Euronav MI II Inc. - FORM 10-Q

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EX-31.1 - EX-31.1 - Euronav MI II Inc.	gnrt-20170930ex311dc7e0d.htm
EX-32.2 - EX-32.2 - Euronav MI II Inc.	gnrt-20170930ex3223f7337.htm
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EX-31.2 - EX-31.2 - Euronav MI II Inc.	gnrt-20170930ex312a28c1c.htm
EX-10.3 - EX-10.3 - Euronav MI II Inc.	gnrt-20170930ex1034cf823.htm
EX-10.2 - EX-10.2 - Euronav MI II Inc.	gnrt-20170930ex102dfd840.htm
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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

For the quarterly period ended September 30, 2017

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 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)


Republic of the Marshall Islands		66‑071‑6485
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

299 Park Avenue, 2nd Floor, New York, NY		10171
(Address of principal		(Zip Code)
executive offices)

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 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, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ☐		Accelerated filer ☒

Non-accelerated filer ☐		Smaller reporting company ☐
(Do not check if a smaller reporting company)

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

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 NOVEMBER 3, 2017:

Common Stock, par value $0.01 per share 82,988,946 shares

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GENER8 MARITIME, INC. AND SUBSIDIARIES

INDEX




ITEM 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2017 and December 31, 2016	4

	Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2017 and 2016	5

	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2017 and 2016	6

	Condensed Consolidated Statement of Shareholders’ Equity (unaudited) for the nine months ended September 30, 2017 and 2016	7

	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2017 and 2016	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	62

ITEM 4.	CONTROLS AND PROCEDURES	62



ITEM 1.	LEGAL PROCEEDINGS	II-1

ITEM 1A.	RISK FACTORS	II-1

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	II-1

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	II-1

ITEM 4.	MINE SAFETY DISCLOSURES	II-1

ITEM 5.	OTHER INFORMATION	II-1

ITEM 6.	EXHIBITS	II-1

SIGNATURES

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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 Investors section. Accordingly, investors should monitor the Investors 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 Investors 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.

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PART 1: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF

SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)


	September 30,		December 31,
	2017		2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	184,677	$	94,681
Due from charterers, net		2,808		2,048
Due from Navig8 pools, net		27,908		60,750
Assets held for sale		31,530		30,195
Prepaid expenses and other current assets		27,127		27,611
Total current assets		274,050		215,285
NONCURRENT ASSETS:
Vessels, net of accumulated depreciation of $222,900 and $197,521, respectively		2,322,111		2,523,710
Vessels under construction		62,537		177,133
Other fixed assets, net		1,440		4,430
Deferred drydock costs, net		12,150		12,714
Working capital at Navig8 pools		26,950		33,100
Restricted cash		1,464		1,457
Derivative financial instruments - non-current		1,259		19,585
Other noncurrent assets		2,983		5,255
Total noncurrent assets		2,430,894		2,777,384
TOTAL ASSETS	$	2,704,944	$	2,992,669
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	26,907	$	33,991
Long-term debt, current portion		138,297		181,023
Derivative financial instruments - current		3,483		1,552
Total current liabilities		168,687		216,566
NONCURRENT LIABILITIES:
Long-term debt		1,274,599		1,400,928
Less unamortized discount and debt financing costs		(52,356)		(63,146)
Long-term debt less unamortized discount and debt financing costs		1,222,243		1,337,782
Other noncurrent liabilities		1,110		910
Derivative financial instruments - non-current		166		—
Total noncurrent liabilities		1,223,519		1,338,692
TOTAL LIABILITIES		1,392,206		1,555,258
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock, $0.01 par value per share; authorized 225,000,000 shares; issued and outstanding 82,988,946 shares at September 30, 2017 and 82,960,194 shares at December 31, 2016		830		830
Preferred stock, $0.01 par value per share; authorized 5,000,000 shares; issued and outstanding 0 shares at September 30, 2017 and December 31, 2016		—		—
Paid-in capital		1,518,969		1,515,362
Accumulated deficit		(219,264)		(96,115)
Accumulated other comprehensive income		12,203		17,334
Total shareholders’ equity		1,312,738		1,437,411
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,704,944	$	2,992,669

See notes to condensed consolidated financial statements.

