ITEM 4 - INFORMATION ON THE COMPANY

 

A. History and Development of the Company

 

We, Excel Maritime Carriers Ltd., were incorporated under the laws of the Republic of Liberia on November 2, 1988 and we are a provider of worldwide sea borne transportation services for dry bulk cargo including among others, iron ore, coal and grain, collectively referred to as "major bulks," and steel products, fertilizers, cement, bauxite, sugar and scrap metal, collectively referred to as "minor bulks". Our fleet is managed by one of our wholly-owned subsidiaries, Maryville.

 

Our Class A common stock has traded on the New York Stock Exchange, or the NYSE, under the symbol "EXM" since September 15, 2005. Prior to that date, our Class A common stock traded on the American Stock Exchange, or the AMEX, under the same symbol. As of December 31, 2008, we had 46,080,272 shares of our Class A common stock and 145,746 shares of our Class B common stock issued and outstanding.

 

On April 15, 2008, we completed our acquisition of Quintana. As a result of the acquisition, Quintana operates as a wholly-owned subsidiary of Excel under the name Bird Acquisition Corp., or Bird. Under the terms of the merger agreement, each issued and outstanding share of Quintana common stock was converted into the right to receive (i) $13.00 in cash and (ii) 0.3979 shares of Excel Class A common stock.  We paid approximately $764.0 million in cash and 23,496,308 shares of our Class A common stock to existing shareholders of Quintana in exchange for all of the outstanding shares of Quintana. The total consideration for the acquisition amounted to $1.4 billion.

 

Beginning on March 6, 2007, we also held 18.9% of the outstanding common stock of Oceanaut Inc., or Oceanaut, a corporation in the development stage, organized on May 3, 2006 under the laws of the Republic of the Marshall Islands. Oceanaut was formed to acquire, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, vessels or one or more operating businesses in the shipping industry. On April 6, 2009, Oceanaut announced that its shareholders approved its dissolution and liquidation, and on April 15, 2009, we received $5.2 million, representing approximately $8.26 per share of Oceanaut common stock included in 625,000 of the 1,125,000 Oceanaut insider units that we owned. Please see "Item 4 – Information on the Company – Organizational Structure – Oceanaut" below.

 

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The address of our registered office in Bermuda is 14 Par-la-Villa Road, Hamilton HM JX, Bermuda. We also maintain executive offices at 17th km National Road Athens-Lamia & Finikos Str., 145 64, Nea Kifisia, Athens, Greece. Our telephone number at that address dialing from the U.S. is (011) 30210 818 7000.

 

B. Business Overview

As of April 27, 2009, we own a fleet of 40 vessels and, together with seven Panamax vessels under bareboat charters, operate 47 vessels, 5 Capesize, 14 Kamsarmax, 21 Panamax, 2 Supramax and 5 Handymax, with a total carrying capacity of approximately 3.9 million dwt.

 

Business Strategy

 

Our business strategy includes:

 

●    Fleet Expansion and Reduction in Average Age. We intend to continue to grow and, over time, reduce the average age of our fleet. Most significantly, our recent acquisition of Quintana has allowed us to add 30 young and well maintained operating dry bulk carriers to our fleet. Our vessel acquisition candidates generally are chosen based on economic and technical criteria. We also expect to explore opportunities to sell some of our older vessels at attractive prices.

 

●    Capitalizing on our Established Reputation. We believe that we have established a reputation in the international shipping community for maintaining high standards of performance, reliability and safety. Since the appointment of new management in 1998 (Maryville), the Company has not suffered the total loss of a vessel at sea or otherwise. In addition, our wholly-owned management subsidiary, Maryville, carries the distinction of being one of the first Greece-based ship management companies to have been certified ISO 14001 compliant by Bureau Veritas.

 

●    Expansion of Operations and Client Base. We aim to become one of the world's premier full service dry bulk shipping companies. The acquisition of Quintana was an important step towards achieving this goal. Following the merger, we now operate a fleet of 47 vessels with a total carrying capacity of 3.9 million dwt and a current average age of approximately 8.8 years, which makes us one of the largest dry bulk shipping companies in the industry and gives us the largest dry bulk fleet by dwt operated by any U.S.-listed company.

 

●    Balanced Fleet Deployment Strategy. Our fleet deployment strategy seeks to maximize charter revenue throughout industry cycles while maintaining cash flow stability. We intend to achieve this through a balanced portfolio of spot and period time charters. Upon completion of their current charters, our recently acquired vessels may or may not be employed on spot/short-duration time charters, depending on the market conditions at the time.

 

Competitive Strengths

 

We believe that we possess a number of competitive strengths in our industry:

 

●    Experienced Management Team. Our management team has significant experience in operating dry bulk carriers and expertise in all aspects of commercial, technical, operational and financial areas of our business, promoting a focused marketing effort, tight quality and cost controls, and effective operations and safety monitoring.

 

●    Strong Customer Relationships. We have strong relationships with our customers and charterers that we believe are the result of the quality of our fleet and our reputation for quality vessel operations. Through our wholly-owned management subsidiary, Maryville, we have many long-established customer relationships, and our management believes it is well regarded within the international shipping community. During the past 18 years, vessels managed by Maryville have been repeatedly chartered by subsidiaries of major dry bulk operators. In 2008, we derived approximately 23% of our gross revenues from a single charterer, Bunge.

 

●    Cost Efficient Operations. We historically operated our fleet at competitive costs by carefully selecting second hand vessels, competitively commissioning and actively supervising cost efficient shipyards to perform repair, reconditioning and systems upgrading work, together with a proactive preventive maintenance program both ashore and at sea, and employing professional, well trained masters, officers and crews. We believe that this combination has allowed us to minimize off-hire periods, effectively manage insurance costs and control overall operating expenses.

 

 

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Ship Management

 

Historically, our fleet was managed by Excel Management, an affiliated Liberian corporation formed on January 13, 1998 and controlled by the Chairman of our Board, under a five-year management agreement. Excel Management had sub-contracted Maryville to perform some of these management services. Maryville became a wholly-owned subsidiary of Excel on March 31, 2001.

 

In order to streamline operations, reduce costs and take control of the technical and commercial management of our fleet, in early March 2005, with effect from January 1, 2005, we reached an agreement with Excel Management to terminate the management agreement, the term of which was scheduled to extend until April 30, 2008. The technical and commercial management of our fleet was assumed by Maryville in order to eliminate the fees we would have paid to Excel Management for the remaining term of the management agreement, which would have increased substantially given the expansion of our fleet.

 

In exchange for terminating the management agreement mentioned above and in exchange for a one time cash  payment of $ 2.0 million, we agreed to issue to Excel Management 205,442 shares of our Class A common stock and to issue to Excel Management additional shares at any time until December 31, 2008 if we issue additional shares of our Class A common stock to any other party for any reason, such that the  number of  additional  Class A common  stock that would be issued to Excel  Management together with the initial 205,442  shares of Class A common stock, in the aggregate, equal 1.5% of our total  outstanding  Class A common stock after taking into account the third party issuance and the shares issued to Excel Management under the anti-dilution provision of the agreement. With the exception of the one time cash payment of $2.0 million discussed above, no other consideration would be received from Excel Management for any shares of Class A common stock issued by us to Excel Management pursuant to an anti-dilution issuance.

 

On June 19, 2007, we issued to Excel Management 298,403 Class A common shares (representing the 205,442 Class A common shares described in the termination agreement and 92,961 additional Class A common shares to reflect the necessary anti-dilution adjustment resulting from the issuance of Class A common stock by us since March 2005) in exchange for the cash payment of $2.0 million.

 

In addition, during the year ended December 31, 2008, we issued 392,801 shares of our Class A common stock under the anti-dilution provision as a result of the shares issued in relation to our acquisition of Quintana, the cancellation of a vessel's purchase and of the incentive share issuances to certain of our officers, directors, and employees. The anti-dilution provision lapsed as of January 1, 2009.

 

Brokering agreement

 

On March 4, 2005, we also entered into a one-year brokering agreement with Excel Management. Under this brokering agreement, Excel Management will, pursuant to our instructions, act as our broker with respect to, among other matters, the employment of our vessels. For its chartering services under the brokering agreement, Excel Management will receive a commission fee equal to 1.25% of the revenue of our vessels. This agreement extends automatically for successive one-year terms at the end of its initial term and may be terminated by either party upon twelve months prior written notice. The agreement was automatically extended by another year on March 4, 2009.

 

Permits and Authorizations

 

The business of the Company and the operation of its vessels are materially affected by government regulation in the form of international conventions, national, state and local laws and regulations in force in the jurisdictions in which the vessels operate, as well as in the country or countries of their registration. Because such conventions, laws, and regulations are often revised, the Company cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale price or useful life of its vessels. Additional conventions, laws and regulations may be adopted which could limit the ability of the Company to do business or increase the cost of its doing business.

 

 

 

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The Company is required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to its operations. The kinds of permits, licenses, certificates and other authorizations required for each vessel depend upon several factors, including the commodity transported, the waters in which the vessel operates the nationality of the vessel's crew and the age of the vessel. Subject to these factors, as well as the discussion below, the Company believes that it has been and will be able to obtain all permits, licenses and certificates material to the conduct of its operations. However, additional laws and regulations, environmental or otherwise, may be adopted which could limit the Company's ability to do business or increase the Company's cost of doing business and which may materially adversely affect the Company's operations.

