Thank you for standing by. Ladies and gentlemen, and welcome to the EuroDry conference call on the third quarter 30th, 2019 financial results. We have with us today Mr. Pittas, Chairman and Chief Executive Officer, and Mr. Aslidis, Chief Financial Officer of the company. At this time, all participants are in listen-only mode. There'll be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press star and one on your telephone keypad and wait for your name to be announced. I must advise you that this conference is being recorded today, Friday the 15th of November, 2019. Please be reminded that the company announced its results with a press release that has been publicly distributed.
Before passing the floor to Mr. Pittas, I would like to remind everyone that in today's presentation and conference call, EuroDry will be making forward-looking statements. These statements are within the meaning of the Federal Securities laws. Matters discussed may be forward-looking statements, which are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. Kindly draw your attention to slide two of the webcast presentation, which has the full forward-looking statement, and the same statement was also included in the press release. Please take a moment to go through the whole statement and read it. I would now like to pass the floor over to Mr. Pittas. Thank you, sir. Please go ahead.
Good morning, ladies and gentlemen, and thank you all for joining us today for our scheduled conference call. Together with me is Tasos Aslidis , our Chief Financial Officer. The purpose of today's call is to discuss our financial results for the nine-month period and quarter ended September 30th, 2019. As a reminder, I would like to mention that in May 2018, Euroseas contributed to EuroDry its dry bulk fleet of six vessels, one Ultramax and two Kamsarmax vessels built between 2016 and 2018, and three Japanese-built Panamax vessels built between 2000 and 2004. EuroDry was spun off from Euroseas on May 30th, 2018. Since the spinoff, EuroDry bought an additional Panamax bulker. Comparisons in the following presentation to periods of last year refer to the dry bulk fleet existing at the time for the periods presented. Please turn to slide three. Our income statement highlights are shown here.
The third quarter of 2019, we reported total net revenues of $7.7 million, adjusted EBITDA of $2.2 million, and adjusted net income attributable to common shareholders of -$0.6 million or -$0.26 per share. Since the operation of EuroDry commenced as a separately listed public company, we have focused on positioning the company to capitalize on market opportunities. By refinancing a portion of our debt, we managed to raise the required funds and pursue selected vessel acquisitions like the Starlight, which we acquired late last year. We generally expect that the dry bulk market could offer opportunities for realizing significant returns in the medium term as the fleet supply is expected to grow modestly in the next couple of years, thus leaving the focus on trade demand developments, which partly depend on geopolitical factors.
The aftermath of the emissions implementation and ballast water treatment regulations over the next two years could possibly further squeeze vessel supply, leading to a solid trade demand growth, therefore creating a very revolving market environment for vessel owners. At the same time, EuroDry stock continues to trade at a significant discount to its NAV. This discount, we believe, will start shrinking as the performance of EuroDry is appreciated and our fleet grows either through single vessel acquisitions or by exploiting our public platform to consolidate other fleets, thus offering additional returns to our shareholders. Please now see slide four, which shows how the markets improved all the way till nearly the end of Q3, but subsequently are correcting in Q4. Average spot levels for Panamax in Q3 were about $16,250, whilst average one-year charter stood at around $13,600 per day.
Please turn to slide five for our chartering operational S&P and dry docking highlights. The Eirini P was fixed for about 11-13 months at $12,500 per day for the first 55 days, and thereafter at 100% of the BPI for PC index. The Pantelis was fixed for a trip for about 90-100 days at $11,500 per day. The Tasos was fixed with a similar trip of about 100-120 days at $11,500 per day. At the beginning of Q4, we sold the Q4 contract, Q4 FFA contract at $14,550, the equivalent to the open days of one Panamax ship. Subsequently, we closed the above position with a net profit of about $112,000, which is the equivalent of about $1,200 daily on one Panamax earnings for the whole of Q4.
In the longer term, we may continue using FFAs solely to hedge our open day positions at management's discretion. Eirini P completed its dry dock in the third quarter of 2019 in roughly 30 days at a cost which is similar to the budget we had of approximately $1.1 million, including the ballast water treatment plant unit. Please turn to slide six for the synopsis of the EuroDry fleet as of today. As you can see, EuroDry comprises of seven dry bulk vessels with a cargo carrying capacity of about 530,000 deadweight tons and with a fleet average age of 10.8 years. Slide seven shows the employment schedule. Average for the remainder of 2019 as of November 1st, excluding ships on index charters, which are open to market fluctuations but have secured employment, stands at about 56%.