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GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)

(UNAUDITED)


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
VOYAGE REVENUES:
Navig8 pool revenues	$	47,887	$	65,529	$	238,573	$	270,960
Time charter revenues		—		—		—		9,278
Spot charter revenues		3,139		6,730		10,414		22,023
Total voyage revenues		51,026		72,259		248,987		302,261

OPERATING EXPENSES:
Voyage expenses		3,133		3,159		6,987		9,710
Direct vessel operating expenses		26,324		26,980		83,225		77,041
Navig8 charterhire expenses		6		19		6		3,240
General and administrative expenses		6,936		7,128		24,988		22,240
Depreciation and amortization		25,653		23,118		80,127		60,622
Goodwill impairment		—		26,291		—		26,291
Loss on disposal of vessels, net		36,941		10,756		114,644		10,177

Total operating expenses		98,993		97,451		309,977		209,321

OPERATING (LOSS) / INCOME		(47,967)		(25,192)		(60,990)		92,940

OTHER EXPENSES:
Interest expense, net		(22,542)		(13,699)		(63,040)		(31,355)
Other financing costs		—		(2)		(55)		(8)
Other income (expense), net		3,041		1,542		936		(75)
Total other expenses		(19,501)		(12,159)		(62,159)		(31,438)
NET (LOSS) / INCOME	$	(67,468)	$	(37,351)	$	(123,149)	$	61,502

(LOSS) / INCOME PER COMMON SHARE:
Basic	$	(0.81)	$	(0.45)	$	(1.48)	$	0.74
Diluted	$	(0.81)	$	(0.45)	$	(1.48)	$	0.74

See notes to condensed consolidated financial statements.

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GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(DOLLARS IN THOUSANDS)

(UNAUDITED)


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016

Net (loss) / income	$	(67,468)	$	(37,351)	$	(123,149)	$	61,502
Other comprehensive (loss) income:
Amount recognized in other comprehensive income (loss) on derivative		(2,003)		5,207		(6,359)		(8,901)
Amount reclassified from AOCI to net (loss) income on derivative		319		1,342		1,228		1,502
Foreign subsidiaries liquidation		—		—		—		(730)
Foreign currency translation adjustments		—		—		—		63
Comprehensive (loss) income	$	(69,152)	$	(30,802)	$	(128,280)	$	53,436

See notes to condensed consolidated financial statements.

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GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(DOLLARS IN THOUSANDS)

(UNAUDITED)


							Accumulated
							Other		Total
	Common		Paid-In		Accumulated		Comprehensive		Shareholders’
	Stock		Capital		Deficit		Income (Loss)		Equity
Balance as of December 31, 2015	$	827	$	1,509,688	$	(163,421)	$	667	$	1,347,761
Net income		—		—		61,502		—		61,502
Issuance of common stock		—		26		—		—		26
Amount recognized in other comprehensive loss on derivative		—		—		—		(8,901)		(8,901)
Amount reclassified from AOCI to net (loss) income on derivative		—		—		—		1,502		1,502
Foreign subsidiaries liquidation		—		—		—		(730)		(730)
Foreign currency translation adjustments		—		—		—		63		63
Stock-based compensation		—		4,299		—		—		4,299
Balance as of September 30, 2016	$	827	$	1,514,013	$	(101,919)	$	(7,399)	$	1,405,522



Balance as of December 31, 2016	$	830	$	1,515,362	$	(96,115)	$	17,334	$	1,437,411
Net loss		—		—		(123,149)		—		(123,149)
Amount recognized in other comprehensive income (loss) on derivative		—		—		—		(6,359)		(6,359)
Amount reclassified from AOCI to net (loss) income on derivative		—		—		—		1,228		1,228
Stock-based compensation		—		3,607		—		—		3,607
Balance as of September 30, 2017	$	830	$	1,518,969	$	(219,264)	$	12,203	$	1,312,738

See notes to condensed consolidated financial statements.

