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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File Number 001-33831

EAGLE BULK SHIPPING INC.
(Exact name of Registrant as specified in its charter)
Republic of the Marshall Islands98-0453513
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
300 First Stamford Place, 5th floor
Stamford, Connecticut 06902
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (203) 276-8100

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareEGLEThe Nasdaq Stock Market LLC
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
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ☐Accelerated filerNon-Accelerated filer
Smaller reporting companyEmerging growth company

If an emerging growth company, 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
 ☒
Number of shares of registrant’s common stock outstanding as of May 4, 2022: 13,692,906




TABLE OF CONTENTS
Page
PART IFINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS (Unaudited)
ITEM 2.
ITEM 3.
ITEM 4.
PART IIOTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbor provided for under these sections. These statements may include words such as “believe,” “estimate,” “project,” “intend,” “expect,” “plan,” “anticipate,” and similar expressions in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements reflect management’s current expectations and observations with respect to future events and financial performance.
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by those forward-looking statements. The principal factors that affect our financial position, results of operations and cash flows include, charter market rates, which could decline from historic highs, periods of charter hire, vessel operating expenses and voyage costs, which are incurred primarily in U.S. dollars, depreciation expenses, which are a function of the cost of our vessels, significant vessel improvement costs and our vessels' estimated useful lives, and financing costs related to our indebtedness. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors which could include the following: (i) changes in demand in the drybulk market, including, without limitation, changes in production of, or demand for, commodities and bulk cargoes, generally or in particular regions; (ii) greater than anticipated levels of drybulk vessel newbuilding orders or lower than anticipated rates of drybulk vessel scrapping; (iii) changes in rules and regulations applicable to the drybulk industry, including, without limitation, legislation adopted by international bodies or organizations such as the International Maritime Organization and the European Union (the “EU”) or by individual countries; (iv) actions taken by regulatory authorities, including, without limitation, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”); (v) changes in trading patterns significantly impacting overall drybulk tonnage requirements; (vi) changes in the typical seasonal variations in drybulk charter rates; (vii) changes in the cost of other modes of bulk commodity transportation; (viii) changes in general domestic and international political conditions, including the current conflict between Russia and Ukraine, which may impact our ability to retain and source crew, and in turn, could adversely affect our revenue, expenses, and profitability; (ix) changes in the condition of the Company's vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking costs); (x) significant deterioration in charter hire rates from current levels or the inability of the Company to achieve its cost-cutting measures; (xi) the duration and impact of the novel coronavirus ("COVID-19") pandemic, including the availability and effectiveness of vaccines on a widespread basis and the impact of any mutations of the virus; (xii) the relative cost and availability of low and high sulfur fuel oil; (xiii) our ability to realize the economic benefits or recover the cost of the scrubbers we have installed; (xiv) any legal proceedings which we may be involved from time to time; and other factors listed from time to time in our filings with the Securities and Exchange Commission (the “SEC”). This discussion also includes statistical data regarding world drybulk fleet and order book and fleet age. We generated some of this data internally, and some were obtained from independent industry publications and reports that we believe to be reliable sources. We have not independently verified this data nor sought the consent of any organizations to refer to their reports in this Quarterly Report on Form 10-Q. We disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.



PART I: FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS
EAGLE BULK SHIPPING INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2022 and December 31, 2021
(In thousands, except share data and par values)

March 31, 2022December 31, 2021
(Unaudited)
ASSETS:
Current assets:
Cash and cash equivalents$83,602 $86,147 
Accounts receivable, net of a reserve of $1,837 and $1,818, respectively
40,918 28,456 
Prepaid expenses5,278 3,362 
Inventories27,771 17,651 
Collateral on derivatives21,307 15,081 
Fair value of derivative assets - current5,516 4,669 
Other current assets797 667 
Total current assets185,189 156,033 
Noncurrent assets: 
Vessels and vessel improvements, at cost, net of accumulated depreciation of $230,318 and $218,670, respectively
900,920 908,076 
Operating lease right-of-use assets 18,654 17,017 
Other fixed assets, net of accumulated depreciation of $1,452 and $1,403, respectively
368 257 
Restricted cash - noncurrent75 75 
Deferred drydock costs, net44,985 37,093 
Fair value of derivative assets - noncurrent8,476 3,112 
Advances for ballast water systems and other assets3,920 4,995 
Total noncurrent assets977,398 970,625 
Total assets$1,162,587 $1,126,658 
LIABILITIES & STOCKHOLDERS' EQUITY 
Current liabilities: 
Accounts payable$23,396 $20,781 
Accrued interest1,512 2,957 
Other accrued liabilities18,815 17,994 
Fair value of derivative liabilities - current13,111 4,253 
Current portion of operating lease liabilities 15,749 15,728 
Unearned charter hire revenue12,746 12,088 
Current portion of long-term debt49,800 49,800 
Total current liabilities135,129 123,601 
Noncurrent liabilities:
Global Ultraco Debt Facility, net of debt issuance costs217,245 229,290 
Convertible Bond Debt, net of debt discount and debt issuance costs 113,150 100,954 
Noncurrent portion of operating lease liabilities 2,899 1,282 
Other noncurrent accrued liabilities395 265 
Total noncurrent liabilities333,689 331,791 
Total liabilities468,818 455,392 
Commitments and contingencies
Stockholders' equity: 
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued as of March 31, 2022 and December 31, 2021
  
Common stock, $0.01 par value, 700,000,000 shares authorized, 12,985,994 and 12,917,027 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
130 129 
Additional paid-in capital 961,930 982,746 
Accumulated deficit(278,858)(313,495)
Accumulated other comprehensive income10,567 1,886 
Total stockholders' equity693,769 671,266 
Total liabilities and stockholders' equity$1,162,587 $1,126,658 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
F-1


EAGLE BULK SHIPPING INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2022 and 2021
(In thousands, except share and per share data)

