FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2016

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934.

For the transition period from to

COMMISSION FILE NUMBER

001-34228

GENER8 MARITIME, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (212) 763-5600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒  No ☐

THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER’S CLASSES OF COMMON STOCK, AS OF MAY 9, 2016:

Common Stock, par value $0.01 per share 82,679,922 shares

GENER8 MARITIME, INC. AND SUBSIDIARIES

INDEX

Website Information

We intend to use our website, www.gener8maritime.com, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in our website’s Investor Relations section. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. To subscribe to our e-mail alert service, please click the “Investor Alerts” link in the Investor Relations section of our website and submit your email address. The information contained in, or that may be accessed through, our website is not incorporated by reference into or a part of this document or any other report or document we file with or furnish to the SEC, and any references to our website are intended to be inactive textual references only.

PART 1: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF

March 31, 2016 AND DECEMBER 31, 2015

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

See notes to condensed consolidated financial statements.

GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED March 31, 2016 AND 2015

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

(UNAUDITED)

See notes to condensed consolidated financial statements.

GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE three MONTHS ENDED march 31, 2016 AND 2015

(DOLLARS IN THOUSANDS)

(UNAUDITED)

See notes to condensed consolidated financial statements.

GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE three MONTHS ENDED march 31, 2016

(DOLLARS IN THOUSANDS)

(UNAUDITED)

See notes to condensed consolidated financial statements.

GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE three MONTHS ENDED march 31, 2016 AND 2015

(DOLLARS IN THOUSANDS)

(UNAUDITED)

See Note 2 for supplementary information of noncash items.

See notes to condensed consolidated financial statements.

GENER8 MARITIME, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS—Incorporated on August 1, 2008, under the Laws of Republic of the Marshall Islands, Gener8 Maritime, Inc. (formerly named General Maritime Corporation) and its wholly-owned subsidiaries (collectively, the “Company”) provides international transportation services of seaborne crude oil and petroleum products. The Company’s owned fleet at March 31, 2016 consisted of thirty two tankers in operation (fifteen Very Large Crude Carriers (“VLCCs”), eleven Suezmax tankers, four Aframax tankers, two Panamax tankers, and thirteen newbuilding VLCCs under construction. The Company operates its business in one business segment, which is the transportation of international seaborne crude oil and petroleum products.

The Company’s vessels are primarily available for charter on a spot voyage or time charter basis and for employment in commercial pools. Under a spot voyage charter, which generally lasts from several days to several months, the owner of a vessel agrees to provide the vessel for the transport of specific goods between specific ports in return for the payment of an agreed-upon freight per ton of cargo or, alternatively, for a specified total amount. All operating and specified voyage costs are paid by the owner of the vessel.

A time charter involves placing a vessel at the charterer’s disposal for a set period of time, generally one to three years, during which the charterer may use the vessel in return for the payment by the charterer of a specified daily or monthly hire rate. In time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel and specified voyage costs such as fuel, canal and port charges are paid by the charterer.

The Company is party to certain commercial pooling arrangements. Commercial pools are designed to provide for effective chartering and commercial management of similar vessels that are combined into a single fleet to improve customer service, increase vessel utilization and capture cost efficiencies.

On May 7, 2015, the Company consummated a merger pursuant to an agreement between Gener8 Maritime Acquisition, Inc., a wholly owned subsidiary of the Company, Navig8 Crude Tankers, Inc. and the equity holders’ representatives named therein. As a result of the merger, Gener8 Maritime Subsidiary Inc. (formerly known as Navig8 Crude Tankers, Inc.) became a wholly owned subsidiary of the Company, and the Company’s name was changed from General Maritime Corporation to Gener8 Maritime, Inc.

BASIS OF PRESENTATION—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and operating results, have been included in the financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s financial statements for the year ended December 31, 2015. The results of operations for the current and prior periods are not necessarily indicative of the operating results for the full year. The financial statements of the Company have been prepared on the accrual basis of accounting and presented in United States Dollars (USD or $) which is the functional currency of the Company. A summary of the significant accounting policies followed in the preparation of the accompanying financial statements, which conform to accounting principles generally accepted in the United States of America, is presented below.

PRINCIPLES OF CONSOLIDATION—The accompanying condensed consolidated financial statements include the accounts of Gener8 Maritime Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and cash equivalents—The Company considers highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less to be cash equivalents.

REVENUE AND EXPENSE RECOGNITION—Revenue and expense recognition policies for spot market voyage charters, time charters and pool revenues are as follows:

SPOT MARKET VOYAGE CHARTERS.  Spot market voyage revenues are recognized on a pro rata basis based on the relative transit time in each period. The period over which voyage revenues are recognized commences at the time the vessel departs from its last discharge port and ends at the time the discharge of cargo at the next discharge port is completed. The Company does not begin recognizing revenue until a charter has been agreed to by the customer and the Company, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its next voyage. The Company does not recognize revenue when a vessel is off hire. Estimated losses on voyages are provided for in full at the time such losses become evident. Voyage expenses primarily include only those specific costs which are borne by the Company in connection with voyage charters which would otherwise have been borne by the charterer under time charter agreements. These expenses principally consist of fuel, canal and port charges which are generally recognized as incurred. Demurrage income represents payments by the charterer to the vessel owner when loading and discharging time exceed the stipulated time in the spot market voyage charter. Demurrage income is measured in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage claims arise and is recognized on a pro rata basis over the length of the voyage to which it pertains. Direct vessel operating expenses are recognized when incurred. At March 31, 2016 and December 31, 2015, the Company has a reserve of approximately $7.6 million and $5.8 million, respectively, against its due from charterers balance associated with voyage revenues, including freight and demurrage revenues.

TIME CHARTERS.  Revenue from time charters is recognized on a straight‑line basis over the term of the respective time charter agreement. Direct vessel operating expenses are recognized when incurred. Time charter agreements require, among others, that the vessels meet specified speed and bunker consumption standards. The Company believes that there may be unasserted claims relating to its time charters of $0.4 million and $0.5 million as of both March 31, 2016 and December 31, 2015, respectively, for which the Company has reduced its amounts due from charterers to the extent that there are amounts due from charterers with asserted or unasserted claims or as an accrued expense to the extent the claims exceed amounts due from such charterers.

POOL REVENUES.  Pool revenue is determined in accordance with the terms specified within each pool agreement. In particular, the pool manager aggregates the revenues and expenses of all of the pool participants and distributes the net earnings to participants based on the following allocation key:

Vessels are chartered into the pool and receive net time charter revenue in accordance with the pool agreement. The time charter revenue is variable depending upon the net result of the pool and the pool points and trading days for each vessel. The pool has the right to enter into voyage and time charters with external parties for which it receives freight and related revenue. It also incurs voyage costs such as bunkers, port costs and commissions. At the end of each period, the pool aggregates the revenue and expenses for all the vessels in the pool and distributes net revenue to the participants based on the results of the pool and the allocation key. The Company recognizes net pool revenue on a monthly basis, when the vessel has participated in a pool during the period and the amount of pool revenue for the month can be estimated reliably.

CHARTERHIRE EXPENSE—Charterhire expense is the amount the Company pays the vessel owner for time chartered-in vessel. The amount is usually for a fixed period of time at charter rates that are generally fixed, but may contain a variable component based on inflation, interest rates, profit sharing, or current market rates. The vessel’s owner is responsible for crewing and other vessel operating costs. Charterhire expense is recognized ratably over the charterhire period.

VESSELS, NET—Vessels, net is stated at cost, less accumulated depreciation. Vessels are depreciated on a straight-line basis over their estimated useful lives, determined to be 25 years from date of initial delivery from the shipyard. If regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life would be adjusted, if necessary, at the date such regulations are adopted. Depreciation is based on cost, which was adjusted to fair value pursuant to fresh-start reporting when applicable, less the estimated residual scrap value. Depreciation expense of vessel assets for the three months ended March 31, 2016 and 2015 totaled $15.6 million and $9.6 million respectively. Undepreciated cost of any asset component being replaced is written off as a component of Loss on disposal of vessels and vessel equipment. Expenditures for routine maintenance and repairs are expensed as incurred. Vessel equipment is depreciated over the shorter of 5 years or the remaining life of the vessel.

