Tsakos Energy Navigation Ltd 6-K, filed Apr 23, 2020
Tsakos Energy Navigation Ltd (TEN)
About this 6-K
Tsakos Energy Navigation Ltd filed this 6-K on April 23, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2020.
Commission File Number 001-31236
TSAKOS ENERGY NAVIGATION LIMITED
(Translation of registrant’s name into English)
367 Syngrou Avenue, 175 64 P. Faliro, Athens, Greece
(Address of principal executive office)
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 ☒ 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): ☐
EXHIBIT INDEX
| Exhibit Number |
Exhibit Title | |
| 99.1 | Proxy Statement for the 2020 Annual Meeting of Shareholders | |
| 99.2 | Form of Proxy Card for the 2020 Annual Meeting of Shareholders | |
| 99.3 | Notice of Internet Availability of Proxy Materials (registered holders) | |
| 99.4 | Notice of Internet Availability of Proxy Materials (street name holders) | |
| 99.5 | 2019 Audited Financial Statements | |
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.
Date: April 23, 2020
| TSAKOS ENERGY NAVIGATION LIMITED | ||
| By: | /s/ George V. Saroglou | |
| George V. Saroglou | ||
| Chief Operating Officer | ||
Exhibit 99.1
TSAKOS ENERGY NAVIGATION LIMITED
367 Syngrou Avenue
175 64 P. Faliro
Athens, Greece
April 22, 2020
Dear Shareholder:
You are cordially invited to attend the 2020 Annual General Meeting of Shareholders of Tsakos Energy Navigation Limited, which will be held on Thursday, May 28, 2020, at 15:00 (3:00 pm) Greek local time in our Auditorium, 367 Syngrou Avenue, P. Faliro, Athens, Greece.
The following Notice of the 2020 Annual General Meeting of Shareholders and 2020 Proxy Statement describe the items to be considered by the shareholders at the meeting and contain certain information about our company and its officers and directors.
We are pleased to provide our proxy materials to our shareholders over the Internet. On or about April 22, 2020, we will begin mailing a Notice of Internet Availability of Proxy Materials to shareholders informing them that our 2020 Proxy Statement, 2019 audited consolidated financial statements and voting instructions are available online. As more fully described in that Notice, shareholders may choose to access our proxy materials on the Internet or may request to receive paper copies of the proxy materials. This allows us to conserve natural resources and reduces the costs of printing and distributing the proxy materials, while providing our shareholders with access to the proxy materials in a fast and efficient manner. If you request proxy materials by mail, the Notice of the 2020 Annual General Meeting of Shareholders, 2020 Proxy Statement and proxy card or voting instruction card and 2019 audited consolidated financial statements will be sent to you.
Whether or not you are able to attend the 2020 Annual General Meeting in person, it is important that your shares be represented. You can vote your shares by using the Internet, by telephone, or by requesting a printed copy of the proxy materials and completing and returning by mail the proxy card or voting instruction card that you will receive in response to your request. Instructions on each of these voting methods are outlined in the enclosed Proxy Statement. Please vote as soon as possible.
We hope to see you on May 28th.
Sincerely,
Efstratios Georgios Arapoglou
Chairman of the Board of Directors
TSAKOS ENERGY NAVIGATION LIMITED
367 Syngrou Avenue
175 64 P. Faliro
Athens, Greece
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On Thursday, May 28, 2020
NOTICE IS HEREBY GIVEN that the 2020 Annual General Meeting (the “2020 Annual General Meeting”) of Shareholders of Tsakos Energy Navigation Limited, a Bermuda company (the “Company”), will be held at 15:00 (3:00 pm) Greek local time, on Thursday, May 28, 2020, in the Company’s Auditorium at 367 Syngrou Avenue, P. Faliro, Athens, Greece for the following purposes:
| (1) | to re-elect two directors who retire by rotation; |
| (2) | to receive and consider the Company’s 2019 audited financial statements; |
| (3) | to appoint Ernst & Young (Hellas), Certified Auditors-Accountants S.A. (Ernst & Young (Hellas)), Athens, Greece, as auditors of the Company for the fiscal year ending December 31, 2020 and to authorize the Audit Committee of the Board of Directors to set their remuneration; |
| (4) | to approve the directors’ remuneration; |
| (5) | to approve a reverse share split of the Company’s 175,000,000 authorized common shares, $1.00 par value, at a ratio of one-for-five; and |
| (6) | to transact such other business as may properly come before the 2020 Annual General Meeting. |
Copies of our audited consolidated financial statements are available at https://materials.proxyvote.com/G9108L and on the Company’s website at www.tenn.gr.
Only holders of record of the Company’s common shares, par value $1.00 per share (the “Common Shares”), at the close of business on April 9, 2020 will be entitled to receive notice of, and to vote at, the 2020 Annual General Meeting and at any adjournment thereof. As described in the attached Proxy Statement, the nominees for re-election to our Board of Directors are Michael G. Jolliffe and Nicholas F. Tommasino.
You are cordially invited to attend the 2020 Annual General Meeting. Whether or not you expect to attend the 2020 Annual General Meeting in person, please vote your shares by using the Internet, by telephone, or by completing and returning by mail the proxy card or voting instruction card. Voting your shares by using the Internet, by telephone, or by returning the proxy card or voting instruction card does not affect your right to vote in person, should you decide to attend the 2020 Annual General Meeting. We look forward to seeing you.
By Order of the Board of Directors
George V. Saroglou
Chief Operating Officer
Athens, Greece
April 22, 2020
IMPORTANT
WE URGE SHAREHOLDERS TO VOTE AS PROMPTLY AS POSSIBLE BY USING THE INTERNET, BY TELEPHONE, OR BY COMPLETING AND RETURNING BY MAIL THE PROXY CARD OR VOTING INSTRUCTION CARD. A PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED. VOTING YOUR SHARES BY USING THE INTERNET, BY TELEPHONE, OR BY RETURNING THE PROXY CARD OR VOTING INSTRUCTION CARD WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON, SHOULD YOU DECIDE TO ATTEND THE 2020 ANNUAL GENERAL MEETING.
TSAKOS ENERGY NAVIGATION LIMITED
367 Syngrou Avenue
175 64 P. Faliro
Athens, Greece
PROXY STATEMENT FOR THE 2020 ANNUAL GENERAL MEETING OF SHAREHOLDERS
To be held on May 28, 2020
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Tsakos Energy Navigation Limited, a Bermuda company (the “Company”), for use at the 2020 Annual General Meeting of Shareholders of the Company (the “2020 Annual General Meeting”) to be held at 15:00 (3:00 pm) Greek local time, on Thursday, May 28, 2020, in the Company’s Auditorium at 367 Syngrou Avenue, P. Faliro, Athens, Greece and at any adjournments thereof.
VOTING METHODS
Internet Voting
Shareholders of record may vote by accessing the following website address: http://www.investorvote.com/TNP.
All street name holders may vote on the Internet by accessing the following website address: http://www.proxyvote.com.
Telephone Voting
Shareholders of record may also vote by calling the following toll-free telephone number: 1-800-652-8683 within the United States and Canada from a touch tone telephone. Please follow the instructions provided by the recorded message.
If you are a street name holder, and you requested printed proxy materials, you may vote by telephone if your bank or broker makes that method available to you in the voting instruction card enclosed with the proxy materials that your bank or broker sends to you.
Vote by Mail
If you receive a printed copy of the proxy materials, you can vote by completing the accompanying proxy card or voting instruction form and returning it in the return envelope provided. If you receive a Notice, you can request a printed copy of the proxy materials by following the instructions contained in the Notice. If you vote by Internet or telephone, you do not need to return your proxy card or voting instruction form.
Shareholders of Record and Beneficial Owners
If your shares are registered directly in your name on the books of the Company maintained with the Company’s transfer agent, Computershare, you are considered the “shareholder of record” of those shares and, if you request to receive a paper copy of them, the proxy materials will be mailed directly to you.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of shares held in street name (also called a “street name” holder), and, if you request to receive a paper copy of them, the proxy materials will be forwarded to you by your broker, bank or nominee. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote and are also invited to attend the 2020 Annual General Meeting. However, since you are not a shareholder of record, you may not vote these shares in person at the 2020 Annual General Meeting unless you bring with you a legal proxy duly executed by the shareholder of record. A legal proxy may be obtained from your broker, bank or other nominee.
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VOTING OF PROXY, REVOCATION
A proxy that is properly executed, whether on the Internet, by telephone or by mail, and not subsequently revoked will be voted in accordance with instructions contained therein. If no instructions are given with respect to the matters to be acted upon, proxies will be voted as follows: (1) for the election of Michael G. Jolliffe and Nicholas F. Tommasino as directors, (2) for the approval of the Company’s 2019 audited financial statements, (3) for the appointment of Ernst & Young (Hellas) as the Company’s auditors for the fiscal year ending December 31, 2020 and to authorize the Audit Committee to set their remuneration, (4) for the approval of the directors’ remuneration, (5) for effecting a reverse share split of the Company’s 175,000,000 authorized Common Shares, at a ratio of one-for-five (the “Reverse Share Split”), and (6) otherwise in accordance with the best judgment of the person or persons voting the proxy on any other matter properly brought before the 2020 Annual General Meeting.
Any shareholder who votes by completing and returning by mail the proxy card or voting instruction card or by using the Internet or by telephone, may revoke its proxy or change its vote at any time before it is voted at the 2020 Annual General Meeting by (A) delivering written notice to the Secretary of the Company of its revocation, (B) executing and delivering to the Secretary of the Company a later dated proxy by using the Internet, by telephone or by mail, or (C) by appearing in person at the 2020 Annual General Meeting and voting his, her or its shares in person.
EXPENSES OF SOLICITATION
Proxies are being solicited by our Board. The expenses of the preparation of proxy materials and the solicitation of proxies for the 2020 Annual General Meeting will be borne by the Company on behalf of the Board. In addition to solicitation by mail, proxies may be solicited in person, by telephone, telecopy, electronically, or other means, or by directors, officers and regular employees of the Company who will not receive additional compensation for such solicitations. If you choose to vote on the Internet, you are responsible for Internet access charges you may incur. D.F. King Co. Inc. has been engaged by the Company to assist in the solicitation of proxies for a fee of $15,000, plus their costs and expenses. Although there is no formal agreement to do so, the Company will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in forwarding the proxy materials to the beneficial owners of the Company’s Common Shares.
VOTING SECURITIES
Holders of record of the Company’s Common Shares as of the close of business on April 9, 2020 will be entitled to notice of, and to vote at, the 2020 Annual General Meeting or any adjournments thereof. On that date there were 95,673,076 Common Shares outstanding, the holders of which are entitled to one vote for each share registered in their names with respect to each matter to be voted on at the 2020 Annual General Meeting. The presence in person or by proxy (regardless of whether the proxy has authority to vote on all matters) of two shareholders of record will constitute a quorum at the 2020 Annual General Meeting.
VOTE REQUIRED
Assuming that a quorum is present at the 2020 Annual General Meeting, directors will be elected by a plurality of the votes cast at the 2020 Annual General Meeting by holders of Common Shares present in person or represented by proxy. Approval of other items at the 2020 Annual General Meeting requires that the number of votes cast in favour of the action exceeds the number of votes cast in opposition to the action, whether in person or by proxy. Withholding authority to vote for directors and broker non-votes will not affect the election of directors or the outcome of the vote on other proposals.
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BOARD OF DIRECTORS VOTING RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR Item No. 1, the election of each nominee to the Board of Directors; FOR Item No. 2, the approval of the Company’s 2019 audited financial statements; FOR Item No. 3, the appointment of Ernst & Young (Hellas), as the Company’s auditors and authorization of the Audit Committee to set their remuneration; FOR Item No. 4, the approval of the remuneration of the directors; and FOR Item No. 5, effecting a reverse share split of the Company’s 175,000,000 authorized Common Shares, at a ratio of one-for-five.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our outstanding Common Shares as of April 9, 2020 held by:
| • | each person or entity that we know beneficially owns 5% or more of our Common Shares; and |
| • | all of our directors, director nominees and officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC. In general, a person who has or shares voting power or investment power with respect to securities is treated as a beneficial owner of those securities. Beneficial ownership does not necessarily imply that the named person has the economic or other benefits of ownership. Under SEC rules, shares subject to options, warrants or rights currently exercisable or exercisable within 60 days are considered as beneficially owned by the person holding those options, warrants or rights. The applicable percentage of ownership of each shareholder is based on 95,673,076 Common Shares outstanding on April 9, 2020.
| Name of Beneficial Owner |
Number of Shares Beneficially Owned |
Percentage of Outstanding Common Shares |
||||||
| Tsakos Holdings Foundation(1) |
15,815,021 | 16.53 | % | |||||
| Redmont Trading Corp.(1) |
3,690,007 | 3.86 | % | |||||
| First Tsakos Investments Inc.(1) |
12,125,014 | 12.67 | % | |||||
| Kelley Enterprises Inc.(1) |
7,600,007 | 7.94 | % | |||||
| Marsland Holdings Limited(1) |
4,525,007 | 4.73 | % | |||||
| AY Tank Limited(3) |
10,302,552 | 9.99 | % | |||||
| Sea Consolidation S.A. of Panama(2) |
6,700,000 | 7.00 | % | |||||
| Methoni Shipping Company Limited(2) |
5,975,000 | 6.25 | % | |||||
| Kopernik Global Investors, LLC(4) |
4,791,500 | 5.01 | % | |||||
| Intermed Champion S.A. of Panama(2) |
2,730,000 | 2.85 | % | |||||
| All officers and directors as a group (11 persons)(5) |
639,108 | 0.67 | % | |||||
| (1) | First Tsakos Investments Inc. (“First Tsakos”) is the sole holder of the outstanding capital stock of Kelley Enterprises Inc. (“Kelley”) and Marsland Holdings Limited (“Marsland”) and may be deemed to have shared voting and dispositive power of the Common Shares reported by Kelley and Marsland. Tsakos Holdings Foundation (“Tsakos Holdings”) is the sole holder of outstanding capital stock of First Tsakos and Redmont Trading Corp. (“Redmont”) and may be deemed to have shared voting and dispositive power of the Common Shares reported by Kelley, Marsland and Redmont. According to a Schedule 13D/A filed on April 12, 2018 by Tsakos Holdings, First Tsakos, Kelley, Marsland and Redmont, Tsakos Holdings is a Liechtenstein foundation whose beneficiaries include persons and entities affiliated with the Tsakos family, charitable institutions and other unaffiliated persons and entities. The council which controls Tsakos Holdings consists of five members, two of whom are members of the Tsakos family. Under the rules of the SEC, beneficial ownership includes the power to directly or indirectly vote or dispose of |
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| securities or to share such power. It does not necessarily imply economic ownership of the securities. Members of the Tsakos family are among the five council members of Tsakos Holdings and accordingly may be deemed to share voting and/or dispositive power with respect to the shares owned by Tsakos Holdings and may be deemed the beneficial owners of such shares. |
| (2) | According to the Schedule 13D/A filed on April 12, 2018 by Sea Consolidation S.A. of Panama (“Sea Consolidation”), Intermed Champion S.A. of Panama (“Intermed”), Methoni Shipping Company Limited (“Methoni”), Panayotis Tsakos and Nikolas Tsakos and information provided to us, Sea Consolidation, Intermed, Methoni and Nikolas Tsakos beneficially owned 6,700,000, 2,730,000, 5,975,000 and 15,613,000 Common Shares, respectively. According to the Schedule 13D/A, each of Panayotis Tsakos and Nikolas Tsakos, our president and chief executive officer, shares voting and dispositive control over the Common Shares held by each of Sea Consolidation, Intermed and Methoni and may be deemed to indirectly beneficially own such Common Shares. Panayotis Tsakos is the father of Nikolas Tsakos. |
| (3) | Based upon the Amendment No. 1 to the Schedule 13G filed by AY Tank Limited, OMP AY Holdings Limited, Offshore Merchant Partners Asset Yield Fund, LP, OMP SICAV p.l.c. and HitecVision VI, LP on October 21, 2019 and information provided to the Company. Consists of 2,949,999 Common Shares previously issued to AY Tank Limited upon conversion of Series G Convertible Preferred Shares and 7,352,553 Common Shares issuable upon conversion of 2,615,000 Series G Redeemable Convertible Perpetual Preferred Shares held by AY Tank Limited, giving effect to a 9.99% beneficial ownership limitation. According to the Amendment No. 1, each of OMP AY Holdings Limited, Offshore Merchant Partners Asset Yield Fund, LP, OMP SICAV p.l.c. and HitecVision VI, LP may be deemed to indirectly beneficially own such Common Shares. In calculating the amount of Common Shares beneficially owned by this shareholder, we treated as outstanding the number of Common Shares issuable upon conversion of this shareholder’s Series G Convertible Preferred Shares. The percentage beneficially owned by this shareholder reflects that the terms of the Series G Convertible Preferred Shares held by this shareholder prohibit the exercise thereof to the extent that such exercise would result in this shareholder’s beneficial ownership being greater than 9.99% of the Common Shares then outstanding. The 2,615,000 Series G Convertible Preferred Shares currently outstanding are convertible into an aggregate of 8,716,667 Common Shares, subject to this 9.99% ownership limitation. |
| (4) | Based solely upon the Amendment No. 2 to the Schedule 13G filed by Kopernik Global Investors, LLC on February 14, 2020. |
| (5) | Does not include shares owned by Tsakos Holdings, First Tsakos, Kelley, Marsland, Redmont Trading Corp., Sea Consolidation, Intermed or Methoni. |
Based on information provided to us, entities affiliated with Panayotis Tsakos and Nikolas Tsakos own 138,544, or 6.9%, of our outstanding Series C Preferred Shares, 306,271, or 8.9%, of our outstanding Series D Preferred Shares, 110,000, or 2.4%, of our outstanding Series E Preferred Shares, and 135,000, or 2.9%, of our outstanding Series F Preferred Shares as of April 2, 2020. Entities affiliated with Nikolas Tsakos own 140,000, or 7.0%, of our outstanding Series C Preferred Shares, and 35,000, or 0.8%, of our outstanding Series E Preferred Shares and 80,000, or 0.7%, of our outstanding Series F Preferred Shares as of April 2, 2020. Methoni owns 2,000, or 0.1%, of our outstanding Series C Preferred Shares, as of April 2, 2020. Kelley owns 700, or less than 0.1%, of our outstanding Series D Preferred Shares as of April 2, 2020. Marsland owns 1,200, or less than 0.1%, of our outstanding Series D Preferred Shares as of April 2, 2020.
To our knowledge, none of the entities in the above table own any other shares, and none of our other officers or directors own 1% or more, of our Series C Preferred Shares, Series D Preferred Shares, Series E Preferred Shares, Series F Preferred Shares or Series G Convertible Preferred Shares as of April 9, 2020.
As of April 9, 2020, we had 21 holders of record of our Common Shares. These shareholders of record include CEDEFAST which, as nominee for the Depository Trust Company, is the record holder of 95,512,848 Common Shares representing approximately 99.83% of our outstanding Common Shares. CEDEFAST is the nominee of banks and brokers which hold shares on behalf of their customers, the beneficial owners of the shares, who may or may not be resident in the United States. However, apart from the shareholders indicated in
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the footnotes (1) and (2) above and certain of the directors and officers, we believe that the majority of the remaining shareholders are resident in the United States. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.
ITEM NO. 1 – ELECTION OF DIRECTORS
The Company’s Bye-laws provide that the Board will consist of not less than five nor more than 15 members. Under the Company’s Bye-laws, one-third (or the number nearest one-third) of the Board (with the exception of any executive director) retires by rotation each year.
Messrs. Jolliffe and Tommasino have been chosen by lot to retire and present themselves for re-election.
NOMINEES FOR RE-ELECTION
| Nominee |
Age(1) | Position |
Director Since | |||
| Michael G. Jolliffe |
70 | Director | 1993 | |||
| Nicholas F. Tommasino(2)(3) |
62 | Director | 2017 |
DIRECTORS CONTINUING IN OFFICE
| Director |
Age(1) | Position |
Director Since | |||||
| Nikolas P. Tsakos | 56 | President and Chief Executive Officer, Director | 1993 | |||||
| George V. Saroglou | 55 | Vice President, Chief Operating Officer, Director | 2001 | |||||
| Efthimios E. Mitropoulos(2) Efstratios Georgios Arapoglou(3) |
80 68 |
Director Chairman of the Board |
|
2012 2010 |
| |||
| Aristides A. N. Patrinos(2) Maria Vassalou(2)(3) Denis Petropoulos(2) |
72 54 63 |
Director Director Director |
|
2006 2016 2017 |
| |||
| (1) | As of April 9, 2020 |
| (2) | Member of the Corporate Governance, Nominating and Compensation Committee |
| (3) | Member of the Audit Committee |
Nominees for Re-Election
The Board of Directors recommends that shareholders vote FOR each of the following nominees to the Board of Directors.