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GENER8 MARITIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(DOLLARS IN THOUSANDS)

(UNAUDITED)


	For the Nine Months Ended
	September 30,
	2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) / income	$	(123,149)	$	61,502
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss on disposal of vessels, net		114,644		10,177
Goodwill impairment		—		26,291
Payment-in-kind interest expense		14,560		13,729
Depreciation and amortization		80,127		60,622
Amortization of fair value of related-party chartered-in vessel		—		427
Amortization of deferred financing costs and senior notes		12,221		7,879
Loss on litigation		400		—
Net unrealized loss on derivative financial instrument		15,292		—
Stock-based compensation expense		3,607		4,299
Provision for bad debts		1,492		(2,689)
Changes in assets and liabilities:
(Increase) decrease in due from charterers		(706)		13,267
Decrease in due from Navig8 pools		32,842		2,866
(Increase) decrease in prepaid expenses and other current and noncurrent assets		(1,695)		59,606
Decrease (increase) in working capital at Navig8 pools		6,150		(5,950)
Decrease in accounts payable and other current and noncurrent liabilities		(4,116)		(5,680)
Deferred drydock costs incurred		(8,796)		(9,228)
Net cash provided by operating activities		142,873		237,118
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for vessels under construction		(97,543)		(800,688)
Payment of capitalized interest		(1,670)		(15,456)
Proceeds from sale of vessels, net		238,751		72,505
Purchase of vessel improvements and other fixed assets		(7,369)		(7,808)
Net cash provided by (used in) investing activities		132,169		(751,447)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities		100,131		636,216
Repayments of credit facilities		(283,746)		(158,665)
Proceeds from issuance of common stock		—		26
Deferred financing costs paid		(1,431)		(20,737)
Net cash (used in) provided by financing activities		(185,046)		456,840
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		—		—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		89,996		(57,489)
CASH AND CASH EQUIVALENTS, beginning of period		94,681		157,535
CASH AND CASH EQUIVALENTS, end of period	$	184,677	$	100,046
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid during the period for interest, net of capitalized interest	$	36,284	$	19,993

See Note 2 for supplementary information of noncash items.

See notes to condensed consolidated financial statements.

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GENER8 MARITIME, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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”) provide international transportation services of seaborne crude oil and petroleum products. The Company’s owned fleet at September 30, 2017 consisted of 34 tankers; 33 tankers in operation (22 Very Large Crude Carriers (“VLCCs”), seven Suezmax tankers, two Aframax tankers, two Panamax tankers), and one newbuilding VLCC 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 employment in commercial pools, or for charter on a spot voyage or time charter basis.

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.

As of September 30, 2017, the Company employed all of its VLCC and Suezmax vessels in Navig8 Group commercial crude tanker pools including the VL8 Pool and the Suez8 Pool. In 2015, the Company’s VLCC, Suezmax, Aframax and newbuilding owning subsidiaries 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 September 30, 2017. See Note 14, Related Party Transactions, for a description of the pool arrangements with these related parties.

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 condensed consolidated financial statements. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited 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, 2016, which provides a more complete understanding of our accounting policies. 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 unaudited interim financial statements, which conform to accounting principles generally accepted in the United States of America, were included in our 2016 Annual Report on Form 10-K.

INTEREST RATE RISK MANAGEMENT—The Company is exposed to interest rate risk through its variable rate credit facilities. The Company uses interest rate swaps, under which the Company pays a fixed rate in exchange for receiving a LIBOR-based variable rate corresponding to the floating rate interest exposure on the Company’s credit facilities, to achieve a fixed rate of interest on the hedged portion of its debt in order to increase the ability of the Company to forecast interest expense. The objective of these swaps is to help to protect the Company against changes in borrowing rates on the current credit facilities and any replacement floating rate LIBOR credit facility. Upon execution of the swaps, the Company designated the hedges as cash flow hedges of benchmark interest rate risk under FASB ASC 815, Derivatives and Hedging, and the Company has established effectiveness testing and measurement processes. In September 2017 the Company adopted Accounting Standards Update ("ASU") 2017-12 which amends ASC 815, and updated the cash flow designation to hedge the contractual LIBOR interest rate risk. Changes in the fair value of the interest rate swaps are recorded as assets or liabilities, and effective after adoption, all gains/losses are captured in a component of accumulated other comprehensive income (“AOCI”) until reclassified to interest expense when the hedged