 

Environmental and Other Regulations

 

Government regulation significantly affects the ownership and operation of dry bulk carriers. A variety of government and private entities subject dry bulk vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (United States Coast Guard, harbor master or equivalent), classification societies, flag state administrations (country of registry), charterers or contract of affreightment counterparties, and terminal operators. Certain of these entities will require us to obtain permits, licenses and certificates for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend the operation of one or more of our vessels.

 

We believe that the heightened level of environmental and quality concerns among insurance underwriters, regulators and charterers is leading to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the dry bulk shipping industry. Increasing environmental concerns have created a demand for vessels that conform to the stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of officers and crews and compliance with local, national and international environmental laws and regulations. We believe that the operations of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations.

 

International Maritime Organization

 

The International Maritime Organization, or IMO, (the United Nations agency for maritime safety and the prevention of pollution by ships) has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the related Protocol of 1978 relating thereto, which has been updated through various amendments, or the MARPOL Convention. The MARPOL Convention establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. The IMO adopted regulations that set forth pollution-prevention requirements applicable to dry bulk carriers. These regulations have been adopted by over 150 nations, including many of the jurisdictions in which the Company's vessels operate.

 

The IMO has also negotiated international conventions that impose liability for oil pollution in international waters and a signatory's territorial waters. In September 1997, the IMO adopted Annex VI to the MARPOL Convention to address air pollution from ships. Annex VI was ratified in May 2004 and became effective in May 2005. Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances (such as halons and chlorofluorocarbons) and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. Annex VI regulations pertaining to nitrogen oxide emissions apply to diesel engines on vessels built on or after January 1, 2000 or diesel engines undergoing major conversions after such date. We believe that all our vessels comply in all material respects with Annex VI. Additional or new conventions, laws and regulations may be adopted that could adversely affect our business, results of operations, cash flows and financial condition. For example, at its 58th session in October 2008, the Marine Environmental Protection Committee of the IMO voted unanimously to adopt amendments to Annex VI regarding particulate matter, sulfur oxide and nitrogen oxide emissions standards. The revised Annex VI reduces air pollution from ships by, among other things, (i) implementing a progressive reduction of sulfur oxide emissions from ships, with the global sulfur cap reduced initially to 3.50% (from the current cap of 4.50%), effective from January 1, 2012, then progressively to 0.50%, effective from January 1, 2020, subject to a feasibility review to be completed no later than 2018; and (ii) establishing new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation.  These amendments to Annex VI are expected to enter into force on July 1, 2010, which is six months after the deemed acceptance date of January 1, 2010. Once these amendments become effective, we may incur costs to comply with these revised standards.

 

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The IMO also has adopted the International Convention for the Safety of Life at Sea, or SOLAS Convention and the International Convention on Load Lines, 1966, or LL convention, which imposes a variety of standards to regulate design and operational features of ships. SOLAS Convention standards are revised periodically. We believe that all our vessels are in substantial compliance with SOLAS Convention standards.

 

In addition, the IMO adopted the International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits. The BWM Convention will not enter into force until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping tonnage. To date, there has not been sufficient adoption of this standard for it to take force.

 

The operation of our ships is also affected by the requirements set forth in the IMO's Management Code for the Safe Operation of Ships and Pollution Prevention, or the ISM Code. The ISM Code requires ship owners and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. The failure of a ship owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels, and may result in a denial of access to, or detention in, certain ports. Currently, each of the Company's applicable vessels is ISM code-certified. However, there can be no assurance that such certifications will be maintained indefinitely.

 

The United States Oil Pollution Act of 1990

 

The Unites States Oil Pollution Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all owners and operators whose vessels trade with the United States, its territories and possessions or whose vessels operate in United States waters, which includes the United States' territorial sea and its 200 nautical mile exclusive economic zone around the United States.

 

Under OPA, vessel owners, operators and bareboat charterers are "responsible parties" and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to include:

 

(i)  natural resources damage and the costs of assessment thereof;

 

(ii)  real and personal property damage;

 

(iii)  net loss of taxes, royalties, rents, fees and other lost revenues;

 

(iv)  lost profits or impairment of earning capacity due to property or natural resources damage; and

 

(v)  net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards, and

 

(vi) loss of subsistence use of natural resources.

 

As a result of 2006 amendments to the law, OPA limits the liability of responsible parties to the greater of $950 per gross ton or $0.8 million per dry bulk vessel that is over 300 gross tons (subject to possible adjustment for inflation). These limits of liability do not apply if an incident was directly caused by violation of applicable United States federal safety, construction or operating regulations or by a responsible party's gross negligence or wilful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities. OPA and the U.S. Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, each preserve the right to recover damages under existing law, including maritime tort law. We believe that we are in substantial compliance with OPA, CERCLA and all applicable state regulations in the ports where our vessels call.

 

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We currently maintain for each of our vessel's pollution liability coverage insurance in the amount of $1.0 billion per incident. If the damages from a catastrophic spill exceeded our insurance coverage, it would have a material adverse effect on our business.

 

OPA requires owners and operators of vessels to establish and maintain with the United States Coast Guard evidence of financial responsibility sufficient to meet their potential liabilities under OPA. Current Coast Guard regulations that were adopted in 1994 require evidence of financial responsibility in the amount of $900 per gross ton, which includes an OPA limitation on liability of $600 per gross ton and the CERCLA liability limit of $300 per gross ton. On October 17, 2008, the U.S. Coast Guard regulatory requirements under OPA and CERCLA were amended to require evidence of financial responsibility in amounts that reflect the higher limits of liability imposed by the 2006 amendments to OPA, as described above. The increased amounts became effective on January 15, 2009. Liability under CERCLA is however limited to the greater of $300 per gross ton or $5.0 million. Under the regulations, vessel owners and operators may evidence their financial responsibility by showing proof of insurance, surety bond, self-insurance, or guaranty. Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximum liability under OPA.

 

The United States Coast Guard's regulations concerning certificates of financial responsibility provide, in accordance with OPA, that claimants may bring suit directly against an insurer or guarantor that furnishes certificates of financial responsibility. In the event that such insurer or guarantor is sued directly, it is prohibited from asserting any contractual defense that it may have had against the responsible party and is limited to asserting those defenses available to the responsible party and the defense that the incident was caused by the willful misconduct of the responsible party. Certain organizations, which had typically provided certificates of financial responsibility under pre-OPA laws, including the major protection and indemnity organizations have declined to furnish evidence of insurance for vessel owners and operators if they are subject to direct actions or required to waive insurance policy defenses.

 

The United States Coast Guard's financial responsibility regulations may also be satisfied by evidence of surety bond, guaranty or by self-insurance. Under the self-insurance provisions, the ship owner or operator must have a net worth and working capital, measured in assets located in the United States against liabilities located anywhere in the world, that exceeds the applicable amount of financial responsibility. The Company has complied with the United States Coast Guard regulations by providing a financial guaranty from a related company evidencing sufficient self-insurance.

 

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for oil spills. In some cases, states, which have enacted such legislation, have not yet issued implementing regulations defining tanker owners' responsibilities under these laws. The Company intends to comply with all applicable state regulations in the ports where the Company's vessels call.

 

The U.S. Clean Water Act

 

The CWA prohibits the discharge of oil or hazardous substances in U.S. navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA.

 

The EPA historically exempted the discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. waters from CWA permitting requirements. However, on March 31, 2005, a U.S. District Court ruled that the EPA exceeded its authority in creating an exemption for ballast water. On September 18, 2006, the court issued an order invalidating the exemption in the EPA's regulations for all discharges incidental to the normal operation of a vessel as of September 30, 2008, and directed the EPA to develop a system for regulating all discharges from vessels by that date. The District Court's decision was affirmed by the Ninth Circuit Court of Appeals on July 23, 2008. The Ninth Circuit's ruling meant that owners and operators of vessels traveling in U.S. waters would soon be required to comply with the CWA permitting program to be developed by the EPA or face penalties. Seeking to provide relief to certain types of vessels, the U.S. Congress enacted laws in July 2008 that exempted from the impending CWA vessel permitting program recreational vessels, commercial fishing vessels, and any other commercial vessel less than 79 feet in length.

 

 

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In response to the invalidation and removal of the EPA's vessel exemption, the EPA has enacted rules governing the regulation of ballast water discharges and other discharges incidental to the normal operation of vessels within U.S. waters. Under the new rules, which took effect February 6, 2009, commercial vessels 79 feet in length or longer (other than commercial fishing vessels), which we refer to as regulated vessels, are required to obtain a CWA permit regulating and authorizing such normal discharges. This permit, which the EPA has designated as the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or VGP, incorporates the current U.S. Coast Guard requirements for ballast water management as well as supplemental ballast water requirements, and includes limits applicable to 26 specific discharge streams, such as deck runoff, bilge water and gray water.

