 12 ships coming open during the balance of 2021. And in a more normal market, you would expect to start talking about rechartering such ships about a month or possibly 2 months in advance. Today, however, such as the demand from the liners, that discussing charters many months in advance, by which I mean, 4, 5, 6 months in advance is not unusual. And as you would imagine, those discussions are in progress today. So I think that was the first part of your question. The second part of your question was how do we balance going for longer charters with potentially slightly lower rates versus short-term exposure. I don't mean to dodge the question, Randy, but I would say that it's actually quite challenging to determine in the market today, although we have provided some benchmarks, a clear picture of where short term, by which I mean 12 months or less, charters really are for most sizes. And the reason for that is that most of the chartering activity in the market in recent weeks has actually tended to be focused upon longer charters for smaller tonnage. I'm talking about 2 years or more. And as the ships get bigger, so the durations get longer. So I think the takeaway there is that both owners and liner operators are of a mind that now makes sense to fix longer rather than shorter on the whole. So perhaps, there isn't such a trade-off as your question might have anticipated.

Randall Giveans, Analyst

Okay. That's fair. And then turning over to the recent acquisition. Obviously, congrats on that deal, seems pretty attractive and accretive as George was saying. With that, can you give some more color on maybe how you decided on that acquisition? And then looking ahead, are you going to remain focused on that 20-year asset or start looking at younger secondhands? And I agree with your strategy of staying away from newbuildings.

George Youroukos, Executive Chairman

If I may start on this, Randy. The deal we considered was a private transaction, as we usually prefer. We don't typically engage in the market competition. This is a strategic move for us as it enhances our relationship with the leading charter. We're acquiring highly sought-after assets, which we believe have a useful life of 30 years, especially with advancements in new fuels. Therefore, we have many years ahead to utilize these assets. We're expanding our fleet through a transaction that immediately reflects positive results in our balance sheet without the delay of loan amortizations. Moving forward, we will look into more secondhand transactions. We are not interested in new builds for reasons that Tom and Ian can further explain. Our business model focuses on opportunities that provide immediate cash flow to our balance sheet and benefit our shareholders. This means we will concentrate on mid-age ships instead of younger vessels. In a competitive market like this, younger ships have become excessively expensive and pose a higher residual value risk at the end of the charters, which we prefer to avoid. We want to maintain a balanced risk-reward strategy. Ian, do you have anything to add regarding new builds?

Ian Webber, CEO

Sure. Yes. I mean I obviously agree with everything that George has said on our area of focus. Let's maximize the utility of existing assets rather than adding to containership capacity. That doesn't do anything for charter market and asset values, et cetera. Furthermore, as we said in the prepared remarks, if we ordered a newbuilding today, we wouldn't get it for 3 years. We would have to fund the entire build program, paying interest on debt if we arrange that and have no income. And that is inconsistent with a clear strategy of making immediately accretive acquisitions.

George Youroukos, Executive Chairman

If I may add that, sorry, Ian.

Ian Webber, CEO

Yes.

George Youroukos, Executive Chairman

Just to say something in more of your style. We are a right here, right now kind of company for the investors. They join GSL, they become shareholders. And they see the results right here, right now. This is our, let's say, motto.

Randall Giveans, Analyst

Yes. No, that's fair. And so, I guess, just finally, with your balance sheet being in, as you stated, kind of the best shape it's been maybe ever, further acquisitions, is that kind of the game plan here, the focus in the coming months?

George Youroukos, Executive Chairman

Strategic acquisitions...

Ian Webber, CEO

Yes, I would say so.

George Youroukos, Executive Chairman

Yes.

Ian Webber, CEO

Yes. Further growth and continued deleveraging, focusing particularly on seeing what we can do to reduce the cost of some of our more expensive debt. And we've got a couple of pieces of junior debt. It's not huge in terms of totals. It's around $80 million, I think, at the year-end, something like that. But it's costing us 10% or more. So if we can chip away at that, that's helpful. And focusing on our 2022 maturities and push those out if we can.

Operator, Operator

Our next question comes from the line of Liam Burke from B. Riley.