MICHAEL G. JOLLIFFE
CO-FOUNDER AND VICE CHAIRMAN
Mr. Jolliffe has been joint Managing Director and then Vice Chairman of our Board since 1993. He is a director of a number of companies in shipping, agency representation, shipbroking capital services and mining. Mr. Jolliffe is Chief Executive Officer of Tsakos Containers Navigation LLC, a shipping company set up in joint venture between the Tsakos and Jolliffe families and Warwick Capital Partners, a London based fund manager. He is also Chairman of the Wighams Group owning companies involved in shipbroking, agency representation and capital markets businesses. Mr. Jolliffe is a director of ColdHarbour Marine, a company manufacturing
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equipment for the marine industry. He is also Chairman of StealthGas Inc., a shipping company which is quoted on the Nasdaq Stock Exchange and which owns 45 LPG carriers, three product carriers and one crude oil tanker. Mr. Jolliffe is also a Trustee of Honeypot Children’s Charity.
NICHOLAS F. TOMMASINO
DIRECTOR
Mr. Tommasino is a retired partner of Deloitte LLP, a global professional services firm focusing on Audit, Tax, Advisory and Consulting services (“D&T”). With more than 38 years of experience, including 27 as a Partner until his retirement in 2016, he served global clients in a variety of industries including Transportation, Telecommunications, Pharmaceuticals, Agribusiness and Hospitality. He provided services across a wide range of areas including audit, mergers and acquisitions, U.S. listings, including foreign private issuers, and regulatory and risk areas. He held a number of leadership roles from leading the New York Audit and Advisory practice to the Northeast Practice to the entire East Sector culminating in his assuming the role of Chairman and CEO of Deloitte and Touche LLP (D&T) where he was responsible for all aspects of a multi-billion dollar, fourteen thousand personnel, professional services firm. He directed the Development and Implementation of Strategy, Operations, Talent, Quality, Governance and Cultural Cultivation at D&T. He was a Board member of D&T (including Chairman) and chaired the D&T Executive Committee. He serves as a Trustee and Vice President of the Madison Square Boys and Girls Club. He was an associate adjunct professor at Columbia University. He graduated Summa Cum Laude with a BS in accounting from Manhattan College.
Directors Continuing in Office
The following directors will continue in office:
NIKOLAS P. TSAKOS, Dr.
FOUNDER, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. Nikolas P. Tsakos is the Founder and Chief Executive Officer of Tsakos Energy Navigation (TEN), a pioneering shipping company, established 27 years ago and quoted on the New York Stock Exchange. He comes from a traditional Chios seafaring family and has extensive seagoing experience, having also served as an Officer in the Greek Navy. Mr. Tsakos was the Chairman of INTERTANKO from 2014 to 2018 and the former President of the environmental organization “HELMEPA”. He sits on the boards of a number of maritime and finance organizations and associations. Nikolas graduated from Columbia University in New York with a degree in Economics and Political Science and obtained a Master’s Degree in Shipping, Trade and Finance from London’s City University Business School (CASS). In 2011, he was awarded an honorary doctorate from City University, for his pioneering work in the equity financial markets relating to shipping companies. He is married and has three children.
GEORGE V. SAROGLOU
CHIEF OPERATING OFFICER
Mr. Saroglou has been Chief Operating Officer of the Company since 1996. Mr. Saroglou worked for a private Greek information technology systems integrator from 1987 until 1994. From 1995 to 1996 he was employed in the Trading Department of the Tsakos Group. He graduated from McGill University in Canada in 1987 with a Bachelor’s Degree in Science (Mathematics). Mr. Saroglou is the cousin of Mr. Tsakos.
EFSTRATIOS GEORGIOS (TAKIS) ARAPOGLOU
CHAIRMAN OF THE BOARD
Takis Arapoglou is a consultant with an earlier career in International Capital Markets and Corporate & Investment banking and later in managing, restructuring and advising publicly listed Financial Institutions and
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Corporates. Most recent executive assignments include: Managing Director and Global Head of the Banks and Securities Industry for Citigroup; Chairman and CEO of the National Bank of Greece; Chairman of the Hellenic Banks Association; CEO of Commercial Banking at EFG Hermes Holding SAE. He is currently holding the following non-executive board positions: Chairman of Bank of Cyprus; Chairman of Titan Cement International; Independent board member of EFG Hermes Holding; Board member of Bank Alfalah Ltd., representing the International Finance Corporation (IFC). He is a member of the International Board of Advisors of Tufts University, Boston, MA., a member of the Business Advisory Council for the International MBA program at the Athens University of Economics and Business. He holds degrees in Mathematics, Engineering and Management from Greek and British Universities.
EFTHIMIOS E. MITROPOULOS, KCMG
DIRECTOR
Mr. Mitropoulos is Secretary-General Emeritus of the International Maritime Organization (IMO), the United Nations specialized agency responsible for the regulation of international shipping from the safety, security and environmental protection points of view. After 23 years of service at IMO (ten of which as Director of the Maritime Safety Division), he was elected Secretary-General in 2003 and re-elected in 2007 for a total of the maximum time permitted of eight years. As a graduate of both Merchant and Naval Academies of Greece, he spent time at sea as a navigation officer and twenty years as a commissioned Hellenic Coast Guard officer, retiring as a rear admiral, having represented Greece at IMO and various other international forums dealing with shipping matters over a twelve year period and having spent two years as Harbour Master of Corfu. Between 2004 and 2012, he was Chancellor of the World Maritime University, Malmö, Sweden and Chairman of the Governing Board of the International Maritime Law Institute in Malta. He is the author of several books on shipping, including texts on tankers, modern types of merchant ships, safety of navigation and shipping economics and policy. He is Chairman of the Board of the “Maria Tsakos” Public Benefit Foundation – International Centre for Maritime Research and Tradition and Patron of two international maritime organizations. He is a member of several shipping societies in Greece and in the United Kingdom and a recipient of many awards and distinctions from Governments, international organizations and universities. He is an honorary citizen of Galaxidi, Greece and Malmö, Sweden.
ARISTIDES A.N. PATRINOS, Ph.D
DIRECTOR
Dr. Patrinos is the Chief Scientist and Director for Research of the Novim Group, a think tank based in Santa Barbara, California, USA. He is also a Visiting Scholar at New York University’s Center for Neural Science. Since 2006 he is also affiliated with Synthetic Genomics Inc. (SGI) serving as President (2006-2011), Senior Vice President for Corporate Affairs (2011-2012) and currently as a Programs and Policy Advisor. SGI is a US-based privately held company dedicated to developing and commercializing synthetic biology instruments, clean and renewable fuels and chemicals, sustainable food products; and novel medical applications such as synthetic vaccines and other biologics. Dr. Patrinos also serves on the board of directors of Liberty Biosecurity LLC (since December 2016), a USA-based private DNA sequencing and analysis company focused on biodefense and other applications; and on the board of directors of Data Cubed, Inc. (since June 2016), a NYC-based private company focused on healthcare, big data, and human decision-making. Dr. Patrinos also consults for Oak Ridge National Laboratory, the Energy Futures Initiative, and the translational medicine program of the University of Pittsburgh. He started his career as an Assistant Professor at the University of Rochester. From 1976 to 2006, Dr. Patrinos served in the U.S. Department of Energy (DOE) and several of the DOE National Laboratories and engaged in R&D for several facets of energy production and use and led key research programs in biology and the environment. He played a leading role in the Human Genome Project and has been a central architect of the “genomics” revolution. He is a member of many scientific societies and is a recipient of numerous awards and distinctions including three U.S. Presidential Rank Awards, and two Secretary of Energy Gold Medals. He holds a Diploma in Mechanical and Electrical Engineering from the National
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Technical University of Athens (Metsovion) and a Ph.D. in Mechanical Engineering and Astronautical Sciences from Northwestern University. During 2016, Dr. Patrinos was Senior Adviser to USA Department of Energy Secretary Ernest Moniz.
MARIA VASSALOU, Ph.D
DIRECTOR
Prior to founding Vassalou Capital Management in 2019, Dr. Maria Vassalou was a Partner and Portfolio Manager at Perella Weinberg Partners, responsible for the Global Macro Business. Dr. Vassalou joined Perella Weinberg Partners from MIO Partners, a subsidiary of McKinsey & Company, where as a Portfolio Manager she managed a similar global macro investment strategy in a dedicated legal entity, and as Head of Asset Allocation she provided counsel on allocation for liquid assets within MIO’s portfolio. Prior to joining MIO, Dr. Vassalou was a Global Macro Portfolio Manager at SAC Capital Advisors, LP. She joined SAC from Soros Fund Management where she was responsible for global quantitative research, as well as the development and management of global quantitative trading strategies. Prior to her career in asset management, Dr. Vassalou was an Associate Professor of Finance at Columbia Business School which she joined in 1995 and where she established many of the investment principles she employs today. Dr. Vassalou is a Past President of the European Finance Association and was the Chair of the 2008 European Finance Association Meetings. A Research Affiliate of the Centre for Economic Policy Research (CEPR) in London for many years, Dr. Vassalou is a past member of the Academic Advisory Board of the Vienna-based Guttmann Center of Competence in Portfolio Management. Her research focus has been on the interrelation of the macro economy and financial markets with applications in hedge fund strategies. A frequent speaker to both academic and practitioner-oriented seminars and conferences, Dr. Vassalou has published in leading academic journals, such as the Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of Business, Journal of International Money and Finance, and the Journal of Economic Dynamics and Control. While she was on the faculty of Columbia University, she also served as a consultant to many premier hedge funds and asset management institutions in the U.S. and Europe. Dr. Vassalou serves on the Board of Directors of Titan Cement International SA (EBR: TITC), and is an Overseer of The Gennadius Library, American School of Classical Studies at Athens. Dr. Vassalou received a Bachelor of Arts in Economics from the University of Athens and she holds a PhD in Financial Economics from London Business School.
DENIS PETROPOULOS
DIRECTOR
Denis Petropoulos is the current Chairman of the Baltic Exchange, headquartered in London, UK. He has worked in competitive ship broking for over 40 years and has presented on a broad base of shipping related topics at many major international industry conferences. His knowledge of the energy industry and in particular its shipping requirements for crude oils, products, chemicals, LPG and LNG extends to all the supply and refinery centers around the world. Mr. Petropoulos left H. Clarksons in 1985 to open Braemar Tankers, which in 2001 evolved into Braemar Shipping Services PLC, as it is known today, where he sat on the board as Executive Director. In 2011 he opened Braemar’s shipbroking office in Singapore and remained there until 2017 heading up the company’s expanding operations in the Asia-Australia. He came off the Braemar Shipping Services PLC board in 2015 and remains a shareholder. He presently sits on INTERTANKO’s Associate Members’ Committee. Educated at Westminister School, London, and University of Surrey, UK.
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CORPORATE OFFICERS OF THE COMPANY
The corporate officers of the Company are appointed annually by the Board and serve at the discretion of the Board. The current corporate officers of the Company, their respective ages and positions are set forth below:
| Name |
Age |
Position | ||
| Nikolas P. Tsakos | 56 | President and Chief Executive Officer | ||
| George V. Saroglou | 55 | Vice President and Chief Operating Officer | ||
| Paul Durham | 69 | Chief Financial Officer and Chief Accounting Officer | ||
| Vasileios Papageorgiou | 73 | Chief Marine Officer |
Biographies for Messrs. Tsakos and Saroglou are set forth under “Directors Continuing in Office” above.
PAUL DURHAM
CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER
Mr. Durham joined Tsakos in 1999 and has served as our Chief Financial Officer and Chief Accounting Officer since 2000. Mr. Durham is a Fellow of the Institute of Chartered Accountants in England & Wales. From 1989 through 1998, Mr. Durham was employed in Athens with the Latsis Group, a shipping, refinery and banking enterprise, becoming Financial Director of Shipping in 1995. From 1983 to 1989, Mr. Durham was employed by RJR Nabisco Corporation, serving as audit manager for Europe, Asia and Africa until 1986 and then as financial controller of one of their United Kingdom food divisions. Mr. Durham worked with public accounting firms Ernst & Young (London and Paris) from 1972 to 1979 and Deloitte & Touche (Chicago and Athens) from 1979 to 1983. Mr. Durham is a graduate in Economics from the University of Exeter, England.
VASILEIOS PAPAGEORGIOU
CHIEF MARINE OFFICER
Mr. Papageorgiou is our Chief Marine Officer. He monitors our fleet’s technical and operational performance. In addition, he heads the newbuilding section and technically led the recent successful large scale fleet expansion and renewal plan. For the past 15 years Mr Papageorgiou has overseen the construction of more than 104 vessels of diverse type and range, amongst them DP Shuttle tankers and LNG vessels. He has an extended technical academic background, holding Bachelor of Science degrees in Naval Architecture and Marine Engineering and Master of Science degrees in Internal Combustion Engines and Management and Economics. Mr. Papageorgiou initiated his career 50 years ago, being employed for a period of 5 years in the Greek ship and repair yards of Skaramanga, Perama and Elefsis, being engaged in the supervision of ship repairs and newbuildings. In 1976 and for a period of 4 years he worked for Chalkis Shipyard and Carras Shipping Co attending repairs and newbuildings in Japan and Yugoslavia. In 1980, Mr. Papageorgiou joined Lloyd’s Register of Shipping initially as a junior Ship and Engine Surveyor in the Far East area (Korea, Japan, China, Hong Kong, Philippines). He was the first surveyor of Greek nationality of Lloyd’s Register supervising the construction of newbuildings in Asia. Soon he was promoted to Principal Surveyor, thereafter to Senior Principal Surveyor, a position held for the first time by an Engineer of Greek nationality. Successively, in 1990, Lloyd’s Register appointed him in the post of area Managing Director for the wider region of Greece, Balkans and Middle East, again a position held for the first time by a Greek citizen. Mr. Papageorgiou is an active participant in a wide range of technical committees.
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CORPORATE GOVERNANCE
Board of Directors
Our business is managed under the direction of the Board, in accordance with the Companies Act 1981 of Bermuda, as amended (the “Companies Act”) and our Memorandum of Association and Bye-laws. Members of the Board are kept informed of our business through: discussions with the Chairman of the Board, the President and Chief Executive Officer and other members of our management team; the review of materials provided to directors; and, participation in meetings of the Board and its committees. In accordance with our Bye-laws, the Board has specified that the number of directors will be set at no less than five nor more than fifteen. At December 31, 2019, we had nine directors on our Board. Under our Bye-laws, one third (or the number nearest to one third) of the Board (with the exception of any executive director) retires by rotation each year. The Bye-laws require that the one third of the directors to retire by rotation be those who have been in office longest since their last appointment or re-appointment. The Bye-laws specify that where the directors to retire have been in office for an equal length of time, those to retire are to be determined by lot (unless they agree otherwise among themselves). From the current directors, Messrs. Jolliffe and Tommasino have been selected to stand for re-election at this year’s Annual General Meeting.
During the fiscal year ended December 31, 2019, the full Board held four meetings, of which three were in person and one by teleconference. Each director attended all of the meetings of the Board and all of the meetings of committees of which such director was a member in 2019, except for two directors, who attended at least 75% of such meetings.
Independence of Directors
The foundation for the Company’s corporate governance is the Board’s policy that a majority of the members of the Board should be independent. With the exception of the two Executive Directors (Messrs. Tsakos and Saroglou) and one Non-executive Director (Mr. Jolliffe), the Board believes that each of the other incumbent directors (Messrs. Tommasino, Arapoglou, Mitropoulos and Petropoulos and Drs. Patrinos and Vassalou) is independent under the standards established by the New York Stock Exchange (the “NYSE”) because none has a material relationship with the Company directly or indirectly or any relationship that would interfere with the exercise of their independent judgment as directors of the Company.
The Board made its determination of independence in accordance with its Corporate Governance Guidelines, which specify standards and a process for evaluating director independence. The Guidelines provide that:
| • | A director cannot be independent if he or she fails to meet the objective requirements as to “independence” under the NYSE listing standards. |
| • | If a director meets the objective NYSE standards, he or she will be deemed independent, absent unusual circumstances, if in the current year and the past three years the director has had no related-party transaction or relationship with the Company or an “interlocking” relationship with another entity triggering disclosure under SEC rules. |
| • | If a director who meets the objective NYSE independence requirements either has had a disclosable transaction or relationship or the Corporate Governance, Nominating and Compensation Committee requests that the Board consider any other circumstances in determining the director’s independence, the Board will make a determination of the director’s independence. |
To promote open discussion among the independent directors, those directors met three times in 2019 in regularly scheduled executive sessions without participation of the Company’s management and will continue to do so in 2020. Dr. Patrinos serves as the Presiding Director for purposes of these meetings.
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Documents Establishing Our Corporate Governance
The Board and the Company’s management have engaged in an ongoing review of our corporate governance practices in order to oversee our compliance with the applicable corporate governance rules of the NYSE and the SEC.
The Company has adopted a number of key documents that are the foundation of its corporate governance, including:
| • | a Code of Business Conduct and Ethics for Directors, Officers and Employees; |
| • | a Corporate Governance, Nominating and Compensation Committee Charter; and |
| • | an Audit Committee Charter. |
These documents and other important information on our governance, including the Board’s Corporate Governance Guidelines, are posted in the “Corporate Governance” section of the Tsakos Energy Navigation Limited website, and may be viewed at http://www.tenn.gr. We will also provide any of these documents in hard copy upon the written request of a shareholder. Shareholders may direct their requests to the attention of Investor Relations, c/o George Saroglou or Paul Durham, Tsakos Energy Navigation Limited, 367 Syngrou Avenue, 175 64 P. Faliro, Athens, Greece.
The Board has a long-standing commitment to sound and effective corporate governance practices. The Board’s Corporate Governance Guidelines address a number of important governance issues such as:
| • | Selection and monitoring of the performance of the Company’s senior management; |
| • | Succession planning for the Company’s senior management; |
| • | Qualifications for membership on the Board; |
| • | Functioning of the Board, including the requirement for meetings of the independent directors; and |
| • | Standards and procedures for determining the independence of directors. |
The Board believes that the Corporate Governance Guidelines and other governance documents meet current requirements and reflect a very high standard of corporate governance.
Committees of the Board
The Board has established an Audit Committee, a Corporate Governance, Nominating and Compensation Committee, a Business Development and Capital Markets Committee and an Operational, Safety and Environmental (“OSE”) Committee.
Audit Committee
The current members of the Audit Committee are Messrs. Tommasino and Arapoglou and Dr. Vassalou, each of whom is an independent director. Mr. Tommasino serves as the Chairman of the committee. The Audit Committee is governed by a written charter, which is approved and adopted annually by the Board. The Board has determined that the continuing members of the Audit Committee meet the applicable independence requirements, and that all continuing members of the Audit Committee meet the requirement of being financially literate. The Audit Committee held four meetings during the fiscal year ended December 31, 2019. The Audit Committee is appointed by the Board and is responsible for, among other matters:
| • | engaging the Company’s external and internal auditors; |
| • | approving in advance all audit and non-audit services provided by the auditors; |
| • | approving all fees paid to the auditors; |
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| • | reviewing the qualification and independence of the Company’s external auditors; |
| • | discussing compliance with accounting standards and any proposals which the external auditors have made regarding the Company’s accounting standards with the external auditors; |
| • | overseeing the Company’s financial reporting and internal control functions; |
| • | overseeing the Company’s whistleblower’s process and protection; |
| • | overseeing general compliance with related regulatory requirements; |
| • | overseeing the executive management’s identification and assessment of risks that the Company faces and the establishment of a risk management structure capable of addressing and mitigating those risks; |
| • | overseeing the division of risk-related responsibilities among each of the Board committees as clearly as possible and performing a gap analysis to confirm that the oversight of any risk is not missed; |
| • | in conjunction with the full Board, approving the Company-wide risk management program; and |
| • | assessing whether the Company’s technical and commercial managers have effective procedures for managing risks. |
The Board of Directors has determined that each of Messrs. Tommasino, Arapoglou, and Dr. Vassalou, whose biographical details are included herein, qualifies as an “audit committee financial expert” under current SEC regulations.
Corporate Governance, Nominating and Compensation Committee
The current members of the Corporate Governance, Nominating and Compensation Committee are Messrs. Arapoglou, Mitropoulos, Tommasino and Petropoulos and Drs. Patrinos and Vassalou, each of whom is an independent director. Dr. Patrinos serves as the Chairman of the committee. The Corporate Governance, Nominating and Compensation Committee is appointed by the Board and is responsible for:
| • | developing and recommending to the Board corporate governance guidelines applicable to the company and keeping such guidelines under review; |
| • | overseeing the evaluation of the Board and management; |
| • | arranging for an annual performance evaluation of the committee and producing an annual report to the Board; |
| • | reviewing regularly the Board structure, size and composition and making recommendations to the Board with regard to any adjustments that are deemed necessary; |
| • | identifying and nominating candidates for the approval of the Board to fill Board vacancies as and when they arise; |
| • | implementing plans for succession, making recommendations to the Board for the continuation in service of an executive director and recommending directors who are retiring by rotation to be put forward for re-election; |
| • | determining the compensation of the non-executive directors, determining and administering the Company’s long-term incentive plans, including any equity-based plans and grants under them; and |
| • | producing an annual report on executive compensation as required by the SEC to be included in the Company’s annual proxy statement or annual report. |
During 2019, there were three meetings of the Corporate Governance, Nominating and Compensation Committee.
