Earnings Call Transcript - SHIP Q1 2020

Operator, Operator

Thank you for standing by ladies and gentlemen and welcome to the Seanergy Maritime Conference Call on the First Quarter 2020 Financial Results. We have with us Mr. Stamatis Tsantanis, Chairman and Chief Executive Officer; and Mr. Stavros Gyftakis, Chief Financial Officer of the Company. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I must advise you that this conference is being recorded today. Please be reminded that the Company publicly released its financial results, which are available to download on the Seanergy website at seanergymaritime.com. If you do not have a copy of the press release, you may contact us, and they will be happy to send it to you. Before turning the call over to Mr. Tsantanis, we would like to remind you that this conference call contains forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events and the Company's growth strategy and measures to implement such strategies. Words such as expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to competitive factors in the market in which the Company operates; risks associated with operations outside the United States; changing rules and regulations applicable to the shipping industry; and other risk factors included from time to time in the Company's Annual Report on Form 20-F and other filings with the Securities and Exchange Commission. The Company's filings can be obtained free of charge on the SEC's website. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Now, I will pass the floor to Mr. Tsantanis. Please go ahead, sir.

Stamatis Tsantanis, Chairman and CEO

Thank you, Jody. Good morning, everyone and thank you for joining us today to discuss our results for the quarter ending March 31, 2020. I want to apologize, before I start the call, for the late start. It happened due to hundreds of people trying to dial in at the same time and webcast. Now, we’re good to go and we will start immediately. First, I want to wish everyone the best of health in these difficult circumstances and the safe return to normality. The outbreak of COVID-19 pandemic had an unprecedented effect on the whole planet and caused severe challenges for societies, governments, and businesses across the world. During these times, our primary concern was the health and safety of our people on board ships, as well as our office staff. We also needed to make sure that our business runs efficiently and our fleet continues to operate commercially and technically with no disruptions, and we were very successful. Before we present our results, I want to start with some basic facts. Since the beginning of June, the Capesize market has increased by more than 700% from historical lows of $2,000 to $3,000 per ship per day to more than $26,000, $28,000 per ship per day. Seanergy is the only listed company in the United States with a pure-play Capesize fleet and all of our vessels are employed in spot or index-linked charters, thus taking full advantage of the soaring market conditions. However, as with most global businesses, during the first quarter of 2020, which is historical now, we saw a steep decline for the raw materials that we transport, which combined with increased levels of uncertainty led to a very weak charter market environment. I also want to state that the first two months of the second quarter were also equally weak. However, as mentioned before, we are at the beginning of June and economic activity has recovered strongly, and we now see a clear path back to normal conditions. Generally, we have reasons to be particularly optimistic that the rising trend will continue for the remaining of the year. Specifically, in the past weeks, Brazilian and Australian iron ore exports have been very strong and Vale has reiterated their annual production targets. It is important to state that their export volumes have now normalized to pre-crisis levels. In addition, the Chinese and the U.S. governments have announced adequate amounts of fiscal stimulus and infrastructure projects in order to support their economies. Therefore, steel demand has been quite strong. As an indication, in China iron ore inventories have dropped to multiyear lows in the first half of 2020 implying large draws by the steel sector and significant requirements to restock as soon as possible. These developments have taken place against a backdrop of restricted vessel supply, due to limited new building orders over the past few years. For the first quarter of 2020, our financial performance was negatively affected by the factors above. Our fleet’s daily time charter equivalent or TCE was equal to $8,481 per day, higher by 11% as compared to a time charter equivalent of $7,633 for the first quarter of 2019. We have to note that we overperformed