Greetings and welcome to the Diana Shipping Fourth Quarter 2016 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ed Nebb, Investor Relations for Diana Shipping. Please go ahead, sir.

Thank you, Kevin. Thanks to all of you for joining us today for. The members of the Diana Shipping management team who are with us include Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary; and Ms. Maria Dede, Chief Accounting Officer. Before management’s remarks, let me remind you of the Safe Harbor notice. Certain statements made during this conference call which are not historical facts are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act. Forward-looking statements are based on assumptions, expectations, or beliefs that may or may not prove accurate. For a description of the risks, uncertainties and other factors that may cause future results to differ from the forward-looking statements, please refer to the company’s filings with the SEC. And with that, let me turn the call over to Mr. Simeon Palios, Chairman and CEO of Diana Shipping.

Thank you, Ed. Good morning and thank you for joining us today to discuss the results of Diana Shipping, Inc. for the fourth quarter and full-year 2016. In a dry bulk marketplace that remains challenging, we continue to manage the company to maintain our financial strength and operational flexibility, while positioning our business for the long-term. To review our financial results, the company recorded a net loss of US23.3 million and the net loss attributed to common stockholders of US$24.7 million for the fourth quarter of 2016. This compares to a net loss of US$22.5 million and a net loss attributed to common stockholders of US23.9 million for the fourth quarter of 2015. For the full-year 2016, the net loss – net loss attributed to common stockholders amounted to US164.2 million and US$170 million, respectively. Of that US$56.5 million related to loss and impairment of our investment in Diana Containerships Inc. This compares to a net loss and net loss attributed to common stockholders of US$64.7 million and US$70.5 million, respectively, for 2015. Time charter revenues were US$28 million for full quarter of 2016 compared to US$38.3 million for the same quarter of 2015. Time charter revenues were US$114.3 million for 2016 compared to US$157.7 million for 2015. Turning to the balance sheet, cash and cash equivalents totaled US121.1 million at December 31, 2016, including compensating cash balance. Long-term debt, net of deferred financing costs, including the current portion was US$598.2 million compared to stockholders’ equity of nearly US$1.1 billion. Several developments during 2016 fourth quarter reflected our firm control over operations and our sharp focus on the long-term prospects of the business. In November, we canceled a shipbuilding contract with respect to a Kamsarmax dry bulk carrier with an original delivery date of May 31, 2016, due to a delay in delivery. In this regard, we subsequently received a refund of all pre-delivery installments payments plus interest of approximately US$9.4 million. In December, we negotiated a reduction in the contract price and extended the delivery date of two Newcastlemax dry bulk carriers in San Francisco and the Newport News. The sellers reduced the price by US$1 million for each of the vessels, which were then delivered on January 4, 2017. With the delivery of the two most recent vessels acquisitions, our fleet consists of 48 dry bulk vessels. We continue to manage the fleet in a prudent manner. Currently, our fixed revenue days are 47% of our total operating days expected for 2017. In conclusion, Diana Shipping will continue to respond to the challenges of our market by continuing to maintain our financial strength and managing our business in a prudent manner. With that, I will now turn the call over to our President, Anastasios Margaronis, for a perspective on the industry conditions. He will then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide a more detailed financial overview. Thank you.

Thank you, Simeon, and welcome as usual to all the participants of this quarterly conference call of Diana Shipping Inc. The references we usually make to the Baltic Indices are particularly interesting at this time. Back in October 2016 the first day of the fourth quarter of that year, the month had started with a Baltic Dry Index at 864 and yesterday closed at 688. The Baltic Cape Index moved from 1,971 to 609 at the close of trading yesterday. The Baltic Panamax index started last quarter at 713 and closed yesterday at 944. In 2016, the Capesize market achieved the time charter average according to Banchero Costa of only $7,388 per day. In 2015, the average was $8,093, and in 2014, the average was $14,287 per day. Unfortunately, we have foreseen this deterioration back in 2013 much to the dismay of many analysts and other members of our peer group who refused that the time to see the size of the oversupply problem, which as it happened coincided with a drop in demand over that period. According to Clarksons, in 2016, a 7% increase in total Chinese seaborne dry bulk imports has been offset to a large extent by a relatively broad decline in dry bulk shipments to other key regions. By current estimate, seaborne dry bulk trade growth is expected to be 1.3% in 2016. The estimate for 2017 stands at $5 billion tons, an increase of about 2% compared to 2016. Let’s turn to macroeconomic developments. The New Year has according to Braemar ACM started with fresh signs of the euro zones economic recovery is continuing. Manufacturing in December 2016 expanded at the fastest pace in more than 5.5 years. Preliminary figures coming from the German government estimate that the country’s economy grew by 1.9% in 2016…