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Business Development and Capital Markets Committee
The current members of the Business Development and Capital Markets Committee are Messrs. Arapoglou, Jolliffe, Saroglou and Tsakos and Dr. Vassalou. Mr. Jolliffe is Chairman of the committee. The Business Development and Capital Markets Committee was established in 2014 for the purpose of overseeing the financial policies and activities of the Company and its subsidiaries relating to the Company’s capital structure and capital raising activities. The committee reviews and approves presentations to, and communications with, shareholders, financial analysts, and potential investors and oversees the establishment and maintenance of the Company’s relations with investment banks and financial institutions, as well as the development and expansion of the Company’s business, including the evaluation of strategic growth opportunities.
Operational, Safety and Environmental Committee
The current members of the Operational, Safety and Environmental Committee are Messrs. Jolliffe, Mitropoulos and Papageorgiou and Dr. Patrinos. Mr. Mitropoulos is Chairman of the committee. The primary role of the OSE Committee is to draw the attention of the Board and the Company’s management to issues of concern regarding the safety of crew and vessels and the impact of the maritime industry on the environment, to provide an update on related legislation and technological innovations, and more specifically highlight areas in which the Company itself may play a more active role in being in the forefront of adopting operational procedures and technologies that will ensure maximum safety for crew and vessels and contribute to a better environment.
How to Contact the Board and its Committees
We have established a process by which shareholders can contact our Board, including any committee of the Board or the independent members of the Board.
To contact the Board or a committee of the Board or the independent members of the Board, you may write to the following address:
TSAKOS ENERGY NAVIGATION LIMITED
c/o Chairman of the Corporate Governance,
Nominating and Compensation Committee
367 Syngrou Avenue
175 64 P. Faliro
Athens, Greece
| • | All concerns and complaints will be received and processed by the Company’s Chief Operating Officer and/or the Company’s Internal Auditor. |
| • | Priority will be assigned to communications involving an allegation of a threat to a person, property or the environment, and to on-going or time-sensitive issues. |
| • | If you have provided your name or have received a control number to permit anonymous or confidential treatment, you will receive a response to your communication by telephone or in writing. |
| • | The Chairman of the Board or the Chairman of the Corporate Governance, Nominating and Compensation Committee will decide whether to forward your communication to other Directors, including the Executive Directors, taking into account the substance of the communication and any request that may have been made regarding such dissemination. |
| • | Any proposal that a shareholder intends to present at the 2021 Annual General Meeting of Shareholders of the Company, including nominations to the Board, must be received by the Chairman of the Corporate Governance, Nominating and Compensation Committee at the above address no later than December 15, 2020 for inclusion in the Company’s Proxy Statement and proxy for such meeting and |
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| must be otherwise in compliance with applicable SEC regulations. If a shareholder intends to present a proposal at the 2021 Annual General Meeting of Shareholders of the Company, but does not seek to have the proposal included in the Company’s Proxy Statement, notice must be received by the Company at its principal executive offices no later than March 30, 2021. Use of certified mail is suggested. |
To enable directors to attend the Annual General Meeting of Shareholders, the Board has established a practice of scheduling a regular Board meeting to coincide with the Annual General Meeting. In 2019, all but one of the directors in office prior thereto and continuing in office thereafter attended the Annual General Meeting of Shareholders.
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COMPENSATION DISCUSSION AND ANALYSIS
Board Compensation
We pay no cash compensation to our directors who are executive officers. For the year ended December 31, 2019, the aggregate cash compensation of all of the members of the Board was $630,000 per the following annual fee schedule which was approved by the shareholders of the Company on May 30, 2019:
| • | Service on the Board - $60,000 |
| • | Service on the Audit Committee - $20,000 |
| • | Service on the Business Development and Capital Markets Committee - $10,000 |
| • | Service on the Operational, Safety and Environmental Committee - $10,000 |
| • | Service as Chairman of the Corporate Governance, Nominating and Compensation Committee - $10,000 |
| • | Service as Chairman of the Operational, Safety and Environmental Committee - $10,000 |
| • | Service as Chairman of the Audit Committee - $30,000 |
| • | Service as Chairman of the Business Development and Capital Markets Committee - $30,000 |
| • | Service as Chairman of the Board - $40,000 |
No fees are paid for service solely as a member of the Corporate Governance, Nominating and Compensation Committee.
We do not provide benefits for directors upon termination of their service with us.
We do not propose any changes to the fee schedule set forth above for 2020. In Item No. 4, the Board recommends that the shareholders re-approve such fee schedule to be payable to non-management directors for the year ending December 31, 2020.
Management Company
Tsakos Energy Management Limited (“Tsakos Energy Management”), under its management agreement with us, provides overall executive and commercial management of our affairs in exchange for a monthly management fee. We paid Tsakos Energy Management management fees of $20.2 million in 2019.
From the management fee we pay it, Tsakos Energy Management pays Tsakos Columbia Shipmanagement S.A. (“TCM”), a joint venture between Tsakos Shipping & Trading S.A. (“Tsakos Shipping”) and Columbia Shipmanagement Ltd, a management fee for its services as technical and operational manager of most of the vessels in our fleet. We prepay or reimburse TCM at cost for all vessel operating expenses payable by them in their capacity as technical manager of the fleet. At December 31, 2019, outstanding advances to TCM amounted to $20.1 million and there was an amount due to Tsakos Shipping of $1.4 million for the commercial management services they provide. In 2018, an additional amount of $2.0 million was paid in fees directly by the Company to TCM for additional services it provided or arranged in relation to information technology, application of corporate governance procedures required by the Company and seafarers’ training.
In 2019 and 2018, we paid Tsakos Energy Management an incentive award of $0.5 million and $0.95 million, respectively.
Management Agreement
Our management agreement with Tsakos Energy Management was amended and restated on March 8, 2007 and has a term of ten years that renews annually. Tsakos Energy Management may terminate the management
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agreement at any time upon not less than one year’s notice. In addition, either party may terminate the management agreement under certain circumstances, including the following:
| • | certain events of bankruptcy or liquidation involving either party; |
| • | a material breach by either party; or |
| • | a failure by Tsakos Energy Management, for a continuous period of two months, materially to perform its duties because of certain events of force majeure. |
Moreover, following a change in control of us, which would occur if at least one director were elected to our Board without having been recommended by our existing Board, Tsakos Energy Management may terminate the agreement on 10 business days’ notice. If Tsakos Energy Management terminates the agreement for this reason, then we would immediately be obligated to pay Tsakos Energy Management the present discounted value of all of the payments that would have otherwise been due under the management agreement up until June 30 of the tenth year following the date of termination plus the average of the incentive awards previously paid to Tsakos Energy Management multiplied by ten. Under these terms, therefore, a termination as of December 31, 2019 would have resulted in a payment of approximately $172.7 million. Under the terms of the Management Agreement between the Company and Tsakos Energy Management, the Company may terminate the agreement only under specific circumstances, such as breach of contract by the manager and change of control in the shareholding of the manager without the prior approval of the Company’s Board of Directors.
Management Compensation
Messrs. Tsakos, Saroglou, Durham and Papageorgiou serve as President and Chief Executive Officer, Vice President and Chief Operating Officer, Chief Financial Officer and Chief Accounting Officer, and Chief Marine Officer, respectively. Such individuals are compensated by our manager, and, except for the equity compensation discussed below and the compensation paid to Mr. Papageorgiou for service on the OSE Committee, are not directly compensated by the Company. Although he is not a member of the Board, our Chief Marine Officer, Mr. Papageorgiou serves on the Operational, Safety and Environmental Committee and receives the same $10,000 per annum cash compensation for service on such committee as is paid to non-executive members of the Board serving thereon.
Employees
Tsakos Energy Navigation Limited has no salaried employees. All crew members are employed by the owning-company of the vessel on which they serve, except where the vessel may be on a bareboat charter-out, or where the vessels or the crewing thereof, are under third-party management arranged by our technical managers. All vessel owning-companies are subsidiaries of Tsakos Energy Navigation Limited. Approximately 2,000 officers and crew members served on board the vessels we own and were managed by our technical managers as of December 31, 2019.
Share Ownership
The Common Shares beneficially owned by our directors and executive officers and/or companies affiliated with these individuals are disclosed in “Security Ownership of Certain Beneficial Owners and Management” above.
Stock Compensation Plan
At the 2012 Annual Meeting of Shareholders, our shareholders approved a share-based incentive plan (the “2012 Plan”). This plan permits us to grant share options or other share based awards to our directors and officers, to the officers of the vessels in the fleet, and to the directors, officers and employees of our manager, Tsakos Energy Management, and our commercial manager, Tsakos Shipping.
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The purpose of the 2012 Plan is to provide a means to attract, retain, motivate and reward the persons whose performance of administrative, commercial, management, technical and maritime services are important for the Company by increasing their ownership in our Company. Awards under the 2012 Plan may include options to purchase our common shares, restricted share awards, other share-based awards (including share appreciation rights granted separately or in tandem with other awards) or a combination thereof.
The 2012 Plan is administered by our Corporate Governance, Nominating and Compensation Committee. Such committee has the authority, among other things, to: (i) select the present or prospective directors, officers, consultants and other personnel entitled to receive awards under the 2012 Plan; (ii) determine the form of awards, or combinations of awards; (iii) determine the number of shares covered by an award; and (iv) determine the terms and conditions of any awards granted under the 2012 Plan, including any restrictions or limitations on transfer, any vesting schedules or the acceleration of vesting schedules and any forfeiture provision or waiver of the same. The 2012 Plan authorizes the issuance of up to 1,000,000 Common Shares in the form of restricted stock units (“RSUs”) or options. In 2017, 110,000 RSUs were issued to the non-executive directors of the Company, which vested immediately. In 2016, 87,500 RSUs were also issued to the non-executive directors of the Company, which vested immediately. In 2018 and 2019, no RSUs or other awards were issued.
As of December 31, 2019, there were no outstanding (non-vested) RSUs.
Total stock compensation expense recognized for the year ended December 31, 2019 and 2018 was $nil and for the year ended December 31, 2017 was $0.5 million.
REPORT OF THE CORPORATE GOVERNANCE, NOMINATING AND COMPENSATION COMMITTEE
We have reviewed the Compensation Discussion and Analysis included herein and have recommended to the Board of Directors that it be included in this Proxy Statement.
THE CORPORATE GOVERNANCE, NOMINATING
AND COMPENSATION COMMITTEE
Aristides A.N. Patrinos – Chairman
Efstratios Georgios Arapoglou – Member
Efthimios E. Mitropoulos – Member
Nicholas F. Tommasino – Member
Maria Vassalou – Member
Denis Petropoulos – Member
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REPORT OF THE AUDIT COMMITTEE
The Tsakos Energy Navigation Audit Committee of the Board is composed entirely of non-management directors. The members of the Audit Committee meet the independence and financial literacy requirements set forth by the SEC and the NYSE and that Nicholas F. Tommasino, Efstratios Arapoglou and Maria Vassalou each qualify as an “audit committee financial expert” as defined by the SEC.
The Audit Committee of the Board operates pursuant to a written charter, which may be accessed through the Corporate Governance section of the Company’s website at http://www.tenn.gr. In accordance with this charter, the Audit Committee assists the Board of Directors in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and system of internal controls. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis.
The Company’s Management team has the primary responsibility of the financial statements and the reporting process, including the system of internal controls. The Audit Committee assists the Board in its general oversight of the Company’s financial reporting processes. Specifically, the Audit Committee:
| • | Reviewed and discussed the Company’s annual audited financial statements and quarterly financial statements, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Form 20-F for the year ended December 31, 2019, with Company management and Ernst & Young (Hellas), its Independent Auditors. |
| • | The Committee also reviewed related issues and disclosure items, including the Company’s earnings press releases, and performed its regular review of critical accounting policies and the processes by which the Company’s Chief Executive Officer and Chief Financial Officer certify the information contained in its quarterly and annual filings. |
| • | Discussed with Ernst & Young (Hellas) the matters required to be discussed by the Public Company Accounting Oversight Board. The Committee also received the written disclosures and letter from Ernst & Young (Hellas) required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the Audit Committee concerning independence and discussed with Ernst & Young (Hellas) their independence and related matters. |
| • | As part of its review of audit matters, the Audit Committee supervises the relationship between the Company and its independent public accountants, including: having responsibility to recommend to the Board for Shareholder approval the selection, compensation and retention of the independent public accountants; approving the nature and type of their services; approving their audit and non-audit services; reviewing the plan for and the results of the annual audit and quarterly reviews of the Company’s Consolidated Financial Statements; and confirming their independence. The Audit Committee has evaluated Ernst & Young (Hellas)’s qualifications, performance and independence, including that of the lead audit partner. As part of the engagement process, the Audit Committee considers whether to rotate the independent public accountants. The Audit Committee has recommended to the Board that the Shareholders approve the selection of Ernst & Young (Hellas) as the Company’s independent public accountants for the year 2020. |
During the year 2019, the Audit Committee held four meetings, of which three were in person. During such in person meetings, the Audit Committee met with representatives of Ernst & Young (Hellas), both with management present and in private sessions without management present, to discuss the results of the audit and to solicit their evaluation of the Company’s accounting principles, practices and judgments applied by management and the quality and adequacy of the Company’s internal controls. At such in person meetings, the Audit Committee also met in private sessions with the Director of Internal Audit, who reports directly to the Audit Committee, to discuss the audit results for 2019 and audit plans for 2020. The Audit Committee continually reviews specific areas of risk management with the Company.
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In performing the above described functions, the Audit Committee acts only in an oversight capacity and necessarily relies on the work and assurances of Company management and the independent public accounting firm, which, in their report, expresses an opinion on the conformity of the Company’s annual financial statements to accounting principles generally accepted in the United States.
In addition, in reliance upon the reviews and discussions as outlined above, the Audit Committee recommended, and the Board of Directors approved, the inclusion of the Company’s audited financial statements in its annual report on Form 20-F for the year ended December 31, 2019 for filing with the SEC and presentation to the Company’s shareholders.
THE AUDIT COMMITTEE
Nicholas F. Tommasino – Chairman
Efstratios Arapoglou – Member
Maria Vassalou – Member
Notwithstanding anything to the contrary set forth in any of our previous or future filings with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that might “incorporate by reference” future or previous filings, including this Proxy Statement, in whole or in part, the above “Report of the Audit Committee” shall not be incorporated by reference into any such filings, nor shall it be deemed to be soliciting material or deemed filed with the SEC under the Securities Act of 1933, as amended, or under the Exchange Act.
This Proxy Statement also includes references to our website address. This website is intended to provide inactive, textual references only. The information on this website is not part of this Proxy Statement.
Independent Registered Public Accountants
The accounting firm of Ernst & Young (Hellas), Athens, Greece served as the Company’s independent registered public accounting firm for the years ended December 31, 2019 and December 31, 2018 and has served in such capacity since 2002.
Principal Accounting Fees and Services
An aggregate amount of Euro 719,250 was billed and accrued for fiscal year 2019 relating to fees for audit services performed by Ernst & Young (Hellas), Athens, Greece. In 2018, an aggregate amount of Euro 680,000 was billed and accrued for fiscal year 2018 relating to fees for audit services. Audit fees consist of the audit of our annual financial statements, services rendered in connection with registration of securities and related comfort letters, consents related to SEC registration statements, as well as work generally only the independent auditor can reasonably be expected to provide, such as statutory audits and financial audits of subsidiaries.
The Audit Committee Charter sets forth the Company’s policy regarding retention of the independent auditors, requiring the Audit Committee to review and approve in advance the retention of the independent auditors for the performance of all audit and lawfully permitted non-audit services. The Chairman of the Audit Committee, or in the absence of the Chairman, any member of the Audit Committee designated by the Chairman, has authority to approve in advance any lawfully permitted non-audit services. The Audit Committee is authorised to establish other policies and procedures for the pre-approval of such services. Where non-audit services are approved under delegated authority, the action must be reported to the full Audit Committee at its next regularly scheduled meeting.
ITEM NO. 2 – APPROVAL OF AUDITED FINANCIAL STATEMENTS
The Board, acting on the recommendation of the Audit Committee, recommends the approval by the Company’s shareholders of the audited financial statements for the fiscal year ended December 31, 2019,
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together with the report of the Company’s auditors, Ernst & Young (Hellas), Athens, Greece. Representatives of Ernst & Young (Hellas), Athens, Greece are expected to be present at the 2020 Annual General Meeting. They will have the opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions from shareholders.
ITEM NO. 3 – APPOINTMENT OF AUDITORS AND AUTHORIZATION OF THE AUDIT COMMITTEE TO DETERMINE THEIR REMUNERATION
The Audit Committee of the Board has recommended that the Company’s shareholders appoint the firm of Ernst & Young (Hellas), Athens, Greece, independent registered public accounting firm, as auditors of the Company for the year ending December 31, 2020.
The Board, acting on the recommendation of the Audit Committee, recommends this Item No. 3 and that the Company’s shareholders appoint Ernst & Young (Hellas), Athens, Greece as auditors of the Company for the fiscal year ending December 31, 2020 and authorize the Audit Committee to set their remuneration.
ITEM NO. 4 – REMUNERATION OF THE DIRECTORS
We pay no cash compensation to our executive officers or to our directors who are executive officers. For the year ended December 31, 2019, the aggregate cash compensation of all of the members of the Board was $630,000. The annual fee allocation for directors was last approved by the shareholders of the Company on May 30, 2019.
The Board recommends that the shareholders approve the fee schedule for non-management directors in 2020 as set forth in this Proxy Statement under the section “Compensation Discussion and Analysis–Board Compensation”.
ITEM NO. 5 – REVERSE SHARE SPLIT OF THE COMPANY’S 175,000,000 AUTHORIZED COMMON SHARES, $1.00 PAR VALUE, AT A RATIO OF ONE-FOR-FIVE
The Board deems it advisable that the Company implement a reverse share split of the 175,000,000 authorized Common Shares, at an exchange ratio of one-for-five (the “Reverse Share Split”). Except as described below with respect to fractional shares, on the effective date of the Reverse Share Split, every five (5) authorized Common Shares, including Common Shares issued and outstanding immediately prior thereto, will be automatically and without any action on the part of the shareholders, combined, converted and changed into one new Common Share.
Reasons for the Possible Reverse Share Split
The Board anticipates that a reverse share split would increase the trading price of the Common Shares on the New York Stock Exchange. The Board also believes that the increased trading price of our Common Shares could improve the marketability and liquidity of our Common Shares and encourage interest and trading in our Common Shares. A reverse share split could allow a broader range of institutions to invest in our Common Shares (namely, funds that are prohibited from buying shares whose price is below a certain threshold), potentially increasing trading volume and liquidity of our Common Shares. A reverse share split could help increase analyst and broker interest in our Common Shares as their policies can discourage them from following or recommending companies with low share prices. Because of the trading volatility often associated with low-priced shares, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced shares or tend to discourage individual brokers from
20
recommending low-priced shares to their customers. Some of those policies and practices may make the processing of trades in low-priced shares economically unattractive to brokers. Additionally, because brokers’ commissions on low-priced shares generally represent a higher percentage of the share price than commissions on higher-priced shares, a low average price per Common Share can result in individual shareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were higher.
The Board does not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
If the shareholders approve the resolution, the Reverse Share Split will become effective as of the open of business on June 1, 2020.
The Board recommends that the shareholders of the Company approve the following resolution to effect the Reverse Share Split:
RESOLVED, to approve a reverse share split (the “Reverse Share Split”) of the 175,000,000 authorized Common Shares, $1.00 par value per common share, of Tsakos Energy Navigation Limited whereby each five (5) Common Shares will be consolidated into and become one (1) Common Share, $5.00 par value per Common Share, subject to the payment of cash in lieu of fractional Common Shares; with such Reverse Share Split to be effective as of the open of business on June 1, 2020.
Effective Date
If the Company’s shareholders approve the resolution to effect the Reverse Share Split, the Reverse Share Split will become effective as of the open of business on June 1, 2020, with respect to which the Company will provide prior notice to the New York Stock Exchange. Except as explained below with respect to fractional shares, on the effective date of the Reverse Share Split, every five (5) authorized Common Shares, including Common Shares issued and outstanding immediately prior thereto, will be automatically and without any action on the part of the shareholders, combined, converted and changed into one new Common Share.
Fractional Shares
No fractional Common Shares will be created or issued in connection with the Reverse Share Split. Shareholders of record who otherwise would be entitled to receive fractional Common Shares as a consequence of the Reverse Share Split will be entitled, upon surrender to the exchange agent of certificates representing such Common Shares or, in the case of non-certificated Common Shares, such proof of ownership as required by the exchange agent, to a cash payment in lieu thereof at a price equal to the fraction to which the shareholder would otherwise be entitled multiplied by the closing price per Common Share on the New York Stock Exchange on the last trading day prior to the effective date of the Reverse Share Split, as adjusted for the Reverse Share Split as appropriate or, if such price is not available, a price to be determined by our Board. The ownership of a fractional interest will not give the holder thereof any voting, dividend or other rights except to receive payment therefor as described herein.