 

For each discharge type, among other things, the VGP establishes effluent limits pertaining to the constituents found in the effluent, including best management practices, or BMPs, designed to decrease the amount of constituents entering the waste stream. Unlike land-based discharges, which are deemed acceptable by meeting certain EPA-imposed numerical effluent limits, each of the 26 VGP discharge limits is deemed to be met when a regulated vessel carries out the BMPs pertinent to that specific discharge stream. The VGP imposes additional requirements on certain regulated vessel types, including tankers that emit discharges unique to those vessels. Administrative provisions, such as inspection, monitoring, recordkeeping and reporting requirements are also included for all regulated vessels. On August 31, 2008, the District Court ordered that the date for implementation of the VGP be postponed from September 30, 2008 until December 19, 2008. This date was further postponed until February 6, 2009 by the District Court.

 

Although the VGP became effective on February 6, 2009, the VGP application procedure, known as the Notice of Intent, or NOI, has yet to be finalized. Accordingly, regulated vessels will effectively be covered under the VGP from February 6, 2009 until June 19, 2009, at which time the "eNOI" electronic filing interface will become operational. Thereafter, owners and operators of regulated vessels must file their NOIs prior to September 19, 2009, or the Deadline. Any regulated vessel that does not file an NOI by the Deadline will, as of that date, no longer be covered by the VGP and will not be allowed to discharge into U.S. navigable waters until it has obtained a VGP. Any regulated vessel that was delivered on or before the Deadline will receive final VGP permit coverage on the date that the EPA receives such regulated vessel's complete NOI. Regulated vessels delivered after the Deadline will not receive VGP permit coverage until 30 days after their NOI submission. Our fleet is composed entirely of regulated vessels, and we intend to submit NOIs for each vessel in our fleet as soon after June 19, 2009 as practicable.

 

In addition, pursuant to §401 of the CWA which requires each state to certify federal discharge permits such as the VGP, certain states have enacted additional discharge standards as conditions to their certification of the VGP. These local standards bring the VGP into compliance with more stringent state requirements, such as those further restricting ballast water discharges and preventing the introduction of non-indigenous species considered to be invasive. The VGP and its state-specific regulations and any similar restrictions enacted in the future will increase the costs of operating in the relevant waters.

 

Other Environmental Initiatives

 

The European Union is considering legislation that will affect the operation of vessels and the liability of owners for oil pollution. It is difficult to predict what legislation, if any may be promulgated by the European Union or any other country or authority.

 

Although the United States is not a party thereto, many countries have ratified and follow the liability scheme adopted by the IMO and set out in the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended in 2000, or the CLC, and the Convention for the Establishment of an International Fund for Oil Pollution of 1971, as amended and supplemented. Under these conventions, a vessel's registered owner is strictly liable for pollution damage caused on the territorial waters of a contracting state by discharge of persistent oil, subject to certain complete defenses. Many of the countries that have ratified the CLC have increased the liability limits through a 1992 Protocol to the CLC. The limits on liability outlined in the 1992 Protocol use the International Monetary Fund currency unit of Special Drawing Rights, or SDR. Under an amendment to the 1992 Protocol that became effective on November 1, 2003, for vessels of 5,000 to 140,000 gross tons liability is limited to approximately 4.5 million SDR plus 631 SDR for each additional gross ton over 5,000. For vessels of over 140,000 gross tons, liability is limited to 89.8 million SDR. The exchange rate between SDRs and U.S. dollars was 0.669895 SDR per U.S. dollar on April 9, 2009. The right to limit liability is forfeited under the CLC where the spill is caused by the owner's actual fault or privity and, under the 1992 Protocol, where the spill is caused by the owner's intentional or reckless conduct. Vessels trading to contracting states must provide evidence of insurance covering the limited liability of the owner. In jurisdictions where the CLC has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to the CLC.

 

 

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In 2005, the European Union adopted a directive on ship-source pollution, imposing criminal sanctions for intentional, reckless or negligent pollution discharges by ships. The directive could result in criminal liability for pollution from vessels in waters of European countries that adopt implementing legislation.  Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

 

The U.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977 and 1990, or the CAA, requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. Our vessels that operate in such port areas are equipped with vapor control systems that satisfy these requirements. In December 1999 and January 2003, the EPA issued final rules regarding emissions standards for marine diesel engines. The final rule applies emissions standards to new engines beginning with the 2004 model year. In the preambles to the final rules, the EPA noted that it may revisit the application of emissions standards to rebuilt or remanufactured engines if the industry does not take steps to introduce new pollution control technologies. While adoption of such standards could require modifications to some existing marine diesel engines, the extent to which our vessels could be affected cannot be determined at this time. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in primarily major metropolitan and/or industrial areas. Several SIPs regulate emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. As indicated above, our vessels operating in covered port areas are already equipped with vapor control systems that satisfy these existing requirements. The EPA and the State of California, however, have each proposed more stringent regulations of air emissions from ocean-going vessels. On July 24, 2008, the California Air Resources Board of the State of California, or CARB, approved clean-fuel regulations applicable to all vessels sailing within 24 miles of the California coastline whose itineraries call for them to enter any California ports, terminal facilities, or internal or estuarine waters. The new CARB regulations require such vessels to use low sulfur marine fuels rather than bunker fuel. By July 1, 2009, such vessels are required to switch either to marine gas oil with a sulfur content of no more than 1.5 percent or marine diesel oil with a sulfur content of no more than 0.5 percent. By 2012, only marine gas oil and marine diesel oil fuels with 0.1 percent sulfur will be allowed. In the event our vessels were to travel within such waters, these new regulations would require significant expenditures on low-sulfur fuel and would increase our operating costs.

 

Additionally, the EPA has proposed new emissions standards for new Category 3 marine diesel engines. These are engines with per-cylinder displacement at or above 30 liters and are typically found on large ocean-going vessels. The EPA proposes to require the application of advanced emission control technologies as well as controls on the sulfur content of fuels.

 

The United States National Invasive Species Act, or NISA, was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. In July 2004, NISA established a mandatory ballast water management program for ships entering U.S. waters. Under NISA, mid-ocean ballast water exchange is voluntary, except for ships heading to the Great Lakes or Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil. However, NISA's reporting and record-keeping requirements are mandatory for vessels bound for any port in the United States.  Although ballast water exchange is the primary means of compliance with the act's guidelines, compliance can also be achieved through the retention of ballast water on board the ship, or the use of environmentally sound alternative ballast water management methods approved by the United States Coast Guard. If the mid-ocean ballast exchange is made mandatory throughout the United States, or if water treatment requirements or options are instituted, the cost of compliance could increase for ocean carriers. Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult to predict the overall impact of such a requirement on the dry bulk shipping industry.

 

 

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Our operations occasionally generate and require the transportation, treatment and disposal of both hazardous and non-hazardous solid wastes that are subject to the requirements of the U.S. Resource Conservation and Recovery Act or comparable state, local or foreign requirements. In addition, from time to time we arrange for the disposal of hazardous waste or hazardous substances at offsite disposal facilities. If such materials are improperly disposed of by third parties, we may still be held liable for clean up costs under applicable laws.

 

In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the Kyoto Protocol, entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases, which are suspected of contributing to warming of the Earth's atmosphere. According to the IMO's study of greenhouse gases emissions from the global shipping fleet, greenhouse emissions from ships are predicted to rise by 38% to 72% due to increased bunker consumption by 2020 if corrective measures are not implemented. Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol. However, the European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme to include emissions of greenhouse gases from vessels. In the United States, the California Attorney General and a coalition of environmental groups in October 2007 petitioned the EPA to regulate greenhouse gas emissions from ocean-going vessels under the CAA. Any passage of climate control legislation or other regulatory initiatives by the IMO, European Union, or individual countries where we operate that restrict emissions of greenhouse gases could require us to make significant financial expenditures we cannot predict with certainty at this time.

 

The International Dry Bulk Shipping Market

 

The dry bulk shipping market is the primary provider of global commodities transportation. Approximately one third of all seaborne trade is dry bulk related.

 

After three consecutive years in which demand for seaborne trade has grown faster than newbuilding supply, the situation was reversed in mid-2005. While demand growth slowed, a new all-time high for newbuilding deliveries, together with minimal scraping, resulted in a weaker market in 2005 which continued in the first half of 2006. Beginning with the second half of 2006, the market showed signs of significant strength which continued in 2007 with the BDI closing the year 2007 at 9,143. The market remained at high levels until May 20, 2008 when the BDI reached an all-time high.

 

Since May 2008, the BDI has fallen over 90% from May 2008 through December 16, 2008 and almost 75% during the fourth quarter of 2008 through December 16, 2008, reaching a low of 663, or 94% below the May 2008 high point, in December 2008.

 

The general decline in the dry bulk carrier charter market has resulted in lower charter rates for vessels exposed to the spot market and time charters linked to the BDI. Specifically, we employ 21 of our vessels in the spot market.

