Ardmore Shipping Corporation

Good morning, ladies and gentlemen, and welcome to the Ardmore Shipping second quarter 2022 earnings conference call. Today's call is being recorded and an audio webcast and presentation are available in the investor relations section of the company's website at ardmoreshipping.com. We will conduct a question and answer session after the opening remarks. Instructions will follow at that time. A replay of the conference call will be accessible on the company's website at at any time during the next two weeks by dialing 1-877-344-7529 or 1-412-317-0088 and entering code 513-2389. At this time, I will turn the call over to Anthony Gurney, Chief Executive Officer of Ardmore Shipping. Thank you. Good morning and welcome to Ardmore Shipping second quarter 2022 earnings call.

First, let me ask Paul to describe the format for the call and discuss forward-looking statements.

Thanks, Tony, and welcome, everyone. Before we begin our conference call, I would like to direct all participants to our website at artmoreshipping.com, where you'll find a link to this morning's second quarter 2022 earnings release and presentation. Tony and I will take about 15 minutes to go through the presentation and then open up the call to questions. Turning to slide two, please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from the results projected from those forward-looking statements. And additional information concerning factors that could cause the actual results to differ materially from those in the forward-looking statements is contained in the second quarter 2022 earnings release, which is available on our website. And now I will turn the call back over to Tony.

Thanks, Paul. I'd like to first outline the format of today's call. To begin with, I'll discuss highlights, recent market developments, and overall Ardmore performance. After which, Paul will provide an update on product and chemical tanker financials, and then I'll conclude the presentation and open up the call for questions. So, turning to slide four, the product and chemical tanker markets are continuing along at historically high levels, with many factors now contributing to ongoing momentum, which we will discuss later on. Our MRs earned 30,500 per day for the second quarter, up from 15,900 last quarter. They're earning $46,600 so far in the third quarter, with 45% fixed, and are averaging $55,300 for fixtures concluded over the last two weeks. Additionally, our chemical tankers are now approaching similar levels on a capital-adjusted basis. Given our operating leverage and spot exposure, this is translated into record earnings of $29 million, or $0.82 a share, for the second quarter, and an estimated $65 million or $1.75 per share for the third quarter if these rates are sustained. Asset prices are also rising as buyers are now factoring in the strong market to their value estimates. Most recently, the sale of the 2016 built Korean MR at $34.5 million, up 25% from $27.5 million at the beginning of the year. But despite the much improved market conditions, given the very challenging business environment we've just come through, Our priority continues to be rebuilding financial strength in order to then continue through our capital allocation priorities once our leverage targets are met. At this end, we've just completed a refinancing of virtually all of our debt with our core lending banks, repaying most of our higher-cost lease portfolio, reducing it from 14 down to just two shifts, and thereby significantly lowering our debt costs. And we've also engaged in limited usage of the ATM program over the past quarter to further build financial strength. Operationally, we're very proud that our ships, the Ardmore Cherokee and the Ardmore Encounter, have recently won the Seafarers Charity Maritime Safety Week competition, a testament to their crew's proactive approach to safety and their dedication to seafaring professionalism. Moving to slide five, on the product and chemical tanker market outlook. The market is being influenced by many factors, but above all, a now deeply rooted energy crisis impacting virtually all energy classes, on a global basis, most notably in Europe. While concerns about a global economic slowdown should temper expectations, there's nevertheless a growing consensus that the conditions causing the crisis, and that's the strong product-tank market, may continue for some time. High oil prices and volatility are reflecting in part the underinvestment in oil and gas exploration for many years. As a result of the Ukraine war, energy security is now an immediate priority globally, which will take some time to resolve. And low global oil inventories, the difficulty of restocking in a supply-constrained market, and strong competition for reliable supplies will likely continue to drive physical supply-demand dislocation, and thus our markets, for some time to come. Under these conditions, MRs in particular are playing a vital role as the most flexible and the largest tanker asset class by number of ships. as they can trade virtually anywhere in the world, and they comprise fully one-third of the global tanker fleet. Also, it's important to point out that tanker demand is highly priced and elastic. The cost of freight, even at today's high levels, is less than 5% of the value of the cargo, so there would appear to be no practical upper limit on charter rates in terms of potential oil demand destruction. Meanwhile, chemical tanker rates are tracking MRs upwards, as a similar dislocation in chemical and veg oil markets is driving ton-mile demand in addition to which there's less competition for chemical cargos from MRs. Moving to slide six regarding Ardmore's commercial and financial performance. Our fleet employment strategy has positioned the company very well to maximize earnings in this market upturn. We made a deliberate move to spot trading away from time charter out going into 2022 in anticipation of an improving market, but of course neither we nor anyone else anticipated the current strength. Technically, our fleet is trading 120% spot when including our time-chartered end vessels, now doubling five at an average T-scan rate of 12,600 per day. As mentioned, chemical tankers are now also doing very well on a capital-adjusted basis, notably engaging on very long-haul voyages, reflecting a key driver in this market. In addition, the $40 million perpetual preferred issuance from last year has proven to be very valuable in managing financial risk, while leaving all the upside to our shareholders in the strong market. And then in the meantime, we're continuing a heads down business as usual approach regarding performance improvement in order to maximize earnings and cash flow, with an ongoing intense focus on trading performance and voyage optimization, which is particularly important in this high bunker price environment. We're also continuing with vessel efficiency improvements consistent with our ETP, but also cash flow. And then financially, the recently concluded refinancing will reduce our average credit spread from 3.2% down to 2.6%, resulting in roughly $2.2 million per annum saving. Assuming a continuation of strong market conditions, we anticipate a meaningful reduction in our leverage and our cash flow break-even levels by year-end, thus opening up new capital allocation opportunities along with more sustainable ongoing profitability. And with that, I'll hand the call back over to Paul.