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variable rate interest expenses are incurred. The Company elected to classify settlement payments as operating activities within the statement of cash flow. See RECENT ACCOUNTING PRONOUNCEMENTS below and Note 11, Financial Instruments, for recent accounting adoption and additional disclosures on the Company’s interest rate swaps.

RECENT ACCOUNTING PRONOUNCEMENTS—In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"). ASU 2017-12 is intended to (i) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and (ii) reduce the complexity of and simplify the application of hedge accounting by preparers. For public business entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods therein; however, early adoption by all entities is permitted. In September 2017 the Company adopted ASU 2017-12 which amends ASC 815 and hedge accounting. At adoption, the Company utilized the modified retrospective transition method. Under the new guidance, effectiveness is no longer measured and all changes in the fair market value of derivatives are recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI”) for effective hedge relationships. The Company has elected to continue testing effectiveness quantitatively using regression analysis. All changes in fair market value of qualifying cash flow derivatives are recognized in Other Comprehensive Income and are released from Accumulated Other Comprehensive Income (Loss) in the same period and in the same line item that the underlying hedged item is recorded.

In February 2016, the FASB issued ASU 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 condensed consolidated financial statements and related disclosures.

In April 2016, the FASB issued 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. In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). In May 2016, the FASB issued ASU No. 2016‑12, Revenue from Contracts with Customers (ASC 606) Narrow-Scope Improvements and Practical Expedients. In December 2016, the FASB issued ASU No. 2016‑20, Technical Corrections and Improvements to Topic 606, 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 requirements of this standard include an increase in required disclosures. The Company intends to adopt the ASU’s for the interim periods after December 31, 2017, using the modified retrospective transition method applied to those contracts which were not completed as of that date. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to its opening balance of retained earnings. Prior periods will not be retrospectively adjusted. Although the majority our charters are currently under pool arrangements, if this should change, the Company could expect an impact on the timing of recognition of revenue for certain ongoing charter contracts and the deferral and amortization of certain voyage related costs. The Company is currently evaluating the impact of the adoption of the ASU’s to its condensed consolidated financial statements, including the presentation of revenues in its condensed consolidated statements of operations. The Company does not anticipate any material effect from adopting this standard on its condensed consolidated financial statements and related disclosures.

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In June 2016, the FASB issued ASU 2016-13-Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU require the measurement of all expected credit losses for financial assets, which include trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance in this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating this ASU and any potential impacts the adoption of this ASU will have on our condensed consolidated financial statements revised guidance for the accounting and reporting of financial instruments.

In August 2016, the FASB issued ASU 2016-15-Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company does not anticipate any material effect from adopting this standard on its condensed consolidated financial statements and related disclosures.

In November 2016, the FASB issued ASU 2016-18-Statement of Cash Flows (Topic 230): Restricted Cash. The new guidance is intended to reduce diversity in practice by adding or clarifying guidance on classification and presentation of changes in restricted cash on the statement of cash flows. The new guidance should be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. As a result of this update, restricted cash will be included within cash and cash equivalents on the Company’s statements of consolidated cash flows. As of September 30, 2017 and December 31, 2016, the Company had an outstanding letter of credit of $1.4 million, as required under the terms of its office lease. This letter of credit is secured by cash placed in a restricted account amounting to $1.5 million as of September 30, 2017 and December 31, 2016. The Company does not anticipate any material effect from adopting this standard on its condensed consolidated 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 $0 and $4.9 million as of September 30, 2017 and December 31, 2016, respectively. Additionally, the Company excluded from cash flows from investing activities in the condensed consolidated statements of cash flows items included in accounts payable for drydock and other vessel related expenses of $0.5 million and $0.2 million, respectively, as of September 30, 2017. Capitalized interest amounted to $3.2 million for the nine months ended September 30, 2017, of which $1.5 million has not been paid out as of September 30, 2017 (which is included in long‑term debt in the condensed consolidated balance sheet). Capitalized interest amounted to $24.3 million for the nine months ended September 30, 2016.