VESSELS UNDER CONSTRUCTION— Vessels under construction represents the cost of acquiring contracts to build vessels, installments paid to shipyards, certain other payments made to third parties and interest costs incurred during the construction of vessels (until the vessel is substantially complete and ready for its intended use). During the three months ended March 31, 2016 and 2015, the Company capitalized interest expense associated with vessels under construction of $9.8 million and $3.5 million, respectively.

OTHER FIXED ASSETS, NET— Other fixed assets, net is stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the following estimated useful lives:

GOODWILL—The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-20-35, Intangibles—Goodwill and Other. This statement requires that goodwill and intangible assets with indefinite lives be tested for impairment at least annually or when there is a triggering event and written down with a charge to operations when the carrying amount of the reporting unit that includes goodwill exceeds the estimated fair value of the reporting unit. If the carrying value of the goodwill exceeds the reporting unit’s implied goodwill, such excess must be written off. Goodwill as of March 31, 2016 and December 31, 2015 was $26.3 million. It was determined that there was no indicator of goodwill impairment during the three months ended March 31, 2016 and 2015.

IMPAIRMENT OF LONG‑LIVED ASSETS—The Company follows FASB ASC 360‑10‑05, Accounting for the Impairment or Disposal of Long‑Lived Assets, which requires impairment losses to be recorded on long‑lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset’s carrying amount. In the evaluation of the future benefits of long‑lived assets, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long‑lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. The Company estimates fair value primarily through the use of third party valuations performed on an individual vessel basis. Various factors, including the use of trailing 10‑year industry average for each vessel class to forecast future charter rates and vessel operating costs, are included in this analysis. It was determined that there was no indicator of impairment for any vessel for the three months ended March 31, 2016 and 2015.

DEFERRED DRYDOCK COSTS, NET—Approximately every thirty to sixty months, the Company’s vessels are required to be dry‑docked for major repairs and maintenance, which cannot be performed while the vessels are operating. The Company defers costs associated with the drydocks as they occur and amortizes these costs on a straight‑line basis over the estimated period between drydocks. Amortization of drydock costs is included in depreciation and amortization in the condensed consolidated statements of operations. For the three months ended March 31, 2016 and 2015, amortization was $1.7 million and $1.1 million, respectively. Accumulated amortization as of March 31, 2016  and December 31, 2015 was $10.5 million and $8.8 million, respectively.

The Company only includes in deferred drydock costs those direct costs that are incurred as part of the drydock to meet regulatory requirements, or that are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include shipyard costs as well as the costs of placing

the vessel in the shipyard. Expenditures for normal maintenance and repairs, whether incurred as part of the drydock or not, are expensed as incurred.

DEFERRED FINANCING COSTS, NET—Deferred financing costs include bank fees and legal expenses associated with securing new loan facilities. These costs are amortized based upon the effective interest rate method over the life of the related debt, which is included in interest expense. Amortization for the three months ended March 31, 2016 and 2015 was $2.4 million and $0.2 million, respectively. During the year ended December 31, 2015, the Company adopted Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which resulted in the reclassification of debt issuance costs from deferred financing costs in other assets to a reduction in the carrying amount of the related debt liability within the Company’s condensed consolidated balance sheets.

ACCOUNTING ESTIMATES—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

SHARE-BASED COMPENSATION – STOCK OPTIONS—The Company calculates the fair value of stock options utilizing the Black-Scholes option pricing model. The parameters used include grant date, share price, exercise price, risk-free interest rate, expected option life, expected volatility (estimated based on historical share prices of similar listed companies) and expected dividends. The amount of share-based compensation recognized during a period is based on the fair value of the award at the time of issuance over the vesting period of the option.

INTEREST EXPENSE, NET—The Company follows the provisions of FASB ASC 835-20-30, Capitalization of Interest, to capitalize interest cost as part of the historical cost of acquiring certain assets.

The amount of interest cost to be capitalized for qualifying assets is intended to be that portion of the interest cost incurred during the assets’ acquisition periods that theoretically could have been avoided (for example, by avoiding additional borrowings or by using the funds expended for the assets to repay existing borrowings) if expenditures for the assets had not been made. The notion of interest on borrowings as an avoidable cost does not require that the practicability of repaying individual borrowings be considered.

The amount capitalized in an accounting period is determined by applying the capitalization rate to the average amount of accumulated expenditures for the asset during the period. The capitalization rates used in an accounting period are based on the rates applicable to borrowings outstanding during the period. If an entity’s financing plans associate a specific new borrowing with a qualifying asset, the entity may use the rate on that borrowing as the capitalization rate to be applied to that portion of the average accumulated expenditures for the asset that does not exceed the amount of that borrowing. If average accumulated expenditures for the asset exceed the amounts of specific new borrowings associated with the asset, the capitalization rate to be applied to such excess is a weighted average of the rates applicable to other borrowings of the entity.

NET INCOME PER SHARE— Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised using the treasury stock method.

CONCENTRATION OF CREDIT RISK—Financial instruments that potentially subject the Company to concentrations of credit risk are amounts due from charterers. As of March 31, 2016, the Company had placed the majority of its vessels in the Navig8 Group commercial vessel pools. As a result, a significant portion of the Company’s shipping revenue were derived from these pools during this period. During the three months ended March 31, 2016, the Company earned approximately 91.1% from Navig8 Group pools.

The Company maintains substantially all of its cash and cash equivalents with two financial institutions. Substantially all of the Company’s cash balances are not covered by insurance in the event of default by these financial institutions.

FOREIGN CURRENCY TRANSACTIONS—Gains and losses on transactions denominated in foreign currencies are recorded within the condensed consolidated statements of operations as components of general and administrative expenses or other expense depending on the nature of the transactions to which they relate.

TAXES—The Company is incorporated in the Republic of the Marshall Islands. Pursuant to the income tax laws of the Marshall Islands, the Company is not subject to Marshall Islands income tax. Additionally, pursuant to the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the Company is exempt from U.S. income tax on its income attributable to voyages that do not begin or end in the U.S. The Company is generally not subject to state and local income taxation. Pursuant to various tax treaties, the Company’s shipping operations are not subject to foreign income taxes. However, as a result of change in ownership of the Company, effective May 17, 2012, the Company no longer qualified for an exemption pursuant to Section 883 of the Code, making the Company subject to U.S. federal gross transportation tax on its shipping income that is derived from voyages that begin or end in the U.S., retroactive to the beginning of 2012. As a result of the Company’s Initial Public Offering (“IPO”), the Company in 2015 again qualified for an exemption from U.S. federal gross transportation tax pursuant to Section 883 of the Code on all of its shipping income (including income attributable to voyages that begin or end in the U.S.). During the three months ended March 31, 2016 and 2015, the Company recorded gross transportation tax of $0 and $0.3 million, respectively, as a component of voyage expenses.

RECENT ACCOUNTING PRONOUNCEMENTS— In April 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-10—Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU No. 2016-10 suggests guidance for stakeholders on identifying performance obligations and licenses in customer contracts. In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers. The core principle is that a company should recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014‑09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, and shall be applied either retrospectively to each period presented or as a cumulative‑effect adjustment as of the date of adoption. The Company is evaluating the potential impact of this standard update on its consolidated financial statements. 

In March 2016, the FASB issued ASU 2016-09—Compensation-Stock Compensation (Topic 718). This update affects all entities that issue share-based payment awards to their employees, and involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the effect of adoption on its financial statements and related disclosure.

In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 is intended to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In order to meet that objective, the new standard requires recognition of the assets and liabilities that arise from leases. A lessee will be required to recognize on the balance sheet the assets and liabilities for leases with lease terms of more than 12 months. The new standard is effective for public companies for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the effect that adopting this standard will have on its financial statements and related disclosures.

2. CASH FLOW INFORMATION

The Company excluded from cash flows from investing and financing activities in the condensed consolidated statements of cash flows items included in accounts payable and accrued expenses for accrued milestone and supervision payments of $67.7 million and $106.0 million for the period ended March 31, 2016 and December 31, 2015, respectively. Capitalized interest amounted to $9.8 million for the three months ended March 31, 2016, out of which, $3.0 has not been paid out as of March 31, 2016 (which is included in Long‑term debt in the condensed consolidated balance sheet). Capitalized interest amounted to $3.5 million for the three months ended March 31, 2015.