 

Dry bulk vessel values have also declined both as a result of a slowdown in the availability of global credit and the significant deterioration in charter rates. Charter rates and vessel values have been affected in part by the lack of availability of credit to finance both vessel purchases and purchases of commodities carried by sea, resulting in a decline in cargo shipments, and the excess supply of iron ore in China, resulting in falling iron ore prices and increased stockpiles in Chinese ports. There can be no assurance as to how long charter rates and vessel values will remain at their currently low levels or whether they will improve to any significant degree.  Charter rates may remain at depressed levels for some time, which will adversely affect our revenue and profitability.

 

 

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Capesize rates, which averaged $100,000 per day in August 2008, fell to approximately $2,300 per day on December 2, 2008. We believe that the root cause of the fall has been a sharp slowdown in Chinese steel demand and prices leading to reduced demand for iron ore. Iron ore price negotiations between Companhia Vale do Rio Doce, a Brazilian mining company, and Chinese steel mills in the third and fourth quarter of 2008 resulted in a number of Chinese mills turning to domestic mining companies for iron ore. Additionally, the unwillingness of banks to issue letters of credit resulted in reduced financing for the purchase of commodities carried by sea which has led to a significant decline in cargo shipments and an attendant decrease in charter rates.

 

Customers

 

The Company has many long-established customer relationships, and management believes it is well regarded within the international shipping community. During the past 18 years, vessels managed by Maryville have been repeatedly chartered by subsidiaries of major dry bulk operators. In 2008, we derived approximately 23% of our gross revenues from a single charterer, Bunge. In particular, following our acquisition of Quintana on April 15, 2008, all 14 of our Kamsarmax vessels and three Panamax vessels are on time charter to Bunge until December 31, 2010. Consequently, a significant portion of our future revenues will be derived from Bunge – see "Risk Factors" above for further details.

 

Inspection by Classification Society

 

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention. The Company's vessels, including those vessels delivered to us upon our acquisition of Quintana on April 15, 2008, have been certified as being "in class" by their respective classification societies which are Bureau Veritas, American Bureau of Shipping, Nippon Kaiji Kyokai, Det Norske Veritas and Lloyd's Register of Shipping.

 

In addition, Maryville believed in "Safety Management and Quality" long before they became mandatory by the relevant institutions. Although the shipping industry was aware that Safety Management (ISM CODE) would become mandatory as of July 1, 1998, Maryville, in conjunction with ISO 9002:1994, commenced operations back in 1995 aiming to voluntarily implement both systems well before the International Safety Management date.

 

Maryville was the first ship management company in Greece to receive simultaneous ISM and ISO Safety and Quality Systems Certifications in February 1996, for the safe operation of dry cargo vessels. Both systems were successfully implemented in the course of the years, until a new challenge ISO 9001: 2000 and ISO 14001:1996 was set. At the end of 2003, Maryville's management system was among the first five company management systems to have been successfully audited and found to be in compliance with both management system standards mentioned above. Certification to Maryville was issued in early 2004.

 

A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. The Company's vessels are on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be dry-docked every two to three years for inspection of the underwater parts of such vessel.

 

Insurance and Safety

 

The business of the Company is affected by a number of risks, including mechanical failure of the vessels, collisions, property loss to the vessels, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. In addition, the operation of any ocean-going vessel is subject to the inherent possibility of catastrophic marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. By imposing potentially unlimited liability upon owners, operators and bareboat charterers for certain oil pollution accidents in the U.S. OPA has made liability insurance more expensive for ship owners and operators and has also caused insurers to consider reducing available liability coverage.

 

 

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The Company maintains hull and machinery and war risks insurance, which includes the risk of actual or constructive total loss, and protection and indemnity insurance with mutual assurance associations. The Company does not carry insurance covering the loss of revenue resulting from vessel off-hire time. The Company believes that its insurance coverage is adequate to protect it against most accident-related risks involved in the conduct of its business and that it maintains appropriate levels of environmental damage and pollution insurance coverage. Currently, the available amount of coverage for pollution is $1.0 billion for dry bulk carriers per vessel per incident. However, there can be no assurance that all risks are adequately insured against, that any particular claim will be paid or that the Company will be able to procure adequate insurance coverage at commercially reasonable rates.

 

C. Organizational Structure

 

We are the parent company of the following subsidiaries as of April 27, 2009:

 

Subsidiary	Place of Incorporation	Percentage of  Ownership
Maryville Maritime Inc.	Liberia	100%
Point Holdings Ltd. (1)	Liberia	100%
Bird Acquisition Corp.(3)	Marshall Islands	100%

(1)

Point Holdings Ltd.("Point") is the parent company (100%) of one Cypriot and sixteen Liberian ship-owning subsidiaries as follows, each of which owns one vessel: Fianna Navigation S.A., Marias Trading Inc., Yasmine International Inc., Tanaka Services Ltd., Amanda Enterprises Ltd., Whitelaw Enterprises Co., Candy Enterprises Inc., Fountain Services Ltd., Harvey Development Corp., Teagan Shipholding S.A., Minta Holdings S.A., Odell International Ltd., Ingram Limited, Snapper Marine ltd., Barland Holdings Inc., Castalia Services Ltd. and Liegh Jane Navigation S.A. In addition, Point is the parent company (100%) of the following four Liberian non ship-owning companies, Magalie Investments Corp., Melba Management Ltd., Naia Development Corp. and Pisces Shipholding Ltd, as well as of the Liberian company Thurman International Ltd. which is the parent company (100% owner) of Centel Shipping Company Ltd., the owner of vessel Lady.

(2)

Bird is the parent company (100%) of the following Marshall Islands ship-owning subsidiaries, each of which owns one vessel: Lowlands Beilun Shipco LLC, Iron Miner Shipco LLC, Kirmar Shipco LLC, Iron Beauty Shipco LLC, Iron Manolis Shipco LLC, Iron Brooke Shipco LLC, Iron Lindrew Shipco LLC, Coal Hunter Shipco LLC, Pascha Shipco LLC, Coal Gypsy Shipco LLC, Iron Anne Shipco LLC, Iron Vassilis Shipco LLC, Iron Bill Shipco LLC, Santa Barbara Shipco LLC, Ore Hansa Shipco LLC, Iron Kalypso Shipco LLC, Iron Fuzeyya Shipco LLC, Iron Bradyn Shipco LLC, Grain Harvester Shipco LLC, Grain Express Shipco LLC, Iron Knight Shipco LLC, Coal Pride Shipco LLC, Iron Man Shipco LLC, Coal Age Shipco LLC, Fearless Shipco LLC, Barbara Shipco LLC, Linda Leah Shipco LLC, King Coal Shipco LLC, Coal Glory Shipco LLC, Sandra Shipco LLC (formerly Iron Endurance Shipco LLC).

 

In addition, Bird is a joint venture partner in seven Marshall Islands ship-owning companies, six of which are 50% owned by Bird (Hope Shipco LLC, Lillie Shipco LLC, Fritz Shipco LLC, Benthe Shipco LLC, Gayle Frances Shipco LLC and Iron Lena Shipco LLC.) and one 42.8% owned by Bird (Christine Shipco LLC). Bird is the successor-in-interest to Quintana Maritime Ltd. Each of the foregoing subsidiaries has been formed to be the owner of respective newbuilding Capesize drybulk carriers.

 

Following our acquisition of Quintana, we also own Quintana Management LLC which was the management company for Quintana's vessels, prior to the merger on April 15, 2008 and it no longer provides management services to any of our vessels, nor to any third party vessels and Quintana Logistics which was incorporated in 2005 to engage in chartering operations, including contracts of affreightment that had no operations during the period from the merger on April 15, 2008 to December 31, 2008.

 

 

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Oceanaut

 

We held 18.9% of the outstanding common stock of Oceanaut, while a percentage of 3.8% was held by certain of Excel's officers and directors. On March 6, 2007 Oceanaut completed its initial public offering in the United States under the United States Securities Act of 1933, as amended and sold 18,750,000 units, or the units, at a price of $8.00 per unit, raising gross proceeds of $150.0 million. Prior to the closing of the initial public offering, Oceanaut consummated a private placement to us, consisting of 1,125,000 units at $8.00 per unit price and 2,000,000 warrants at $1.00 per warrant to purchase an equivalent amount of common stock at a price of $6.00 per share, raising gross proceeds of $11.0 million. Each unit issued in the initial public offering and the private placement consists of one newly issued share of Oceanaut's common stock and one warrant to purchase one share of common stock. The initial public offering and the private placement generated gross proceeds in an aggregate amount of $161.0 million to be used to complete a business combination with a target business. This amount, less certain amounts paid to the underwriters and an amount withheld for use as working capital, was held in a trust account until the earlier of (i) the consummation of a business combination or (ii) the distribution of the trust account under Oceanaut's liquidation procedure. The remaining proceeds not held in trust were used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses, as well as claims raised by any third party. In the event that Oceanaut would not consummate a Business Combination within 18 months from the date of the consummation of the Offering (March 6, 2007), or 24 months from the consummation of the Offering if certain extension criteria had been satisfied  and would be liquidated, we had waived our right to receive distributions with respect to the 2,000,000 warrants and 500,000 of 1,125,000 units purchased in the private placement amounting to $6.0 million, while we would be entitled to receive the same liquidation rights as the purchasers of shares in the initial public offering with respect to the remaining 625,000 units acquired in the private placement. In addition, in the event of a dissolution and liquidation of Oceanaut, we would cover any shortfall in the trust account as a result of any claims by various vendors, prospective target businesses or other entities for services rendered or products sold to Oceanaut, if such vendor or prospective target business or other third party had not executed a valid and enforceable waiver of any rights or claims to the trust account, up to a maximum of $75,000.

