UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
 
(Mark One)
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
For the fiscal year ended December 31, 2023
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
OR
 
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
Date of event requiring this shell company report  _______________________________
For the transition period from ____ to ____.
Commission file number
000-29106
 
 
Golden Ocean Group Limited
(Exact name of Registrant as specified in its charter)
 
(Translation of Registrant's name into English)
 
Bermuda
(Jurisdiction of incorporation or organization)
 
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, Bermuda, HM 08
(Address of principal executive offices)
 
James Ayers, Telephone: (1) 441 2956935, Facsimile: (1) 441 295 3494,
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Shares, Par Value $0.05 Per Share
GOGL
NASDAQ Global Select Market
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period
covered by the annual report.
199,628,293 Common Shares, Par Value $0.05 Per Share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x
No o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes o
No x
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x
No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes  x
No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an
emerging growth company. See definition of "large accelerated filer", "accelerated filer", and "emerging growth company" in
Rule 12b-2 of the Exchange Act.:
Large accelerated filer  x
Accelerated filer  o
Non-accelerated filer  o
Emerging growth company  ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term ''new or revised financial accounting standard'' refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
                                                                                                                                               o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b).                                                                                                                        o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
U.S. GAAP x
International Financial Reporting Standards as issued by the
International Accounting Standards Board o
Other o
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow:
Item 17 o
Item 18 o
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes ☐
No ☒
INDEX TO REPORT ON FORM 20-F
 
 
PAGE
 
 
 