Thank you, Stacy, and good morning. I’m pleased to be discussing today with you Diana’s operational results for the fourth quarter and year ended December 31, 2016. For the fourth quarter 2016, first, the net loss and net loss attributed to common stock holders amounted to $23.3 million and $24.7 million respectively. Loss per common share was $0.51. Time charter revenues decreased to $28 million compared to $38.3 million in the fourth quarter of 2015. The decrease was due to the decreased average time charter rate that we achieved for our vessels during the quarter and was partly offset by revenue derived from the addition to our fleet, the vessel New Orleans and Seattle delivered November 2015, Selina and Ismene delivered in March 2016 and Maia delivered in June 2016. Ownership days were 4,232 in the fourth quarter of 2016 compared to 3,870 in the same quarter of 2015. Fleet utilization was 99.9% compared to 99.8% for the same quarter 2015 and the daily time charter equivalent rate was $6,319 compared to $9,169 for the same quarter 2015. Voyage expenses were $1.4 million for the quarter compared to $3.4 for the same quarter of 2015. The decrease in voyage expenses was mainly due to decreased commissions on revenue and bunkers amounting to gain of $0.1 million in Q4 2016 compared to a loss of $1.4 million in the same quarter last year. Vessel operating expenses amounted to $20.9 million compared to $23.6 million for the fourth quarter 2015 and decreased by 11% despite the 9% increase in ownership days, resulting from the enlargement of the fleet. The decrease was a result of the Company’s effort to minimize costs without compromising the vessel’s operations and safety and achieved reductions in all of operating expense categories, except for taxes and other operating…

Thank you. We’re now conducting a question-and-answer session [Operator Instructions] One moment please while we poll for questions. Our first question today is coming from Amit Mehrotra from Deutsche Bank. Please proceed with your question.

Great. Thank you, operator. Hello, everyone. Thank you for taking the question. My first question is obviously on any update with the lenders, I know it was called off last quarter. Just wondering if there’s been any dialogue at all there, and or is it just basically still status quo or maybe radio silence? Thank you.

Hi, Amit, there’s always dialogue with your lenders and we are currently there nonetheless not in any kind of restructuring or any such mood. As we said many times, we let the dust settle. We pay our obligations and that’s where we stand today.

Amit this is Ioannis Zafirakis

Hey…

Amit, sorry. Again, if you run the numbers and when you run the numbers, you can easily see that we are going through – easily through the middle of 2018 without any cash flow issues and at that time we stay with a very strong balance sheet as well. We are currently – if you run the numbers, you will see that we are still to value, still to debt, we are at the 125%. So…

You said – sorry, did you say you still view the 125%?

Yes, the value of our vessels is around 125%...

Oh, right.

…of the value of our debt, without counting the cash and the modern vessels.

Right, the value of the loan makes it, right, yeah, that makes sense. And then the, just Andreas associated with that, can you just give us an update on the cash calls? I know there was, I guess, $47 million of debt amortization this year. Can you just tell us sort of, has that number changed at all? Or is that still $47 million as of the cut of the end of December? And then also, I guess the remaining equity payments, the non-debt related drawdown associated with any of the newbuilding CapEx? Thank you.

Well, the number has not changed. Actually our numbers are exactly the way we have foreseen them, so no they have not changed. Remaining CapEx, we don’t have – we have the delivery of the vessels that was done. We have the loan of the $57 million from China Export-Import Bank that was drawn down and the only thing that is reaming is the dry-docks that are foreseen and I can go through them, but there are not so many, if you want I can go through the dry docks for 2017, but…

I mean, you could just – I mean, is it like, sort of like, is it like $3 million to $5 million in total, is that how we should think about it?