Thanks, Tony. I'll take a look at the fundamentals, then a move to a financial review and capital allocation. Starting with slide 8 for demand fundamentals, the demand outlook for product and chemical tankers remains very positive. The IEA are forecasting global oil demand to increase by 1.7 million barrels a day this year and 2.1 billion barrels a day in 2023, in spite of a deceleration of global economic activity. In particular, aviation activity continues to support oil demand, with jet fuel demand increasing by 900,000 barrels a day, or 18% since the start of the year. And the disruption to trade flows associated with the Ukraine-Russia war and energy crisis are adding to tonne mile demand. For example, Europe is now sourcing refined oil products from the US Gulf and the Middle East, rather than Russia, and this is unlikely to change any time soon. Meanwhile, as we've been saying for some time, the ongoing trend of refinery dislocation will continue to have a positive impact on product-anchored demand, providing an additional layer of growth. Over the next four years, there is 8.9 million barrels a day of export refinery capacity growth in the Middle East and Asia, as compared to 5.9 million barrels a day of closures of local market-focused refineries in the US, Europe, Japan and Australia. A combination of these developments means larger seaborne volumes of refined product moving over longer distances. Overall, product tanker tonne mile demand is expected to grow by 3% to 4% annually over the medium term, which should be well above supply growth. Chemical tanker demand outlook is also very positive, driven by ongoing global GDP growth and increasing petrochemical output in the long term, and favourable tonne mile demand forces consistent with product tanker market in the near term. Moving to slide 9, we'll take a closer look at the supply fundamentals. The supply outlook for product and chemical tankers is also favourable, driven by a lower order book and increased scrapping levels. Net feed growth, deliveries less scrapping, is expected to be well below demand growth for the coming years. Estimated net feed growth in 2022 is 1.4% for product tankers and 1.1% for chemical tankers, with the downward trend expected to continue, as you can see on the chart on the upper right. Scrapping has been running at more elevated levels for the past two years, and given the age profile of the fleet, this should continue. 29 product tankers have scrapped in the year to date, compared to 68 ships or 2% of the fleet scrapped last year. And while a resurgent market may slow scrapping in the near term, an aging fleet will ultimately see scrapping levels increase in the long term. Currently 9% or 271 ships of the product tanker fleet and 13% or 239 ships of the chemical tanker fleet are over 20 years old and close to scrapping age. At the same time, the order book for product and chemical tankers remains low. The product tanker order book is at 6.2%, or 179 ships, and the chemical tanker order book is at 6.3%, or 78 ships, delivering over the next three years. U-ordering activity is expected to remain low in the near term. There's very limited burst availability until 2025, and a lack of clarity in propulsion technology and emission regulations has dampened the willingness of tanker owners to order speculatively. Moving to slide 11, we take a closer look at fleet and operational highlights. We are continuing to invest in the fleet to optimise operating performance. We expect to complete one dry docking and a ballast water treatment system installation in the fourth quarter, with a total capex of 2.4 million. Forecasted revenue days for 2022 are approximately 9,750, including time charter in-ships, with chemical tankers representing 24% of fleet days for the year. And operationally, the fleet continues to perform very well, with non-hire availability at 99.3% for the second quarter. Turning to slide 12 for financial highlights and guidance, we're reporting earnings of 29 million, or 82 cents per share, for the second quarter, representing our strongest quarter ever. And in addition to a strong chartering performance, we've continued our focus on cost control and efficiency improvements. Operating expenses are at 15.9 million for the second quarter, compared to 16.4 million for the same period last year. And looking ahead, we expect OPEX for the third quarter to be lower at approximately 14 million following the sale of three ships. Charter-in expense was 2.3 million for the second quarter, and will increase to 5 million in the third quarter, reflecting five ships on time charter-in, which includes the charter back of the three recently sold vessels. And as you can see in the chart, we have split the time, charter, and expense between operating and capital components in our income statement from this quarter, and more on that in a moment. Depreciation and amortization totaled 7.9 million in the second quarter, down 1.1 million from the prior quarter as a result of the sale of three ships, and we expect depreciation and amortization for the third quarter to be about approximately 8 million. Total overhead costs were 5.3 million for the quarter, and we're forecasting them to be in line with the third quarter. Interest in financing costs, excluding non-recurring items associated with the sale of