 

Prior to the initial public offering and private placement of shares of Oceanaut, we owned 75% of the outstanding common stock of Oceanaut, with the remaining 25% was held by certain of our officers and directors.  As such, the financial position and results of operations of Oceanaut were included in our consolidated financial statements.  Subsequent to the initial public offering and private placement, we evaluated our relationship with Oceanaut and determined that Oceanaut is not required to be consolidated in our financial statements pursuant to FIN 46R because Oceanaut did not meet the criteria for a variable interest entity.  As such, subsequent to March 6, 2007, Oceanaut is accounted for under the equity method of accounting on the basis of our ability to influence Oceanaut's operating and financial decisions.

 

On February 18, 2009, the board of directors of Oceanaut determined that Oceanaut would not consummate a business combination by the March 6, 2009 deadline provided for in its charter and that it would be advisable that Oceanaut be dissolved. The above plan of liquidation was approved by Oceanaut's shareholders at a special meeting held on April 6, 2009, and, as a result, on April 15, 2009, we received $5.2 million, representing approximately $8.26 per share of Oceanaut common stock included in 625,000 of the 1,125,000 Oceanaut insider units that we owned.

 

From the completion of its initial public offering and until February 2009, Oceanaut entered into the following agreements in relation to business acquisitions which were not consummated:

 

Agreements for vessel acquisitions

 

On October 12, 2007, Oceanaut entered into definitive agreements pursuant to which it had agreed to: (i) purchase, for an aggregate purchase price of $700 million in cash, nine dry bulk vessels from third parties, (ii) issue 10,312,500 shares of its common stock, at a purchase price of $8.00 per share, in a private placement by separate companies associated with the third parties. On February 19, 2008, the above agreements were mutually terminated.

 

On August 20, 2008, Oceanaut entered into definitive agreements (collectively "the Definitive Agreements"), pursuant to which it had agreed to purchase, for an aggregate purchase price of $352.0 million in cash, four dry bulk carriers. The Definitive Agreements would be financed by the cash held in Oceanaut's trust account along with the proceeds from a loan facility already secured by that time subject to customary financial covenants and preferred equity that would be issued to us. Upon delivery of the vessels that would be acquired as part of the Definitive Agreements, Oceanaut would own an initial fleet of three Panamax dry bulk carriers and one Supra-Panamax dry bulk carrier. The vessels had a combined cargo-carrying capacity of 278,806 dwt and an average age of approximately four years. All the vessels would be under medium to long-term time charters, with an average term of 3.3 years, entered into with first-class customers such as Cargill, COSCO and Mitsui OSK Lines.

 

 

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The purchase of the vessels was subject to the approval of Oceanaut's shareholders. In relation to the above acquisition and in the event the acquisition would not consummated by Oceanaut, we had agreed to acquire one of the vessels, the Medi Cebu, for $72.5 million, and we had advanced to the seller of the Medi Cebu an amount of $7.2 million as security for this obligation.

On October 8, 2008, Oceanaut announced that, in light of the then market conditions, the special shareholders' meeting scheduled for October 15, 2008 was cancelled. Oceanaut would advise its shareholders of the new meeting date if and when it would be rescheduled, while Oceanaut was discussing whether the terms of each of the four Definitive Agreements, dated August 20, 2008, as amended on September 5, 2008, for the purchase of dry bulk carrier vessels would be extended or restructured.

In December 2008, our board of directors approved the restructuring of our agreement discussed above with the sellers whereby, in lieu of our absolute obligation to purchase the Medi Cebu, the sellers would instead grant us the option, expiring on December 31, 2009, to acquire the Medi Cebu for $25.7 million and, in exchange, we would issue 1,100,000 shares of our Class common stock to the sellers. In addition, the restructuring provided for the retention by the sellers of the $7.2 million security deposit.

Agreements entered in contemplation of the vessels acquisition

 

In connection with the acquisition contemplated by the August 20, 2008 agreement, we entered into the following agreements that were conditional on such transaction being approved by Oceanaut stockholders and being consummated.

(a)

Right of first refusal and corporate opportunity agreement providing that, commencing on the date of consummation of the transaction and extending until the fifth anniversary of the date of such agreement, we would provide Oceanaut with a right of first refusal on any of the  acquisition, operation, chartering-in, sale or disposition of any dry bulk carrier that would be subject to a time or bareboat charter-out having a remaining duration, excluding any extension options, of at least four years.

(b)

Subordination Agreement pursuant to which we and our current directors and officers had agreed that 5,578,125 of their shares of common stock acquired prior to Oceanaut's initial public offering would become subordinated shares after the initial closing of the vessels acquisition.

(c)

Series A preferred stock financing pursuant to which Oceanaut agreed to sell up to $62.0 million in shares of its series A preferred stock to us, of which $15.0 million would be used to finance a portion of the aggregate purchase price of the vessels and up to $47.0 million of which would be used to fund the balance of the aggregate purchase price of the vessels, to the extent that funds in the trust account would be used to pay public shareholders that exercised their conversion rights.

(d)

Commercial Management Agreement under the terms of which we would provide commercial management services to the Oceanaut's subsidiaries.

(e)

Technical Management Agreement under the terms of which Maryville would perform certain duties that would include general administrative and support services necessary for the operation and employment of all vessels to be owned by all of Oceanaut's subsidiaries.

 

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Our Fleet

 

The following is a list of the operating vessels in our fleet as of April 27, 2009, all of which are drybulk carriers:

 

Vessel Name		DWT			Year Built	Type
Sandra			180,000		2008	Capesize
Lowlands Beilun			170,162		1999	Capesize
Iron Miner			177,000		2007	Capesize
Kirmar			165,500		2001	Capesize
Iron Beauty			165,500		2001	Capesize
Iron Manolis			82,300		2007	Kamsarmax
Iron Brooke			82,300		2007	Kamsarmax
Iron Lindrew			82,300		2007	Kamsarmax
Coal Hunter			82,300		2006	Kamsarmax
Pascha			82,300		2006	Kamsarmax
Coal Gypsy			82,300		2006	Kamsarmax
Iron Anne			82,000		2006	Kamsarmax
Iron Vassilis			82,000		2006	Kamsarmax
Iron Bill			82,000		2006	Kamsarmax
Santa Barbara			82,266		2006	Kamsarmax
Ore Hansa			82,229		2006	Kamsarmax
Iron Kalypso			82,204		2006	Kamsarmax
Iron Fuzeyya			82,229		2006	Kamsarmax
Iron Bradyn			82,769		2005	Kamsarmax
Grain Harvester			76,417		2004	Panamax
Grain Express			76,466		2004	Panamax
Iron Knight			76,429		2004	Panamax
Coal Pride			72,600		1999	Panamax
Iron Man (1)			72,861		1997	Panamax
Coal Age (1)			72,861		1997	Panamax
Fearless I (1)			73,427		1997	Panamax
Barbara (1)			73,390		1997	Panamax
Linda Leah (1)			73,390		1997	Panamax
King Coal (1)			72,873		1997	Panamax
Coal Glory (1)			73,670		1995	Panamax
Isminaki			74,577		1998	Panamax
Angela Star			73,798		1998	Panamax
Elinakos			73,751		1997	Panamax
Rodon			73,670		1993	Panamax
Happy Day			71,694		1997	Panamax
Birthday			71,504		1993	Panamax
Renuar			70,128		1993	Panamax
Powerful			70,083		1994	Panamax
Fortezza			69,634		1993	Panamax
First Endeavour			69,111		1994	Panamax
July M			55,567		2005	Supramax
Mairouli			53,206		2005	Supramax
Emerald			45,588		1998	Handymax
Marybell			42,552		1987	Handymax
Attractive			41,524		1985	Handymax
Lady			41,090		1985	Handymax
Princess I			38,858		1994	Handymax
Total			3,860,372

(1)  Indicates a vessel sold by Quintana to a third party in July 2007 and subsequently leased back to Quintana under a bareboat charter.

 

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In addition to the above fleet, upon acquisition of Quintana on April 15, 2008, the Company assumed the following newbuidling contracts for seven Capesize vessels:

 

Vessel		DWT			Estimated Delivery		Ownership
Christine			180,000		March 10			42.8	%
Hope			181,000		November 10			50.0	%
Lillie			181,000		December 10			50.0	%
Fritz (A)			180,000		May10			50.0	%
Benthe (A)			180,000		June 10			50.0	%
Gayle Frances (A)			180,000		July 10			50.0	%
Iron Lena (A)			180,000		August 10			50.0	%
Total			1,262,000

(A)  No refund guarantees have yet to be received for the newbuilding contracts owned by these subsidiaries. These vessels may be delayed in delivery or may never be delivered at all.