significantly the average of the Baltic Capesize Index or BCI, for the same period, which stood at $4,569 per day, one of the lowest periods in history. For the quarter ended March 31, 2020, the Company generated net revenues of $13.3 million, a 17% decrease compared to the first quarter of 2019. EBITDA for the quarter was approximately $1 million, compared to EBITDA of $0.4 million in the same period of 2019. Net loss for the first quarter was $8.3 million compared to a net loss of $8.6 million in the first quarter of 2019. However, it appears that the improved market conditions seen currently will lead to a much stronger second half of the year. This is in line with what we saw in 2019 when the improvement in the second part of the year was not only enough to offset that weak performance during the first six months, but also led to the strongest annual rates over the last five years. Moving on to corporate development, Seanergy took a number of important actions that have developed an even stronger company. First on the chartering front, on May 15, 2020, one of our Capesizes, the Knightship was delivered to a new long-term time-charterer Glencore, one of the world's largest commodities traders. Under the terms of the agreement, the installation of exhaust gas scrubber system, which was $3.5 million, was completed at the charterer’s cost and the employment duration will be for a period of three to five years. The daily hire of the time charter is indexed to the Baltic Capesize Index. This is a third of our vessels chartered on a long-term basis by Glencore and the sixth ship of our fleet in such an arrangement with first-class charters. Contrary to a number of other shipping companies, we have not burdened our shareholders with millions of dollars of compliance CapEx associated with the installation of scrubbers. As mentioned earlier, all of our fleet now operates in the spot or index-linked charters, which takes full advantage of the booming market conditions and produces strong cash flows from the beginning of June. I also wanted to give you a high-level update of our financial development. First, we're pleased to announce that we have already refinanced $31.1 million of indebtedness with initial maturities within 2020 and 2021. The new maturities have now been extended to 2022 at substantially the same terms. We’re also finalizing discussions with another lender regarding 2020 maturities, and we expect positive results soon. We will keep you posted with upcoming good news very soon. Given the high uncertainty that we faced in Q1 due to the low market levels and the COVID-19 situation, we initiated a series of public equity offerings aimed to further improve our financial position. We raised a substantial amount of liquidity from these offerings with very strong institutional interest. In addition to the common shares, virtually all the warrants issued have now been exercised to common shares. So, no additional overhang or dilution is expected from these warrant conversions. Our shareholders’ equity at the end of the first quarter was $21.9 million, but when adjusted for our recent equity-raising activities, our shareholders’ equity is approximately $68.9 million. The total adjusted capitalization of Seanergy is now approximately $285 million. Seanergy is very well capitalized to withstand any unexpected market pressure that may arise in this volatile environment. Moreover, Seanergy is very well funded and in a great position to capitalize on attractive opportunities at historically low values. Before I pass the call to our CFO, Stavros Gyftakis, I wanted to note that our share price declined through the first quarter of 2020 due to the unprecedented challenges faced in our sector. We do not believe this is representative of our true value. Even though the NASDAQ has granted us an extension until September 25, 2020, which is effectively four or five months from now, to comply with a minimum bid price, we decided to proactively resolve this matter now. Therefore, our Board of Directors is determined to proceed with a reverse stock split expect to be effective on June 30, 2020, such decision aims to restore the price of our shares to an acceptable range in which most of our peers trade. We strongly believe that executing a reverse stock split at this time will further encourage institutional interest in our stock and provide a clear runway for the second half of the year. We want to thank our shareholders for their support and loyalty during the previous challenging period of our sector. And we expect to deliver strong shareholder value going forward in what we believe to be a much better market environment. On that note, I will pass the call to our CFO, Stavros Gyftakis, and I will come back later on for the market segment developments.