Odd Lots
The Reverse Share Split may result in some shareholders owning “odd lots” of less than 100 Common Shares. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
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Authorized Common Share and Par Value
The Reverse Share Split will not result in a change in the authorized share capital of our authorized Common Shares, which will remain $175,000,000. The pre-split 175,000,000 authorized Common Shares, $1.00 par value per share, will become 35,000,000 authorized Common Shares, $5.00 par value per share. Accordingly, the Reverse Share Split would not provide the Company with additional Common Shares available for issuance.
Accounting Consequences
The $175,000,000 authorized share capital of the Company related to common shares would remain unchanged after the Reverse Share Split. As a result, the stated capital on our balance sheet attributable to the Common Shares will be unchanged as a result of the Reverse Share Split. Net income or loss and net book value per Common Share will be increased because there will be fewer Common Shares outstanding. We will reclassify prior period per share amounts for the effect of the Reverse Share Split for any prior periods in our financial statements and reports such that prior periods are comparable to current period presentation. We do not anticipate that any other accounting consequences would arise as a result of the Reverse Share Split.
Material U.S. Federal Tax Consequences of the Reverse Share Split
As used herein, the term “U.S. Holder” means a beneficial owner of Common Shares that is a U.S. citizen or resident, a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.
If a partnership holds our Common Shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding our common stock, you are encouraged to consult your tax advisor.
We have not sought and will not seek any ruling from the Internal Revenue Service (the “IRS”), or an opinion from counsel with respect to the U.S. federal income tax consequences discussed below. There can be no assurance that the tax consequences discussed below would be accepted by the IRS or a court. The authorities on which this summary is based are subject to various interpretations, and it is therefore possible that the U.S. federal income tax treatment may differ from the treatment described below.
We urge holders to consult with their own tax advisors as to any U.S. federal, state, or local or foreign tax consequences applicable to them that could result from the Reverse Share Split.
The Reverse Share Split is intended to constitute a “reorganization” within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and is not intended to be part of a plan to increase periodically a shareholder’s proportionate interest in our earnings and profits. Assuming the Reverse Share Split so qualifies, for U.S. federal income tax purposes:
| • | A U.S. Holder should not recognize any gain or loss on the Reverse Share Split (except for cash, if any, received in lieu of a fractional Common Share); |
| • | The U.S. Holder’s aggregate tax basis of the Common Shares received pursuant to the Reverse Share Split, including any fractional Common Shares not actually received, should be equal to the aggregate tax basis of such holder’s Common Shares surrendered in the exchange; |
| • | The U.S. Holder’s holding period for the Common Shares received pursuant to the Reverse Share Split should include such holder’s holding period for the Common Shares surrendered in the exchange; and |
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| • | Cash payments received by the U.S. Holder for a fractional Common Share generally should be treated as if such fractional share had been issued pursuant to the Reverse Share Split and then redeemed by us, and such U.S. Holder generally should recognize capital gain or loss with respect to such payment, measured by the difference between the amount of cash received and such U.S. Holder’s tax basis in such fractional share. However, in certain circumstances, it is possible that the cash received in lieu of a fractional share could be characterized as a dividend for such purposes. U.S. Holders are encouraged to consult their tax adviser on the treatment of the receipt of cash in lieu of fractional shares in their specific situation. |
U.S. Holders will be required to provide their social security or other taxpayer identification numbers (or, in some instances, additional information) to the exchange agent in connection with the Reverse Share Split to avoid backup withholding requirements that might otherwise apply. This information is generally provided on IRS Form W-9 or a substitute form. Failure to provide such information may result in backup withholding at a rate of 24%.
THE FOREGOING IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SHARE SPLIT TO U.S. HOLDERS UNDER CURRENT LAW AND IS FOR GENERAL INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF STOCKHOLDERS. YOU ARE ENCOURAGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE SHARE SPLIT TO YOU, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.
Procedures for Effecting Reverse Share Split
As soon as practicable after the effective date of the Reverse Share Split, the Company’s shareholders will be notified that the Reverse Share Split has been effected. The Company expects that its transfer agent, Computershare Trust Company, N.A, will act as exchange agent for purposes of implementing the exchange of share certificates. Holders of pre-split shares will be asked to surrender to the exchange agent certificates representing pre-split Common Shares in exchange for post-split Common Shares or, in the case of holders of non-certificated shares, such proof of ownership as required by the exchange agent. No new share certificates will be issued to shareholders, and any shareholder submitting a share certificate will receive uncertificated Common Shares in return. Any pre-split Common Shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split Common Shares. SHAREHOLDERS SHOULD NOT DESTROY ANY SHARE CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Shareholders holding their Common Shares in book-entry form with the transfer agent need not take any action to receive post-split Common Shares or cash payment in lieu of any fractional interest, if applicable. If a shareholder is entitled to post-split Common Shares, a transaction statement will automatically be sent to the shareholder’s address of record indicating the number of Common Shares held following the Reverse Share Split.
Banks, brokers or other nominees will be instructed to effect the Reverse Share Split for their beneficial holders holding Common Shares in “street name”. However, these banks, brokers or other nominees may have different procedures from those that apply to registered shareholders for processing the Reverse Share Split and making payment for fractional Common Shares. If a shareholder holds Common Shares with a bank, broker or other nominee and has any questions in this regard, shareholders are encouraged to contact their bank, broker or other nominee.
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***
Approval of the resolution requires that the number of votes cast in favor of the resolution exceeds the number of votes cast in opposition to the action, whether in person or by proxy.
The Board recommends that the shareholders approve the resolution to effect the Reverse Share Split of the Company’s authorized Common Shares at a ratio of one-for-five.
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS
The Company’s Annual Report on Form 20-F and its audited consolidated financial statements for the fiscal year ended December 31, 2019, are available at www.proxyvote.com and on the Company’s website, http://www.tenn.gr and can be accessed through the SEC’s Web site at http://www.sec.gov. If you would like to receive, at no cost, a printed copy of the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2019, please contact the Company by telephone at +30 210 94 07 710, by email at ten@tenn.gr or in writing at Tsakos Energy Navigation Limited, Investor Relations, c/o George Saroglou or Paul Durham, 367 Syngrou Avenue, 175 64 P. Faliro, Athens, Greece.
George V. Saroglou
Chief Operating Officer
April 22, 2020
24
Exhibit 99.2
Tsakos Energy Navigation Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2020 Annual Meeting Proxy Card 1234 5678 9012 345 q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommend a vote FOR all the nominees listed and FOR Proposals 2 – 5. 1. to re-elect two directors who retire by rotation; 01—Michael G. Jolliffe 02—Nicholas F. Tommasino Mark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees 01 02 For All EXCEPT—To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right. 2. to receive and consider the Company’s 2019 audited 3. to appoint Ernst & Young (Hellas), Certified Auditors-financial statements; Accountants S.A. (Ernst & Young (Hellas)), Athens, Greece, as auditors of the Company for the fiscal year ending December 31, 2020 and to authorize the Audit Committee of the Board of Directors to set their remuneration; 4. to approve the directors’ remuneration; 5. to approve the resolution set out below: RESOLVED, to approve a reverse share split (the “Reverse Share Split”) of the 175,000,000 authorized Common Shares, $1.00 par value per share, of Tsakos Energy Navigation Limited whereby each five (5) Common Shares Any other business that properly comes before the meeting. will be consolidated into and become one (1) Common Share, $5.00 par value per share, subject to the payment of cash in lieu of fractional Common Shares; with such Reverse Share Split to be effective as of the open of business on June 1, 2020. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
2020 Annual Meeting Admission Ticket 2020 Annual Meeting of Tsakos Energy Navigation Limited Shareholders May 28, 2020, 3:00pm Greek local time 367 Syngrou Avenue, 17564, P. Faliro, Athens, Greece Upon arrival, please present this admission ticket and photo identification at the registration desk. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/TNP q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q TSAKOS ENERGY NAVIGATION LIMITED + Notice of 2020 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 28, 2020 Efstratios Georgios Arapoglou, and if Mr. Arapoglou is not present, any director of the Company, with full power of substitution, is hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of Tsakos Energy Navigation Limited to be held on May 28, 2020 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxy will have authority to vote FOR the election of the Board of Directors and FOR items 2-5. In his discretion, the Proxy is authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below.
Exhibit 99.3
Tsakos Energy Navigation Online Go to www.investorvote.com/TNP or scan the QR code — login details are located in the shaded bar below. Votes submitted electronically must be received by 11:59 p.m., Eastern Time, on May 27, 2020 Shareholder Meeting Notice 1234 5678 9012 345 Important Notice Regarding the Availability of Proxy Materials for Tsakos Energy Navigation Limited Shareholder Meeting to be Held on May 28, 2020. Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual shareholders’ meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The 2020 Proxy Statement and audited consolidated financial statements for the year ended December 31, 2019, are available at: www.investorvote.com/TNP Easy Online Access — View your proxy materials and vote. Step 1: Go to www.investorvote.com/TNP Step 2: Click on the icon on the right to view meeting materials. Step 3: Return to the investorvote.com window and follow the instructions on the screen to log in. Step 4: Make your selections as instructed on each screen for your delivery preferences. Step 5: Vote your shares. go online, you can also help the environment by consenting to receive electronic delivery of future materials. Obtaining a Copy of the Proxy Materials – If you want to receive a copy of the proxy materials, you must request one. There is no charge to you for requesting a copy. Please make your request as instructed on the reverse side on or before May 18, 2020 to facilitate timely delivery.
Shareholder Meeting Notice Tsakos Energy Navigation Limited Annual Meeting of Shareholders will be held on May 28, 2020 at 367 Syngrou
Avenue 17564 P. Faliro, Athens, Greece at 3:00 p.m. Greek Local Time. Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations. The Board of Directors recommend a vote FOR all the nominees
listed and FOR Proposals 2-5: 1. to re-elect two directors who retire by rotation 01 - Michael G. Jolliffe 02 - Nicholas F. Tommasino 2. to receive and consider the Company’s 2019 audited financial statements 3. to appoint Ernst & Young
(Hellas), Certified Auditors-Accountants S.A. (Ernst & Young (Hellas)), Athens, Greece, as auditors of the Company for the fiscal year ending December 31, 2020 and to authorize the Audit Committee of the Board of Directors to set their
remuneration 4. to approve the directors’ remuneration 5. to approve the resolution set out below: RESOLVED, to approve a reverse share split (the “Reverse Share Split”) of the 175,000,000 authorized Common Shares, $1.00 par value per
share, of Tsakos Energy Navigation Limited whereby each five (5) Common Shares will be consolidated into and become one (1) Common Share, $5.00 par value per share, subject to the payment of cash in lieu of fractional Common Shares; with such
Reverse Share Split to be effective as of the open of business on June 1, 2020. PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must go online or request a paper copy of the proxy materials to receive a proxy
card. If you wish to attend and vote at the meeting, please bring this notice with you. Here’s how to order a copy of the proxy materials and select delivery preferences: Current and future delivery requests can be submitted using the options
below. If you request an email copy, you will receive an email with a link to the current meeting materials. PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a copy of the proxy materials. — Internet
– Go to www.investorvote.com/TNP. — Phone – Call us free of charge at 1-866-641-4276. — Email – Send an email to investorvote@computershare.com with “Proxy Materials Tsakos Energy Navigation Limited” in the subject
line. Include your full name and address, plus the number located in the shaded bar on the reverse side, and state that you want a paper copy of the meeting materials. To facilitate timely delivery, requests for a paper copy of proxy materials must
be received by May 18, 2020
authority to vote FOR the election of the Board of Directors and FOR items 2-5. In his
discretion, the Proxy is authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print
new address below. Comments — Please print your comments below.
Exhibit 99.4
May 28, 2020 TSAKOS ENERGY NAVIGATION LTD Annual Meeting April 09, 2020 May 28, 2020 3:00 PM LST Tsakos Energy Navigation Limited 367 Syngrou Avenue 17564 P. Faliro Athens, Greece Return Address Line 1 Return Address Line 2 Return Address Line 3 51 MERCEDES WAY EDGEWOOD NY 11717 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 18 Investor Address Line 4 1 . .. 0 Investor Address Line 5 R1 . John Sample 1234 ANYWHERE STREET 1 ANY CITY, ON A1A 1A1 0000464153 _
Before You Vote How to Access the Proxy Materials Proxy Materials Available to VIEW or RECEIVE: 1. Notice & Proxy Statement 2. Financial Statements How to View Online: Have the information that is printed in the box marked by the arrow ? (located on the following page) and visit: www.proxyvote.com. How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: 1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*: sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrow (located on the following page) in the subject line. Requests, instructions ? and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 14, 2020 to facilitate timely delivery. How To Vote Please Choose One of the Following Voting Methods Vote In Person: If you choose to vote these shares in person at the meeting, you must request a “legal proxy.” To do R1.0.1.18 so, please follow the instructions at www.proxyvote.com or request a paper copy of the materials, which will contain the appropriate instructions. Many shareholder meetings have attendance requirements including, but not limited to, the _ 2 possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. 0000464153 Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow available and follow the instructions. Internal Use ? Only Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a voting instruction form.
The Board of Directors recommends that you vote FOR the following: 1. Election of Directors Nominees 01 Michael G. Jolliffe 02 Nicholas F. Tommasino The Board of Directors recommends you vote FOR the following proposal(s): 2 to receive and consider the Company’s 2019 audited financial statements; 3 to appoint Ernst & Young (Hellas), Certified Auditors-Accountants S.A. (Ernst & Young (Hellas)), Athens, Greece, as auditors of the Company for the fiscal year ending December 31, 2020 and to authorize the Audit Committee of the Board of Directors to set their remuneration; 4 to approve the directors’ remuneration; 5 to approve the resolution set out below: RESOLVED, to approve a reverse share split (the Reverse Share Split) of the 175,000,000 authorized Common Shares, $1.00 par value per share, of Tsakos Energy Navigation Limited whereby each five (5) Common Shares will be consolidated into and become one (1) Common Share, $5.00 par value per share, subject to the payment of cash in lieu of fractional Common Shares; with such Reverse Share Split to be effective as of the open of business on June 1, 2020. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. . 18 . 1 . 0 R1 _ 3 0000464153
Reserved for Broadridge Internal Control Information Voting Instructions THIS SPACE RESERVED FOR LANGUAGE PERTAINING TO BANKS AND BROKERS 18 . AS REQUIRED BY THE NEW YORK STOCK EXCHANGE . 1 . 0 R1 _ 4 0000464153 Broadridge Internal Use Only P99999-010 12 Job # THIS SPACE RESERVED FOR SIGNATURES IF APPLICABLE Envelope # Sequence 15 # # of # Sequence # OF# #
Exhibit 99.5
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
2019
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
TSAKOS ENERGY NAVIGATION LIMITED
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of TSAKOS ENERGY NAVIGATION LIMITED and subsidiaries (the “Company“) as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income / (loss), other comprehensive income / (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements“). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated April 14, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
We have served as the Company’s auditor since 2002.
Athens, Greece
April 14, 2020
F-3
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
TSAKOS ENERGY NAVIGATION LIMITED
Opinion on Internal Control over Financial Reporting
We have audited TSAKOS ENERGY NAVIGATION LIMITED and subsidiaries’ internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, TSAKOS ENERGY NAVIGATION LIMITED and subsidiaries (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019 based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of comprehensive income / (loss), other comprehensive income / (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and our report dated April 14, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
F-4
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece
April 14, 2020
F-5
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2019 AND 2018
(Expressed in thousands of U.S. Dollars—except share and per share data)
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 184,835 | $ | 204,763 | ||||
| Restricted cash |
12,935 | 15,763 | ||||||
| Accounts receivable, net (Note 1(f)) |
40,342 | 35,351 | ||||||
| Capitalized voyage expenses |
505 | 617 | ||||||
| Due from related parties (Note 2) |
20,113 | 20,923 | ||||||
| Advances and other |
23,282 | 18,407 | ||||||
| Vessels held for sale (Note 1(j)) |
100,277 | — | ||||||
| Inventories |
13,032 | 20,388 | ||||||
| Prepaid insurance and other |
895 | 1,073 | ||||||
| Current portion of financial instruments—Fair value (Note 14) |
798 | 217 | ||||||
|
|
|
|
|
|||||
| Total current assets |
397,014 | 317,502 | ||||||
|
|
|
|
|
|||||
| INVESTMENTS (Note 3) |
— | 1,000 | ||||||
| FINANCIAL INSTRUMENTS—FAIR VALUE, net of current portion (Note 14) |
287 | 133 | ||||||
| RIGHT OF USE ASSET UNDER OPERATING LEASES (Note 4) |
21,428 | — | ||||||
| LONG TERM RECEIVABLE (Note 4) |
13,000 | 13,000 | ||||||
| FIXED ASSETS (Note 4) |
||||||||
| Advances for vessels under construction |
61,475 | 16,161 | ||||||
| Vessels |
3,610,590 | 3,813,987 | ||||||
| Accumulated depreciation |
(977,339 | ) | (984,540 | ) | ||||
|
|
|
|
|
|||||
| Vessels’ Net Book Value |
2,633,251 | 2,829,447 | ||||||
|
|
|
|
|
|||||
| Total fixed assets |
2,694,726 | 2,845,608 | ||||||
|
|
|
|
|
|||||
| DEFERRED CHARGES, net (Note 5) |
27,648 | 27,815 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 3,154,103 | $ | 3,205,058 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Current portion of long-term debt (Note 6) |
$ | 235,513 | $ | 160,584 | ||||
| Payables |
36,611 | 37,532 | ||||||
| Due to related parties (Note 2) |
7,702 | 4,366 | ||||||
| Accrued liabilities |
50,873 | 45,765 | ||||||
| Unearned revenue |
12,067 | 6,007 | ||||||
| Current portion of obligations under operating leases (Note 4) |
7,534 | — | ||||||
| Current portion of financial instruments—Fair value (Note 14) |
3,900 | 48 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
354,200 | 254,302 | ||||||
|
|
|
|
|
|||||
| LONG-TERM DEBT, net of current portion (Note 6) |
1,298,783 | 1,435,017 | ||||||
| LONG-TERM OBLIGATIONS UNDER OPERATING LEASES (Note 4) |
13,894 | — | ||||||
| FINANCIAL INSTRUMENTS—FAIR VALUE, net of current portion (Note 14) |
14,907 | 8,962 | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Preferred Shares, $ 1.00 par value; 25,000,000 shares authorized, 2,000,000 Series C Preferred Shares, 3,424,803 Series D Preferred Shares, 4,600,000 Series E Preferred Shares, 6,000,000 Series F Preferred Shares and 2,625,000 Series G Convertible Preferred Shares issued and outstanding at December 31, 2019 and 2,000,000 Series B Preferred Shares, 2,000,000 Series C Preferred Shares, 3,424,803 Series D Preferred Shares, 4,600,000 Series E Preferred Shares and 6,000,000 Series F Preferred Shares at December 31, 2018 |
18,650 | 18,025 | ||||||
| Common shares, $ 1.00 par value; 175,000,000 shares authorized at December 31, 2019 and December 31, 2018; 95,078,607 and 87,604,645 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively |
95,079 | 87,605 | ||||||
| Additional paid-in capital |
992,020 | 996,833 | ||||||
| Accumulated other comprehensive loss |
(18,353 | ) | (8,660 | ) | ||||
| Retained earnings |
364,000 | 400,933 | ||||||
|
|
|
|
|
|||||
| Total Tsakos Energy Navigation Limited stockholders’ equity |
1,451,396 | 1,494,736 | ||||||
| Non-controlling Interest |
20,923 | 12,041 | ||||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
1,472,319 | 1,506,777 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 3,154,103 | $ | 3,205,058 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of the consolidated financial statements.