Liam Burke, Analyst

George or Ian, you acquired 20-year-old vessels. Can you share your perspective on their competitiveness given that they come with existing charters, especially when compared to newer, more fuel-efficient vessels?

George Youroukos, Executive Chairman

Liam, if I can begin, with Ian's help, in this market, the current fuel price differences are negligible. Those differences do get reflected in charter rates, possibly adding $1,000 or $2,000 if the ships were brand new and very fuel efficient. However, we must consider the residual value that we would need to amortize. When factoring in the interest expense from a larger loan associated with new ships, the advantage of higher fuel efficiency and the slightly elevated charter rates is offset by the additional interest costs. Currently, we observe that charters are moving away from new-build orders for various reasons, primarily environmental concerns. Additionally, charterers, particularly logistics companies, are trying to secure cargo space over the next 3 to 5 years. This reflects a solid market perception moving forward. Some may think the current situation is merely a result of COVID, but I want to highlight two factual figures: cargo volumes in 2020 were 2% lower than in 2019, indicating that what we are witnessing is not a result of excess demand but rather reduced supply. If a ship is ordered today, delivery won't be until the third or fourth quarter of 2023, meaning this situation will remain unchanged for at least the next 2.5 years. These figures are not subjective; they are factual, helping convey the sustainability of the current market.

Ian Webber, CEO

Not much more to add.

Liam Burke, Analyst

Okay. Fair enough. Regarding the acquisition, the purchase of 7 vessels was highly beneficial. You mentioned that supply will drive the value of the fleet. What do you expect pricing to be for future acquisitions? Can you continue making such acquisitions and still generate value for shareholders?

George Youroukos, Executive Chairman

As we always look at deals. And actually, we only do, like I said before, private deals. We don't go into the market and buy, competing with others, what is out there. We have a very strong deal flow, maybe one of the strongest out there. And that gives us a first look on many things. So we always try to create value to shareholders by doing the special deal. And this is the deal we did in 2019. This is similar to deals we did just now. And this is the kind of transaction that we look to do going forward. We only do deals that we feel are risk-adverse and create immediate accretive returns to the shareholders without taking unnecessary risks.

Ian Webber, CEO

Liam, just to add, we've always said that we do want to grow, but we're not growing for growth's sake. We're not targeting a fleet of 100 ships just because we want 100 ships. We're very disciplined and rigorous in our approach to the investment appraisal, which we run the financial investment appraisal and also the sort of technical due diligence on the vessels themselves. And we always have to have a charter. As we keep saying, these transactions have to be immediately accretive.

Operator, Operator

Our next question comes from the line of Ward Blum from UBS.

Ward Blum, Analyst

I want to congratulate you on another good quarter. Your niche-oriented and disciplined approach has certainly won the day, and finally, the market is starting to appreciate what you've done. I have a specific question about the ATM program for the 8% senior notes. You raised additional funds last year and in the first quarter, but with the liquidity on the balance sheet, I wonder if you plan to continue issuing those notes in the current and coming quarters. I'd also like to know what the current amount outstanding of those 8% notes is at this point.

George Youroukos, Executive Chairman

Ian?

Ian Webber, CEO

Thank you for your question. I don't have the exact outstanding number right now. Tassos might be able to find that out, but we will report it in the first quarter balance sheet when it's available. Regarding the continuation of the ATM program for the 2024 notes and our perpetual preferred shares, it has been very successful, raising a significant amount of cash over the past several months. This has greatly helped us refinance not only the 2022 notes, which we've aimed to do for quite some time, but we've also reduced some costly junior debt that was taking 10% of the proceeds. If we can, we will keep replacing the expensive debt with cheaper options. If a broader solution isn’t found, this approach will continue. These programs are largely opportunistic; we activate and deactivate them based on the potential use of funds. I realize that might not be very clear, but that's how it works.

Anastasios Psaropoulos, CFO

In our press release, you can find the figures for both ATMs preferred series B preferred shares and 2024 notes. Since September, we have raised approximately $18.5 million in preferred shares and around $13 million in the 2024 notes.

Operator, Operator

Next question comes from Joe Kaplan from Whitefort Capital.

