Hello, and welcome to Pelagic Credit's Q3 2026 earnings presentation. I am Tobias Backer. I am the CEO of Pelagic Credit. Also with me today is Maximilian Debatin, who is our investment manager, who will be here to answer questions in the Q&A part of this presentation. Before we jump into this, we want to remind you that this presentation includes forward-looking statements and expectations that are subject to inherent risks and uncertainties. Many factors can cause the actual results and developments to deviate substantially from what has been expressed or implied in such statements and expectations, and no assurance can be given that they will be met or that actual results will be set out as in this presentation. In today's presentation, we will cover key developments and financial figures. We will talk about recent transactions.
We will go through the portfolio snapshot, where we are in the portfolio today.
There have been some questions about our dividend policy and our capital discipline or our expectations for further fundraising, so we will talk a bit about this in this presentation as well. Finally, we will leave you with some key takeaways. Before we get too far into the recent transactions, it should be noted that we did release a new transaction statement, a new transaction today, after the release of Q3 reports. This presentation today and this conference call today, we will make certain references to the recently announced transaction. If you go to the current quarter, in the current quarter, we had a net income of $2.6 million, and I am sorry, total revenue of $2.6 million and a net income of $1 million in the quarter.
That is earnings per share of $0.03 a share, and we have declared a dividend of $0.04 per share. That might seem a bit odd, but I think as we will get a little bit into later on a reoccurring basis, the $0.04 a share is a good reflection of the full-year earnings. The $0.03 a share was a bit of an anomaly for this particular quarter, as we closed some deals in the middle of the quarter. We ended the quarter with $32 million in cash, but with the announcement today of the most recent transaction, we have now committed $90 million. That may seem odd, $90 million is more than the $75 million we raised in our IPO, but certain of those commitments will repay before we meet the capital requirements under the newbuilding investments that we committed to.
At no point in time will the committed amounts exceed $72 million when you net out the requirements. If you look at the new transactions closed, we announced two of these transactions in our last earnings call. These closed after the second quarter, so they closed in July. The first one was a newbuilding order for two chemical carriers. This $24 million committed, only $6 million have been committed so far, and they will be paid in over the construction period, which runs for another nearly two years. The amounts mentioned here, the lease-adjusted backlog of $4 million, that is only reflecting in the newbuilding period, but this deal was done very much with the expectation that we will also fund these vessels when they deliver. When they deliver, they will enter into five-year time charters to an energy company.
This as shown here is only one-year weighted average transaction, but we fully expect this to go beyond that. Second deal we closed in July was a sale leaseback of three dry bulk vessels. This particular transaction was done with our sponsor, the Hartmann Group, but it was primarily done to support a time charter for a large dry bulk shipping company. This particular deal, these were done seven-year sale leaseback to the Hartmann Group, but back-to-back time charter with this shipping company. This deal, we got backlever. We got a bank loan to support part of the acquisition. Our funding for this particular deal was $10 million, even though the overall acquisition was larger than that. Then finally, the deal that we announced this morning, this is a $29.5 million transaction. It's a short-term deal.
It's an 18-month deal supporting the acquisition of two Suezmax tankers. This is a client that we worked with for quite some time to get this deal closed. We're very excited to announce this deal this morning. This deal looks a bit different than what we've done in the past. I mean, our overall strategy is to do long-term sale leaseback transactions. But as you'll see, this 18-month short-term period matches up very well with the funding requirements under the chemical carriers newbuilding transaction here on your left of the screen. As we are getting repaid on the new transaction, we are funding into the capital commitments for the newbuildings.
At the same time, we're getting a return on our investments that's meeting our funding requirements or return requirements, which is a better use of cash than sitting on the cash and getting bank deposits, interest on those cash balances. If you move forward on where we are today, we are now funding or committed on 11 vessels in five different transactions. Overall, lease-adjusted backlog is $134 million. As you can see here, we also have an option period on one transaction, and we do have the five-year post-delivery opportunity on our chemical carriers that we expect to be put in place, which will then add to the backlog. But if you just look at the firm backlog today, $134 million, of which $31 million is the profit element of that transaction or those transactions. Overall, these five deals generate an IRR of 14.1%.
That is if they run full term. As we mentioned in these type of calls before, we generally don't see the deals that we do to run until maturity. Generally speaking, we expect deals to be refinanced early, either because vessels are sold in the open market by our clients or they exercise purchase options for other reasons, or prepayment options for other reasons. If they are taken out halfway through the deal life, which is fairly typical to what we've seen in the past, then the IRR would move up from 14.1% to 15.6% at deal level. Again, this is before expenses, so just on the deal portfolio level. If you look at how this deployment runway has been to date, we raised, as mentioned, $75 million in our IPO. We then have deployed now four deals up until the end of September.
We paid out a dividend, and we ended the quarter 30 September with a cash balance of a little over $30 million, $32 million. With the recent transaction, that has largely been deployed, and our cash balance is much lower than we are showing here. That is what you should expect to see at the end of the next quarter. Where are we today? There are two things to update you on. One is the dividend policy. As mentioned, we have declared a $0.04 a share dividend payment for this quarter as well, matching what we paid in August for the second quarter. Generally speaking, we will distribute net cash earnings from the portfolio. This is what was communicated in our IPO in March. How is that calculated?
