Ian Webber - Chief Executive Officer Tom Lister - Chief Commercial Officer.

Richard Smith - Muzinich Angus Rosborough - Park Vale Capital Julien Raffelsbauer - Cantor Fitzgerald.

Good day ladies and gentlemen, and welcome to the Global Ship Lease Q4, 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mr. Ian Webber, CEO of Global Ship Lease. Sir, you may begin..

Thank you very much. Good morning everybody and thank you for joining us. I hope that you’ve been able to look at the earnings release that we issued earlier today and been able to access the slides that will accompany this call.

As usual the first two slides remind you that the call may include forward-looking statements that are based on current expectations and assumptions and are by their nature inherently uncertain and outside of the Company’s control.

Actual results may differ materially from these forward-looking statements due to many factors, including those described in the Safe Harbor section of the slide presentation. We also draw your attention to the Risk Factors section of our most recent Annual Report on Form 20-F, which is for 2016 and was filed with the SEC on April 12, 2017.

You can obtain this via our website or via the SEC’s. All of our statements are qualified by these and other disclosures in our reports filed with the SEC. We do not undertake any duty to update forward-looking statements.

For reconciliations of the non-GAAP financial measures to which we will refer during this call to the most directly comparable measures calculated and presented in accordance with GAAP, you should refer to the earnings release that we issued this morning.

For today’s presentation, I’ll begin with an overview of our fourth quarter and the full year and I’ll then provide some color on our fleets, charter portfolio and strategy.

After that, Tom Lister will discuss the container shipping markets and provide an overview of our financials I’ll return for a brief summary, and then we will be glad to take your questions. If you turn to Slide 3, I’ll provide an overview of our results and recent developments.

We generated operating revenue of $37.9 million for the fourth quarter and $159 million for the full year. We also determined that despite recent strengthening in the spot charter markets and in asset values. On the U.S.

GAAP, it would nonetheless be a preterit for us to conduct a fleet-wide impairment review which resulted in a non-cash charge of $87.6 million. In conjunction with $14.4 million in costs and charges associated with our refinancing in October, notably, $8.7 million co-premium paid to redeem the old notes. Our net loss for the quarter was $99.8 million.

Excluding these items, normalized net income for the fourth quarter was $2.2 million. For the full year, reported net loss was $77.3 million, which on a normalized basis would have been $25.2 million. Our adjusted EBITDA for the fourth quarter 2017 was $24.8 million and for the full year adjusted EBITDA was $110.3 million.

The ratio of net debt-to-adjusted EBITDA was 3.1 times, down from 3.3 times for 2016. In addition to generating excellent operating results, over the course of the year and into early 2018, we’ve made significant progress on a number of other fronts. We substantially strengthened our balance sheet with a major refinancing.

As we discussed on the previous earnings call, we were able to refinance in October, all of our outstanding debt on improved terms which provides additional flexibility and ensures that we are in a strong position to pursue value-generative opportunities.

We secured and extended full charter cover for our fleet with no idle time extending charters or finding further employment for a number of vessels as their previous charters came to an end. All renewals have been on an EBITDA positive basis with top-tier counterparties to ensure long-term cash flow stability and continued high utilization levels.

And most recently, we returned to growth by agreeing to buy a vessel at an attractive price in an improving market. Last week, we agreed to acquire the 2005 built 2800 TEU container ship which expands our fleet at a time when supply and demand fundamentals in the markets are creating upward pressure on charter rates in the short-term markets.

Because of our strong relationship with CMACGM and consistent with our investment thesis of only buying vessels with employment, we were able to arrange in advance at 12-month charter for this vessel commencing on delivery to us which we expect to be in the second quarter of this year and representing an additional $3.3 million of contracted revenue.

Incidentally, we pegged the charter on this vessel to only twelve months given our view of continuing market recovery. Our strong balance sheet and commercial relationships put GSL in a good position to pursue further such attractive immediately accretive acquisition opportunities.

Following the successful refinancing in October, and with a strengthening market, we believe it is appropriate to explore strategic alternatives to maximize shareholder value. Accordingly, we engaged Evercore in January this year to assist in this review.

The alternatives include among other things corporate acquisition, business combination or a partnership. I am sure you will understand that we can’t make any specific comments on the process, but I wanted to confirm that this review is taking place.

Moving forward, we intend to provide updates on the process only if and such time as when we have a material announcement to make. On Slide 4, as usual, we show an index for the charter market over the last five years.