F-6
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017
(Expressed in thousands of U.S. Dollars—except share and per share data)
| 2019 | 2018 | 2017 | ||||||||||
| VOYAGE REVENUES: |
$ | 597,452 | $ | 529,879 | $ | 529,182 | ||||||
| EXPENSES: |
||||||||||||
| Voyage expenses |
125,802 | 125,350 | 113,403 | |||||||||
| Charter hire expense |
10,822 | 10,822 | 311 | |||||||||
| Vessel operating expenses |
180,233 | 181,693 | 173,864 | |||||||||
| Depreciation and amortization |
139,424 | 146,798 | 139,020 | |||||||||
| General and administrative expenses |
27,696 | 27,032 | 26,324 | |||||||||
| Loss on sale of vessels (Note 4) |
— | 364 | 3,860 | |||||||||
| Impairment charges (Note 3, 4) |
27,613 | 65,965 | 8,922 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
511,590 | 558,024 | 465,704 | |||||||||
|
|
|
|
|
|
|
|||||||
| Operating income (loss) |
85,862 | (28,145 | ) | 63,478 | ||||||||
|
|
|
|
|
|
|
|||||||
| OTHER INCOME (EXPENSES): |
||||||||||||
| Interest and finance costs, net (Note 7) |
(74,723 | ) | (76,809 | ) | (56,839 | ) | ||||||
| Interest income |
3,694 | 2,507 | 1,082 | |||||||||
| Other, net |
(825 | ) | 1,405 | 1,464 | ||||||||
|
|
|
|
|
|
|
|||||||
| Total other expenses, net |
(71,854 | ) | (72,897 | ) | (54,293 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Net income (loss) |
14,008 | (101,042 | ) | 9,185 | ||||||||
| Less: Net loss (income) attributable to the non-controlling interest |
1,118 | 1,839 | (1,573 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Net income (loss) attributable to Tsakos Energy Navigation Limited |
$ | 15,126 | $ | (99,203 | ) | $ | 7,612 | |||||
|
|
|
|
|
|
|
|||||||
| Effect of preferred dividends (Note 10) |
(40,400 | ) | (33,763 | ) | (23,776 | ) | ||||||
| Deemed dividend on Series B Preferred Shares (Note 10) |
(2,750 | ) | — | — | ||||||||
| Net loss attributable to common stockholders of Tsakos Energy Navigation Limited |
(28,024 | ) | (132,966 | ) | (16,164 | ) | ||||||
| Loss per share, basic and diluted attributable to Tsakos Energy Navigation Limited common stockholders |
$ | (0.32 | ) | $ | (1.53 | ) | $ | (0.19 | ) | |||
|
|
|
|
|
|
|
|||||||
| Weighted average number of shares, basic and diluted |
88,757,923 | 87,111,636 | 84,713,572 | |||||||||
|
|
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017
(Expressed in thousands of U.S. Dollars)
| 2019 | 2018 | 2017 | ||||||||||
| Net income (loss) |
$ | 14,008 | $ | (101,042 | ) | $ | 9,185 | |||||
| Other comprehensive income (loss) |
||||||||||||
| Unrealized losses from hedging financial instruments |
||||||||||||
| Unrealized loss on interest rate swaps, net |
(9,693 | ) | (3,355 | ) | (992 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Comprehensive income (loss) |
4,315 | (104,397 | ) | 8,193 | ||||||||
|
|
|
|
|
|
|
|||||||
| Less: comprehensive loss (income) attributable to the non-controlling interest |
1,118 | 1,839 | (1,573 | ) | ||||||||
|
|
|
|
|
|
|
|||||||
| Comprehensive income (loss) attributable to Tsakos Energy Navigation Limited |
$ | 5,433 | $ | (102,558 | ) | $ | 6,620 | |||||
|
|
|
|
|
|
|
|||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-8
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017
(Expressed in thousands of U.S. Dollars—except for share and per share data)
| Preferred Shares |
Common Shares |
Additional Paid-in Capital |
Treasury stock | Retained Earnings |
Accumulated Other Comprehensive Loss |
Tsakos Energy Navigation Limited |
Non-controlling Interest |
Total Stockholders’ Equity |
||||||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||||||
| BALANCE December 31, 2016 |
$ | 7,400 | $ | 87,339 | $ | 752,001 | 3,617,786 | $ | (20,173 | ) | $ | 582,889 | $ | (4,313 | ) | $ | 1,405,143 | $ | 12,307 | $ | 1,417,450 | |||||||||||||||||||
| Net income |
7,612 | 7,612 | 1,573 | 9,185 | ||||||||||||||||||||||||||||||||||||
| —Issuance of 9.25% Series E Preferred Shares |
4,600 | 105,896 | — | 110,496 | 110,496 | |||||||||||||||||||||||||||||||||||
| —Sale of Series D Preferred Shares |
25 | 508 | — | 533 | 533 | |||||||||||||||||||||||||||||||||||
| —Sale of Common Shares |
(407 | ) | (2,488,717 | ) | 13,848 | (2,588 | ) | 10,853 | 10,853 | |||||||||||||||||||||||||||||||
| —Shares granted to non-executive directors |
(110,000 | ) | 589 | (102 | ) | 487 | 487 | |||||||||||||||||||||||||||||||||
| —Cash dividends paid ($0.05 per common share) |
(17,066 | ) | (17,066 | ) | (17,066 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series B Preferred Shares |
(4,000 | ) | (4,000 | ) | (4,000 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series C Preferred Shares |
(4,438 | ) | (4,438 | ) | (4,438 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series D Preferred Shares |
(7,485 | ) | (7,485 | ) | (7,485 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series E Preferred Shares |
(6,885 | ) | (6,885 | ) | (6,885 | ) | ||||||||||||||||||||||||||||||||||
| —Other comprehensive loss |
— | (992 | ) | (992 | ) | (992 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| BALANCE December 31, 2017 |
$ | 12,025 | $ | 87,339 | $ | 857,998 | 1,019,069 | $ | (5,736 | ) | $ | 547,937 | $ | (5,305 | ) | $ | 1,494,258 | $ | 13,880 | $ | 1,508,138 | |||||||||||||||||||
| Adoption of new accounting standard |
(1,311 | ) | (1,311 | ) | (1,311 | ) | ||||||||||||||||||||||||||||||||||
| Net Loss |
(99,203 | ) | (99,203 | ) | (1,839 | ) | (101,042 | ) | ||||||||||||||||||||||||||||||||
| —Issuance of 9.50% Series F Preferred Shares |
6,000 | 138,280 | — | 144,280 | 144,280 | |||||||||||||||||||||||||||||||||||
| —Sale of Common Shares |
266 | 555 | (1,019,069 | ) | 5,736 | (2,046 | ) | 4,511 | 4,511 | |||||||||||||||||||||||||||||||
| —Cash dividends paid ($0.05 per common share) |
(13,096 | ) | (13,096 | ) | (13,096 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series B Preferred Shares |
(4,000 | ) | (4,000 | ) | (4,000 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series C Preferred Shares |
(4,438 | ) | (4,438 | ) | (4,438 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series D Preferred Shares |
(7,492 | ) | (7,492 | ) | (7,492 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series E Preferred Shares |
(10,637 | ) | (10,637 | ) | (10,637 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series F Preferred Shares |
(4,781 | ) | (4,781 | ) | (4,781 | ) | ||||||||||||||||||||||||||||||||||
| —Other comprehensive loss |
— | (3,355 | ) | (3,355 | ) | (3,355 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| BALANCE December 31, 2018 |
$ | 18,025 | $ | 87,605 | $ | 996,833 | — | $ | — | $ | 400,933 | $ | (8,660 | ) | $ | 1,494,736 | $ | 12,041 | $ | 1,506,777 | ||||||||||||||||||||
| Net income (loss) |
15,126 | 15,126 | (1,118 | ) | 14,008 | |||||||||||||||||||||||||||||||||||
| —Issuance of Series G Convertible Preferred Shares |
3,500 | 30,484 | — | 33,984 | 33,984 | |||||||||||||||||||||||||||||||||||
| —Conversion of Series G Convertible Preferred Shares |
(875 | ) | 2,917 | (2,042 | ) | — | — | — | ||||||||||||||||||||||||||||||||
| —Sale of Common Shares |
4,557 | 11,995 | — | 16,552 | 16,552 | |||||||||||||||||||||||||||||||||||
| —Capital contribution from non-controlling interest |
— | — | 10,000 | 10,000 | ||||||||||||||||||||||||||||||||||||
| —Cash dividends paid ($0.05 per common share) |
(8,907 | ) | (8,907 | ) | (8,907 | ) | ||||||||||||||||||||||||||||||||||
| —Redemption of Series B Preferred Shares paid |
(2,000 | ) | (45,250 | ) | (2,750 | ) | (50,000 | ) | (50,000 | ) | ||||||||||||||||||||||||||||||
| —Dividends paid on Series B Preferred Shares |
(3,000 | ) | (3,000 | ) | (3,000 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series C Preferred Shares |
(4,438 | ) | (4,438 | ) | (4,438 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series D Preferred Shares |
(7,492 | ) | (7,492 | ) | (7,492 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series E Preferred Shares |
(10,639 | ) | (10,639 | ) | (10,639 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series F Preferred Shares |
(14,250 | ) | (14,250 | ) | (14,250 | ) | ||||||||||||||||||||||||||||||||||
| —Dividends paid on Series G Convertible Preferred Shares |
(583 | ) | (583 | ) | (583 | ) | ||||||||||||||||||||||||||||||||||
| —Other comprehensive loss |
— | (9,693 | ) | (9,693 | ) | (9,693 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| BALANCE December 31, 2019 |
$ | 18,650 | $ | 95,079 | $ | 992,020 | — | $ | — | $ | 364,000 | $ | (18,353 | ) | $ | 1,451,396 | $ | 20,923 | $ | 1,472,319 | ||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-9
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017
(Expressed in thousands of U.S. Dollars)
| 2019 | 2018 | 2017 | ||||||||||
| Cash Flows from Operating Activities: |
||||||||||||
| Net income (loss) |
$ | 14,008 | $ | (101,042 | ) | $ | 9,185 | |||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities |
||||||||||||
| Depreciation |
128,783 | 137,023 | 131,873 | |||||||||
| Amortization of deferred dry-docking costs |
10,641 | 9,775 | 7,147 | |||||||||
| Amortization of loan costs |
4,822 | 3,992 | 4,152 | |||||||||
| Stock compensation expense |
— | — | 487 | |||||||||
| Change in fair value of derivative instruments |
(820 | ) | 10,295 | (3,692 | ) | |||||||
| Loss on sale of vessels |
— | 364 | 3,860 | |||||||||
| Impairment charges |
27,613 | 65,965 | 8,922 | |||||||||
| Payments for dry-docking |
(12,871 | ) | (14,869 | ) | (12,532 | ) | ||||||
| (Increase) Decrease in: |
||||||||||||
| Receivables, net |
(9,056 | ) | (15,995 | ) | 8,573 | |||||||
| Inventories |
7,356 | (4,095 | ) | 2,463 | ||||||||
| Prepaid insurance and other |
178 | 504 | 265 | |||||||||
| Capitalized voyage expenses |
112 | 20 | — | |||||||||
| Increase (Decrease) in: |
||||||||||||
| Payables |
2,415 | (12,460 | ) | (4,045 | ) | |||||||
| Accrued liabilities |
5,108 | 2,072 | 8,986 | |||||||||
| Unearned revenue |
6,060 | (7,604 | ) | 5,183 | ||||||||
|
|
|
|
|
|
|
|||||||
| Net Cash provided by Operating Activities |
184,349 | 73,945 | 170,827 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash Flows from Investing Activities: |
||||||||||||
| Advances for vessels under construction and acquisitions |
(55,988 | ) | (16,161 | ) | — | |||||||
| Vessel acquisitions and/or improvements |
(46,217 | ) | (1,154 | ) | (293,347 | ) | ||||||
| Proceeds from sale of vessels |
— | 17,136 | 51,550 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Cash used in Investing Activities |
(102,205 | ) | (179 | ) | (241,797 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Cash Flows from Financing Activities: |
||||||||||||
| Proceeds from long-term debt |
494,368 | 352,872 | 397,092 | |||||||||
| Financing costs |
(3,556 | ) | (4,300 | ) | (3,177 | ) | ||||||
| Payments of long-term debt |
(556,939 | ) | (508,832 | ) | (400,053 | ) | ||||||
| Sale of treasury stock, net |
— | 4,511 | 10,853 | |||||||||
| Redemption of Series B preferred shares |
(50,000 | ) | — | — | ||||||||
| Proceeds from stock issuance program, net |
16,552 | — | — | |||||||||
| Proceeds from preferred stock issuance, net |
33,984 | 144,280 | 111,029 | |||||||||
| Cash dividends |
(49,309 | ) | (44,444 | ) | (39,874 | ) | ||||||
| Capital contribution from non-controlling interest to subsidiary |
10,000 | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Cash (used in) provided by Financing Activities |
(104,900 | ) | (55,913 | ) | 75,870 | |||||||
|
|
|
|
|
|
|
|||||||
| Net (decrease) increase in cash and cash equivalents and restricted cash |
(22,756 | ) | 17,853 | 4,900 | ||||||||
| Cash and cash equivalents and restricted cash at beginning of period |
220,526 | 202,673 | 197,773 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents and restricted cash at end of period |
$ | 197,770 | $ | 220,526 | $ | 202,673 | ||||||
|
|
|
|
|
|
|
|||||||
| Interest paid |
||||||||||||
| Cash paid for interest, net of amounts capitalized |
$ | 70,755 | $ | 67,922 | $ | 56,580 | ||||||
| Reconciliation of cash and cash equivalents and restricted cash at end of period: |
||||||||||||
| Current Assets: |
||||||||||||
| Cash and cash equivalents |
184,835 | 204,763 | 189,763 | |||||||||
| Restricted cash |
12,935 | 15,763 | 12,910 | |||||||||
| Total Cash and cash equivalents and restricted cash |
197,770 | 220,526 | 202,673 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-10
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| 1. | Significant Accounting Policies |
| (a) | Basis of presentation and description of business: The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of Tsakos Energy Navigation Limited (the “Holding Company”), and its wholly-owned and majority-owned subsidiaries (collectively, the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. |
The Company owns and operates a fleet of crude oil and product carriers including two vessels chartered-in and two liquified natural gas (“LNG”) carriers providing worldwide marine transportation services under long, medium or short-term charters.
| (b) | Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and expenses, reported in the consolidated financial statements and the accompanying notes. Although actual results could differ from those estimates, management does not believe that such differences would be material. |
| (c) | Other Comprehensive Income (loss): The statement of other comprehensive income (loss), presents the change in equity (net assets) during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by shareholders and distributions to shareholders. Reclassification adjustments are presented out of accumulated other comprehensive loss on the face of the statement in which the components of other comprehensive income (loss) are presented or in the notes to the consolidated financial statements. The Company follows the provisions of ASC 220 “Comprehensive Income”, and presents items of net income, items of other comprehensive income (“OCI”) and total comprehensive income in two separate and consecutive statements. |
| (d) | Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar because the Company’s vessels operate in international shipping markets in which the U.S. Dollar is utilized to transact most business. The accounting books of the Company are also maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated into U.S. Dollars at the year-end exchange rates. Resulting gains or losses are reflected within Vessel operating expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss). |
| (e) | Cash, Cash Equivalents and Restricted Cash: The Company classifies highly liquid investments such as time deposits and certificates of deposit and their equivalents with original maturities of three months or less as cash and cash equivalents. Cash deposits with certain banks that may only be used for special purposes (including loan repayments) are classified as Restricted cash. |
| (f) | Accounts Receivable, Net: Accounts receivable, net at each balance sheet date includes estimated recoveries from charterers for hire, freight and demurrage billings and revenue earned but not yet billed, net of an allowance for doubtful accounts (nil as of December 31, 2019 and 2018). Accounts receivable are recorded when the right to consideration becomes unconditional. The Company’s management at each balance sheet date reviews all outstanding invoices and provides allowance for receivables deemed uncollectible primarily based on the aging of such balances and any amounts in dispute. During 2019, the Company has written off $3,218 ($nil during 2018) of accounts receivable, deemed uncollectible. |
F-11
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| (g) | Inventories: Inventories consist of bunkers, lubricants, victualling and stores and are stated at the lower of cost or net realizable value. The cost is determined primarily by the first-in, first-out method. Net realizable value is defined as estimated selling prices in the ordinary course of business, disposal and transportation. When evidence exists that the net realizable value of inventory is lower than its cost, the difference is recognized as a loss in earnings in the period in which it occurs. |
| (h) | Fixed Assets: Fixed assets consist of vessels. Vessels are stated at cost, less accumulated depreciation. The cost of vessels includes the contract price and pre-delivery costs incurred during the construction and delivery of newbuildings, including capitalized interest, and expenses incurred upon acquisition of second-hand vessels. Subsequent expenditures for conversions and major improvements are capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise they are charged to expense as incurred. Expenditures for routine repairs and maintenance are expensed as incurred. |
Depreciation is provided on the straight-line method based on the estimated remaining economic useful lives of the vessels, less an estimated residual value based on a scrap price.
| (i) | Impairment of Fixed Assets: The Company reviews vessels for impairment whenever events or changes in circumstances indicate that the carrying amount of a vessel may not be recoverable. When such indicators are present, a vessel to be held and used is tested for recoverability by comparing the estimate of future undiscounted net operating cash flows expected to be generated by the use of the vessel over its remaining useful life and its eventual disposition to its carrying amount. Net operating cash flows are determined by applying various assumptions regarding the use or probability of sale of each vessel, future revenues net of commissions, operating expenses, scheduled dry-dockings, expected off-hire and scrap values, and taking into account historical revenue data and published forecasts on future world economic growth and inflation. Should the carrying value of the vessel exceed its estimated future undiscounted net operating cash flows, impairment is measured based on the excess of the carrying amount over the fair market value of the asset. The Company determines the fair value of its vessels based on management estimates and assumptions and by making use of available market data and taking into consideration third party valuations. The review of the carrying amounts in connection with the estimated recoverable amount for certain of the Company’s vessels and an advance for a vessel under construction as of December 31, 2019, 2018 and 2017, indicated an impairment charge of $18,661, $65,965 and $8,922, respectively (Note 4). |
In addition, the Company reviews and tests its right-of use-assets for impairment at each reporting date by comparing their carrying amount with the estimated future undiscounted net operating cash flows expected to be generated by the use of the vessels over the remaining lease term (Note 4). The review of the carrying amounts in connection with the estimated recoverable amount for the Company’s right of use assets as of December 31, 2019 indicated no impairment charge.
| (j) | Reporting Assets held for sale: It is the Company’s policy to dispose of vessels when suitable opportunities occur and not necessarily to keep them until the end of their useful life. Long-lived assets are classified as held for sale when all applicable criteria enumerated under ASC 360 “Property, Plant, and Equipment” are met and are measured at the lower of their carrying amount or fair value less cost to sell. These assets are not depreciated once they meet the criteria to be held for sale. An impairment charge for an asset held for sale is recognized when its fair value less cost to sell is lower that its carrying value at the date it meets the held for sale criteria and upon subsequent measurement. At December 31, 2019, the Company considered that the suezmax tankers Archangel, Alaska, Silia T and the aframax tanker Izumo Princess met the criteria to be classified as held for sale, all expected to be sold within a year. An impairment charge of $7,952 was recognized in 2019. At December 31, 2018, there were no vessels held for sale. |
F-12
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| (k) | Accounting for Special Survey and Dry-docking Costs: The Company follows the deferral method of accounting for dry-docking and special survey costs whereby actual costs incurred are reported in Deferred Charges and are amortized on a straight-line basis over the period through the date the next dry-docking is scheduled to become due (approximately every five years during the first fifteen years of vessels’ life and every two and a half years within the remaining useful life of the vessels). Costs relating to routine repairs and maintenance are expensed as incurred. The unamortized portion of special survey and dry-docking costs for a vessel that is sold is included as part of the carrying amount of the vessel in determining the gain or loss on sale of the vessel. |
| (l) | Loan Costs: Costs incurred for obtaining new loans or refinancing of existing loans, upon application of certain criteria, are capitalized and amortized over the term of the respective loan, using the effective interest rate method. Any unamortized balance of costs relating to loans repaid or refinanced as debt extinguishments is expensed in the period the repayment or extinguishment is made. Deferred financing costs, net of accumulated amortization, are presented as a reduction of long-term debt (Note 6). |
| (m) | Accounting for Leases: The Company adopted Accounting Standards Update 2016-02, Leases (or ASU 2016-02) and ASU No. 2018-11, Leases (ASC 842)—Targeted Improvements, on January 1, 2019, using the optional transition method. In connection with the adoption of ASC 842, the Company elected the package of practical expedients that allows companies not to reassess whether any expired or expiring contracts are or contain leases, lease classification for any expired or expiring leases and initial direct costs for any expired or expiring leases. Following the adoption and based on the Company’s analysis, there was no cumulative effect adjustment to the opening balance of retained earnings. The adoption of ASC 842 resulted in a change in the accounting method for the lease portion of the daily charter hire for the Company’s chartered-in vessels accounted for as operating leases with firm periods of greater than one year. |
Sale and Leaseback Transactions: The Company has entered into two sale and leaseback transactions accounted for as operating leases (Note 4). According to the provisions of ASC 842-20-30-1, at the commencement date, a lessee shall measure both of the following: a) The lease liability at the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement and b) The right-of-use asset, which shall consist of all of the following: i) The amount of the initial measurement of the lease liability, ii) Any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and iii) Any initial direct costs incurred by the lessee.
| (n) | Revenue from Contracts with Customers: On January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers, using the modified retrospective method only to contracts that were not completed at January 1, 2018. The prior period comparative information has not been restated and continues to be reported under the accounting guidance in effect for that period. Its adoption mainly changed the method of recognizing revenue over time for voyage charters from the discharge-to-discharge method to the loading-to-discharge method. The adoption of the new accounting standard resulted in a cumulative adjustment of $1,311 in the opening balance of the retained earnings for the fiscal year of 2018. The Company has decided to apply the optional exemption not to disclose the value of the undelivered performance obligations for contracts with an original expected length of one year or less. |
Accounting for Revenue and Expenses: Voyage revenues are generated from voyage charter agreements and contracts of affreightment, bareboat charter or time charter agreements (including profit sharing clauses).