Three Months Ended
March 31, 2022March 31, 2021
Revenues, net $184,398 $96,572 
Voyage expenses43,627 26,615 
Vessel operating expenses27,915 21,519 
Charter hire expenses22,711 8,480 
Depreciation and amortization14,580 12,506 
General and administrative expenses10,054 7,698 
Other operating expense133 961 
Total operating expenses119,020 77,779 
Operating income65,378 18,793 
Interest expense4,447 8,251 
Interest income(45)(17)
Realized and unrealized loss on derivative instruments, net7,903 710 
Total other expense, net12,305 8,944 
Net income$53,073 $9,849 
Weighted average shares outstanding:
Basic12,974,125 11,729,492 
Diluted16,254,898 11,744,568 
Per share amounts:
Basic net income$4.09 $0.84 
Diluted net income$3.27 $0.84 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

F-2


EAGLE BULK SHIPPING INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2022 and 2021
(In thousands)


Three Months Ended
March 31, 2022March 31, 2021
Net income$53,073 $9,849 
Other comprehensive income:
Net unrealized gain on cash flow hedges8,681 600 
Comprehensive income$61,754 $10,449 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
F-3


EAGLE BULK SHIPPING INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
For the Three Months Ended March 31, 2022 and 2021
(In thousands, except share data)

Common
stock
Common
stock
amount
Additional
paid-in
capital
Accumulated deficitAccumulated other comprehensive incomeTotal stockholders’
equity
Balance at December 31, 202112,917,027 $129 $982,746 $(313,495)$1,886 $671,266 
Net income— — 53,073 — 53,073 
Dividends declared— — — (27,112)— (27,112)
Cumulative effect of adoption of ASU 2020-06— — (20,726)8,676 — (12,050)
Issuance of shares due to vesting of restricted shares 60,890 1 (1)— — — 
Issuance of shares upon exercise of stock options8,077  85 — — 85 
Unrealized gain on cash flow hedges— — — — 8,681 8,681 
Fees for equity offerings— — 201 — — 201 
Cash used to settle net share equity awards— — (1,862)— — (1,862)
Stock-based compensation — — 1,487 — — 1,487 
Balance at March 31, 202212,985,994 $130 $961,930 $(278,858)$10,567 $693,769 

Common
stock
Common
stock
amount
Additional
paid-in
capital
Accumulated deficitAccumulated other comprehensive (loss)/incomeTotal stockholders’
equity
Balance at December 31, 202011,661,797 $116 $943,572 $(472,138)$(1,132)$470,418 
Net income— — — 9,849 — 9,849 
Issuance of shares due to vesting of restricted shares71,146 1 (1)— — — 
Unrealized gain on cash flow hedges— — — — 600 600 
Fees for equity offerings— — (32)— — (32)
Cash used to settle net share equity awards— — (811)— — (811)
Stock-based compensation— — 872 — — 872 
Balance at March 31, 202111,732,943 $117 $943,600 $(462,289)$(532)$480,896 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
F-4


EAGLE BULK SHIPPING INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2022 and 2021
(In thousands)

Three Months Ended
March 31, 2022March 31, 2021
Cash flows from operating activities:
Net income$53,073 $9,849 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation11,697 10,507 
Amortization of operating lease right-of-use assets5,706 3,080 
Amortization of deferred drydocking costs2,883 1,999 
Amortization of debt discount and debt issuance costs562 1,629 
Net unrealized loss/(gain) on fair value of derivatives11,450 (503)
Stock-based compensation expense1,487 872 
Drydocking expenditures(10,774)(4,821)
Changes in operating assets and liabilities:
Accounts payable3,010 6,488 
Accounts receivable (12,462)(6,697)
Accrued interest(1,445)2,150 
Inventories(10,120)(3,096)
Operating lease liabilities current and noncurrent(5,706)(3,302)
Collateral on derivatives(6,226) 
Fair value of derivatives, other current and noncurrent assets(252)(5,743)
Other accrued liabilities 628 159 
Prepaid expenses(1,916)(308)
Unearned charter hire revenue659 2,070 
Net cash provided by operating activities42,254 14,333 
Cash flows from investing activities:
Purchase of vessels and vessel improvements(283)(47,977)
Advances for vessel purchases (4,720)
Purchase of scrubbers and ballast water systems(3,494)(755)
Proceeds from hull and machinery insurance claims 75 
Purchase of other fixed assets(160)(8)
Net cash used in investing activities(3,937)(53,385)
Cash flows from financing activities:
Repayment of term loan under New Ultraco Debt Facility (7,811)
Repayment of revolver loan under Super Senior Facility (15,000)
Proceeds from revolver loan under New Ultraco Debt Facility 55,000 
Repayment of term loan under Global Ultraco Debt Facility(12,450) 
Cash received from exercise of stock options85  
Cash used to settle net share equity awards(1,862)(811)
Equity offerings issuance costs201 (292)
Financing costs paid to lenders(18)(170)
Dividends paid(26,818) 
Net cash (used in)/provided by financing activities(40,862)30,916 
Net decrease in cash, cash equivalents and restricted cash(2,545)(8,136)
Cash, cash equivalents and restricted cash at beginning of period86,222 88,849 
Cash, cash equivalents and restricted cash at end of period$83,677 $80,713 
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest$4,791 $4,320 
Accruals for vessel purchases and vessel improvements included in Other accrued liabilities$70 $244 
Accruals for scrubbers and ballast water treatment systems included in Accounts payable and Other accrued liabilities$2,943 $3,153 
Accruals for dividends payable included in Other accrued liabilities and Other noncurrent accrued liabilities$785 $ 
Accruals for debt issuance costs included in Accounts payable and Other accrued liabilities$ $250 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
F-5