3. (LOSS) / INCOME PER COMMON SHARE

The computation of basic (loss) income per share is based on the weighted-average number of common shares outstanding during the period. The computation of diluted net (loss) income 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.

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


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
Basic net (loss) / income per share:
Numerator:
Net (Loss) / Income	$	(67,468)	$	(37,351)	$	(123,149)	$	61,502
Denominator:
Weighted-average shares outstanding, basic		82,989		82,682		82,976		82,681

Basic net (loss) / income per share	$	(0.81)	$	(0.45)	$	(1.48)	$	0.74

Diluted net (loss) / income per share:
Numerator:
Net (Loss) / Income	$	(67,468)	$	(37,351)	$	(123,149)	$	61,502
Denominator:
Weighted-average shares outstanding, basic		82,989		82,682		82,976		82,681
Add:
Restricted stock units		—		—		—		—
Stock options		—		—		—		—
Weighted-average shares outstanding, diluted		82,989		82,682		82,976		82,681

Diluted net (loss) / income per share:	$	(0.81)	$	(0.45)	$	(1.48)	$	0.74

Options to purchase 309,296 shares of common stock, which expired on May 7, 2017, were excluded from the above calculation for the nine months ended September 30, 2017 and for the three and nine months ended September 30, 2016, because the impact is anti-dilutive. Options to purchase 13,420 shares of common stock, which expired on July 8, 2017, were also excluded from the above calculation for the nine months ended September 30, 2017 and for the three and nine months ended September 30, 2016, because certain market conditions have not been met.

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 generally vest in tranches on December 1, 2017 and December 1, 2018, subject for each increment to employment with the Company through the applicable vesting date for such increment. On December 7, 2016, the Company issued 278,483 shares in settlement of RSUs that had vested on December 1, 2016. As of September 30, 2017, 44,919 RSUs were forfeited and 635,518 shares are remaining to be issued in future years, following the vesting date for each increment.

On September 9, 2016, in accordance with the Company’s amended 2012 Equity Incentive Plan, the Company granted certain non-employee directors 28,752 RSUs. The RSUs were valued at $6.26 per share. On May 16, 2017, the RSUs vested and the Company issued 28,752 shares.

On May 16, 2017, in accordance with the Company’s amended 2012 Equity Incentive Plan, the Company granted certain non-employee directors 44,856 RSUs. The RSUs, which were valued at $5.35 per share, will generally vest on the earlier of (a) the date of the Company’s next annual meeting of shareholders and (b) the date that is 30 days following the first anniversary of the grant date, subject to the director’s continued service with the Company through the applicable vesting date.

For the three and nine months ended September 30, 2017, weighted-average RSUs outstanding of 800,047 and 733,439, respectively, were excluded in determining the diluted net (loss) income per share, because the impact is anti-dilutive. For both the three and nine months ended September 30, 2016, weighted-average RSUs outstanding of 1,072,948, were excluded in determining the diluted net (loss) income per share, because the impact is anti-dilutive.

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On January 5, 2017, Peter C. Georgiopoulos, Chief Executive Officer and Chairman of the Board of the Company and Leonard J. Vrondissis, Executive Vice President, Secretary and Chief Financial Officer of the Company were each granted awards of stock options, pursuant to the Company’s amended 2012 Equity Incentive Plan. Mr. Georgiopoulos received stock options to purchase 500,000 shares of common stock. Mr. Vrondissis received stock options to purchase 25,000 shares of common stock. The stock options granted were excluded in determining the diluted net (loss) income per share for the three and nine months ended September 30, 2017, because the impact is anti-dilutive. See Note 15, Stock Based Compensation, for more details.