The dividends are set at the lower of the net income number and the cash available for distribution. This is paid out then on a quarterly basis. Now, there might be scenarios where the cash flow exceeds the net income. That would be in particular for older vessels or vessels that are paying them back faster than the net income on those projects. If that were to be the case, we would recommend to the board that we would do a one-off capital return to the shareholders. However, if you look at the current run rate for the company for 2026, we do not anticipate that there will be a significant difference between the net cash available for distribution and the net income. It will be nearly the same.
That is, as mentioned, the highly cash-generating transactions are offset by the transactions that have less cash flow, but good returns, in particular the newbuilding commitments. Now that we are fully deployed, what does that mean for our further investments going forward? We are seeing a lot of investment opportunities that meet our risk-return requirements, and we are actively working to deploy into those transactions. That means that we will need to raise additional funding to fund those transactions. We are exploring many different options. There is a lot of interest in what we do, and we are in discussions with multiple investors in different structures. However, the one thing we will not do is to raise capital at the current share price.
We believe that it is significantly undervalued, and we would primarily look to raise capital, or equity capital, I should say, at a price that reflects the net asset value for our platform. If you look, what are the key takeaways for this quarter? Q3 was largely in line with what we expected. Not a big surprise because our revenues and our expenses are largely fixed, just will vary depending on when during the quarter or when during the year we make new investments or divestments. We have entered into several new transactions, as mentioned, two transactions in Q3, and then the new transaction that we just announced this morning. Dividend was declared or announced this morning, continuing the dividend payment we had from the last quarter. Then finally, the platform is largely deployed.
We are actively seeking ways to build it further, but all the $75 million that we raised in the IPO has now largely been invested. With that, I will turn it over for any questions that you may have.
Thank you. We will then move on to questions from our online audience. First one is, with the current deals in the portfolio, we would have expected a further improvement in earnings. Any comment on that?
I think the main reason here is that there are two deals that we announced during the third quarter. They closed in July, and one of them also primarily generated cash only in August. So, there was a bit of a delay in when those transactions started. We will expect that that will even out as we go forward.
Thank you. What kind of deals are you seeing? Can you deploy at the top of the asset value cycle?
I think, yes, we can definitely. We see a lot of demand for what we do. It is quite interesting. But we are mindful of where we are in the asset cycle. If we are going to invest at these levels, then either we need to have a very good contract that reduces our exposure down to a level we are comfortable with during the contract period, or we need to be at a leverage that is low enough that we are comfortable with. But yes, we are turning a lot of transactions down, but we are also seeing a lot of good transactions that we believe we can deploy at the risk-reward that we are comfortable with.
One topic that comes up quite a bit is how we fit into the bank lending environment, which becomes more and more competitive, and margins are getting squeezed more and more. This is a benefit for us, as this will decrease our own cost of capital and will make our offering to our clients more competitive.
Thank you. Moving on to the transaction announced just before this call. Why would you do an 18-month deal when the stated strategy is long-term deals?
Well, I think there are two comments there. One is that, number one, this is a client that we have worked with for quite some time to build a relationship, and I think there are a lot of things we can do with this particular company. Then number two, we probably would not have done an 18-month deal standalone, but it marries very well with the funding of a newbuilding commitment. So, this is something that we would probably do in the future as well, but only if it matches up with similar type of newbuilding projects, and so that we can manage liquidity in the most efficient manner.
Perfect. Can you please talk about the residual risk or current maturity LTV that you underwrote in the latest Suezmax deal?
This is a full payout transaction, so over 18 months, we are paid out in full. We are not taking any residual risk on that particular transaction.
Thank you. When will the remaining loan commitments to Project Luke be drawn down?
It will be drawn down over the next 18 - 24 months on each vessel. As Tobias mentioned, it matches up very closely with the cash flows that are coming from the latest project, the Suezmax tanker project. The exact dates of the drawdowns are driven by the yard instalments. We expect the next deployment to happen shortly before year-end, and then several more in the first half of next year.
Thank you. Moving on to the final question for now at least. How much debt ranks senior to your mezzanine loan on the Suezmaxes?
As of right now, we would have to get back with the exact numbers here. However, there are contractual guardrails in place that governs how much senior debt the borrower can place under our mezzanine loan here, which is very much in line with our risk return requirements, which we would normally apply if this was a sale leaseback transaction.
It should be added, we view this very much as a corporate risk, as there is a substantial corporate entity that is the ultimate counterparty here. So yes, we care about the ultimate assets that we finance, but it is the number one driver here, as we mentioned before, we look at projects, is the counterparty, and are we comfortable with the counterparty's ability to repay under the transaction.
Good. Another question coming in here. The $3 million earnings imply roughly 6.7% annualized on the $30 million facility. Is that before or after financing costs, and what return do you expect on Pelagic's own equity?
There it is. Since this is a mezzanine loan, we are not intending to backlever this particular transaction. This would be pure earnings. Bear in mind that this is an 18-month full payout period. Yes, if you view it against the $30 million initial investment, the dividend yield seems quite low. But the weighted average dollar outstanding under the project, because we are so heavily repaid, is of course much lower, which brings up the annualized dividend yield to well over double digits on this one.
Thank you. Who are the end counterparties in the Suezmax deal? Assume there is a TC underlying the deal.
This has not been announced. We may make that announcement in the future, but it has not been cleared with the ultimate client here.
Okay. Thank you very much. There seems to be no further questions, so that concludes today's Q&A session. Thank you all for attending.
Thank you very much. Appreciate it.