3. INCOME PER COMMON SHARE

The computation of basic income per share is based on the weighted-average number of common shares outstanding during the year. The computation of diluted earnings per share assumes the exercise of all dilutive stock options using the treasury stock method and the lapsing of restrictions on unvested restricted stock awards, for which the assumed proceeds upon lapsing the restrictions are deemed to be the amount of compensation cost attributable to future services and not yet recognized using the treasury stock method, to the extent dilutive.

The reconciliation of basic to diluted income per common share was as follows (in thousands, except per share amounts):

On May 7, 2015, all shares of Class A Common Stock and Class B Common Stock were converted on a one-to-one basis to a single class of common stock. As a result of the conversion in 2015, and since both Class A Common Stock and Class B Common Stock had equal rights to earnings and losses, the 2016 presentation of net income per share combines Class A Common Stock, Class B Common Stock and new common stock. Options to purchase 343,662 shares of Class A Common Stock were excluded from the above calculation for the three months ended March 31, 2015, because the impact is anti-dilutive. Warrants to purchase 1,431,520 shares of new common stock and options to purchase 13,420 shares of new common stock were also excluded from the above calculation for the three months ended March 31, 2016, because certain market conditions have not been met.

Additionally, on June 24, 2015, in connection with the pricing of the Company’s IPO, the Company granted members of management restricted stock units (“RSUs”) of the Company’s common stock pursuant to the Company’s amended 2012 Equity Incentive Plan. The remaining RSUs will vest in tranches on December 1, 2016, December 1, 2017 and December 1, 2018, subject for each increment to employment with the Company through the applicable vesting date for such increment. The RSUs were excluded in determining the diluted net income per share for the three months ended March 31, 2016, because the impact is anti-dilutive.

4. 2015 MERGER

On February 24, 2015, the Company entered into an Agreement and Plan of Merger (“2015 merger agreement”) with Gener8 Maritime Acquisition, Inc. (one of its wholly-owned subsidiaries, referred to as “Gener8 Acquisition”), Navig8 Crude Tankers, Inc. (“Navig8 Crude”) and each of the equityholders’ representatives named therein. Pursuant to the 2015 merger agreement, Gener8 Acquisition merged with and into Navig8 Crude (the “2015 merger”), with Navig8 Crude continuing as the surviving corporation and our wholly-owned subsidiary and being renamed Gener8 Maritime Subsidiary Inc. or “Gener8 Subsidiary.” Navig8 Crude’s former shareholders that are determined by the Company, based on certifications received by the Company from such shareholders following the closing of the 2015 merger, to be permitted to receive shares of the Company’s common stock pursuant to the Securities Act under the 2015 merger agreement are entitled to receive 0.8947 shares of our common stock for each common share of Navig8 Crude they owned immediately prior to the consummation of the transactions contemplated under the 2015 merger agreement. Navig8 Crude’s former shareholders that are not determined to be permitted to receive shares of the Company’s common stock pursuant to the Securities Act under the 2015 merger agreement (such as shareholders that are not “accredited investors”) are entitled to receive cash in an amount equal to the number of shares of the Company’s common stock such shareholder would have received multiplied by $14.348. Concurrently with the 2015 merger, the Company filed with the Registrar of Corporations of the Republic of the Marshall Islands its Third Amended and Restated Articles of Incorporation to, among other things, increase the Company’s authorized capital, reclassify the Company’s common stock into a single class of common stock and change the Company’s legal name to “Gener8 Maritime, Inc.”

The Company follows the guidance of FASB ASC, Topic 805, Business Combinations. Pursuant to this, the Company accounted for the 2015 merger as an asset acquisition.

The assets acquired through the 2015 merger primarily included 14 newbuilding VLCC vessels under construction, one time chartered-in VLCC vessel, the time charter for which expired in March 2016, and cash and cash equivalents. These assets were recorded on May 7, 2015 at cost, which approximates fair value, and the common stock issued on such date for the benefit of Navig8 Crude’s former shareholders was recorded based on costs of net assets acquired.

The assets acquired and the liabilities assumed from Navig8 Crude were recorded at cost, which approximates fair value, and included the following:

Immediately following the consummation of the 2015 merger on May 7, 2015, the Company’s shareholders prior to the 2015 merger owned approximately 34.9 million, or 52.55%, of the shares of its common stock and Navig8 Crude’s shareholders prior to the 2015 merger owned approximately 31.5 million, or 47.45% of the shares of the Company’s common stock.

Until twenty-four months following the anniversary of the closing of the 2015 merger, the Company is required, subject to a maximum amount of $75.0 million and a deductible of $5.0 million, to indemnify and defend the pre-merger shareholders of General Maritime or the former shareholders of Navig8 Crude, immediately prior to the 2015 merger, in

respect of certain losses arising from inaccuracies or breaches in the representations and warranties of, or the breach prior to the closing of the 2015 merger by, Navig8 Crude and General Maritime, respectively. Any amounts payable pursuant to such indemnification obligation will be satisfied by the issuance of shares of our common stock with a fair market value equal to the amount of the indemnified loss.

5. DELIVERY OF VESSELS

Gener8 Apollo

On January 5, 2016, Gener8 Apollo LLC, a wholly-owned subsidiary of the Company, took delivery of the Gener8 Apollo, a 2016-built VLCC newbuilding. Upon delivery, the Gener8 Apollo entered into the VL8 Pool. As of March 31, 2016, the Company borrowed approximately $59.6 million under the Korean Export Credit Facility to fund the delivery of the Gener8 Apollo. The Company has made all shipyard installment payments, and there is no outstanding payable balance in respect of the Gener8 Apollo.

Gener8 Supreme

On January 6, 2016, Gener8 Supreme LLC, a wholly-owned subsidiary of the Company, took delivery of the Gener8 Supreme, a 2016-built VLCC newbuilding. Upon delivery, the Gener8 Supreme entered into the VL8 Pool. As of March 31, 2016, the Company borrowed approximately $62.6 million under the Sinosure Credit Facility to fund the delivery of the Gener8 Supreme. The Company has made all shipyard installment payments, and there is no outstanding payable balance in respect of the Gener8 Supreme.

Gener8 Ares

On January 22, 2016, Gener8 Ares LLC, a wholly-owned subsidiary of the Company, took delivery of the Gener8 Ares, a 2016-built VLCC newbuilding. Upon delivery, the Gener8 Ares entered into the VL8 Pool. As of March 31, 2016, the Company borrowed approximately $61.1 million under the Korean Export Credit Facility to fund the delivery of the Gener8 Ares. The Company has made all shipyard installment payments, and there is no outstanding payable balance in respect of the Gener8 Ares.

Gener8 Hera

On February 24, 2016, Gener8 Hera LLC, a wholly-owned subsidiary of the Company, took delivery of the Gener8 Hera, a 2016-built VLCC newbuilding. Upon delivery, the Gener8 Hera entered into the VL8 Pool. As of March 31, 2016, the Company borrowed approximately $60.5 million under the Korean Export Credit Facility to fund the delivery of the Gener8 Hera. The Company has made all shipyard installment payments, and there is no outstanding payable balance in respect of the Gener8 Hera.

Gener8 Success

On March 22, 2016, Gener8 Success LLC, a wholly-owned subsidiary of the Company, took delivery of the Gener8 Success, a 2016-built VLCC newbuilding. Upon delivery, the Gener8 Success entered into the VL8 Pool. As of March 31, 2016, the Company borrowed approximately $59.9 million under the Sinosure Credit Facility to fund the delivery of the Gener8 Success. The Company has made all shipyard installment payments and there is no outstanding payable balance in respect of the Gener8 Success.

6. DISPOSAL OF VESSELS AND VESSEL EQUIPMENT

On December 30 2015, the Company entered into an agreement to sell the 2004-built Handymax tanker Gener8 Consul for $17.5 million, gross proceeds. As of December 31, 2015, the Gener8 Consul was classified as held for sale. On February 17, 2016, the sale was completed.

During both periods the three months ended March 31, 2016 and 2015, the Company recorded a loss on disposal of vessel equipment of $0.1 million. Losses on disposal of vessels include the cost of fuel consumed to deliver the vessels to their point of sale, as well as legal costs and commissions. The loss on disposal of vessel equipment relates to replacement of steel and vessel equipment.

7. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following (dollars in thousands):

Insurance claims receivable consist substantially of payments made by the Company for repairs of vessels that the Company expects, pursuant to the terms of the insurance agreements, to recover from the carrier within one year, net of deductibles which have been expensed. As of March 31, 2016 and December 31, 2015, the portion of insurance claims receivable not expected to be collected within one year of $1.1 million and $0.8 million, respectively, is included in Other assets (non‑current) on the condensed consolidated balance sheets. Other primarily represents advances to our third‑party technical managers.