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this annual report and the documents incorporated by reference may constitute forward-looking statements.
The Private Securities Litigation Reform Act of 1995 (the "PSLRA"), provides safe harbor protections for forward-looking
statements in order to encourage companies to provide prospective information about their business. Forward-looking
statements include, but are not limited to, statements concerning plans, objectives, goals, strategies, future events or
performance, underlying assumptions and other statements, which are other than statements of historical facts.
We are taking advantage of the safe harbor provisions of the PSLRA and are including this cautionary statement in connection
with this safe harbor legislation. This annual report and any other written or oral statements made by us or on our behalf may
include forward-looking statements, which reflect our current views with respect to future events and financial performance.
This annual report includes assumptions, expectations, projections, intentions and beliefs about future events. These statements
are intended as "forward-looking statements." We caution that assumptions, expectations, projections, intentions and beliefs
about future events may and often do vary from actual results and the differences can be material. When used in this document,
the words "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "projects," "likely," "will," "would," "could,"
"seeks," "potential," "continue," "contemplate," "possible," "might," "forecasts," "may," "should" and similar expressions or
phrases may identify forward-looking statements.
The forward-looking statements in this annual report are based upon various assumptions, including without limitation,
management's examination of historical operating trends, data contained in our records and data available from third parties.
Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to
significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot
assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to
rely on any forward-looking statements.
In addition to these important factors and matters discussed elsewhere herein, and in the documents incorporated by reference
herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-
looking statements include among other things:
• general market trends in the dry bulk industry, which is cyclical and volatile, including fluctuations in charter hire rates
and vessel values;
• a decrease in the market value of our vessels;
• changes in supply and demand in the dry bulk shipping industry, including the market for our vessels and the number
of newbuildings under construction;
• delays or defaults in the construction of our newbuildings could increase our expenses and diminish our net income
and cash flows;
• an oversupply of dry bulk vessels, which may depress charter rates and profitability;
• our future operating or financial results;
• our continued borrowing availability under our debt agreements and compliance with the covenants contained therein;
• our ability to procure or have access to financing, our liquidity and the adequacy of cash flows for our operations;
• the failure of our contract counterparties to meet their obligations, including changes in credit risk with respect to our
counterparties on contracts;
• the loss of a large customer or significant business relationship;
• the strength of world economies;
• the volatility of prevailing spot market and charter-hire charter rates, which may negatively affect our earnings;
• our ability to successfully employ our dry bulk vessels and replace our operating leases on favorable terms, or at all;
• changes in our operating expenses and voyage costs, including bunker prices, fuel prices (including increased costs for
low sulfur fuel), drydocking, crewing and insurance costs;
• the adequacy of our insurance to cover our losses, including in the case of a vessel collision;
• vessel breakdowns and instances of offhire;
• our ability to fund future capital expenditures and investments in the construction, acquisition and refurbishment of our
vessels (including the amount and nature thereof and the timing of completion of vessels under construction, the
delivery and commencement of operation dates, expected downtime and lost revenue);
• risks associated with any future vessel construction or the purchase of second-hand vessels;
• effects of new products and new technology in our industry, including the potential for technological innovation to
reduce the value of our vessels and charter income derived therefrom;
• the impact of an interruption or failure of our information technology and communications systems, including the
impact of cyber-attacks, upon our ability to operate;
i
• potential liability from safety, environmental, governmental and other requirements and potential significant additional
expenditures (by us and our customers) related to complying with such regulations;
• changes in governmental rules and regulations or actions taken by regulatory authorities and the impact of government
inquiries and investigations;
• the arrest of our vessels by maritime claimants;
• government requisition of our vessels during a period of war or emergency;
• our compliance with complex laws, regulations, including environmental laws and regulations and the U.S. Foreign
Corrupt Practices Act of 1977;
• potential difference in interests between or among certain members of our board of directors ("Board"), executive
officers, senior management and shareholders;
• our ability to attract, retain and motivate key employees;
• work stoppages or other labor disruptions by our employees or the employees of other companies in related industries;
• potential exposure or loss from investment in derivative instruments;
• stability of Europe and the Euro or the inability of countries to refinance their debts;
• inflationary pressures and central bank policies intended to combat overall inflation and rising interest rates and
foreign exchange rates;
• fluctuations in currencies;
• acts of piracy on ocean-going vessels, public health threats, terrorist attacks and international hostilities and political
instability;
• potential physical disruption of shipping routes due to accidents, climate-related (acute and chronic), political
instability, terrorist attacks, piracy, international sanctions or international hostilities, including the developments in
the Ukraine region and in the Middle East, including the conflicts in Israel and Gaza, and the Houthi attacks in the Red
Sea;
• general domestic and international political and geopolitical conditions or events, including any further changes in
U.S. trade policy that could trigger retaliatory actions by affected countries;
• the impact of adverse weather and natural disasters;
• the impact of increasing scrutiny and changing expectations from investors, lenders and other market participants with
respect to our Environmental, Social and Governance ("ESG") policies;
• changes in seaborne and other transportation;
• the length and severity of epidemics and pandemics and governmental responses thereto and the impact on the demand
for seaborne transportation in the dry bulk sector;
• impacts of supply chain disruptions and market volatility surrounding the impacts of the Russian-Ukrainian conflict
and the developments in the Middle East;
• fluctuations in the contributions of our joint ventures to our profits and losses;
• the potential for shareholders to not be able to bring a suit against us or enforce a judgement obtained against us in the
United States;
• our treatment as a "passive foreign investment company" by U.S. tax authorities;
• being required to pay taxes on U.S. source income;
• our operations being subject to economic substance requirements;
• the volatility of the stock price for our common shares, from which investors could incur substantial losses, and the
future sale of our common shares, which could cause the market price of our common shares to decline; and
• other factors discussed in "Item 3. Key Information D. Risk Factors." in this annual report.
We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only as of their
dates. Except to the extent required by applicable law or regulation, we undertake no obligation to release publicly any revisions
to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the
occurrence of unanticipated events. These forward-looking statements are not guarantees of our future performance, and actual
results and future developments may vary materially from those projected in the forward-looking statements.
ii
PART I
ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.  KEY INFORMATION
On October 7, 2014, Knightsbridge Shipping Limited, (''Knightsbridge''), and Golden Ocean Group Limited, (''Former Golden
Ocean''), entered into an agreement and plan of merger ("the Merger Agreement"), pursuant to which the two companies
agreed to merge ("the Merger"), with Knightsbridge serving as the surviving legal entity. The Merger was completed on March
31, 2015, and the name of Knightsbridge was changed to Golden Ocean Group Limited. The Merger has been accounted for as
a business combination using the acquisition method of accounting, with us selected as the accounting acquirer. See "Item 4.
Information on the Company - A. History and Development of the Company" for more information.
Throughout this report, unless the context otherwise requires, "Golden Ocean," the "Company," "we," "us" and "our" refer to
Golden Ocean Group Limited and its subsidiaries.
The term deadweight ton ("dwt"), is used in describing the capacity or size of vessels. Dwt, expressed in metric tons, each of
which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry.
We own and operate dry bulk vessels of the following sizes:
• Newcastlemax, which are vessels with carrying capacities of between 200,000 dwt and 210,000 dwt;
• Capesize, which are vessels with carrying capacities of between 105,000 dwt and 200,000 dwt; and
• Panamax (including Kamsarmax), which are vessels with carrying capacities of between 65,000 and 105,000 dwt.
Unless otherwise indicated, all references to "USD", "US$" and "$" in this report are to, and amounts are presented in U.S.
dollars.
A.  [RESERVED]
B.  CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C.  REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
Our assets are primarily engaged in international dry bulk shipping. The risk factors summarized in the Cautionary Statement
Regarding Forward Looking Statements and Summary of Risk Factors and detailed below, summarize certain risks that may
materially affect our business, financial condition or results of operations. Unless otherwise indicated in this annual report on
Form 20-F, all information concerning our business and our assets is as of March 20, 2024.
Risk Factors Summary
The principal risks that could adversely affect, or have adversely affected, our Company’s business, operation results and
financial conditions are categorized and detailed below.
1
• Risk Related to Our Industry
Our assets operate worldwide within the dry bulk shipping sector which is volatile and unpredictable. Several risk factors
including but not limited to our global and local market presence will impact our widespread operations. We are exposed to
regulatory, statutory, operational, technical, counterpart, environmental, and political risks, developments and regulations that
may impact and or disrupt our business. Details of specific risks relating to our industry are described below.
• Risks Related to our Business
Our Company is subject to a significant number of external and internal risks. We are a company with operations in many
different jurisdictions, markets and industries and with numerous employees, shareholders, customers and other stakeholders
having varying interests, and this broad exposure subjects us to significant risks. We also engage in activities, operations and
actions that could result in harm to our Company, and adversely affect our financial performance, position and our business.
Details of specific risks relating to our Company are described below.
• Risk Related to an Investment in Our Securities
Our common shares are subject to a significant number of external and internal risks. The market price of our common shares
has historically been unpredictable and volatile. As a holding company, we depend on the ability of our subsidiaries to
distribute funds to satisfy our financial and other obligations. As we are a foreign corporation, our shareholders may not have
the same rights as a shareholder in a U.S. corporation may have. In addition, our shareholders may not be able to bring suit
against us or enforce a judgement obtained in the U.S. against us since our offices and the majority of our assets are located
outside of the U.S. Furthermore, sales of our common shares or conversions of our convertible notes could cause the market
price of our common shares to decline. Details of specific risks relating to our common shares are described below.
Some risks are static while other risks may change and will vary depending on global and corporate developments that may
occur now or in the future. The risk factors below identify risks relating to our industry, Company and common shares. These
risks may not cover all risk factors applicable to the Company.
Risks Related to Our Industry
Charter hire rates for dry bulk vessels are volatile, have fluctuated significantly the past years and may decrease below our
break-even rates in the future, which may adversely affect our earnings, revenues and profitability and our ability to comply
with our loan covenants.
Substantially all of our revenues are derived from a single market, the dry bulk segment, and therefore our financial results are
subject to the cyclicality of the dry bulk shipping industry and any attendant volatility in charter hire rates and profitability. The
degree of charter hire rate volatility among different types of dry bulk vessels has varied widely, and time charter and spot
market rates for dry bulk vessels have in the recent past declined below operating costs of vessels.
Dry bulk market conditions remained volatile in 2023, reflecting the impact of a broad economic slowdown, easing of port
congestions, the armed conflicts between Russia and Ukraine and between Israel and Hamas and other geopolitical conflicts.
Dry bulk rates stabilized in the second half of 2023 as demand has stabilized and tonne-miles have increased, on the back of
strong Chinese imports. Towards the end of 2023, we witnessed strengthening in dry bulk rates which has continued in 2024.
Charter rate fluctuations result from changes in the supply and demand for vessel capacity for the major commodities carried on
water internationally. Because the factors affecting the supply and demand for vessels are outside of our control and are
unpredictable, the nature, timing, direction and degree of changes in charter rates are also unpredictable. Since we charter our
vessels principally in the spot market, we are exposed to the cyclicality and volatility of the spot market. Please refer to risk
factor "We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our
earnings and ability to pay our dividends."
Furthermore, a significant decrease in charter rates would cause asset values to decline which may require us to record an
impairment charge in our consolidated financial statements, which in turn could adversely affect our financial results. In 2023,
2022 and 2021, we have not had any impairment losses on our owned or leased assets. Further, because the market value of our
vessels may fluctuate significantly, we may also incur losses when we sell vessels, which may adversely affect our earnings. If
we sell vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial
2
statements, the sale may be at less than the vessel's carrying amount in our financial statements, resulting in a loss and a
reduction in earnings. For instance, during the years ended December 31, 2023 and 2021, we recorded impairment losses of
$11.8 million and $4.2 million, respectively, related to sales of vessels. No impairment loss was recorded during the year ended
December 31, 2022.
Factors that influence demand for vessel capacity include:
• Supply of and demand for and seaborne transportation of energy resources, commodities, and semi-finished and
finished consumer and industrial products;
• changes in the exploration or production of energy resources, commodities, and semi-finished and finished consumer
and industrial products;
• the location of regional and global exploration, production and manufacturing facilities;
• the location of consuming regions for energy resources, commodities, and semi-finished and finished consumer and
industrial products;
• the globalization of production and manufacturing;
• global and regional economic and political conditions, armed conflicts, including the conflicts between Russia and
Ukraine and between Israel and Hamas and fluctuations in industrial and agricultural production;
• disruptions and developments in international trade, including the increased vessel attacks and piracy in the Red Sea in
connection with the conflict between Israel and Hamas;
• changes in seaborne and other transportation patterns, including the distance cargo is transported by sea;
• international sanctions, embargoes, import and export restrictions, nationalizations, piracy and terrorist attacks;
• legal and regulatory changes including regulations adopted by supranational authorities and/or industry bodies, such as
safety and environmental regulations and requirements;
• weather and natural disasters;
• currency exchange rates, most importantly versus USD; and
• economic slowdowns caused by public health events.
Demand for our dry bulk oceangoing vessels is dependent upon economic growth in the world's economies, seasonal and
regional changes in demand and changes to the capacity of the global dry bulk fleet and the sources and supply of dry bulk
cargo transported by sea. Continued adverse economic, political or social conditions or other developments could further
negatively impact charter rates and therefore have a material adverse effect on our business results, results of operations and
ability to pay dividends.
Factors that influence the supply of vessel capacity include:
• the number of newbuilding orders and deliveries, including delays in vessel deliveries;
• the number of shipyards and ability of shipyards to deliver vessels;
• port or canal congestion;
• potential disruption, including supply chain disruptions, of shipping routes due to accidents or political events;
• scrapping of older vessels;
• speed of vessel operation;
• vessel casualties;
• technological advances in vessel design, capacity, propulsion technology and fuel consumption efficiency;
• the degree of scrapping or recycling of older vessels, depending, among other things, on scrapping or recycling rates
and international scrapping or recycling regulations;
• the price of steel and vessel equipment;
• product imbalances (affecting the level of trading activity) and developments in international trade;
• number of vessels that are out of service, namely those that are laid-up, drydocked, awaiting repairs or otherwise not
available for hire;
• availability of financing for new vessels and shipping activity;
• changes in national or international regulations that may effectively cause reductions in the carrying capacity of
vessels or early obsolescence of tonnage; and
• changes in environmental and other regulations that may limit the useful lives of vessels.
In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up
include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs,
costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, the efficiency,
sophistication and age profile of the existing dry bulk fleet in the market, and government and industry regulation of maritime
transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of and
3
demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and
degree of changes in industry conditions.
Global economic conditions may negatively impact the dry bulk shipping industry and we face risks attendant in economic
and regulatory conditions around the world.
Major market disruptions and adverse changes in market conditions and regulatory climate in China, the United States, the
European Union and worldwide may adversely affect our business or impair our ability to borrow amounts under credit
facilities or any future financial arrangements.
Chinese dry bulk imports have accounted for the majority of global dry bulk transportation growth annually over the last
decade. Accordingly, our financial condition and results of operations, as well as our future prospects, would likely be hindered
by an economic downturn in any of these countries or geographic regions. While global economic activity levels led by China
generally stabilized towards the last quarter of 2023, the outlook for China remains uncertain and dependent on recovery of
Chinese economy, including a recovery in the real estate sector, and the extent of trade tensions between the United States and
China. It is unknown whether and to what extent tariffs (or other laws or regulations) will be adopted, or the effect that any such
actions would have on us or our industry. If any new tariffs, legislation and/or regulations are implemented, or if existing trade
agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the U.S.-China trade
tension, such changes could have an adverse effect on our business, financial condition, and results of operations. Additionally,
the outlook for the rest of the world remains uncertain and are dependent on inflation and present geopolitical stability,
including the conflicts between Russia and Ukraine and between Israel and Hamas.
Broader economic slowdown, high energy prices and accelerating inflation, together with the concurrent volatility in charter
rates and vessel values, may have a material adverse effect on our results of operations, financial condition and cash flows and
could cause the price of our common shares to decline. An extended period of deterioration in the outlook for the world
economy could reduce the overall demand for our services and could also adversely affect our ability to obtain financing on
acceptable terms or at all.
Continuing concerns over inflation, rising interest rates, energy costs, geopolitical issues, including the conflicts between
Russia and Ukraine and between Israel and Hamas and the availability and cost of credit have contributed to increased volatility
and diminished expectations for the economy and the markets going forward. These factors, combined with volatile oil prices,
declining business and consumer confidence, have precipitated fears of a possible economic recession. Domestic and
international equity markets continue to experience heightened volatility and turmoil. The weakness in the global economy has
caused, and may continue to cause, a decrease in worldwide demand for certain goods and, thus, shipping.
An over-supply of dry bulk vessel capacity may lead to reductions in charter hire rates, vessel values and profitability.
Historically, over the past few years, the supply of dry bulk vessels has outpaced vessel demand growth, thereby causing
downward pressure on charter rates. In such cases, if the supply of dry bulk vessels is not fully absorbed by the market, charter
rates and value of the vessels may have a material adverse effect on our results of operations, our ability to pay dividends and
our compliance with current or future covenants in any of our agreements.
Risks involved with operating ocean-going vessels could result in the loss of life or harm to our seafarers, environmental
accidents or otherwise affect our business and reputation, which could have a material adverse effect on our results of
operations and financial condition.
The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:
• loss of life or harm to seafarers;
• a marine accident or disaster;
• terrorism;
• piracy or robbery;
• environmental accidents and pollution;
• cargo and property losses and damage; and
• business interruptions caused by mechanical failure, human error, war, political action in various countries, labor
strikes, or adverse weather conditions.
Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an
environmental disaster may harm our reputation as a safe and reliable dry bulk operator.
4
Our operations outside the United States expose us to global risks, such as political instability, terrorist or other attacks, war,
international hostilities, economic sanctions restrictions, and global public health concerns, which may affect the seaborne
transportation industry and adversely affect our business.
We are an international shipping company and primarily conduct most of our operations outside the United States, and our
business, results of operations, cash flows, financial condition and ability to pay dividends, if any, in the future may be
adversely affected by changing economic, political and government conditions in the countries and regions where our vessels
are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the
effects of political conflicts.
Currently, the world economy continues to face a number of actual and potential challenges, including the war between Ukraine
and Russia and between Israel and Hamas, current trade tension between the United States and China, political instability in the
Middle East and the South China Sea region and other geographic countries and areas, terrorist or other attacks, war (or
threatened war) or international hostilities, such as those between the United States and China, North Korea or Iran, and
epidemics or pandemics, such as COVID-19, banking crises or failures, such as the recent notable regional bank failures in the
United States, and real estate crises, such as the decreasing real estate values in China.
In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt
international shipping, particularly in the Arabian Gulf region, Black Sea and in connection with the recent attacks by the
Houthi movement in the Red Sea following the recent conflicts between Israel and Hamas. Acts of terrorism and piracy have
also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these
occurrences could have a material adverse impact on our future performance, results of operation, cash flows and financial
position.
In 2022 and 2023, US and several European leaders announced various economic sanctions against Russia in connection with
the aforementioned conflicts in the Ukraine region, which may adversely impact our business.
The United States Department of the Treasury’s Office of Foreign Assets Control ("OFAC") administers and enforces multiple
authorities under which sanctions have been imposed on Russia, including: the Russian Harmful Foreign Activities sanctions
program, established by the Russia-related national emergency declared in Executive Order (E.O.) 14024 and subsequently
expanded and addressed through certain additional authorities, and the Ukraine-Russia-related sanctions program, established
with the Ukraine-related national emergency declared in E.O. 13660 and subsequently expanded and addressed through certain
additional authorities. The ongoing conflict could result in the imposition of further economic sanctions or new categories of
export restrictions against persons in or connected to Russia. While in general much uncertainty remains regarding the global
impact of the conflict in Ukraine, it is possible that such tensions could adversely affect the Company’s business, financial
condition, results of operation and cash flows.
Our business could also be adversely impacted by trade tariffs, trade embargoes or other economic sanctions that limit trading
activities by the United States or other countries against countries in the Middle East, Asia or elsewhere as a result of terrorist
attacks, hostilities or diplomatic or political pressures, including as a result of the current conflict between Israel and Hamas.
Changes in the economic and political environment in China and policies adopted by the government to regulate its
economy may have a material adverse effect on our business, financial condition and results of operations.
The Chinese economy differs from the economies of western countries in such respects as structure, government involvement,
level of development, growth rate, capital reinvestment, allocation of resources, bank regulation, currency and monetary policy,
rate of inflation and balance of payments position. Since 1978, there has been an increasing level of freedom and autonomy in
areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a ''market
economy'' and enterprise reform. The Chinese government adopts annual and five-year State Plans in connection with the
development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial
output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through
State Plans and other measures. Many of the reforms are unprecedented or experimental and may be subject to revision, change
or abolition based upon the outcome of such experiments. The Chinese government may not continue to pursue a policy of
economic reform, and the level of imports to and exports from China could be adversely affected by the failure to continue
market reforms or changes to existing pro-export economic policies. For example, China imposes a tax for non-resident
international transportation enterprises engaged in the provision of services of passengers or cargo, among other items, in and
out of China using their own, chartered or leased vessels. The regulation may subject international transportation companies to
Chinese enterprise income tax on profits generated from international transportation services passing through Chinese ports.
This tax or similar regulations, such as the recently promoted environmental taxes on coal, by China may result in an increase in
the cost of raw materials imported to China and the risks associated with importing raw materials to China, as well as a decrease
in any raw materials shipped from our charterers to China. This could have an adverse impact on our charterers’ business,
5
operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to
renew and increase the number of their time charters with us. The level of imports to and exports from China may also be
adversely affected by changes in political, economic and social conditions (including a slowing of economic growth) or other
relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, internal
political instability, changes in currency policies, changes in trade policies and territorial or trade disputes. In recent years,
China and the United States have implemented certain increasingly protective trade measures with continuing trade tensions,
including significant tariff increases, between these countries. Although the United States and China successfully reached an
interim trade deal in January 2020 that de-escalated the trade tensions with both sides rolling back tariffs, the extent to which
the trade deal will be successfully implemented is unpredictable. A decrease in the level of imports to and exports from China
could adversely affect our business, operating results and financial condition.
In addition, in September 2020, President Xi Jinping committed his country to achieving carbon neutrality by 2060 at the UN
General Assembly. Carbon emissions are currently a prominent part of China’s economic and industrial structure as it relies
heavily on nonrenewable energy sources, generally lacks energy efficiency, and has a rapidly growing energy demand.
Depending on how China attempts to achieve carbon neutrality by 2060, including through the reduction in the use of coal, an
overall increase in the use of nonrenewable energy as part of the energy consumption mix and through other means and any
reduction in the demand for coal and related products could have a material adverse effect on our business, cash flows and
results of operations.
We conduct a substantial amount of business in China, which means the uncertainties in China’s legal system could have a
material adverse effect on our business, financial condition and results of operations.
Chinese administrative and court authorities have significant discretion in interpreting and implementing statutory and
contractual terms. Accordingly, it may be more difficult to evaluate the outcome of administrative and court proceedings than
in more developed legal systems and to ensure the level of legal protection we enjoy elsewhere. For example, we enter into
charters with Chinese customers, which may be subject to new regulations in China. We may, therefore, be required to incur
new or additional compliance or other administrative costs, and pay new taxes or other fees to the Chinese government.
Although the charters we enter into with Chinese counterparties are not governed by Chinese law, we may have difficulties
enforcing a judgment rendered by an arbitration tribunal or by an English or U.S. court (or other non-Chinese court) in China.
Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities could
affect our vessels that are either chartered to Chinese customers or that call to Chinese ports and our vessels that undergo
drydocking, or to which we install scrubbers, at Chinese shipyards, and the financial institutions with whom we have entered
into financing agreements, could have a material adverse effect on our business, results of operations and financial condition.
If our vessels call at ports located in countries or territories that are the subject of sanctions or embargoes imposed by the
U.S. government, the European Union, the United Nations or other governmental authorities, it could lead to monetary fines
or penalties and adversely affect our reputation and the market for our shares of common stock and its trading price.
None of our vessels called on ports located in countries or territories that are the subject of country-wide or territory-wide
sanctions or embargoes imposed by the U.S. government or other applicable governmental authorities ("Sanctioned
Jurisdictions") in 2023 in violation of applicable sanctions or embargo laws. Although we intend to maintain compliance with
all applicable sanctions and embargo laws , and we endeavor to take precautions reasonably designed to mitigate such risks, it is
possible that in the future our vessels may call on ports located in Sanctioned Jurisdictions on charterers’ instructions and/or
without our consent. If such activities result in a violation of sanctions or embargo laws, we could be subject to monetary fines,
penalties, or other sanctions, and our reputation and the market for our common shares could be adversely affected.
The laws and regulations of these different jurisdictions vary in their application and do not all apply to the same covered
persons or proscribe the same activities. In addition, the sanctions and embargo laws and regulations of each jurisdiction may
be amended to increase or reduce the restrictions they impose over time, and the lists of persons and entities designated under
these laws and regulations are amended frequently. Moreover, most sanctions regimes provide that entities owned or controlled
by the persons or entities designated in such lists are also subject to sanctions. The U.S. and EU have both enacted new
sanctions programs in recent years. Additional countries or territories, as well as additional persons or entities within or
affiliated with those countries or territories, have, and in the future will, become the target of sanctions. These require us to be
diligent in ensuring our compliance with sanctions laws. Further, the U.S. has increased its focus on sanctions enforcement with
respect to the shipping sector. Current or future counterparties of ours may be affiliated with persons or entities that are or may
in the future become the subject of sanctions imposed by the United States, EU and/or other international bodies. If we
determine that such sanctions require us to terminate existing or future contracts to which we, or our subsidiaries, are party or if
6
we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected, or we may
suffer reputational harm.
As a result of Russia’s actions in Ukraine and the war between Israel and Hamas, the U.S., EU and United Kingdom, together
with numerous other countries, have imposed significant economic sanctions which may adversely affect our ability to operate
in the region and also restrict parties whose cargo we carry.
Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations in 2023,
and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as
the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in
fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business,
and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain
institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that
have contracts with countries or territories identified by the U.S. government as state sponsors of terrorism. The determination
by these investors not to invest in, or to divest from, our common shares may adversely affect the price at which our common
shares trade. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions
that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. Investor perception of
the value of our common shares may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and
governmental actions in countries or territories that we operate in.
Compliance with safety and other vessel requirements imposed by classification societies may require additional investments
and could reduce our net cash flows and net income.
A classification society authorized by the country of registry of a commercial vessel must certify such vessel as being "in class"
and safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the
Safety of Life at Sea Convention. Most insurance underwriters make it a condition for insurance coverage and lending that a
vessel be certified "in class" by a classification society which is a member of the International Association of Classification
Societies, the IACS. The IACS has adopted harmonized Common Structural Rules, or "the Rules", which apply to oil tankers
and bulk carriers contracted for construction on or after July 1, 2015. The Rules attempt to create a level of consistency between
IACS Societies. All of our vessels are certified as being "in class" by all the applicable Classification Societies (e.g., American
Bureau of Shipping, Lloyd's Register of Shipping and Det Norske Veritas).
Additionally a vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. Alternatively, a
vessel's machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed periodically
over a five-year period. We expect our vessels to be on special survey cycles for hull inspection and continuous survey cycles
for machinery inspection. Our vessels also undergo inspections with a view towards compliance under the Ship Inspection
Report Programme (SIRE) and the United States Coast Guard (USCG) requirements, as applicable.
Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of the vessel. If any
vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel
will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation
of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of
covenants, could have a material adverse impact on our financial condition and results of operations.
Compliance with the above requirements may require significant additional investments by us, and we may incur significant
additional costs in meeting any new inspection requirements or rules. If any vessel does not maintain its class or fails any
annual, intermediate or special survey or drydocking, the vessel will be unable to trade between ports and will be unemployable
and uninsurable, which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to
carry cargo or be employed, or any such violation of covenants, could have a material adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay dividends.
Further, government regulation of vessels, particularly in the areas of safety and environmental requirements, can be expected
to become stricter in the future and require us to incur significant capital expenditures on our vessels to keep them in
compliance.
Climate change and related legislation or regulations may adversely impact our business, including potential financial,
operational and physical impacts.
Growing concern about the sources and impacts of global climate change has led to the proposal or enactment of a number of
domestic and foreign legislative and administrative measures, as well as international agreements and frameworks, to monitor,
7
regulate and limit carbon dioxide and other greenhouse gases ("GHG") emissions. Although the Paris Agreement, which was
adopted under the UN Framework Convention on Climate Change in 2015, does not specifically require controls on GHG
emissions from ships, it is possible that countries seek to impose such controls as they implement the Paris Agreement or any
new treaty that may be adopted in the future. In the European Union, emissions are regulated under the E.U. Emissions Trading
System (the "EU ETS"). As of January 1, 2024, maritime shipping was phased into the EU ETS, which applies to cargo and
passenger ships of 5,000 gross tonnage or above. All 100% of carbon emissions on voyages and port calls within the EU/EEA
and 50% of carbon emissions on voyages into or out of the EU/EEA, are subject to the EU ETS. The person or organization
responsible for the compliance with the EU ETS is the shipping company, defined as the shipowner or any other organization or
person, such as the manager or the bareboat charterer, that has assumed the responsibility for the operation of the ship from the
shipowner. This regulation will be applicable to our entire Fleet (as defined below) as from January 1, 2024. While the legal
obligation of purchasing and surrendering the emission allowances is with the Company; when the vessel is under a time
charter contract, the Company will typically be reimbursed for the purchase of emission allowances by the charterer. On
December 18, 2022, the Environmental Council and European Parliament agreed to include maritime shipping emissions within
the scope of the EU ETS on a gradual introduction of obligations for shipping companies to surrender allowances: 40% for
verified carbon emissions from 2024, 70% for 2025 and 100% for 2026. Compliance with the EU ETS will result in additional
compliance and administration costs to properly incorporate the provisions of the Directive into our business routines.
Additional EU regulations which are part of the EU’s Fit-for-55, could also affect our financial position in terms of compliance
and administration costs when they take effect.
In addition, in June 2021, the IMO adopted amendments to MARPOL Annex VI that entered into force on November 1, 2022
and require ships to reduce GHG emissions using technological and operational approaches to improve energy efficiency and
that provide important building blocks for future GHG reduction measures. FuelEU Maritime is entering into force from
January 1, 2025, it will increase the share of renewable and low-carbon fuels in the fuel mix of international maritime transport
in the European Union.
These requirements and any passage of additional climate control legislation or other regulatory initiatives by the IMO, the
European Union, the United States or other countries where we operate, or any treaty adopted at the international level, that
restrict emissions of GHGs could require us to make significant financial expenditures, including the installation of pollution
controls and the purchase of emissions credits, as well as have other impacts on our business or operations, that we cannot
predict with certainty at this time. While we have installed scrubbers on 41 vessels in our fleet pursuant to IMO sulfur cap
regulations, we may be required in the future to expend more capital to modify, upgrade or replace vessels as a result of new
climate GHG related rules and regulations. While IMO has set specific targets for 2030 and 2050 within the scope of its GHG
strategy, currently only short-term measures have been adopted thus far, which we do not believe at this time will require
material capital expenditures. Should additional medium-term measures be adopted and come into force, including market
based measures to put a price on carbon, we may need to incur additional capital expenditures to comply with the relevant GHG
emission regulations. Even in the absence of climate control legislation and regulations, our business and operations may be
materially affected to the extent that climate change results in sea level changes or more intense weather events.
Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our
ESG policies may impose additional costs on us or expose us to additional risks.
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain
institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in
recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and
activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate
capital or to not commit capital as a result of their assessment of a company’s ESG practices. Additionally, we may face
increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to
prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. Certain investors and lenders
may exclude transportation companies, such as us, from their investing portfolios altogether due to environmental, social and
governance factors. Companies which fail to adapt to or comply with investor, lender or other industry shareholder expectations
and standards, which are evolving, or which are perceived to have failed to respond appropriately to the growing concern for
ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage, costs related to
litigation, and the business, financial condition, and/or stock price of such a company could be materially and adversely
affected.
In February 2021, the Acting Chair of the U.S. Securities and Exchange Commission (the "SEC") issued a statement directing
the Division of Corporation Finance to enhance its focus on climate-related disclosure in public company filings and in March
2021 the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement (the "Task Force"). The
Task Force’s goal is to develop initiatives to proactively identify ESG-related misconduct consistent with increased investor