Yes, yes, exactly for the year 2017.

Okay, right. Let me just ask one more sort of, I guess, corporate finance question. In terms of, Ioannis, you know the stock, obviously I don’t have to tell you, is up 30% in the last 44, 45 days, which would make any potential equity offering you know I would, by my math like 25% plus dilutive. So I’m just trying to understand like, with that being said, obviously the stock is still at a relatively low level, but given the improvement in the equity value of the Company, is an equity offering – I know you don’t have to do it, but you know it’s – it might be nice to add, given sort of the lack of maybe equity cushion you do have if something does go wrong, but is an equity deal still out of the question for you guys and maybe has it gotten a little bit more tenable given the less dilution, given the rise in the stock price?

You know that it is our strategy place debt at the bottom of the market and equity at the higher part of the market. And therefore strategically speaking, we are not here to do an equity offering if we don’t have to. And you have to understand that the benefit of the premium to net asset value in any offering and how less dilutive it is, it can be clearly seen only with purchase of vessels, something that we do not have as a plan.

Okay, so you don’t plan on acquiring any assets now, you are just potentially going to accrue any cash or…?

Yeah, this is what I said, in order to explain your comment, as regards to less dilutive premium to net asset value etcetera. You only get the benefit of the premium to net asset value when you raise equity and you exchange cash with vessels and you raise equity at a premium to net asset value and when you buy vessels at net asset value. That’s why I made the comment about the purchases.

Okay, that makes sense. And then, one last one from me, just more on the market. Stacey, you comments are always so helpful every quarter in terms of the market outlook and I kind of understood you view – the brokers view on iron ore, but there just seems to be a lot more uncertainty around coal shipments and you know coal shipments obviously collapsed 30% in 2015, they grew 25% last year and I’m just trying to understand like, it seems like that’s the area where there could be potentially the most risk. And do you guys have a view? I mean, you’ve been pretty good about calling the market in the past. And just trying to understand that, the risk parameters around coal, could we see things like weather or even rainy season in China, things like that could impact the coal volumes to the downside. I’m just trying to understand like, where do you see the vulnerability of the dry bulk market specifically as it relates to coal shipments and what are your views there for the remainder of the year?

Yes, with coal, we have two ways of looking at it. First, we look at it long-term, and that’s not very positive, the reasons that we all know about the environment and how clean the energy produced from coal is. But that’s not something that will affect coal shipments either this year or next, that is our feeling or even the year after that. It’s something that we can look at more seriously affecting the markets from 2020 onwards. What is happening now in the short and medium-term has more to do about how the Chinese handle their domestic coal production to one extent, of course. And also, how much energy we need to produce in the form of electricity in the short to medium-term, because if that need goes up for whatever reason, then we do know that coal is going to be the commodity, which will respond more quickly than any other form of electricity generation, which is either some solar power, or wind, or hydropower. Those cannot respond quickly if there’s a relatively quick increase in the demand for power generation. So the factors about weather and the rainy season in China are extra short-term. We feel factors and they will play their role, but we don’t feel it’s going to be a lasting role in the demand for coal shipments. The lasting role is going to be affected by the terms, as I mentioned earlier. Demand for power generation on the one hand and domestic Chinese coal production on the other hand. In the longer-term, substitution of coal in the energy production sector with other forms of producing energy and electricity.

All right. Okay. All right. That’s all I have. Thank you for taking my questions.

You’re welcome.

Thank you. [Operator Instructions] Our next question today is coming from Fotis Giannakoulis from Morgan Stanley. Please proceed with your question.

Hi, guys. This is actually Ben stepping in for Fotis. Just one question on the market and since we already spoken about coal, I guess, specifically iron ore here. Rates have certainly come down in the near-term, especially for Capesize rates. But what is your perspective on changed iron ore inventories, given that they’re up roughly 30% year-on-year is, do you have any idea on potential timing of when restocking begins in China, begins again as a buyer?