The index has generally a nine week in this period with an upswing in the first half of 2015 and more recently from second quarter last year. Through this period, and ending previously, we have continued to deliver strong and stable results.

Tom will speak more on the recent meaningful improvement in the index driven by increasing supply demand tension, particularly for mid-size and smaller vessels. We believe that GSL is in a good position to benefit from that improvement as our vessels come into the market over time.

Slide 5 provides more detail on our current 18 vessel charter portfolio and also includes the recently announced addition. As of December 31, 2017, we had a weighted average remaining contract duration of 3.2 years and approximately $487 million of contracted revenue taking into account the recent charter extensions but not the new vessel.

Our charters generally have well staggered explorations over a period that extends through 2025 with the longest duration applying to our larger ship, which also commands our fleet’s highest day rate. Given the positive market signals that Tom will talk about shortly, we remain optimistic about future vessel rechartering.

Turning now to Slide 6, I’ll give a brief update on our main counterparty and larger shareholder, CMACGM, which is the charterer of 16 of our current 18 vessels. They remain the third largest lane accompanied by operated capacity and continue to outperform the wider industry whilst relying heavily on chartered in tonnage.

We have long had an excellent working and strategic relationship with CMACGM and the developments over the last year demonstrates the strength of that relationship including charter extensions and new charter with GSL Tianjin which has since been further extended and the addition of a CMACGM executive to our board.

As I mentioned earlier, we also worked with CMACGM to ensure that our most recent vessel acquisition would have twelve months of charter cover following its delivery to GSL in line with our strategy of focusing only on acquisitions that will be immediately accretive to EBITDA.

On Slide 7, we’ve outlined our strategy for maximizing long-term shareholder value, which I’ll recap briefly. We will continue to maintain a quality fleet operating on time charters to established quality counterparties and with a strong emphasis on consistency and predictability of cash flows.

This consistency and predictability puts Global Ship Lease in an excellent position to pursue attractive growth opportunities in a strengthening market as we have recently demonstrated with the vessel acquisition announced last week.

We will continue to pursue growth opportunities that meet our criteria advance our strategic goals and create shareholder value.

The major refinancing that we completed last year added significant strength and flexibility to our balance sheet and we will continue to opportunistically allocate capital towards growth whilst also looking to add leverage selectively as we hope to do against the recent acquisition to improve returns for equity.

With that, I will turn the call over to Tom to discuss the markets and to give some insight into why our level of our optimism continues to increase. .

Thanks, Ian. Over the next few slides there will be some recurring themes and these are summarized at the top of Slide 8. Our thesis is that, one, after a long challenging period and almost in its infancy we believe that 2017 marks the beginning of a fundamentals-driven recovery for the industry.

Two, the order book is being rightsizing over time as the industry adjusts to a combination of capital constraints and a new demand growth paradigm.

Three, improving supply demand fundamentals of supporting earnings in the spot or short-term charter markets and pushing up asset values, and four, and this is a point we’ve been focusing on for some time and that goes to the very heart of the GSL value proposition.

We believe industry dynamics are most attractive for midsize and smaller ships which make up the GSL fleet and represent our focus for growth going forward. As we see it, these segments are said to be supply constrained while also being core to most trade lanes. The chart from the lower half of the slide underline the points I just made.

On the left, you can see a comparison of demand growth, dark blue bars and supply bars, the pale blue bars. The jagged red line cutting through the chart is the spot market charter rate index upper armature of health of the sector.

You can see demand growth beginning to overhaul supply growth in 2016, a trend which continued in 2017 and is anticipated to continue in 2018. And charter rates, the red line, have responded positively as longstanding oversupply begins to swing back into balance. The lower right-hand chart shows how the global fleet has evolved since 2007.

Most significantly, you can see how the order book to fleet ratio which was north of 60% in 2007 on the back of speculative orders largely out of the German KG market that’s fallen 12.6%.

If you drill down further and as we were on a later slide, the order book-to-fleet ratio for sub-10,000 TEU units, in other words, the midsize and smaller vessel segments is only 3.6%. Slide 9 focuses mainly on demand side fundamentals, the pie chart at the top left shows the composition of global containerized trade in 2017.

Almost 30% of volume were carried in the mainlane trades, by which I mean, Asia, Europe, the Transpacific and Transatlantic more relevant to us.

However is the fact that in aggregate, a little over 70% of global containerized trade volumes were carried in the non-mainlane, intermediate and intra-regional trades, of which the largest is Intra-Asia as which will demonstrate later, these are the trades served primarily by midsize and smaller ships, there also the traits that have tended to show robust growth.