The only vessel that is still expected to open up for a charter during Q4 is the MV Pantelis at some point in the second half of November. In the following slides, we synopsis our outlook in the dry bulk market. Let's turn to slide nine. The IMF projected world GDP growth in 2019 is revised downwards from 3.2% in the previous quarter to 3% now. Among the developed economies, China's third quarter suggests a weakening growth rate of 6.1% compared to 6.2% in the previous quarter. For the advanced economies, the revision of U.S. growth in 2019 reflects a less strong performance of 2.4% compared to 2.6% in the previous quarter. The IMF also scaled back predictions for the Euro zone slightly to 1.2% from 1.3%, while India is down from 7% to 6.1% only. Only Brazil is expected to see a slow uplift from 0.8% to 0.9%.
For 2020, the IMF predicts stronger growth of 3.4%, even though the U.S., China, and Japan are expected to grow a bit more slower. Stronger growth is expected for Europe, India, Russia, and Brazil. It must be noted, however, that some analysts believe that global growth may be slightly lower in 2020 than in 2019. Looking onto the dry bulk trade, according to Clarksons, the trade in 2019 is now projected to grow by 1.4%, up from 1.3% expected in the previous quarter estimates. In 2020, according to Clarksons' forecast, the trade rate is set to grow at a solid 2.9% rate. Please turn to slide 10 to review the dry bulk delivery schedule. Currently, the order book stands at 5.7% for 2019 and 2020 and 3.3% for 2021. This is comparatively very low, near the lowest levels of the last 20 years.
Also note that due to slippage, cancellations, and scrapping, the overall fleet growth during the next two years, unless a significant number of new orders is placed, should be very small. Please turn to page 11, where we summarize our outlook on the dry bulk market. Since the beginning of 2019, we have seen that rates for Capesize vessels moved from below OpEx levels in the first quarter to multi-year highs of about $40,000 daily in the third quarter. Panamax and Supramax were much less affected by the Vale disaster and dropped much less before increasing again, also to multi-year highs of about $18,000 per day and $15,000 per day, respectively, by September. Since then, however, the market has corrected by about 50%, currently standing at around the $9,000 mark for Panamax vessels.
The main reason for these strong movements we've seen in this year in rates was the accident in Vale's iron ore mine in Brazil, which was estimated to reduce Brazilian iron ore exports by 90 million tons annually until the mines came back to operation. However, it seems that a big part of the capacity is already coming back. The Brazilian iron ore exports and the drive for the Cape market, as said, have shown improvements from -30% in the first half of the year to -15% and still improving. Our mid-year analysis for 2019 has been accurate, predicting the total recovery of the market in the second half of the year as it happened.
However, the rate expectations for the remaining two months of the year are rather flat in view of the return back into the market of the ships having installed scrubbers as compared to ships taking the time to install them and less coal imports by China. Our outlook moving forward is as follows. For 2020, our supply-demand analysis shows a marginally negative balance, which would suggest a slightly softer market. However, especially in 2020, there might be unexpected disruptions due to the introduction of cleaner fuels, which could lead to a tighter than expected market by having delays and vessels speed drop. For 2021, our analysis indicates a promising year amidst a very low order book. Longer term, iron ore trading volume growth is at risk due to the lack of further mining production investments in both Australia and Brazil, the two major producers.
Coal imports, despite the longer-term concerns due to the overall desire to reduce coal use, are expected to further grow in 2020 following an above 10% rise in Chinese coal imports so far in 2019, as electricity demand growth remains robust there and in other developing areas. The grain trade is expected to rebound following a much desired trade agreement between China and the U.S. Please turn to slide 12. The left side of the slide shows the evolution of one-year time charter of Panamax dry bulk vessels since 2001. Even though dry bulk vessel rates bounced back from the all-time lows in 2016, we are still below historical median levels. The right-hand side of the slide shows the vessel values in relation to 10-year historical prices.
Of course, dry bulk prices have moved above all-time low values that were established at the beginning of 2016. The median price of 10-year-old Panamax is still lower than that. With a stabilizing and even improving freight rate environment, we would expect asset values to improve as well. I will now pass the floor over to our CFO, Tasos Aslidis, to go over our financial highlights.