EAGLE BULK SHIPPING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Basis of Presentation and General Information
The accompanying condensed consolidated financial statements include the accounts of Eagle Bulk Shipping Inc. and its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our” or similar terms). The Company is engaged in the ocean transportation of drybulk cargoes worldwide through the ownership, charter and operation of drybulk vessels. The Company’s fleet is comprised of Supramax and Ultramax drybulk carriers and the Company operates its business in one business segment.
As of March 31, 2022, the Company owned and operated a modern fleet of 53 oceangoing vessels, including 27 Supramax and 26 Ultramax vessels with a combined carrying capacity of 3.19 million deadweight tons ("dwt") and an average age of approximately 9.5 years. Additionally, the Company charters-in four Ultramax vessels on a long term basis with remaining lease term of approximately one year each and also charters-in vessels on a short term basis for a period less than one year.
For the three months ended March 31, 2022 and 2021, the Company’s charterers did not individually account for more than 10% of the Company’s gross charter revenue during those periods.
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), and the rules and regulations of the SEC that apply to interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes normally included in consolidated financial statements prepared in conformity with U.S. GAAP. They should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K, filed with the SEC on March 14, 2022 (the "Form 10-K").
The accompanying condensed consolidated financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of its condensed consolidated financial position and results of operations for the interim periods presented.
The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year.
In March 2021, the Company entered into an at market issuance sales agreement with B. Riley Securities, Inc., BTIG, LLC and Fearnley Securities, Inc., as sales agents (each, a “Sales Agent” and collectively, the “Sales Agents”), to sell shares of common stock, par value $0.01 per share, of the Company with aggregate gross sales proceeds of up to $50.0 million, from time to time through an “at-the-market” offering program (the “ATM Offering”). During the second quarter of 2021, the Company sold and issued an aggregate of 581,385 shares at a weighted average sales price of $47.97 per share under the ATM Offering for aggregate net proceeds of $27.1 million after deducting sales agent commissions and other offering costs. The proceeds were used for partial financing of vessel acquisitions and other corporate purposes.
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions of the Company are residual value of vessels, the useful lives of vessels, the value of stock-based compensation, estimated losses on our trade receivables, fair value of Convertible Bond Debt (as defined below) and its equity component, fair value of operating lease right-of-use assets and operating lease liabilities and the fair value of derivatives. Actual results could differ from those estimates.

Note 2. Recent Accounting Pronouncements

Significant Accounting Policies

The Company's significant accounting policies are described in Note 2, Significant Accounting Policies, in the Notes to the Consolidated Financial Statements in the Form 10-K. Included herein are certain updates to those policies.



F-6


Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. ASU 2020-06 removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, after adopting the ASU's guidance, entities will not separately present in equity an embedded conversion feature in such debt. Instead, the entity will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. The Company adopted ASU 2020-06 as of January 1, 2022 under the modified retrospective approach. The Convertible Bond Debt (defined below) will no longer require bifurcation and separate accounting of the equity component. The resulting debt discount will no longer be amortized to interest expense over the life of the bond and thus an adjustment to beginning retained earnings of $8.7 million was recorded within Accumulated deficit reflecting the cumulative impact of adoption. Additionally, a $20.7 million reduction to Additional paid-in capital was recorded to reverse the equity component and an offsetting $12.0 million was recorded within Long-term debt as a reversal of the debt discount.

Recently Issued Accounting Pronouncements Not Yet Effective

The FASB has issued accounting standards that had not yet become effective as of March 31, 2022 and may impact the Company's consolidated financial statements or related disclosures in future periods. Those standards and their potential impact are discussed below:

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 addresses concerns about certain accounting consequences that could result from the anticipated transition away from the use of LIBOR and other interbank offered rates to alternative reference rates. ASU 2020-04 is elective and applies “to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.” ASU 2020-04 establishes (1) a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and (2) certain elective hedge accounting expedients. ASU 2020-04 is optional and effective for all entities as of March 12, 2020 and may be applied prospectively to contract modifications made on or before December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, ("ASU 2021-01"), which clarifies certain provisions in Topic 848, if elected by an entity, to apply to derivative instruments that use interest rate for margining, discounting, or contract price alignment that is modified as a result of rate reference reform The Company is currently evaluating the adoption of ASU 2020-04 on its debt under the Global Ultraco Debt Facility (as defined below) as it bears interest on outstanding borrowings at LIBOR plus a margin rate. Additionally, the Company is also evaluating the adoption of ASU 2021-01 on its interest rate swaps related to the Global Ultraco Debt Facility.

Note 3. Vessels
Vessel and Vessel Improvements
As of March 31, 2022, the Company’s owned operating fleet consisted of 53 drybulk vessels.
During the third quarter of 2018, the Company entered into a contract for the installation of ballast water treatment systems ("BWTS") on 39 of our owned vessels. The projected cost, including installation, is approximately $0.5 million per BWTS. The Company intends to complete the installations during scheduled drydockings. The Company completed installation of BWTS on 28 vessels and recorded $15.7 million in Vessels and vessel improvements in the Condensed Consolidated Balance Sheets as of March 31, 2022. Additionally, the Company recorded $3.4 million as advances paid towards installation of BWTS on the remaining vessels as a Noncurrent asset in its Condensed Consolidated Balance Sheets as of March 31, 2022.



F-7


The Vessels and vessel improvements activity for the three months ended March 31, 2022 is below:
(In thousands)
Vessels and vessel improvements, at December 31, 2021$908,076 
Purchase of vessels and vessel improvements247 
Scrubbers and BWTS 4,245 
Depreciation expense(11,648)
Vessels and vessel improvements, at March 31, 2022$900,920 

Note 4. Debt
(In thousands)March 31, 2022December 31, 2021
Convertible Bond Debt$114,119 $114,119 
Debt discount and debt issuance costs - Convertible Bond Debt(969)(13,165)
Convertible Bond Debt, net of debt discount and debt issuance costs113,150 100,954 
Global Ultraco Debt Facility 275,100 287,550 
Debt discount and Debt issuance costs - Global Ultraco Debt Facility (8,055)(8,460)
Less: Current portion - Global Ultraco Debt Facility (49,800)(49,800)
Global Ultraco Debt Facility, net of debt issuance costs217,245 229,290 
Total long-term debt $330,395 $330,244 
Convertible Bond Debt

On July 29, 2019, the Company issued $114.1 million in aggregate principal amount of 5.00% Convertible Senior Notes due 2024 (the “Convertible Bond Debt”). After deducting debt discount of $1.6 million, the Company received net proceeds of approximately $112.5 million. Additionally, the Company incurred $1.0 million of debt issuance costs relating to this transaction. The Company used the proceeds to partially finance the purchase of six Ultramax vessels and for general corporate purposes, including working capital.
The Convertible Bond Debt bears interest at a rate of 5.00% per annum on the outstanding principal amount thereof, payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2020. The Convertible Bond Debt may bear additional interest upon certain events, as set forth in the indenture governing the Convertible Bond Debt (the "Indenture").