Slide 10 looks at the supply side fundamentals and illustrates the dynamics continue to improve for the midsize and smaller vessel segments. Top left, you can see that idle fleet capacity is trending down at its worst back in 2009, the idle fleet peaked at around 11%.

By the end of 2017, it was below 2% contrast that to 6.9% twelve months earlier and it since fallen further to around 1.4%. The chart at top right partly explains this reduction in idle capacity. In short, scrapping.

Almost 430,000 TEU went to the breakouts in 2017, down from 2016 which was a record year, but still material, particularly for the midsize and smaller tonnage segments in which scrapping continue to be focused. In fact, 430,000 TEU represents about 3% of the sub-10,000 TEU fleet.

As you would expect, with the improvements seen in the charter markets and corresponding increases in asset values, scrapping activity slowed as 2017 progressed. Bottom left is a chart showing the order book. Significant for the big ships, very small for the midsize and smaller vessel segments.

So to reiterate, the overall order book to fleet ratio at December 31 was 12.6%, while the vessels below 10,000 TEU, it was 3.6%. So, existing capacity for midsize and smaller tonnage has been reduced by scrapping and the order book pipeline for replacement tonnage is limited.

The results, as you can see from the chart at bottom right is that net fleet growth in 2017 was negative for a number of these segments continuing a trend established in 2016. As we have said before, in our view, this suggests the makings of a supply side squeeze for midsize and smaller tonnage.

Turning to Slide 11, this slide looks at vessel deployment patterns, the larger of the two charts shots global containerized trade into 20 or so trade groupings which are ranged along the horizontal access. Immediately below these you will see the number of vessels operated in each trade grouping.

The largest number of vessels by quite some margin over 60 to 100 units out of the global fleet of around 5,000 is concentrated on the Intra-Asia trade come back to that in a moment. The bars in the chart show the maximum vessel size deployed by trade lane, the pale blue bars and the average vessel size, the dark blue bars.

Clearly, the really big ships are key to a handful of trades driven by constant search for unit cost efficiency driven by relatively high volumes, decent port infrastructure and long trade distances.

Asia Europe is the obvious example served by the largest ships on the water with a maximum size north of 22,000 TEU and with an average size of around 14,000 TEU.

On the flip side, midsize and smaller ships, a quarter most other trade lanes, returning to the largest single trade grouping, Intra-Asia, the breakout chart on the right shows that this trade is served exclusively by midsize and smaller vessels, more than three quarters of which are 2000 TEU or smaller.

Slides 12 and 13 make the same point of Slide 11, but more graphically. Slide 12 shows the sailings of the big ships over 10,000 TEU during a 30 day period in the fourth quarter of 2017. As you can see they are primarily employed on the big East-West arterial trades.

Contrast this to Slide 13, where you can see the deployment of midsize and smaller vessels during the same period there everywhere which underlines that commercial utility and operational flexibility. And now Slide 14 and 15 conclude this section.

Slide 14 underpins our thesis the sector is at a positive inflection point especially for midsize and smaller tonnage. Container market fundamentals are improving with idle capacity down and demand growth outpacing supply growth.

Spot market charter rates, a leading indicator increased by almost 40% albeit from a very low base between the fourth quarter of 2016 and the fourth quarter of 2017. Asset values firmed equally significantly over the same period.

Nevertheless, and as you can see from the chart on the left, that remain close to long-term cyclical lows suggesting a favorable risk reward backdrop for selective acquisitions. Slide 15 reemphasizes this last point demonstrating the degree to which purchase opportunities and trading volumes of container ships have picked up.

Roughly 2.4 times the number of trading container ships changed hands during 2017 versus 2016. Many of the sales are still coming out of the distressed German KG environment which was the source of the 2800 TEU vessel we’ve recently agreed to buy and expect to take delivery of during the second quarter.

This is a high spec vessel, built at the Hyundai Mipo yard in South Korea. She has a high reefer content and is of a design popular in the charter market.

We co-selected her with CMACGM as Ian said earlier and crucially they have agreed to take her on a twelve months charter ensuring that on delivery, she will be immediately EBITDA accretive and to remind you we are permitted to put leverage up to 70% LTV on new vessel acquisitions.

So, to wrap up the market section, although the sector will remain both cyclical and seasonal, we see the foundations for recovery and for selective growth with midsize and smaller vessels, especially attractive given that tighter supply, flexible deployment and commercial relevance to most trade lanes.