Stavros Gyftakis, CFO

Thank you, Stamatis. Good morning, everyone. Before we get into the numbers, I would like to note that the results reflect one of the most challenging periods for our industry and the global economy. All this is now behind us and we're currently looking at much brighter days for the Capesize sector as attested by the impressive rebound of the market through the recent weeks. In the first quarter of 2020, our fleet achieved the time charter equivalent of $8,500, marking an 11% improvement from that of the first quarter of 2019, while outperforming the Capesize Index by a solid 86%. Our fleet’s performance benefited from the favorable time charter equivalent rate achieved in voyages contracted during the fourth quarter of 2019, which were carried over to the revenue of the first three months of 2020. Additionally, in the fourth quarter of 2019, we exercised the option to convert the floating rate to fixed under one of our long-term time charters for a period that extended until the end of February 2020 at a much stronger rate than what materialized in the market. Lastly, when compared to 2019, in the first quarter of 2020, we had more vessels employed under time charter agreements achieving full utilization. The net operating revenue in the first quarter of 2020 defined as revenue after deducting all voyage expenses and commissions was $7.6 million, marking an increase of 13% when compared to $6.8 million in the first quarter of 2019. Now, to give you an idea of the current market rate, we recently triggered the fixed rate option in one of our time charters for July and August, locking the vessel at a rate of $19,250 per day. This corresponds to approximately $1.2 million in net operating revenues or about 16% of the net operating revenues by a whole fleet for the full first quarter. So, a single vessel will generate in two months 16% of our entire operating revenue for the first quarter. Moving on to the expense side. Operating expenses for the first quarter were $5.1 million, increased from $4.4 million in the first quarter of last year, mainly due to the timing of certain payments. Nonetheless, the figure is comparable with $5.1 million operating expenses incurred in the fourth quarter of 2019. At the same time, general and administrative expenses were down by 19%. EBITDA in the first quarter of 2020 was approximately $1 million, up by 130%, compared to an EBITDA of $430,000 in the same period of 2019. The improved commercial performance of our fleet resulted in higher net operating revenues offsetting the marginal increase in operating expenses. Interest and finance costs in the first quarter of 2020 amounted to $5.7 million, a decrease of 9% from $6.3 million in the first quarter of last year. For this amount, cash interest expense represented about $4.2 million, marking a reduction of 11% compared to the corresponding amount of $4.8 million in 2019. On the interest front, we’re marking year-over-year improvement through the last three years. As a result of the above valuations, the net loss for the first quarter of 2020 was $8.3 million, as compared to a net loss of $8.6 million in the same period last year. Now, turning to our balance sheet. As of the end of the quarter, Seanergy had $6.2 million in cash and cash equivalents and shareholders’ equity was equal to $21.9 million. The effect of the recent capital raising activities will reflect in our six-month balance sheet, translating into a much stronger shareholders’ equity position and solid cash, and this after having fully absorbed shortfalls from the low earnings environment up to June. Now, having said this, I would like to note that the series of equity raisings that took place in the second quarter of the year came in response to the extreme levels of macroeconomic uncertainty that prevailed at the time when global industrial and economic activity was halted. Our primary has been to strengthen our balance sheet and the smooth continuation of our fleet operations. So far, we have emphasized on maintaining liquidity and the flexibility to respond to the rapidly changing and highly uncertain market conditions. If the recent improvement in the dry bulk market proves to have any durability as we expect it will, we would not rule out shifting emphasis on the deleveraging of our balance sheet to unleveraged low-leveraged vessel acquisitions. This would eventually contribute to an expansion of our scale and operating leverage as a leading pure-play Capesize platform. Lastly, I would like to provide some color on the ongoing discussions with our lenders for the upcoming maturities on two of our senior secured facilities. The first is in June 2020 and the amount outstanding is approximately $29 million. We’re currently in the process of finalizing an agreement to refinance the loan in a way that will create accretion for investors while reducing the breakevens of the underlying vessels. Considering the proximity of the maturity, we regret that we’re unable to share more information today, yet we will be in a position to provide further details about the agreement in due course. Unfortunately, the COVID-19 situation has increased the processing time for most banks today and thus the delay in concluding our arrangements. At the same time, we’re having constructive discussions with our lenders with the aim to reach an agreement of the second and last facility expiring in 2020, way ahead of the December maturity. I would like to reassure our shareholders that based on the proactive capital raising actions that we took during the first half of the year and the improved market conditions seen through the start of June, we’re on track to address the upcoming maturities successfully. This concludes my review of the financial. I will now turn the call back to Stamatis who will discuss the markets and industry fundamentals before concluding with final remarks.