reliance on climate and ESG-related disclosure and investment. To implement the Task Force’s purpose, the SEC has taken
several enforcement actions, with the first enforcement action taking place in May 2022, and proposed new rules. On March 21,
2022, the SEC proposed that all public companies are to include extensive climate-related information in their SEC filings. On
8
May 25, 2022, SEC proposed a second set of rules aiming to curb the practice of "greenwashing" (i.e., making unfounded
claims about one's ESG efforts) and would add proposed amendments to rules and reporting forms that apply to registered
investment companies and advisers, advisers exempt from registration, and business development companies. On March 6,
2024, the SEC adopted final rules to require registrants to disclose certain climate-related information in SEC filings of all
public companies. The final rules require companies to disclose, among other things: material climate-related risks; activities to
mitigate or adapt to such risks; information about the registrant's board of directors' oversight of climate-related risks and
management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are
material to the registrant's business, results of operations, or financial condition. Further, to facilitate investors' assessment of
certain climate-related risks, the final rules require disclosure of Scope 1 and/or Scope 2 greenhouse gas (GHG) emissions on a
phased-in basis when those emissions are material; the filing of an attestation report covering the required disclosure of such
registrants’ Scope 1 and/or Scope 2 emissions, also on a phased-in basis; and disclosure of the financial statement effects of
severe weather events and other natural conditions including, for example, costs and losses. The final rules include a phased-in
compliance period for all registrants, with the compliance date dependent on the registrant’s filer status and the content of the
disclosure. However, on March 15, 2024, the U.S. Court of Appeals for the Fifth Circuit granted an administrative stay on the
SEC's recent climate disclosure rule.
Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities,
including clean-up obligations and natural resource damages liability, in the event that there is a release of hazardous materials
from our vessels or otherwise in connection with our operations. Environmental laws often impose strict liability for
remediation of spills and releases of oil and hazardous substances, which could subject us to liability, without regard to whether
we were negligent or at fault.
Many environmental requirements are designed to reduce the risk of pollution and our compliance with these requirements
could be costly. For example, Annex VI of the International Convention for the Prevention of Marine Pollution from Ships
("MARPOL"), which instituted a global 0.5% (lowered from 3.5% as of January 1, 2020) sulfur cap on marine fuel consumed
by a vessel, unless the vessel is equipped with a scrubber As of March 20, 2024, 41 of our vessels have been equipped with
scrubbers to comply with this change in regulation ("Scrubber Program") and as of January 1, 2020, we have transitioned to
burning IMO compliant fuels in our non-scrubber equipped vessels as necessary.
In addition, regulations relating to ballast water discharge may adversely affect our revenues and profitability. The International
Maritime Organization (the "IMO") has imposed updated guidelines for ballast water management systems specifying the
maximum amount of viable organisms allowed to be discharged from a vessel's ballast water. Depending on the date of the
International Oil Pollution Prevention (the "IOPP") renewal survey, existing vessels constructed before September 8, 2017,
must comply with the updated D-2 standard on or after September 8, 2019. For most vessels, compliance with the D-2 standard
involves installing on-board systems to treat ballast water and eliminate unwanted organisms. Ships constructed on or after
September 8, 2017 are to comply with the D-2 standards upon delivery. We currently do not have vessels in our fleet
constructed prior to September 8, 2017 that do not have ballast water management systems installed, however, the ballast water
treatment systems ("BWTS") need to be upgraded on several of our vessels, and we expect to incur costs of approximately $4.8
million in 2024.
Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit (''VGP'') program and
U.S. National Invasive Species Act (''NISA'') are currently in effect to regulate ballast discharge, exchange and installation, the
Vessel Incidental Discharge Act (''VIDA''), which was signed into law on December 4, 2018, requires that the U.S.
Environmental Protection Agency ("EPA") develop national standards of performance for approximately 30 discharges, similar
to those found in the VPG within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for
Vessel Incidental Discharge National Standards of Performance under VIDA. On October 18, 2023, the EPA published a
supplemental notice of the proposed rule sharing new ballast water data received from the U.S. Coast Guard ("USCG") and
providing clarification on the proposed rule. The public comment period for the proposed rule ended on December 18, 2023.
Once EPA finalizes the rule (possibly by Fall 2024), USCG must develop corresponding implementation, compliance and
enforcement regulations regarding ballast water within two years. The new regulations could require the installation of new
equipment, which may cause us to incur substantial costs.
Please see "Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the
Shipping Industry" for a discussion of the environmental and other regulations applicable to us.
If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect
our insurance coverage and may result in a denial of access to, or detention in, certain ports.
The operation of our vessels is affected by the requirements set forth in the IMO's International Safety Management Code (the
"ISM Code"). The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive
9
"Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth
instructions and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to comply
with the ISM Code, we may be subject to increased liability, or may invalidate existing insurance or decrease available
insurance coverage for our affected vessels, and such failure may result in a denial of access to, or detention in, certain ports.
The U.S. Coast Guard and European Union authorities enforce compliance with the ISM and International Ship and Port
Facility Security Code (the "ISPS Code"), and prohibit non-compliant vessels from trading in U.S. and European Union ports.
This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Given that the IMO continues to review and introduce new regulations, it is impossible to predict what additional regulations, if
any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.
Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such
conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional
conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing
business and which may materially adversely affect our operations. We are required by various governmental and quasi-
governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.
Please see "Item 4. Information on the Company - B. Business Overview - Environmental and Other Regulations in the
Shipping Industry" for a discussion of the environmental and other regulations applicable to us.
Developments in safety and environmental requirements relating to the recycling of vessels may result in escalated and
unexpected costs.
The 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the "Hong Kong
Convention"), aims to ensure ships, being recycled once they reach the end of their operational lives, do not pose any
unnecessary risks to the environment, human health and safety. In June 2023, the Hong Kong Convention was ratified by the
required number of countries, and thus will enter into force in June 2025. Upon the Hong Kong Convention's entry into force,
each ship sent for recycling will have to carry an inventory of its hazardous materials. The hazardous materials, whose use or
installation are prohibited in certain circumstances, are listed in an appendix to the Hong Kong Convention. Ships will be
required to have surveys to verify their inventory of hazardous materials initially, throughout their lives and prior to the ship
being recycled.
On November 20, 2013, the European Parliament and the Council of the EU adopted the Ship Recycling Regulation, which
retains the requirements of the Hong Kong Convention and requires that certain commercial seagoing vessels flying the flag of
an EU member state may be recycled only in facilities included on the European list of permitted ship recycling facilities.
Apart from that, any vessel, including ours, is required to set up and maintain an Inventory of Hazardous Materials from
December 31, 2018 for EU flagged new ships and from December 31, 2020 for EU flagged existing ships and Non-EU flagged
ships calling at a port or anchorage of an EU member state. Such a system includes Information on the hazardous materials with
a quantity above the threshold values specified in relevant EU Resolution and are identified in ship’s structure and equipment.
This inventory should be properly maintained and updated, especially after repairs, conversions or unscheduled maintenance on
board the ship.
These regulatory requirements may lead to cost escalation by shipyards, repair yards and recycling yards. This may then result
in a decrease in the residual recycling value of a vessel, which could potentially not cover the cost to comply with the latest
requirements, which may have an adverse effect on our future performance, results of operations, cash flows and financial
position.
Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our customers' or our cash
flows.
Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime
lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien
by "arresting" or "attaching" a vessel through judicial or foreclosure proceedings. The arrest or attachment of one or more of
our vessels could interrupt the cash flow of the charterer and/or our cash flow and require us to pay a significant amount of
money to have the arrest lifted, which would have an adverse effect on our financial condition and results of operations. In
addition, in jurisdictions where the "sister ship" theory of liability applies, such as South Africa, a claimant may arrest the
vessel that is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the
same owner. In countries with "sister ship" liability laws, claims may be asserted against us or any of our vessels for liabilities
of other vessels that we own. Under some of our present charters, if the vessel is arrested or detained as a result of a claim
10
against us, we may be in default of our charter and the charterer may terminate the charter, which will negatively impact our
revenues and cash flows.
Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.
A government of a vessel's registry could requisition for title or seize one or more of our vessels. Requisition for title occurs
when a government takes control of a vessel and becomes the owner. Such government could also requisition one or more of
our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the
charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of
one or more of our vessels could have a material adverse effect on our business, results of operations, cash flows, financial
condition and ability to pay dividends.
Acts of piracy and attacks on ocean-going vessels could adversely affect our business.
Acts of piracy and attacks have historically affected ocean-going vessels trading in certain regions of the world, such as the
South China Sea, the Gulf of Aden and the Red Sea. Piracy continues to occur in the Gulf of Aden, off the coast of Somalia,
and increasingly in the Gulf of Guinea. We consider potential acts of piracy to be a material risk to the international shipping
industry, and protection against this risk requires vigilance. Our vessels regularly travel through regions where pirates are
active. Furthermore, the recent Houthi seizures and attacks on commercial vessels in the Red Sea and the Gulf of Aden have
impacted the global economy as some companies have decided to reroute vessels to avoid the Suez Canal and Red Sea. We may
not be adequately insured to cover losses from acts of terrorism, piracy, regional conflicts and other armed actions, which could
have a material adverse effect on our results of operations, financial condition and ability to pay dividends. Crew costs could
also increase in such circumstances.
Risks Related to Our Business
The market values of our vessels may decline, which could limit the amount of funds that we can borrow, cause us to breach
certain financial covenants in our credit facilities, or result in an impairment charge, and cause us to incur a loss if we sell
vessels following a decline in their market value.
The fair market values of dry bulk vessels, including our vessels, have generally experienced high volatility and may decline in
the future. The fair market value of vessels may increase and decrease depending on but not limited to the following factors:
• general economic and market conditions affecting the shipping industry;
• the balance between the supply of and demand for ships of a certain type;
• competition from other shipping companies;
• the availability and cost of ships of the required size and design;
• the availability of other modes of transportations;
• the cost of newbuildings;
• shipyard capacity;
• changes in environmental, governmental or other regulations that may limit the useful life of vessels, require costly
upgrades or limit their efficiency;
• distressed asset sales, including newbuilding contract sales below acquisition costs due to lack of financing;
• the types, sizes, sophistication and ages of vessels, including as compared to other vessels in the market;
• the prevailing level of charter rates;
• the need to upgrade secondhand and previously owned vessels as a result of environmental, safety, regulatory or
charterer requirements; and
• technological advances in vessel design, capacity, propulsion technology and fuel consumption efficiency.
During the period a vessel is subject to a charter, we might not be permitted to sell it to take advantage of increases in vessel
values without the charterer's consent. If we sell a vessel at a time when ship prices have fallen, the sale may be at less than the
vessel's carrying amount in our financial statements, with the result that we could incur a loss and a reduction in earnings.
During the year ended December 31, 2023 and 2021, we recorded impairment losses of $11.8 million and $4.2 million,
respectively, related to the sales of vessels. There were no impairment losses recorded in 2022 related to the sales of vessels.
The carrying values of our owned and leased vessels are reviewed quarterly or whenever events or changes in circumstances
indicate that the carrying amount of the vessel may no longer be recoverable. We assess recoverability of the carrying value by
estimating the future net cash flows expected to result from the vessel, including eventual disposal for owned vessels. If the
11
future net undiscounted cash flows and the estimated fair market value of the vessel are less than the carrying value, an
impairment loss is recorded equal to the difference between the vessel's carrying value and fair value. There were no
impairment losses recorded in 2023, 2022 or 2021 for owned and leased vessels. Any impairment charges incurred as a result of
declines in charter rates and other market deterioration could negatively affect our business, financial condition or operating
results or the trading price of our common shares.
Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may
increase and this could adversely affect our business, results of operations, cash flow and financial condition.
We are dependent on spot charters and any decrease in spot charter rates in the future may adversely affect our earnings
and ability to pay dividends.
As of December 31, 2023, 78 of the 91 vessels, which are owned, leased or chartered-in by us, were employed in the spot
market or on short-term or variable time rate charters, and we are therefore exposed to fluctuations in spot market charter rates.
We may also employ any additional vessels that we acquire to take delivery of in the spot market.
Although the number of vessels in our fleet that participate in the spot market will vary from time to time, we anticipate that a
significant portion of our fleet will participate in this market. As a result, our financial performance will be significantly
affected by conditions in the dry bulk spot market and only our vessels that operate under fixed-rate time charters may, during
the period such vessels operate under such time charters, provide a fixed source of revenue to us.
Historically, the dry bulk markets have been volatile as a result of the many conditions and factors that can affect the price,
supply of and demand for dry bulk capacity. Weak global economic trends may further reduce demand for transportation of dry
bulk cargoes over longer distances, which may materially affect our revenues, profitability and cash flows. The spot market
may fluctuate significantly based upon supply of and demand for vessels and cargoes. The successful operation of our vessels in
the competitive spot market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent
possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. The spot market is volatile and there
have been periods when spot rates have declined below the operating cost of vessels. If future spot market rates decline, then
we may be unable to operate our vessels trading in the spot market profitably, or meet our obligations, including payments on
indebtedness, or to pay dividends in the future. Furthermore, as charter rates for spot charters are fixed for a single voyage,
which may last up to several weeks during periods in which spot charter rates are rising, we will generally experience delays in
realizing the benefits from such increases.
Our ability to renew the charters on our vessels on the expiration or termination of our current charters, or on vessels that we
may acquire in the future, or the charter rates payable under any replacement charters and vessel values will depend upon,
among other things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply and
demand for vessel capacity and changes in the supply and demand for the seaborne transportation of energy resources.
Our credit facilities impose operating and financial restrictions, which could significantly limit our ability to execute our
business strategy and increase the risk of default under our debt obligations.
As of December 31, 2023, we had $1,380.7 million of outstanding indebtedness under our credit facilities and debt securities, of
which $109.3 million was classified as current portion of long-term debt. We cannot assure you that we will be able to generate
cash flow in amounts that is sufficient to satisfy these obligations. If we are not able to satisfy these obligations, we may have to
undertake alternative financing plans or sell our assets. In addition, debt service payments under our credit facilities may limit
funds otherwise available for working capital, capital expenditures, payment of cash distributions and other purposes. If we are
unable to meet our debt obligations, or if we otherwise default under our credit facilities, our lenders could declare the debt,
together with accrued interest and fees, to be immediately due and payable and foreclose on our fleet, which could result in the
acceleration of other indebtedness that we may have at such time and the commencement of similar foreclosure proceedings by
other lenders.
Our credit facilities impose operating and financial restrictions on us that limit our ability, or the ability of our subsidiaries party
thereto, as applicable, to:
• pay dividends and make capital expenditures if there is an event of default under our credit facilities;
• incur additional indebtedness, including the issuance of guarantees, or refinance or prepay any indebtedness, unless
certain conditions exist;
• create liens on our assets, unless otherwise permitted under our credit facilities;
12
• change the flag, class or management of our vessels or terminate or materially amend the management agreement
relating to each vessel;
• merge or consolidate with, or transfer all or substantially all our assets to, another person; or
• enter into a new line of business.
In addition, our loan agreements, which are secured by liens on our vessels, contain various financial covenants. Among those
covenants are requirements that relate to our financial position, operating performance and liquidity. For example, there are
financial covenants that require us to maintain (i) an equity ratio fixing a minimum value of adjusted equity that is based, in
part, upon the market value of the vessels securing the loans, (ii) minimum levels of free cash, (iii) positive working capital, and
(iv) a minimum value, or loan-to-value, covenant, which could require us to post collateral or prepay a portion of the
outstanding borrowings should the value of the vessels securing borrowings decrease below a required level.
Our ability to comply with the covenants and restrictions contained in our current or future credit facilities may be affected by
events beyond our control, including prevailing economic, financial and industry conditions, interest rate developments,
changes in the funding costs of our banks and changes in vessel earnings and asset valuations. If market or other economic
conditions deteriorate, our ability to comply with these covenants may be impaired. For example, the market value of dry bulk
vessels is likewise sensitive to, among other things, changes in the dry bulk market, with vessel values deteriorating in times
when dry bulk rates are falling or anticipated to fall and improving when charter rates are rising or anticipated to rise. Such
conditions may result in us not being in compliance with our loan covenants. In such a situation, unless our lenders are willing
to provide further waivers of covenant compliance or modifications to our covenants, or would be willing to refinance our
indebtedness, we may have to sell vessels in our fleet and/or seek to raise additional capital in the equity markets in order to
comply with our loan covenants. Furthermore, if the value of our vessels deteriorates significantly, we may have to record an
impairment adjustment in our financial statements, which would adversely affect our financial results and further hinder our
ability to raise capital. The fair market values of our vessels may decline, which could limit the amount of funds that we can
borrow, cause us to breach certain financial covenants in our credit facilities, or result in an impairment charge, and cause us to
incur a loss if we sell vessels following a decline in their market value.
If we are not in compliance with our covenants and are not able to obtain covenant waivers or modifications, our lenders could
require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our
indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our fleet, or they could accelerate
our indebtedness, any of which would impair our ability to continue to conduct our business. If our indebtedness is accelerated,
we might not be able to refinance our debt or obtain additional financing and could lose our vessels if our lenders foreclose on
their liens. In addition, if we find it necessary to sell our vessels at a time when vessel prices are low, we will recognize losses
and a reduction in our earnings, which could affect our ability to raise additional capital necessary for us to comply with our
loan agreements.
Furthermore, certain of our credit facilities contain a cross-default provision that may be triggered by a default under one of our
other credit facilities. A cross-default provision means that a default on one loan would result in a default on certain of our other
loans. Because of the presence of cross-default provisions in certain of our credit facilities, the refusal of any one lender under
our credit facilities to grant or extend a waiver could result in certain of our indebtedness being accelerated, even if our other
lenders under our credit facilities have waived covenant defaults under the respective credit facilities. If our secured
indebtedness is accelerated in full or in part, it would be very difficult for us to refinance our debt or obtain additional financing
and we could lose our vessels securing our credit facilities if our lenders foreclose their liens, which would adversely affect our
ability to conduct our business.
Also, any contemplated vessel acquisitions will have to be at levels that do not impair the required ratios set out above. The
global economic downturn that occurred within the past several years had an adverse effect on vessel values, which may occur
again if an economic slowdown arises in the future. If the estimated asset values of the vessels in our fleet decrease, such
decreases may limit the amounts we can draw down under our future credit facilities to purchase additional vessels and our
ability to expand our fleet. In addition, we may be obligated to prepay part of our outstanding debt in order to remain in
compliance with the relevant covenants in our current or future credit facilities. If funds under our current or future credit
facilities become unavailable as a result of a breach of our covenants or otherwise, we may not be able to perform our business
strategy, which could have a material adverse effect on our business, results of operations and financial condition and our
ability to pay dividends.
Technological innovation and quality and efficiency requirements from our customers could reduce our charter hire income
and the value of our vessels.
13
Our customers have a high and increasing focus on quality and compliance standards with their suppliers across the entire
supply chain, including the shipping and transportation segment. Our continued compliance with these standards and quality
requirements is vital for our operations. The charter hire rates and the value and operational life of a vessel are determined by a
number of factors including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel
economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related
docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and
construction, its maintenance and the impact of the stress of operations. We face competition from companies with more
modern vessels having more fuel efficient designs than our vessels, or eco vessels, and if new dry bulk vessels are built that are
more efficient or more flexible or have longer physical lives than the current eco vessels, competition from the current eco
vessels and any more technologically advanced vessels could adversely affect the amount of charter hire payments we receive
for our vessels and the resale value of our vessels could significantly decrease. Similarly, technologically advanced vessels are
needed to comply with environmental laws the investment in which along with the foregoing could have a material adverse
effect on our results of operations, charter hire payments and resale value of vessels. This could have an adverse effect on our
results of operations, cash flows, financial condition and ability to pay dividends.
We may be unable to successfully compete with other vessel operators for charters, which could adversely affect our results
of operations and financial position.
The operation of dry bulk vessels and international seaborne transportation of dry bulk cargoes is extremely competitive.
Competition is intense and can depend on factors such as price, location, size, age, condition and the acceptability of the vessel
and its operators to the charterers. Through our operating subsidiaries, we compete with other vessel owners, and, to a lesser
extent, owners of other size vessels.
The dry bulk market is also highly fragmented. Due in part to this, competitors with greater resources could enter the dry bulk
shipping industry and operate larger fleets through consolidations or acquisitions and may be able to offer lower charter rates
and higher quality vessels than we are able to offer. As a result, we cannot assure you that we will be successful in finding
continued timely employment of our existing vessels, which could adversely affect our results of operations and financial
position.
We are subject to certain risks with respect to our counterparties on contracts, and failure of such counterparties to meet
their obligations could cause us to suffer losses or otherwise adversely affect our business.
We have entered, and may enter in the future, into various contracts that are material to the operation of our business, including
charter parties with our customers, loan agreements with our lenders, and vessel management, pooling arrangements,
newbuilding contracts and other agreements with other entities, all of which subject us to counterparty risks. The ability and
willingness of each of the counterparties to perform its obligations under a contract with us or contracts entered into on our
behalf will depend on a number of factors that are beyond our control and may include, among other things, general economic
conditions, the condition of the shipping sector, the overall financial condition of the counterparty, charter rates received for our
vessels and the supply and demand for commodities. Should a counterparty fail to honor its obligations under any such contract
or attempt to negotiate our agreements, we could sustain significant losses which could have a material adverse effect on our
business, financial condition, results of operations, cash flows, ability to pay dividends to holders of our common shares in the
amounts anticipated or at all and compliance with covenants in our secured loan agreements. Charterers are sensitive to the
commodity markets and may be impacted by market forces affecting commodities and/or uncertain industry conditions. In
depressed market conditions, charterers may have incentive to renegotiate their charters or default on their obligations under
charters. Should a charterer in the future fail to honor its obligations under agreements with us, it may be difficult to secure
substitute employment for such vessel, and any new charter arrangements we secure on the spot market or on charters may be at
lower rates, depending on the then existing charter rate levels, compared to the rates currently being charged for our vessels. In
addition, if the charterer of a vessel in our fleet that is used as collateral under one or more of our loan agreements defaults on
its charter obligations to us, such default may constitute an event of default under our loan agreements, which may allow the
bank to exercise remedies under our loan agreements. Although we assess the creditworthiness of our counterparties, a
prolonged period of difficult industry conditions could lead to changes in a counterparty’s financial condition and increase our
exposure to credit risk and bad debts. In addition, we may offer extended payment terms to our customers in order to secure
contracts, which may lead to more frequent collection issues and adversely affect our financial results and liquidity.
14
Volatility of SOFR rates under our financing agreements could affect our profitability, earnings and cash flow.
As certain of our current financing agreements have, and our future financing arrangements may have, floating interest rates,
typically based on the Secured Overnight Financing Rate (SOFR), movements in interest rates could negatively affect our
financial performance.
In order to manage our exposure to interest rate fluctuations under SOFR or any other variable interest rate, we have and may
from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No assurance can
however be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate
movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives.
Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash
position. Volatility in applicable interest rates among our financing agreements presents a number of risks to our business,
including potential increased borrowing costs for future financing agreements or unavailability of or difficulty in attaining
financing, which could in turn have an adverse effect on our profitability, earnings and cash flow.
Certain of our directors, executive officers and major shareholders may have interests that are different from the interests of
our other shareholders.
C.K. Limited is the trustee of two trusts (the "Trusts") that indirectly hold all of the shares of Hemen, our largest shareholder.
Accordingly, C.K. Limited, as trustee, may be deemed to beneficially own the 79,090,603 of our common shares, representing
39.6% of our outstanding shares that are owned by Hemen. Mr. Fredriksen established the Trusts for the benefit of his
immediate family. Beneficiaries of the Trusts do not have any absolute entitlement to the Trust assets and thus disclaim
beneficial ownership of all of our common shares owned by Hemen. Mr. Fredriksen is neither a beneficiary nor a trustee of
either Trust and has no economic interest in such common shares. He disclaims any control over and all beneficial ownership of
such common shares, save for any indirect influence he may have with C.K. Limited, as the trustee of the Trusts, in his capacity
as the settlor of the Trusts.
Please see "Item 7. Major Shareholders and Related Party Transactions - A. Major Shareholders."
Hemen is also a principal shareholder of a number of other large publicly traded and private companies involved in various
sectors of the shipping and oil services industries (the "Hemen Related Companies"). In addition, certain of our directors,
including Mr. Lorentzon, Mr. Fredriksen, Mr. O'Shaughnessy and Mr. Stonex, also serve on the boards of one or more of the
Hemen Related Companies, including but not limited to, Frontline plc (NYSE:FRO) ("Frontline"), SFL Corporation Ltd.
(NYSE:SFL) ("SFL"), Archer Limited (OSE:ARCHER) ("Archer"), Avance Gas Holding Ltd. (OSE:AGAS) ("Avance") and
Flex LNG Ltd. (OSE:FLNG) ("FLEX"). There may be real or apparent conflicts of interest with respect to matters affecting
Hemen and other Hemen Related Companies whose interests in some circumstances may be adverse to our interests.
To the extent that we do business with or compete with other Hemen Related Companies for business opportunities, prospects
or financial resources, or participate in ventures in which other Hemen Related Companies may participate, these directors and
officers may face actual or apparent conflicts of interest in connection with decisions that could have different implications for
us. These decisions may relate to corporate opportunities, corporate strategies, potential acquisitions of businesses, newbuilding
acquisitions, inter-company agreements, the issuance or disposition of securities, the election of new or additional directors and
other matters. Such potential conflicts may delay or limit the opportunities available to us, and it is possible that conflicts may
be resolved in a manner adverse to us or result in agreements that are less favorable to us than terms that would be obtained in
arm's-length negotiations with unaffiliated third parties.
For so long as Hemen owns a significant percentage of our outstanding common shares, it may be able to exercise significant
influence over us and will be able to strongly influence the outcome of shareholder votes on other matters, including the
adoption or amendment of provisions in our articles of incorporation or bye-laws and approval of possible mergers,
amalgamations, control transactions and other significant corporate transactions. This concentration of ownership may have the
effect of delaying, deferring or preventing a change in control, merger, amalgamations, consolidation, takeover or other
business combination. This concentration of ownership could also discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of us, which could in turn have an adverse effect on the market price of our common
shares. Hemen, may not necessarily act in accordance with the best interests of other shareholders. The interests of Hemen may
not coincide with the interests of other holders of our common shares. To the extent that conflicts of interests may arise, Hemen
may vote in a manner adverse to us or to you or other holders of our securities.
The increased costs associated with operating and maintaining secondhand vessels could adversely affect our earnings.
15
In general, the costs to operate and maintain a vessel in good operating condition increase with the age of the vessel. As of the
date of this annual report, the average age of our dry bulk vessel fleet is approximately 7.3 years. As our fleet ages, we will
incur increased costs. Older vessels are typically less fuel efficient than more recently constructed vessels due to improvements
in engine and hull technology. Governmental regulations, safety and other equipment standards related to the age of vessels
may require expenditures for alterations or the addition of new equipment to some of our vessels and may restrict the type of
activities in which these vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those
expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. As a result, regulations and
standards could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability
to pay dividends.
Delays or defaults by the shipyards in the construction of our newbuildings could increase our expenses and diminish our
net income and cash flows.
As of December 31, 2023, we had contracts for four newbuilding vessels. Vessel construction projects are generally subject to
risks of delay that are inherent in any large construction project, which may be caused by numerous factors, including shortages
of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard
construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced
by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or
approvals, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other
events of force majeure. Significant delays could adversely affect our financial position, results of operations and cash flows.
Additionally, failure to complete a project on time may result in the delay of revenue from that vessel, and we will continue to
incur costs and expenses related to delayed vessels, such as supervision expense and interest expense for the issued and
outstanding debt.
Changes in the price of fuel, or bunkers, may adversely affect our profits.
Since we primarily employ our vessels in the spot market, we expect that fuel, or bunkers, will typically be the largest expense
in our shipping operations for our vessels. The cost of fuel, including the fuel efficiency or capability to use lower priced fuel,
can also be an important factor considered by charterers in negotiating charter rates. While we believe that we can transfer
increased cost to the customer and will experience a competitive advantage as a result of increased bunker prices due to the
greater fuel efficiency of our vessels compared to the average global fleet, changes in the price of fuel may adversely affect our
profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including
geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries
(the "OPEC"), and other oil and gas producers, war and unrest in oil producing countries and regions, regional production
patterns and environmental concerns. Any future increase in the cost of fuel may reduce the profitability and competitiveness of
our business versus other forms of transportation, such as truck or rail.
In addition, potential sharp increase in crude oil prices and widening of the spread between the prices of high sulfur fuel and
low sulfur fuel, resulting from the conflicts between Russia and Ukraine and between Israel and Hamas, might lead to a
decrease in the economic viability of older vessels that lack fuel efficiency and a reduction of useful lives of these vessels.
Operational risks and damage to our vessels could adversely impact our performance.
Our vessels and their cargoes are at risk of being damaged or lost because of events such as marine disasters, bad weather and
other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error,
war, terrorism, piracy, labor strikes, boycotts and other circumstances or events. These hazards may result in death or injury to
persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our
customer relationships and market disruptions, delay or rerouting. Epidemics and other public health incidents may also lead to
crew member illness, which can disrupt the operations of our vessels, or to public health measures, which may prevent our
vessels from calling on ports or discharging cargo in the affected areas or in other locations after having visited the affected
areas.
If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are
unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover at all or in full.
The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may
adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all
drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels
may be forced to travel to a drydocking facility that is not conveniently located relative to our vessels' positions. The loss of
earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may adversely affect
our business and financial condition.
16
The operation of dry bulk vessels has certain unique operational risks. With a dry bulk vessel, the cargo itself and its interaction
with the ship can be a risk factor. By their nature, dry bulk cargoes are often heavy, dense and easily shifted, and react badly to
water exposure. In addition, dry bulk vessels are often subjected to battering treatment during unloading operations with grabs,
jackhammers (to pry encrusted cargoes out of the hold), and small bulldozers. This treatment may cause damage to the dry bulk
vessel. Dry bulk vessels damaged due to treatment during unloading procedures may be more susceptible to a breach at sea.
Hull breaches in dry bulk vessels may lead to the flooding of their holds. If flooding occurs in the forward holds, the bulk cargo
may become so waterlogged that the vessel's bulkheads may buckle under the resulting pressure leading to the loss of the dry
bulk vessel. These risks may also impact the risk of loss of life or harm to our crew.
If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent these events. Any of these
circumstances or events could negatively impact our business, financial condition or results of operations. In addition, the loss
of any of our vessels could harm our crew and our reputation as a safe and reliable vessel owner and operator.
We rely on our and our ship managers' information security management system to conduct our business, and failure to
protect this system against security breaches could adversely affect our business and results of operations, including on our
vessels. Additionally, if this system fails or becomes unavailable for any significant period of time, our business could be
harmed.
The safety and security of our vessels and efficient operation of our business, including processing, transmitting and storing
electronic and financial information, depend on computer hardware and software systems, which are increasingly vulnerable to
security breaches and other disruptions. Any significant interruption or failure of our information security management system
or any significant breach of security could adversely affect our business and results of operations.
Our vessels rely on our information security management system for a significant part of their operations, including navigation,
provision of services, propulsion, machinery management, power control, communications and cargo management. We have in
place safety and security measures on our vessels and onshore operations to secure our vessels against cyber-security attacks
and any disruption to their information security management system. However, these measures and technology may not
adequately prevent security breaches despite our continuous efforts to upgrade and address the latest known threats, which are
constantly evolving and have become increasingly sophisticated. If these threats are not recognized or detected until they have
been launched, we may be unable to anticipate these threats and may not become aware in a timely manner of such a security
breach, which could exacerbate any damage we experience. A disruption to the information security management system of any
of our vessels could lead to, among other things, incorrect routing, collision, grounding and propulsion failure.
Beyond our vessels, we rely on industry accepted security measures and technology to securely maintain confidential and
proprietary information maintained on our information security management system. However, these measures and technology
may not adequately prevent security breaches. The technology and other controls and processes designed to secure our
confidential and proprietary information, detect and remedy any unauthorized access to that information were designed to
obtain reasonable, but not absolute, assurance that such information is secure and that any unauthorized access is identified and
addressed appropriately. Such controls may in the future fail to prevent or detect unauthorized access to our confidential and
proprietary information. In addition, the foregoing events could result in violations of applicable privacy and other laws. If
confidential information is inappropriately accessed and used by a third party or an employee for illegal purposes, we may be
responsible to the affected individuals for any losses they may have incurred as a result of misappropriation. In such an
instance, we may also be subject to regulatory action, investigation or liable to a governmental authority for fines or penalties
associated with a lapse in the integrity and security of our information security management system.
We may be required to expend significant capital and other resources to protect against and remedy any potential or existing
security breaches and their consequences. A cyber-attack could also lead to litigation, fines, other remedial action, heightened