the vessels, came in at 4.2 million for the second quarter. We expect it to be approximately 3.9 million in the third quarter, following the prepayment of the debt associated with the vessel sales and the cost savings associated with the refinancing currently underway. And finally, this quarter we are introducing EBITDA, which is EBITDA plus bare-body equivalence lease expense, as a metric to enable a comparable valuation with IFRS reporting peers. Artmore reports under US GAAP, while most of our peers report under IFRS. IFRS differs from US GAAP in its presentation of lease expense by including it in depreciation, whereas US GAAP does not. As a consequence, vessels that are chartered in for greater than one year result in higher EBITDA under IFRS than under US GAAP. Therefore, to assist in the process of a like-for-like valuation, we are introducing EBITDA as comparable to EBITDA reported by IFRS peers. The effect is that we will add back vessel lease expense, which is the implied capital component of the time charter expense, to EBITDA to arrive at EBITDAR. And a full reconciliation of this is provided on slide 20 to this presentation and also in this quarter's earnings release form 6K released this morning. And turning now to slide 13, we can immediately see the reality of the current market. The charter rates for the second quarter were very strong, but they pale in comparison to the charter rates in the third quarter. Fleet average TCE was $27,800 in the second quarter, with MRs earning $30,500 and chemicals earning $22,000 per day on a capital-adjusted basis. And for the third quarter, with 45% of the days booked, the fleet average is $43,300 per day, comprising MRTCE of $46,600 per day and chemical tanker rates of $32,900 per day. And to put this in perspective on slide 14, we're highlighting our operating leverage and providing some illustrative calculations of EPS and net income at different TCE rates. In the highlighted bars, you can see annualized net income in EPS based on charter rates for the second quarter and approximate charter rates for the third quarter. Based on the fleet average TCE of 27,500 per day, which is approximate to what we reported in the second quarter, This translates to annualized net income of $120 million and EPS of $3.25. And using fleet average rates of $42,500 per day for the third quarter, based on the bookings to date, this translates to annualized net income of $265 million or $7.15 per share. As you can see with our operating leverage, the higher rate environment is substantially resulting in stronger financial performance. Moving to slide 15 for the balance sheet. In the second quarter, we finalised the refinancing of our debt facilities with our existing banks for three separate loans for £308 million in the aggregate. The new loans have been used to refinance 19 vessels, including nine vessels financed under leases. The loans comprise of £185 million fully revolving credit facility, a £108 million senior term loan and a £15 million receivables facility. The two main loan facilities are priced at an equivalent of LIBOR plus 2.25%, a significant reduction on the existing debt pricing, and all three loans are sustainability linked and include a pricing adjustment feature linked to carbon emission reduction and other environmental and social initiatives. The refinancing is hugely advantageous for the company. It is allowing us to eliminate the expense of leases, taking the number of leased vessels from 14 to 2 since the start of the year. And the average credit spread on the debt was substantially reduced from 3.2% to 2.6%, resulting in annual interest savings of 2.2 million per year. The final documentation is in progress, and we expect it to be fully completed by October when all the leases are refinanced. And in addition to the refinancing, we engaged in limited usage of the ATM to build financial strength. We issued 2.8 million shares in the period at a weighted average price of 7.40 per share, raising 20.5 million in net proceeds. And as a result of these initiatives and favorable market conditions, we're well on course to build a fortress-like balance sheet consistent with our capital allocation objectives in a very short timeframe. Finally, moving to slide 16 for our capital allocation policy. Our capital allocation policy was introduced in March of 2020, and the overall objective is to build shareholder value in a highly cyclical industry. The policy is designed to ensure that Ardmore is well-positioned to capitalize on opportunities through the cycle and developments in the industry. And our priorities remain the same. We maintain the fleet over time in terms of number of owned ships, reduce leverage to below 40%, grow increasingly to scale, and return capital to shareholders. And we've made significant progress towards these objectives over the past 18 months. The preferred share issuance in mid-2021 buttressed the balance sheet through the COVID weakness while protecting upside for common shareholders. And the exceptionally strong charter market is now affording a great opportunity to further improve capital structure and reduce debt. The priority now is to accelerate that reduction and clear the pathway to consider different uses of cash when those targets are met. With that, I'd like to turn the call back over to Tony.