Stamatis Tsantanis, Chairman and CEO

Thank you, Stavros. Moving on to the industry outlook, as we mentioned in the beginning of our call, the Capesize sector was really affected in Q1 by a combination of negative factors. The main factors were the unusual severe local weather disruptions, especially in Brazil, and of course the outsized impact of the COVID-19 pandemic worldwide. As a result, iron ore exports were considerably lower than expected at the start of the year. However, as mentioned earlier, since the beginning of June, the Capesize market has performed exceptionally well and the BCI levels have improved enormously from a daily level of about $2,000 per ship per day to more than $28,000 per ship currently. Consistent with previous years, high volatility and seasonality are normal features of the Capesize market and should not distract us from the positive overall fundamentals. Notwithstanding the difficult start of the year, seaborne iron ore ton-mile demand is expected to rise by about 0.3% in 2020 compared to a contraction of about 3% in 2019. As mentioned before, the global governments of China and the United States have put enormous stimulus in place in order to jumpstart their economies. Furthermore, bauxite volumes which rose by more than 10% in 2019 are expected to rise by similar levels in 2020 and thereafter, and continue to support demand for larger vessels through long-haul voyages out of West Africa. Looking further towards the next two years, the eventual full resumption of Vale iron ore production could add more than 60 million additional tons of long-haul Brazilian exports that is on top of the current guidance of 320 million tons. These levels alone would be enough to sustain a healthy Capesize market in the future, without even factoring in any further growth drivers, such as the explosive growth seen in the seaborne trade of bauxite, or the possibility for certain iron ore mine expansions in Africa and Brazil. As regards to fleet growth, there are a number of reasons to be optimistic as the Capesize order book is at historical lows. As mentioned in more detail in our previous earnings call, the International Maritime Organization regulations regarding CO2 emissions are bound to become very restrictive from 2030 onwards and the uncertainty around new vessels and new designs makes it very hard for ship owners to commit to new investments. This is also clearly reflected in the lack of availability of financing for new projects. We are confident that the positive supply outlook sets the stage for continued strong market performance. And this is evident by the resilience of the Capesize rates even during the highly uncertain macroeconomic environment over the last two years. Seanergy’s emphasis on the improvement of the fleet’s environmental efficiency and the established long-term relationships with prominent charters ensure our fleet’s continued commercial success. As a closing remark, the Capesize vessels are once again outperforming the rest of the dry bulk market by far. Seanergy is the only pure-play Capesize company listed in the U.S. charter markets with all of our ships taking advantage of the soaring market conditions. Moreover, our strong balance sheet will allow us to capitalize on attractive opportunities at historically low asset values and deliver highly accretive transactions to our shareholders. On that note, I would like to turn the call to our operator and answer any questions you may have.

Operator, Operator

Thank you very much, sir. Our first question for today is from the line of Tate Sullivan. Please go ahead.

Tate Sullivan, Analyst

Hi, thank you. It’s Tate Sullivan from Maxim. I appreciate the comments. Can you provide more background on the timing of the stock split and the reasons for choosing to do it now?

Stamatis Tsantanis, Chairman and CEO

Well, Tate, of course. First of all, as I mentioned, our stock had dropped a lot during the first quarter, it has nothing to do with the offerings that we did. It was just a result of where the overall market was going. We decided to do it now. Even though we have another quarter basically ahead of us, we decided to do it now so we provide a clear runway for the investors and in order for stock price to reflect what we believe to be the true value of our shares. I mean, we don't really think we deserve to be hovering between $0.20 and $0.35. I mean, this is a company, which is worth much, much more than that. And we want that to be reflected in our stock price. We decided to do it now that the market has recovered significantly, and everybody's joining the Company now. We'll take advantage of the whole thing.