The Convertible Bond Debt will mature on August 1, 2024 (the “Maturity Date”), unless earlier repurchased, redeemed or converted pursuant to its terms. The Company may not otherwise redeem the Convertible Bond Debt prior to the Maturity Date.

Each holder has the right to convert any portion of the Convertible Bond Debt, provided such portion is of $1,000 or a multiple thereof, at any time prior to the close of business on the business day immediately preceding the Maturity Date. The conversion rate of the Convertible Bond Debt after adjusting for a 1-for-7 reverse stock split effected on September 15, 2020 (the "Reverse Stock Split") and the Company's payments of cash dividends of $2.00 per share and $2.05 per share on November 24, 2021 (to shareholders of record as of November 15, 2021) and on March 25, 2022 (to shareholders of record as of March 15, 2022), respectively, is 27.606 shares of the Company's common stock per $1,000 principal amount of Convertible Bond Debt, which is equivalent to a conversion price of approximately $36.22 per share of its common stock (subject to further adjustments for future dividends).

Upon conversion of the remaining bonds, the Company will pay or deliver, as the case may be, either cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, to the holder (subject to shareholder approval requirements in accordance with the listing standards of the Nasdaq Global Select Market).

If the Company undergoes a fundamental change, as set forth in the Indenture, each holder may require the Company to repurchase all or part of their Convertible Bond Debt for cash in principal amounts of $1,000 or a multiple thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the Convertible Bond Debt to be repurchased, plus accrued and unpaid interest. If, however, the holders instead elect to convert their Convertible Bond Debt in
F-8


connection with the fundamental change, the Company will be required to increase the conversion rate of the Convertible Bond Debt at a rate determined by a combination of the date the fundamental change occurs and the stock price of the Company's common stock on such date.

The Convertible Bond Debt is the general, unsecured senior obligations of the Company. It ranks: (i) senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Convertible Bond Debt; (ii) equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; (iii) effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all indebtedness and other liabilities of current or future subsidiaries of the Company.

The Indenture also provides for customary events of default. Generally, if an event of default occurs and is continuing, then the trustee or the holders of at least 25% in aggregate principal amount of the Convertible Bond Debt then outstanding may declare 100% of the principal of and accrued and unpaid interest, if any, on all the Convertible Bond Debt then outstanding to be due and payable.

In accordance with ASC 470, Debt, ("ASC 470") the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) prior to the adoption of ASU 2020-06 were to be separately accounted for in a manner that reflected the issuer's non-convertible debt borrowing rate. The guidance required the initial proceeds received from the sale of convertible debt instruments to be allocated between a liability component and equity component in a manner that reflected the interest expense at the interest rate of similar non-convertible debt that could have been issued by the Company at the time of issuance. Prior to the adoption of ASU 2020-06, the Company accounted for the Convertible Bond Debt based on the above guidance and attributed a portion of the proceeds to the equity component. The resulting debt discount was amortized using the effective interest method over the expected life of the Convertible Bond Debt as interest expense. Additionally, the debt discount and issuance costs were allocated based on the total amount incurred to the liability and equity components using the same proportions as the proceeds from the Convertible Bond Debt. The Company adopted ASU 2020-06 as of January 1, 2022 and made adjustments to account for the cumulative impact of the adoption. See Note 2, Recent Accounting Pronouncements, for discussion of the impact of ASU 2020-06 on the accounting for the Convertible Bond Debt and the condensed consolidated financial statements upon adoption on January 1, 2022.

Share Lending Agreement

In connection with the issuance of the Convertible Bond Debt, certain persons entered into an arrangement (the "Share Lending Agreement") to borrow up to 511,840 shares of the Company’s common stock through share lending arrangements from Jefferies LLC (“JCS”), an initial purchaser of the Convertible Bond Debt, which in turn entered into an arrangement to borrow the shares from an entity affiliated with Oaktree Capital Management, LP, one of the Company’s shareholders. The number of shares under the Share Lending Agreement have been adjusted for the Reverse Stock Split. As of March 31, 2022, the fair value of the 511,840 outstanding loaned shares was $34.9 million based on the closing price of the common stock on March 31, 2022. In connection with the Share Lending Agreement, JCS paid $0.03 million representing a nominal fee per borrowed share, equal to the par value of the Company’s common stock.

While the Share Lending Agreement does not require cash payment upon return of the shares, physical settlement is required (i.e., the loaned shares must be returned at the end of the arrangement). In view of this share return provision and other contractual undertakings of JCS in the share lending agreement, which have the effect of substantially eliminating the economic dilution that otherwise would result from the issuance of borrowed shares, the loaned shares are not considered issued and outstanding for the purpose of computing and reporting the Company's basic and diluted weighted average shares or earnings per share. If JCS were to file bankruptcy or commence similar administrative, liquidating or restructuring proceedings, the Company will have to consider 511,840 shares lent to JCS as issued and outstanding for the purposes of calculating earnings per share.

Global Ultraco Debt Facility

On October 1, 2021, Eagle Bulk Ultraco LLC (“Eagle Ultraco”), a wholly-owned subsidiary of the Company, along with certain of its vessel-owning subsidiaries as guarantors, entered into a new senior secured credit facility (the "Global Ultraco Debt Facility") with the lenders party thereto (the “Lenders”) Credit Agricole Corporate and Investment Bank (“Credit Agricole”), Skandinaviska Enskilda Banken AB (PUBL), Danish Ship Finance A/S, Nordea Bank ABP, Filial I Norge, DNB Markets Inc., Deutsche Bank AG, and ING Bank N.V., London Branch. The Global Ultraco Debt Facility provides for an aggregate principal amount of $400.0 million, which consists of (i) a term loan facility in an aggregate principal amount of $300.0 million (the “Term Facility”) and (ii) a revolving credit facility in an aggregate principal amount of $100.0 million (the “Revolving Facility”) to be used for refinancing the outstanding debt, including accrued interest and commitment fees under the Holdco Revolving Credit
F-9


Facility, New Ultraco Debt Facility and Norwegian Bond Debt (each as defined in Note 6, Debt, in the Notes to the Consolidated Financial Statements in the Form 10-K) and for general corporate purposes. The Company paid fees of $5.8 million to the Lenders in connection with the transaction.