8. VESSELS UNDER CONSTRUCTION

Vessels under construction consist of the following (dollars in thousands):

In March 2014, the Company acquired seven newbuilding contracts for VLCC tankers from Scorpio Tankers Inc. (the “2014 Acquired VLCC Newbuildings”) in a stock purchase transaction (“SPV Stock Purchase”).  Additionally,  the Company acquired 14 newbuilding contracts for VLCC tankers from Navig8 Crude in connection with the 2015 merger (the “2015 Acquired VLCC Newbuildings,” and together with the 2014 Acquired VLCC Newbuildings, the “Acquired VLCC Newbuildings”). As of March 31, 2016, the Company’s estimated commitments associated with

the Acquired VLCC Newbuildings through their expected delivery dates were approximately $753.9 million, of which $658.1 million and $95.8 million is due in the remaining period of 2016 and 2017, respectively.

During the three months ended March 31, 2016 and in accordance with their newbuilding contracts, three of the 2014 Acquired VLCC Newbuilding were delivered to the Company. As of March 31, 2016, two additional 2014 Acquired VLCC Newbuildings are scheduled to be delivered during 2016.

During the three months ended March 31, 2016 and in accordance with their newbuilding contracts, two of the 2015 Acquired VLCC Newbuildings were delivered to the Company. As of March 31, 2016, eleven additional 2015 Acquired VLCC Newbuilding are scheduled to be delivered during the remaining period of 2016 and early 2017.

See Note 20,  Subsequent Events for a discussion regarding the delivery of additional vessels.

9. fair value of financial instruments

The estimated fair values of the Company’s financial instruments are as follows (dollars in thousands):

The fair value of the Refinancing Facility, Korean Export Credit Facility and the Sinosure Credit Facility as of March 31, 2016 and December 31, 2015 was deemed to approximate the carrying value based on fact that the Company recently entered into these loan agreements in September 2015 and December 2015, as applicable. The fair value of the Senior Notes, included above as a component of long-term debt, was based on quoted yields of bond indices and is classified within Level 3 of the fair value hierarchy.

The carrying amounts of the Company’s other financial instruments at March 31, 2016 and December 31, 2015 (principally restricted cash and cash equivalents) approximate fair value and are considered to be Level 1 items.

On December 30 2015, the Company entered into an agreement to sell the 2004-built Handymax tanker Gener8 Consul. As of December 31, 2015, the Gener8 Consul was classified as held for sale. On February 17, 2016, the sale was completed.

The following table summarizes the valuation of assets measured on a nonrecurring basis (dollars in thousands):

10. OTHER ASSETS

Other assets consist of the following (dollars in thousands):

As of December 31, 2015, escrow deposits primarily represented the final installment payments for Gener8 Apollo. The Gener8 Apollo was delivered in January 2016 (see Note 5, DELIVERY of vessels).

11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following (dollars in thousands):

12. LONG‑TERM DEBT

Long‑term debt consists of the following (dollars in thousands):

Refinancing Facility

On September 3, 2015, the Company entered into a term loan facility (the “Refinancing Facility”) to refinance its former senior secured credit facilities. The Refinancing Facility provides for term loans up to the aggregate approximate amount of $581.0 million, which have been fully drawn. The loans under the Refinancing Facility will mature on September 3, 2020. The Refinancing Facility bears interest at a rate per annum based on London Interbank

Offered Rate (“LIBOR”) plus a margin of 3.75% per annum. If there is a failure to pay any amount due on a loan under the Refinancing Facility and related credit documents, interest shall accrue at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount. 

The Company is obligated to repay the Refinancing Facility in 20 consecutive quarterly installments which commenced on September 3, 2015. The Company is also required to prepay the Refinancing Facility upon the occurrence of certain events, such as the sale of a vessel held as collateral or total loss of a vessel.

Korean Export Credit Facility

On September 3, 2015, the Company entered into a term loan facility (the “Korean Export Credit Facility”) to fund a portion of the remaining installment payments due under shipbuilding contracts in respect of 15 of the Acquired VLCC Newbuildings being built at Korean shipyards. As of March 31, 2016, the Korean Export Credit Facility funded the delivery of 5 of these newbuildings.

The Korean Export Credit Facility provides for term loans up to the aggregate approximate amount of $963.7 million, which is comprised of a tranche of term loans to be made available by a syndicate of commercial lenders up to the aggregate approximate amount of $282.0 million (the “Commercial Tranche”), a tranche of term loans to be fully guaranteed by the Export-Import Bank of Korea (“KEXIM”) up to the aggregate approximate amount of up to $139.7 million (the “KEXIM Guaranteed Tranche”), a tranche of term loans to be made available by KEXIM up to the aggregate approximate amount of $197.4 million (the “KEXIM Funded Tranche”) and a tranche of term loans insured by Korea Trade Insurance Corporation (“K-Sure”) up to the aggregate approximate amount of $344.6 million (the “K-Sure Tranche”).

Borrowings under each term loan will be available to be incurred at or around the time of delivery of each VLCC newbuilding funded by the Korean Export Credit Facility in an amount equal to the lowest of (i) 65% of the final contract price of such VLCC newbuilding, (ii) 65% of the maximum contract price of such VLCC newbuilding and (iii) 60% of the fair market value of such VLCC newbuilding tested at or around the time of delivery of such VLCC newbuilding. The Company’s ability to utilize these funds is subject to the actual delivery of the vessel and other borrowing conditions. Each loan will mature, in respect of the Commercial Tranche, on the date falling 60 months from the date of borrowing of that loan and, in respect of the other tranches, on the date falling 144 months from the date of borrowing of that loan.

The Korean Export Credit Facility bears interest at a rate per annum based on LIBOR plus a margin of, in relation to the Commercial Tranche, 2.75% per annum, in relation to the KEXIM Guaranteed Tranche, 1.50% per annum, in relation to the KEXIM Funded Tranche, 2.60% per annum and in relation to the K-Sure Tranche, 1.70% per annum. If there is a failure to pay any amount due, interest shall accrue at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount.

The Company is obligated to repay the Commercial Tranche of each loan in 20 equal consecutive quarterly installments (excluding a final balloon payment equal to 2/3 of the applicable loan) of such loan and is obligated to repay the other tranches of each loan in 48 equal consecutive quarterly installments. The Company is also required to prepay the loans upon the occurrence of certain events, including a default under a shipbuilding contract, a sale or total loss of a vessel, and upon election by the majority lenders, upon a change of control of the Company.

Sinosure Credit Facility

On December 1, 2015, the Company entered into a term loan facility (the “Sinosure Credit Facility”) to fund a portion of the installment payments due under shipbuilding contracts in respect of four of the Acquired VLCC Newbuildings being built at Chinese shipyards. As of March 31, 2016, the Sinosure Credit Facility funded the delivery of 3 of these newbuildings. The Sinosure Credit Facility provides for term loans up to the aggregate approximate amount of $259.6 million.

Borrowings under each term loan will be available to be incurred at or around the time of delivery of each newbuilding funded by the Sinosure Credit Facility in an amount equal to the lowest of (i) 67.5% of the contract price of such VLCC newbuilding, (ii) 67.5% of the maximum contract price of such VLCC newbuilding and (iii) 65% of the fair market value of such VLCC newbuilding tested at or around the time of delivery of such VLCC newbuilding. The Company’s ability to utilize these funds is subject to the actual delivery of the vessel and other borrowing conditions. Each loan will mature on the date falling 144 months from the date of borrowing of that loan.

The Sinosure Credit Facility bears interest at a rate per annum based on LIBOR plus a margin of 2.00% per annum. If there is a failure to pay any amount due on a loan, interest shall accrue at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount.

The Company is obligated to repay each loan under the Sinosure Credit Facility in equal consecutive quarterly installments (excluding a final balloon payment equal to 20% of the applicable loan), each in an amount equal to 1 2/3% of such loan, on each of March 21, June 21, September 21 and December 21 until the loan’s maturity date. On the respective maturity date, the Company is obligated to repay the remaining amount that is outstanding under each loan. The Company is also required to prepay the loans upon the occurrence of certain events, including a default under a shipbuilding contract, a sale or total loss of a vessel and, upon election by The Export-Import Bank of China and one other lender, upon a change of control of the Company.