Thank you very much, Aris. Good morning from me as well, ladies and gentlemen. I will now take you over our financial result highlights for the third quarter and nine-month period of 2019. For that, please turn now to slide 14. For the third quarter of this year, we reported net revenues of $7.7 million, representing 13% increase over total net revenues of $6.8 million during the third quarter of 2018. That increase was mainly the result of increased average number of vessels we operated this year. The company reported net loss for the period of $0.4 million and net loss attributable to common shareholders of $0.8 million as compared to net income of $1.7 million and net income attributable to common shareholders of $1.4 million for the third quarter of 2018.
Depreciation expenses for the third quarter of 2019 amounted to $1.6 million compared to $1.4 million for the same period of last year. Interest and other financing costs for the third quarter of 2019 amounted to $0.8 million, remaining about the same to the corresponding period of last year. Adjusted EBITDA for the third quarter of 2019 was $2.2 million compared to $3.8 million for 2018. Basic and diluted loss per share attributable to common shareholders for the third quarter of 2019 was $0.35, calculated on $2.25 million basic and diluted weighted average number of shares outstanding, compared to basic and diluted earnings per share of $0.63 for the third quarter of last year.
Excluding the effect on the income or loss attributable to common shareholders for the quarter for the unrealized gain or loss on derivatives, the adjusted loss attributable to common shareholders for the quarter ended September 30th, 2019, would have been $0.26 per share basic and diluted, compared to earnings of $0.62 basic and diluted for the same period for the third quarter of 2018. Usually, security analysts not include unrealized items in the published estimates of earnings per share. Let's now move on the second half of the slide to discuss the nine-month results for this year. For the nine months of this year, we reported total net revenues of $19.6 million, representing a 12% increase over total net revenues of $17.5 million during the third quarter of 2018. The increase partly due to the higher average number of vessels we operated this year.
The company reported net loss for the period, the nine months, of $1.4 million and net loss attributable to common shareholders of $2.9 million as compared to net income of $0.3 million and net loss attributable to common shareholders of $0 million for the same period of 2018. Depreciation expenses for the nine-month period of this year amounted to $4.8 million compared to $3.9 million for the same period of 2018. Interest and other financing costs for the nine-month period of this year amounted to $2.7 million as compared to $1.8 million for the nine-month period of 2018. Finally, adjusted EBITDA for the first nine months of this year was $6.5 million compared to $5.9 million for the same period of 2018.
Basic and diluted loss per share attributable to common shareholders for the first nine months of 2019 was $1.31. Calculated on 2.48 million basic and diluted weighted average number of shares outstanding, compared to basic and diluted loss per share of $0, slightly negative, that is. Zero for the same period of 2019. Again, excluding the effect on the income or loss attributable to common shareholders for the period of the unrealized gain or loss on derivatives, the adjusted loss attributable to common shareholders for the nine-month period that ended September 30th, 2019, would have been $1.13, compared to adjusted loss of $0.07 for the first nine months of 2018. Again, typically, security analysts not include unrealized contributions into their estimates of results. Let's now turn to slide 15.
In this slide, we will review our fleet performance for the third quarter of 2019 and the nine-month period and compare it to the corresponding periods of the previous year. Let's look first at our three-month figures. Our utilization rate is, as usual, broken down into commercial and operational. For the third quarter of 2019, we had 100% commercial utilization rate and 99.5% operational utilization rate compared to 100% commercial and 99.7% operational for the corresponding quarter of the previous year. I want to remind you here that our utilization rate calculation does not include vessels that were in scheduled dry docks or repairs if any such event occurred during the period.
During the third quarter of this year, we operated seven vessels with an average time charter equivalent rate of $12,088 per vessel per day, compared to six vessels during the same period, third quarter of 2018, which earned an average $13,839 per vessel per day. Total daily vessel operating expenses, including management fees, general and administrative expenses, but excluding dry docking costs, averaged $5,722 per vessel per day during the third quarter of this year, compared to $6,182 per vessel per day for the same period, same quarter of 2018. Let's now look at the bottom of this table to our daily cash flow breakeven level, presented here on a per vessel per day basis.
For the third quarter of 2019, we reported an operating cash flow breakeven level, including loan repayments and the cash portion of our preferred dividend of $11,222 per vessel per day, compared to $11,115 per vessel per day for the third quarter of 2018. Let's look on the right part of the slide to review our nine-month figures. Our utilization rate, again here, is broken into commercial and operational. We had a 99.9% commercial utilization rate for the period, for the nine-month period, a 99.2% operational utilization rate compared to 100% commercial, a 99.6% operational utilization rate for the corresponding nine months of 2018.