So, now let’s move on to the fourth quarter financials starting on Slide 17. Revenue and utilization.

We generated revenue of $37.9 million during the fourth quarter, down $3.5 million from the comparative 2016 period with the reduction due mainly to the effect of the new charters of Julie Delmas, Delmas Keta and GSL Tianjin being at low rates as compared to the previous sale of leaseback charters they rolled off.

In the fourth quarter 2017, there were 10 days of unplanned offhire giving us utilization of 99.4%. Revenue for the full year 2017 was $159 million, down $7.5 million on the prior year, mainly for renewals of charters of our rates and during the full year 2017, we had 62 days of scheduled offhire for four drydockings. Vessel operating expenses.

Vessel operating expenses were $11.6 million in the fourth quarter compared to $11.2 million in the prior year period. The average operating cost per ownership day was $6992, up 3.2% compared to the prior year period, mainly attributable to insurance deductibles incurred in the fourth quarter 2017.

For the full year, on the other hand, average daily costs was $6614, down $322 per day or 4.6% from their 2016 daily average. Instantly, this reduction follows a reduction of 4.6% in average daily operating costs in 2016. Interest expense.

Interest expense in the quarter was $27 million, up $17.6 million on the interest expense for the comparative 2016 period, primarily due to incremental costs such as the co-premium of $8.7 million on the old notes associated with a refinancing completed in October. Net income.

Taking into account the costs and charges associated with the refinancing non-cash impairment charge discussed previously, net loss for the fourth quarter was $99.8 million, as compared to a loss of $55.1 million in the fourth quarter of 2016, which also included a non-cash impairment charge buzz of $63.1 million. The balance sheet.

Slide 18 shows the balance sheet. Key items as of December 31 include cash at $73.3 million, total assets of $675.2 million, of which $597.8 million is vessels in operation.

Our total debt was $414.8 million, down $14.6 million at the end of last year as a result of amortization of both the old notes and old secured term loans during the first nine months of the year, net of the effects of the refinancing completed in October. Net debt at December 31, 2017 was $341.5 million, down $33.7 million on the previous year end.

Net debt-to-adjusted EBITDA was 3.1 times in 2017, a reduction on 3.3 times to 2016. Cash flows. Next slide 19 shows our cash flows.

It highlights the net cash provided by operating activities was $11.2 million in the fourth quarter as compared to $27.8 million in the same period last year with the reduction being mainly due to lower EBITDA and costs associated with the refinancing such as the $8.7 million co-premium together with changes in working capital.

I’ll now turn the call back to Ian for some closing remarks. .

Tom, thank you. If you kindly turn to Slide 20, I’ll briefly summarize and then we’ll open up the call for questions. We’ve made important progress over the course of 2017 and into 2018.

Putting Global Ship Lease in a position not only to maintain consistency and stability, but also to take advantage of opportunities to grow and create shareholder value amid an improving market environment. We maintained full fleet employment with top-tier counterparties and maintained a high level of utilization.

We agreed new charters and extensions at EBITDA-positive levels and ended the year with 3.2 years of weighted average remaining contract cover including the recent extensions. We strengthened our balance sheet through a refinancing of all of our outstanding debts on improved terms with additional flexibility.

And whilst supply demand tension continues to push up both spot rates and second-hand vessel prices, we believe that we have put Global Ship Lease in an excellent position to capitalize on attractive growth opportunities, such as our recent acquisition announced last week and look to develop strategic alternatives.

With that, I would now like to open the call up to your questions. .

[Operator Instructions] And our first question comes from the line Richard Smith from Muzinich. Your line is now open. .

Hi, there. Thanks for taking my call. Just a couple of questions.

I’ve got three questions in particular, the first, can you – as a result of the impairments, so for choosing Q4, what’s your view on the kind of existing difference than they still exists between the carrying value of the vessel assets on the balance sheet and what market value is or is that collectively been now reduced to zero, the difference has been reduced to zero from these impairments? Secondly, if you could go into maybe some of the details around the insurance deductibles in Q4 that’s driven that daily OpEx up and also on the gross debt, maybe I am missing something very obvious, but I get about just shy of $400 million if I add up long-term debt and short-term debt, but you are referencing about $415 million in gross debt, maybe you could just help me kind of reconcile that.

.

Sure, the last point first, the gross debt is $360 million of bonds and $54.8 million of secured term loan. When it’s presented in the financial statements, we deduct from that deferred financing costs and original issue discount.