regulatory scrutiny and diminished customer confidence. In addition, our remediation efforts may not be successful and we may
not have adequate insurance to cover these losses.
The unavailability of the information security management system or the failure of this system to perform as anticipated for any
reason could disrupt our business and could have a material adverse effect on our business, results of operations, cash flows and
financial condition.
Additionally, cybersecurity researchers have observed increased cyberattack activity, and warned of heightened risks of
cyberattacks, in connection with the conflicts between Russia and Ukraine and between Israel and Hamas. To the extent such
attacks have collateral effects on global critical infrastructure or financial institutions, such developments could adversely affect
17
our business, operating results and financial condition. At this time, it is difficult to assess the likelihood of such threat and any
potential impact at this time.
Furthermore, cybersecurity continues to be a key priority for regulators around the world, and some jurisdictions have enacted
laws requiring companies to notify individuals or the general investing public of data security breaches involving certain types
of personal data, including the SEC, which, on July 26, 2023, adopted amendments requiring the prompt public disclosure of
certain cybersecurity breaches. If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a
disruption of our businesses, liability to investors, regulatory intervention or reputational damage.
For more information on our cybersecurity risk management and strategy, please see "Item 16K. Cybersecurity."
Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and
cause disruption of our business.
International shipping is subject to security and customs inspection and related procedures in countries of origin, destination
and trans-shipment points. Under the U.S. Maritime Transportation Security Act of 2002 ("MTSA"), the U.S. Coast Guard
issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to
the jurisdiction of the United States and at certain ports and facilities. These security procedures can result in delays in the
loading, offloading or trans-shipment and the levying of customs duties, fines or other penalties against exporters or importers
and, in some cases, carriers. Future changes to the existing security procedures may be implemented that could affect the dry
bulk sector. These changes have the potential to impose additional financial and legal obligations on carriers and, in certain
cases, to render the shipment of certain types of goods uneconomical or impractical. These additional costs could reduce the
volume of goods shipped, resulting in a decreased demand for vessels and have a negative effect on our business, revenues and
customer relations.
Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect
on our business.
We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption.
We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business
conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977 (the
"FCPA"), and other anti-bribery legislation. We are subject, however, to the risk that we, our affiliated entities or our or their
respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws,
including FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of
operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In
addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting,
investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our
senior management. Though we have implemented monitoring procedures and required policies, guidelines, contractual terms
and audits, these measures may not prevent or detect failures by our agents or intermediaries regarding compliance.
We may be subject to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material
adverse effect on us.
We may be, from time to time, involved in various litigation matters. These matters may include, among other things, contract
disputes, shareholder litigation, personal injury claims, environmental claims or proceedings, asbestos and other toxic tort
claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of
our business. Although we intend to defend these matters vigorously, we cannot predict with certainty the outcome or effect of
any claim or other litigation matter, and the ultimate outcome of any litigation or the potential costs to resolve them may have a
material adverse effect on us. Insurance may not be applicable or sufficient in all cases and/or insurers may not remain solvent
which may have a material adverse effect on our financial condition.
We may not have adequate insurance to compensate us if our vessels are damaged or lost.
In the event of a casualty to a vessel or other catastrophic event, we rely on our insurance to pay the insured value of the vessel
or the damages incurred. We procure insurance for our fleet against those risks that we believe companies in the shipping
industry commonly insure. These include hull and machinery insurance, protection and indemnity insurance, including
environmental damage and pollution insurance coverage, freight, demurrage and defense insurance and war risk insurance. We
can give no assurance that we will be adequately insured against all risks and we cannot guarantee that any particular claim will
18
be paid, even if we have previously recorded a receivable or revenue in respect of such claim. Our insurance policies may
contain deductibles for which we will be responsible and limitations and exclusions, which may increase our costs or lower our
revenues.
We cannot assure you that we will be able to obtain adequate insurance coverage for our vessels in the future or renew our
existing policies on the same or commercially reasonable terms, or at all. For example, more stringent environmental
regulations have in the past led to increased costs for, and in the future may result in the lack of availability of, protection and
indemnity insurance against risks of environmental damage or pollution. Any uninsured or underinsured loss could harm our
business, results of operations, cash flows, financial condition and ability to pay dividends. In addition, our insurance may be
voidable by the insurers as a result of certain of our actions, such as our vessels failing to maintain certification with applicable
maritime self-regulatory organizations. Further, we cannot assure you that our insurance policies will cover all losses that we
incur, or that disputes over insurance claims will not arise with our insurance carriers. Any claims covered by insurance would
be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these
deductibles could be material. In addition, our insurance policies may be subject to limitations and exclusions, which may
increase our costs or lower our revenues, thereby possibly having a material adverse effect on our business, results of
operations, cash flows and financial condition and ability to pay dividends.
We may be subject to calls because we obtain some of our insurance through protection and indemnity associations.
We may be subject to increased premium payments, or calls, if the value of our claim records, the claim records of our fleet
managers, and/or the claim records of other members of the protection and indemnity associations through which we receive
insurance coverage for tort liability (including pollution-related liability) significantly exceed projected claims. In addition, our
protection and indemnity associations may not have enough resources to cover claims made against them. Our payment of these
calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations,
cash flows, financial condition and ability to pay dividends.
United States tax authorities could treat us as a "passive foreign investment company", which could have adverse United
States federal income tax consequences to United States shareholders.
A foreign corporation will be treated as a "passive foreign investment company" ("PFIC"), for United States federal income tax
purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at
least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive
income". For purposes of these tests, "passive income" includes dividends, interest, and gains from the sale or exchange of
investment property and rents and royalties other than rents and royalties which are received from unrelated parties in
connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of
services does not constitute "passive income". United States shareholders of a PFIC are subject to a disadvantageous United
States federal income tax regime with respect to the distributions they receive from the PFIC and the gain, if any, they derive
from the sale or other disposition of their shares in the PFIC.
Based on our current and proposed method of operation, we do not believe that we are or that we have been since our 2004
taxable year or will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or
are deemed to derive from our time chartering and voyage chartering activities as services income, rather than rental income.
Accordingly, we believe that our income from these activities does not constitute "passive income", and the assets that we own
and operate in connection with the production of that income do not constitute assets that produce, or are held for the
production of, "passive income".
Although there is no direct legal authority under the PFIC rules addressing our method of operation there is substantial legal
authority supporting our position consisting of case law and the United States Internal Revenue Service (the "IRS"),
pronouncements concerning the characterization of income derived from time charters and voyage charters as services income
for other tax purposes. However, it should be noted that there is also authority that characterizes time charter income as rental
income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of
law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no
assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature
and extent of our operations.
If the IRS were to find that we are or have been a PFIC for any taxable year, other than the taxable years ending prior to its
2004 taxable year, our United States shareholders will face adverse United States federal income tax consequences. Under the
PFIC rules, unless those shareholders make an election available under United States Internal Revenue Code of 1986, as
amended (the "Code") (which election could itself have adverse consequences for such shareholders, as discussed below under
19
"Taxation-United States Federal Income Tax Considerations"), such shareholders would be liable to pay United States federal
income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain
from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the
shareholder's holding period of our common shares.
We may not qualify for an exemption under Section 883 of the Code, and may therefore have to pay tax on United States
source income, which would reduce our earnings.
Under the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our
subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States,
may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for
exemption from tax under Section 883 of the Code and the applicable Treasury Regulations promulgated thereunder.
We believe that we and each of our subsidiaries qualified for this statutory tax exemption for our taxable year ending on
December 31, 2023 and we will take this position for United States federal income tax return reporting purposes. However,
there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption for future taxable
years and thereby become subject to United States federal income tax on our United States source shipping income. For
example, we would no longer qualify for exemption under Section 883 of the Code for a particular taxable year if certain non-
qualified shareholders with a 5% or greater interest in our common shares owned, in the aggregate, 50% or more of our
outstanding common shares for more than half the days during the taxable year. It is possible that we could be subject to this
rule for our taxable year ending on or after December 31, 2024. Due to the factual nature of the issues involved, there can be no
assurances on our tax-exempt status or that of any of our subsidiaries.
If we or our subsidiaries are not entitled to exemption under Section 883 of the Code for any taxable year, we, or our
subsidiaries, could be subject during those years to an effective 2% United States federal income tax on gross shipping income
derived during such a year that is attributable to the transport of cargoes to or from the United States. The imposition of this tax
would have a negative effect on our business. However, the amount of our shipping income that would be subject to this tax has
historically not been material.
Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay, results of
operations and financial results.
We are subject to income and other taxes in various jurisdictions, and our results of operations and financial results may be
affected by tax and other initiatives around the world. For instance, there is a high level of uncertainty in today’s tax
environment stemming from global initiatives put forth by the Organisation for Economic Co-operation and Development’s
("OECD") two-pillar base erosion and profit shifting project. In October 2021, members of the OECD put forth two proposals:
(i) Pillar One reallocates profit to the market jurisdictions where sales arise versus physical presence; and (ii) Pillar Two
compels multinational corporations with €750 million or more in annual revenue to pay a global minimum tax of 15% on
income received in each country in which they operate. The reforms aim to level the playing field between countries by
discouraging them from reducing their corporate income taxes to attract foreign business investment. Over 140 countries agreed
to enact the two-pillar solution to address the challenges arising from the digitalization of the economy and, in 2024, these
guidelines were declared effective and must now be enacted by those OECD member countries.
Further, on December 27, 2023 the Bermuda Corporate Income Tax Act of 2023 (the "Corporate Income Tax Act") became law
in response to the OECD’s Pillar Two global minimum tax initiative to impose a 15% corporate income tax. The tax is effective
beginning on or after January 1, 2025. The Bermuda corporate income tax regime will supersede the previously granted tax
assurances which provided an exemption from corporate income taxes until March 31, 2035. Subject to certain exceptions,
Bermuda entities that are part of a multinational group will be in scope of the provisions of the Corporate Income Tax Act if,
with respect a fiscal year, such group has annual revenue of €750 million or more in the consolidated financial statements of the
ultimate parent entity for at least two of the four fiscal years immediately prior to such fiscal year ("Bermuda Constituent Entity
Group"). Further, Bermuda Constituent Entity’s international shipping income and qualified ancillary international shipping
income shall be excluded from the computation of its taxable income or loss. In order for a Bermuda Constituent Entity’s
international shipping income and ancillary international shipping income to qualify for the exclusion from its net taxable
income or loss under this section, the Bermuda Constituent Entity must demonstrate that the strategic or commercial
management of all ships concerned is effectively carried on from or within Bermuda.
Even though we believe that we will qualify for international shipping income exclusion, it is possible that these guidelines,
including the global minimum corporate tax rate measure of 15%, could increase the burden and costs of our tax compliance,
the amount of taxes we incur in those jurisdictions and our global effective tax rate, which could have a material adverse impact
on our results of operations and financial results.
20
Because our offices and most of our assets are outside the United States, you may not be able to bring suit against us, or
enforce a judgment obtained against us in the United States.
Our executive offices, administrative activities and the majority of our assets are located outside the United States. In addition,
most of our directors and officers are not United States residents. As a result, it may be more difficult for investors to effect
service of process within the United States upon us, or to enforce both in the United States and outside the United States
judgments against us in any action, including actions predicated upon the civil liability provisions of the United States federal
securities laws.
As an exempted company incorporated under Bermuda law, our operations may be subject to economic substance
requirements.
The Economic Substance Act 2018 and the Economic Substance Regulations 2018 of Bermuda (the ''Economic Substance Act''
and the ''Economic Substance Regulations'' respectively) became operative on December 31, 2018. The Economic Substance
Act applies to every registered entity in Bermuda that engages in a relevant activity and requires that every such entity shall
maintain a substantial economic presence in Bermuda. Relevant activities for the purposes of the Economic Substance Act are
banking business, insurance business, fund management business, financing and leasing business, headquarters business,
shipping business, distribution and service center business, intellectual property holding business and conducting business as a
holding entity.
The Bermuda Economic Substance Act provides that a registered entity that carries on a relevant activity complies with
economic substance requirements if (a) it is directed and managed in Bermuda, (b) its core income-generating activities (as may
be prescribed) are undertaken in Bermuda with respect to the relevant activity, (c) it maintains adequate physical presence in
Bermuda, (d) it has adequate full time employees in Bermuda with suitable qualifications and (e) it incurs adequate operating
expenditure in Bermuda in relation to the relevant activity.
A registered entity that carries on a relevant activity is obliged under the Bermuda Economic Substance Act to file a declaration
in the prescribed form (the "Declaration") with the Registrar of Companies (the "Registrar") on an annual basis.
If we fail to comply with our obligations under the Bermuda Economic Substance Act or any similar law applicable to us in any
other jurisdictions, we could be subject to financial penalties and spontaneous disclosure of information to foreign tax officials
in related jurisdictions and may be struck from the register of companies in Bermuda or such other jurisdiction. Any of these
actions could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to an Investment in Our Securities
Our share price may be highly volatile and future sales of our common shares could cause the market price of our common
shares to decline.
Our common shares commenced trading on the NASDAQ Global Select Market (the "NASDAQ") in February 1997 and
currently trade under the symbol "GOGL". Beginning on April 7, 2015, our shares have traded on the Oslo Stock Exchange (the
"OSE"), under the ticker code "GOGL". We cannot assure you that an active and liquid public market for our common shares
will continue. The market price of our common shares has historically fluctuated over a wide range and may continue to
fluctuate significantly in response to many factors, such as actual or anticipated fluctuations in our operating results, changes in
financial estimates by securities analysts, economic and regulatory trends, general market conditions, rumors and other factors,
many of which are beyond our control. If the volatility in the broad stock market worsens, it could have an adverse effect on the
market price of our common shares and impact a potential sale price if holders of our common shares decide to sell their shares.
The dry bulk shipping industry has been highly unpredictable and volatile, and this is often reflected in the market for common
shares of companies in this industry. Further, we believe volatility in the market for our common shares could result from
market and trading dynamics unrelated to our operating business or prospects and outside of our control. Investors may
purchase our common shares to hedge existing exposure in our common shares or to speculate on the price of our common
shares. Speculation on the price of our common shares may lead to volatile price movements in our shares that are not directly
correlated to the performance or prospects of our company and could cause purchasers of our common shares to incur
substantial losses.
In addition, some companies that have experienced volatility in the market price of their common shares have been subject to
securities class-action litigation. If instituted against us, such litigation could result in substantial costs and diversion of
management’s attention and resources, which could materially and adversely affect our business, financial condition, operating
21
results and growth prospects. There can be no guarantee that the price of our common shares will remain at or rise above its
post-distribution level or that future sales of our common shares will not be at prices lower than those initially distributed or
sold to investors.
We are thus unable to predict when such instances of trading volatility will occur or how long such dynamics may last.
Therefore, we cannot assure you that you will be able to sell any of our common shares you may have purchased at a price
greater than or equal to its original purchase price, or that you will be able to sell our common shares at all.
Future issuance of shares or other securities may dilute the holdings of shareholders and could materially affect the price of
our common shares.
In the future we may offer additional shares or other securities to finance new projects, in connection with unanticipated
liabilities or expenses or for any other purposes. Any such additional offering could reduce the proportionate ownership and
voting interests of holders of our common shares, as well as our earnings per share and our net asset value per share, which
could have a material adverse effect on the market price of our common shares. These issuances and sales could also impair our
ability to raise additional capital through the sale of our equity securities in the future.
We cannot assure you that our Board will declare dividend payments in the future.
The declaration and payment of dividends, if any, will always be subject to our board of director's discretion. The timing and
amount of any dividends declared will depend on, among other things, our earnings, financial condition and cash requirements
and availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy. In
addition, other external factors, such as our lenders imposing restrictions on our ability to pay dividends under the terms of
future loan facilities we may enter into, may limit our ability to pay dividends.
Our growth strategy contemplates that we will finance the acquisition of additional vessels through a combination of debt and
equity financing on terms acceptable to us. If financing is not available to us on acceptable terms, our Board may determine to
finance or refinance acquisitions with cash from operations, which could also reduce or even eliminate the amount of cash
available for the payment of dividends.
ITEM 4.  INFORMATION ON THE COMPANY
A.  HISTORY AND DEVELOPMENT OF THE COMPANY
History
On September 18, 1996, we were incorporated in Bermuda under the name Knightsbridge Tankers Limited as an exempted
company pursuant to the Bermuda Companies Act of 1981. Following the completion of the Merger with the Former Golden
Ocean, a dry bulk shipping company based in Bermuda and listed on the Oslo Stock Exchange ("OSE"), we changed our name
to Golden Ocean Group Limited.
Our common shares currently trade on the NASDAQ and the OSE under the ticker code "GOGL".
We are engaged primarily in the ownership and operation of dry bulk vessels. We operate through subsidiaries located in
Bermuda, Liberia, the Marshall Islands, Norway, Singapore and UK. We are also involved in the charter, purchase and sale of
vessels.
Historical business purpose and the Merger
We were originally established for the purpose of owning and operating five very large crude oil carriers ("VLCCs"). However,
we expanded our business to the dry bulk segment from 2009 and onwards by acquiring secondhand vessels and by entering
into newbuilding contracts. Between 2007 and 2013, we sold our five VLCCs and subsequently discontinued our crude oil
tanker operations. In 2014, we made significant expansion in the dry bulk segment by acquiring 29 special purpose companies,
from Frontline 2012 Ltd ("Frontline 2012"), each owning a dry bulk newbuilding, all of which were delivered to us between
2014 and 2018.
22
On October 7, 2014, we and the Former Golden Ocean entered into the Merger Agreement. The Merger was approved by our
shareholders and the shareholders of the Former Golden Ocean at separate special general meetings held on March 26, 2015. In
addition, our shareholders approved the adoption of the Amended and Restated Bye-laws. As of March 31, 2015, and following
completion of the Merger, we owned 47 vessels and had 25 vessels under construction.
Our Acquisitions, Disposals and Newbuildings
We entered into the following acquisitions and disposals in 2021, 2022, 2023 and 2024 (to date):
In January 2021, we entered into an agreement to sell Golden Saguenay, a Panamax vessel, to an unrelated third party for $8.4
million. The vessel was delivered to its new owners and final payment received in April 2021.
In February 2021, we entered into an agreement to acquire 15 modern dry bulk vessels and three newbuildings for a total
consideration of $752.0 million from affiliates of Hemen, our largest shareholder. We took delivery of all vessels and
newbuildings in the first six months of 2021.
In the second half of 2021, we entered into agreements to construct a total of seven Kamsarmax vessels. All seven vessels were
delivered as of the date of this report, six during 2023 and one in January 2024.
In November 2021, we sold two older Panamax vessels, Golden Opportunity and Golden Endurer, to unrelated third parties for
$37.2 million.
In February 2022, we entered into an agreement to sell en-bloc three older Panamax vessels, Golden Empress, Golden
Enterprise and Golden Endeavour to an unrelated third party for $52.0 million. The vessels were delivered to their new owner
in 2022. We recorded a gain of $9.5 million from the sale in the second quarter of 2022.
In June 2022, we entered into agreements to construct a total of three Kamsarmax vessels. The vessels are expected to be
delivered to us during 2024. Remaining capital commitments as of the date of this annual report, for the three last newbuildings
not yet delivered, are $69.5 million net of commissions. Capital commitments will be partially financed with the $85.0 million
sale and leaseback agreement entered into in December 2023 for four Kamsarmax newbuildings to be delivered during 2024,
out of which one Kamsarmax vessel was delivered to the Company in January 2024. See Note 29, "Subsequent Events" for
further disclosures.
In June 2022, we entered into an agreement to sell en-bloc two Ultramax vessels 1, Golden Cecilie and Golden Cathrine to an
unrelated third party for $63.0 million. The vessels were delivered to their new owner in the third quarter of 2022 and the total
net cash flows from the transaction after repayment of debt was approximately $42.8 million. We recorded a gain of $21.9
million from the sale in 2022.
In November 2022, we entered into an agreement to sell two Panamax vessels, Golden Ice and Golden Strength, to an unrelated
third party for an aggregate sales price of $30.3 million. In December 2022, the Panamax vessel, Golden Ice, was delivered to
its new owner, at which time we recorded a gain of approximately $2.8 million. In January 2023, the Panamax vessel, Golden
Strength was delivered to its new owner and we recorded a gain of approximately $2.6 million.
In February 2023, we signed agreements for the acquisition of six scrubber fitted Newcastlemax vessels Golden Aquamarine,
Golden Duke, Golden Earl, Golden Walcott, Golden Emerald and Golden Sapphire from H-Line, an unrelated third party for a
total consideration of $291.0 million. The newly acquired vessels are chartered back to their former owner, an unrelated third
party, for approximately 36 months at an average net TCE rate of just above $21,000 per day. All vessels were delivered to us
by July 2023.
In March 2023, we entered into an agreement to sell two Capesize vessels, Golden Feng and Golden Shui, to an unrelated third
party for an aggregate net sale price of $43.6 million. We recorded an impairment loss of $11.8 million in connection with the
sale.
In September 2023, we entered into and completed the sale of one Panamax vessel Golden Suek, to an unrelated third party for
a consideration of $15.0 million, recognizing a gain from sale of $0.8 million.
23
1 Defined as vessels carrying capacities of between 55,000 and 65,000 dwt. As per December 31, 2023 and as of the date of this
report, we do not own or operate any Ultramax vessels.
In September 2023, for the Supramax vessel Golden Hawk2 chartered-in to the Company from an unrelated third party, the
Company declared an option under the current time charter contract to acquire the vessel at a net purchase price of
approximately $15.3 million. Subsequent to entering into the purchase agreement, the Company entered into an agreement to
sell the Supramax vessel to an unrelated third party, for total consideration of $21.6 million. The Company recognized a gain
from the sale and net cash proceeds of approximately $5.8 million upon delivery of the vessel to new owners in November
2023.
In December 2023, we entered into an agreement to sell one Panamax vessel, Golden Bull, to an unrelated third party for net
consideration of $15.8 million. The vessel was delivered to its new owner in February 2024 and the net gain from sale of
approximately $1.4 million was recorded upon delivery.
In 2023, we took delivery of six Kamsarmax newbuildings, Golden Star, Golden Soul, Golden Hope, Golden Lion, Golden
Grace and Golden John, and in January 2024, we took delivery of one Kamsarmax, Golden Erling, relating to the ten contracts
that we entered into in 2021 and 2022. The remaining three vessels are expected to be delivered to us in 2024.
B.  BUSINESS OVERVIEW
We are an international shipping company that owns and operates a fleet of dry bulk vessels, comprising of Newcastlemax,
Capesize and Panamax vessels. Our vessels transport a broad range of major and minor bulk commodities, including ores, coal,
grains and fertilizers, along worldwide shipping routes. Our vessels operate in the spot and time charter markets.
As of March 20, 2024, we owned 83 dry bulk vessels and had construction contracts for three newbuildings. Each vessel is
owned and operated by one of our subsidiaries and is flagged either in the Marshall Islands or Hong Kong. In addition, we had
eight vessels chartered-in from SFL (of which seven are chartered in on finance leases and one is chartered in on an operating
lease). Of the 91 vessels that we own and operate, 12 of our vessels are chartered-out on fixed rate time charters, 36 of our
vessels are chartered out on index linked rate time charters and the remaining 43 vessels operate in the spot market.
We own various vessel owning and operating subsidiaries. Our operations take place substantially outside of the United States.
Our subsidiaries, therefore, own and operate vessels that may be affected by changes in foreign governments and other
economic and political conditions. Our vessels operate worldwide and as a result, our management does not, and did not,
evaluate performance by geographical region because this information is not meaningful.
The dry bulk shipping industry is highly cyclical, experiencing volatility in profitability, vessel values and freight rates. Freight
rates are strongly influenced by the supply of dry bulk vessels and the demand for dry bulk seaborne transportation.
Our Business Strategy
Our business strategy centers around the largest sizes of dry bulk carriers (Capesize and Panamax). Another element of our
strategy is to maintain a low average fleet age, ensuring low operational costs and a low carbon footprint.
Shipowners essentially have two options: (i) fix the vessels on long-period charters at fixed-paying rates, or, (ii) be exposed to
the daily spot market rates.
We decide our fixed-paying versus spot market ratio depending on market expectations, charter rates, newbuilding costs,
vessels’ resale and scrap values, and vessel operating expenses.
We adjust our market exposure through time charters, voyage charters, bareboat charters, sale and leasebacks, sales and
purchases of vessels, and acquisitions. Our intention is to create shareholder value through sustainable growth and prudent
employment of our fleet.
Our business strategy includes three main pillars (Simplification, Risk Management, and Decarbonization) on which we are
focusing our efforts: (1) Simplification relates to the increased focus on our core business and our capabilities as a shipowner in
large-size dry bulk shipping, (2) Risk Management relates to our decision making on fixed-paying income versus spot
exposure, as well as on enhancing transparency and accountability through clearly defined risk parameters and (3)
Decarbonization and digitalization refers to our focus on positioning the Company for a low-carbon future by exploring new
technologies and optimization tools.
24
2 Defined, together with Ultramax vessels, as vessels carrying capacities of between 55,000 and 65,000 dwt. As per December
31, 2023 and as of the date of this report, we do not own or operate any Supramax vessels.
Our Environmental, Social and Governance Efforts
Environment
Environmental risk management is an integrated part of our daily operations and management processes. We review all
identified risks to the environment, which allows us to establish appropriate management tools and safeguards in place. Our
Management System is ISO-compliant and in accordance with the ISM Code. Our Ship Energy Efficiency Management Plans
("SEEMP") allows for a granular risk assessment for each individual vessel's performance as well as providing a thorough
system for reporting.
Together with affiliated companies such as Avance Gas, Flex LNG, Frontline and SFL, Golden Ocean established the ESG
forum. The goal is to design and maintain industry-leading approaches to ESG risk management and reporting parameters to
ensure best-in-class performance.
Social
Our policy promotes safety at sea, health and prevention of injury, illness, and loss of life. Our managers employ and train
qualified seafarers in accordance with the requirements of the flag state and established by the Standards of Training,
Certification & Watchkeeping Convention ("STCW").
In addition to securing our workers’ health and safety, we seek to ensure that our employees, on-shore and off-shore, are
working under conditions that meet the requirements set out in the International Labour Conventions and the Maritime Labour
Convention. As part of safeguarding seafarers' labor rights, these conventions include the right to collective bargaining
agreements and that no employee is discriminated based on nationality, race or any other basis. The PSC and the OCIMF Ship
Inspection Report Programme (SIRE) have been implemented, ensuring that we comply with applicable labor rights.
Governance
We have a risk-based approach to compliance and have established policies and procedures which clearly set out how we
manage ESG issues. Implementing these policies and procedures mitigates our risks and any negative ESG impacts. All policies
and procedures were updated in 2023.
Our Board is responsible for the governance of ESG-related issues and approves the company’s ESG Policies as well as
additional topics included in the ESG report. Our Board takes an active role in considering what constitutes strategic ESG
matters. Our Board annually reviews our ESG report and is responsible for ensuring that appropriate and effective ESG-related
risk management and internal control systems are in place.
The executive management team, led by the principal executive officer, recognizes the importance of climate risk and
opportunities and their impact on the future of the shipping industry. The executive management team leads the strategy process
and risk management and discusses risks and opportunities with the technical department and, more generally, in the ESG
Forum (outlined above). The team reports all material climate-related risks and opportunities to the Board – i.e., divestments
and investments impacting the carbon emission profile of Golden Ocean.
Our Decarbonization Strategy
Decarbonization has been a part of Golden Ocean’s strategy since 2020. Our goal is to own and operate a modern, fuel-efficient
fleet with a low carbon footprint. Golden Ocean acknowledges the initial GHG strategy of the IMO, aiming to lower CO2
emissions per transport work by at least 40% by 2030, compared to 2008 levels.
However, we believe the IMO strategy is not ambitious enough and have, therefore, introduced our own emission-reduction
targets surpassing the goals of the IMO. We target a reduction of Annual Efficiency Ratio ("AER") by 15% by 2026 and 30%
by 2030, compared to 2019. We will also aim for net-zero emissions by 2050.
Decarbonization of our fleet also means that Golden Ocean’s fleet has become more competitive, as customers’ demand for
low-emission shipping is increasing. Having a fleet that generates low emissions demonstrates Golden Ocean’s compliance
with current regulations, such as like the IMO’s carbon intensity indicator ("CII"), and complying with future regulations, such
as the carbon tax in the EU, becomes easier.
ESG Report
Our comprehensive and stand-alone annual ESG report, in respect of the calendar year ended December 31, 2022, was
published in May 2023 (the "2022 ESG Report") and can be found on the Company's website. The information in the ESG
report and on the Company’s website is not incorporated by reference into this document.
25
We have considered and assessed if detailed information in our 2022 ESG Report or similar information for year 2023 should
be included in this annual report for the year ended December 31, 2023. Decarbonization is of strategic importance to us and we
believe that, going forward, ESG can have a material effect on our financial position and results of operations. While climate
change and environmental regulations have not had a material impact on our business, financial position or results of operations
in 2022 or 2023, our investors and shareholders are provided with a sufficient material level of details regarding climate risks
and environmental expenditures in this annual report, specifically described above in "Item 3. D. Risk Factors." While we
expect that the ESG report for 2023 will further enhance this information, we do not believe it will contain additional material
information.
As described above, in previous years we set targets for scope 1 emission reduction and aim to reduce our AER by 15% by
2026 and 30% by 2030, compared to 2019 levels. We also targeted net-zero emissions by 2050. In 2023, we have continued to
implement measures to achieve targets above. As of the date of this annual report, these measures have not resulted in a
material increase of our ESG related expenditures. The longer-term prospective creates a vast array of implications for our
business and dry bulk industry in general and involve more uncertainty. As of the date of this annual report, we have one of the
most modern and fuel-efficient fleets in the industry, and we continue to modernize our fleet by selling older tonnage. In the
long-term, we are looking for zero emission propulsion technology with the ultimate aim of net zero emissions.
During the year ended December 31, 2023, we have incurred operating costs of $1.8 million for various energy saving devices
and digitalization (2022: $5.7 million). In addition, in 2023 we increased drydock costs for cargo hold maintenance and hull/
cargo sand blasting and painting by approximately $8.0 million to improve the efficiency of our vessels. Further, in 2023, we
incurred $3.1 million for BWTS installation costs, and $6.2 million for scrubber installations, both of which were capitalized.
In 2024, we expect to incur costs of approximately $4.8 million in relation to upgrading the BWTS on several of our vessels.
Additionally, in 2024, we are planning to incur various other decarbonization costs up to approximately $6.0 million in total.
While decarbonization is of strategic importance to us, it is not material to our business when comparing our total revenues and
result of operations to the total cost of our environmental initiatives.
Russian-Ukrainian War
The ongoing conflict between Russia and Ukraine has disrupted supply chains and caused instability in the global economy,
and the United States and the European Union, among other countries, announced sanctions against the Russian government
and its supporters.
The United States Department of the Treasury’s Office of Foreign Assets Control ("OFAC") administers and enforces multiple
authorities under which sanctions have been imposed on Russia, including: the Russian Harmful Foreign Activities sanctions
program, established by the Russia-related national emergency declared in Executive Order (E.O.) 14024 and subsequently
expanded and addressed through certain additional authorities, and the Ukraine-/Russia-related sanctions program, established
with the Ukraine-related national emergency declared in E.O. 13660 and subsequently expanded and addressed through certain
additional authorities. The ongoing conflict could result in the imposition of further economic sanctions or new categories of
export restrictions against persons in or connected to Russia. While in general much uncertainty remains regarding the global
impact of the conflict in Ukraine, it is possible that such tensions could adversely affect the Company’s business, financial
condition, results of operation and cash flows.
Prior to the war, Russia and Ukraine combined accounted for approximately 10% of global steel trade and supply
approximately 30% of Europe’s steel imports. Following the onset of the conflict, steel buyers had to find alternative supplies
to substitute for steel and semi-finished products sourced from Russia and Ukraine, which stimulated seaborne trade routes. The
impact of decreased demand for certain commodities was offset by increased demand for others, elevated port congestion and
new trade routes that emerged after Russia’s incursion into Ukraine.
Notably, high fuel prices have also impacted the dry bulk market in 2023, which was reflected in sailing speeds trending down
during the periods with high fuel prices. We believe that the increased fuel prices may well be absorbed by increased freight
rates going forward for a modern fleet.
The direct impact of the conflict on our business has been limited to time charter cancellations and suspensions under time
charter agreements made prior to the onset of the conflict. In March 2022, we cancelled a time charter agreement with respect to
Golden Pearl in consequence of our counterparty’s failure to pay charter hire following the imposition of sanctions by the
European Union on charterers’ beneficial owner. In addition, in April 2022, we suspended time charter agreements with respect
26
to two vessels (Admiral Schmidt and Vitus Bering), and in May 2022 redelivered those vessels to their disponent owners, where
we understand that those vessels were financed by disponent owners as part of a sale-leaseback arrangement with a Russian-
state owned entity. We did not conduct any business with sanctioned counterparties in 2023.
Conflict between Israel and Hamas
We believe that there is a limited effect of the conflict on our results and operations, since historically we did not have many
port calls to Israel. Recent Houthis attacks in the Red Sea led to a short-term immaterial positive effect on our operations due to
an increase in tonne-miles as a result of vessels rerouting to bypass the Suez Canal. There is still significant uncertainty relating
to the conflict and we cannot guarantee that impact on our operations will remain limited in the long term.
Management Structure
Overall responsibility for the oversight of the management of our company and its subsidiaries rests with our Board. We
operate management services through Golden Ocean Group Management (Bermuda) Ltd, our subsidiary incorporated in
Bermuda, which in turn subcontracts services to Golden Ocean Management AS and Golden Ocean Shipping Co. Pte. Ltd., our
subsidiaries incorporated in Norway and Singapore, respectively. Our principal executive officer and principal financial officer
are employed by Golden Ocean Management AS. The Board defines the scope and terms of the services to be provided,
including day-to-day operations by the aforementioned subsidiaries, and requires that it be consulted on all matters of material
importance and/or of an unusual nature and, for such matters, provides specific authorization to personnel to act on our behalf.
Technical Supervision Services
Up until January 1, 2024, we received technical supervision services from Frontline Management (Bermuda) Limited
("Frontline Management"). Pursuant to the terms of the agreement, Frontline Management received a management fee per
vessel per year, which was subject to annual review. Beginning January 1, 2024, technical supervision is performed by Golden
Ocean's technical team.
Frontline Management performs also newbuilding supervision on our behalf and charges us for costs incurred in relation to the
supervision. Technical operations and crewing of all owned vessels are outsourced to several leading ship management
companies.
Information Security Management System Services
Our chief information security officer (CISO), who is employed by Front Ocean Management AS ("Front Ocean"), a related
party, is responsible for assessing and managing cybersecurity threats, reporting cybersecurity updates and reporting to the
Board material cybersecurity incidents. For more information on our cybersecurity risk management and strategy, please see
"Item 16K. Cybersecurity."
Seasonality
 
