Financial Instruments and Fair Value Disclosures

12 Months Ended

Mar. 31, 2025

Financial Instruments and Fair Value Disclosures:

Financial Instruments and Fair Value Disclosures

21. Financial Instruments and Fair Value Disclosures

Our principal financial assets consist of cash and cash equivalents, investment securities, amounts due from related parties, derivative instruments, and trade accounts receivable. Our principal financial liabilities consist of long-term debt, accounts payable, amounts due to related parties, and accrued liabilities.

(a) Concentration of credit risk:  Financial instruments, which may subject us to significant concentrations of credit risk, consist principally of amounts due from our charterers, including the receivables from Helios Pool, and cash and cash equivalents. We limit our credit risk with amounts due from our charterers, including those through the Helios Pool, by performing ongoing credit evaluations of our charterers’ financial condition and generally do not require collateral from our charterers. We limit our credit risk with our cash and cash equivalents and restricted cash by placing it with highly-rated financial institutions.

(b) Interest rate risk:  One of our long-term bank loans is based on SOFR and hence we are exposed to movements thereto. We entered into interest rate swap agreements in order to hedge a majority of our variable interest rate exposure related to the 2023 A&R Debt Facility. Three of these swaps expired on March 26, 2025.

On January 20, 2023, we entered into an interest rate swap agreement with ING in order to manage our variable interest rate exposure risk by effectively converting a portion of our debt from a floating to a fixed rate. The notional value increased as the three other swaps amortized and now decreases with the debt outstanding under the 2023 A&R Debt Facility until final settlement in July 2029. The effect is to maintain a constant ratio between the debt outstanding under the 2023 A&R Debt Facility and the notional hedges. The initial notional value of $3.5 million became effective on June 26, 2023 with a fixed interest rate of 2.8525%. We have no exposure to floating rate movements on any of our other debt financings.

The principal terms of our interest rate swaps are as follows:

	Transaction	Termination	Fixed		Nominal value		Nominal value
Interest rate swap	Date	Date	interest rate		March 31, 2025		March 31, 2024
2023 A&R Debt Facility - ING(1)	September 2015	March 2025	0.9150	%		—		28,649,740
2023 A&R Debt Facility - CACIB(2)	August 2022	March 2025	0.9208	%		—		57,299,480
2023 A&R Debt Facility - BNP(3)	August 2022	March 2025	0.9208	%		—		57,299,480
2023 A&R Debt Facility - ING(4)	January 2023	July 2029	2.8250	%		148,000,000		20,751,300
					$	148,000,000	$	164,000,000

(1) Reduced quarterly with a final settlement of $23.8 million in March 2025.

(2) Reduced quarterly with a final settlement of $47.6 million in March 2025.

(3) Reduced quarterly with a final settlement of $47.6 million in March 2025.

(4) Notional value increased to a high of $148.0 million on March 26, 2025 while other swaps amortized and now decreases with the debt outstanding under the 2023 A&R Debt Facility until final settlement of $80 million in July 2029.

(c) Fair value measurements:  Interest rate swaps are stated at fair value, which is determined using a discounted cash flow approach based on market‑based SOFR swap yield rates. SOFR swap rates are observable at commonly quoted intervals for the full terms of the swaps and, therefore, are considered Level 2 items in accordance with the fair value hierarchy. The fair value of the interest rate swap agreements approximates the amount that we would have to pay or receive for the early termination of the agreements.

Additionally, we have, at times, taken positions in freight forward agreements (“FFAs”) as economic hedges to reduce the risk related to vessels trading in the spot market and to take advantage of fluctuations in market prices. Customary requirements for trading FFAs include the maintenance of initial and variation margins based on expected volatility, open position and mark-to-market of the contracts. FFAs are recorded as assets/liabilities until they are settled. Changes in fair value prior to settlement are recorded in unrealized gain/(loss) on derivatives. Upon settlement, if the contracted charter rate is less than the average of the rates for the specified route and time period, as reported by an identified index, the seller of the FFA is required to pay the buyer the settlement sum, being an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period covered by the FFA. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. Settlement of FFAs are recorded in realized gain/(loss) on derivatives. FFAs are considered Level 2 items in accordance with the fair value hierarchy. We had no outstanding FFAs as of March 31, 2025.