So you’ve got a figure in the financial statements net of those two items, which isn’t particularly helpful, but the gross debt is indeed just shy of $415 million. Insurance deductibles in the fourth quarter, it’s a fact of life in our industry that from time-to-time and fortunately our record is really very good.

We do have accidents if we have to make a claim on our insurance policies, particularly the haul policy, we have to bear a deductible of between $125,000 and $150,000. On impairments, the U.S. GAAP impairment testing is not designed to bring the carrying value of vessels to a market value.

We do disclosed in our 20-F for 2017 and we will continue that disclosure in 2017 more information on impairments and the book value of our assets against the kind of market value. .

Okay. That’s great. Thank you..

And our next question comes from the line of Angus Rosborough from Park Vale Capital. Your line is now open..

Hi. Just two questions really. You spoke quite a bit about the mid and small-size portion of the market being basically favorably positioned. I was wondering if you could just add a little granularity of that and talk about the differences between the small size portion of the market and the midsize portion of the market.

And the second thing, if indeed there are already differences, and the second question relates to the pace of acquisitions going forward.

One of the things that you’ve done on the call quite effectively is talk about how well you think that GSL is positioned for the future and you’ve also spoken about where prices are going? How optimistic you are? You’ve done one acquisition here which is yet to hit the books, but it’s pretty small as things go, can we over the course of 2018 expect to see things really pick up pace?.

Sure. Hi, Angus.

On the first question, what’s the distinction between a midsize and smaller tonnage categories, I would say, the broad category covering both midsize and smaller would be vessels of 10,000 TEU or below, very broadly speaking and this distinction between the smaller and midsize when we are thinking of the smaller ships, effectively we are thinking of the feeder size vessels which very crudely run from roughly 1,000 TEU up to roughly 3,500 TEU.

As to the pace of acquisitions, the – under the notes, we have the capacity to put $30 million worth of “equity” or cash to work on acquisitions and we are also committed to lever that up to 70% LTV. Thus, subjects to the availability of appropriate leverage, the hypothetical investment capacity that we would have would be roughly $100 million.

But nevertheless, we are a small company.

We recognize that and we also recognize that not every acquisition is a good acquisition, so we will be very selective in the acquisitions that we make focusing on vessels where we think there is a high specification and where we think that the operating and commercial prospects of that particular target assets is promising.

And in that sense, it’s very helpful to have CMACGM as our 45% shareholder and third largest liner operator in the world giving us vessels on the sorts of assets and the characteristics of the assets that they as an operator would see as being valuable on a go-forward basis. .

Thank you very much for that. I am sorry. I probably didn’t phrase my question accurately enough, but when I was talking about the differences between the small and medium-size portion of the markets, I was wondering if you could talk about the different dynamics that you are seeing.

It’s my impression that things are better in the 1,000 to 3,500 TEU area versus the more midsize portion of the market, but that’s just a guess.

Could you offer little bit more color around that?.

Sure. I think, one of the phrases that has been banded around by various people during the course of the last few months is small is beautiful.

So, I think we see the most favorable dynamics currently in the sort of the feeder sizes which is not to say that there aren’t opportunities in the midsize segments as well, but we think the most immediate opportunities are in the feeder sizes.

And that’s one of the reasons why we broke out in the chart in the presentation, the Intra-Asia trade to make the point that that which represents in aggregate the largest container volumes by demand and also absorbs the largest number of ships, roughly 1600 is serviced by vessels which are predominantly on the small side, in fact, over three quarters of those vessels are 2000 TEU or below.

.

Got it.

Now, in terms of the midsize section of the market, is it – how would you describe? It is under threat? Is it doing well? Is it benign? How would you describe that environment?.

I would say, it’s an environment which is still an interesting environment and I would point I suppose to the experience that we’ve had recently with the charter extensions on two of our midsized vessels.

The GSL Tianjin and the OOCL Qingdao respectively, because they demonstrate the elasticity of pricing in that segment and how finely tuned it is from a supply-demand perspective.

So, the first vessel GSL Tianjin, we announced an extension on her in January and it was a negotiation that took place in late December and early January and the rate that resulted was $11,900 a day and then a matter of just six weeks or so later, her sister vessel, OOCL Qingdao, we’ve announced an extension of $14,000 a day.

So I think that’s demonstrative of the growing tension which is a good thing in the supply-demand balance for the midsize tonnage segments. .

That’s very helpful. That’s where I was trying to go. And the last thing was a question I hadn’t anticipated, but here it is, Evercore, you’ve hired them. They are working on various things.