In the nine-month period, we operated 7 vessels with an average time charter equivalent rate of $10,750 per vessel per day, compared to 5.5 vessels for the same period of 2018, the first nine months, during which they earned $11,649 per vessel per day. Total daily operating expenses, including management fees, general administrative expenses, and excluding direct docking costs, averaged $5,839 per vessel per day during the nine months of 2018, as compared to $6,512 per vessel per day for the same period of last year. Let's now look again at the bottom of this table to our daily cash flow breakeven level, again, presented on a per vessel per day basis.
For the nine months, we reported an operating cash flow breakeven level, including loan repayments and the cash portion of our preferred dividend of $11,314 per vessel per day as compared to $12,227 per vessel per day for the first nine months of 2018. Let's now turn to slide 16. This slide shows on the right-hand side an estimate of our cash flow breakeven level for the next 12 months. On the left side of the slide, we show our scheduled debt repayments, including scheduled balloon repayments over the next six year. This chart shows our debt profile before and after the recent refinancing of the balloon payment of Eirini that took place earlier this year. We see in the chart that we have no balloon payments coming up before 2021. We believe we have a very competitive cost of debt for the size of our company.
The average senior debt margin stands at about 3%, which assuming a LIBOR cost of around 2%, would translate to an all-in cost for our debt of about 5%, and if we included the cost of the dividend we pay to our preferred equity, the overall cost of debt and preferred equity financing is just around 5.9%. I would like to note here that we prepaid $4.3 million of Series B preferred shares in exchange of a decrease of the annual dividend rate to 9.25% from the 12% that it was originally until January 2021. At that time, the annual dividend rate would increase to 14%. The remaining amount of our Series B preferred shares is about $15.4 million.
We see the contribution of our loan repayments to our cash flow breakeven expressed in dollars per day in the second to last line of the table at the right part of this slide. We can see there that our loan repayments over the next 12 months contribute about $2,750 per vessel per day to our cash flow breakeven level. In the same table, we can see that our preferred dividend amounts to about $550 per vessel per day. If we make similar assumptions for the rest of the components of our cash flow breakeven, that is our operating expenses, general and administrative expenses, interest, dry docking, et cetera, always expressed in a per vessel per day basis, we can estimate that we would have approximately a cash flow breakeven level over the next 12 months of $11,350 per vessel per day.
Let's now turn to the next slide 17. This slide provides, in graphical form, a snapshot of our balance sheet as of September 30th, 2019 and helps us assess the intrinsic value of EuroDry stock, highlighting how undervalued that is. The left bar of the chart stacks our assets, which are mainly the value of our fleet and the current assets, including our cash, while the right bar of the chart shows our bank debt, preferred stock, and other liabilities, with the difference shown in yellow being the net value of the company. As you can see, the book value of our vessels is about $107 million, which is very close to what we believe their market value is.
Our outstanding debt is about $58.4 million, which represents about 50% of our total assets, while our preferred stock, as I mentioned earlier, amounts to about $16.4 million, representing roughly a little less, 15% of our total assets. Taking into account other current assets and liabilities, we conclude that we have a book value for the company of almost $40 million or about $17.5 per share, which should be very close to the market value of our stock. With our stock trading at about $8 per share, we believe that an investment in EuroDry is a very attractive proposition. With that, I would like to pass the floor back to our Chairman and CEO, Aristides, to continue the call.
Thank you, Tasos. Let's open the floor for any questions there might be.
Thank you. Ladies and gentlemen, as a reminder, it's star and one if you would like to ask your question. We will now take our first question. Please go ahead, your line is open.
Hi, Tate Sullivan from Maxim Group. Good morning. Thanks for taking my questions. Can we start with just your market comments, and they were helpful in terms of the new supply coming into the market. Can you comment in terms of, can you give an approximate number of active vessels in your market, including your own, as well as the absolute number of scheduled additions for the next couple of years, please, if you have that available?
We can get that number. I think, we don't have it on the top of our heads, the expected fleet growth in terms of vessels or even deadweight for our segments, but we'll be happy to provide that information.
We don't have the actual numbers in my head, but what I have in my head is the percentage increase of vessels that will be supplied in 2019, 2020, and 2021. 2019 is practically done, we don't care. In 2020, we expect 5.7% increase in the fleet. The majority of that growth comes from Capesize vessels. In the Panamax vessels where we are involved, and the Supramax, it's a bit less than that. Similar growth rates are expected in 2021, about 5% or 5.7%. No, sorry. 3.3% is in 2021, 5.7% is the 2019 and the 2020 growth. From that, you have to subtract the scrapping and the late deliveries and the occasional cancellations and all that stuff. Overall, we would expect the global fleet to grow around 3% next year.