The dry bulk trade has a history of tracking seasonal demand fluctuations. As China is the most significant market for dry bulk
shipping, the public holidays in relation to the Chinese New Year during the first quarter usually results in a decrease in market
activity during this period. Also, in the last few years, adverse weather conditions in the Southern Hemisphere, which often
occur during the first quarter, have had a negative impact on iron ore and coal exports from Australia and iron ore exports from
Brazil.
Grain has traditionally had the greatest impact on the seasonality in the dry bulk market, particularly during the peak demand
seasons, which occurs during the second quarter in the Southern Hemisphere and at the end of the third quarter and throughout
the fourth quarter in the Northern Hemisphere. The growth of iron ore and coal transportation over the last decade, however,
has diminished the relative importance of grain to the dry bulk transportation industry. Since iron ore, like most other
commodities, has moved from fixed price agreements between shippers and receivers to spot pricing, short-term price
fluctuations have had an impact on iron ore trading by reducing normal seasonal patterns. Other factors, however, such as
weather and port congestion still impact market volatility. The last two years has seen an increase in the significance of the
bauxite trade from West Africa to Asia. The trade represents long sailing distances and is predominantly done by Capesize
vessels. Further, the trade is inversely seasonal with the iron ore trade, meaning that the highest volumes are exported during
the winter, when iron ore exports normally are lower.
Customers
27
For the years ended December 31, 2023 and December 31, 2022, no customer accounted for 10% or more of our consolidated
revenues. For the year ended December 31, 2021, one customer accounted for 10% or more of our consolidated revenues in the
amounts of $117.7 million.
Competition
The market for international seaborne dry bulk transportation services is highly fragmented and competitive. Seaborne dry bulk
transportation services are generally provided by independent ship-owners. In addition, many owners and operators in the dry
bulk sector pool their vessels together on an ongoing basis, and such pools are available to customers to the same extent as
independently owned and operated fleets. Competition for charters in the dry bulk market is intense and is based upon price,
location, size, age, condition and acceptability of the vessel and its manager. Competition is also affected by the availability of
other size vessels to compete in the trades in which we engage. Charters are to a large extent brokered through international
independent brokerage houses that specialize in finding the optimal ship for any particular cargo based on the aforementioned
criteria. Brokers may be appointed by the cargo shipper or the ship owner.
Environmental and Other Regulations in the Shipping Industry
Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international
conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may
operate or are registered relating to safety and health and environmental protection including the storage, handling, emission,
transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for
damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense,
including vessel modifications and implementation of certain operating procedures.
A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities
include the local port authorities (applicable national authorities such as the USCG, harbor master or equivalent), classification
societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these
entities require us to obtain permits, licenses, certificates and other authorizations for the safe operation of our vessels. Failure
to comply could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our
vessels.
Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are
required to maintain robust operating standards for all of our vessels that emphasize operational safety, quality maintenance,
continuous training of our officers and crews and compliance with international and port regulations. We believe that the
operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels
have all material permits, licenses, certificates or other authorizations necessary for the safe conduct of our operations.
However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot
predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful
lives of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could
result in additional legislation or regulation that could negatively affect our profitability and reputation.
International Maritime Organization
The IMO, the United Nations agency for maritime safety and the prevention of pollution by vessels (the "IMO"), has adopted
the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating
thereto, collectively referred to as MARPOL 73/78 and herein as "MARPOL," the International Convention for the Safety of
Life at Sea of 1974 ("SOLAS Convention"), and the International Convention on Load Lines of 1966 (the "LL Convention").
MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions,
handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to
dry bulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different
source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in
liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and
Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emission
standards, titled IMO-2020, took effect on January 1, 2020.
In 2013, the IMO’s Marine Environmental Protection Committee (the "MEPC") adopted a resolution amending MARPOL
Annex I Condition Assessment Scheme ("CAS"). These amendments became effective on October 1, 2014, and require
compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and
Oil Tankers ("ESP Code"), which provides for enhanced inspection programs. We may need to make certain financial
28
expenditures to comply with these amendments following close-up surveys and thickness measurements during Special Survey
dry docking repairs.
Air Emissions
In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005,
Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits
"deliberate emissions" of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile
compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the
sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as
explained below. Emissions of "volatile organic compounds" from certain vessels, and the shipboard incineration (from
incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls ("PCBs")) are also
prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.
The Marine Environment Protection Committee ("MEPC"), adopted amendments to Annex VI regarding emissions of sulfur
oxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into force on July 1, 2010. The
amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the
amount of sulfur contained in any fuel oil used on board ships. On October 27, 2016, at its 70th session, the MEPC agreed to
implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020. This limitation
can be met by using low-sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are now
required to obtain bunker delivery notes and International Air Pollution Prevention ("IAPP") Certificates from their flag states
that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5%
sulfur on ships were adopted and took effect on March 1, 2020, with the exception of vessels fitted with exhaust gas cleaning
equipment ("scrubbers"), which can carry fuel of higher sulfur content. These regulations subject ocean-going vessels to
stringent emissions controls, and have caused us to incur additional costs.
Sulfur content standards are even stricter within certain "Emission Control Areas" ("ECAs"). As of January 1, 2015, ships
operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Amended Annex VI
establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portions
of the Baltic Sea area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these
areas will be subject to stringent emission controls and may cause us to incur additional costs. Other areas in China, ocean-
going vessels are subject to local regulations that impose stricter emission controls. In December 2021, the member states of the
Convention for the Protection of the Mediterranean Sea Against Pollution ("Barcelona Convention") agreed to support the
designation of a new ECA in the Mediterranean. On December 15, 2022, MEPC 79 adopted the designation of a new ECA in
the Mediterranean, with an effective date of May 1, 2025. In July 2023, MEPC 80 announced three new ECA proposals,
including the Canadian Arctic waters and the North-East Atlantic Ocean. If other ECAs are approved by the IMO, or other new
or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the
U.S. Environmental Protection Agency ("EPA") or the states where we operate, compliance with these regulations could entail
significant capital expenditures or otherwise increase the costs of our operations.
Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines,
depending on their date of installation. At the MEPC meeting held from March to April 2014, amendments to Annex VI were
adopted which address the date on which Tier III Nitrogen Oxide ("NOx") standards in ECAs will go into effect. Under the
amendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs designed
for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1, 2016.
Tier III requirements could apply to areas that will be designated for Tier III NOx in the future. At MEPC 70 and MEPC 71, the
MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. The EPA
promulgated equivalent (and in some senses stricter) emissions standards in 2010. As a result of these designations or similar
future designations, we may be required to incur additional operating or other costs.
As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and
requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database, with the
first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as the first step in its
roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.
As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now
required to develop and implement Ship Energy Efficiency Management Plans ("SEEMP"), and new ships must be designed in
compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index
("EEDI"). Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014.
MEPC 75 adopted amendments to MARPOL Annex VI which brings forward the effective date of the EEDI’s "phase 3"
requirements from January 1, 2025 to April 1, 2022 for several ship types, including general cargo ships.
29
Additionally, MEPC 75 introduced draft amendments to Annex VI which impose new regulations to reduce greenhouse gas
emissions from ships. These amendments introduce requirements to assess and measure the energy efficiency of all ships and
set the required attainment values, with the goal of reducing the carbon intensity of international shipping. The requirements
include (1) a technical requirement to reduce carbon intensity based on a new Energy Efficiency Existing Ship Index ("EEXI"),
and (2) operational carbon intensity reduction requirements, based on a new operational carbon intensity indicator ("CII"). The
attained EEXI is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for
ship types and categories. With respect to the CII, the draft amendments would require ships of 5,000 gross tonnage to
document and verify their actual annual operational CII achieved against a determined required annual operational CII.
Additionally, MEPC 75 proposed draft amendments requiring that, on or before January 1, 2023, all ships above 400 gross
tonnage must have an approved SEEMP on board. For ships above 5,000 gross tonnage, the SEEMP would need to include
certain mandatory content. MEPC 75 also approved draft amendments to MARPOL Annex I to prohibit the use and carriage for
use as fuel of heavy fuel oil ("HFO") by ships in Arctic waters on and after July 1, 2024. The draft amendments introduced at
MEPC 75 were adopted at the MEPC 76 session in June 2021 and entered into force on November 1, 2022, with the
requirements for EEXI and CII certification effective from January 1, 2023. We have incurred increased costs to comply with
these revised standards, and we will incur additional costs in 2024, however we do not expect these costs to be material.
Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission
control systems and could adversely affect our business, results of operations, cash flows and financial condition. MEPC 77
adopted a non-binding resolution which urges Member States and ship operators to voluntarily use distillate or other cleaner
alternative fuels or methods of propulsion that are safe for ships and could contribute to the reduction of Black Carbon
emissions from ships when operating in or near the Arctic. MEPC 79 adopted amendments to MARPOL Annex VI, Appendix
IX to include the attained and required CII values, the CII rating and attained EEXI for existing ships in the required
information to be submitted to the IMO Ship Fuel Oil Consumption Database. MEPC 79 revised the EEDI calculation
guidelines to include a CO2 conversion factor for ethane, a reference to the updated ITCC guidelines, and a clarification that in
case of a ship with multiple load line certificates, the maximum certified summer draft should be used when determining the
deadweight. The amendments will enter into force on May 1, 2024. In July 2023, MEPC 80 approved the plan for reviewing
CII regulations and guidelines, which must be completed at the latest by January 1, 2026. There will be no immediate changes
to the CII framework, including correction factors and voyage adjustments, before the review is completed.
We may incur costs to comply with these revised standards, however we do not expect these costs to be material. Additional or
new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems
and could adversely affect our business, results of operations, cash flows and financial condition.
Safety Management System Requirements
The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The Convention of
Limitation of Liability for Maritime Claims (the "LLMC") sets limitations of liability for a loss of life or personal injury claim
or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC
standards.
Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and
for Pollution Prevention (the "ISM Code"), our operations are also subject to environmental standards and requirements. The
ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that
includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and
procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety
management system that our managers have developed for compliance with the ISM Code. The failure of a vessel owner or
person such as the manager or bareboat charterer, who has assumed the responsibility for operation of the ship from the owner
of the ship and who on assuming such responsibility has agreed to take over all the duties and responsibilities imposed by the
ISM Code, may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and
may result in a denial of access to, or detention in, certain ports. The ISM Code requires that vessel operators obtain a safety
management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the
ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its
manager has been awarded a document of compliance, issued by either flag state or an organization recognized by the flag state,
under the ISM Code. Our managers have obtained applicable documents of compliance for their offices and safety management
certificates for all of our vessels for which the certificates are required by the ISM. The document of compliance and safety
management certificate are renewed as required.
The SOLAS Convention regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and oil tankers, which
entered into force on January 1, 2012, requires that all oil tankers and bulk carriers of 150 meters in length and above, for which
the building contract is placed on or after July 1, 2016, satisfy applicable structural requirements conforming to the functional
requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and Oil Tankers (GBS Standards).
30
Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be
in compliance with the International Maritime Dangerous Goods Code ("IMDG Code"). Effective January 1, 2018, the IMDG
Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International
Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods, and (3) new mandatory
training requirements. Amendments which took effect on January 1, 2020 also reflect the latest material from the UN
Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2) new
abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by
flammable liquid or gas. Additional amendments, which came into force on June 1, 2022, include (1) addition of a definition of
dosage rate, (2) additions to the list of high consequence dangerous goods, (3) new provisions for medical/clinical waste, (4)
addition of various ISO standards for gas cylinders, (5) a new handling code, and (6) changes to stowage and segregation
provisions.
The IMO has also adopted the International Convention on STCW. As of February 2017, all seafarers are required to meet the
STCW standards and be in possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally
employ the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to
undertake surveys to confirm compliance.
The IMO's Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for
Ships Operating in Polar Water (the "Polar Code"). The Polar Code, which entered into force on January 1, 2017, covers design,
construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships
operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution
prevention as well as recommendatory provisions. The Polar Code applies to new ships constructed after January 1, 2017, and
after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of
their first intermediate or renewal survey.
Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity
regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity
threats. By IMO resolution, administrations are encouraged to ensure that cyber-risk management systems are incorporated by
ship-owners and managers by their first annual Document of Compliance audit after January 1, 2021. In February 2021, the
U.S. Coast Guard published guidance on addressing cyber risks in a vessel’s safety management system. This might cause
companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital
expenditures. The impact of such regulations is difficult to predict at this time.
In June 2022, SOLAS also set out new amendments that took effect on January 1, 2024, which include new requirements for:
(1) the design for safe mooring operations, (2) the Global Maritime Distress and Safety System ("GMDSS"), (3) watertight
integrity, (4) watertight doors on cargo ships, (5) fault-isolation of fire detection systems, and (6) life-saving appliances. These
new requirements may impact the cost of our operations.
Pollution Control and Liability Requirements
The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial
waters of the signatories to such conventions. For example, the IMO adopted an International Convention for the Control and
BWM Convention in 2004. The BWM Convention entered into force on September 8, 2017. The BWM Convention requires
ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge of new or invasive aquatic
organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing regulations call for a
phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration
limits, and require all ships to implement a ballast water management plan including carrying a ballast water record book and be
certified with an international ballast water management certificate.
On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that
the dates are triggered by the entry into force date and not the dates originally in the BWM Convention. This, in effect, makes
all vessels delivered before the entry into force date "existing vessels" and allows for the installation of ballast water
management systems on such vessels at the first International Oil Pollution Prevention ("IOPP") renewal survey following entry
into force of the convention. The MEPC adopted updated guidelines for approval of ballast water management systems (G8) at
MEPC 70. At MEPC 71, the schedule regarding the BWM Convention’s implementation dates was also discussed and
amendments were introduced to extend the date existing vessels are subject to certain ballast water standards. Those changes
were adopted at MEPC 72. Ships over 400 gross tons generally must comply with a "D-1 standard," requiring the exchange of
ballast water only in open seas and away from coastal waters. The "D-2 standard" specifies the maximum amount of viable
organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. Depending on the date
of the IOPP renewal survey, existing vessels must comply with the D-2 standard on or after September 8, 2019. For most ships,
31
compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted
organisms. Ballast water management systems, which include systems that make use of chemical, biocides, organisms or
biological mechanisms, or which alter the chemical or physical characteristics of the ballast water, must be approved in
accordance with IMO Guidelines (Regulation D-3). As of October 13, 2019, MEPC 72’s amendments to the BWM Convention
took effect, making the Code for Approval of Ballast Water Management Systems, which governs assessment of ballast water
management systems, mandatory rather than permissive, and formalized an implementation schedule for the D-2 standard.
Under these amendments, all ships must meet the D-2 standard by September 8, 2024. Remaining costs of compliance with
these regulations is estimated to be approximately $1.0 million in total for the remaining two vessels that do not currently have
ballast water management systems installed. Additionally, in November 2020, MEPC 75 adopted amendments to the BWM
Convention which would require a commissioning test of the ballast water management system for the initial survey or when
performing an additional survey for retrofits. This analysis will not apply to ships that already have an installed BWM system
certified under the BWM Convention. These amendments have entered into force on June 1, 2022. In December 2022, MEPC
79 agreed that it should be permitted to use ballast tanks for temporary storage of treated sewage and grey water. MEPC 79 also
established that ships are expected to return to D-2 compliance after experiencing challenging uptake water and bypassing a
BWM system should only be used as a last resort. July 2023, MEPC 80 approved a plan for a comprehensive review of the
BWM Convention. over the next three years and the corresponding development of a package of amendments to the
Convention. MEPC 80 also adopted further amendments relating to Appendix II of the BWM Convention concerning the form
of the Ballast Water Record Book, which are expected to enter into force in February 2025. A protocol for ballast water
compliance monitoring devices and unified interpretation of the form of the BWM Convention certificate were also adopted.
Once mid-ocean exchange or ballast water treatment requirements become mandatory under the BWM Convention, the cost of
compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries
already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive
and harmful species via such discharges. The U.S., for example, requires vessels entering its waters from another country to
conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements.
The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the "Bunker
Convention") to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator)
for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention
requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the
limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in
accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s
bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.
Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions,
such as the United States where the International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time
to time amended and replaced by the 1992 protocol, or the Bunker Convention has not been adopted, various legislative
schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.
Anti-Fouling Requirements
In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships (the "Anti-
fouling Convention"). The Anti-fouling Convention, which entered into force on September 17, 2008, prohibits the use of
organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over
400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into
service or before an International Anti-fouling System Certificate is issued for the first time; and subsequent surveys when the
Anti-fouling systems are altered or replaced.
We have obtained Anti-fouling System Certificates for all our vessels that are subject to the Anti-fouling Convention.
Compliance Enforcement
Noncompliance with the ISM Code or other IMO regulations may subject the ship owner, ship manager or bareboat charterer to
increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of
access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not in compliance
with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively. As
of the date of this report, all our vessels have a valid Safety Management Certificate as applicable under the ISM Code. The
IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be
adopted by the IMO and what effect, if any, such regulations might have on our operations.
32
United States Regulations
The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act
The U.S. Oil Pollution Act of 1990 ("OPA") established an extensive regulatory and liability regime for the protection and
cleanup of the environment from oil spills. OPA affects all "owners and operators" whose vessels trade or operate within the
U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200
nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), which applies to the discharge of hazardous substances other than oil, except in
limited circumstances, whether on land or at sea. OPA and CERCLA both define "owner and operator" in the case of a vessel as
any person owning, operating or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.
Under OPA, vessel owners and operators are "responsible parties" and are jointly, severally and strictly liable (unless the spill
results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs
and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA
defines these other damages broadly to include:
i. injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
ii. injury to, or economic losses resulting from, the destruction of real and personal property;
iii. loss of subsistence use of natural resources that are injured, destroyed or lost;
iv. net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss
of real or personal property, or natural resources;
v. lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal
property or natural resources; and
vi. net cost of increased or additional public services necessitated by removal activities following a
discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of
natural resources.
OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. On December 23, 2022,
the USCG issued a final rule to adjust the limitation of liability under the OPA. Effective March 23, 2023, the new adjusted
limits of OPA liability for non-tank vessels, edible oil tank vessels, and any oil spill response vessels, to the greater of $1,300
per gross ton or $1,076,000 (previous limit was $1,200 per gross ton or $997,100).
These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety,
construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual
relationship), or a responsible party's gross negligence or willful misconduct. The limitation on liability similarly does not apply
if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has
reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or
(iii) without sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the
Intervention on the High Seas Act.
CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and
remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs
associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a
hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under
CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and
the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person
liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from
willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or
operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to
provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject
to OPA.
OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and
CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial
responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject.
Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety
bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the USCG’s financial
responsibility regulations by providing applicable certificates of financial responsibility.
33
The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including
higher liability caps under OPA, new regulations regarding offshore oil and gas drilling, and a pilot inspection program for
offshore facilities. However, several of these initiatives and regulations have been or may be revised. For example, the U.S.
Bureau of Safety and Environmental Enforcement’s ("BSEE") revised Production Safety Systems Rule ("PSSR"), effective
December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the
BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms regarding the safety of
drilling operations, and former U.S. President Trump had proposed leasing new sections of U.S. waters to oil and gas
companies for offshore drilling. In January 2021, U.S. President Biden signed an executive order temporarily blocking new
leases for oil and gas drilling in federal waters. However, attorney generals from 13 states filed suit in March 2021 to lift the
executive order, and in June 2021, a federal judge in Louisiana granted a preliminary injunction against the Biden
administration, stating that the power to pause offshore oil and gas leases "lies solely with Congress." In August 2022, a federal
judge in Louisiana sided with Texas Attorney General Ken Paxton, along with the other 12 plaintiff states, by issuing a
permanent injunction against the Biden Administration’s moratorium on oil and gas leasing on federal public lands and offshore
waters. After being blocked by the courts, in September 2023, the Biden administration announced a scaled back offshore oil
drilling plan, including just three oil lease sales in the Gulf of Mexico. With these rapid changes, compliance with any new
requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our
operations and adversely affect our business.
OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring
within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have
enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigable waterway have
enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a
discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law. Moreover, some
states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some
cases, states which have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’
responsibilities under these laws. The Company intends to comply with all applicable state regulations in the ports where the
Company’s vessels call.
We currently maintain pollution liability coverage insurance in the amount of $2.1 billion per incident for each of our vessels. If
the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business
and results of operation.
Other United States Environmental Initiatives
The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) ("CAA") requires the EPA to promulgate
standards applicable to emissions of volatile organic compounds and other air contaminants. The CAA requires states to adopt
State Implementation Plans ("SIPs"), some of which regulate emissions resulting from vessel loading and unloading operations
which may affect our vessels.
The U.S. Clean Water Act ("CWA") prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable
waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any
unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and
complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of "waters of the
United States" ("WOTUS"), thereby expanding federal authority under the CWA. Following litigation on the revised WOTUS
rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of WOTUS. In 2019 and
2020, the agencies repealed the prior WOTUS Rule and promulgated the Navigable Waters Protection Rule ("NWPR") which
significantly reduced the scope and oversight of EPA and the Department of the Army in traditionally non-navigable
waterways. On August 30, 2021, a federal district court in Arizona vacated the NWPR and directed the agencies to replace the
rule with the pre-2015 definition. In January 2023, the revised WOTUS rule was codified in place of the vacated NWPR. On
May 25, 2023, the United States Supreme Court ruled in the case Sackett v. EPA that only wetlands and permanent bodies of
water with a "continuous surface connection" to "traditional interstate navigable waters" are covered by the CWA, further
narrowing the application of the WOTUS rule. On August 2023, the EPA and the Department of the Army issued the final
WOTUS rule, effective on September 8, 2023, that largely reinstated the pre-2015 definition and applied the Sackett ruling.
The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels
within United States waters pursuant to the Vessel Incidental Discharge Act ("VIDA"), which was signed into law on December
4, 2018 and replaces the 2013 Vessel General Permit ("VGP") program (which authorizes discharges incidental to operations of
commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in
U.S. waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable
lubricants) and current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species
34
Act ("NISA"), such as mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels
equipped with ballast water tanks bound for U.S. ports or entering U.S. waters. VIDA establishes a new framework for the
regulation of vessel incidental discharges under Clean Water Act ("CWA"), requires the EPA to develop performance standards
for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation, compliance,
and enforcement regulations within two years of EPA’s promulgation of standards. Under VIDA, all provisions of the 2013
VGP and USCG regulations regarding ballast water treatment remain in force and effect until the EPA and U.S. Coast Guard
regulations are finalized. Non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the
requirements of the VGP, including submission of a Notice of Intent ("NOI") or retention of a PARI form and submission of
annual reports. We have submitted NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard and state
regulations would require the installation of ballast water treatment equipment on our vessels or the implementation of other
port facility disposal procedures at potentially substantial cost or may otherwise restrict our vessels from entering U.S. waters.
European Union Regulations
In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of
polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the
discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a
polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag,
but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability for pollution
may result in substantial penalties or fines and increased civil liability claims. Regulation (EU) 2015/757 of the European
Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring, reporting and
verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with
ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur
additional expenses.
The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of
high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been detained. The European
Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for
repeated offenses. The regulation also provided the European Union with greater authority and control over classification
societies, by imposing more requirements on classification societies and providing for fines or penalty payments for
organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur
content fuel for their main and auxiliary engines including boiler. The EU Directive 2005/33/EC (amending Directive 1999/32/
EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels. In addition, the EU
imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English
Channel (the so called "SOx-Emission Control Area"). As of January 2020, EU member states must also ensure that ships in all
EU waters, except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.
On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector in the
European Union’s carbon market, the EU Emissions Trading System ("EU ETS") as part of its "Fit-for-55" legislation to reduce
net greenhouse gas emissions by at least 55% by 2030. On July 14, 2021, the European Parliament formally proposed its plan,
which would involve gradually including the maritime sector from 2023 and phasing the sector in over a three-year period. This
will require shipowners to buy permits to cover these emissions. The Environment Council adopted a general approach on the
proposal in June 2022. On December 18, 2022, the Environmental Council and European Parliament agreed on a gradual
introduction of obligations for shipping companies to surrender allowances equivalent to a portion of their carbon emissions:
40% for verified emissions from 2024, 70% for 2025 and 100% for 2026. Most large vessels will be included in the scope of
the EU ETS from the start. Big offshore vessels of 5,000 gross tonnage and above will be included in the 'MRV' on the
monitoring, reporting and verification of CO2 emissions from maritime transport regulation from 2025.
In 2023 the European Parliament (EP), Council of the European Union, and the European Commission (EC) adopted FuelEU
Maritime regulation. From 2025, for ships trading in the EU or European Economic Area (EEA), the yearly average GHG
intensity of energy used on board, measured as GHG emissions per energy unit (gCO2e/MJ), needs to be below a required
level.
International Labour Organization
The International Labour Organization (the "ILO") is a specialized agency of the UN that has adopted the Maritime Labor
Convention 2006 ("MLC 2006"). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to
ensure compliance with the MLC 2006 for all ships and are either engaged in international voyages or flying the flag of a
35
Member and operating from a port, or between ports, in another country. We believe that all our vessels are in substantial
compliance with and are certified to meet MLC 2006.
Greenhouse Gas Regulation
Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United
Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries
have been required to implement national programs to reduce greenhouse gas emissions with targets extended through 2020.
International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping
emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed
the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. The 2015 United
Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016
and does not directly limit greenhouse gas emissions from ships. The U.S. initially entered into the agreement, but on June 1,
2017, the former U.S. President Trump announced that the United States intends to withdraw from the Paris Agreement, and the
withdrawal became effective on November 4, 2020. On January 20, 2021, U.S. President Biden signed an executive order to
rejoin the Paris Agreement, which the U.S. officially rejoined on February 19, 2021.
At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy
on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at
the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initial strategy identifies "levels of
ambition" to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through
implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an
average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008
emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while
pursuing efforts towards phasing them out entirely. The initial strategy notes that technological innovation, alternative fuels
and/or energy sources for international shipping will be integral to achieve the overall ambition. These regulations could cause
us to incur additional substantial expenses. At MEPC 77, the Member States agreed to initiate the revision of the Initial IMO
Strategy on Reduction of GHG emissions from ships, recognizing the need to strengthen the ambition during the revision
process. In July 2023, MEPC 80 adopted a revised strategy, which includes an enhanced common ambition to reach net-zero
greenhouse gas emissions from international shipping around or close to 2050, a commitment to ensure an uptake of alternative
zero and near-zero greenhouse gas fuels by 2030, as well as i). reducing the total annual greenhouse gas emissions from
international shipping by at least 20%, striving for 30%, by 2030, compared to 2008; and ii). reducing the total annual
greenhouse gas emissions from international shipping by at least 70%, striving for 80%, by 2040, compared to 2008.
The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990
levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period from 2013 to
2020. Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data
on carbon dioxide emissions and other information. Under the European Climate Law, the EU committed to reduce its net
greenhouse gas emissions by at least 55% by 2030 through its "Fit-for-55" legislation package. As part of this initiative,
regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s carbon
market, EU ETS were phased in from January 1, 2024.
Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where
we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts
emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with
certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent
that climate change may result in sea level changes or certain weather events.
Vessel Security Regulations
Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to
enhance vessel security such as the MTSA. To implement certain portions of the MTSA, the USCG issued regulations requiring
the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United
States and at certain ports and facilities, some of which are regulated by the EPA.
Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and
mandates compliance with the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against
security threats including terrorism. To trade internationally, a vessel must attain an International Ship Security Certificate
("ISSC") from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate
may be detained, expelled from, or refused entry at port until they obtain an ISSC. The various requirements, some of which are
found in the SOLAS Convention, include, for example, on-board installation of automatic identification systems to provide a
36
means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations,
including information on a ship’s identity, position, course, speed and navigational status; on-board installation of ship security
alert systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans;
ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record kept onboard showing a
vessel’s history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was
registered with that state, the ship’s identification number, the port at which the ship is registered and the name of the registered
owner(s) and their registered address; and compliance with flag state security certification requirements.
The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA
vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the
SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant financial
impact on us. We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the
ISPS Code.
The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships,
notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of revenue and other costs
may be incurred as a result of unauthorized detention of a vessel or additional security measures, and the risk of uninsured
losses could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best
Management Practices to Deter Piracy, notably those contained in the BMP4 industry standard.
Inspection by Classification Societies
The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of
registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and
regulations of the country of registry of the vessel which is a party to the relevant conventions. Most insurance underwriters
make it a condition for insurance coverage and lending that a vessel be certified "in class" by a classification society which is a
member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized Common
Structural Rules (the "Rules"), which apply to oil tankers and bulk carriers contracted for construction on or after July 1, 2015.
The Rules attempt to create a level of consistency between IACS Societies. All of our vessels are certified as being "in class" by
all the applicable Classification Societies (e.g., American Bureau of Shipping, Lloyd's Register of Shipping).
A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a
vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a
five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of
the vessel. Our vessels that are less than 15 years old have UWILD or IWS Class notation where underwater inspection in lieu
of drydocking can be performed. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey,
drydocking or special survey, the vessel will not be issued with the appropriate statutory certificates, resulting in our vessel
being unable to trade and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in
our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a
material adverse impact on our financial condition and results of operations.
Risk of Loss and Liability Insurance
General
The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo
loss or damage and business interruption due to political circumstances in foreign countries, piracy incidents, hostilities and
labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental
mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA, which imposes virtually
unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the exclusive economic zone of
the United States for certain oil pollution accidents in the United States, has made liability insurance more expensive for
shipowners and operators trading in the United States market. We carry insurance coverage as customary in the shipping
industry. However, not all risks can be insured, specific claims may be rejected, and we might not be always able to obtain
adequate insurance coverage at reasonable rates.
Hull and Machinery Insurance
We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental damage and
pollution insurance and war risk insurance and freight, demurrage and defense insurance for our fleet.
37
Protection and Indemnity Insurance
Protection and indemnity insurance is provided by mutual protection and indemnity associations ("P&I Associations"), and
covers our third-party liabilities in connection with our shipping activities. This includes third-party liability and other related
expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions
with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and
other related costs, including wreck removal. Protection and indemnity insurance is a form of mutual indemnity insurance,
extended by protection and indemnity mutual associations (such associations, "clubs").
Our current protection and indemnity insurance coverage for pollution is $2.1 billion per vessel per incident. The 12 P&I
Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and have
entered into a pooling agreement to reinsure each association’s liabilities. The International Group’s website states that the Pool
provides a mechanism for sharing all claims in excess of $10.0 million up to, currently, approximately $8.9 billion. As a
member of a P&I Association, which is a member of the International Group, we are subject to calls payable to the associations
based on our claim records as well as the claim records of all other members of the individual associations and members of the
shipping pool of P&I Associations comprising the International Group.
C.  ORGANIZATIONAL STRUCTURE
See Exhibit 8.1 for a list of our significant subsidiaries.
D.  PROPERTY, PLANT AND EQUIPMENT
The following table summarizes key information about our fleet as of March 20, 2024:
Vessel
Built
DWT
Flag
Type of Employment
Newcastlemax - Owned
Golden Gayle
2011
206,565
MI
Spot market
Golden Scape
2016
211,112
HK
Index linked time charter
Golden Swift
2016
211,112
HK
Index linked time charter
Golden Walcott
2017
208,000
MI
Time charter
Golden Coral
2019
208,132
MI
Spot market
Golden Champion
2019
208,391
MI
Spot market
Golden Comfort
2020
208,000
MI
Spot market
Golden Courage
2020
208,395
MI
Spot market
Golden Confidence
2020
207,988
MI
Spot market
Golden Competence
2020
208,000
MI
Spot market
Golden Skies
2020
210,897
MI
Index linked time charter
Golden Spirit
2020
210,866
MI
Index linked time charter
Golden Saint
2020
211,138
MI
Spot market
Golden Earl
2020
208,000
MI
Time charter
Golden Duke
2020
208,000
MI
Time charter
Golden Emerald
2020
208,000
MI
Time charter
Golden Spray
2021
208,000
MI
Index linked time charter
Golden Aquamarine
2021
208,000
MI
Time charter
Golden Sapphire
2021
208,000
MI
Time charter
3,966,596
Capesize - Owned
Golden Myrtalia
2011
177,979
MI
Index linked time charter
Golden Anastasia
2014
179,189
MI
Spot market
Golden Houston
2014
181,214
MI
Spot market
Golden Kaki
2014
181,214
MI
Index linked time charter
38
KSL Salvador
2014
180,958
HK
Index linked time charter
KSL San Francisco
2014
181,066
HK
Index linked time charter
KSL Santiago
2014
181,020
HK
Spot market
KSL Santos
2014
181,055
HK
Index linked time charter
KSL Sapporo
2014
180,960
HK
Index linked time charter
KSL Seattle
2014
181,015
HK
Index linked time charter
KSL Singapore
2014
181,062
HK
Index linked time charter
KSL Sydney
2014
181,000
HK
Index linked time charter
Golden Amreen
2015
179,337
MI
Spot market
Golden Aso
2015
182,472
HK
Spot market
Golden Finsbury
2015
182,418
HK
Spot market
Golden Kathrine
2015
182,486
HK
Index linked time charter
KSL Sakura
2015
181,062
HK
Index linked time charter
KSL Seoul
2015
181,010
HK
Index linked time charter
KSL Seville
2015
181,062
HK
Spot market
KSL Stockholm
2015
181,055
HK
Index linked time charter
Golden Barnet
2016
180,355
HK
Index linked time charter
Golden Behike
2016
180,491
MI
Index linked time charter
Golden Bexley
2016
180,209
HK
Index linked time charter
Golden Fulham
2016
182,610
HK
Index linked time charter
Golden Monterrey
2016
180,491
MI
Index linked time charter
Golden Nimbus
2017
180,504
MI
Index linked time charter
Golden Savannah
2017
181,044
HK
Index linked time charter
Golden Surabaya
2017
181,046
HK
Index linked time charter
Golden Arcus
2018
180,478
MI
Index linked time charter
Golden Calvus
2018
180,521
MI
Index linked time charter
Golden Cirrus
2018
180,487
MI
Index linked time charter
Golden Cumulus
2018
180,499
MI
Index linked time charter
Golden Incus
2018
180,511
MI
Index linked time charter
5,967,880
Capesize - Operating Lease - Related Party, SFL
KSL China
2013
179,109
MI
Index linked time charter
179,109
Capesize - Finance Lease - Related Party, SFL
Battersea
2009
169,500
MI
Spot market
Belgravia
2009
169,500
MI
Spot market
Golden Magnum
2009
179,788
HK
Spot market
Golden Beijing
2010
176,000
HK
Spot market
Golden Future
2010
176,000
HK
Spot market
Golden Zhejiang
2010
175,834
HK
Spot market
Golden Zhoushan
2011
175,834
HK
Spot market
1,222,456
Panamax - Owned
Golden Arion
2011
82,188
MI
Time charter
Golden Ioanari
2011
81,526
MI
Spot market
Golden Jake
2011
82,188
MI
Spot market
Golden Daisy
2012
81,507
MI
Time charter
39
Golden Ginger
2012
81,487
MI
Spot market
Golden Keen
2012
81,586
MI
Spot market
Golden Rose
2012
81,585
MI
Time charter
Golden Brilliant
2013
74,500
HK
Spot market
Golden Diamond
2013
74,062
HK
Index linked time charter
Golden Pearl
2013
74,186
HK
Spot market
Golden Sue
2013
84,943
MI
Time charter
Golden Deb
2014
84,943
MI
Time charter
Golden Ruby
2014
74,052
HK
Index linked time charter
Golden Kennedy
2015
83,789
MI
Time charter
Golden Amber
2017
74,500
MI
Index linked time charter
Golden Opal
2017
74,231
MI
Index linked time charter
Golden Fortune
2020
81,600
MI
Spot market
Golden Fellow
2020
81,135
MI
Spot market
Golden Frost
2020
80,559
MI
Spot market
Golden Forward
2021
81,130
MI
Spot market
Golden Friend
2021
81,206
MI
Spot market
Golden Freeze
2021
81,000
MI
Spot market
Golden Fast
2021
81,000
MI
Spot market
Golden Furious
2021
81,000
MI
Spot market
Golden Star
2023
84,988
MI
Spot market
Golden Soul
2023
84,986
MI
Spot market
Golden Lion
2023
84,967
MI
Spot market
Golden Hope
2023
84,986
MI
Spot market
Golden Grace
2023
84,504
MI
Spot market
Golden John
2023
84,508
MI
Spot market
Golden Erling
2023
84,504
MI
Spot market
2,513,346
Key to Flags:
MI – Marshall Islands, HK – Hong Kong.
Other than our interests in the vessels described above, we do not own or lease any other material physical properties, except
for related party leases of our office space in Singapore and in Oslo.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. OPERATING RESULTS
Summary of key information
The following table should also be read in conjunction with the consolidated financial statements and notes thereto included
herein. Our accounts are maintained in U.S. dollars.
40
 