Based on a Memorandum of Agreement dated February 20, 2009, the vessel Swift was sold for net proceeds of approximately $3.7 million. As of December 31, 2008, the vessel's value was impaired and written down to its fair value which approximated its sale proceeds. The vessel was delivered to her new owners on March 16, 2009.

D. Property, Plant and Equipment

 

We do not own any real estate property. Our management agreement with Maryville includes terms under which we and our subsidiaries are being offered office space, equipment and secretarial services at 17th km National Road Athens-Lamia & Finikos Str., Nea Kifisia, Athens, Greece. Maryville has a rental agreement for the rental of these office premises with an unrelated party.

 

ITEM 4A – UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 

The following management's discussion and analysis of the results of our operations and our financial condition should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this report. This discussion includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, such as those set forth in the "Risk Factors" section and elsewhere in this report.

 

A. Operating Results

 

Factors Affecting Our Results of Operations

 

Voyage revenues from vessels

 

Gross revenues from vessels consist primarily of (i) hire earned under time charter contracts, where charterers pay a fixed daily hire or (ii) amounts earned under voyage charter contracts, where charterers pay a fixed amount per ton of cargo carried. Gross revenues are also affected by the proportion between voyage and time charters, since revenues from voyage charters are generally higher than equivalent time charter hire revenues, as they are of a shorter duration and cover all costs relating to a given voyage, including port expenses, canal dues and fuel (bunker) costs. Accordingly, year-to-year comparisons of gross revenues are not necessarily indicative of the fleet's performance. The time charter equivalent per vessel, or TCE, which is defined as gross revenue per day less commissions and voyage costs, provides a more accurate measure for comparison.

 

Subsequent to December 31, 2008, the Company reached an agreement (effective as of January 26th, 2009) with the charterers of the Kirmar, reducing the daily hire from $105,000 per day gross to $49,000 per day net, while at the same time, extending the duration of the charter by 24 months.  Additionally, the Company, during the full revised charter party period, as part of a profit sharing agreement, is entitled to receive all daily hire proceeds in excess of $59,000 net.  Lastly, the Company has received a sum of $15.0 million, serving as security for the performance of the amended terms of the charter party, which will be amortized to income over the charter period.

 

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In addition, on April 16, 2009 the vessel Sandra terminated her existing time charter by receiving an amount of approximately $2.0 million as compensation for the early termination and entered into a new one at a daily rate of $32,000 expiring in October 2010. A second charter on the vessel has been fixed upon completion of her current charter at a rate of $25,000 through May 2016.

 

Please refer to the "Risk Factors" section for a detailed discussion on risks associated with decreases in the charter rates.

 

Voyage expenses and commissions to a related party

 

Voyage expenses consist of all costs relating to a given voyage, including port expenses, canal dues, fuel costs, net of gains or losses from the sale of bunkers to charterers, and commissions. Under voyage charters, the owner of the vessel pays such expenses whereas under time charters the charterer pays such expenses excluding commissions. Therefore, voyage expenses can fluctuate significantly from period to period depending on the type of charter arrangement.

 

Vessel operating expenses

 

Vessel operating expenses consist primarily of crewing, repairs and maintenance, lubricants, victualling, stores and spares and insurance expenses. The vessel owner is responsible for all vessel operating expenses under voyage charters and time charters.

 

Depreciation

 

Vessel acquisition cost and subsequent improvements are depreciated on a straight-line basis over the remaining useful life of each vessel, estimated to be 28 years from the date of construction. In computing vessel depreciation, the estimated salvage value is also taken into consideration. Effective October 1, 2008 and following management's reassessment of the residual value of the vessels, the estimated salvage value per light weight ton (LWT) was increased to $200 from $120. Management estimate was based on the average demolition prices prevailed in the market during the last five years for which historical data were available. The effect of this change in accounting estimate, which did not require retrospective application as per SFAS No. 154 "Accounting Changes and Error Corrections," was to decrease net loss for the year ended December 31, 2008 by $0.5 million or $0.01 per weighted average number of share, both basic and diluted. The expected impact on our future results of operations and financial condition from the changes in such accounting estimate is approximately $38.5 million.

 

Depreciation of office, furniture and equipment is calculated on a straight line basis over the estimated useful life of the specific asset placed in service, which ranges from three to nine years.

 

Amortization of dry-docking and special survey costs

 

As of December 31, 2005, dry-docking and special survey costs were deferred and amortized on a straight-line basis over a period of 2.5 years and five years, respectively which approximated the next dry-docking and special survey due dates. Following management's reassessment of the service lives of these costs during 2006, the amortization period of the deferred special survey costs was changed from five years to the earliest between the date of the next dry-docking and 2.5 years for all surveys. The effect of this change in accounting estimate, which did not require retrospective application as per SFAS 154 "Accounting Changes and Error Corrections," was to decrease net income and basic and diluted earnings per share for the year ended December 31, 2006 by $0.6 million or $0.03 per share, respectively.

 

Results of Operations

 

Fiscal Year ended December 31, 2008 Compared to Fiscal Year ended December 31, 2007

 

Voyage revenues from vessels

 

Voyage revenues increased by $284.5 million, or 161.0%, to $461.2 million in the year ended December 31, 2008, compared to $176.7 million for the year ended December 31, 2007.  The increase is attributable to the increased hire rates earned over the year and the increase in the average number of vessels operated from 16.5 during the year ended December 31, 2007 to 38.6 during the year ended December 31, 2008. Time charter equivalent per ship per day for the year ended December 31, 2008 amounted to $31,291 compared to time charter equivalent per ship per day of $28,942 for the year ended December 31, 2007.

 

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Time charter amortization

 

Time charter amortization, which relates to the amortization of unfavorable time charters that were fair valued upon the acquisition of Quintana Maritime Ltd., amounted to $234.0 million for the year ended December 31, 2008. There was no such amortization recorded in the corresponding period in 2007.

 

Voyage expenses and commissions to a related party

 

Voyage expenses increased by $17.0 million, or 153.2%, to $28.1 million for the year ended December 31, 2008, compared to $11.1 million for the year ended December 31, 2007.  The increase was driven by higher commissions due to increased voyage revenues which also account for the increase by $1.4 million, or 63.6%, in Commissions to a related party for the year ended December 31, 2008 as compared with the respective period in 2007. 

 

Charter hire expense

 

Charter hire expense amounted to $23.4 million representing bareboat hire for the bareboat vessels.  No charter hire expense existed in the year ended December 31, 2007.

 

Charter hire amortization

 

Charter hire amortization of $28.4 million relates to the favorable bareboat charters that were fair valued upon the acquisition of Quintana Maritime Ltd. There was no such charter hire amortization in the corresponding period in 2007.

 

Vessel operating expenses

 

Vessel operating expenses increased by $36.1 million, or 107.4%, to $69.7 million in the year ended December 31, 2008 compared to $33.6 million for the year ended December 31, 2007. The increase is mainly attributable to the increase in the number of vessels operated from an average of 16.5 vessels for the year ended December 31, 2007 to 38.6 vessels for the year ended December 31, 2008.

 

 Daily vessel operating expenses per vessel decreased by $668 or 11.9%, to $4,930 for 2008, compared to $5,598 for 2007. This decrease was mainly attributed to the economies of scale from our merging with Quintana, which reduced the average age of the combined fleet and the application of joint fleet management processes that resulted in significant savings.

 

Depreciation

 

Depreciation expense, which includes depreciation of vessels and depreciation of office furniture and equipment increased by $70.9 million, or 254.1%, to $98.8 million for the year ended December 31, 2008, compared to $27.9 million for the year ended December 31, 2007. The increase is mainly attributable to the increase in the number of vessels operated from an average of 16.5 vessels for the year ended December 31, 2007 to 38.6 vessels for the year ended December 31, 2008. 

 

Vessel impairment loss

 

Vessel impairment loss amounted to $2.4 million and relates to the loss determined on vessel Swift following our impairment analysis at December 31, 2008. No impairment loss was recognized in the year ended December 31, 2007.

 

Amortization of dry-docking and special survey costs

 

Amortization of deferred drydocking and special survey costs increased by $3.5million, or 89.7%, to $7.4 million for the year ended December 31, 2008 compared to $3.9 million for the respective period in 2007. The increase is attributable to the increase in the completed drydockings or special surveys in the year ended December 31, 2007 or early within 2008, the amortization of which was accounted for the entire year ended December 31, 2008 as compared to the respective costs in the corresponding period in 2007.

 

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General and Administrative Expenses

 

General and administrative expenses increased by $20.3 million, or 161.1%, to $32.9 million for the year ended December 31, 2008 compared to $12.6 million for the year ended December 31, 2007. Our general and administrative expenses include salaries and other related costs of the executive officers and other employees, office rent, legal and auditing costs, regulatory compliance costs and other miscellaneous office expenses. The general and administrative costs were higher during the year ended December 31, 2008 compared to the respective year in 2007 due to the increase in our shore-based personnel following the acquisition of Quintana Maritime Ltd. and the increased costs of operating a larger fleet. Stock-based compensation for the year ended December 31, 2008 was $8.6 million as compared to $0.8 million for the corresponding year in 2007. As at December 31, 2008, the total unrecognized cost related to the above awards was $25.6 million which will be recognized through December 31, 2012. Out of this amount, $14.7 million was forfeited subsequently to December 31, 2008.