You can look in slide 10, there's a little insert there in orange that actually shows what is scheduled to be delivered by segment in terms of vessel numbers for the next two years.
Perfect.
That is an indication. The numbers that are still quoted are gross. They are not net growth rates. The net growth rates are lower than the 5.7 that you mentioned.
Yes, 5.7 is what is planned to be supplied.
Delivered, yeah.
Yeah, to be delivered within that year. It will not necessarily happen because there are delays and of course, there will be scrapping, which you have to subtract from that. Right. Okay. Right now, in terms of the new build market, how long does it take from the time of order to delivery, roughly?
Normally it takes about 18 months from the time you order till the time you deliver, 18-24 months.
Okay. I know it's hard to generalize, but can you give some comments on what are the most common routes and ports for your ships or the number of ships around Brazil versus the numbers around Australia? Again, I know it's hard to generalize, but any comment?
Yes. This is a big discussion. I suggest we have a call after this call, and we can discuss the matters then.
Okay, thanks. The last one for me, do you have a normal time or an expected time between the contract for the one ship that ends the contract this month, or is that hard to say?
It will be in direct continuation, there will be no downtime. In dry bulk these days, there is no downtime or waiting time. It will be in direct continuation.
Okay. Thank you for that context and your earlier comments, too. Have a good rest of the day.
Thank you.
Thank you. Bye-bye.
Thank you very much.
Thank you. We'll now take our next question. Go ahead. Your line is open.
Hi, Tasos?
Yes. Hi.
Yeah, sorry. I can't tell if my line's open. This is Poe Fratt from Noble Capital Markets. Good morning.
Good morning, Poe.
Good morning. To go back to slide 10, you're showing 5.9% or 5.7% growth. That's a growth number. What has scrapping run so far? We're almost done with the year, so what do you think the net growth is for 2019?
Yeah, I think it should be closer to 3%.
3.5%.
3.5%, I think.
Yeah. Okay.
Probably. That's what I can Yeah.
Yeah, just want to clarify because that chart does show higher than expected growth, just to make sure we're on the same page.
What that shows is the scheduled deliveries as a % of the fleet. It's only the scheduled deliveries. It doesn't do all the accounting to subtract the scrapping. If we do our-
Also, the 5.7% is what is in the analyst's, Clarksons' books to be delivered in this year, but not all of it will be delivered. There is a slippage of around 10% in that. There is slippage. There is the scrapping. Overall, we expect that the growth rate will be around three and about.
3.9%. I think if we did our internal little analysis, if we make assumptions for scrapping that happened and is expected to happen in the last couple of months, we would be just below 4%, 3.7%-3.9%, net growth of the fleet for 2019.
Yep. Great. Yeah. Scrapping and slippage will mute that gross number and take it down by almost half. When you look at sort of the scrubber situation out there, my impression is that people have been scrambling to get shipyard time, and the installations are maybe taking a little bit longer. Is that your impression, too? Second part of that question is IMO 2020 changing your chartering strategy at all? How are you approaching the potential for fuel costs to diverge here?
Yes. First, on the scrubber issue, you're absolutely right. It's not an impression. It's an actual fact that it has been taking longer to install the scrubbers than originally anticipated by maybe 10 days or something like that on average. This obviously is happening. On the change of fuel from January 2020, we are already taking the necessary measures, and we will be starting to get supplies of low sulfur fuel oil on our ships obviously before that time. We've already started in one or two ships. There will be this disadvantage, let's say, for the ships that do not have scrubbers against the scrubber-fitted ships, at least initially, with the price difference being around $250 per ton at this point in time, $200-$250 depending on the port.
There are going to be problems in availability of both types of fuel. Some pumps will have only one or the other. Planning will need to be made onto where you bunker, which has to be much more careful. This is something we will be discussing together with our charterers and helping them because they are the ones in time charters that direct the vessel where it needs to go. We will be discussing with them to try and help and optimize the situation. All this will create some disruption generally, and this disruption is essentially reducing the number of ships available. We think that it will be a positive disruption, even though the scrubber-fitted ships will be benefiting with higher time charter rates.
Of course, if the time charter rates that they will be getting are sufficient to amortize the investment, this is something that remains to be seen.
Great. Your chartering strategy won’t change. You still expect to focus more on time charters so that the fuel cost risk is on the customer or the charterer.