When are they going to be done their work?.

It’s impossible to put a timeline on this. As I said, we think with the improved market conditions with GSL having refinanced and got a stable balance sheet for the next few years, it’s right for us to take and review strategic alternates. We engaged Evercore.

We announced that process to be completely transparent and it remains to be seen, it remains to be seen to what transpires and on what timetable..

Okay. So, when your second quarter – excuse me – first quarter comes out, we should not be expecting any sort of basically summary of their deep dive. It will probably remain an open question..

Unless we’ve got something to announce of course..

Okay, thank you very much..

Thank you..

[Operator Instructions] And our next question comes from the line of Julien Raffelsbauer from Cantor Fitzgerald. .

Yes, good morning. I just wanted to have your view on what is holding charter rates at relatively low level.

Or you are showing on the Slide 14, given the very, very low yielding rate, I was wondering why there is not a stronger fleet from the low yielding rate to the charter rate? And my second question is, could you comment on the old Panamax side – size? Do you think there was enough scrapping which has been done on that specific category?.

Sure. I mean, I think, I might slightly disagree with your characterization of charter rates. I think as you can see from the slide that we’ve provided on Slide 14 there has been really a quite a significant increase, at least in percentage terms on charter rates.

Clearly, we would like to see in absolute terms those rates go higher and indeed, we expect to see them go higher over time. But I think you got to remember that the industry has had a very challenging number of years and it takes a little bit of time to change sentiment and for confidence to properly return and take hold within the sector.

So I think that, owners are still perhaps a little cautious and possibly even overly cautious when it comes to agreeing charter rates to ensure their vessels are fixed and I think that as the recovery continues to take hold, you’ll see people perhaps being a little bit more aggressive than they currently are and you will see charter rates reacting accordingly going forward.

And then your second question was about the Panamax category. Last year, roughly 650,000 TEU from memory, was scrapped overall and I think that roughly half of that was made up of Panamax capacity.

So that has seen a very material reduction in the Panamax fleet and I think what we are also seeing is that, classic Panamaxes are being deployed on more trades including Intra-Asia by the way than they have been in the past.

So, I think we are seeing over time a rightsizing of the Panamax fleet, but given that our Panamaxes of still on term charters for some time to come clearly from a selfish perspective, we would be pleased to see additional scrapping in those segments. .

Okay. So, yes, coming back on the first question, so you think that the main reason why charter rates which I agree you had have come up. The reason why they are not moving up more quickly is just about the attitude from the owner which are not aggressive, and – because I guess, if there is only 2% yielding rates should be able to be more aggressive..

Correct and in fact the idle capacity has come down from 2% in mid-February it was as low as 1.4%.

So, yes, I think the data would suggest that the charter rates should be firming faster than they are, they are indeed firming and really the only sort of explanation we can attribute to that is, but they have been held back at least for the time-being by caution and by sentiment.

And we think that is – as owners become more confident, the recovery is really taking hold. They will then take a more aggressive stance when it comes to the charter rates themselves. .

That’s very clear. And then last question, so the last charter you agree were short-term.

Is it your decision? Because you think the charters are going to increase or was it a common decision with you and the charter lines?.

These negotiations are always bilateral, but our strong preference was to not fix long on this vessel.

We think that there is material upside and 12 months seem to us like a sensible period to fix while retaining access to that upside while still being consistent with the investment thesis we’ve put in front of people which is that we will only acquire vessels if there is a charter already in place or if we can put a charter in place such that the vessel will be accretive from the moment it’s acquired.

.

Okay. Thank you very much. Thank you. .

Okay, thank you..

And our next question comes from the line of Peter [Indiscernible] from Janus Henderson. Your line is now open..

Hi, good afternoon. Just a couple of quick questions on the new vessel. Can you share what the OpEx is on that vessel? And I think as you have the financing in place on this is it sort of 70% loan-to-value? What are you planning to say on that financing? Thanks..

On the operating front, it’s – you could use our average cost in 2017 around $6,600..

Okay. Thanks. .

And on the financing, based on the alignment, but as I mentioned or both mentioned in our remarks, we are looking to place some leverage on that vessel, based on what terms might be..

Okay. Thank you. .

And I am currently see no further questions and I would like to turn the call back to Ian Webber for any further remarks. .

Thank you very much. Thanks for listening and we look forward to talking to you later in the year on our Q1 results. Thank you..

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program and you may all disconnect. Everyone have a great day..