With stockpiles of iron ore in the past, we have, all of us, not us in Diana proven to be wrong. Every time we felt that iron ore stockpiles are very high. The Chinese would buy more. And when we felt that they didn’t have enough, for some reason they would stop buying. So unfortunately, it’s unpredictable. Their criteria have to do more with how they view the cost of acquiring iron ore and the prospect of utilizing it in their steel industry. So from here onwards what we are looking at is pretty high stockpiles admittedly. But that is not sufficient in itself to make us draw the conclusion that the Chinese are not going to continue buying iron ore, if they feel that it is a opportunity to do so for them. So unfortunately, their criteria are not only price related, but they have to do, as I said, with the rate that they feel they’re going to deplete their stocks. They don’t want to be caught with dropping stockpiles and then increases in the price of iron ore. So they might keep increasing their stockpile if they feel that the practice is advantageous. And steel industry will be consuming we feel, at least, in the medium-term more iron ore than we have expected at least for 2016 and what we were looking at a few years earlier as predictions. So they might surprise us on the upside is all I’m saying on the demand for iron ore by their steel industry.

Sure. And just one more follow-up, if this prediction comes in a fruition and there’s a surprise to the upside. Where do you anticipate this – these imports coming from? I think, lately, we’ve seen a pretty substantial slowdown in Brazilian exports. Do you think that Brazil will come back into the margin return to grow at a similar pace that had been growing earlier this year?

Unfortunately, we cannot predict, because we don’t know enough about the insights of Brazilian shipments and what affects them. But for sure, if there’s an increase in iron ore demand, it will come partially from Brazil and from Australia. And regrettably, we’re not in a position to apportion such an increase between these two major sources of this commodity

Sure. Thanks a lot, guys.

You’re welcome.

Thank you. [Operator Instructions] Our next question today is coming from Spiro Dounis from UBS Securities. Please proceed with your question.

Hey, good morning, gentlemen, how are you?

Very, well, and you?

Good, good. Just wanted to ask a real quick on asset values. Sounds like you’re getting a little more optimistic on rates and I think you said you’re positioned well to benefit from a rising rate environment just given your shorter charter book. So just as you think about asset value, do you think the track rates are up, or is there potential that you actually see asset values left behind just given stronger dollar, struggling shipyards, difficulty in getting financing, how do you think about that?

Spiro, what we’re trying to say is the following. We’re currently in the last two months or so at the level of, let’s say, $10,000, $11,000 for a Cape, $8,000 for Panamax, $7,000 per day for Panamax. What we’re saying is, this is neither here or there rate environment, which if we see that stay for a six-month to eight-month period, then we will be convinced that this is our balancing point. From the moment we have established that we’re at the balancing point in the demand and supply curve of ours. Then if we run the numbers then and we try to calculate supply and demand whatever result we’re going to come up with as an incremental change either positive or negative is going to be sufficient to have a better idea on what the market is going to do. We go back to what we kept saying the last two years that people were predicting or they were looking at incremental changes we have – having established a correct starting point. We find this period and then months to come as a very interesting period in establishing our balancing point. If we manage to do so, we will have a better idea about where the assets are going to be going the asset prices and the charter rates.

Okay. That’s fair. Second question is just around, I guess, regulation coming up here between ballast water treatment and the sulfur rules. I think it sounds like this could increase the rate of scrapping out there. I guess, just wondering two things, one, how do you see this impacting your fleet, how do you plan on dealing with it? And two, how do you see an impact in the fleet as a whole and when do you think we’ll start to see that benefit?

Again, we go back to what we were saying previously in the previous question. All of these factors that you are asking there certainly factors that they have to go into the equation to see whether we’re going to have a incremental positive change in the supply and demand equation. But we have to wait a bit before we do that type of calculation. But certainly it’s without saying that if you have the need for spending a lot of money on vessels, but shelf supply being kept at lower levels. But again, it’s irrelevant the result we’re going to come up with after doing this calculation if we have not established previously our starting point.

Got it. Okay. Last one from me. You’re still the largest holder of Diana Containerships. Just wondering, longer-term, once we get maybe through better part of the dry bulk cycle, what’s the plan with Diana Containerships? Do you see yourself actually opportunistically adding more there at a certain point, or how you think about that?

We will have to cross that bridge when the time comes.

Okay. I didn’t think I’d get much out of that one. I appreciate it. Thanks, guys.

Thank you. We’ve reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Thank you again for your interest in and support of Diana Shipping. We look forward to speak with you in the months ahead. Thank you.

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.