Joseph Kaplan, Analyst

There's been several comments on the call as well as questions with relation to accretive growth, and I thought it would be helpful to drill down into the math of the accretion, specifically as it relates into review and confirm the accretive growth from the purchase with Maersk of the 7 late-vintage Post-Panamax 6,000 TEU ships. And so I appreciate if you just bear with me while I walk through the assumptions that you've publicly disclosed and sort of how that derives the level of accretion. So you have $116 million purchase price, disclosed EBITDA of $95 million to $126 million over 3- to 5-year fixed charters. Based on the estimated scrap values at $400 per lightweight ton, as you highlight in Footnote 3 on Page 7 of your presentation, is approximately $70 million. That's probably conservative since that's based on 10-year averages versus the current steel prices, which are higher. And then if I make an assumption on dry docking CapEx, using as a proxy your November 2020 presentation for similar size and similar age vessels, specifically, I'm looking at the Dimitris Y, the GSL Vinia, the GSL Christel Elizabeth, on Page 18 of your November 2020 presentation, which implies approximately $1.6 million to $1.9 million per ship per dry dock. And if I look at those assumptions, effectively, what that leads me to is, one, you've diversified your counterparty risk with Maersk, who's, as you point out, the #1 charterer. You have no residual value risk because by the end of your year 3 fixed charter, you've amortized down your purchase price below the residual scrap value of your ships. And that implies an unlevered IRR in, call it, the low teens. But you've announced the financing for that transaction is only 1/3 equity, 2/3 bank debt. So on a levered basis, that implies an IRR significantly in excess of 20%. And those assumptions are only based on the 5-year contractual life. As George pointed out, these are 30-year useful life assets in the containership space. We're in a very tight market. In the sub-10,000 TEU segment, there's almost no supply coming online. And given the IMO environmental regulation uncertainty, there's almost no new CapEx. And therefore, potentially, the useful life of these ships may well be 30 years beyond the 5-year extension options with Maersk. And so that 20%-plus levered IRR excludes any real option value for the useful life of those ships. Am I thinking about that correctly? Am I capturing it? Because I mean, frankly, I'm trying to reconcile that sort of accretion growth with the valuation of your stock?

George Youroukos, Executive Chairman

I can give it a try, and the rest to complete. More or less, although when we're doing our model, as you can understand, we are a little bit more conservative in the approach. The figures and the calculations you have mentioned is, more or less, correct on that case. And of course, on the assumption is that there is more value if everything goes well and we make full use of the useful life of the asset. So at least in my view, the basic assumptions that you have done are, more or less, a little bit on the positive side, but in line of what we have also calculated.

Ian Webber, CEO

Yes. Joe, I think your summary is pretty good, frankly.

George Youroukos, Executive Chairman

Just one point to say, out of the seven ships, only four will have dry docking.

Joseph Kaplan, Analyst

Yes. Got it. Well, look, I mean, if there's more transactions like that, this one was quite accretive on our view. So congratulations on these.

Ian Webber, CEO

Absolutely. yes. And on a financial leverage basis, on a debt to EBITDA, this acquisition is sort of 4x against the corporate ratio of 4.5x. So it's delevering as well.

Thomas Lister, Chief Commercial Officer

Actually, it's even better than that. It's the purchase price to EBITDA is 4x.

Ian Webber, CEO

Sorry, purchase price to EBITDA. Yes.

Thomas Lister, Chief Commercial Officer

Yes. So debt-to-EBITDA would be even lower than that. So you're right, it's an actively delevering transaction.

Ian Webber, CEO

Yes. And we hope by executing on these sorts of deals, and by the market understanding, the economics behind it and the consequences for the business and the upside that we have, then that will be reflected in an improved stock price.

Operator, Operator

At this time, I am showing no further questions. I would like to turn the call back over to Ian Webber for closing remarks.

Ian Webber, CEO

Thank you. Thank you, operator. Thank you for your questions. Thank you for listening to us. We look forward to providing you with a further update on the company when we've issued our first quarter 2021 results, which according to our normal timetable will be late April, early May. Thank you very much.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.