Senior Notes

On March 28, 2014, the Company and Gener8 Maritime Sub V entered into a Note and Guarantee Agreement (the “Note and Guarantee Agreement”), with affiliates of BlueMountain Capital Management, LLC, in respect of the Company’s issuance of senior unsecured notes due 2020 (the “Senior Notes”). On May 13, 2014, the Company issued the Senior Notes in the aggregate principal amount of $131.6 million for proceeds of approximately $125 million (before fees and expenses), after giving effect to the original issue discount provided for in the Note and Guarantee Agreement. As of March 31, 2016 and December 31, 2015, the discount on the Senior Notes was $5.5 million and $5.7 million, respectively, which the Company amortizes as additional interest expense until March 28, 2020.

Interest on the Senior Notes accrues at the rate of 11.0% per annum in the form of additional Senior Notes and the balloon repayment is due 2020, except that if the Company at any time irrevocably elects to pay interest in cash for the remainder of the life of the Senior Notes, interest on the Senior Notes will thereafter accrue at the rate of 10.0% per annum.

Interest Expense

Interest expense, net consist of the following (amounts in thousands):

Financial Covenants

Under the Refinancing Facility, the Korean Export Credit Facility and the Sinosure Credit Facility, the Company is required to comply with various collateral maintenance and financial covenants, including with respect to its maximum leverage ratio, minimum cash balance and an interest expense coverage ratio covenant. The lenders also requires the Company to comply with a number of customary covenants, including covenants related to the delivery of quarterly and annual financial statements, budgets and annual projections; maintaining required insurances; compliance with laws (including environmental); maintenance of flag and class of the collateral vessels; restrictions on consolidations, mergers or sales of assets; limitations on liens; limitations on issuance of certain equity interests; limitations on restricted payments; limitations on transactions with affiliates; and other customary covenants and related provisions. As of March 31, 2016, the Company was in compliance with all such covenants that were in effect on such date.

The Refinancing Facility, the Korean Export Credit Facility and the Sinosure Credit Facility also contains certain restrictions on payments of dividends and prepayments of the indebtedness under the Note and Guarantee Agreement. The Refinancing Facility, the Korean Export Credit Facility and the Sinosure Credit Facility permit the Company to pay dividends and make prepayments under the Note and Guarantee Agreement so long as the Company satisfies certain conditions under these facilities’ minimum cash balance and collateral maintenance tests subject to a limit of 50% of consolidated net income earned by the Company after the date of the respective facility. For purposes of calculating consolidated net income, consolidated net income will be adjusted, without duplication, by adding noncash interest expense and amortization of other fees and expenses; amounts attributable to impairment charges on intangible assets, including amortization of goodwill; non-cash management retention or incentive program payments; non-cash restricted stock compensation; and losses on minority interests or investments less gains on such minority interests or investments. The Company is also permitted to pay dividends in an amount not to exceed net cash proceeds received from its issuance of equity after the date of the respective facility. It may also make prepayments under the Note and Guarantee Agreement from the proceeds received from sale of assets so long as it satisfies certain conditions under its minimum cash balance and collateral maintenance tests. Further, the Company is allowed to refinance the Note and Guarantee Agreement subject to certain restrictions and repay the outstanding indebtedness under the Note and Guarantee Agreement on the maturity date of the Note and Guarantee Agreement.

13. VESSEL POOL ARRANGEMENTS

2011 VLCC Pool

During the second quarter of 2011, the Company agreed to enter five of its VLCCs into a commercial pool of VLCCs (the “2011 VLCC Pool”) managed by a third‑party company (“2011 VLCC Pool Operator”). Through March 31, 2012, the Genmar Vision, the Genmar Ulysses, the Genmar Zeus, the Genmar Hercules and the Genmar Victory were delivered into the 2011 VLCC Pool.

The subsidiaries of the Company which own the Genmar Poseidon and the Genmar Atlas entered into time charters with a subsidiary company of the 2011 VLCC Pool Operator which in turn delivered those vessels into the 2011 VLCC Pool in July 2011. These two time charters were at market related rates, subject to a floor of $15 thousand per day and a 50% profit share above $30 thousand per day. The Genmar Atlas and the Genmar Poseidon time charters were terminated and the vessels were removed from the 2011 VLCC Pool in October 2012 and June 2013, respectively.

As each vessel entered the 2011 VLCC Pool, the Company was required to fund a working capital reserve of $2.0 million per vessel, which was increased to $2.5 million per vessel during the fourth quarter of 2012. This reserve was being accumulated over an eight‑month period via $250 thousand per month being withheld from distributions of revenues earned. The 2011 VLCC Pool Operator is responsible for the working capital reserve for the two vessels it charters. For the five vessels delivered directly into the 2011 VLCC Pool by December 31, 2012, there is a working capital reserve of $1.9 million as of March 31, 2016 and December 31, 2015. All five of these vessels left the 2011 VLCC Pool by the end of May 2013, while the Company continues to own and operate these vessels. These five vessels have receivables from the 2011 VLCC Pool, including the working capital reserve, amounting to $3.5 million, which is recorded on the condensed consolidated balance sheet as Other assets, as of March 31, 2016 and December 31, 2015 for

undistributed earnings and bunkers onboard the vessels when they entered into the 2011 VLCC Pool and certain other advances made by the Company on behalf of the vessels in the 2011 VLCC Pool.

See Note 19, Commitments and Contingencies for discussion regarding a dispute on balances due from the 2011 VLCC Pool.

Unique Tankers Pool

On November 29, 2012, Unique Tankers LLC, a wholly‑owned subsidiary of the Company (“Unique Tankers”), entered into an Agency Agreement (the “Unique Agency Agreement”) with Unipec UK Company Limited (“Unipec”) for purposes of establishing and operating a pool of tanker vessels (the “Unique Pool”) to be employed in the worldwide carriage or storage of crude oil, fuel oil or other products. Pursuant to the Unique Agency Agreement, Unique Tankers is jointly managed by Gener8 Maritime Management LLC, a wholly‑owned subsidiary of the Company (“GMM”), and Unipec through a pool committee (the “Unique Pool Committee”).

Unique Tankers chartered in tanker vessels (“Unique Pool Vessels”) under time charters providing vessel owners with a charter hire based on the earnings of all of the vessels entered in the Unique Tankers pool and pool weightings assigned to the vessels pursuant to pool participation agreements entered into with vessel owners. In turn, Unique Tankers deployed Unique Pool Vessels as agent of the vessel owners/disponent owners to its customers.

Subject to the direction of the Unique Pool Committee, GMM acts as Unique Pool manager, providing administrative services to Unique Tankers. GMM also oversees, monitors and assists with, commercial management of the Unique Pool Vessels. GMM is entitled to receive a fixed fee per day for each Unique Pool Vessel for such services. All such fees have been eliminated in consolidation. For the three months ended March 31, 2016 and 2015, all of the vessels in the Unique Pool were owned by the Company. Pursuant to the Unique Agency Agreement, Unipec acted as the exclusive commercial manager of the Unique Pool Vessels, and as compensation received a certain percentage of the gross voyage revenues obtained by each Unique Pool Vessel (the “Unique Agency Fee”). For the three months ended March 31, 2016 and 2015, the Unique Agency Fee amounted to $0 and $0.8 million, respectively. The Unique Agency Fee is included in Voyage Expenses on the condensed consolidated statements of operations.

On May 7, 2015, the Company delivered to Unipec a notice of termination under certain of its pool-related agreements between Unipec and Unique Tankers, including the Unique Agency Agreement. As of March 31, 2016, none of the Company’s vessels were deployed in the Unique Pool.

Navig8 Pools

The Company employs all of its VLCC, Suezmax and Aframax vessels, with the exception of two VLCCs that remain on time and spot charters, in Navig8 Group commercial crude tanker pools including the VL8 Pool, the Suez8 Pool and the V8 Pool. In 2015, certain of the Company’s VLCC, Suezmax, Aframax and newbuilding owning subsidiaries (but not the subsidiaries for the Gener8 Victory and Gener8 Vision) entered into pool agreements with the pool managers VL8 Pool Inc. and V8 Pool Inc., subsidiaries of Navig8 Limited, the beneficial owner of over 4% of the Company’s outstanding common shares as of March 31, 2016. See Note 16, Related Party Transactions, for a description of the pool arrangements with these related parties. 