The Global Ultraco Debt Facility has a maturity date of five years from the date of borrowing on the Term Facility, which is October 1, 2026. Outstanding borrowings bear interest at a rate of LIBOR plus 2.10% to 2.80% per annum, depending on certain metrics such as the Company's financial leverage ratio and meeting sustainability linked criteria. Repayments of $12.45 million are due quarterly beginning on December 15, 2021, with a final balloon payment of all outstanding principal and accrued interest due upon maturity. The loan is repayable in whole or in part without premium or penalty prior to the maturity date subject to certain requirements stipulated in the Global Ultraco Debt Facility.

The Global Ultraco Debt Facility is secured by 49 of the Company's vessels. The Global Ultraco Debt Facility contains certain standard affirmative and negative covenants along with financial covenants. The financial covenants include: (i) minimum consolidated liquidity based on the greater of (a) $0.6 million per vessel owned directly or indirectly by the Company or (b) 7.5% of the Company's total debt; (ii) debt to capitalization ratio not greater than 0.60:1.00; and (iii) maintaining positive working capital.

Pursuant to the Global Ultraco Debt Facility, the Company borrowed $350.0 million and together with cash on hand repaid the outstanding debt, accrued interest and commitment fees under the Holdco Revolving Credit Facility and New Ultraco Debt Facility. Concurrently, the Company issued a 10-day call notice to redeem the outstanding bonds under the Norwegian Bond Debt. Additionally, in October 2021, the Company entered into four interest rate swaps for the notional amount of $300.0 million of the Term Facility under the Global Ultraco Debt Facility at a fixed interest rate ranging between 0.83% and 1.06% to hedge the LIBOR-based floating interest rate (see Note 5, Derivative Instruments, for additional details).

Interest Rates

2022

For the three months ended March 31, 2022, the interest rate on the Convertible Bond Debt was 5.00%. The weighted average effective interest rate including the amortization of debt discount and debt issuance costs for this period was 5.49%.

For the three months ended March 31, 2022, the interest rate on the Global Ultraco Debt Facility ranged from 2.35% to 2.98%, including a margin over LIBOR applicable under the terms of the Global Ultraco Debt Facility and commitment fees of 40% of the margin on the undrawn portion of the revolver credit facility of the Global Ultraco Debt Facility. The weighted average effective interest rate including the amortization of debt discount and debt issuance costs for this period was 3.05%.

2021

For the three months ended March 31, 2021, the interest rate on the Convertible Bond Debt was 5.00%. The weighted average effective interest rate including the amortization of debt discount and debt issuance costs for this period was 10.14%.

For the three months ended March 31, 2021, the interest rate on the New Ultraco Debt Facility ranged from 2.62% to 2.72%, including a margin over LIBOR applicable under the terms of the New Ultraco Debt Facility and commitment fees of 40% of the margin on the undrawn portion of the revolver credit facility of the New Ultraco Debt Facility. The weighted average effective interest rate including the amortization of debt discount and debt issuance costs for this period was 3.22%.

For the three months ended March 31, 2021, the interest rate on the Norwegian Bond Debt was 8.25%. The weighted average effective interest rate including the amortization of debt discount and debt issuance costs for this period was 8.84%.

For the three months ended March 31, 2021, the interest rate on our outstanding debt under the Super Senior Facility (as defined in Note 6, Debt, in the Notes to the Consolidated Financial Statements in the Form 10-K) was 2.24%. The weighted average effective interest rate including the amortization of debt issuance costs for these periods was 2.58%. Additionally, we paid commitment fees of 40% of the margin on the undrawn portion of the Super Senior Revolver Facility.





F-10


The following table summarizes the Company’s total interest expense:

Three Months Ended
(In thousands)March 31, 2022March 31, 2021
Convertible Bond Debt interest$1,427 $1,426 
Global Ultraco Debt Facility interest2,213  
New Ultraco Debt Facility interest 1,465 
Norwegian Bond Debt interest 3,630 
Super Senior Facility interest 30 
Amortization of debt discount and debt issuance costs562 1,629 
Commitment fees on revolving credit facilities245 71 
Total Interest expense$4,447 $8,251 

Scheduled Debt Maturities
The following table presents the scheduled maturities of principal amounts of our debt obligations as of March 31, 2022:
(In thousands)Convertible Bond Debt Global Ultraco Debt FacilityTotal
Nine months ending December 31, 2022$ $37,350 $37,350 
2023 49,800 49,800 
2024114,119 49,800 163,919 
2025 49,800 49,800 
2026 88,350 88,350 
$114,119 $275,100 $389,219 


Note 5. Derivative Instruments
Interest rate swaps
During October 2021, the Company entered into four interest rate swaps for the notional amount of $300.0 million of the Term Facility under the Credit Agreement for the Global Ultraco Debt Facility at a fixed interest rate ranging between 0.83% and 1.06% to hedge the LIBOR-based floating interest rate.
During 2020, the Company entered into a series of interest rate swap agreements to effectively convert a portion of its debt under the New Ultraco Debt Facility, excluding any amounts outstanding under the revolving credit facility as well as any new term loan borrowings from a floating to a fixed-rate basis. In August 2021, the Company cancelled the New Ultraco Debt Facility interest rate swaps. Concurrent with the cancellation, the Company entered into another interest rate swap which was subsequently cancelled on October 1, 2021 upon repayment of the New Ultraco Debt Facility.

