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FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2020

FAIR VALUE OF FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE DISCLOSURES [Abstract]

The estimated fair values of the Company’s financial instruments, other than derivatives that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:


(Dollars in thousands)	Fair Value		Level 1		Level 2
June 30, 2020:
Cash and cash equivalents⁽¹⁾	$	144,461	$	144,461	$	—
Core Term Loan Facility		(290,524)		—		(290,524)
Transition Term Loan Facility		(40,000)		—		(40,000)
Sinosure Credit Facility		(257,916)		—		(257,916)
8.5% Senior Notes		(25,250)		(25,250)		—

December 31, 2019:
Cash and cash equivalents⁽¹⁾	$	150,243	$	150,243	$	—
2017 Term Loan Facility		(333,177)		—		(333,177)
ABN Term Loan Facility		(23,248)		—		(23,248)
Sinosure Credit Facility		(269,705)		—		(269,705)
8.5% Senior Notes		(26,120)		(26,120)		—
10.75% Subordinated Notes		(32,649)		—		(32,649)

(1)	Includes non-current restricted cash of $16.4 million and $60.6 million at June 30, 2020 and December 31, 2019, respectively.

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value


	Liability Derivatives
(Dollars in thousands)	Balance Sheet Location	Amount
June 30, 2020:
Derivatives designated as hedging instruments:
Interest rate swaps:
Current portion	Current portion of derivative liability	$	(9,227)
Long-term portion	Long-term derivative liability		(18,191)
Total derivatives designated as hedging instruments		$	(27,418)

December 31, 2019:
Derivatives not designated as hedging instruments:
Interest rate collar:
Current portion	Current portion of derivative liability	$	(1,230)
Long-term portion	Long-term derivative liability		(577)

Derivatives designated as hedging instruments:
Interest rate swaps:
Current portion	Current portion of derivative liability		(2,384)
Long-term portion	Long-term derivative liability		(5,968)
Total derivatives designated as hedging instruments		$	(10,159)

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Loss

The effect of cash flow hedging relationships recognized in other comprehensive loss excluding amounts reclassified from accumulated other comprehensive loss, including hedges of equity method investees, for the three and six months ended June 30, 2020 and 2019 follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2020		2019		2020		2019
Derivatives designated as hedging instruments:
Interest rate swaps	$	(2,828)	$	(8,737)	$	(18,949)	$	(12,828)
Interest rate cap		—		(199)		—		(1,107)
Total other comprehensive loss	$	(2,828)	$	(8,936)	$	(18,949)	$	(13,935)

The effect of cash flow hedging relationships on the condensed consolidated statement of operations is presented excluding hedges of equity method investees. The effect of the Company’s cash flow hedging relationships on the condensed consolidated statement of operations for the three and six months ended June 30, 2020 and 2019 follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)		2020		2019		2020		2019
Derivatives designated as hedging instruments:
Interest rate swaps	$	1,417	$	219	$	2,312	$	359
Interest rate cap		—		57		—		98

Derivatives not designated as hedging instruments:
Interest rate collar		—		—		1,352		—
Total interest expense	$	1,417	$	276	$	3,664	$	457

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the fair values, which are pre-tax, for assets and liabilities measured on a recurring basis (excluding investments in affiliated companies):


(Dollars in thousands)	Fair Value		Level 1		Level 2
Assets/(Liabilities) at June 30, 2020:
Derivative Assets (interest rate swaps)	$	—	$	—	$	—	⁽¹⁾
Derivative Liabilities (interest rate swaps)		(27,418)		—		(27,418)	⁽¹⁾

Assets/(Liabilities) at December 31, 2019:
Derivative Assets (interest rate swaps and collar)	$	—	$	—	$	—	⁽¹⁾
Derivative Liabilities (interest rate swaps and collar)		(10,159)		—		(10,159)	⁽¹⁾

(1)

For interest rate caps, swaps and collars, fair values are derived using valuation models that utilize the income valuation approach. These valuation models take into account contract terms such as maturity, as well as other inputs such as interest rate yield curves and creditworthiness of the counterparty and the Company.

Schedule of Fair Value, Assets and Liabilities Measured on Nonrecurring Basis

The following table summarizes the fair values of assets for which an impairment charge was recognized for the three and six months ended June 30, 2020:


(Dollars in thousands)		Fair Value		Level 2		Total Impairment Charges
Assets:
Crude Tankers - Vessels held for use ⁽¹⁾⁽²⁾	$	30,380	$	30,380	$	(5,469)

(1)	Pre-tax impairment charges of $5.5 million related to one 2002-built VLCC vessel in the Crude Tanker segment were recorded during the three-month period ended June 30, 2020.

(2)

Fair value measurement of $30.4 million at June 30, 2020 used to determine impairment for one 2002-built VLCC held for use was based upon a market approach, which considered the expected sales price of the vessel obtained from vessel appraisals. Because sales of vessel occur somewhat infrequently the expected sales price is considered to be Level 2.