Thanks, Paul. So to sum up then, MR charter rates are now at levels offering impressive returns. For this quarter, earnings are $29 million or $0.82 per share, representing an annualized return on equity of about 40%. And for the third quarter to date, with 45% fixed, potential earnings of $65 million or $1.75 in EPS, and an annualized return on equity of about 90% if these levels are sustained. We believe the product tanker market is being influenced above all by the energy crisis. While the prospects of a global slowdown should temper expectations, there is growing consensus that the energy crisis will not be resolved anytime soon. Meanwhile, product tanker supply-demand fundamentals also look favorable. with solid demand growth expected on the back of strong oil demand growth, even after recent downward revisions. And product-tanker supply constrained by shipyard birth availability and continued scrapping. As a company, we remain focused on operating performance and are making good progress, in addition, toward our capital allocation policy objectives. In other words, leverage reduction and fleet size management, which, when met, will allow us to pivot to other priorities In other words, further growth and returning capital to shareholders. In addition, our energy transition plan is still very much at the center of our thinking, most immediately driving efficiency improvements and progress with our E1 Marine joint venture, while continuing to seek opportunities in a gradually but nevertheless profoundly changing business landscape. And on a final note, I want to take this moment to thank our CFO, Paul Tivnin, for all his effort, great results, and companionship over these past 12 years. and wish him the very best in his future endeavors. At the same time, as you will see in our separate press release, we're very pleased to welcome our new CFO, Bart Kelleher, to the team, and we look forward to working with him from September 1st. And with that, we're happy to open up the call for questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star, then 2. The first question is from Sean Morgan of Evercore. Please go ahead.

