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Safe Bulkers Reports First Quarter

Safe Bulkers Reports First Quarter
Safe Bulkers, Inc., an international provider of marine drybulk transportation services, announced yesterday its unaudited financial results for the first quarter of 2009.

Safe Bulkers, Inc. Reports First Quarter 2009 Results

Safe Bulkers, Inc., an international provider of marine drybulk transportation services, announced yesterday its unaudited financial results for the first quarter of 2009 and the filing on May 19, 2009 of its Annual Report on Form 20-F for the fiscal year ended December 31, 2008.

Fleet and Employment Profile The Company's operational fleet is comprised of 13 drybulk vessels with an average age of 3.43 years as of May 15, 2009 and has contracted employment under period time charters, including the vessels that will be delivered to us in the future, as follows: 64% of fleet ownership days for 2009, 54% for 2010 and 48% for 2011. Detailed information on our fleet and its employment as of May 15, 2009 is contained in our Annual Report on Form 20-F for the fiscal year ended December 31, 2008.

Management Commentary

Polys Hajioannou, Chairman of the Board of Directors and Chief Executive Officer of the Company said:
"We continue to closely manage our business through the current recession. We selectively entered into early-termination agreements with respect to certain of our charters in exchange for compensation from those charterers. We successfully amended our loan agreements with our lenders to address the current depressed market values of drybulk vessels and in the second quarter of 2009 have reduced our capital expenditure exposure through selective newbuild cancellations. At the same time, we are paying a dividend of $0.15 per share for the first quarter of 2009, which represents a portion of our free cash flows."

Management Discussion of First Quarter 2009 Results

Net income increased by 162.7% to $62.0 million for the first quarter of 2009, from $23.6 million for the first quarter of 2008. The increase in net income is attributable to the following factors:

Net revenues: Net revenues were $46.9 million for the first quarter of 2009, a 4.9% decrease compared to $49.3 million for the first quarter of 2008, due to a decrease in TCE rate from $49,692 to $41,486. The decrease in TCE rate resulted mainly from the employment of certain of our vessels in long-term time charters contracted in previous periods, and to a lesser extent from the lower prevailing charter rates in the spot market.

Vessel operating expenses: Vessel operating expenses increased 20% to $4.8 million for the first quarter of 2009, compared to $4.0 million for the same period in 2008. Daily vessel operating expenses increased to $4,222 for the first quarter of 2009, compared to $3,992 for the first quarter of 2008, an increase of 5.8%. These increases are attributable mainly to crew wages and expenses, stores, provisions and lubricants, as well as to the initial supplies relating to the delivery of the newbuild vessel Martine on February 12, 2009.

Early redelivery (cost)/income: During the first quarter of 2009, we recorded $29.7 million of early redelivery income relating to the early termination of period time charters of our vessels Maritsa and Efrossini, versus $0.4 million expense for the same period in 2008. Maritsa was redelivered on January 1, 2009, instead of January 13, 2009, for which we received compensation of $0.6 million. Maritsa has subsequently been employed on a one year period time charter through until December 2009, when a five year time charter will commence. Efrossini was redelivered on March 15, 2009 instead of January 8, 2011, for which we recognised income of $29.1 million comprising cash compensation received of $25.5 million net of commissions, and $3.6 million representing the unearned revenue from the terminated time charter contract as of the redelivery date. Efrossini is currently employed in the spot market.

Interest expense: Interest expense decreased to $3.7 million in the first quarter of 2009 from $4.0 million for the same period in 2008, attributable primarily to a decrease in interest rates, which offsets the effects of higher outstanding loan balances.

The weighted average annual interest rate charged on loans outstanding was 3.1358% in the first quarter of 2009, compared to 4.4626% in the first quarter of 2008. The weighted average of loans outstanding during the first quarter of 2009 amounted to $483.32 million, compared to $357.62 million during the first quarter of 2008. The higher average indebtedness reflects additional indebtedness to finance vessel acquisitions, including advances for newbuildings, and indebtedness used for general corporate purposes, including payment of previous dividends.

Foreign currency (loss)/gain: Foreign currency exchange differences amounted to a $1.0 million gain in the first quarter of 2009 compared to a $10.2 million loss for the same period in 2008. The effect of foreign currency exchange differences from loans denominated in foreign currencies was diminished in the first quarter of 2009, as during this quarter the one loan that was denominated in a foreign currency was converted into U.S. dollars.

Cash, time deposits & restricted cash: Cash, time deposits & restricted cash as of March 31, 2009 include cash and cash equivalents and short-term bank deposits amounting to $25.0 million, and restricted cash of $120.6 million. The restricted cash represents collateral in favour of our banks in connection with performance guarantees issued on our behalf for payments to shipyards due in 2009 totalling $32.6 million and cash pledged in favour of our lenders of $87.9 million as a result of our supplemental agreements. Cash, time deposits & restricted cash as of December 31, 2008 include cash and cash equivalents and short-term bank deposits amounting to $49.0 million, and restricted cash of $32.6 million. The restricted cash represents collateral in favour of our banks in connection with performance guarantees issued on our behalf for payments to shipyards due in 2009.

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