Tate Sullivan, Analyst

Looking back on 1Q results and currently, you just better than the index rate would suggest that your time charter equivalent was more resilient during severely low rates than I expected. And if you can comment on how they can hold up a little bit better than what we saw the index during May as well too, any dynamics there?

Stamatis Tsantanis, Chairman and CEO

Well, that's actually a very good question. To be honest, there is no magic answer to that. So, we had a lot of ships coming in, in the first quarter from the Q4, which was substantially fixed at substantially much higher levels? That's why we were able to produce almost 60% or 70% higher rates than were the index was. However, of course, the second point, the reality kicked in for everyone, the COVID situation together with all these negative factors we explained before. And, it came to a point where we had to face the market ourselves as well. Right now, of course, the market has grown up, as I mentioned before, almost 700%. And I think it's going to remain at much higher levels for the second half of the year. Therefore the cash flows of the Company as they were last year in the second half will be multiple times the ones of the first half of the year.

Tate Sullivan, Analyst

Thank you. And in the current environment on for this current quarter with the rates already improving so meaningfully, what other operating expenses in the current market?

Stamatis Tsantanis, Chairman and CEO

We don't have any other updates. The good news about our fleet is that we have almost zero dry dock days. Since we completed our dry dock schedule in 2019, most of our fleet, if I remember correctly, will remain dry docked until the end of the year. This means we can hopefully take full advantage of the market from now until year-end. We do not anticipate any additional expenses or capital expenditures, and we expect a clear path toward a very healthy revenue stream from the beginning of June through the end of the year.

Tate Sullivan, Analyst

Thank you. For my last question, you mentioned improvements in your balance sheet. Could you provide some historical context regarding your last acquisition? As you look ahead, do you plan to acquire more new builds considering that your current order book is at a historical low? Also, can you provide any further context regarding your current ships?

Stamatis Tsantanis, Chairman and CEO

Yes. Even though the market has seen a significant increase in rates, there are still excellent acquisition opportunities for those willing to invest in additional assets right now. I can't elaborate further on that, but what I can say is that it is quite challenging to predict new buildings because the new regulations have not provided a clear outlook on what the future will hold. Currently, the real value in the Capesizes lies in second-hand ships, which has always been the best strategy for Seanergy. This is how we have achieved our most beneficial transactions to date.

Operator, Operator

Our next question is from Poe Fratt. Please go ahead.

Poe Fratt, Analyst

Good morning, Poe Fratt from Noble Capital Markets. You mentioned that you raised $30 million through the middle of May. Can you provide details on how much additional capital was generated from the exercise of the warrants?

Stamatis Tsantanis, Chairman and CEO

Poe, I will pass first of all the answer of that to Stavros to give you. Let me give you the call to Stavros and he will answer.

Stavros Gyftakis, CFO

Hello, Poe. Actually, I mean the exercises are an ongoing exercise, which has not been finalized yet and we expect to reconcile that in the following update together with some ideas that we have for the potential use of the proceeds coming out of the warrant. But it's in the region of 15 plus million.

Poe Fratt, Analyst

Okay, great. If you look at cash at the end of the first quarter, $6.1 million, do you have a pro forma estimate for cash that would correlate to the table in the press release on your pro forma adjusted capitalization table?

Stamatis Tsantanis, Chairman and CEO

Well, that's why we have a very generic capitalization table out there, so people can do the math. I cannot really say right now, Poe, because there are certain important transactions that are going to be finalized in the next few days. So, I don't want to give a pro forma figure that may change substantially. So, I don't want to give you a pro forma number, just for the offerings. So, there will be additional positive effects to our capitalization after these transactions are consummated. But I cannot really comment right now. It's going to be very soon though.

Poe Fratt, Analyst

Just to be clear, those are from refinancing of the $29 million of debt that due at the end of the month or due now?

Stamatis Tsantanis, Chairman and CEO

Not just that, some other things as well, which we cannot really comment.

Poe Fratt, Analyst

Okay.