Fiscal year ended December 31,
 
2023
2022
2021
(in thousands of $, except shares, per share data and ratios)
Statement of Operations Data:
Total operating revenues
885,767
1,113,456
1,203,181
Total operating expenses
706,343
712,141
697,353
Net operating income
188,612
435,087
513,608
Net income
112,268
461,847
527,218
Earnings per share: basic ($)
$0.56
$2.30
$2.74
Earnings per share: diluted ($)
$0.56
$2.29
$2.73
Dividends per share ($)
$0.50
$2.35
$1.60
Balance Sheet Data (at end of year):
Cash and cash equivalents
116,382
134,784
197,032
Short-term restricted cash
2,254
3,289
12,985
Vessels and equipment, net
2,987,360
2,665,785
2,880,321
Finance leases, right of use assets, net
68,643
83,589
98,535
Operating leases, right of use assets, net
9,538
15,646
19,965
Total assets
3,489,018
3,257,291
3,454,177
Current portion of long-term debt
109,309
92,865
105,864
Current portion of obligations under finance lease
19,601
18,387
21,755
Current portion of obligations under operating lease
2,632
5,546
13,860
Long-term debt
1,260,758
1,027,991
1,156,481
Non-current portion of obligations under finance lease
67,987
87,588
105,975
Non-current portion of obligations under operating lease
9,621
13,051
14,907
Share capital
10,061
10,061
10,061
Total equity
1,921,891
1,917,033
1,928,741
Common shares outstanding
199,628,293
200,485,621
200,435,621
Other Financial Data:
Equity to assets ratio (percentage) (1)
55.1%
58.9%
55.8%
Debt to equity ratio (2)
0.8
0.6
0.7
Price earnings ratio (3)
17.4
3.8
3.4
Time charter equivalent income (4)
633,913
833,230
948,757
Time charter equivalent rate (5)
17,905
24,262
27,582
(1) Equity to assets ratio is calculated as total equity divided by total assets.
(2) Debt to equity ratio is calculated as total interest bearing current and long-term liabilities divided by total equity.
(3) Price earnings ratio is calculated using the year end share price divided by basic (loss) earnings per share.
(4) A reconciliation of time charter equivalent income ("TCE income"), to total operating revenues as reflected in the
consolidated statements of operation is as follows: 
41
(in thousands of $)
2023
2022
2021
Total operating revenues
885,767
1,113,456
1,203,181
Add: Amortization of charter party-out contracts
(1,419)
—
1,859
Add: Other operating income / (expenses)
—
(413)
(2,008)
Less: Other revenues
4,274
1,263
1,410
Net time and voyage charter revenues
880,074
1,111,780
1,201,622
Less: Voyage expenses & commission
246,161
278,550
252,865
Time charter equivalent income
633,913
833,230
948,757
Consistent with general practice in the shipping industry, we use TCE income as a measure to compare revenue generated from
a voyage charter to revenue generated from a time charter. We define TCE income as operating revenues less voyage expenses
and commission plus amortization of time charter party out contracts. Under time charter agreements, voyage costs, such as
bunker fuel, canal and port charges and commissions, are borne and paid by the charterer whereas under voyage charter
agreements, voyage costs are borne and paid by the owner. TCE income is a common shipping industry performance measure
used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter
types (i.e., spot charters and time charters) under which the vessels may be employed between the periods. TCE income, a non-
U.S. GAAP measure, provides additional meaningful information in conjunction with operating revenues, the most directly
comparable U.S. GAAP measure, because it assists management in making decisions regarding the deployment and use of our
vessels and in evaluating their financial performance, regardless of whether a vessel has been employed on a time charter or a
voyage charter.
(5) TCE rate, represents the weighted average daily TCE income of our entire operating fleet.
(in thousands of $, except for TCE Rate and days)
2023
2022
2021
Time charter equivalent income
633,913
833,230
948,757
Fleet available days
35,990
35,217
35,114
Fleet offhire days
(585)
(874)
(716)
Fleet onhire days
35,405
34,343
34,398
Time charter equivalent rate
17,905
24,262
27,582
TCE rate is a measure of the average daily income performance, following alignment of the revenue streams resulting from
operation of the vessels under voyage or spot charters and time charters, as detailed in footnote 5 above. Our method of
calculating TCE rate is determined by dividing TCE income by onhire days during a reporting period. Onhire days are
calculated on a vessel by vessel basis and represent the net of available days and offhire days for each vessel (owned or
chartered in) in our possession during a reporting period. Available days for a vessel during a reporting period is the number of
days the vessel (owned or chartered in) is in our possession during the period. By definition, available days for an owned vessel
equal the calendar days during a reporting period, unless the vessel is delivered by the yard during the relevant period whereas;
available days for a chartered-in vessel equal the tenure in days of the underlying time charter agreement, pro-rated to the
relevant reporting period if such tenure overlaps more than one reporting periods. Offhire days for a vessel during a reporting
period is the number of days the vessel is in our possession during the period but is not operational as a result of unscheduled
repairs, scheduled drydocking or special or intermediate surveys and lay-ups, if any.
Overview of fleet
The following discussion should be read in conjunction with "Item 4. Information on the Company" and the audited
Consolidated Financial Statements and Notes thereto included herein.
As of December 31, 2023, we owned 83 dry bulk vessels and had construction contracts for four newbuildings. In addition, we
had eight vessels chartered-in from SFL (of which seven are chartered in on finance leases and one is chartered in on an
operating lease). Our owned vessels are owned and operated by one of our subsidiaries and are flagged either in the Marshall
Islands or Hong Kong. As of December 31, 2023, 13 of our vessels were chartered-out on fixed rate time charters, 31 of our
vessels were chartered out on index linked rate time charters, 47 vessels operated in the spot market.
42
Fleet Changes
Refer to "Item 4. Information on the Company - A. History and Development of the Company" for a discussion on acquisitions
and disposals of vessels during the years ended December 31, 2023, 2022, and 2021. A summary of the changes in the vessels
that we own and chartered in under long-term operating and finance leases for the years ended December 31, 2023, 2022 and
2021 is summarized below.
 