Hey, guys. I'm on for John today. He wanted me to relay our sentiments to Paul and wish him luck in his new endeavor. I'm not sure where he's planning to go, but if it's New York, I'm sure we can make room for one more Irishman here. So just... On the eMarine business, I think it's been about a year since that's closed. Are you guys seeing – is it commercially ready to start licensing out for royalties, or where are we sort of commercially with that business line?

Thanks, John. I'll take this. And firstly, thanks for your comments, and John also. So, yeah, e1Marine has made a lot of progress, and e1Corp, indeed, has made a lot of progress over the last – you know, number of years, particularly in the last 12 months. In terms of commercialization, yeah, they are at the stage that they could issue licenses. The focus has been for the moment to get the technology marinized. And to that end, the Hydrogen One vessel, which was announced last December, is construction is well underway. I think on the last call, we announced that they've got approval of principal from Lloyds and Hydrogen One maritime partners. Our JV partner have also, I think, just appointed their... ordered their fuel cells to partner with the E1 system. So huge amount of progress on the commercialization and marinizing the technology. And I think in terms of next steps, you'll see kind of commercial progress and perhaps licensing over the next couple of quarters.

Okay, thanks, Paul. And then just to follow up for Tony, I think on the broader market, We've had, obviously, a nice improvement here in rates on the clean MRs. And I'm just wondering, how much of that do you ascribe to sort of dislocation from Russia versus the changing geographies of clean product production? And then, I guess, just kind of return of travel demand. And how sustainable do you think this nice client environment we have is?

Yeah, that's a good question, Sean, and that's what we tried to focus on in the presentation. So, you know, I think you're hitting out a few things there. One are fundamentals, return to jet fuel, you know, most particularly. So I think that underlying all this is a pretty healthy dynamic in terms of supply and demand. You know, there's, you know, what we're seeing and kind of hearing more about now is just more broadly an energy crisis that obviously is in part being driven by the Ukraine war. But there are other factors at play. And this happens at a time when, you know, a lot of consumers are, you know, running with very low inventories and are having to go, you know, look very far away for a reliable source of supply.

Okay. Thanks a lot. That's all. Thanks, John.

The next question is from Ben Nolan of Stifel. Please go ahead.

All right. Appreciate it. And good luck to you, Paul. miss some of our outings, but I guess I would start from a sort of a bigger picture macro question. You addressed this a little bit in the capital allocation with, you know, a target of 40% leverage. I mean, at these kind of day rates, you're going to get there really fast, especially with the addition of the ATM that you've been somewhat active on there. I guess, Tony, for you, big picture, if this market can sustain here or at least reasonably healthy levels and the leverage gets down, where do you want Ardmore to be? I don't know, a year from now or two years from now. How would it look different now that things have sort of transitioned from theoretical to actually possible?

Well, I think that kind of a year or two years from now, if the market continues at anywhere near these levels, we'll obviously have reached our, you know, leverage targets, et cetera, you know, well before then, and we'll be in a position and probably be returning lots of capital to shareholders, you know, under those conditions, and also being well positioned to find the right opportunities for growth. If the market isn't sustained, you know, we believe we'll be in a position to, you know, I think as you pointed out, I think our financial strength is going to build very quickly and that's going to give us a lot more flexibility about capital allocation priorities. So, you know, just to take a step back, the overriding objective when we set out the capital allocation policy was to position the company for well-timed and therefore highly accretive growth as well as more regular return on capital to shareholders.