14. LEASE COMMITMENTS

In July 2015, the Company amended its office lease to, among other things, extend the lease term for an additional five year period commencing on October 1, 2020 at a rate of $0.2 million per month. During the three months ended March 31, 2016 and 2015, the Company recorded expense associated with this lease of $0.5 million and $0.4 million, respectively. After the lease amendment, future minimum rental payments on this lease for the next five years are as follows: 2016— $1.0 million (from April 1, 2016), 2017— $1.5 million, 2018— $1.5 million, 2019—$1.5 million, 2020—$1.7 million and thereafter—$10.4 million.

On June 30, 2015, the Company increased its letter of credit and related cash collateral in anticipation of the extension of its office lease. As of March 31, 2016 and December 31, 2015, the Company had an outstanding letter of credit of $1.4 million, respectively, as required under the terms of its office lease. This letter of credit is secured by cash placed in a restricted account amounting to $1.4 million as of March 31, 2016 and December 31, 2015.

15. CLOSING OF PORTUGAL OFFICE

The Company announced the closing of its Portugal office to its employees on April 2014. As of December 31, 2015, the Portugal office was officially closed and the Company incurred approximately $5.6 million, in one‑time charges associated with the closing, including severance of $4.7 million. The Company outsources the management of the vessels that have been managed by the Portugal office to a third‑party ship manager with its principal office in Mumbai, India. Management commenced the change of management of the vessels in May 2014 and completed the change in November 2014.

For the three months ended March 31, 2016 and 2015, costs incurred associated with the closing of the Portugal office amounted to $0 million and $0.2 million, respectively, and are included in Closing of Portugal office on the condensed consolidated statements of operations. The Company concluded the closure of our Portugal office during the fourth quarter of 2015.

16. RELATED PARTY TRANSACTIONS

The following are related party transactions not disclosed elsewhere in these financial statements:

VL8 Pool

Navig8 Group consists of Navig8 Limited, the beneficial owner of over 4% of the Company’s outstanding common shares, and all of its subsidiaries. These subsidiaries include Navig8 Shipmanagement Pte Ltd., Navig8 Asia Pte Ltd, VL8 Management Inc., Navig8 Inc., VL8 Pool Inc. (the VL8 pool manager), V8 Management, Inc., V8 Pool Inc. (the V8 pool and Suez8 pool manager) and Integr8 Fuels Inc.

In 2015, each of the Company’s VLCC then-existing newbuilding or vessel owning subsidiaries (other than for the Gener8 Victory and Gener8 Vision) entered into a pool agreement with VL8 Pool Inc., a subsidiary of Navig8 Limited and the pool operator of the VL8 pool. VL8 Pool Inc. acts as the time charterer of the pool vessels and will enter the pool vessels into employment contracts such as voyage charters. VL8 Pool Inc. allocates the revenue of VL8 pool vessels between all the pool participants based on pool results and a pre-determined allocation method. Pursuant to each pool agreement the Company is required to pay an administration fee of $325.00 per day per vessel.

As of March 31, 2016, thirteen of the Company’s owned VLCC vessels have entered into the VL8 pool. During the three months ended March 31, 2016, the Company earned net pool distributions of $62.5 million from VL8 Pool and these amounts are included in Navig8 pool revenues on the condensed consolidated statement of operations. As of March 31, 2016 and December 31, 2015, a balance of $24.8 million and $17.3 million, respectively, is unpaid and is included in Due from Navig8 pools on the condensed consolidated balance sheet.

From the closing of the 2015 merger until March 2016, the Nave Quasar was chartered-in from Navig8 Inc., a subsidiary of Navig8 Limited, at a gross daily rate of $26 thousand, and the pool earnings were subject to a 50% profit share with Navig8 Inc. for earnings above $30 thousand per day. For the three months ended March 31, 2016, the related expense amounted to $3.3 million, and is included in Navig8 charterhire expenses on the condensed consolidated statement of operations. In March 2016, the Company re-delivered the Nave Quasar to the owner.

Suez8 Pool

In 2015, each of the Company’s Suezmax vessel owning subsidiaries entered into pool agreements with V8 Pool Inc., a subsidiary of Navig8 Limited and the pool operator of the Suez8 pool. V8 Pool Inc. acts as the time charterer of the pool vessels and will enter the pool vessels into employment contracts such as voyage charters.V8 Pool Inc.

allocates the revenue of Suez8 pool vessels between all the pool participants based on pool results and pre-determined allocation method. Pursuant to the pool agreement, the Company is required to pay an administration fee of $325.00 per day per vessel.

As of March 31, 2016, eleven of the Company’s Suezmax vessels have entered into the Suez8 pool. During the three months ended March 31, 2016, the Company earned net pool distributions of $37.4 million, from Suez8 pool and these amounts are included in Navig8 pool revenues on the condensed consolidated statement of operations. As of March 31, 2016 and December 31, 2015, a balance of $16.8 million and $15.5 million, respectively, is unpaid and is included in Due from Navig8 pools on the condensed consolidated balance sheet.

V8 Pool

In 2015, each of the Company’s Aframax vessel owning subsidiaries entered into a pool agreement with V8 Pool Inc., a subsidiary of Navig8 Limited and the operator of the V8 pool. V8 Pool Inc. acts as the time charterer of the pool vessels and will enter the pool vessels into employment contracts such as voyage charters. V8 Pool Inc. allocates the revenue of the V8 pool vessels between all the pool participants based on pool results and pre-determined allocation method. Pursuant to the pool agreement, the Company is required to pay an administration fee of $250.00 per day per vessel.

As of March 31, 2016, four of the Company’s Aframax vessels have entered into the V8 pool. During the three months ended March 31, 2016, the Company received net pool distributions from the V8 pool of $9.2 million, and these amounts are included in Navig8 pool revenues on the condensed consolidated statement of operations. As of March 31, 2016 and December 31, 2015, a balance of $5.0 million and $5.3 million, respectively, is unpaid and is included in Due from Navig8 pools on the condensed consolidated balance sheet.

Working Capital at Navig8 Pools

The Company is required to provide working capital of $1.5 million to VL8 Pool Inc. upon delivery of each vessel into the VL8 pool; and to provide working capital of $1.0 million and $0.8 million to V8 Pool Inc. upon delivery of each vessel into the Suez8 pool and V8 pool, respectively. During the first quarter of 2016, Navig8 Group revised the working capital requirements of the Navig8 pools whereby participants provide working capital of $1.0 million, $0.8 million and $0.7 million to VL8 Pool Inc. in respect of theVL8 pool, V8 Pool Inc. in respect of the Suez8 pool and V8 Pool Inc. in respect of the V8 pool, respectively, for each applicable vessel delivered into the pool.

As of March 31, 2016 and December 31, 2015, the working capital associated with the Company’s owned vessels entered into the VL8 pool, Suez8 pool, and V8 pool aggregated to $27.0 million and $26.0 million, respectively, and is included in Working capital at Navig8 pools on the condensed consolidated balance sheet as noncurrent assets.

Navig8 Supervision Agreement

The Company has supervision agreements with Navig8 Shipmanagement Pte Ltd., or “Navig8 Shipmanagement,” a subsidiary of Navig8 Limited, with regards to the 2015 Acquired VLCC Newbuildings whereby Navig8 Shipmanagement agrees to provide advice and supervision services for the construction of the newbuilding vessels. These services also include project management, plan approval, supervising construction, fabrication and commissioning and vessel delivery services. As per the supervision agreements, Gener8 Subsidiary agrees to pay Navig8 Shipmanagement a total fee of $0.5 million per vessel. During the three months ended March 31, 2016, the Company recorded supervision fees of $0.3 million, and $3.9 million remained outstanding as of March 31, 2016.

Corporate Administration Agreement

On December 17, 2013, Navig8 Crude, which merged into a subsidiary of the Company on May 7, 2015, entered into a corporate administration agreement with a subsidiary of Navig8 Limited, whereby the Navig8 Limited subsidiary agreed to provide certain administrative services for Navig8 Crude. In accordance with the corporate administration agreement, Navig8 Crude agreed to pay the Navig8 Limited subsidiary a fee of $250.00 per vessel or

newbuilding owned by Navig8 Crude per day. During the three months ended March 31, 2016, the Navig8 Limited subsidiary billed the Company a total of $0.3 million for corporate administration fees. A payable balance of $0.1 million remained outstanding as of March 31, 2016.