Yes. The big majority of our fixtures will be time charters, either spot time charters for one trip or longer-term time charters. Yes.
Great. Can you give us color on the third quarter rate from the Guardian Navigation on the Alexandros P, and then sort of give us an idea of where that is quarter to date for the fourth quarter? That would be helpful.
Yes. I can tell you that, generally, the Guardian Navigation has outperformed the index by a very little bit overall over the years that we’ve been with them. We’ve outperformed the index, of course, adjusted for the size of our vessel because the Supramax index is for a 57,000 deadweight vessel, but we are 63, which implies generally at least a 10% higher rate. This is what we have been achieving. We have been achieving a little bit higher than 10% above the index historically up to now. This quarter, I think it’s running around the same level. We’ll have better color when we get the next statement from them.
Generally, results from pools, in general, have a small lag with the market. If the market drops, they do a little better during the period of the market drop because they carry the older charters. If the market increases, they do a little worse because they carry the lower charters that have been fixed before. The same is reflected in the results of this pool.
Yep. A lot of companies give COAs forward cover, percentage of days booked for the fourth quarter and sort of an average P5TC rate. Do you have ballpark numbers for those two? I know that most of your capacity is under contract but indexed. I was just trying to get a flavor of where we stand during the middle of the quarter on both really rates.
If you look on slide seven, what we show is fixed, which is what determines a big chunk of what our rates will be for the third quarter. The remaining part, the unfixed part or the part that is open, is linked to the market. I think looking at the index, the average index today is probably the best estimate of what the rate will be. This is what we do, frankly, ourselves to make a projection for the quarter. I don’t have it on the top of my head, the number to give you. You can see on slide seven the fixed charters and the ones that are linked to the index. The average to-date index and whatever expectations you might want to put for the remaining month and a half would constitute a good guess for Q4.
Yep. I noticed on that the Guardian Navigation, the Alexandros P is highlighted in blue. It shows as an option. Should we view that as an option, or is that more in the pool, it’s in the pool permanently, and it should work and generate 112 pool points each quarter?
Yes. It’s our option really to exit the pool if we decide at any point that we want to do that. This is not something we’re currently considering.
Yeah. We should view it as more full employment.
At the pool. Yeah.
Yes.
Okay, great. Tasos, if you could just talk about costs and what drove costs down over the third quarter, sort of where relative to what the 5,200 per day that you're guiding or offering for the next 12 months, that would be helpful.
From quarter to quarter, there is some small variation on the operating expenses. It's the way certain expenses happen, and that affects the quarterly average. I think compared to the same period of last year that we saw, I think we saw a little lower cost compared to last year. I think we were having some vessels that were relatively new to the fleet. I think we had a vessel, the Ekaterini had joined the fleet in the middle of last year and sort of originally the results, the contribution of a new vessel is a little higher. There is no real trend there. I think we're doing just around budget. If you look at the quarter volatility of the OpEx, which I happen to look at just before our call, it's around 5,000 give or take, even $100 up and down.
I think nothing special is happening with the costs. We're trying to keep them as low as we can. We have been helped a little bit because I think the exchange rate, we had budgeted at 12%, it is 10%. I mean, the dollar/euro exchange rate is slightly lower. That's basically it. There's nothing more to add than that.
You've done a good job of refinancing, redeeming the preferred or partially redeeming the preferred. Should we expect 2020 to be pretty quiet from a refinancing standpoint? You have what, about $7 million due in 2020. When should we sort of expect you to start looking at the refinancing that you possibly might have to do in 2021?
The plan is to refinance the remaining of the preferred sometime towards the end of 2020 because in 2021, the coupon steps up to 14%. Obviously we don't want to do that. The plan is to refinance it at some point within this year. Within next year. Yeah, within this coming year. That. In terms of debt, there is no urgency to refinance anything. We have no balloons. We have borrowing capacity in one of our ships, the Xenia. There is a possibility if we need liquidity to invest, we can refinance one of our ships by increasing the debt to create investment capacity. More investment capacity from what we already have. We have some.
Would you highlight how much financing capacity that's on the Xenia?
I think probably $4 million-$5 million.
Great. Thank you so much.
Thank you, Poe. Thanks very much for your questions. Thank you.
Thank you. There are no further questions at this time. I would now like to turn the floor back to Mr. Pittas.
Thank you all for listening in to our conference call this quarter. We'll be with you early next year to discuss how the year ended and what we think will happen. Thank you very much. Thank you, guys. Thanks, everybody.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.