Right. Although I suppose the tradeoff, and this is always seemingly the case in shipping, I mean, you addressed in the presentation that MR values have come up a lot. It's always a tradeoff. Do you pay for growth even though maybe prices are higher versus, again, return of capital? I'm just trying to get a sense of, again, how you think about executing on growth.

I think you know us well enough to know that we're not momentum players, so we'll be quite prudent in terms of how and when we engage in growth. The last big step we made was quite a while ago now. It was the frontline fleet acquisition. We bought those chips, their MRs, EcoDesign MRs, when they were about a year old. We got them for $29 million each, and now a six-year-old chip is worth $34, $35 million. We don't need to necessarily... you know, do that well in acquisitions. But we do think that there's potentially pockets of opportunity that could arise over the next year or two, even in relatively strong market conditions. But otherwise, we can be patient.

Okay.

We've got to be able to generate a lot of cash flow for the next at least three years. Right.

And then lastly for me, I think I caught this at the end when you were talking about just sort of the chartering strategy and so forth. Are you guys looking to maybe lock in or lock in gains, let's say, on some of the charter ends by chartering out those vessels and securing some cash flow visibility? What's the shape of the curve there? I mean, is it a substantial decline for time charter versus spot?

At the moment, it's very heavily backward dated. So, you know, we're looking, you know, we've talked about the spot rates. One year TC is probably around 20,000 now, substantially lower. And then it's maybe flat for a couple of years. So, you know, we're not drawn to those kind of numbers yet. It also depends on our, you know, our view on the next kind of one to two years at the time that opportunity arises. But also you have to factor in who the counterparty is and how, you know, how reliable they are. to perform even if rates fall off.

Yeah. All right. Well, I appreciate the time. And, Paul, I'll miss our conversation.

Thanks, Ben. We'll talk to you soon.

The next question comes from Omar Nocta of Jefferies. Please go ahead.

Thank you. Hey, guys. Good afternoon. Good afternoon. uh yeah you know congrats obviously on a very you know strong quarter and it looks like you set up uh the third quarter to look even better and also paul yeah congrats on your 12 years with ardmore it's been a pleasure and definitely look forward to seeing what you have uh coming next and definitely not a bad way to go with those refinancings here the the past couple of months um i wanted to ask about uh just kind of going back to you know ben's uh question about capital allocation Obviously, your priorities in order are maintaining the fleet, followed by getting the target leveraged below 40%. That's obviously, it seems like that's a bit different than in the past where the target was to get to 40. Now it's below, which makes sense. How far below 40 do you want to get to?

You're probably reading a bit too much into the below, Omar. I think we're happy with, you know, if we include the press, you know, in the leverage component, then I think we're happy below 40% on a mid-cycle basis. But it seems like there's a lot of momentum heading toward that target right now.

Okay. Do you think that's something that obviously it's all projections, but is that a figure you think you can get to by year-end based off of how things are playing out so far?

Yeah, based on how things are playing out now, definitely. You know, just look at the forecast for 3Q. And if you even have a moderate assumption for 4Q, I think that probably gets us there. And then, you know, we're very pleased when that happens because then it opens up all sorts of other opportunities, you know, notably return capital to shareholders, but also looking for growth opportunities without playing into a hot market.

Yeah. And I guess, yeah, just kind of on that note of looking at fleet opportunities, what do you think makes sense? I know a couple of years back after that floating storage boom, you had a good amount of excess free cash and you went out, you bought an MR. It was a bit old. There was a quality ship, but it was, I think, a 2010 built. How do you think about the next time you deploy capital and buying ships or a ship, could you see you doing something opportunistic like that again? Or do you focus more on going younger?