Other Related Party Transactions

During the three months ended March 31, 2016 and 2015, the Company incurred office expenses totaling $2.0 thousand, during each period, on behalf of P C Georgiopoulos & Co. LLC, an investment management company controlled by Peter C. Georgiopoulos, the Chairman of the Company’s Board and Chief Executive Officer. As of March 31, 2016 and December 31, 2015, a balance due from P C Georgiopoulos & Co., LLC of $9.0 thousand and $7.0 thousand, respectively, remains outstanding.

The Company incurred fees for legal services aggregating $0 and $2 thousand, during the three months ended March 31, 2016 and 2015, respectively, due to the father of Mr. Georgiopoulos. As of March 31, 2016 and December 31, 2015, there was no balance due to the father of Mr. Georgiopoulos.

The Company incurred certain business, travel, and entertainment costs totaling $24 thousand and $30 thousand, during the three months ended March 31, 2016 and 2015, respectively, on behalf of Genco Shipping & Trading Limited (“Genco”), an owner and operator of dry bulk vessels. Mr. Georgiopoulos is chairman of Genco’s board of directors. As of March 31, 2016 and December 31, 2015, a balance due from Genco of $8.0 thousand at each date remains outstanding.

Aegean Marine Petroleum Network, Inc. (“Aegean”) supplied bunkers and lubricating oils to the Company’s vessels aggregating $1.1 million and $2.0 million, during the three months ended March 31, 2016 and 2015, respectively.  As of March 31, 2016 and December 31, 2015, a balance of $0.6 million and $0.8 million, respectively, remains outstanding. Mr. Georgiopoulos is the chairman of Aegean’s board of directors, and John Tavlarios, the Company’s Chief Operating Officer, is on the board of directors of Aegean. In addition, the Company provided office space to Aegean and Aegean incurred rent and other expenses in its New York office during the three months ended March 31, 2016 and 2015, for $51.0 thousand and $52.0 thousand, respectively. As of March 31, 2016 and December 31, 2015, a balance of $0.3 thousand and $4.0 thousand, respectively, remains outstanding.

The Company provided office space to Chemical Transportation Group, Inc. (“Chemical”), an owner and operator of chemical vessels for $17.0 thousand and $15.0 thousand, during the three months ended March 31, 2016 and 2015, respectively. Mr. Georgiopoulos is chairman of Chemical’s board of directors. As of March 31, 2016 and December 31, 2015, a balance of $1.0 thousand and $0, respectively, remains outstanding.

During 2013, the Company assigned certain payments associated with bunker supply contracts with third‑party vendors amounting to $20,364 to Oaktree Principal Bunker Holdings Ltd., which is managed by Oaktree Capital Management, L.P. One board member of the Company is employed by Oaktree Capital Management, L.P. Prior to the consummation of the 2015 merger on May 7, 2015, three members of the Board were associated with or employed by Oaktree Capital Management, L.P. The fees incurred to Oaktree Principal Bunker Holdings Ltd. for this assignment amounted to $0 and $0.8 million for the three months ended March 31, 2016 and 2015, respectively, and this amount is included in Voyage expenses on the condensed consolidated statement of operations. As of March 31, 2016 and December 31, 2015, there are no balances due to Oaktree Principal Bunker Holdings Ltd.

The Company purchased bunkers from Integr8 Fuels Inc., a subsidiary of Navig8 Limited, amounting to $0 and $2.8 million for the three months ended March 31, 2016 and 2015, respectively. There are no payable balances due to Integr8 Fuels Inc. as of March 31, 2016 and December 31, 2015. 

Amounts due from the related parties described above as of March 31, 2016 and December 31, 2015 are included in Prepaid expenses and other current assets on the condensed consolidated balance sheets (except as otherwise indicated above); amounts due to the related parties described above as of March 31, 2016 and December 31, 2015 are included in Accounts payable and accrued expenses on the condensed consolidated balance sheets (except as otherwise indicated above).

17. STOCK‑BASED COMPENSATION AND WARRANTS

Stock Options under 2012 Equity Incentive Plan

In connection with the 2015 merger and the grant to members of the Company’s management of restricted stock options upon the pricing of the IPO, the outstanding stock options for 343,662 shares under the 2012 Equity Inventive Plan were surrendered and cancelled on June 24, 2015, and unamortized balance was expensed immediately. For the three months ended March 31, 2016 and 2015, amortization of the fair value of these stock options was $0 and $0.2 million, respectively, which is included in the Company’s condensed consolidated statements of operations as a component of general and administrative expense.

2015 Restricted Stock Units

On June 24, 2015, in connection with the pricing of the Company’s IPO, the Company granted members of management restricted stock units (“RSUs”) on 1,663,660 shares of the Company’s common stock pursuant to the Company’s amended 2012 Equity Incentive Plan. The RSUs, which were valued at the IPO price of $14.00 per share,  vest ratably in 20% increments or tranches on June 24, 2015, June 30, 2015, December 1, 2016, December 1, 2017 and December 1, 2018, subject for each increment to employment with the Company through the applicable vesting date for such increment. The shares for the first two vesting increments were issued within three business days after December 3, 2015 and the shares for the remaining vesting increments are expected to be issued within a similar short period of time following the vesting date for each of such increments. The unvested RSUs were excluded in determining the diluted net income per share for the three months ended March 31, 2016 (see Note 3, INCOME PER COMMON SHARE). On December 3, 2015, the Company issued 574,546 shares in settlement of RSUs that had vested on June 24, 2015 and June 30, 2015. As of March 31, 2016, 44,919 RSUs have been forfeited and 953,279 shares remain to be issued in future years, following the vesting date for each increment. 

Stock options under the 2012 Equity Incentive Plan had been cancelled in connection with the granting of the RSUs. The incremental compensation cost of these RSUs on their grant date of $21,952 was calculated to be the excess of the fair value of the RSUs over the fair value of the cancelled stock options immediately prior to cancellation and will be amortized over the vesting period using a graded amortization schedule. For the three months ended March 31, 2016, compensation expense of $1.4 million, in connection with the RSUs is included in the Company’s condensed consolidated statements of operations as a component of general and administrative expense.

2015 Warrant Agreement

In connection with the 2015 merger, the Company entered into an amended and restated warrant agreement (the “2015 Navig8 warrant agreement”) with Navig8 Limited. Under the 2015 Navig8 warrant agreement, 1,600,000 warrants that had, prior to the Navig8 merger, provided Navig8 Limited had the right to purchase 1,600,000 shares of Navig8 Crude common stock at $10 per share , which were converted in connection with the 2015 merger into warrants entitling Navig8 Limited to purchase 0.8947 shares of our common stock for each warrant held for a purchase price of $10.00 per warrant, or $11.18 per share. The 2015 Navig8 warrant agreement expired on March 31, 2016.

2015 Stock Options

In connection with the 2015 merger, the Company agreed to convert each outstanding option to acquire Navig8 Crude common stock into an option to acquire the number of shares of the common stock of the Company equal to the product obtained by multiplying (i) the number of shares of Navig8 Crude common stock subject to such stock option immediately prior to the consummation of the 2015 merger by (ii) 0.8947, at an exercise price per share equal to the quotient obtained by dividing (A) the per share exercise price specified in such stock option immediately prior to the 2015 merger by (B) 0.8947. Immediately prior to the consummation of the 2015 merger, there was one option to purchase 15,000 shares of Navig8 common stock at $13.50 per share; this option was converted into an option to purchase 13,420 of the Company’s common shares at an exercise price of $15.088 per share. The Company also agreed to treat the option agreement as exercisable through July 8, 2017.

The fair value of the stock option was calculated by using the Black-Scholes option pricing model. As this stock option was assumed by the Company in conjunction with the 2015 merger, the fair value of this stock option at the date of the 2015 merger of $39.0 thousand was included as part of vessel acquisition costs within Vessels-under-construction as of March 31 2016.