2023
2022
2021
Newcastlemax
At start of period
13
13
3
Acquisitions and newbuilding deliveries
6
a
—
10
i
At end of period
19
13
13
Capesize
At start of period
43
43
43
Acquisitions and newbuilding deliveries
—
—
—
Disposals
(2)
b
—
—
At end of period
41
43
43
Panamax
At start of period
27
33
29
Acquisitions and newbuilding deliveries
6
c
—
8
j
Disposals
(2)
d
(4)
f
(4)
k
Redelivery
—
(2)
g
—
At end of period
31
27
33
Ultramax
At start of period
1
3
3
Acquisitions and newbuilding deliveries
—
—
—
Disposals
(1)
e
(2)
h
—
At end of period
—
1
3
Total
At start of period
84
92
78
Acquisitions and newbuilding deliveries
12
—
18
Disposals
(5)
(6)
(4)
Redelivery
—
(2)
—
91
84
92
a. Delivery of six vessels (Golden Aquamarine, Golden Duke, Golden Earl, Golden Walcott, Golden Emerald and
Golden Sapphire) acquired from an unrelated third party.
b. Disposal of two vessels (Golden Feng and Golden Shui) to unrelated third parties.
c. Delivery of six newbuildings (Golden Star, Golden Soul, Golden Hope, Golden Lion, Golden Grace and Golden
John).
d. Disposal of two vessels (Golden Strength and Golden Suek) to unrelated third parties.
e. Disposal of one vessel (Golden Hawk) to an unrelated third party.
f. (i) Disposal of three vessels (Golden Empress, Golden Endeavour and Golden Enterprise) to an unrelated third party
and (ii) disposal of one vessel (Golden Ice) to an unrelated third party.
g. Redelivery of two vessels (Admiral Schmidt and Vitus Bering) to their owner in May 2022 and as such are not included
in our fleet.
h. Disposal of two vessels (Golden Cathrine and Golden Cecilie) to an unrelated third party.
i. (i) Delivery of one newbuilding (Golden Spray) and (ii) delivery of nine vessels (Golden Coral, Golden Champion,
Golden Comfort, Golden Courage, Golden Competence, Golden Confidence, Golden Skies, Golden Spirit and Golden
Saint) acquired from affiliates of Hemen.
j. (i) Delivery of two newbuildings (Golden Fast and Golden Furious) and (ii) delivery of six vessels (Golden Fortune,
Golden Forward, Golden Friend, Golden Fellow, Golden Frost and Golden Freeze) acquired from affiliates of
Hemen.
43
k. Disposal of four vessels (Golden Shea, Golden Saguenay, Golden Opportunity and Golden Endurer) to unrelated third
parties.
Summary of Fleet Employment
As discussed below, as of December 31, 2023, our vessels operated under time charters or voyage charters.
A time charter agreement is a contract entered into by an owner and a charterer whereby the charterer is entitled to the use of a
vessel for a specific period of time for a specified daily fixed or index-linked rate of hire. Under a time charter agreement,
voyage costs, such as bunker fuel and port charges, are borne and paid by the charterer. In the time charter market, rates vary
depending on the length of the charter period and vessel specific factors such as age, speed and fuel consumption. An index-
linked rate usually refers to freight rate indices issued by the Baltic Exchange, such as the Baltic Capesize Index and the Baltic
Panamax Index. These rates are based on actual charter hire rates under charter entered into by market participants, as well as
daily assessments provided to the Baltic Exchange by a panel of major shipbrokers.
A voyage or spot charter agreement is a contract entered into by an owner and a charterer whereby a charterer is entitled to the
use of a vessel to transport commodities between specified geographical locations at a specified freight rate per ton. Under
voyage charter agreements, voyage costs are borne and paid by the owner. In the voyage charter market, rates are also
influenced by cargo size, commodity, port dues and canal transit fees, as well as delivery and redelivery regions. In general, a
larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally
command higher rates than routes with low port dues and no canals to transit. Voyages with a load port within a region that
includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo are
generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or
ballast leg) that is included in the calculation of the return charter to a loading area.
44
 
As of December 31,
 
2023
2022
2021
 
Number of
vessels
Percentage
of fleet
Number of
vessels
Percentage
of fleet
Number of
vessels
Percentage
of fleet
Newcastlemax
Spot
9
47.4%
8
61.5%
8
61.5%
Time charter
6
31.6%
—
—
—
—
Index linked time charter
4
21.0%
5
38.5%
5
38.5%
19
100.0%
13
100.0%
13
100.0%
Capesize
Spot
18
43.9%
17
39.5%
22
51.2%
Time charter
—
—
—
—
—
—
Index linked time charter
23
56.1%
26
60.5%
21
48.8%
41
100.0%
43
100.0%
43
100.0%
Panamax
Spot
20
64.5%
16
59.3%
24
72.7%
Time charter
7
22.6%
5
18.5%
5
15.2%
Index linked time charter
4
12.9%
6
22.2%
4
12.1%
31
100.0%
27
100.0%
33
100.0%
Ultramax
Spot
—
—
1
100.0%
—
—
Time charter
—
—
—
—%
3
100.0%
Index linked time charter
—
—
—
—
—
—
—
—
1
100.0%
3
100.0%
Total
Spot
47
51.6%
42
50.0%
54
58.7%
Time charter
13
14.3%
5
6.0%
8
8.7%
Index linked time charter
31
34.1%
37
44.0%
30
32.6%
91
100.0%
84
100.0%
92
100.0%
Below is an overview as of December 31, 2023 of our vessels on time charter contracts that had a minimum initial contract
duration of more than 11 months:
Vessel Type
Vessel Name
Dwt
Expiry (min period)
Newcastlemax
Golden Aquamarine
208,000
January 2026
Newcastlemax
Golden Walcott
208,000
December 2025
Newcastlemax
Golden Earl
208,000
October 2025
Newcastlemax
Golden Duke
208,000
September 2025
Newcastlemax
Golden Emerald
208,000
September 2025
Newcastlemax
Golden Sapphire
208,000
September 2025
Panamax
Golden Arion
82,188
December 2024
Panamax
Golden Rose
81,585
July 2024
Panamax
Golden Daisy
81,507
June 2024
Panamax
Golden Sue
84,943
May 2024
Panamax
Golden Kennedy
83,789
May 2024
Panamax
Golden Deb
84,943
April 2024
Panamax
Golden Jake
82,188
April 2024
45
Refer to "Item 4. Information on the Company - D. Property Plant and Equipment" for a summary of key information of our
fleet as of the date of this annual report. In addition, from time to time we may also enter into Forward Freight Agreements
("FFAs"), to hedge our exposure to the charter market for a specified route and period of time. Refer to Note 27, "Financial
Assets and Liabilities", to our Consolidated Financial Statements included herein for additional information on our financial
instruments.
Our Fleet – Comparison of Possible Excess of Carrying Value Over Estimated Charter-Free Market Value of Certain
Vessels
In "Critical Accounting Policies – Impairment of long-lived assets, newbuildings and right of use assets", we discuss our policy
for impairing the carrying values of our vessels and newbuildings. During the past few years, the market values of vessels have
experienced particular volatility, with valuations reaching peak in the first half of 2022 following subsequent declines in the
second half of 2022 for many vessel classes. In 2023, in light of strengthened market conditions, most vessel classes have
experienced increased vessel values throughout the year. The charter-free market value, or basic market value, of certain of our
vessels may be below those vessels' carrying value, even though we would not impair those vessels' carrying value under the
accounting impairment policy, as the future undiscounted cash flows expected to be earned by such vessels over their operating
lives would exceed such vessels' carrying amounts.
Our estimates of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and
if inspected would be certified in class without notations of any kind. Our estimates are based on the values achieved for the
sale/purchase of similar vessels and appraised valuations and are inherently uncertain. In addition, vessel values are highly
volatile; as such, our estimates may not be indicative of the current or future basic market value of the vessels or prices that we
could achieve if we were to sell them.
The table set forth below indicates the carrying value of our owned vessels by type and year of construction as of December 31,
2023 and 2022:
46
Vessel Type
Built
Aggregate
dwt
2023
($ millions)
2022
($ millions)
Newcastlemax
2011
206,565
25.6
26.8
Newcastlemax
2016
422,224
103.8*
108.6*
Newcastlemax
2017
208,000
41.5
—
Newcastlemax
2019
833,587
186.9
193.6
Newcastlemax
2020
1,673,186
389.8
249.4
Newcastlemax
2021
626,667
149.8
51.5
Total Newcastlemax
3,970,229
897.4
629.9
Capesize
2009
338,565
—
56.1*
Capesize
2011
177,979
21.3
22.3
Capesize
2014
1,989,762
474.7*
498.3*
Capesize
2015
1,450,965
362.2*
379.9*
Capesize
2016
904,156
188.3
196.6*
Capesize
2017
542,594
139.0*
144.4*
Capesize
2018
902,496
211.5
212.8*
Total Capesize
6,306,517
1,397.0
1,510.4
Panamax
2011
320,751
42.4
58.9
Panamax
2012
400,911
62.0
80.1
Panamax
2013
392,638
85.8
88.0
Panamax
2014
74,052
16.8
17.6
Panamax
2015
84,978
19.5
20.3
Panamax
2017
148,985
35.8
37.2
Panamax
2020
242,904
76.7
79.5
Panamax
2021
404,082
138.0
143.1
Panamax
2023
508,939
215.5*
—
Total Panamax
2,578,240
692.5
524.7
Total fleet
12,854,986
2,986.9
2,665.0
*Indicates vessel groups categorized by type and year of construction for which we believe, as of December 31, 2023 and/or
2022, the basic charter-free market value is lower than the vessel’s carrying value. We believe that the aggregate carrying value
of these vessels exceed their December 31, 2023 and 2022 aggregate basic charter-free market value by approximately $186.7
million and $328.1 million, respectively. We believe that the estimated future undiscounted cash flows expected to be earned by
each of these vessels over its remaining estimated useful life, exceed each of these vessel's carrying value as of December 31,
2023 and 2022, respectively, and accordingly, we have not recorded an impairment charge. The aggregate carrying value of our
total fleet is below the aggregate basic charter-free market value by approximately $151.1 million as of December 31, 2023.
The aggregate carrying value of our total fleet is above the aggregate basic charter-free market value by approximately
$124.0 million as of December 31, 2022.
We refer you to "Item 3. Key Information – D. Risk Factors – "The market values of our vessels may decline, which could limit
the amount of funds that we can borrow, cause us to breach certain financial covenants in our credit facilities, or result in an
impairment charge, and cause us to incur a loss if we sell vessels following a decline in their market value".
Factors Affecting Our Results
The principal factors which affect our results of operations and financial position include:
47
• the earnings from our vessels;
• gains (losses) from the sale of assets;
• other operating income (expenses), net;
• ship operating expenses;
• impairment losses on vessels and newbuildings;
• administrative expenses;
• depreciation;
• interest expense;
• share of results of associated companies; and
• changes in fair value of our financial instruments.
We derive our earnings from time charters and voyage charters. As of December 31, 2023, 78 of our 91 vessels, which are
owned or leased in by us, were employed in the voyage charter market or on short-term time charters of less than eleven
months. The dry bulk industry has historically been highly cyclical, experiencing volatility in profitability, vessel values and
freight rates.
Gains and losses on the sale of vessels are recognized when the vessel has been delivered and all risks have been transferred
and are determined by comparing the net proceeds received with the carrying value of the vessel.
Ship operating costs are the direct costs associated with running a vessel and include crew costs, vessel supplies, repairs and
maintenance, drydockings, lubricating oils, insurance and management fees.
An impairment loss on vessels and newbuildings is recognized when the carrying value exceeds the estimated future net
undiscounted cash flows expected to be earned over the remaining estimated useful life of the vessel, or exceeds the estimated
net sales proceeds when a vessel is classified as held for sale.
Administrative expenses are comprised of general corporate overhead expenses, including personnel costs, property costs, audit
fees, legal and professional fees, stock option expenses and other general administrative expenses. Personnel costs include,
among other things, salaries, pension costs, fringe benefits, travel costs and health insurance.
Depreciation, or the periodic costs charged to our income for the reduction in usefulness and long-term value of our vessels, is
also related to the number of vessels we own or lease. We depreciate the cost of vessels we own, less their estimated residual
value, over their estimated useful life on a straight-line basis. We depreciate the cost of vessels held under finance lease over the
term of the lease. No charge is made for depreciation of vessels under construction until they are delivered.
Interest expense relates to vessel specific debt facilities and finance leases. Interest expense depends on our overall borrowing
levels and may significantly increase when we acquire vessels or on the delivery of newbuildings. Interest expense may also
change with prevailing interest rates, although the effect of these changes may be reduced by interest rate swaps or other
derivative instruments.
Our marketable equity securities are investments in equity securities with readily determinable fair values. These investments
are measured at fair value and any resulting unrealized gains and losses are recorded in the consolidated statement of
operations.
None of our derivatives qualify for hedge accounting and changes in fair values are recognized in the Consolidated Statements
of Operations.
Share of results from associated companies is accounted for under equity method of accounting.
Inflation
Inflation has only had a moderate effect on our expenses given current economic conditions. Significant global inflationary
pressures (such as triggered by various economic stimuli and war between Russia and Ukraine) increase operating, voyage,
general and administrative, and financing costs. However, in the event of a shipping downturn, costs subject to inflation can
usually be controlled as shipping companies typically monitor costs to preserve liquidity and encourage suppliers and service
providers to lower rates and prices.
48
Inflationary effects were immaterial for the period ended December 31, 2023. In particular, we have observed inflation
affecting ship operating expenses, such as crew expenses, insurance costs and spares freight, however, these effects were not
material in comparison to our total ship operating expenses and did not exceed 10% of total Operating expenses. Please refer to
"Item 5. Operating and Financial Review and Prospects – A. Operating Results – Factors Affecting Our Results" for more
details.
The extent of inflation impact on our future financial and operational results, which could be material, will depend, among other
things, on the overall macroeconomic environment and duration and severity of the Russian-Ukrainian War. For 2024, we
expect an increase in crew expenses of approximately 4%, due to Russian seafarers no longer being present in the global pool,
which decreases overall number of seafarers in the world. Therefore, there will be an increased demand for qualified crew, and
this has and will continue to put inflationary pressure on crew costs.
Year ended December 31, 2023 compared with year ended December 31, 2022
Operating revenues
We currently operate most of our vessels in the spot market, or on floating rate index-linked time charters, exposing us to
fluctuations in spot market charter rates. As a result, our shipping revenues and financial performance are significantly affected
by conditions in the dry bulk spot market, and any decrease in spot charter rates may adversely affect our earnings. In addition,
the mix of charters between spot or voyage charters and time charters also affects our revenues and voyage expenses. In 2023,
market conditions softened compared to those in 2022, which is illustrated by a decrease in the Baltic Dry Index, or BDI, from
an average of 1,936 points in 2022 to an average of 1,378 in 2023. This is also evidenced through a decrease in our achieved
TCE rate for the full fleet from $24,262 per day in 2022 to $17,905 per day in 2023. Our achieved TCE rates are a combination
of many factors, including, but not limited to, timing of entering into contracts, earnings on our scrubber fitted vessels due to
the level of price spread between high sulfur and low sulfur fuel, as well as the mix of charters between spot or voyage charters
and time charters. In addition, during 2023 we have taken delivery of six Newcastlemax vessels acquired from H-Line,
delivered between end of March 2023 and July 2023, and six Kamsarmax newbuildings out of the ten newbuildings, delivered
between April 2023 and August 2023, therefore adding capacity to our fleet in 2023 compared to 2022.
(in thousands of $)
2023
2022
Change
Time charter revenues
434,827
593,795
(158,968)
Voyage charter revenues
446,666
518,398
(71,732)
Other revenues
4,274
1,263
3,011
Total operating revenues
885,767
1,113,456
(227,689)
Time charter revenues decreased by $159.0 million in 2023 compared with 2022, primarily due to:
• a decrease of $133.1 million reflecting lower rates under index-linked and short-term time charters for vessels that
were in our fleet through the duration of both these periods;
• a decrease of $44.8 million due to the sale of five vessels that were delivered to new owners during 2023 and seven
vessels that were delivered to new owners during 2022, whereas for 2022, the vessels were in our fleet for part of the
entire duration of the period;
• a decrease of $14.9 million reflecting the decrease in bunker prices for bunkers on board delivered to charterers; and
• a decrease of $20.7 million attributable to chartered-in vessels that traded on time charters during the period.
The decrease in time charter revenues described above was partially offset by:
• an increase of $30.2 million attributable to the six Newcastlemax vessels acquired from H-Line during 2023;
• an increase of $12.8 million attributable to the six newbuildings delivered during 2023;
• an increase of $10.1 million attributable to an increase in the number of time charter days for own vessels attributable
to contract type mix between time charter and voyage charter for vessels that were in our fleet through the duration of
both of these periods; and
• an increase of $1.4 million attributable to increase in amortization of unfavorable charter party contracts during the
period.
Voyage charter revenues decreased by $71.7 million in 2023 compared with 2022, primarily due to:
• a decrease of $94.5 million attributable to decrease in dry bulk freight rates;
49
• a decrease of $20.2 million due to sale of vessels; and
• a decrease of $7.6 million attributable to a decrease in the number of voyage charter days for own vessels attributable
to contract type mix between time charter and voyage charter for vessels that were in our fleet through the duration of
both of these periods.
The decrease in voyage charter revenues described above was partially offset by:
• an increase of $40.8 million relating to increased voyage charter activity of chartered-in vessels; and
• an increase of $9.8 million attributable to four of the six newbuildings delivered during 2023.
Other revenues increased by $3.0 million in 2023 compared with 2022 primarily attributable to an increase in insurance income
of $2.2 million and in commercial management services of $0.8 million.
The average TCE rate decreased from $24,262 for the year ended December 31, 2022 to $17,905 for the year ended
December 31, 2023.
Gain on sale of assets
(in thousands of $)
2023
2022
Change
Gain on sale of assets
9,188
34,185
(24,997)
Gain on sale of assets decreased by $25.0 million in 2023 compared with 2022. In 2023, we recorded a gain of $9.2 million
related to the sales of Golden Strength, Golden Suek and Golden Hawk. In 2022, we sold a total of six vessels, Golden Empress,
Golden Enterprise, Golden Endeavour, Golden Cecilie, Golden Cathrine and Golden Ice, and recorded a gain of $34.2 million.
Voyage expenses and commission
(in thousands of $)
2023
2022
Change
Voyage expenses and commission
246,161
278,550
(32,389)
 