The interest rate swaps were designated and qualified as cash flow hedges. The Company uses interest rate swaps for the management of interest rate risk exposure, as an interest rate swap effectively converts a portion of the Company’s debt from a floating to a fixed rate. The interest rate swap is an agreement between the Company and counterparties to pay, in the future, a fixed-rate payment in exchange for the counterparties paying the Company a variable payment. The amount of the net payment obligation is based on the notional amount of the interest rate swap and the prevailing market interest rates. The Company may terminate the interest rate swaps prior to their expiration dates, at which point a realized gain or loss may be recognized, or may be amortized over the original life of the interest rate swap if the hedged debt remains outstanding. The value of the Company’s commitment would increase or decrease based primarily on the extent to which interest rates move against the rate fixed for each swap.
F-11



Tabular disclosure of derivatives location
The following table summarizes the interest rate swaps in place as of March 31, 2022 and December 31, 2021:
Interest Rate Swap detailNotional Amount outstanding (in thousands)
Trade dateFixed rateStart dateEnd dateMarch 31, 2022December 31, 2021
October 07, 20210.83 %October 12, 2021December 15, 2025$206,325 $215,663 
October 13, 20210.94 %October 15, 2021December 15, 202522,925 23,963 
October 14, 20210.93 %October 18, 2021December 15, 202522,925 23,963 
October 22, 20211.06 %October 26, 2021December 15, 202522,925 23,963 
$275,100 $287,552 
The Company records the fair value of the interest rate swap as an asset or liability on its balance sheet. The effective portion of the swap is recorded in Accumulated other comprehensive income. The estimated income that is currently recorded in Accumulated other comprehensive income as of March 31, 2022 that is expected to be reclassified into the earnings within the next twelve months is $2.4 million. No portion of the cash flow hedges were ineffective during the three months ended March 31, 2022.

The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 is below:
Derivatives designated as hedging instrumentsLocation of loss in Statements of OperationsEffective portion of loss reclassified from Accumulated other comprehensive income (in thousands)
Three Months Ended
March 31, 2022March 31, 2021
Interest rate swapsInterest expense$397 $145 
The following table shows the interest rate swap assets and liabilities as of March 31, 2022 and December 31, 2021:
Derivatives designated as hedging instruments (in thousands)Balance Sheet locationMarch 31, 2022December 31, 2021
Interest rate swapFair value of derivative assets - current $2,371 $ 
Interest rate swapFair value of derivative assets - noncurrent$8,476 $3,112 
Interest rate swap Fair value of derivative liabilities - current$ $885 
Forward freight agreements and bunker swaps
The Company trades in forward freight agreements (“FFAs”) and bunker swaps, with the objective of utilizing this market as economic hedging instruments that reduce the risk of specific vessels to changes in the freight market. The Company’s FFAs and bunker swaps have not qualified for hedge accounting treatment. As such, unrealized and realized gains are recognized as a component of Other expense, net in the Condensed Consolidated Statements of Operations and Other current assets and Fair value of derivatives in the Condensed Consolidated Balance Sheets. Derivatives are considered to be Level 2 instruments in the fair value hierarchy. For our bunker swaps, the Company may enter into master netting, collateral and offset agreements with counterparties.

As of March 31, 2022, the Company had International Swaps and Derivatives Association ("ISDA") agreements with five applicable banks and financial institutions, which contain netting provisions. In addition to a master agreement with the Company supported by a primary parent guarantee on either side, the Company also has associated credit support agreements in place with the two counterparties which, among other things, provide the circumstances under which either party is required to post eligible
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collateral, when the market value of transactions covered by these agreements exceeds specified thresholds. The Company does not anticipate non-performance by any of the counterparties.

As of March 31, 2022, the Company had outstanding bunker swap agreements to purchase 25,250 metric tons of high and low sulfur fuel oil with prices ranging between $486 and $798 that are expiring at March 31, 2023. The volume represents less than 10% of our estimated consumption on our fleet for the year.

The following table shows our open positions on FFAs as of March 31, 2022:

FFA PeriodNumber of Days HedgedAverage FFA Contract Price
Quarter ending June 30, 2022405$16,672 
Quarter ending September 30, 20221125$22,503 
Quarter ending December 31, 2022990$20,914 

The Company will realize a gain or loss on these FFAs based on the price differential between the average daily BSI rate and the FFA contract price. The gains or losses are recorded in Other expense, net in the Condensed Consolidated Statements of Operations.

The effect of non-designated derivative instruments on the Condensed Consolidated Statements of Operations and Balance Sheets is as follows:

(In thousands)For the Three Months Ended
Derivatives not designated as hedging instrumentsLocation of loss/(gain) in Statements of OperationsMarch 31, 2022March 31, 2021
FFAs - realized (gain)/lossRealized and unrealized loss on derivative instruments, net$(1,772)$1,966 
FFAs - unrealized loss/(gain)Realized and unrealized loss on derivative instruments, net14,252 (277)
Bunker swaps - realized gainRealized and unrealized loss on derivative instruments, net(1,774)(753)
Bunker swaps - unrealized gainRealized and unrealized loss on derivative instruments, net(2,803)(226)
Total$7,903 $710 


Derivatives not designated as hedging instruments (in thousands)Balance Sheet locationMarch 31, 2022December 31, 2021
FFAs - Unrealized lossFair value of derivative liabilities - current$13,111 $3,368 
FFAs - Unrealized gainFair value of derivative assets - current 4,326 
Bunker swaps - Unrealized gainFair value of derivative assets - current3,145 343 
Cash Collateral Disclosures
The Company does not offset fair value amounts recognized for derivatives by the right to reclaim cash collateral or the obligation to return cash collateral. The amount of collateral to be posted is defined in the terms of respective master agreements executed with counterparties or exchanges and is required when agreed upon threshold limits are exceeded. As of March 31, 2022 and December 31, 2021, the Company posted cash collateral related to derivative instruments under its collateral security arrangements of $21.3 million and $15.1 million, respectively, which is recorded as a Current asset in the Condensed Consolidated Balance Sheets.


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6. Fair Value Measurements
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash, cash equivalents and restricted cash—the carrying amounts reported in the Condensed Consolidated Balance Sheets for interest-bearing deposits approximate their fair value due to the short-term nature thereof.
Debt—the carrying values approximates fair values for bonds issued under the Convertible Bond Debt, which is traded on NASDAQ. The carrying amount of our term loan borrowing under the Global Ultraco Debt Facility approximates its fair value, due to its variable interest rates.
The Company defines fair value, establishes a framework for measuring fair value and provides disclosures about fair value measurements. The fair value hierarchy for disclosure of fair value measurements is as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities. Our Level 1 non-derivatives include cash, money-market accounts, restricted cash accounts and collateral on derivatives.

Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable. Our Level 2 non-derivatives include our debt balances under the Convertible Bond Debt and the Global Ultraco Debt Facility. Freight forward agreements, bunker swaps and interest rate swaps are considered to be a Level 2 item as the Company, using the income approach to value the derivatives, uses observable Level 2 market inputs at measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact. See Note 5, Derivative Instruments.

Level 3 – Inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

March 31, 2022
Fair Value
(In thousands)
Carrying Value (7)
Level 1Level 2
Assets
Cash and cash equivalents (1)
$83,677 $83,677 $ 
Collateral on derivatives21,307 21,307  
Fair value of derivative assets - current (2)
5,516  5,516 
Fair value of derivative assets - noncurrent (3)
8,476  8,476 
Liabilities
Global Ultraco Debt Facility (4)
275,100  275,100 
Convertible Bond Debt (5)
114,119  195,751 
Fair value of derivative liabilities - current (6)
13,111  13,111 
December 31, 2021
Fair Value
(In thousands)
Carrying Value (7)
Level 1Level 2
Assets
Cash and cash equivalents (1)
$86,222 $86,222 $ 
Collateral on derivatives15,081 15,081  
Fair value of derivative assets - current (2)
4,669  4,669 
Fair value of derivative assets - noncurrent (3)
3,112  3,112 
Liabilities
Global Ultraco Debt Facility (4)
287,550  287,550 
Convertible Bond Debt (5)
114,119  147,499 
Fair value of derivative liabilities - current (6)
4,253  4,253 

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(1) Includes restricted cash (noncurrent) of $0.1 million at March 31, 2022 and $0.1 million at December 31, 2021.
(2) Includes $3.1 million of unrealized mark-to-market gains on bunker swaps and $2.4 million of unrealized gains on our interest rate swaps as of March 31, 2022 and $4.7 million of unrealized mark-to-market gains on FFAs and bunker swaps as of December 31, 2021.
(3) Includes $8.5 million and $3.1 million of unrealized gains on our interest rate swaps as of March 31, 2022 and December 31, 2021, respectively.
(4) The fair value of the liabilities is based on the required repayment to the lenders if the debt was discharged in full on March 31, 2022 and December 31, 2021.
(5) The fair value of the Convertible Bond Debt is based on the last trade on March 16, 2022 and December 16, 2021 on Bloomberg.com.
(6) Includes $13.1 million of unrealized mark-to-market losses on FFAs as of March 31, 2022 and $3.4 million of unrealized mark-to-market losses on FFAs and $0.9 million of unrealized losses on our interest rate swaps as of December 31, 2021.
(7) The outstanding debt balances represent the face value of the debt excluding debt discount and debt issuance costs.

Note 7. Commitments and Contingencies
Legal Proceedings
The Company is involved in legal proceedings and may become involved in other legal matters arising in the ordinary course of its business. The Company evaluates these legal matters on a case-by-case basis to make a determination as to the impact, if any, on its business, liquidity, results of operations, financial condition or cash flows.
In March 2021, the U.S. government began investigating an allegation that one of the Company's vessels may have improperly disposed of ballast water that entered the engine room bilges during a repair. The investigation of this alleged violation of environmental laws is ongoing, and, although at this time we do not believe that this matter will have a material impact on the Company, our financial condition or results of operations, we cannot determine what penalties, if any, will be imposed. We have posted a surety bond as security for any fines, penalties or associated costs that may be issued, and the Company is cooperating fully with the U.S. government in its investigation of this matter. For the three months ended March 31, 2022 and 2021, the Company incurred and recorded $0.1 million and $1.0 million, respectively, as Other operating expense in its Condensed Consolidated Statements of Operations relating to this incident, which include legal fees, surety bond expenses, vessel off-hire, crew changes and travel costs.

Note 8. Leases

Time charter-in contracts

The Company has time charter-in contracts for Ultramax vessels which are greater than 12 months as of the lease commencement date. A description of each of these contracts is below:

(i) The Company entered into an agreement effective April 28, 2017, to charter-in a 61,400 dwt, 2013 built Japanese vessel for approximately four years with options for two additional years. The hire rate for the first four years is $12,800 per day and the hire rate for the first optional year is $13,800 per day and $14,300 per day for the second optional year. In addition, the Company’s fair value below contract value of time charters acquired of $1.8 million as of December 31, 2018, which related to the unamortized value of a prior charter with the same counterparty that had been recorded at the time of the Company’s emergence from bankruptcy, was offset against the corresponding right of use asset on this lease as of January 1, 2019. On July 8, 2021, the Company exercised its option to extend the charter for another year at a hire rate of $13,800 per day. The Company has increased the lease liability and the corresponding right-of-use asset by $5.0 million to reflect the extended lease term in its Condensed Consolidated Balance Sheet as of September 30, 2021. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the Company's implied credit rating and the yield curve for debt as of July 8, 2021 was 1.36%.
    (ii) On May 4, 2018, the Company entered into an agreement to charter-in a 61,425 dwt 2013 built Ultramax vessel for three years with an option for an additional two years. The hire rate for the first three years is $12,700 per day and $13,750 per day for the first year option and $14,750 per day for the second year option. The Company took delivery of the vessel in the third quarter of 2018. During the second quarter of 2021, the Company decided to extend the lease term to its maximum redelivery date allowed under the charter party. Additionally, on June 28, 2021, the Company exercised its option to extend the charter for another year until October 19, 2022 at a hire rate of $13,750 per day. The Company has increased the lease liability and the corresponding right-of-use asset by $5.8 million to reflect the extended lease term in its Condensed Consolidated Balance Sheet as
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of September 30, 2021. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the Company's implied credit rating and the yield curve for debt as of June 28, 2021 was 1.34%.
(iii) On December 9, 2018, the Company entered into an agreement to charter-in a 62,487 dwt 2016 built Ultramax vessel for two years. The hire rate for the vessel until March 2020 was $14,250 per day and $15,250 per day thereafter. The Company took delivery of the vessel in the fourth quarter of 2018. On December 25, 2019, the Company renegotiated the lease terms for another year at a hire rate of $11,600 per day. The Company accounted for this as a lease modification on December 25, 2019 and increased its lease liability and right-of-use asset on its consolidated balance sheet as of December 31, 2019 by $4.5 million. During the first quarter of 2021, the Company decided to extend the lease term to its maximum redelivery date allowed under the charter party. Therefore, the lease liability and the corresponding right-of-use asset as of March 31, 2021 have been increased by $1.0 million to reflect the change in lease term from minimum redelivery date to maximum redelivery date allowed under the charter party. On May 4, 2021, the Company exercised its option to extend the charter for another year until July 31, 2022 at a hire rate of $12,600 per day. The Company has increased the lease liability and the corresponding right-of-use asset by $4.3 million to reflect the extended lease term in its Condensed Consolidated Balance Sheet as of September 30, 2021. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the Company's implied credit rating and the yield curve for debt as of May 4, 2021 was 1.38%. On March 17, 2022, the Company has further extended the lease to a minimum period of ten months and maximum period of twelve months with an option to further extension of minimum ten months and twelve months period. The Company has increased the lease liability and the corresponding right-of-use asset by $6.9 million to reflect the extended lease term in its Condensed Consolidated Balance Sheet as of March 31, 2022. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the Company's implied credit rating and the yield curve for debt as of March 17, 2022 was 4.48%.
(iv) On December 22, 2020, the Company entered into an agreement to charter-in a 63,634 dwt 2021 built Ultramax vessel for twelve months with an option for an additional three months at a hire rate of $5,900 per day plus 57% of the Baltic Supramax Index ("BSI") 58 average of 10 time charter routes as published by the Baltic Exchange each business day. Additionally, following the initial fifteen month period the Company has an additional option to extend for a period of eleven to thirteen months at an increased rate of $6,500 per day with no change in the rest of the terms. Also, the Company shall share the scrubber benefit with the owners 50% calculated as the price differential between the high sulfur and low sulfur fuel oil based on actual bunker consumption during the lease period. On July 7, 2021, the Company took delivery of the vessel and recorded $9.1 million as lease liability and corresponding right-of-use asset in its Condensed Consolidated Balance Sheet as of September 30, 2021. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the Company's implied credit rating and the yield curve for debt as of July 7, 2021 was 1.33%.
(v) On September 6, 2021, the Company entered into an agreement to charter-in a 2021 built Ultramax vessel for a period of a minimum of twelve months and a maximum of fifteen months at a hire rate of $11,250 per day plus 57.5% of the BSI 58 average of 10 time charter routes published by the Baltic Exchange each business day. The Company has the option to extend the lease term for another year, during which time the fixed hire rate decreases to $10,750 per day with no change to the remaining terms. The vessel is expected to be delivered to the Company in the second quarter of 2022. No right-of-use asset or corresponding liability has been recognized in the Condensed Consolidated Balance Sheet as of March 31, 2022 since the Company did not take delivery of the vessel and as such lease term has not begun yet.
Office leases
On October 15, 2015, the Company entered into a commercial lease agreement as a sublessee for office space in Stamford, Connecticut. The lease is effective from January 2016 through June 2023, with an average annual rent of $0.4 million. The lease is secured by cash collateral of $0.1 million which is recorded as Restricted cash - noncurrent in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

In November 2018, the Company entered into an office lease agreement in Singapore, which was initially set to expire in October 2021, with an average annual rent of $0.3 million. On August 17, 2021, the Company renewed the lease on the existing office space for an additional 5 years with an average annual rent of $0.4 million. The Company increased the lease liability and the corresponding right-of-use asset by $1.3 million in its Condensed Consolidated Balance Sheet as of December 31, 2021. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the Company's implied credit rating as of August 17, 2021 was 3.09%. Additionally, the Company entered into a new lease agreement for an additional office space in Singapore for 4.9 years beginning in the second quarter of 2022 with an average annual rent of $0.2 million. On February 15, 2022, the Company took possession of the additional office space. The Company has recognized $0.5 million of lease liability and corresponding right-of-use asset in its Condensed Consolidated Balance Sheet as of March 31, 2022. The discount rate utilized in the measurement of lease liability and the corresponding right-of-use asset based on the
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Company's implied credit rating and the yield curve for debt as of February 15, 2022 was 5.7%.
The Company determined the three office leases to be operating leases and recorded the lease expense as part of General and administrative expenses in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021.
Operating lease right-of-use assets and lease liabilities as of March 31, 2022 and December 31, 2021 are as follows:


DescriptionLocation in Balance Sheet
March 31, 2022 (1)
December 31, 2021 (1)
Noncurrent assets:(In thousands)
Chartered-in contracts greater than 12 months Operating lease right-of-use assets $16,377 $15,039 
Office leasesOperating lease right-of-use assets 2,277 1,978 
Operating lease right-of-use assets $18,654 $17,017 
Liabilities:
Chartered-in contracts greater than 12 monthsCurrent portion of operating lease liabilities$14,966 $15,039 
Office leasesCurrent portion of operating lease liabilities783 689 
Lease liabilities - current portion$15,749 $15,728 
Chartered-in contracts greater than 12 monthsNoncurrent portion of operating lease liabilities $1,412 $ 
Office leasesNoncurrent portion of operating lease liabilities $1,487 $1,282 
Lease liabilities - noncurrent portion$2,899 $1,282 

(1) The Operating lease right-of-use assets and Operating lease liabilities represent the present value of lease payments for the remaining term of the lease. The discount rate used ranged from 1.33% to 6.08%. The weighted average discount rate used to calculate the lease liability was 2.88%.


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The table below presents the components of the Company’s lease expenses and sublease income on a gross basis earned from chartered-in contracts greater than 12 months for the three months ended March 31, 2022 and 2021:

(In thousands)Three Months Ended
DescriptionLocation in Statement of OperationsMarch 31, 2022March 31, 2021
Lease expense for chartered-in contracts less than 12 months