Stamatis Tsantanis, Chairman and CEO

They're not associated with offerings; they're associated with some deals that the Company has managed to execute and that will be announced in due course very soon.

Poe Fratt, Analyst

And you talked about locking up through July and August this $19,250. Can you talk about any other opportunities that you have to lock in, what are attractive rates near term?

Stamatis Tsantanis, Chairman and CEO

We have and we have already started looking in some of the ships for July and August. We're constantly monitoring the market right now. So, we have already started with one or two of our ships. The signal that we're getting is that the market is going to shoot up even further. So, we don't want to miss the upside, having had very tough first five months of the year. So, we are cautiously monitoring the markets. We're ready to pull the trigger. We have this flexibility from our index-linked charters to convert into fixed. So, we're taking a very cautious step and monitoring the whole circumstances on a daily basis to do additional ships.

Poe Fratt, Analyst

Do you have a current figure for how much forward cover you have for the third quarter?

Stamatis Tsantanis, Chairman and CEO

Well, I don't want to give a figure because the market has been shooting up so much and we have some spot charters that are yet to be finalized. So, I don't want to give a figure because the majority of the fleet is index-linked. So, it moves with the index on a daily basis. We have some conversions, as I mentioned before, to some fixed. But, I don't want to give a clear outlook to get, because, again, there are certain things that need to be developed. But it’s of course, at substantially higher levels than what we did in the first half of the year, multiple times.

Poe Fratt, Analyst

Could you provide an update on your average TCE rates for the second quarter since it's almost over? Additionally, could you clarify that part of the premium compared to BCI in the first quarter was $3,912? Is that related to the recovery of scrubber investments? Do you have an estimate of how much of that outperformance is attributed to the recovery of investments in the fleet that has been updated with scrubbers?

Stamatis Tsantanis, Chairman and CEO

Yes, I'll begin with the second part of your question. The answer is yes. We've experienced a significant recovery, as four of our ships are earning a notable premium due to the scrubber premium from our charterers. Regarding the guidance for the second quarter, as I mentioned earlier, April and May were weak months. However, the surge we experienced in June hasn't been fully analyzed yet to determine its impact for the second quarter. That's why I can't provide guidance at this moment. We're still finalizing our calculations with just a few days left in the quarter. The rapid increase in revenue has surprised us, which is another reason we can't give a clear answer now. There are various cutoff and accounting matters that need addressing before we can offer guidance. June has been a great month, but April and May were less favorable due to the prolonged crisis. Therefore, I prefer not to provide guidance right now.

Poe Fratt, Analyst

It's nice to have a pleasant surprise occasionally. Could we discuss operating expenses a bit more? Operating expenses increased in the first quarter primarily due to various expenses. Can you provide an outlook on operating expenses for the remainder of the year? Additionally, could we examine the changes in working capital for the first and possibly the second quarters, as well as the expected capital expenditure figures for those quarters?

Stavros Gyftakis, CFO

First of all, the OpEx for the first quarter was inflated with the one-off expenses having to do with decisions on certain of our vessels because we decided to change some operations. Now going forward, you should expect our operating expenses to normalize to the levels that you used to, around $4.5 million to $5 million per quarter for the entire fleet. Moving over to the dry docking expenses, as discussed in the past, we had one ship that went through dry docking in the first quarter, next is scrubber installation. The cost of scrubber installation and the associated price was covered by the charterer, which was Glencore. So, the overall CapEx that was left for Seanergy was around $0.5 million to $750,000.

Poe Fratt, Analyst

Okay. Do you have an idea of how working capital changed over the first quarter and possibly for the second quarter?

Stavros Gyftakis, CFO

Working capital over the second quarter was drastically reduced and we were able through the offerings to reduce lots on the working capital, and this was normalized to the level of $0.5 million to $1 million per vessel, which is very normal considering our fleet comprises Capesize vessels.