4. ASSETS HELD FOR SALE

At the end of every reporting period the Company reviews and evaluates all of its vessels to determine the vessels, if any, that meet the criteria for “held for sale” as stated in ASC 360-10 – Property, Plant and Equipment ASC subtopic 360-10-Property, Plant, and Equipment (“ASC 360-10”.) As of September 30, 2017, all the criteria of ASC 360-10 were met for the following vessels (Gener8 Poseidon and Gener8 Pericles) and the transactions were qualified as assets held for sale. These vessels were written down to their fair value, less cost to sell of $31.5 million as of September 30, 2017.

On October 4, 2017 the Company entered into an agreement for the sale of the 2002-built VLCC tanker the Gener8 Poseidon for gross proceeds of $21.5 million. As a result of the vessel held for sale classification, the Company recorded a loss of $12.9 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017. The sale is expected to be finalized during 2017. The Company intends to use the net proceeds to repay approximately $14.1 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On August 21, 2017 the Company entered into an agreement for the sale of the 2003-built Aframax tanker the Gener8 Pericles for gross proceeds of $11.0 million. As a result of the vessel held for sale classification, the Company recorded a loss of $6.6 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017. On October 18, 2017, the sale was finalized and we used the net proceeds to repay $7.8 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

As of December 31, 2016, the Company classified the Gener8 Ulysses as Current assets - held for sale, in the condensed consolidated balance sheet, as all the criteria of ASC 360-10 have been met and the transaction was qualified as assets held for sale. This vessel was written down to its fair value, less cost to sell, of $30.2 million on the consolidated balance sheet. The Gener8 Ulysses vessel was sold during the first quarter of 2017. As a result of the sale in 2017, the Company recorded a loss of $6.9 million as Loss on disposal of vessels, net, on the consolidated statement of operations for the year ended December 31, 2016.

5. DELIVERY AND DISPOSAL OF VESSELS

Delivery of Vessels

During the nine months ended September 30, 2017, the Company took delivery of the following 2017-built VLCC newbuildings. Upon delivery, all of these vessels entered into the VL8 Pool. The Company has made all shipyard installment payments, and there is no outstanding payable balance in respect of each vessel.


		Borrowings to
		Fund Vessel's
Vessel Name	Date of Delivery	Delivery (1)		Credit Facility
		(Dollars in thousands)
Gener8 Hector	January 6, 2017	$	49,500	Korean Export Credit Facility
Gener8 Ethos	March 9, 2017		50,631	Korean Export Credit Facility

(1)

Amounts reflect the borrowings incurred under the Korean Export Credit Facility to fund the delivery of the indicated newbuilding. For more information see Note 10, LONG-TERM DEBT.

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Disposal of Vessels

On July 27, 2017, the Company entered into an agreement for the sale of the 2002-built Aframax tanker the Gener8 Elektra for $10.5 million in gross proceeds. As a result of the sale, the Company recorded a loss of $1.0 million and $5.9 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017, respectively. On August 15, 2017, the sale of the Gener8 Elektra was finalized. The Company used the net proceeds from the sale to repay $7.6 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On July 20, 2017 the Company entered into agreements for the disposition, demolition and scrapping of the 1999-built Suezmax tankers the Gener8 Phoenix and Gener8 Horn for gross proceeds of $7.8 million and $8.0 million, respectively. As a result of the disposition, the Company recorded a loss of $16.2 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017. The disposition of the Gener8 Phoenix and the Gener8 Horn was finalized on August 9, 2017 and August 1, 2017, respectively. The Company used the net proceeds along with available cash to repay $8.2 million and $7.6 million, for the Gener8 Horn and the Gener8 Phoenix, respectively, the related portion of the senior secured debt outstanding under the Refinancing Facility associated with these vessels.