F-13
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
Voyage charters and contracts of affreightment: Voyage charters, where a contract is made in the spot market for the use of a vessel for a specific voyage in return of payment of an agreed upon freight rate per ton of cargo. Contracts of affreightment are contracts for multiple voyage charter employments. Revenues from voyage charters in the spot market or under contracts of affreightment are recognized ratably from commencement of cargo loading to completion of discharge of the current cargo. Voyage charter payments are due upon discharge of the cargo. Revenues from voyage charters and contracts of affreightment amounted to $215,197, $184,779 and $196,590 for the years ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019 and 2018, receivables from voyage charters and contracts of affreightment amounted to $26,222 and $25,206 respectively, the majority of them collected upon completion of the voyage.
Demurrage revenue, which is included in voyage revenues, represents charterers’ reimbursement for any potential delays exceeding the allowed lay time as per charter party agreement and is recognized as the performance obligation is satisfied.
Time charters and Bareboat revenues: For time charters and bareboat arrangements, a contract exists, and the vessel is delivered (commencement date) to the charterer, for a fixed period of time, at rates that are determined in the charter agreement and the relevant voyage expenses burden the charterer (i.e. port dues, canal tolls, pilotages and fuel consumption). The charterer has the right, upon delivery of the vessel, to control the use of the vessel as it has the enforceable right to: (i) decide the (re)delivery time of the vessel; (ii) arrange the ports from which the vessel shall pass; (iii) give directions to the master of the vessel regarding the vessel’s operations (i.e. speed, route, bunkers purchases, etc.); (iv) sub-charter the vessel and (v) consume any income deriving from the vessel’s charter. Thus, time and bareboat charter agreements are accounted for as operating leases, ratably on a straight line over the duration of the charter agreement and therefore, fall under the scope of ASC 842 (Note 1 (m)).
The charterer may charter the vessel with or without the owner’s crew and other operating services (time and bareboat charter, respectively). Thus, the agreed day rates (hire rates) in the case of time charter agreements also include compensation for part of the agreed crew and other operating services provided by the owner (non-lease components). The Company has elected to account for the lease and non-lease components of time charter agreements as a combined component in its consolidated financial statements, having taken into account that the non-lease component would be accounted for ratably on a straight-line basis over the duration of the time charter in accordance with ASC 606 and that the lease component is considered as the predominant component. In this respect, the Company qualitatively assessed that more value is ascribed to the vessel rather than to the services provided under the time charter agreements.
Profit sharing contracts are accounted for as variable consideration and included in the transaction price to the extent that variable amounts earned beyond an agreed fixed minimum hire are determinable at the reporting date and when there is no uncertainty associated with the variable consideration. Profit-sharing revenues are calculated at an agreed percentage of the excess of the charter’s average daily income over an agreed amount.
Revenue from time charter hire arrangements with an escalation clause is recognized on a straight-line basis over the charter term unless another systematic and rational basis is more representative of the time pattern in which the vessel is employed. Revenues from time and bareboat charter hire arrangements amounted to $382,255, $345,100 and $332,592 for the years ended December 31, 2019, 2018 and 2017 respectively.
Revenues generated from time charter and bareboat arrangements are usually collected in advance.
F-14
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
Voyage related and vessel operating costs: Voyage expenses primarily consist of port charges, canal dues and bunker (fuel) costs relating to spot charters or contract of affreightment. These voyage expenses are borne by the Company unless the vessel is on time-charter, in which case they are borne by the charterer. Commissions (i.e. brokerage and address) are included in voyage expenses under all types of employment. All voyage expenses are expensed as incurred, apart from bunker expenses which consist part of the contract fulfillment costs and are recognized as a deferred contract cost and amortized over the voyage period when the relevant criteria under ASC 340-40 are met. Unamortized deferred contract costs are included in the consolidated balance sheet under Capitalized voyage expenses. Commissions are expensed as incurred. Vessel operating costs include crew costs, insurances, repairs and maintenance, spares, stores, lubricants, quality and safety costs and other expenses such as tonnage tax, registration fees and communication costs, as well as foreign currency gains or losses. All vessel operating expenses are expensed as incurred. Under a bareboat charter, the charterer assumes responsibility for all voyage and vessel operating expenses and risk of operation. Upon adoption of ASC 842, the Company made an accounting policy election to not recognize contract fulfillment costs for time charters under ASC 340-40.
Unearned revenue: Unearned revenue represents cash received prior to the year-end for which related service has not been provided primarily relating to charter hire paid in advance to be earned over the applicable charter period and to revenue resulting from charter agreements with varying rates.
Customers’ concentration: Voyage revenues for 2019, 2018 and 2017 included revenues derived from significant charterers as follows (in percentages of total voyage revenues):
| Charterer |
2019 | 2018 | 2017 | |||
| A | 13% | 15% | 14% | |||
| B | 11% | 10% | 11% | |||
| C | 10% | 10% | 10% |
| (o) | Segment Reporting: The Company does not evaluate the operating results by type of vessel or by type of charter or by type of cargo. Although operating results may be identified by type of vessel, management, including the chief operating decision maker, reviews operating results primarily by revenue per day and operating results of the fleet. The Company operates two LNG carriers which meet the quantitative thresholds used to determine reportable segments. The chief operating decision maker does not review the operating results of these vessels separately or make any decisions about resources to be allocated to these vessels or assess their performance separately; therefore, the LNG carriers do not constitute a separate reportable segment. The Company’s vessels operate on many trade routes throughout the world and, therefore, the provision of geographic information is considered impracticable by management. For the above reasons, the Company has determined that it operates in one reportable segment, the worldwide maritime transportation of liquid energy related products. |
| (p) | Derivative Financial Instruments: The Company regularly enters into interest rate swap contracts to manage its exposure to fluctuations of interest rates associated with its specific borrowings. Also, the Company enters into bunker swap contracts and put or call options to manage its exposure to fluctuations of bunker prices associated with the consumption of bunkers by its vessels. Interest rate and bunker price differentials paid or received under the swap agreements are recognized as part of Interest and finance costs, net. On the inception of a put or call option on bunkers an asset or liability is recognized. The subsequent changes in its fair value and realized payments or receipts upon exercise of the options are recognized in the consolidated statement of comprehensive income (loss) as part of the interest and finance costs, net. All derivatives are recognized in the consolidated financial statements at their fair value. On the inception date |
F-15
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| of the derivative contract, the Company evaluates the derivative as an accounting hedge of the variability of cash flow to be paid of a forecasted transaction (“cash flow” hedge). Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in other comprehensive income (loss) until earnings are affected by the forecasted transaction. Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in earnings in the period in which those fair value changes occur. Realized gains or losses on early termination of undesignated derivative instruments are also classified in earnings in the period of termination of the respective derivative instrument. |
The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as cash flow hedges of the variable cash flows of a forecasted transaction to a specific forecasted transaction. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. In accordance with ASC 815 “Derivatives and Hedging,” the Company may prospectively discontinue the hedge accounting for an existing hedge if the applicable criteria are no longer met, the derivative instrument expires, is sold, terminated or exercised or if the Company removes the designation of the respective cash flow hedge. In those circumstances, the net gain or loss remains in accumulated other comprehensive loss and is reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings, unless the forecasted transaction is no longer probable in which case the net gain or loss is reclassified into earnings immediately.
On January 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815). Targeted Improvements to Accounting for Hedging Activities (ASU No. 2017-12), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the consolidated financial statements, and ASU 2018-16, “Derivatives and Hedging (Topic 815)—Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes”, which permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Fed Funds Effective Rate and the SIFMA Municipal Swap Rate, as further amended through ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments”. The amendments have been adopted on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption. The adoption of this new accounting guidance had no effect on the Company’s consolidated financial statements.
| (q) | Fair Value Measurements: The Company follows the provisions of ASC 820, “Fair Value Measurements and Disclosures” which defines, and provides guidance as to the measurement of fair value. ASC 820 applies when assets or liabilities in the consolidated financial statements are to be measured at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (Note 14). |
| (r) | Going concern: The Company evaluates whether there is substantial doubt about its ability to continue as a going concern by applying the provisions of ASU No. 2014-15. In more detail, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date the consolidated financial statements are issued. As part of |
F-16
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| such evaluation, the Company did not identify any conditions that raise substantial doubt about the entity’s ability to continue as a going concern within one year from the date the consolidated financial statements are issued. As a result, there was no impact in the Company’s results of operations, financial position, cash flows or disclosures. |
| (s) | Treasury stock: Treasury stock is stock that is repurchased by the issuing entity, reducing the number of outstanding shares in the open market. When shares are repurchased, they may either be cancelled or held for reissue. If not cancelled, such shares are referred to as treasury stock. Treasury stock is essentially the same as unissued capital and reduces ordinary share capital. The cost of the acquired shares should generally be shown as a deduction from stockholders’ equity. Dividends on such shares held in the entity’s treasury should not be reflected as income and not shown as a reduction in equity. Gains and losses on sales of treasury stock should be accounted for as adjustments to stockholders’ equity and not as part of income. Depending on whether the shares are acquired for reissuance or retirement, treasury stock is accounted for under the cost method or the constructive retirement method. The cost method is also used, when reporting entity management has not made decisions as to whether the reacquired shares will be retired, held indefinitely or reissued. The Company elected for the repurchase of its common shares to be accounted for under the cost method. Under this method, the treasury stock account is charged for the aggregate cost of shares reacquired. |
| (t) | Accounting for transactions under common control: Common control transaction is any transfer of net assets or exchange of equity interests between entities or businesses that are under common control by an ultimate parent or controlling shareholder before and after the transaction. Common control transactions may have characteristics that are similar to business combinations but do not meet the requirements to be accounted for as business combinations because, from the perspective of the ultimate parent or controlling shareholder, there has not been a change in control over the acquiree. Due to the fact common control transactions do not result in a change in control at the ultimate parent or controlling shareholder level, the Company does not account for such transactions at fair value. Rather, common control transactions are accounted for at the carrying amount of the net assets or equity interests transferred. |
| (u) | Net Income (Loss) Per Share Attributable to Common Stockholders: The Company computes net income (loss) per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common shares and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. |
The Company’s Series G Convertible Preferred Shares (Note 8) are participating securities. Any remaining earnings would be distributed to the holders of common shares and the holders of the Series G Convertible Preferred Shares on a pro-rata basis assuming conversion of all Series G Convertible Preferred Shares into common shares. This participating security does not contractually require the holders of such shares to participate in the Company’s losses. As such, net losses for the periods presented were not allocated to the Company’s participating security.
New Accounting Pronouncements—Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13—Financial Instruments—Credit Losses (Topic 326) which amends the guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. The standard is effective for interim and annual periods beginning after December 15, 2019, although
F-17
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
early adoption is permitted. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses”. The amendments clarify that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments”, the amendments of which clarify the modification of accounting for available for sale debt securities excluding applicable accrued interest, which must be individually assessed for credit losses when fair value is less than the amortized cost basis. In May 2019, the FASB issued ASU 2019-05, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 Financial Instruments”, the amendments of which provide entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments—Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement—Overall, and 825-10. The effective date and transition requirements for the amendments in these Updates are the same as the effective dates and transition requirements in Update 2016-13, as amended by these Updates. The adoption of the new accounting guidance will not have a material impact on the Company’s consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820)—Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”, which improves the effectiveness of fair value measurement disclosures. In particular, the amendments in this Update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments in the Update apply to all entities that are required under existing U.S. GAAP to make disclosures about recurring and non-recurring fair value measurements. ASU 2018-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)”, which is intended to provide temporary optional expedients and exceptions to U.S. GAAP guidance on contracts, hedge accounting and other transactions affected by the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This ASU is effective for all entities beginning on March 12, 2020 through December 31, 2020. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.
F-18
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| 2. | Transactions with Related Parties |
| (a) | Tsakos Energy Management Limited (the “Management Company”): The Holding Company has a Management Agreement (“Management Agreement”) with the Management Company, a Liberian corporation, to provide overall executive and commercial management of its affairs for a monthly fee, which may be adjusted per the Management Agreement of March 8, 2007, effective from January 1, 2008, at the beginning of each year, in accordance with the terms of the Management Agreement, if both parties agree. In 2019, 2018 and 2017, the monthly fees for operating conventional vessels were $27.5 and $20.4 for vessels chartered in or chartered out on a bare-boat basis or for vessels under construction, $35.0 for the DP2 shuttle tankers, while the monthly fees for LNG carriers amounted to $36.9 for both 2019 and 2018 and $36.3 for 2017. From the above fees, fees are also paid to third-party managers for the LNG carriers, Maria Energy and Neo Energy, the suezmax Eurochampion 2004, the aframaxes Maria Princess and Sapporo Princess, the VLCCs Ulysses, Hercules I and the VLCC Millennium until April 11, 2018, the date of vessel’s sale. The Management Company, for services rendered, charged $20,147, $20,169 and $19,480 for 2019, 2018 and 2017, respectively. Management fees for vessels are included in the General and Administrative Expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss). |
In addition to the Management fee, the Management Agreement provides for an incentive award to the Management Company, which is at the absolute discretion of the Holding Company’s Board of Directors. In 2019, 2018 and 2017, an award of $500, $200 and $575, respectively, was granted to the Management Company and is included in the General and Administrative expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss). In addition, special awards of $750 and $575 were paid to the Management Company in relation to capital raising offerings in 2018 and 2017, respectively. These awards relating to offerings have been included as a deduction of additional paid-in capital in the accompanying consolidated financial statements.
The Holding Company and the Management Company have certain officers and directors in common. The President, who is also the Chief Executive Officer and a Director of the Holding Company, is also the sole stockholder of the Management Company. The Management Company may unilaterally terminate its Management Agreement with the Holding Company at any time upon one year’s notice. In addition, if even one director is elected to the Holding Company without the recommendation of the existing Board of Directors, the Holding Company would be obligated to pay the Management Company an amount calculated in accordance with the terms of the Management Agreement. Under the terms of the Management Agreement between the Holding Company and the Management Company, the Holding Company may terminate the Management Agreement only under specific circumstances, without the prior approval of the Holding Company’s Board of Directors.
Estimated future management fees payable over the next ten years under the Management Agreement, exclusive of any incentive awards and based on existing vessels and known vessels scheduled for future delivery as at December 31, 2019, are $21,271 for 2020, $21,420 for years 2021 and 2022, $20,934 for each of the years 2023 and 2024, and $102,213 from 2025 to 2029.
Also, under the terms of the Management Agreement, the Management Company provides supervisory services for the construction of new vessels for a monthly fee of $20.4 in 2019, 2018 and 2017. These fees in total amounted to $850, $245 and $590 for 2019, 2018 and 2017, respectively, and are either accounted for as part of construction costs for delivered vessels or are included in Advances for vessels under construction.
At December 31, 2019, the amount due to the Management Company was $197 ($114 at December 31, 2018).
F-19
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| (b) | Tsakos Columbia Shipmanagement S.A. (“TCM”): The Management Company appointed TCM to provide technical management to the Company’s vessels from July 1, 2010. TCM is owned jointly and in equal part by related party interests and by a private German Group. TCM, with the consent of the Holding Company, may subcontract all or part of the technical management of any vessel to an alternative unrelated technical manager. |
Effective July 1, 2010, the Management Company, at its own expense, pays technical management fees to TCM, and the Company bears and pays directly to TCM most of its operating expenses, including repairs and maintenance, provisioning and crewing of the Company’s vessels, as well as certain charges which are capitalized or deferred, including reimbursement of the costs of TCM personnel sent overseas to supervise repairs and perform inspections on the Company’s vessels. TCM for services rendered charged $2,038, $2,389 and $1,518 for 2019, 2018 and 2017, respectively.
At December 31, 2019, the amount due from TCM was $20,113 ($20,923 at December 31, 2018), relating to vessel operating expenses to be incurred in the following month.
TCM has a 25% share in a manning agency, located in the Philippines, named TCM Tsakos Maritime Philippines (TMPI), which provides crew to certain of the Company’s vessels. The Company has no control or ownership directly in TCM Tsakos Maritime Philippines, nor had any direct transactions to date with the agency.
| (c) | Tsakos Shipping and Trading S.A. (“Tsakos Shipping”): Tsakos Shipping provides chartering services for the Company’s vessels by communicating with third party brokers to solicit research and propose charters. For this service, the Company pays Tsakos Shipping a chartering commission of approximately 1.25% on all freights, hires and demurrages. Such commissions are included in Voyage expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss). Tsakos Shipping also provides sale and purchase of vessels brokerage service. In 2019 there were no such sale and purchase charges. In 2018, the VLCC tanker Millennium was sold and for this service, Tsakos Shipping charged a brokerage commission of $0.1 million, which was 0.5% of the sale price of the vessel. Tsakos Shipping may also charge a fee of $200 (or such other sum as may be agreed) on delivery of each newbuilding vessel in payment for the cost of design and supervision of the newbuilding by Tsakos Shipping. In 2019 and 2018, no such fee was charged. In 2017, $3.1 million in aggregate was charged for supervision fees on fifteen vessels which were delivered between May 2016 and October 2017. All commissions are paid in the ordinary course of the Company’s business and at terms standard to industry practice. |
Certain members of the Tsakos family are involved in the decision-making processes of Tsakos Shipping and of the Management Company and are also shareholders of the Holding Company.
Tsakos Shipping for services rendered charged $7,405, $6,580 and $6,532 for 2019, 2018 and 2017, respectively. At December 31, 2019, the amount due to Tsakos Shipping was $1,386 ($520 at December 31, 2018). There is also at December 31, 2019, an amount of $350 ($327 at December 31, 2018) due to Tsakos Shipping, included in accrued liabilities, which relates to services rendered but not yet invoiced.
| (d) | Argosy Insurance Company Limited (“Argosy”): The Company places its hull and machinery insurance, increased value insurance, war risk insurance and certain other insurance through Argosy, a captive insurance company affiliated with Tsakos Shipping. Argosy, for services rendered, charged $9,519, $9,799 and $10,199 for 2019, 2018 and 2017, respectively. At December 31, 2019, the amount due to Argosy was $5,705 ($3,387 at December 31, 2018). There is also at December 31, 2019, an amount of $18 ($nil at December 31, 2018) due to Argosy, included in accrued liabilities, which relates to services rendered but not yet invoiced. |
F-20
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| (e) | AirMania Travel S.A. (“AirMania”): Apart from third-party agents, the Company also uses an affiliated company, AirMania, for travel services. AirMania, for services rendered, charged $5,617, $5,345 and $5,404 for 2019, 2018 and 2017, respectively. |
At December 31, 2019, the amount due to AirMania was $420 ($345 at December 31, 2018).
| 3. | Long-term Investments |
At December 31, 2019 and 2018, the Company held 125,000 common shares at a total cost of $1,000 in a private U.S. company which undertakes research into synthetic genomic processes which may have a beneficial environmental impact within the energy and maritime industries. Management performed a qualitative assessment considering impairment indicators and evaluated that the investment is impaired in 2019. The impairment charge of $1,000 is included in “Impairment Charges” in the accompanying Consolidated Statements of Comprehensive Income (Loss). No income was received from this investment during 2019, 2018 and 2017.
| 4. | Vessels |
Acquisitions
On October 21, 2019, the Company took delivery of its newbuilding aframax tanker Mediterranean Voyager for $51,980. In 2018, there were no vessel acquisitions.
Sales
There were no vessel sales in 2019.
On April 11, 2018, the Company sold the VLCC Millennium, for net proceeds of $17,136, realizing a net loss of $364. The loss from the sale of the vessel is separately reflected in the accompanying Consolidated Statements of Comprehensive Income (Loss).
Sale and Leaseback
On December 21, 2017, the Company entered into a five-year sale and leaseback agreement for each of the two suezmaxes, Eurochampion 2004 and Euronike. The agreed net sale price was $32,600 each. Under these leaseback agreements, there is a seller’s credit of $13,000 on the sales price that becomes immediately payable to the Company by the owners at the end of the five-year charter or upon sale of the vessels during the charter period. At December 31, 2019 and 2018, the Company has assessed the recoverability of seller’s credit. There was no indication of impairment. Following adoption of ASC 842 and the package of practical expedients, the Company continues to account for the transaction as an operating lease.
Upon adoption of ASC 842, the Company as at January 1, 2019, recognized on its consolidated balance sheet a right-of-use asset of $29,382 based on the present value of the future minimum lease payments and an obligation under operating leases of $29,382. The Company has not incurred any initial direct costs for the sale and leaseback transaction and has not performed any payments prior to the commencement date of the contract. The leaseback agreements include three one-year option periods, following completion of the initial five-year charters, which are not recognized as part of the right-of-use asset and the obligation under operating leases.
F-21
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
The incremental borrowing rate used to determine the right-of-use asset and the obligations under operating leases was 5.45% and the weighted average remaining lease term was 2.98 years as at December 31, 2019. Amortization of the right-of-use asset is recognized on a straight-line basis from the commencement date of the contract to the end of the non-cancellable lease period, provided that no impairment will be recognized over the lease term. As at December 31, 2019, both the right-of use asset and the corresponding obligation under operating leases were $21,428 (current portion $7,534 and non-current portion $13,894).
| Year |
Lease Commitment | |||
| 2020 |
$ | 8,191 | ||
| 2021 |
8,191 | |||
| 2022 |
8,191 | |||
|
|
|
|||
| Minimum net lease payments |
$ | 24,573 | ||
| Less: Present value discount |
(3,145 | ) | ||
|
|
|
|||
| Total Obligations under operating leases (current and non-current portion) |
$ | 21,428 | ||
|
|
|
|||
The amount of $15,408 was recognized as sublease income for the year ended December 31, 2019, compared to $11,599 for the corresponding period of 2018.