18. COMMON STOCK

At the closing of the 2015 merger, the Company deposited into an account maintained by the 2015 merger exchange and paying agent, in trust for the benefit of Navig8 Crude’s former shareholders, 31,233,170 shares of the Company’s common stock and $4.5 million in cash. The number of shares and amount of cash deposited into such account was calculated based on an assumption that the former holders of 1% or less of Navig8 Crude’s shares would not be permitted under the 2015 merger agreement to receive shares of the Company as consideration and would receive cash instead. During the period from May 8, 2015 (post-merger) to December 31, 2015, all of these shares and 232,819 additional shares were issued to former shareholders of Navig8 Crude as merger consideration and $3.3 million of cash was returned to the Company from the trust account since the former holders of more than 99.0% of Navig8 Crude’s shares received shares of the Company as consideration. As of December 31, 2015, $1.2 million in cash and 31,465,989 shares were issued to former shareholders of Navig8 Crude as merger consideration. As of March 31, 2016, $29.0 thousands of cash remained in the trust account.

On June 30, 2015, the Company completed its IPO of 15,000,000 shares at $14.00 per share, which resulted in gross proceeds of $210.0 million. After underwriting commissions, the Company received net proceeds of $196.4 million. On July 17, 2015, following the exercise by the underwriters of the IPO of their over-allotment option to purchase 1,882,223 shares of common stock at the public offering price of $14.00 per share, the Company closed the issuance and sale of such shares, resulting in additional gross proceeds of $26.4 million and net proceeds of $24.6  million after underwriting commissions and other registration expenses. Additionally, the Company incurred $6.5 million of issuance costs.

19. COMMITMENTS AND CONTINGENCIES

From time to time the Company has been, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of its business, principally personal injury and property casualty claims. Such claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

GENMAR PROGRESS

In August 2007, an oil sheen was discovered and reported by shipboard personnel in the vicinity of the Genmar Progress, in Guayanilla Bay, Puerto Rico. Subsequently, the U.S. Coast Guard formally designated the Genmar Progress as a source of the pollution incident. In October 2010, the United States, GMR Progress, LLC, and General Maritime Management (Portugal) L.d.A. executed a Joint Stipulation and Settlement Agreement. Pursuant to the terms of this agreement, the United States agreed to accept $6.3 million in full satisfaction of oil spill response costs of the Coast Guard and certain natural damage assessment costs incurred through the date of settlement. The settlement had been paid in full by the vessel’s protection & indemnity underwriters.

In April 2013, the Natural Resource Trustees for the United States and the Commonwealth of Puerto Rico, or the “Trustees,” submitted a claim to GMR Progress, LLC and General Maritime Management (Portugal) L.d.A. for alleged injury to natural resources as a result of this oil spill, primarily seeking monetary damages in the amount of $4.9 million for both loss of beach use and compensation for injury to natural resources such as mangroves, sea grass and coral. On July 7, 2014, the Trustees presented a revised claim for $7.9 million, consisting of $0.9 million for loss of beach use, $5.0 million for injuries to mangroves, sea grass and coral and for uncompensated damage assessment costs and $2.0 million for a 35% contingency for monitoring and oversight. In October 2015, the parties reached an agreement to settle this claim for $2.8 million plus interest, which remains subject to approval by the federal court in Puerto Rico and other customary requirements. The settlement was reported to the vessel’s protection & indemnity underwriters, who are expected to fund the settlement of any such claim.

2011 VLCC POOL DISPUTE

Pursuant to an arbitration commenced in January 2013, on August 2, 2013, five vessel owning subsidiaries of the Company (the “2011 VLCC Pool Subs”) that entered into the 2011 VLCC Pool submitted to London arbitration in accordance with the terms of the London Maritime Arbitrator’s Association claims of balances due following the withdrawal of their respective vessels from the 2011 VLCC Pool. The claims are for, among other things, amounts due for hire of the vessels and amounts due in respect of working capital invested in the 2011 VLCC Pool. The respondents in the arbitrations, the 2011 VLCC Pool Operator and agent, assert that lesser amounts are owed to the 2011 VLCC Pool Subs by the 2011 VLCC Pool and that the working capital amounts of approximately $1.9 million in the aggregate are not due to be returned until a later date pursuant to the terms of the pool agreements. The respondents also counterclaim for damages for alleged breaches of collateral contracts to the pool agreements, claiming that such contracts purport to extend the earliest date by which the 2011 VLCC Pool Subs were entitled to withdraw their vessels from the 2011 VLCC Pool. Such counterclaim for damages has not yet been quantified. Submissions in this arbitration have closed.

ATLAS CHARTER DISPUTE

On April 22, 2013, GMR Atlas LLC, a vessel owning subsidiary of the Company, submitted to arbitration in accordance with the terms of the London Maritime Arbitrator’s Association a claim for declaratory relief as to the proper construction of certain provisions of a charterparty contract (the “Atlas Charterparty”) between GMR Atlas LLC and, the party chartering a vessel from GMR Atlas LLC (the “Atlas Claimant”) relating to, among other things, customer vetting eligibility. The Atlas Claimant is an affiliate of the 2011 VLCC Pool Operator. The Atlas Claimant initially counterclaimed (the “Initial Atlas Claims”) for repayment of hire and other amounts paid under the Atlas Charterparty during the period from July 22, 2012 to November 4, 2012 and also asserted claims for interests and costs. GMR Atlas LLC provided security for those claims, plus amounts in respect of interest and costs, in the sum of $3.5 million pursuant to an escrow agreement (the “Escrow Account”). The Initial Atlas Claims were dismissed with prejudice to the extent they were for repayment of hire or other amounts paid prior to October 26, 2012 and this dismissal is no longer subject to appeal.

The Atlas Claimant served further submissions on March 7, 2014 which set out claims in the aggregate amount of $4.0 million plus an unquantified claim for interest and legal costs (the “Subsequent Atlas Claims”) arising from the Atlas Charterparty, including primarily claims for damages (as opposed to a claim for repayment) for alleged breaches of customer vetting eligibility requirements. The Subsequent Atlas Claims, in addition to setting out new claims not previously asserted, also include the portion of the Initial Atlas Claims which had not been dismissed. The $3.5 million security previously provided in respect of the Initial Atlas Claims remains held in respect of the Subsequent Atlas Claims. The aggregate amount of claims currently asserted by the Atlas Claimant in respect of the Atlas Charterparty is $4.0 million plus an unquantified claim for interest and legal costs. These claims are presently proceeding in London arbitration. Both parties have exchanged lists of documents for standard disclosure and copies of the documents to be disclosed. Witness statements of fact have also been exchanged. The parties and the arbitral tribunal are at present discussing dates for a full hearing of the dispute, which we expect to be fixed not before Q4 of 2016. The next stage in the arbitration will be an exchange of expert reports. 

As of March 31, 2016 and December 31, 2015, an amount due from the 2011 VLCC Pool and the Atlas charter dispute of $3.4 million was included in Other assets (noncurrent).

20. SUBSEQUENT EVENTS

In preparing the condensed consolidated financial statements, the Company has evaluated events and transactions occurring after March 31, 2016 for recognition or disclosure purposes. Based on this evaluation, from March 31, 2016 through the date the condensed consolidated financial statements were available to be issued, no material events have been identified other than the following:

Vessel Delivery

Gener8 Nautilus

On April 20, 2016, Gener8 Nautilus LLC, a wholly-owned subsidiary of the Company, took delivery of the Gener8 Nautilus, a 2016-built VLCC newbuilding. Upon delivery, the Gener8 Nautilus entered into the VL8 Pool. On April 15, 2016, the Company borrowed approximately $59.7 million under the Korean Export Credit Facility to fund the delivery of the Gener8 Nautilus. The Company has made all shipyard installment payments and there is no outstanding payable balance in respect of the Gener8 Nautilus.

Interest Rate Swap Agreements

On May 2, 2016, the Company entered into the interest rate swap transactions described below, which are intended to be cash flow hedges that effectively fix the interest rates for the Refinancing Facility, Korean Export Credit Facility and Sinosure Credit Facility. The interest rate swap transactions were each confirmed under an ISDA Master Agreement including the Schedule thereto and related documentation containing customary representations, warranties and covenants.

Interest Rate Swap Transactions under Refinancing Facility

On May 2, 2016, the Company entered into interest rate swap transactions having amortizing notional amounts with each of Citibank, N.A. and Skandinaviska Enskilda Banken AB (publ), related to the Refinancing Facility, with an initial aggregate notional amount of $256.8 million. The interest rate swap transactions each have an effective date of May 31, 2016 and a termination date of September 3, 2020. Each swap counterparty is, or is an affiliate of, a lender under the Refinancing Facility.