Poe Fratt, Analyst

Okay. And then, Stamatis, if we could just look this, you just indicated that you potentially think that the market is going to tighten even further. What do you think goes right from here, and what do you think goes wrong from here?

Stamatis Tsantanis, Chairman and CEO

Well, the obvious answer for things that can go wrong are pretty much the same things that went wrong in the beginning of the year. It has to be weather-related disruptions, as well as the COVID pandemic. However, if I may say, the dry bulk and especially the Capesizes are what we believe to be the more resilient in these kinds of circumstances, because the first thing that any government is doing in order to boost the recoveries of their economies is the infrastructure spending. So, we're not affected by, let's say, the planes or traveling or things like that. I mean, they will build more roads, they will build more houses, they will build all that to achieve the spacing and also to jumpstart their economies. In the U.S. also it was announced recently $1 trillion of infrastructure projects. And that is only helpful for the Capesizes because we transport iron ore and coal, which is then converted into steel. So, it's one of the most resilient sectors to be in right now. So, things can go bad if the COVID outbreak pandemic becomes a major issue again towards the end of the year, which we hope that doesn't happen, not for the rates, of course, but for the health of the global population. Number two, the weather disruptions that always are an issue in the northern export system of Brazil. Right now, things appear to be quite normal. Things that can go well is the addition of imports of China in order to recover and to restock the inventories with iron ore, which the demand is particularly strong. And that's why the iron ore prices have gone up. And the aggressive and massive investments in infrastructure that are expected to happen will lead the Capesize rates to go even further up. That's all I can say. All that of course, with new building schedules which appears to be kicking in now, and providing very strong fundamentals for the Capesize market.

Poe Fratt, Analyst

And then, if we could just look at the reverse stock split for a second. In the press release, you indicated post reverse split that you'll have 30 million shares outstanding. How many shares would you have available to issue, if you chose to issue additional shares?

Stamatis Tsantanis, Chairman and CEO

Well, I mean, a company always has the ability to raise additional capital. And that's not so relevant in the way we're doing the whole thing right now. The main driver for the reverse stock split, as I said, is for the stock price to recover into levels that are more marketable and more investable for institutional investors. We don't really think that Seanergy belongs into the range between $0.20 and $0.35, especially now that we have strengthened the balance sheet into such a position that really qualifies for a massive upgrading in various forms, and the stock price is one of them. So that's the purpose and that's why we are proactively doing the reverse stock split now. And we don't wait until the very last moment. We think that in the rising market conditions, we need to give institutional investors the option to invest into the stock without necessarily having it at any $0.20 to $0.35.

Poe Fratt, Analyst

Okay. And I know that you don't want to give pro forma cash number. But, how about asking the question this way? How much cash are you comfortable having on the balance sheet, given the volatility of the Capesize market? And then, also, when we look at your comments on the potential durability of the recovery, what do you think we're at the point where we're going to see a durable, secular market recovery, as opposed to a seasonal one, and then we're finally going to break out from the historic volatility that we've seen over the last three years?

Stamatis Tsantanis, Chairman and CEO

Well, that's a very good question. I will try and be as direct as I can. The balance sheet of the Company has not only been very well strengthened with the cash that we have raised, but also with some additional deals, transactions that the Company has achieved so far. And we have not really announced, this is the ones that we were saying that we will be announcing in the next few weeks. So that's important to know that the balance sheet strength and not just because of the equity offerings, but from other actions that we did in the last two, three months and that are closing these days. We think that the Company has more than sufficient cash, not only to sustain market downturns but also to look into expansion as well. That's all I can say right now. We have that in place and we are in very, very good shape right now.

Operator, Operator

And there are no further questions at this time. I’ll now hand back to Mr. Stamatis Tsantanis. Thank you.

Stamatis Tsantanis, Chairman and CEO

Thank you, Jody. Have a great day, everyone. Thank you for listening to our call.

Operator, Operator

Ladies and gentlemen, that does conclude the call for today. Thank you all for joining. You may now disconnect.