Impairment
As of December 31, 2019, the Company reviewed the carrying amount in connection with the estimated recoverable amount and the probability of sale for each of its vessels and vessels under construction. This review indicated that such carrying amount was not fully recoverable for three of the Company’s vessels classified as held for sale (Note 1(j)); Archangel, Alaska, Izumo Princess and for four of the Company’s vessels held and used (Note 1(i)); Amphitrite, Arion, Andromeda, Aegeas. Consequently, the carrying value of five of the above vessels (Amphitrite, Arion, Andromeda, Aegeas, Izumo Princess) totaling $102,550, has been written down to $79,300 based on the lower of the carrying amounts and Level 2 inputs of the fair value hierarchy, as determined by management taking into consideration valuations from independent marine valuers. The carrying value of two of the above vessels (Archangel, Alaska) totaling $64,433, has been written down to $61,070 based on the lower of their carrying amounts and Level 1 inputs indicative of the vessels’ sales prices, less cost to sell. The resulting impairment charge was $26,613 and is reflected in the accompanying Consolidated Statements of Comprehensive Income (Loss). In 2018, there was an impairment charge of $65,965 relating to Silia T, Byzantion, Bosporos, Selini, Salamina plus an advance for a construction later abandoned. In 2017, there was an impairment charge of $8,922 relating to the vessels Silia T and Millennium.
| 5. | Deferred Charges |
Deferred charges, consisting of dry-docking and special survey costs, net of accumulated amortization, amounted to $27,648 and $27,815 at December 31, 2019 and 2018, respectively. Amortization of deferred dry-docking costs is included in Depreciation and amortization in the accompanying Consolidated Statements of Comprehensive Income (Loss).
F-22
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| 6. | Long –Term Debt |
| Facility |
2019 | 2018 | ||||||
| (a) Credit Facilities |
— | 62,500 | ||||||
| (b) Term Bank Loans |
1,544,551 | 1,544,622 | ||||||
|
|
|
|
|
|||||
| Total |
1,544,551 | 1,607,122 | ||||||
| Less loan costs, net |
(10,255 | ) | (11,521 | ) | ||||
| Total long-term debt |
1,534,296 | 1,595,601 | ||||||
| Less current portion of debt |
(238,351 | ) | (163,870 | ) | ||||
| Add deferred finance costs, current portion |
2,838 | 3,286 | ||||||
|
|
|
|
|
|||||
| Total long-term portion, net of current portion and deferred finance costs |
1,298,783 | 1,435,017 | ||||||
|
|
|
|
|
|||||
| (a) | Credit facilities |
As at December 31, 2018, the Company had one open reducing revolving credit facility which matured in February 2019.
| (b) | Term bank loans |
Term loan balances outstanding at December 31, 2019, amounted to $1,544,551. These bank loans are payable in U.S. Dollars in semi-annual installments with balloon payments mainly due at maturity between July 2020 and May 2030. Interest rates on the outstanding loans as at December 31, 2019 are based on London interbank offered rate (“LIBOR”) plus a spread.
On December 6, 2018, the Company signed a new eight-year loan agreement for $82,752 relating to the pre- and post-delivery financing of the aframax tankers under construction, Mediterranean Voyager and Caribbean Voyager. The loan is repayable in sixteen equal consecutive semi-annual installments of $1,149.3, commencing six months after the delivery of each vessel, plus a balloon of $22,987 payable together with the last installment for each vessel. The amount of $56,892 was drawn up to December 31, 2019 and the remaining amount of $25,860 was drawn on January 2, 2020, with the delivery of the second aframax tanker Caribbean Voyager (Note 10).
On December 28, 2018, the Company signed a new five-year loan agreement for $62,500 relating to the refinancing of the LNG carrier Neo Energy. On January 10, 2019, the Company repaid the amount of $62,500 which was outstanding at the refinancing date and drew down $62,500 on the same date. The new loan is repayable in ten semi-annual installments of $3,000, commencing six months after the drawdown date, plus a balloon of $32,500 payable with the last installment.
On January 28, 2019, the Company signed a new six-year loan agreement for $88,150 relating to the refinancing of the debt approaching maturity of the suezmax tankers, Spyros K and Dimitris P, the aframax tanker Uraga Princess and the panamax tanker Salamina. The loan was drawn on January 30, 2019 and is repayable in twelve semi-annual installments of $5,200, commencing six months after the drawdown date, plus a balloon of $25,750 payable together with the last installment. Part of the loan, for the vessel Salamina, amounting to $14,272, was prepaid on June 17, 2019.
F-23
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
On May 31, 2019, the Company signed a new five-year loan agreement amounting to $38,250 to refinance the existing loans of four vessels, the panamax tankers, Maya, Inca, Selini and Salamina. On May 31, 2019 and June 13, 2019, the Company drew down the amount of $25,500 and $12,750, respectively. On May 31, 2019 and June 3, 2019, the Company repaid the old loan amounts of $9,062 for Maya and Inca and $16,575 for Selini. The loan is repayable in ten semi-annual installments of $3,187, commencing six months after the drawdown date, plus a balloon of $6,375 payable together with the last installment.
On July 12, 2019, the Company signed a new four-year loan agreement amounting to $26,000 for the refinancing of three handysize vessels, Amphitrite, Arion and Andromeda. On July 17, 2019, the Company drew down $26,000 and on the same date, repaid the old loan amounting to $19,448. The new loan is repayable in ten semi-annual installments of $2,600.
On July 12, 2019, the Company signed a new seven-year loan agreement amounting to $56,352 relating to the pre- and post-delivery financing of the first suezmax tanker under contruction (Hull 8041). The first drawdown of $6,979 was made on July 31, 2019, for the payment of the second installment to the ship building yard. The loan is repayable in fourteen consecutive semi-annual installments of $1,408.8, commencing six months after the delivery of the vessel, plus a balloon of $36,629 payable together with the last installment.
On August 5, 2019, the Company signed a new seven-year loan agreement amounting to $72,000 for the refinancing of two aframax tankers, Thomas Zafiras and Leontios H. The loan was drawn on August 8, 2019 and is repayable in fourteen semi-annual installments of $2,400 plus a balloon payment of $38,400 payable together with the last installment. On August 9, 2019, the Company prepaid the old loan amounting to $64,825.
On August 7, 2019, the Company signed a new ten-year loan agreement amounting to $54,387 relating to pre- and post-delivery financing of the second suezmax tanker under construction (Hull 8042). The first drawdown of $6,733 was made on August 9, 2019, for the payment of the second installment to the ship building yard. The loan is repayable in twenty consecutive semi-annual installments of $1,510.7, commencing six months after the delivery of the vessel, plus a balloon of $24,172 payable together with the last installment.
On August 21, 2019, the Company signed a new five-year loan agreement amounting to $71,036 for the refinancing of two aframax tankers, Elias Tsakos and Oslo TS. The loan was drawn in two tranches on August 27, 2019 and August 28, 2019, repayable in fourteen semi-annual installments of $1,200 plus a balloon of $19,200 and ten semi-annual installments of $1,341 plus a balloon of $21,626 payable with last installment, respectively. On August 27, 2019 and August 28, 2019, the Company prepaid the old loans amounting to $31,212 and $35,036, respectively.
On December 6, 2019, the Company signed a new five-year loan agreement amounting to $36,000 for the refinancing of the aframax tanker Parthenon TS. The loan was drawn on December 10, 2019 and on the same date prepaid the old loan amounting to $31,212. The loan is repayable in ten semi-annual installments of $1,200 plus a balloon of $24,000 payable with last installment.
On December 18, 2019, the Company signed a new five-year loan agreement amounting to $35,000 for the refinancing of the aframax tanker Eurovision. The loan was drawn on December 19, 2019 and on the same date the Company prepaid the old loan amounting to $28,000. The loan is repayable in ten semi-annual installments of $1,591 plus a balloon of $19,090 payable with the last installment.
At December 31, 2019, interest rates on these term bank loans ranged from 3.45% to 5.13%.
F-24
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
The weighted-average interest rates on the above executed loans for the applicable periods were:
| Year ended December 31, 2019 |
4.41 | % | ||
| Year ended December 31, 2018 |
4.21 | % | ||
| Year ended December 31, 2017 |
3.47 | % |
Loan movements for credit facilities and term loans throughout 2019:
| Loan |
Origination Date |
Original Amount |
Balance at January 1, 2019 |
New Loans |
Prepaid | Repaid | Balance at December 31, 2019 |
|||||||||||||||||||||
| Credit facility |
2007 | 120,000 | 62,500 | — | 62,500 | — | — | |||||||||||||||||||||
| 12-year term loan |
2009 | 40,000 | 18,750 | — | — | 2,500 | 16,250 | |||||||||||||||||||||
| 10-year term loan |
2010 | 39,000 | 16,900 | — | 16,900 | — | — | |||||||||||||||||||||
| 10-year term loan |
2010 | 43,924 | 18,181 | — | 16,575 | 1,606 | — | |||||||||||||||||||||
| 9-year term loan |
2010 | 42,100 | 21,300 | — | 21,300 | — | — | |||||||||||||||||||||
| 10-year term loan |
2011 | 48,000 | 24,000 | — | 24,000 | — | — | |||||||||||||||||||||
| 9-year term loan |
2011 | 48,650 | 25,948 | — | 25,948 | — | — | |||||||||||||||||||||
| 8-year term loan |
2011 | 73,600 | 73,672 | — | — | 6,406 | 67,266 | |||||||||||||||||||||
| 7-year term loan |
2014 | 42,000 | 30,800 | — | 28,000 | 2,800 | — | |||||||||||||||||||||
| 6-year term loan |
2014 | 193,239 | 169,120 | — | 127,250 | 8,476 | 33,394 | |||||||||||||||||||||
| 7-year term loan |
2014 | 40,400 | 36,377 | — | 35,036 | 1,341 | — | |||||||||||||||||||||
| 6-year term loan |
2014 | 78,744 | 72,925 | — | — | 4,669 | 68,256 | |||||||||||||||||||||
| 6-year term loan |
2014 | 39,954 | 37,457 | — | — | 2,497 | 34,960 | |||||||||||||||||||||
| 5-year term loan |
2015 | 35,190 | 31,280 | — | — | 1,955 | 29,325 | |||||||||||||||||||||
| 7-year term loan |
2015 | 35,190 | 30,792 | — | — | 2,199 | 28,593 | |||||||||||||||||||||
| 7-year term loan |
2015 | 39,900 | 29,019 | — | — | 3,627 | 25,392 | |||||||||||||||||||||
| 5-year term loan |
2015 | 82,775 | 56,908 | — | — | 10,347 | 46,561 | |||||||||||||||||||||
| 6-year term loan |
2015 | 46,217 | 32,351 | — | — | 4,622 | 27,729 | |||||||||||||||||||||
| 7-year term loan |
2015 | 44,800 | 36,800 | — | — | 3,200 | 33,600 | |||||||||||||||||||||
| 12-year term loan |
2016 | 309,824 | 252,433 | — | — | 21,502 | 230,931 | |||||||||||||||||||||
| 5-year term loan |
2016 | 33,104 | 21,996 | — | 19,450 | 2,546 | — | |||||||||||||||||||||
| 4-year term loan |
2016 | 18,125 | 10,875 | — | 9,063 | 1,812 | — | |||||||||||||||||||||
| 71/2-year term loan |
2017 | 85,000 | 79,333 | — | — | 5,667 | 73,666 | |||||||||||||||||||||
| 4-year term loan |
2017 | 122,500 | 92,314 | — | — | 15,594 | 76,720 | |||||||||||||||||||||
| 6-year term loan |
2018 | 80,000 | 76,255 | — | — | 7,490 | 68,765 | |||||||||||||||||||||
| 5-year term loan |
2018 | 180,000 | 151,014 | — | — | 23,122 | 127,892 | |||||||||||||||||||||
| 5-year term loan |
2018 | 44,000 | 44,000 | — | — | 4,700 | 39,300 | |||||||||||||||||||||
| 5-year term loan |
2018 | 48,650 | 48,650 | — | — | 6,081 | 42,569 | |||||||||||||||||||||
| 8-year term loan |
2018 | 82,752 | 5,172 | 51,720 | — | — | 56,892 | |||||||||||||||||||||
| 5-year term loan |
2018 | 62,500 | — | 62,500 | — | 3,000 | 59,500 | |||||||||||||||||||||
| 6-year term loan |
2019 | 88,150 | — | 88,150 | 14,272 | 4,358 | 69,520 | |||||||||||||||||||||
| 5-year term loan |
2019 | 38,250 | — | 38,250 | — | 3,187 | 35,063 | |||||||||||||||||||||
| 4-year term loan |
2019 | 26,000 | — | 26,000 | — | — | 26,000 | |||||||||||||||||||||
| 7-year term loan |
2019 | 56,352 | — | 6,979 | — | — | 6,979 | |||||||||||||||||||||
| 10-year term loan |
2019 | 54,387 | — | 6,733 | — | — | 6,733 | |||||||||||||||||||||
| 7-year term loan |
2019 | 72,000 | — | 72,000 | — | — | 72,000 | |||||||||||||||||||||
| 5-year term loan |
2019 | 71,036 | — | 71,036 | — | 1,341 | 69,695 | |||||||||||||||||||||
| 5-year term loan |
2019 | 36,000 | — | 36,000 | — | — | 36,000 | |||||||||||||||||||||
| 5-year term loan |
2019 | 35,000 | — | 35,000 | — | — | 35,000 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total |
1,607,122 | 494,368 | 400,294 | 156,645 | 1,544,551 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
F-25
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
The above term bank loans are secured by first priority mortgages on all vessels owned by the Company’s subsidiaries, by assignments of earnings and insurances of the respectively mortgaged vessels, and by corporate guarantees of the relevant ship-owning subsidiaries and in certain cases of the parent company as well.
The loan agreements include, among other covenants, covenants requiring the Company to obtain the lenders’ prior consent in order to incur or issue any financial indebtedness, additional borrowings, pay dividends provided no event of default has occurred, sell vessels and assets, and change the beneficial ownership or management of the vessels. Also, the covenants require the Company to maintain a minimum liquidity, not legally restricted, of $104,979 at December 31, 2019 and $99,154 at December 31, 2018, a minimum consolidated leverage ratio, a minimum hull value in connection with the vessels’ outstanding loans and insurance coverage of the vessels against all customary risks. Two loan agreements require the Company to maintain throughout the security period, an aggregate credit balance in a deposit account of $3,700. Four loan agreements require a monthly pro rata transfer to retention account of any principal due but unpaid.
As at December 31, 2019, the Company and its wholly owned subsidiaries had twenty-nine loan agreements, totaling $1,544,551. The Company fulfilled its requirements in respect of the financial covenants of all of its loan agreements, as at December 31, 2019.
The Company’s liquidity requirements relate primarily to servicing its debt, funding the equity portion of investments in vessels and funding expected capital expenditures on dry-dockings and working capital.
The annual principal payments, including balloon payments on loan maturity, required to be made after December 31, 2019, are as follows:
| Year |
Amount | |||
| 2020 |
238,351 | |||
| 2021 |
224,044 | |||
| 2022 |
164,367 | |||
| 2023 |
347,775 | |||
| 2024 |
250,978 | |||
| 2025 and thereafter |
319,036 | |||
|
|
|
|||
| 1,544,551 | ||||
|
|
|
|||
| 7. | Interest and Finance Costs, net |
| 2019 | 2018 | 2017 | ||||||||||
| Interest expense |
69,980 | 72,191 | 62,343 | |||||||||
| Less: Interest capitalized |
(1,018 | ) | (252 | ) | (445 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Interest expense, net |
68,962 | 71,939 | 61,898 | |||||||||
| Interest swaps termination cash settlements |
— | (477) | (3,685 | ) | ||||||||
| Bunkers swap and call options cash settlements |
1,469 | (9,857 | ) | (2,547 | ) | |||||||
| Bunker call options premium |
— | — | 216 | |||||||||
| Amortization of loan costs |
4,822 | 3,992 | 4,152 | |||||||||
| Bank charges |
240 | 405 | 164 | |||||||||
| Change in fair value of non-hedging financial instruments |
(770 | ) | 10,807 | (3,359 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net total |
74,723 | 76,809 | 56,839 | |||||||||
|
|
|
|
|
|
|
|||||||
F-26
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
At December 31, 2019, the Company was committed to nine floating-to-fixed interest rate swaps with major financial institutions covering notional amounts aggregating to $481,998, maturing from July 2020 through October 2027, on which it pays fixed rates averaging 2.40% and receives floating rates based on the six-month LIBOR (Note 14).
At December 31, 2019, the Company held eight of the nine interest rate swap agreements, designated and qualifying as cash flow hedges, in order to hedge its exposure to interest rate fluctuations associated with its debt covering notional amounts aggregating to $455,998.
The fair values of such financial instruments as of December 31, 2019 and 2018, in aggregate amounted to $14,832 (negative) and $5,000 (negative), respectively. The net amount of cash flow hedge losses at December 31, 2019, that is estimated to be reclassified into earnings within the next twelve months is $45.
At December 31, 2019, the Company held one interest rate swap that did not meet hedge accounting criteria. On December 20, 2018, the Company discontinued as a cash flow hedge one hedging interest rate swap. This interest rate swap associated with a secured term loan facility, which was part of the refinancing of debt approaching maturity relating to the vessels Euro and Sakura Princess. Upon completion of the refinancing on December 20, 2018, the hedge no longer met the criteria for hedge accounting as it was no longer highly effective, and it was determined by management that the future cash flows associated with the repayment of the new financing were not probable of occurring. The fair value of the non-hedging swap as of December 31, 2019 and 2018, amounted to $187 (negative) and $38 (negative), respectively. As such, the changes in its fair value during 2019 and 2018 amounting to $149 (negative) and $86 (negative), respectively, have been included in Change in fair value of non-hedging financial instruments in the above table.
In November 2018, the Company entered into two call option agreements, with an exercise date in 2019 and through 2020, for a total premium of $1,602. At December 31, 2019 and 2018, the Company held one and three, respectively, call option agreements in order to hedge its exposure to bunker price fluctuations associated with the consumption of bunkers by its vessels. The value of the call options at December 31, 2019 and 2018 was $147 (positive) and $350 (positive), respectively. The changes in their fair value during 2019 and 2018 amounting to $203 (negative) and $232 (positive), respectively, have been included in Change in fair value of non-hedging financial instruments in the above table.
In 2019 and 2018, the Company held twenty-five and nineteen bunker swap agreements, respectively, in order to hedge its exposure to bunker price fluctuations associated with the consumptions of bunkers by its vessels. The fair value of bunker swap agreements at December 31, 2019 and December 31, 2018 were $2,850 (negative) and $3,972 (negative), respectively. The change in the fair values as of December 31, 2019 and December 31, 2018, was $1,122 (positive) and $10,999 (negative), respectively.
During 2016, the Company entered into three bunker swap agreements in order to hedge its exposure to bunker price fluctuations associated with the consumption of bunkers by the vessel Ulysses. In November 2018, the Company entered into early termination agreements of the three bunker swap agreements with expiring dates September 2019 and October 2019. Total cash received from those swaps’ terminations amounted to $1,470. The change in their fair value during 2018 and 2017 were $3,264 (negative) and $785 (positive) respectively.
| 8. | Stockholders’ Equity |
In 2019, the Company issued 4,557,296 common shares for net proceeds of $16,552. In 2018, the Company sold 1,019,069 common shares from its treasury stock and issued 265,993 common shares for net proceeds
F-27
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
of $4,511. In 2017, the Company sold 2,488,717 common shares from its treasury stock for net proceeds of $10,853 and 24,803 of its Series D Preferred Shares for net proceeds of $533.
As of December 31, 2019, the Company was in full compliance with all the covenants contained within the terms of its Series C Preferred Shares. There are no financial covenants in the Company’s other outstanding series of preferred shares.
On July 30, 2019, the Company redeemed all of its 2,000,000 Series B Preferred Shares, with a liquidation preference of $25.00 per share along with the payment of a final dividend of $0.50 per share, declared on June 28, 2019. The difference between the carrying value and the fair value of the Series B Preferred Shares, amounting to $2,750, was recognized as a reduction of retained earnings as a deemed dividend, and has been considered in the calculations of Loss per Common Share in 2019 (Note 10).
In September 2019, the Company entered into a share purchase agreement for the private placement of 3,500,000 Series G Redeemable Convertible Perpetual Preferred Shares, par value $1.00 per share and liquidation preference $10.00 per share (the “Series G Convertible Preferred Shares”), at a purchase price of $10.00 per share, raising $33,984, net of structuring fee and other expenses. The Series G Convertible Preferred Shares have a stated coupon rate of 0%, subject to adjustment in the event of a cross-default or failure to redeem on any redemption date and participate on an as-converted basis in dividends declared and paid on the Company’s common shares.