Voyage expenses and commission decreased by $32.4 million in 2023 compared with 2022 primarily due to:
• a decrease of $42.7 million attributable to a decrease in fuel prices and commissions; and
• a decrease of $9.4 million relating to vessels sold in 2023 and 2022.
The decrease in voyage expenses and commission was partially offset by:
• an increase of $12.7 million relating to more vessels being chartered in; and
• an increase of $7.0 million relating to six newbuildings delivered during 2023.
Ship operating expenses
(in thousands of $)
2023
2022
Change
Ship operating expenses
251,950
225,971
25,979
Ship operating expenses increased by $26.0 million in 2023 compared with 2022 primarily due to:
• an increase of $18.9 million attributable to the six Newcastlemaxes and six newbuildings delivered during the period;
• an increase of $9.0 million in drydocking expenses, where majority of the increase relates to increased drydocking
scope to improve vessel efficiencies and covering increased hull and cargo blasting area and additional paint;
• an increase of $5.1 million attributable to the non-lease component, or service element, reclassified from charter hire
expenses to ship operating expenses for vessels chartered in on time charters during the period;
• an increase of $4.3 million related to running ship operating expenses, primarily as a result of higher expenses related
to crew costs, spares and repairs due to increased inflation, for the vessels that were in our fleet during the period; and
• an increase of $1.6 million mostly related to various vessels upgrades and costs related to change of technical
managers for 33 of our vessels.
This was partially offset by:
• a decrease of $12.9 million relating to vessels sold.
As a result, daily operating costs per vessel (excluding drydocking costs) increased by $298 per day, from $6,144 per day
during the year ended December 31, 2022 to $6,442 per day during the year ended December 31, 2023. Of the increase of $298
50
per day, approximately $200 per day relates to increased operating expenses due to change in ship managers for 33 of our
vessels.
Charter hire expenses
(in thousands of $)
2023
2022
Change
Charter hire expenses
42,225
57,406
(15,181)
Charter hire expenses decreased by $15.2 million in 2023 compared with 2022 primarily due to:
• a decrease of $22.3 million related to a decrease in chartered in rates; offset by
• an increase of $7.1 million related to increase in trading activity for short-term charter-in activity from third parties.
Administrative expenses
(in thousands of $)
2023
2022
Change
Administrative expenses
18,679
20,375
(1,696)
Administrative expenses decreased by $1.7 million in 2023 as compared to 2022 primarily due to a decrease in non-recurring
personnel expenses.
Impairment loss on vessels
(in thousands of $)
2023
2022
Change
Impairment loss on vessels
11,780
—
11,780
In March 2023, the Company entered into an agreement to sell two Capesize vessels, Golden Feng and Golden Shui, to an
unrelated third party for an aggregate net sale price of $43.6 million, and the Company recorded an impairment loss of $11.8
million in connection to the sale. No impairments were recorded in 2022.
Depreciation
(in thousands of $)
2023
2022
Change
Depreciation
135,548
129,839
5,709
Depreciation expenses increased by $5.7 million in 2023 as compared to 2022, primarily due to:
• an increase of $5.6 million attributable to vessels delivered in 2023, in connection with the acquisition of six
Newcastlemax vessels from H-Line in February 2023;
• an increase of $3.9 million attributable to six Kamsarmax newbuildings delivered in 2023; and
• an increase of $0.5 million attributable to vessels that were in our fleet during both periods.
The increase was partially offset by:
• a decrease of $4.3 million due to sale of vessels in 2023 and 2022.
Interest income
(in thousands of $)
2023
2022
Change
Interest income
4,717
2,345
2,372
Interest income increased by $2.4 million in 2023 compared with 2022 primarily due to higher interest rates earned on our
deposits.
51
Interest expense
(in thousands of $)
2023
2022
Change
Interest on floating rate debt
94,702
45,792
48,910
Finance lease interest expense
8,314
6,989
1,325
Commitment fees
1,076
2,273
(1,197)
Interest capitalized on newbuildings
(5,194)
(2,424)
(2,770)
Amortization of deferred charges
4,766
3,618
1,148
Interest expense
103,664
56,248
47,416
Interest expense increased by $47.4 million in 2023 compared with 2022, primarily due to:
• an increase of $48.9 million attributable to higher interest on our floating debt primarily due to an increase in the
London Interbank Offered Rate (LIBOR) and SOFR rates, with the average 3-month LIBOR rate being 2.40% in 2022
and average 3-month SOFR rate being 5.01% in 2023;
• an increase of $1.3 million in finance lease interest expenses; and
• an increase of $1.1 million of amortization of deferred charges.
These factors were partially offset by:
• a decrease of $2.8 million due to increased capitalized interest on newbuildings as four newbuildings are due for
delivery by 2024; and
• a decrease of $1.2 million in commitment fees during 2023.
Equity results of associated companies
(in thousands of $)
2023
2022
Change
Equity results of associated companies
12,316
40,793
(28,477)
Equity results of associated companies decreased by $28.5 million in 2023 compared to 2022. This was primarily due to
recognizing a total equity in earnings from our investment in SwissMarine Pte. Ltd. ("SwissMarine") which amounted to $5.0
million in 2023 compared to an equity in earnings of $21.5 million in 2022. We also recognized a total equity in earnings of
$7.3 million from our investment in TFG Marine Pte Ltd ("TFG Marine") and United Freight Carriers LLC ("UFC") in 2023
compared to an equity in earnings of $19.3 million in 2022. The decrease in gains for SwissMarine, TFG Marine and UFC was
due to a combination of factors, among others, a decrease in trading activity.
Gain (loss) on derivatives
(in thousands of $)
2023
2022
Change
Gain (loss) on derivatives
11,371
39,968
(28,597)
The gain on derivatives decreased by $28.6 million in 2023 compared with 2022 primarily due to a negative development in the
change of fair value of our USD denominated interest rate swaps of $29.4 million. In addition, we had negative development
for forward freight derivatives of $0.6 million. This was partly offset by a positive development for bunker derivatives of $1.1
million and foreign currency swaps of $0.2 million.
Gain (loss) on marketable equity securities
(in thousands of $)
2023
2022
Change
Gain (loss) on marketable equity securities
287
503
(216)
The gain on marketable equity securities in 2023 relates to our investment in Eneti Inc., a company engaged in marine based
renewable energy. Until December 29, 2023, Eneti Inc. was listed on the New York Stock Exchange, measured at fair value,
with changes in the fair value recognized in the Consolidated Statements of Operations.
Other financial items
(in thousands of $)
2023
2022
Change
Other financial items
(830)
(222)
(608)
52
Other financial items decreased by $0.6 million in 2023 compared with 2022 primarily due to a decrease of $0.7 million in
other financial charges, offset by an increase of $0.1 million in bank charges.
For the discussion of our operating results in 2022 compared with 2021, we refer to "Item 5. Operating and Financial Review
and Prospects" included in our annual report on Form 20-F for the year ended December 31, 2022, which was filed with the
U.S. Securities and Exchange Commission on March 16, 2023.
Recently Issued Accounting Standards
Refer to Note 3, "Recent Accounting Pronouncements", of "Item 18. Financial Statements".
B. LIQUIDITY AND CAPITAL RESOURCES
We operate in a capital-intensive industry and have historically financed our purchase of vessels through a combination of
equity capital and borrowings from commercial banks, as well as issuance of convertible bonds. Our ability to generate
adequate cash flows on a short and medium term basis depends substantially on the trading performance of our vessels in the
market. Periodic adjustments to the supply of and demand for dry bulk vessels cause the industry to be cyclical in nature.
We expect continued volatility in market rates for our vessels in the foreseeable future with a consequent effect on our short and
medium term liquidity.
Our funding and treasury activities are conducted within corporate policies to increase investment returns while maintaining
appropriate liquidity for our requirements. Cash and cash equivalents are held primarily in U.S. dollars with some balances held
in Norwegian Kroner, Euro and Singapore dollars.
Our short-term liquidity requirements relate to payment of operating costs (including drydocking), payment of installments for
newbuildings, activities relating to decarbonization, BWTS, funding working capital requirements, repayment of bank loans,
lease payments for our chartered in fleet and maintaining cash reserves against fluctuations in operating cash flows and
payment of cash distributions. Sources of short-term liquidity include cash balances, restricted cash balances, short-term
investments and receipts from customers, $50 million undrawn revolving credit tranche under the $304 million facility and $25
million undrawn revolving credit tranche under the $175 million facility. Restricted cash consists of cash, which may only be
used for certain purposes under the Company's contractual arrangements and primarily comprises collateral deposits for
derivative trading. Please refer to Note 11, "Cash, Cash equivalents and Restricted cash", for a description of our covenant
requirements.
As of December 31, 2023 and 2022, we had cash and cash equivalents of $116.4 million and $134.8 million, respectively. In
addition, as of December 31, 2023 and 2022, we had total restricted cash balances of $2.3 million and $3.3 million,
respectively, primarily comprising of collateral deposits for derivative trading. As of December 31, 2023, cash and cash
equivalents included cash balances of $72.9 million (December 31, 2022: $61.3 million), which are required to be maintained
by the financial covenants in our loan facilities.
As of December 31, 2023, the Company had four Kamsarmax vessels under construction and outstanding remaining contractual
commitments of $93.1 million due by the fourth quarter of 2024. The remaining commitments for the four remaining
newbuildings will be partially financed with the $85.0 million sale and leaseback agreement signed in December 2023.
Other significant transactions subsequent to December 31, 2023, impacting our cash flows include the following:
• One of the four remaining Kamsarmax newbuildings was delivered in January 2024, and as a result the Company has
drawn $20.0 million from the $85 million sale and leaseback facility.
• In February 2024, we signed a $360 million sustainability-linked credit facility to refinance the $304 million and $120
million facilities with total outstanding debt balance of $256.5 million as of December 31, 2023. Subsequent to year
end, we drew down $310 million on the new facility. Similar to the $304 million facility, the new $360 million facility
includes $50 million revolving credit tranche. The financing has a five-year tenor and has an age adjusted amortization
profile of 20 years. The facility is priced with interest rate of SOFR plus a margin of 175 basis points per annum, and
includes sustainability linked pricing element with an additional 5 basis points pricing adjustment, dependent on
emission reduction performance.
• In February 2024, we received credit approvals for a $180 million credit facility to refinance the six Newcastlemax
vessels under the $233 million facility (with remaining balance of $181 million as of December 31, 2023). The
financing has a five-year tenor and an interest rate of SOFR plus a margin of 160 basis points per annum, and has an
53
age adjusted amortization profile of 20 years. The financing is subject to customary documentation and closing
procedures.
• In February 2024, the Company repaid in total $50 million under its $275 and $175 million revolving credit facilities,
leaving total undrawn revolving credit tranche balance of $125 million.
• One Panamax vessel was delivered to its new owner in February 2024 and a net consideration of $15.8 million was
received.
• On February 28, 2024, the Company announced a cash dividend of $0.30 per share in respect of the fourth quarter of
2023, which is payable on or about March 25, 2024, to shareholders of record on March 13, 2024. Shareholders
holding the Company’s shares through Euronext VPS may receive this cash dividend on or about March 27, 2024.
We believe that our working capital, cash on hand and borrowings under our current facilities will be sufficient to fund our
requirements for, at least, the 12 months from the date of this annual report.
Medium to Long-term Liquidity and Cash Requirements
Our medium and long-term liquidity requirements include funding drydockin gs, payment of installments for newbuildings,
BWTS, investments relating to environmental requirements and the debt and equity portion of potential investments in new or
replacement vessels and repayment of bank and related party loans. Potential additional sources of funding for our medium and
long-term liquidity requirements include new loans, refinancing of existing arrangements, equity issues, public and private debt
offerings, sales of vessels or other assets and sale and leaseback arrangements.
Summary of contractual obligations
As of December 31, 2023, we had the following contractual obligations:
 
Payment due by period
 
 
Less than
 
 
More than
(in thousands of $)
Total
one year
1-3 years
3-5 years
5 years
Floating rate debt
1,380,673
109,309
649,114
534,751
87,499
Operating lease obligations 1
12,253
2,569
5,194
4,490
—
Finance lease obligations 2
87,588
19,601
36,834
31,153
—
Ballast water treatment system commitments 3
—
—
—
—
—
Scrubber commitments
—
—
—
—
—
Newbuilding commitments4
93,063
93,063
—
—
—
Interest on floating rate debt 5
262,634
98,338
114,355
42,905
7,036
Interest on operating lease obligations1
2,021
821
921
279
—
Interest on finance lease obligations2
13,070
4,952
6,334
1,784
—
Total contractual cash obligations
1,851,302
328,653
812,752
615,362
94,535
1. As of December 31, 2023, we had one vessel under operating lease from SFL. The operating lease obligation for the
SFL vessel excludes the purchase option exercisable at the end of the ten-year minimum term to buy back the vessel
together with the seven finance leased vessels en-bloc for an aggregate $112.0 million and excludes the additional
three years of hire that are at SFL's option. It is also net of the $7,000 per day that SFL pays to us for operating costs.
The table above does not reflect the contingent profit sharing arrangement with SFL. See also Note 10, "Operating
Leases", and Note 26, "Related Party Transactions", to our audited Consolidated Financial Statements included herein.
2. As of December 31, 2023, we held seven vessels under finance leases from SFL. The table above does not reflect the
contingent profit sharing arrangement with SFL and purchase option. See also Note 26, "Related Party Transactions",
to our audited Consolidated Financial Statements included herein.
3. As of December 31, 2023, we had no firm commitments to install ballast water treatment systems.
4. Newbuilding commitments represent remaining capital commitments relating to the last four out of ten Kamsarmax
vessels for which we entered into seven contracts in 2021 and three contracts in 2022.
5. Interest on floating rate debt was calculated using the three-month USD SOFR plus the agreed margin applicable for
each of our credit facilities and the respective outstanding principal as of December 31, 2023.
Cash Flows
54
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated.
(in thousands of $)
2023
2022
2021
Net cash provided by operating activities
266,337
503,387
560,398
Net cash provided by (used in) investing activities
(381,771)
72,816
(390,024)
Net cash provided by (used in) financing activities
95,997
(648,147)
(135,459)
Net change in cash, cash equivalents and restricted cash
(19,437)
(71,944)
34,915
Cash, cash equivalents and restricted cash at beginning of period
138,073
210,017
175,102
Cash, cash equivalents and restricted cash at end of period
118,636
138,073
210,017
Net cash provided by operating activities
We have significant exposure to the spot market as on average only nine of our 91 owned and leased vessels traded on long-
term fixed rate time charter contracts during 2023. As of the date of this annual report, we have 12 vessels currently on a fixed
rate time charters with longer duration of more than 11 months. From time to time we may also enter into FFAs, to hedge our
exposure to the charter market for a specified route and period of time. See "Item 5. Operating and Financial Review and
Prospects" for further information of our FFA positions as of December 31, 2023. As a substantial part of our fleet trade on
either voyage charters or index linked time charter contracts, we are significantly exposed to the spot market. Therefore, our
reliance on the spot market contributes to fluctuations in cash flows from operating activities as a result of its exposure to
highly cyclical dry bulk charter rates. TCE represents operating revenues less other income and voyage expenses. TCE is
therefore impacted by both movements in operating revenues, as determined by market freight rates, and voyage expenses,
which are primarily comprised of bunker expenses, port charges and canal tolls. Any increase or decrease in the average TCE
rates earned by our vessels will have a positive or negative comparative impact, respectively, on the amount of cash provided
by operating activities, and as a result any increase or decrease in the average rates earned by our vessels in periods subsequent
to December 31, 2023, compared with the actual rates achieved during 2023, will as a consequence have a positive or negative
comparative impact on the amount of cash provided by operating activities.
Net cash provided by operating activities in the year ended December 31, 2023 was $266.3 million compared with $503.4
million and $560.4 million in the year ended December 31, 2022 and December 31, 2021, respectively. Net cash provided by
operating activities was primarily impacted by: (i) overall market conditions as reflected by TCE income of our fleet, (ii) the
size and composition of our fleet that we own, lease and charter-in, (iii) changes in operating assets and liabilities including
impact of whether our vessels are operated under time charters or voyage charters as revenues from time charters are generally
received monthly or bi-weekly in advance while revenues from voyage charters are received on negotiated terms for each
voyage, normally 90/95% after completed loading and the remaining after completed discharge, (iv) changes in net cash interest
expense as a result of outstanding debt and changes in LIBOR/SOFR, (v) the number of vessels drydocking in a period and (vi)
change in other operating items.
The decrease in net cash provided by operating activities of $237.1 million in the year ended December 31, 2023 compared
with the year ended December 31, 2022 was primarily driven by (i) impact by overall market conditions as reflected by
decreased TCE income of $202.8 million attributable to vessels that were in our fleet through the duration of both periods, (ii)
$1.4 million negative result related to our fleet; sale of vessels and change in short-term trading activity, (iii) net positive effect
of $0.3 million from change in operating assets and liabilities, (iv) negative effect of $57.7 million as a result of increased net
interest costs, (v) negative effect of $9.0 million related to higher drydock costs in 2023 and (vi) a positive change of $33.7
million in other operating items.
Based on the current level of operating expenses, debt repayments, interest expenses and general and administrative costs, the
average cash break-even rates on a TCE basis are (i) approximately $15,500 per day for our Capesize vessels and (ii)
approximately $11,500 per day for our Panamax vessels. These are the daily rates our vessels must earn to cover current level
operating expenses including dry dock expenses, estimated interest expenses, scheduled loan principal repayments, time charter
hire and net general and administrative expenses. These rates do not take into account capital expenditures and contingent rental
expense. As of March 20, 2024, average market spot rates year to date were as follows: Non-scrubber fitted Capesize vessels
approximately $24,000 per day and non-scrubber fitted Panamax vessels approximately $13,600 per day.
Net cash used in investing activities
Net cash used in investing activities was $381.8 million in 2023 and comprised primarily of:
55
• payments totaling $291.3 million for six scrubber fitted Newcastlemax vessels acquired from H-Line and delivered
during the period;
• payment of $177.9 million in installments and supervision fees relating to ten Kamsarmax newbuilding contracts; and
• other investing cash outflows of approximately $8.3 million mainly related to payments for the installation of ballast
water treatment systems and scrubbers on the existing fleet.
This was partially offset by the following:
• proceeds from the sale of Golden Feng and Golden Shui of $43.6 million;
• proceeds from the sale of Golden Suek and Golden Strength of $30.1 million;
• proceeds from the sale of Golden Hawk of $21.2 million; and
• repayment of a shareholder loan by TFG Marine of $0.9 million.
Net cash provided by financing activities
Net cash provided by financing activities in 2023 was $96.0 million and were comprised of:
• full draw down on the $250.0 million credit facility entered in January 2023 to refinance three older facilities;
• a $214.6 million drawdown on the $233.0 million facility entered into to finance acquisitions of six Newcastlemax
vessels acquired from H-Line in 2023;
• a full drawdown on the new $80.0 million facility for the first four Kamsarmax newbuildings delivered during 2023;
• a full drawdown on the new $40.0 million facility for the two Kamsarmax newbuildings delivered later in 2023; and
• $50.0 million drawdown on our revolving credit facilities.
This was partially offset by:       
• $230.5 million repayment of outstanding debt in connection with refinancing of the $93.75 million facility, the
$131.79 million facility and the $155.3 million facility;
• ordinary repayment of long-term debt of $104.2 million;
• $25.0 million repayment of our revolving credit facility;
• $25.8 million debt repayment on the $233.0 million debt facility as a result of the sale of Golden Feng and Golden
Shui previously securing the facility;
• repayments of $40.6 million in finance lease obligation, including repayment of Golden Hawk finance lease;
• $4.9 million in debt fees paid in connection with the new $250.0 million, $80.0 million and $40.0 million credit
facilities;
• distributions of $100.0 million in cash dividends to our shareholders; and
• $8.4 million in share repurchase payments.
Cash Flows for the Years ended December 31, 2022 and 2021
See "Item 5. Operating and Financial Review and Prospects – Liquidity and Capital Resources – Cash Flows – Cash Flows for
the Years Ended December 31, 2022" in our annual report on Form 20-F for the year ended December 31, 2022 for a discussion
of our cash flows for 2022. For a discussion of our cash flows for 2021 please see "Item 5. Operating and Financial Review and
Prospects – Liquidity and Capital Resources – Cash Flows – Cash Flows for the Years Ended December 31, 2021" in our
annual report on Form 20-F for the year ended December 31, 2021.
Borrowing Activities
A summary of our interest bearing loans and borrowings, including lease financing, as of December 31, 2023 is as follows:
$85.0 million lease financing
In December 2023, we signed a sale and leaseback agreement for an amount of $85.0 million to partially finance the four
Kamsarmax newbuildings to be delivered during 2024. The lease financing has a ten-year tenor and an interest rate of SOFR
plus a margin of 185 basis points per annum. The lease is repaid over a straight-line amortization profile of 21 years and with
purchase options throughout the term and at maturity. As of December 31, 2023, there were no amounts drawn under the
facility. With reference to Note 29, "Subsequent Events", one of the Kamsarmax newbuildings was delivered in January 2024,
and as a result we have drawn $20.0 million from the facility.
$40.0 million term loan facility
In July 2023, we entered into a $40.0 million credit facility to partially finance the two Kamsarmax newbuildings delivered
during the third quarter of 2023. The facility has a seven-year tenor and an interest rate of SOFR plus a margin of 175 basis
56
points per annum. Repayments are made on a quarterly basis from fourth quarter of 2023 onward, with a balloon payment of
$26.5 million at maturity. During 2023, $0.5 million was repaid and there was no available undrawn amount.
$80.0 million term loan facility
In April 2023, we signed an agreement for a $80.0 million facility to partially finance the four Kamsarmax newbuildings
delivered during the second quarter of 2023. The facility has a seven-year tenor and an interest rate of SOFR plus a margin of
180 basis points per annum. During 2023, $2.0 million was repaid and there was no available undrawn amount.
$233.0 million term loan facility
In March 2023, we entered into a $233.0 million two-year credit facility to partially finance the acquisition of six
Newcastlemax vessels. The new financing has an interest rate of SOFR plus 190 basis points and matures in the first quarter of
2025. As of December 31, 2023, all six vessels were delivered, and we drew down $214.6 million on the facility. During the
year ended December 31, 2023, we entered into and finalized the sale of Golden Feng and Golden Shui, vessels which served as
collateral for the $233.0 million facility. As such, following the completion of the sale, the undrawn commitment of the facility
was reduced by $17.8 million and the remaining sales proceeds of $25.8 million were used to prepay the debt under the
$233.0 million facility. During 2023, $33.2 million was repaid and there was no available undrawn amount. In February 2024,
with reference to Note 29, "Subsequent Events", we received credit approvals for the facility. The new $180.0 million credit
facility has a five-year tenor and an interest rate of SOFR plus a margin of 160 basis points per annum.
$250.0 million term loan facility
In January 2023, we signed a loan agreement for a $250.0 million credit facility with a group of leading shipping banks to
refinance three ($93.75 million, $131.79 million and $155.3 million) credit facilities with total outstanding debt balance of
$230.4 million as of December 31, 2022. The facility has an interest rate of SOFR plus a margin of 185 basis points and
matures in January 2028 and is secured by a fleet of 20 Capesize and Panamax vessels. During 2023, $26.0 million was repaid,
which included repayment of debt in connection to the sale of Golden Suek amounting to $8.0 million. There was no available
undrawn amount.
$275.0 million term loan facility
In May 2022, we signed a loan agreement for a $275.0 million term loan and revolving facility to refinance our obligations
under the $420.0 million loan facility described below. The $420 million loan facility was secured by 14 Capesize vessels was
scheduled to mature in June 2023. The facility bears an interest of SOFR plus a margin of 190 basis points. It also includes a
$50.0 million non-amortizing revolving credit tranche. All tranches under the $275.0 million term loan facility and revolving
credit tranche mature in May 2027, with a balloon payment of $170.0 million. Repayments are made on a quarterly basis from
third quarter of 2022 onward. During 2023, $22.1 million, (2022: $11.1 million) was repaid and there was no available undrawn
amount.
$175.0 million term loan facility
In August 2021, we entered into the $175.0 million loan facility refinancing six Newcastlemax vessels acquired from Hemen,
previously financed under the $413.6 million loan agreement with Sterna Finance Ltd., a related party (the "Sterna Facility").
The $175 million loan facility has a five-year tenor and 19-year age adjusted repayment profile. The facility bears an interest of
SOFR plus a margin of 216 basis points. It also includes a $50 million non-amortizing revolving credit tranche. All tranches
under the term loan facility mature in August 2026, with a balloon payment of $77.1 million (excluding revolving credit
tranche). Repayments of term loan are made on a quarterly basis from fourth quarter of 2021 onward. During 2023,
$10.1 million (2022: $10.1 million) was repaid in regular repayments and $25.0 million was repaid on the revolving credit
tranche, leaving an available undrawn amount of $25.0 million.
$260.0 million lease financing
In August 2021, we signed a sale and leaseback agreement for an amount of $260.0 million, refinancing the remaining nine
vessels and three newbuildings financed by the Sterna Facility. The lease financing has a seven-year tenor, bears an interest of
SOFR plus a margin of 200 basis points, has a straight line amortization profile of 21 years and has purchase options throughout
the term, with a purchase obligation at maturity. Repayments are made on a quarterly basis from fourth quarter of 2021 onward.
During 2023, $12.4 million (2022: $12.4 million) was repaid and there was no available undrawn amount.
$304.0 million term loan facility
In November 2020, we entered into the $304.0 million term loan and revolving credit facility to refinance our obligations under
$425.0 million credit facility that was scheduled to mature in March 2021. This loan facility has been entered into with six
reputable shipping banks, five of which were part of the group of banks that financed the $425.0 million credit facility and is
secured by 14 Capesize vessels. The term loan facility of $254.0 million has a tenor of five years and a 20-year age adjusted
repayment profile, bears an interest of SOFR plus a margin of 261 basis points. All tranches under the term loan facility mature
57
in November 2025, with a balloon payment of $165.2 million. Repayments of term loan are made on a quarterly basis from first
quarter of 2021 onward. The facility includes a non-amortizing revolving credit tranche of $50.0 million with maturity date in
November 2025. During 2023, $18.7 million (2022: $18.7 million) was repaid in regular repayments. In 2021, we repaid the
full $50.0 million revolving credit tranche, consequently leaving an available undrawn amount of $50.0 million.
$120.0 million term loan facility
In May 2018, we entered into a $120.0 million term loan facility to refinance 10 vessels and repay $58.3 million