 

In addition, since the majority of such expenses are paid in Euro, the significant increase in the average exchange rate between USD and Euro for the year ended December 31, 2008 compared to the year ended December 31, 2007 also contributed to the increase in our general and administrative expenses.

 

Write-down of Goodwill

 

During the year ended December 31, 2008, we recognized an impairment of $335.4 million to write-off the goodwill that resulted from Quintana's acquisition. See "Critical Accounting Policies" below for further details.

 

Loss from vessel purchase cancellation

 

Loss from vessel purchase cancellation amounted to approximately $15.6 million and represents the costs to terminate the agreement for the acquisition of the Medi Cebu, entered into in connection with a proposed transaction by Oceanaut. No contracts to purchase vessels were cancelled in the year ended December 31, 2007.

 

Interest and finance costs, net

 

Interest and finance costs, net, which include interest and finance costs and interest income, increased by $42.5 million, or 598.6%, to $49.6 million in the year ended December 31, 2008 compared to $7.1 million for the respective year in 2007. The increase is primarily attributable to increased interest costs due to the increase in the average outstanding debt balances during the year ended December 31, 2008 following the loan obtained to partly finance the acquisition of Quintana.

 

Interest rate swap losses

 

Interest rate swap losses increased by $35.5 million to $35.9 million in the year ended December 31, 2008 as compared to $0.4 million in the year ended December 31, 2007. Realized interest rate swap losses for the year ended December 31, 2008 increased by $10.4 million to $10.1 million as compared to realized interest rate swap gains of $0.3 in the year ended December 31, 2007. In addition, included in interest rate swaps losses for the years ended December 31, 2007 and 2008 are unrealized losses of $0.7 million and $25.8 million, respectively attributable to the mark- to- market valuation of interest rate swaps that do not qualify for hedge accounting.

 

Other net

 

Other net amounted to an income of $1.6 million for the year ended December 31, 2008 compared to a loss of $0.1 million in the respective period in 2007.

 

U.S. source income taxes

 

U.S. source income taxes amounted to $0.5 million and $0.8 million for the years ended December 31, 2007 and 2008, respectively.

 

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Minority Interest

 

Minority interest in the year ended December 31, 2008 represents the joint ventures partners' share of the net income of the joint ventures. Minority interest in the year ended December 31, 2007 represents the 25% share held by certain of the Company's officers and directors in Oceanaut's results prior to its initial public offering on March 6, 2007.

 

Income from investment

 

Income from investment relates to our share (18.9%)  of the earnings of Oceanaut. During the years ended December 31, 2007 and 2008, income from this investment amounted to $0.9 million and $0.5 million, respectively.

 

Loss in value of investment

 

Loss in value of investment amounted to approximately $11.0 million and represents the unrecoverable amount of our investment in Oceanaut on the basis of its liquidation. No such loss existed in the year ended December 31, 2007.

 

Fiscal Year ended December 31, 2007 Compared to Fiscal Year ended December 31, 2006

 

Voyage revenues from vessels

 

Voyage revenues increased by $53.2 million or 43.1%, to $176.7 million for the year ended December 31, 2007 compared to $123.5 million for the same period in 2006. This increase was primarily due to the increase in the time charter equivalent earned per ship per day during 2007 of $28,942 compared to $19,195 during 2006.

 

Voyage expenses and commissions to a related party

 

Voyage expenses and commissions to a related party increased by $3.7 million, or 38.5%, to $13.3 million for 2007, compared to $9.6 million for 2006. The increase is driven by higher commission costs which increased by 43.5% to $12.2 million in 2007 from $8.5 million in 2006.

 

Vessel operating expenses

 

Vessel operating expenses increased by $3.2 million, or 10.5%, to $33.6 million for 2007 compared to $30.4 million for 2006. Daily vessel operating expenses per vessel increased by $697 or 14.2%, to $5,598 for 2007, compared to $4,901 for 2006. This increase is primarily due to increased maintenance costs as well as increased crew costs due to the annual pay increases.

 

Depreciation

 

Depreciation, which includes depreciation of vessels and depreciation of office furniture and equipment decreased by $0.6 million, or 2.1% to $27.9 million for 2007 compared to $28.5 million for 2006. The decrease is mainly attributable to the decrease in the number of vessels operated from an average of 17.0 vessels for the year ended December 31, 2006 to 16.5 vessels for the year ended December 31, 2007.

 

Amortization of dry-docking and special survey costs

 

Amortization of deferred drydocking and special survey costs increased by $2.4 million, or 160.0%, to $3.9 million for the year ended December 31, 2007 compared to $1.5 million for the respective period in 2006. This increase is primarily due to increased amortization charges of $2.3 million mainly due to the change in accounting estimate relating to the amortization of special survey costs that is discussed below under "Critical Accounting Policies."

 

General and administrative expenses

 

General and administrative expenses, increased by $2.8 million, or 28.6%, to $12.6 million for 2007 compared to $9.8 million for 2006. Our general and administrative expenses include salaries and other related costs of the executive officers and other employees, office rent, legal and auditing costs, regulatory compliance costs, other miscellaneous office expenses, stock based compensation costs and corporate overheads. The general and administrative costs were higher during 2007 compared to 2006 primarily due to the increase in the overall level of salaries and bonuses paid in 2007. In 2007, general and administrative expenses represented approximately 7.1% of revenues for the year compared to 7.9% of revenues in 2006. The percentage reduction is principally due to the higher revenues generated by the fleet in 2007.

 

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Gain on sale of vessels

 

In 2007, one vessel was sold resulting in a gain of approximately $6.2 million. No vessels were sold during 2006.

 

Interest and finance costs, net

 

Interest and finance costs, net, which include interest and finance costs and interest income, decreased by $4.7 million to $7.1 million for the year ended December 31, 2007 compared to $11.8 million for the year ended December 31, 2006. The decrease is mainly due to interest income of $7.5 million in 2007 compared with $4.1 million in 2006, repayment of loans within the year and the competitive interest rate of 1.875% of our $150.0 million Convertible Senior Notes offered in October 2007.

 

Interest rate swap losses

 

Interest rate swap losses decreased by $0.4 million to $0.4 million in the year ended December 31, 2007 as compared to $0.8 million in the year ended December 31, 2006. Realized interest rate swap gains, included in the above amounts, for the years ended December 31, 2006 and 2007 amounted to $0.1 million and $0.3 million, respectively. In addition, included in interest rate swaps losses for the years ended December 31, 2006 and 2007 are unrealized losses of $0.8 million and $0.7 million, respectively attributable to the mark- to- market valuation of interest rate swaps that do not qualify for hedge accounting.

 

U.S. source income taxes

 

U.S source income taxes amounted to $0.5 million for 2007 compared to $0.4 million in 2006.

 

Income from investments

 

Income from investments of $0.9 million relates to our share of the earnings of Oceanaut after March 7, 2007 when Oceanaut completed its initial public offering discussed under "Item 4 – Information on the Company – Organizational Structure". There was no income from investments during the year ended December 31, 2006.

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions. Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application. For a description of all our significant accounting policies, see Note 2 to our consolidated financial statements included under "Item 18. Financial Statements".

 

Vessels' Depreciation

 

We record the value of our vessels at their cost (which includes acquisition costs directly attributable to the vessel and expenditures made to prepare the vessel for its initial voyage) less accumulated depreciation. Depreciation begins when the vessel is ready for its intended use, on a straight-line basis over the vessel's remaining economic useful life, after considering the estimated residual value (vessel's residual value is equal to the product of its lightweight tonnage and estimated scrap rate). Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. We estimate the useful life of our vessels to be 28 years from the date of initial delivery from the shipyard and the residual value of our vessels to be $120 per lightweight ton. A decrease in the useful life of a dry bulk vessel or in its residual value would have the effect of increasing the annual depreciation charge. Effective October 1, 2008 and following management's reassessment of the residual value of the vessels, the estimated salvage value per light weight ton (LWT) was increased to $200 from $120. Management estimate was based on the average demolition prices prevailed in the market during the last five years for which historical data were available. The effect of this change in accounting estimate, which did not require retrospective application as per SFAS No. 154 "Accounting Changes and Error Corrections," was to decrease net loss for the year ended December 31, 2008 by $0.5 million or $0.01 per weighted average number of share, both basic and diluted. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations become effective.

 

 

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Impairment of Long-Lived Assets

 

We evaluate the carrying amounts (primarily for vessels and related drydock and special survey costs) and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, we review certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions.

The current economic and market conditions, including the significant disruptions in the global credit markets, are having broad effects on participants in a wide variety of industries. Since mid-August 2008, the charter rates in the dry bulk charter market have declined significantly, and dry bulk vessel values have also declined both as a result of a slowdown in the availability of global credit and the significant deterioration in charter rates, conditions that we consider indicators of potential impairment.

