Hajioannou Takes on Safe Bulkers Newbuilds

Safe Bulkers, Inc. announced today that the Company has agreed to novate an existing newbuild contract for Hull No. S835, a Japanese Panamax class vessel, and sell, upon delivery, Hull No. 1551, a Japanese Kamsarmax class vessel, in each case, to entities owned by Mr. Polys Hajioannou, the Chairman of the Board and the Chief Executive Officer of the Company. Each vessel is scheduled to be delivered in the first quarter of 2017.

The two transactions were evaluated and approved by a Special Committee of the Company’s Board of Directors, which committee was wholly comprised of independent members of the Board and advised by independent counsel. The Special Committee obtained two appraisals from independent third party brokers for each newbuild vessel, and negotiated the terms of each transaction.

The higher of the two appraisals obtained from the independent third party brokers was $21.5 million for Hull No. S835 and $24.5 million for Hull No. 1551; or $46.0 million in the aggregate. The remaining capital expenditure requirements of the
Company in respect of Hull No. S835 and Hull No. 1551 were $48.2 million in the aggregate. The difference of $2.2 million between the aggregate vessel valuations and the remaining aggregate capital expenditure requirements with respect to the newbuilds, as well as the commission of 1% of the contract price payable to the related party management company with respect to each of the newbuilds, have been waived in favor of the Company.

Through these transactions, the Company will substantially preserve its liquidity position and avoid the need to incur additional indebtedness. As a result of the transactions described above, the Company will record an aggregate non-cash
impairment loss of $16.6 million in the third quarter of 2016, which represents installments already paid in respect of Hull No. S835 and Hull No. 1551.

Dr. Loukas Barmparis, President of the Company, said: “Consistent with our efforts to preserve liquidity through arrangements with our commercial lenders and maintenance of a lean operational profile, these transactions have allowed the Company to continue to minimize its cash outflows for capital expenditures. Of the four newbuild vessels that were previously on the Company’s orderbook, we have been able to finance one newbuild vessel through the issuance of preferred equity securities and we now have entered into arrangements to sell or novate two additional newbuild vessels, thus substantially preserving the Company’s liquidity position.”