The decision comes as Paragon comes to grips with difficult market plagued by vessel oversupply and record-low charter rates.
The company’s outstanding newbuilding program consists of two Ultramax drybulk carriers, with expected deliveries between the third and fourth quarter of 2015, and three Kamsarmax drybulk carriers with expected deliveries in the first quarter of 2016.
The aggregate cost of the newbuilding program is USD 148.2 million, of which USD 101.7 million is currently outstanding.
With the USD 160 million syndicated secured loan facility led by Nordea Bank Finland Plc, Paragon has secured debt financing of up to USD 78 million for the two Ultramax and two of its Kamsarmax newbuilding drybulk carriers. For the remaining Kamsarmax newbuilding drybulk carrier, the company is in talks to secure debt financing.
The company posted adjusted net loss of USD 8.8 million, or USD 0.35 per common share, in the first quarter of 2015.
Paragon’s recorded net revenue, net of voyage expenses, was USD 6.8 million in the quarter, with reduced average daily adjusted total vessel operating expenses by 23.5% year-over-year.
“During the first quarter of 2015, charter rates remained at historically low levels. The demand and supply dynamics remain quite adverse and this resulted in lower revenues compared to the prior year. Given the current market environment, it has become even more critical to maintain our liquidity. Thus, we have further intensified our efforts to maintain our cost control efficiency. Within this context, we reported record low adjusted total vessel operating expenses for the first quarter of 2015 of USD 5,907 per vessel per day,” said Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping.
The company has agreed with certain of its lenders to defer a portion of its quarterly installments, which were originally due from the first quarter of 2015 through the second quarter of 2016 and payable from the company’s available cash, of about USD 6.5 million in the aggregate.
“We believe that we are taking steps to the right direction, given this difficult market. We are pleased to note that positive signs have emerged with respect to the supply side, as a significant number of vessels are heading to the scrapyards, while the market participants refrain from ordering new vessels and delay the delivery of the already placed newbuilding orders. Nonetheless, it seems that a healthy equilibrium, by historical standards, is yet to be reached and, consequently, we continue to remain cautious for the near future,” Bodouroglou concluded.