Gary Chapman: Hi, Jim. Yes. I think the interest expense is probably accounted for by two things. First of all, we purchased a vessel. So, there’s one extra vessel, 18 vessels now. If you look back previously, that obviously wasn’t there. So that accounts for a chunk of interest expense. And plus one-third approximately 34% at March, is not hedged, is not linked to swaps. So, it’s variable. And obviously LIBOR has gone from crazy low to quite high recently. So when you’re looking at — as at today, $350 million that is exposed to that LIBOR increase, yes, of course you’re going to see a significant increase in quarterly and annual interest expenses. Where that goes from here, I think that’s the jury is still out on whether the Fed will increase rates anymore.
We’ve obviously got a fair amount of debt that is fixed, and as we’re paying that down, you see on the diagram that, the proportion that swapped compared to total debt, actually increases for the next few years. So, we’re going to be slightly better off in that respect. But yes, I think to the extent that the U.S. interest rates don’t go higher, then yes, we’ve probably topped out in terms of interest expense. Perhaps the third element is as well, obviously, we’ve increasingly drawn on our revolving credit facilities and that obviously has also added to our overall interest expense. So again, that’s one of the reasons why our key focus is on our visible liquidity going forward, to allow us to perhaps use those revolvers less, and reduce that borrowing in that respect as well.
So, I think it’s a combination of things. And possibly, it’s topped out. But yes, it depends on what the U.S. Fed does going forward.
Jim Altschul: Okay. Next question, you make reference to the 172.5 million senior secured loan facilities maturing in September and next January, that are secured by the Dan Cisne and the Dan Sabia, so they’re going to be fully repaid on maturity. You don’t have a $172 million or anywhere near it in cash sitting on your balance sheet? How are you going to repay them at maturity without doing a refinancing?
Gary Chapman: Yes. Well, the $172 million is an original notional debt. Obviously, since we took it out, that has been paid down. So, the balance today is around $8 million on each, and so we factored that $8 million which is —
Jim Altschul: Oh, oh.
Gary Chapman: Yes. So we don’t need to find $172 million.
Jim Altschul: Oh, good. Okay. And I didn’t — when I saw in the in the news release, the reference to those two ships, I didn’t recognize them from the prior years, prior quarters releases. Am I just overlooking something? I mean, were they new to the fleet or?
Gary Chapman: No. No, they’ve always been there, Jim. I hope so. I’m pretty much guarantee they’ve always been there.
Jim Altschul: Okay. Which is the new ship that you took on and for which you added debt? And when did you take it on?
Gary Chapman: Sorry. Which – it’s new ship.
Jim Altschul: In response to my first question, but you said that one of the reasons the interest rate, the interest expense increase was because you added a new ship to the fleet and was financed partly with debt. So there’s interest expense. I’m looking now at Slide 10, which ship is that for which you began incurring interest expense in the book.
Gary Chapman: The last ship.
Jim Altschul: Reason of the —
Gary Chapman: We purchase was the scenario on the first of July 2022.