On May 25, 2017, the Company entered into an agreement for the sale of the 2002-built Suezmax tanker Gener8 Orion for $13.0 million in gross proceeds. On June 13, 2017, the sale was finalized and the Company recorded a net loss of $10.1 million, as Loss on vessel disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. The Company used the net proceeds to repay $11.1 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On May 2, 2017, the Company entered into an agreement for the sale of the 2016-built VLCC tanker the Gener8 Theseus for $81.0 million in gross proceeds. As a result of the sale, the Company recorded a loss of $31.9 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. On August 7, 2017, the sale of the Gener8 Theseus was finalized. The Company used the net proceeds to repay $50.1 million of the related portion of the senior secured debt outstanding under the Korean Export Credit Facility associated with the vessel.

On May 2, 2017, the Company entered into an agreement for the sale of the 2016-built VLCC tanker the Gener8 Noble for $81.0 million in gross proceeds. As a result of the sale, the Company recorded a loss of $25.4 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. On September 15, 2017, the sale of the Gener8 Noble was finalized. The Company used the net proceeds to repay $50.4 million of the related portion of the senior secured debt outstanding under the Korean Export Credit Facility associated with the vessel.

On April 3, 2017, the Company entered into an agreement for the sale of the 2002-built Aframax tanker Gener8 Daphne for $10.5 million in gross proceeds. On May 13, 2017, the sale was finalized and the Company recorded a net loss of $5.1 million, as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. The Company used the net proceeds to repay $8.1 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On January 25, 2017, the Company entered into an agreement for the sale of the 2003-built VLCC tanker Gener8 Ulysses for $30.5 million in gross proceeds. As of December 31, 2016, the Company classified the Gener8 Ulysses as held for sale on the consolidated balance sheet. The Company recorded a loss of $6.9 million, as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the year ended December 31, 2016. On February 1, 2017, the sale was finalized and the Company used the net proceeds to repay $20.0 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On December 5, 2016, the Company entered into an agreement for the sale of the 2000-built Suezmax tanker Gener8 Spyridon for $13.9 million in gross proceeds. On December 19, 2016, the sale was finalized and the Company recorded a net loss of $7.1 million, as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the year ended December 31, 2016. The Company used the net proceeds to repay $11.7 million of the related

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portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On August 8, 2016, the Company entered into an agreement for the sale of the 2001-built VLCC tanker Genmar Victory for $29.0 million in gross proceeds. On August 25, 2016, the sale was finalized and the Company recorded a net loss of $7.3 million, as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the year ended December 31, 2016. The Company used the net proceeds to repay $19.4 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On July 22, 2016, the Company entered into an agreement for the sale of the 2001-built VLCC tanker Genmar Vision for $28.0 million in gross proceeds. On August 5, 2016, the sale was finalized and the Company recorded a net loss of approximately $3.2 million, as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the year ended December 31, 2016. The Company used the net proceeds to repay approximately $19.4 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

6. PREPAID EXPENSES AND OTHER CURRENT ASSETS

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


	September 30,		December 31,
	2017		2016
Bunkers and lubricants	$	6,933	$	7,522
Insurance claims receivable		4,204		5,047
Prepaid insurance		2,306		3,185
Other		13,684		11,857
Total	$	27,127	$	27,611

Insurance claims receivable consists 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 September 30, 2017 and December 31, 2016, the portion of insurance claims receivable not expected to be collected within one year of $0 and $0.6 million, respectively, is included in Other noncurrent assets on the condensed consolidated balance sheets.

As of September 30, 2017, Other includes $7.6 million of advances to our third‑party technical managers and $1.7 million of working capital due from Navig8. The working capital due from Navig8 is associated with the Gener8 Poseidon ($1.0 million) and Gener8 Pericles ($0.7 million) related to their treatment as vessels held for sale (see Note 4, Assets HELD for sale and Note 17, Subsequent Events for more updates on recent vessel sales). As of December 31, 2016, Other primarily represents $4.7 million of advances to our third‑party technical managers and $1.9 million of working capital due from Navig8. The working capital due from Navig8 is associated with the Gener8 Spyridon and Gener8 Ulysses ($0.9 million and $1.0 million, respectively), related to their treatment as vessels held for sale.