 

We determine undiscounted projected net operating cash flows for each vessel and compare it to the vessel's carrying value. The projected net operating cash flows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated daily time charter equivalent for the unfixed days (based on the most recent ten year historical average) over the remaining estimated life of the vessel, net of brokerage commissions, expected outflows for vessels' maintenance and vessel operating expenses, assuming an average annual inflation rate of 3.5%. If our estimate of undiscounted future cash flows for any vessel is lower than the vessel's carrying value plus any unamortized drydocking and special survey costs, the carrying value is written down, by recording a charge to operations, to the vessel's fair market value if the fair market value is lower than the vessel's carrying value.

 

In developing estimates of future cash flows, the Company must make assumptions about future charter rates, ship operating expenses, vessels' residual value and the estimated remaining useful lives of the vessels. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective. Our impairment analysis as of December 31, 2008 indicated that the undiscounted projected net operating cash flows of vessel Swift were below the vessel's carrying value and an impairment loss of $2.4 million was recognized (see Note 2(m) to our consolidated financial statements).

 

Accounting for Dry-docking and Special Survey Costs

 

Our vessels are required to pass drydock and special survey periodically for major repairs and maintenance that cannot be performed while the vessels are operating. As of December 31, 2005, dry-docking and special survey costs were deferred and amortized on a straight-line basis over a period of 2.5 years and 5 years, respectively which approximated the next dry-docking and special survey due dates. Within 2006 and following management's reassessment of the service lives of these costs, the amortization period of the deferred special survey costs was changed from 5 years to the earliest between the date of the next dry-docking and 2.5 years for all surveys. The effect of this change in accounting estimate, which did not require retrospective application as per SFAS 154 "Accounting Changes and Error Corrections", was to decrease net income and basic and diluted earnings per share for the year ended December 31, 2006 by $655,000, or $0.03 per share, respectively. Unamortized dry-docking and special survey costs of vessels that are sold are written-off and included in the calculation of the resulting gain or loss on vessel disposal in the period the sale is concluded. Costs capitalized as part of the drydocking and special survey include actual costs incurred at the yard and parts used in the drydocking. We believe that these criteria are consistent with industry practice.

 

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Effective January 1, 2009, we changed the method of accounting for dry-docking and special survey costs from the deferral method to the direct expense method under which related costs are expensed as incurred. We consider this as a preferable method since it eliminates the subjectivity and significant amount of time that is needed in determining which costs related to dry-docking and special survey activities should be deferred and amortized over a future period. See "Recent Developments-Change in Accounting Policy" below.

 

Goodwill and Intangible Assets

 

Goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired. In accordance with the Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), we perform a goodwill impairment analysis using the two-step method on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability of goodwill is measured at the Company's level representing the reporting unit by comparing the Company's carrying amount, including goodwill, to the fair market value of the Company. The first step of the goodwill impairment test (Step One) is to identify potential impairment. If the fair value of a reporting unit exceeds its carrying amount, no impairment of the goodwill of the reporting unit is indicated and the second step of the impairment test is unnecessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test (Step Two) is performed to measure the amount of impairment loss, if any.

 

We performed the annual testing for impairment of goodwill as of September 30, 2008 and determined that no indication of goodwill impairment existed as of that date.  SFAS 142 requires goodwill of a reporting unit to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  In this respect, during the fourth quarter of 2008, we concluded that sufficient indicators existed requiring to perform another goodwill impairment analysis as of December 31, 2008. We made this determination based upon a combination of factors, including the significant and sustained decline in our market capitalization below the book value, the current market turmoil, the deteriorating charter rates during the fourth quarter of 2008 and illiquidity in the overall credit markets.

 

In estimating the fair value, we used the income approach which estimates fair value based upon future revenue, expenses and cash flows discounted to their present value using our weighted average cost of capital. The estimated future cash flows projected can vary within a range of outcomes depending on the assumptions and estimates used. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to revenues, expenses, and capital expenditures, adjusted for current economic conditions and expectations.  Our assumptions also included a discount rate representing our weighted average cost of capital and a terminal growth rate of 3.5%.  Based on the analysis performed, we concluded that the carrying value of goodwill was above its implied fair value as of December 31, 2008 and an impairment loss of $335.4 million was recognized as of December 31, 2008.

 

ITEM 19 –EXHIBITS

 

1.1	Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company's Registration Statement on Form F-1, Registration No. 33-8712 filed on May 6, 1998, or the Registration Statement.
1.2	Amended and Restated Articles of Incorporation of the Company, adopted April 1, 2008, incorporated by reference to Exhibit 1.0 of the Company's Form 6-K submitted to the SEC on April 11, 2008.
1.3	Amended and Restated By-Laws of the Company adopted on January 10, 2000, incorporated by reference to Exhibit 1.0 of the Company's Form 6-K submitted on September 5, 2007.
2.1	Specimen Class A Common Stock Certificate, incorporated by reference to Exhibit 4.2 of the Registration Statement.
2.2	Specimen Class B Common Stock Certificate, incorporated by reference to the Company's Form 20-F filed on June 29, 2006.
2.3	Form of Indenture, incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form F-3, Registration No. 333-120259, filed on November 5, 2004.
2.4	Form of Indenture – Convertible Senior Notes, incorporated by reference to the Company's Form 20-F filed on May 27, 2008.
4.1	Credit facility in the amount of $27.0 million, dated December 23, 2004, incorporated by reference to the Company's Form 6-K submitted on March 8, 2005.
4.2	Management Agreement Termination Agreement and Addendum No. 1 to Management Agreement Termination Agreement, incorporated by reference to Exhibits 99.1 and 99.2, respectively, to the Company's Form 6-K submitted on March 14, 2005.
4.3	Credit facility in the amount of $95.0 million, dated February 16, 2005, incorporated by reference to the Company's Form 6-K submitted on March 16, 2005.
4.4	Brokering Agreement between the Company and Excel Management, dated March 4, 2005, incorporated by reference to the Company's Form 6-K submitted on March 18, 2005.
4.5	Registration Rights Agreement between Oceanaut, Inc. and the Investors listed therein, incorporated by reference to Exhibit 10.7 to Oceanaut, Inc.'s Form F-1 (Registration Statement 333-140646) filed on February 13, 2007.
4.6	Insider Unit and Warrant Purchase Agreement between the Company and Oceanaut, Inc., incorporated by reference to Exhibit 10.8 to Oceanaut, Inc.'s Form F-1 (Registration Statement 333-140646) filed on February 13, 2007.
4.7	Insider Letter from the Company to Oceanaut, Inc., incorporated by reference to Exhibit 10.2 to Oceanaut, Inc.'s Form F-1/A (Registration Statement 333-140646) filed on February 28, 2007.
4.8	Right of First Refusal between the Company and Oceanaut, Inc. dated February 28, 2007, incorporated by reference to Exhibit 10.15 to Oceanaut, Inc.'s Form F-1/A (Registration Statement 333-140646) filed on February 28, 2007.
4.9	Guarantee between the Company and Fortis Bank, dated April 15, 2008, incorporated by reference to the Company's Form 20-F filed on May 27, 2008.
4.10	Agreement and Plan of Merger dated as of January 29, 2008, among the Company, Bird Acquisition Corp. and Quintana Maritime Limited, incorporated by reference to Exhibit 2.1 to the Company's Form F-4/A filed on March 10, 2008.
4.11	Senior secured credit facility in the amount of $1.4 billion, dated April 15, 2008, incorporated by reference to the Company's Form 20-F filed on May 27, 2008.
4.12	Right of First Refusal and Corporate Opportunities Agreement between the Company and Oceanaut, Inc. dated September 5, 2008, incorporated by reference to Exhibit 10.5 to Oceanaut, Inc.'s Form 6-K submitted on September 9, 2008
4.13	Subordination Agreement between the Company and Oceanaut, Inc. dated September 5, 2008, incorporated by reference to Exhibit 10.6 to Oceanaut, Inc.'s Form 6-K submitted on September 9, 2008
4.14	Series A Preferred Stock Purchase Agreement between the Company and Oceanaut, Inc. dated September 5, 2008, incorporated by reference to Exhibit 10.7 to Oceanaut, Inc.'s Form 6-K submitted on September 9, 2008
4.15	Commercial Management Agreement between the Company and Oceanaut, Inc. dated September 5, 2008, incorporated by reference to Exhibit 10.9 to Oceanaut, Inc.'s Form 6-K submitted on September 9, 2008
4.16	Technical Management Agreement between Maryville and Oceanaut, Inc. dated September 5, 2008, incorporated by reference to Exhibit 10.10 to Oceanaut, Inc.'s Form 6-K submitted on September 9, 2008
8.1	Subsidiaries of the Company, incorporated by reference to the Company's Form 20-F filed on May 27, 2008.
11.1	Code of Ethics, incorporated by reference to the Company's Form 20-F filed on May 27, 2008.
12.1	Certificate of Chief Executive pursuant to Rule 13a-14(a) of the Exchange Act.
12.2	Certificate of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
13.1	Certificate of Chief Executive pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2	Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1	Consent of Independent Registered Public Accounting Firm.

 

 

 

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SIGNATURES

 

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

 

EXCEL MARITIME CARRIERS LTD.

By:          /s/ Gabriel Panayotides

Name:           Gabriel Panayotides

Title:             President

April 30, 2009

SK 02545 0001 990864 v2