The following table summarizes the location on the balance sheet of the financial assets and liabilities that are carried at fair value on a recurring basis, which comprise our financial derivatives all of which are considered Level 2 items in accordance with the fair value hierarchy:

		March 31, 2025				March 31, 2024
	Current assets		Current liabilities		Current assets		Current liabilities
Derivatives not designated as hedging instruments	Derivative instruments		Derivative instruments		Derivative instruments		Derivative instruments
Interest rate swap agreements	$	—	$	—	$	5,139,056	$	—
		March 31, 2025				March 31, 2024
	Other non-current assets		Long-term liabilities		Other non-current assets		Long-term liabilities
Derivatives not designated as hedging instruments	Derivative instruments		Derivative instruments		Derivative instruments		Derivative instruments
Interest rate swap agreements	$	3,497,493	$	—	$	4,145,153	$	—

The effect of derivative instruments within the consolidated statements of operations for the periods presented is as follows:

		Year ended
Derivatives not designated as hedging instruments	Location of gain/(loss) recognized	March 31, 2025		March 31, 2024		March 31, 2023
Interest rate swaps—change in fair value	Unrealized gain/(loss) on derivatives		(5,786,717)		5,665		2,766,065
Forward freight agreements—realized loss	Realized loss on derivatives		(512,082)		—		—
Interest rate swaps—realized gain	Realized gain on derivatives		5,824,074		7,493,246		3,771,522
Gain/(Loss) on derivatives, net		$	(474,725)	$	7,498,911	$	6,537,587

As of March 31, 2025 and March 31, 2024, no fair value measurements for assets or liabilities under Level 1 or Level 3 were recognized in the consolidated balance sheets with the exception of cash and cash equivalents, restricted cash, and securities. We did not have any assets or liabilities measured at fair value on a non-recurring basis during the years ended March 31, 2025 and 2024.

(d) Book values and fair values of financial instruments.  In addition to the derivatives that we are required to record at fair value on our balance sheet (see (c) above) we have investment securities that are recorded at fair value and included in other current assets in our balance sheet. Additionally, on our March 31, 2024 balance sheet, we had available-for-sale debt securities consisting of U.S. treasury notes with an aggregate fair value of $11.5 million as of March 31, 2024 and face values of $1.8 million and $10.0 million that matured on September 30, 2024 and March 15, 2025, respectively, that were recorded at fair value as a current asset on our balance sheet. We had no such available-for-sale debt securities on our March 31, 2025 balance sheet. We have other financial instruments that are carried at historical cost including trade accounts receivable, equity securities, at cost, amounts due from related parties, cash and cash equivalents, restricted cash, accounts payable, amounts due to related parties and accrued liabilities for which the historical carrying value approximates the fair value due to the short-term nature of these financial instruments.

The summary of gains and losses on our investment securities included in other gain/(loss), net on our consolidated statements of operations for the periods presented is as follows:

	Year ended
	March 31, 2025		March 31, 2024		March 31, 2023
Unrealized gain/(loss) on investment securities	$	(1,300,287)	$	1,483,522	$	1,443,683
Realized gain on investment securities		—		872,557		987,206
Net gain/(loss) on investment securities	$	(1,300,287)	$	2,356,079	$	2,430,889

We have long-term bank debt, the 2023 A&R Debt Facility, for which we believe the carrying value approximates fair value as the facility bears interest at variable interest rates based on SOFR at March 31, 2024 and 2023, which is observable at commonly quoted intervals for the full terms of the loans, and hence are considered as a Level 2 item in accordance with the fair value hierarchy. We have long-term debt related to the Corsair Japanese Financing, Cresques Japanese Financing, Cratis Japanese Financing, Copernicus Japanese Financing, Chaparral Japanese Financing, Cougar Japanese Financing, Caravelle Japanese Financing, and Captain Markos Dual-Fuel Japanese Financing, (collectively, the “Japanese Financings”) that incur interest at a fixed rate. We have long-term debt related to the BALCAP Facility that incurs interest at a fixed rate. The Japanese Financings and BALCAP Facility are considered Level 2 items in accordance with the fair value hierarchy and the fair value of each is based on a discounted cash flow analysis using current observable interest rates. The following table summarizes the carrying value and estimated fair value of our fixed rate debt obligations as of:

	March 31, 2025				March 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
Corsair Japanese Financing	$	27,895,834	$	27,449,194	$	31,145,834	$	29,624,330
Cresques Japanese Financing		23,840,367		25,079,649		25,608,991		26,180,173
Cratis Japanese Financing		37,420,000		35,683,595		41,500,000		38,302,845
Copernicus Japanese Financing		37,420,000		35,683,595		41,500,000		38,302,845
Chaparral Japanese Financing		57,316,129		56,960,711		59,896,473		57,627,652
Caravelle Japanese Financing		39,200,000		37,313,039		42,500,000		39,003,038
Cougar Japanese Financing		40,100,000		41,274,707		43,700,000		43,715,910
Captain Markos Dual-Fuel Japanese Financing		50,960,000		54,060,280		53,270,000		54,923,798
BALCAP Facility		58,266,112		56,498,815		66,330,459		62,186,682