That's a really good question. Look, we're really happy with that one acquisition we made. It did use quite a bit of cash, but the reality is that that ship then and even today has a break-even rate, including full overhead allocation of $11,700 per day. So that always works. We obviously, over time, need to consider how to rebuild, build, and modernize our fleet. We think our timing is pretty good in that respect in terms of what the right type of ship will be for the future, meaning that nobody really knows quite yet, but hopefully we'll have visibility on that in a year or two. And if in the meantime, interesting, either in the product or chemical space, opportunities come to buy more modern ships at a good price in some form, obviously we'll take a hard look at that.

Thanks, Tony. And just one final one. You did sell three of the older MRs. You've seen asset values go up here tremendously over the past several months. Any interest in monetizing another portion of the Ardmore fleet, whether it be the handies or the chemical tankers, or are you happy with what you have at the moment?

Yeah, those ships, we actually kind of held out to sell those ships for about a year. always with the intention of taking the back on a, on a medium term time charter basis so that we could efficiently exit chips that were approaching 15 years of age, but keep, keep them in the fleet from a, you know, an earning standpoint and a kind of commercial, uh, commercial platform standpoint. Um, so what's interesting now is that rates, and I think we've seen this in the dry bulk market, you know, rates are so strong that they're actually kind of monetizing themselves through cashflow. Um, so we don't, we don't feel that, uh, I think there'll come a time that people will look back in hindsight and say, yep, that was a time to sell. And that's very, very difficult to call looking forward. And I don't think that's really in our mindset at the moment anyway.

Got it. Thanks, Tony. Thanks, Paul. And again, Paul, pleasure working with you and good luck in the future. Likewise, Omar. Thank you.

Again, if you have a question, please press star then one. The next question is from Chris Sung of Weber Research. Please go ahead.

Hi, Bonnie. Hi, Tony and Paul. Thanks for taking my question. On the new sustainability-linked loans replacing the existing facilities, can you expand a bit on the factors that were considered to secure these little rates, and what do the pricing adjustments look like?

Thanks, Chris. Great question. I think when you think about sustainability-linked loans or if you think about the way the shipping finance market is going, I think if you want to get access to attractive funding, well-priced funding from top-tier banks, you have to show your credentials on sustainability and sign up to some pretty robust targets in terms of where you want to go to on your carbon reduction. So I would say in terms of the loans themselves, The fact that we're able to get very sharp loans at what is, given the overall economic environment, at a pretty sharp price and a big saving on our existing debt, that's achievement number one. And then specifically on the pricing adjustment, it's approximately five basis points plus or minus, which is market for sustainability-linked loans. But I suppose the main point I would say is in terms of accessing kind of top-tier financing at competitive pricing with the leading banks. you need to have a pretty robust sustainability feature built into them.

Got it. Thanks. Yeah, congrats on securing that. That looks great. And then maybe just thinking about Ardmore's scale and perhaps bandwidth, how long do you maybe, Tony, continue to commercially manage the three?

Chris, you faded out there at the end. Could you repeat the question?

Yes, sure. So just when thinking about scale and bandwidth for your operations, how long do you continue to commercially manage those three chemical tankers?

It's on an ongoing basis, but I think they're really pleased with the results they're achieving right now. So hopefully it'll be with us for a while. But yeah, that brings the fleet up to 30 ships altogether, which we think is okay for the time being in terms of you know, commercial platform and market reach.

Right. Okay. And for the three vessels that you sold and chartered back for two years, when would those options need to be declared and are the rates firmer or softer than the current chartering rates?

Yeah. So those are, we haven't specified what exactly the rate is, but it's a, if the structure is two years firm and then an option one year. And I, you know, I think the, I think the one year option is probably declarable probably a few months before the end of that two-year period. They're just starting now. The rate, you know, if you combine it with the other two chartered-in ships, the average of the five ships is 12,600 per day, so that's way below current levels.

Great. Great. Thanks. And lastly, just from all of us at Weber Research, congrats and best of luck to you, Paul.

Thanks, Chris, and hopefully we'll speak to you all soon.

Yes, definitely. Take care.

This concludes our question and answer session and today's conference. Thank you for attending today's presentation. You may now disconnect.