The Series G Convertible Preferred Shares are convertible at any time, at the option of the holder, at a conversion price of $3.00 per share, representing a conversion rate of three and one-third common shares per Series G Convertible Preferred Share. All or a portion of the Series G Convertible Preferred Shares will automatically convert into common shares at the conversion rate if the trading price of the Company’s common shares exceed certain levels between 130% and 170% of the conversion price. The holders, however, will be prohibited from converting the Series G Convertible Preferred Shares into common shares to the extent that, as a result of such conversion, the holder would own more than 9.99% of the total number common shares then issued and outstanding, unless a 61-day notice is delivered to the Company.
The conversion price is subject to customary anti-dilution and other adjustments relating to the issuance of common shares as a dividend or the subdivision, combination, or reclassification of common shares into a greater or lesser number of common shares. The Company may also redeem in full or in part the Series G Convertible Preferred Shares prior to September 1, 2020, for cash, at the as-converted value of the Series G Convertible Preferred Shares, if the trading price of the common shares exceeds certain levels.
The Series G Convertible Preferred Shares did not generate a beneficial conversion feature (BCF) upon issuance as the fair value of the Company’s common shares was lower than the conversion price. The Series G Convertible Preferred Shares did not meet the criteria for mandatorily redeemable financial instruments. Additionally, the Company determined that the nature of the Series G Convertible Preferred Shares was more akin to an equity instrument and that the economic characteristics and risks of the embedded conversion options were clearly and closely related to the Series G Convertible Preferred Shares. As such, the conversion options were not required to be bifurcated from the equity host under ASC 815, Derivatives and Hedging. The Company also determined that the redemption call option did meet the definition of a derivative, but that the value of the derivative was zero due to the expectations under which the call option would be exercised.
On December 23, 2019, 875,000 Series G Convertible Preferred Shares converted into 2,916,666 common shares.
F-28
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
The holders of the Series G Convertible Preferred Shares generally do not have voting rights. However, without the affirmative vote or consent of the holders of at least two-thirds of the outstanding Series G Convertible Preferred Shares, voting as a single class, the Company may not adopt any amendment to its memorandum of association or bye-laws that materially or adversely alters or affects the preferences, powers or rights of the Series G Convertible Preferred Shares in any respect or any amendment to the Series G Convertible Preferred Shares Certificate of Designations. The Series G Convertible Preferred Shares rank pari passu with the Company’s other outstanding series of preferred shares and senior to the Company’s common shares with respect to dividend distributions and distributions upon any liquidation event.
On February 1, 2021, or, if earlier, the delivery date of the last of the Company’s newbuilding conventional tankers i.e. Hull 8042, (the “Redemption Date”), subject to certain limitations, outstanding Series G Convertible Preferred Shares having a redemption price of up to $35,000 will be mandatorily exchanged for preferred shares (the “Shyris Shipping Preferred Shares”) to be issued by the subsidiary of the Company that will own such crude oil tankers after receipt of requisite approvals (Shyris Shipping). The redemption price at which the Series G Convertible Preferred Shares will be exchanged will be the higher of 95% of the as-converted value of the Series G Convertible Preferred Shares, based on a six-month volume weighted average price (“VWAP”) of the Company’s common shares, or a price providing for a return of 7.75% per annum on an actual/360-day basis on the Series G Convertible Preferred Shares, taking into account all dividends actually received on the Series G Convertible Preferred Shares. To the extent certain limitations result in less than $35,000 of Shyris Shipping Preferred Shares being issued on the Redemption Date, Series G Convertible Preferred Shares with an aggregate redemption price equal to such shortfall will remain subject to redemption prior to the fifth anniversary of the share purchase agreement. After such time, any Series G Convertible Preferred Shares will automatically convert into the Company’s common shares at the conversion rate or be redeemed for Shyris Shipping Preferred Shares. Any other Series G Convertible Preferred Shares not exchanged for Shyris Shipping Preferred Shares on the Redemption Date will automatically convert on such date into the Company’s common shares at the conversion rate (unless the Company elects to redeem such Series G Convertible Preferred Shares for cash). The Series G Convertible Preferred Shareholders will also have the right to require the Company to redeem the Series G Convertible Preferred Shares for cash, in the event of non-compliance with certain requirements relating to Shyris Shipping.
On July 10, 2018, the Company completed an offering of 6,000,000 of its Series F Cumulative Redeemable Perpetual Preferred Shares, par value $1.00 per share, liquidation preference $25.00 per share, raising $144,280, net of underwriter’s discount and other expenses. Dividends on the Series F Preferred Shares are cumulative from the date of original issue and are payable quarterly in arrears on the 30th day of January, April, July and October of each year, commencing October 30, 2018, when, as and if declared by our board of directors. Dividends will be payable from cash available for dividends at a rate equal to 9.50% per annum of the stated liquidation preference prior to July 30, 2028 and from and including July 30, 2028, at a floating rate equal to three-month LIBOR plus spread of 6.54% per annum of the stated liquidation preference.
On April 5, 2017, the Company completed an offering of 4,600,000 of its Series E Cumulative Perpetual Preferred Shares, par value $1.00 per share, liquidation preference $25.00 per share, raising $110,496, net of underwriter’s discount and other expenses. Dividends on the Series E Preferred Shares are cumulative from the date of original issue and will be payable quarterly in arrears on the 28th day of February, May, August and November of each year, commencing May 28, 2017, when, as and if declared by our board of directors. Dividends will be payable from cash available for dividends at a rate equal to 9.25% per annum of the stated liquidation preference prior to May 28, 2027 and from and including May 28, 2027, at a floating rate equal to three-month LIBOR plus a spread of 6.881% per annum of the stated liquidation preference.
F-29
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
On October 10, 2017, under the Company’s share-based plan the Company granted 110,000 restricted share units to all non-executive directors out of the repurchased treasury stock, which vested immediately. A related amount of $0.5 million was accounted for as stock compensation expense within General and Administrative expenses in the accompanying financial statements.
| 9. | Accumulated other comprehensive loss |
In 2019, Accumulated other comprehensive loss increased to $18,353 ($8,660 in 2018) mainly due to unrealized losses from hedging financial instruments of $9,693 (losses of $3,355 and $992 in 2018 and 2017, respectively).
| 10. | Loss per Common Share |
The Company calculates basic and diluted net loss per share in conformity with the two-class method required for companies with participating securities. The Company considered all series of redeemable convertible preferred shares to have been participating securities as the holders were entitled to receive non-cumulative dividends on a pari passu basis in the event that a dividend was paid on common shares. Under the two-class method, the net loss attributable to common stockholders is not allocated to the redeemable convertible preferred shares as the holders of redeemable convertible preferred shares do not have a contractual obligation to share in losses.
Under the two-class method, basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by giving effect to all potentially dilutive common share equivalents outstanding for the period.
The following table sets forth the computation of basic and diluted net loss per share:
Numerator
| 2019 | 2018 | 2017 | ||||||||||
| Net income (loss) attributable to Tsakos Energy Navigation Limited |
$ | 15,126 | $ | (99,203 | ) | $ | 7,612 | |||||
| Preferred share dividends, Series B |
(3,000 | ) | (4,000 | ) | (4,000 | ) | ||||||
| Preferred share dividends, Series C |
(4,438 | ) | (4,438 | ) | (4,437 | ) | ||||||
| Preferred share dividends, Series D |
(7,492 | ) | (7,492 | ) | (7,479 | ) | ||||||
| Preferred share dividends, Series E |
(10,637 | ) | (10,637 | ) | (7,860 | ) | ||||||
| Preferred share dividends, Series F |
(14,250 | ) | (7,196 | ) | — | |||||||
| Preferred share dividends, convertible Series G |
(583 | ) | — | — | ||||||||
| Deemed dividend on Series B preferred shares |
(2,750 | ) | — | — | ||||||||
| Net loss attributable to common stockholders |
(28,024 | ) | (132,966 | ) | (16,164 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Denominator |
||||||||||||
| Weighted average common shares outstanding |
88,757,923 | 87,111,636 | 84,713,572 | |||||||||
|
|
|
|
|
|
|
|||||||
| Basic and diluted loss per common share |
$ | (0.32 | ) | $ | (1.53 | ) | $ | (0.19 | ) | |||
For purposes of this calculation, potential redeemable convertible preferred shares of 3,100,457 for the year ended December 31, 2019, are considered common shares equivalents but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive. Basic and diluted net loss per share was the same for each period presented.
F-30
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| 11. | Non-controlling Interest in Subsidiary |
The Company owns 51% of Mare Success S.A., the holding-company of two Panamanian registered companies which own the vessels Maya and Inca and two Liberian registered companies which own the vessels Selini and Salamina. 49% of Mare Success S.A. is owned by Polaris Oil Shipping Inc. (“Polaris”), an affiliate of one of the Company’s major charterers, Flopec Petrolera Ecuatoriana (“Flopec”). Mare Success S.A. is fully consolidated in the accompanying consolidated financial statements. There have been no transactions between Polaris and the Company since the incorporation of Mare Success S.A., whereas approximately 6.2% of the Company’s 2019 revenue (7.5% in 2018 and 9.5% in 2017) was generated by Flopec.
In June 2019, Mare Success S.A increased its paid-in capital by $20,408, of which $10,408 constituted the 51% portion contributed by the Company and the $10,000 constituted the 49% portion contributed by Polaris. After the recapitalization, the shareholding of Mare Success S.A. remained at 51% owned by the Company and 49% owned by Polaris. The additional paid-in capital was made to finance part of the intragroup sale of vessels, in particular, the panamax tankers, Selini and Salamina. This transaction did not affect vessels’ carrying values on a consolidated basis.
| 12. | Income Taxes |
Under the laws of the countries of the Company’s subsidiaries’ incorporation and/or vessels’ registration (Greece, Liberia, Marshall Islands, Panama, Bahamas, Cyprus, Malta), the companies are subject to registration and tonnage taxes, which have been included in the Vessel operating expenses.
The Company is not expected to be subject to United States Federal income tax on its gross income from the international operations of ships. In general, foreign persons operating ships to and from the United States are subject to United States Federal income tax of 4% of their United States source gross transportation income, which equals 50% of their gross income from transportation to or from the United States. The Company believes that it is exempt from United States Federal income tax on its United States source gross transportation income, as each vessel-operating subsidiary is organized in a foreign country that grants an equivalent exemption to corporations organized in the United States, and derives income from the international operation of ships and satisfies the stock ownership test as defined by the Internal Revenue Code and related regulations as a result of the Company’s stock being primarily and regularly traded on an established securities market in the United States. Under the regulations, a Company’s stock is considered to be regularly traded on an established securities market if (i) one or more classes of its stock representing 50% or more of its outstanding shares, by voting power and value, is listed on the market and is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year; and (ii) the aggregate number of shares of stock traded during the taxable year is at least 10% of the average number of shares of the stock outstanding during the taxable year. Other requirements such as the substantiation and reporting requirements under the regulations also must be satisfied to qualify for the exemption from United States Federal income tax.
| 13. | Commitments and Contingencies |
As at December 31, 2019, the Company had under construction one aframax tanker, two suezmax tankers and one LNG carrier.
F-31
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
The total contracted amount remaining to be paid for the four vessels under construction plus the extra costs agreed as at December 31, 2019, were $323,331. The amount of $188,792 is due to be paid in 2020 and the amount of $134,539 in 2021.
In the ordinary course of the shipping business, various claims and losses may arise from disputes with charterers, agents and other suppliers relating to the operations of the Company’s vessels. Management believes that all such matters are either adequately covered by insurance or are not expected to have a material adverse effect on the Company’s results from operations or financial condition.
Charters-out
The future minimum revenues of vessels in operation at December 31, 2019, before reduction for brokerage commissions, expected to be recognized on non-cancelable time charters are as follows:
| Year |
Amount | |||
| 2020 |
$ | 306,717 | ||
| 2021 |
213,165 | |||
| 2022 |
133,127 | |||
| 2023 |
96,426 | |||
| 2024 to 2028 |
210,100 | |||
|
|
|
|||
| Minimum charter revenues |
$ | 959,535 | ||
|
|
|
|||
These amounts do not assume any off-hire.
| 14. | Financial Instruments |
| (a) | Interest rate risk: The Company is subject to interest rate risk associated with changing interest rates with respect to its variable interest rate term loans and credit facilities as described in Notes 6 and 7. |
| (b) | Concentration of credit risk: Financial Instruments consist principally of cash, trade accounts receivable, investments, and derivatives. |
The Company places its temporary cash investments, consisting mostly of deposits, primarily with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk. The Company limits the exposure of non-performance by counterparties to derivative instruments by diversifying among counterparties with high credit ratings and performing periodic evaluations of the relative credit standing of the counterparties.
| (c) | Fair value: The carrying amounts reflected in the accompanying Consolidated Balance Sheet of cash and cash equivalents, restricted cash, trade receivables, accounts payable and due from(to) related parties, approximate their respective fair values due to the short maturity of these instruments. The fair value of long-term bank loans with variable interest rates approximate the recorded values, generally due to their variable interest rates. The Company performs relevant enquiries on a periodic basis to assess the recoverability of the long-term investment (Note 3) and the long-term receivable estimates that the amount |
F-32
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| presented on the accompanying balance sheet approximates the amount that is expected to be received by the Company in the event of sale of that investment and the end of the non-cancellable lease period, respectively. |
The fair values of the interest rate swap agreements, bunker swap agreements and call option agreements discussed in Note 6 above are determined through Level 2 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements and are derived principally from or corroborated by observable market data, interest rates, yield curves and other items that allow value to be determined.
The estimated fair values of the Company’s financial instruments, other than derivatives at December 31, 2019 and 2018, are as follows:
| 2019 | 2018 | |||||||||||||||
| Carrying Amount |
Fair Value | Carrying Amount |
Fair Value | |||||||||||||
| Financial assets (liabilities) |
||||||||||||||||
| Cash and cash equivalents |
184,835 | 184,835 | 204,763 | 204,763 | ||||||||||||
| Restricted cash |
12,935 | 12,935 | 15,763 | 15,763 | ||||||||||||
| Investments |
— | — | 1,000 | 1,000 | ||||||||||||
| Debt |
(1,544,551 | ) | (1,544,551 | ) | (1,607,122 | ) | (1,607,122 | ) | ||||||||
Tabular Disclosure of Derivatives Location
Derivatives are recorded in the consolidated balance sheet on a net basis by counterparty when a legal right of set-off exists. The following tables present information with respect to the fair values of derivatives reflected in the consolidated balance sheet on a gross basis by transaction. The tables also present information with respect to gains and losses on derivative positions reflected in the Consolidated Statements of Comprehensive Income (Loss) or in the Consolidated Balance Sheets, as a component of Accumulated other comprehensive loss.
| Asset Derivatives | Liability Derivatives | |||||||||||||||||
| December 31, 2019 |
December 31, 2018 |
December 31, 2019 |
December 31, 2018 |
|||||||||||||||
| Derivative |
Balance Sheet Location |
Fair Value | Fair Value | Fair Value | Fair Value | |||||||||||||
| Derivatives designated as hedging instruments |
|
|||||||||||||||||
| Interest rate swaps |
Current portion of financial instruments— Fair value |
131 | — | 3,024 | 30 | |||||||||||||
| Financial instruments—Fair Value, net of current portion | 260 | — | 12,199 | 4,970 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Subtotal |
391 | — | 15,223 | 5,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
F-33
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| Asset Derivatives | Liability Derivatives | |||||||||||||||||
| December 31, 2019 |
December 31, 2018 |
December 31, 2019 |
December 31, 2018 |
|||||||||||||||
| Derivative |
Balance Sheet Location |
Fair Value | Fair Value | Fair Value | Fair Value | |||||||||||||
| Derivatives not designated as hedging instruments |
|
|||||||||||||||||
| Interest rate swaps |
Current portion of financial instruments— Fair value |
— | — | 121 | 18 | |||||||||||||
| Financial instruments—Fair Value, net of current portion | — | — | 66 | 20 | ||||||||||||||
| Bunker swaps |
Current portion of financial instruments—Fair value | 520 | — | 755 | — | |||||||||||||
| Bunker swaps |
Financial instruments—Fair Value, net of current portion | 27 | — | 2,642 | 3,972 | |||||||||||||
| Bunker call options |
Current portion of financial instruments—Fair value | 147 | 217 | — | — | |||||||||||||
| Bunker call options |
Financial instruments—Fair Value, net of current portion | — | 133 | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Subtotal |
694 | 350 | 3,584 | 4,010 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total derivatives |
1,085 | 350 | 18,807 | 9,010 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
Derivatives designated as Hedging Instruments-Net effect on the Consolidated Statements of Comprehensive Income (Loss)
|
Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivative (Effective |
||||||||||||||
| Derivative |
Amount | |||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||
| Interest rate swaps |
(9,938 | ) | (4,316 | ) | (3,692 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
| Total |
(9,938 | ) | (4,316 | ) | (3,692 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
| Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion) Location |
||||||||||||||
| Derivative |
Amount | |||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||
| Interest rate swaps |
Depreciation expense | (189 | ) | (189 | ) | (189 | ) | |||||||
| Interest rate swaps |
Interest and finance costs, net | (56 | ) | (772 | ) | (2,511 | ) | |||||||
|
|
|
|
|
|
|
|||||||||
| Total |
(245 | ) | (961 | ) | (2,700 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
The accumulated loss from Derivatives designated as Hedging instruments recognized in Accumulated Other Comprehensive Income (Loss) as of December 31, 2019 and 2018, was $18,353 and $8,660 respectively.
F-34
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
Derivatives not designated as Hedging Instruments – Net effect on the Consolidated Statements of Comprehensive Income (Loss)
| Net Realized and Unrealized Gain (Loss) Recognized on Statement of Comprehensive Income (Loss) Location |
||||||||||||||
| Derivative |
Amount | |||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||
| Interest rate swaps |
Interest and finance costs, net | (149 | ) | (39 | ) | — | ||||||||
| Bunker swaps |
Interest and finance costs, net | 1,122 | (1,142 | ) | 5,903 | |||||||||
| Bunker call options |
Interest and finance costs, net | (1,672 | ) | 231 | (213 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
| Total |
(699 | ) | (950 | ) | 5,690 | |||||||||
|
|
|
|
|
|
|
|||||||||
The following tables summarize the fair values for assets and liabilities measured on a recurring basis as of December 31, 2019 and 2018, using Level 2 inputs (significant other observable inputs):
| Recurring measurements: |
December 31, 2019 |
December 31, 2018 |
||||||
| Interest rate swaps |
(15,019 | ) | (5,038 | ) | ||||
| Bunker swaps |
(2,850 | ) | (3,972 | ) | ||||
| Bunker call options |
147 | 350 | ||||||
|
|
|
|
|
|||||
| (17,722 | ) | (8,660 | ) | |||||
|
|
|
|
|
|||||
| 15. | Subsequent Events |
| a) | On January 7, 2020, the Company acquired the aframax tanker Caribbean Voyager. |
| b) | On January 9, 2020, the Company entered into a five-year sale and leaseback agreement for each of the two suezmaxes previously classified as held for sale, Archangel and Alaska. |
| c) | On January 15, 2020, the holders of the Series G Convertible Preferred Shares converted 10,000 Series G Convertible Preferred Shares into 33,333 common shares. |
| d) | On January 30, 2020, the Company paid a dividend of $0.55469 per share for its 8.875% Series C Preferred Shares. |
| e) | On January 30, 2020, the Company paid a dividend of $0.59375 per share for its 9.50% Series F Preferred Shares. |
| f) | On January 31, 2020, the Company paid the second installment for the LNG carrier under construction, Hull 3157, amounting to $9,250. |
| g) | On February 3, 2020, the Company sold the suezmax tanker Silia T to a client company of Tsakos Shipping for gross proceeds of $15,500. |
| h) | On February 28, 2020, the Company paid a dividend of $0.54687 per share for its 8.75% Series D Preferred Shares. |
| i) | On February 28, 2020, the Company paid a dividend of $0.57812 per share for its 9.25% Series E Preferred Shares. |
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TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS DECEMBER 31, 2019, 2018 AND 2017—(Continued)
(Expressed in thousands of U.S. Dollars, except for share and per share data, unless otherwise stated)
| j) | On March 24, 2020, the Company declared a dividend of $0.05 per common share payable in June 2020 and announced an up to $50,000 common and preferred stock buyback program. |
| k) | On March 24, 2020, the Company received a capital contribution of $4.0 million from non-controlling owners. |
| l) | On April 6, 2020, the Company declared a dividend of $0.55469 per share and $0.59375 per share, respectively, for its Series C and Series F Preferred Shares payable on April 30, 2020. |
| m) | As of April 14, 2020, the Company had raised $2,425 from the issuance of 561,136 common shares. |
| n) | The current COVID-19 pandemic might have catastrophic impact globally, with a broad range of unavoidable consequences for the shipping industry, which might negatively affect our business, financial performance and our results of operations. An estimate of the impact cannot be made at this time. |
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