7. 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).

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



	September 30, 2017		Nine Months Ended September 30, 2017 Activities		December 31, 2016
2014 Acquired VLCC Newbuildings:
Vessels / SPV Stock Purchase	$	162,683	$	—	$	162,683
Installment and supervision payments		579,818		—		579,818
Others		5,214		—		5,214
2015 Acquired VLCC Newbuildings:
Vessels		435,417		—		435,417
Acquisition-related costs		10,295		—		10,295
Installment and supervision payments		936,544		95,711		840,833
Accrued milestones and supervision payments		—		(5,368)		5,368
Others		16,116		1,978		14,138
Fair value of 2015 Warrant Agreement assumed		3,381		—		3,381
Fair value of 2015 Stock Options assumed		39		—		39
Capitalized interest		74,894		3,163		71,731
Vessel deliveries		(2,161,864)		(210,080)		(1,951,784)
Total	$	62,537	$	(114,596)	$	177,133

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 December 31, 2016, the Company took delivery of all the 2014 Acquired VLCC Newbuildings and took delivery of 11 out of 14 of the 2015 Acquired VLCC Newbuildings.

During the nine months ended September 30, 2017, two of the 2015 Acquired VLCC Newbuildings were delivered to the Company and the Company borrowed approximately $100.1 million under the Korean Export Credit Facility to fund these deliveries. See Note 5, DELIVERY AND DISPOSAL OF VESSELS, for deliveries during the nine months ended September 30, 2017. See Note 17, Subsequent Events, for additional information regarding the delivery of Gener8 Nestor.

8. OTHER NONCURRENT ASSETS

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



	September 30,		December 31,
	2017		2016
Working capital for 2011 VLCC pool	$	1,900	$	1,900
Fresh start lease asset		1,083		1,183
Insurance claims		—		588
Escrow deposits		—		38
Long-term due from charters		—		1,546
Total	$	2,983	$	5,255

Working capital for 2011 VLCC pool and Long-term due from charters represent amounts due from the 2011 VLCC Pool and the Atlas charter disputes. On May 9, 2017, the arbitration tribunal before which the dispute is being heard ruled that GMR Atlas LLC (a subsidiary of the Company) had been in breach of certain customer eligibility requirements as claimed by the Atlas claimant. Accordingly, during the nine months ended September 30, 2017, the Company wrote-off $1.5 million related to the Atlas charter dispute and the amount is recorded in General and

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Administrative, in the condensed consolidated statement of operations. See Note 16, commitments and contingencies for more details.

9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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


	September 30,		December 31,
	2017		2016
Accounts payable	$	7,607	$	6,821
Accrued milestone and supervision payments		—		5,368
Accrued operating expenses		10,084		16,990
Accrued administrative expenses		3,199		2,767
Accrued interest		6,017		2,045
Total	$	26,907	$	33,991

Accrued milestones and supervision payments represent the amounts due for construction milestone and supervision installment payments under the contracts for the Acquired VLCC newbuildings. As of September 30, 2017, the Company paid $5.4 million of milestone and supervision installments that were accrued as of December 31, 2016.

10. LONG‑TERM DEBT

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


	September 30,		December 31,
	2017		2016
Refinancing Facility	$	273,081	$	408,337
Korean Export Credit Facility		627,893		658,568
Senior Notes		189,164		174,604
Sinosure Credit Facility		322,758		340,442
Total		1,412,896		1,581,951
Less: current portion of long-term debt		(138,297)		(181,023)
Less: unamortized discount and debt financing costs		(52,356)		(63,146)
Long-term debt less unamortized discount and debt financing costs	$	1,222,243	$	1,337,782

Unamortized discount and debt financing costs include an unamortized discount related to the Company’s Senior Notes and deferred financing costs comprised of insurance, bank fees and legal expenses associated with securing new loan facilities. These deferred financing costs are amortized based upon the effective interest rate method over the life of the related debt, which is included in interest expense, net in the condensed consolidated statements of operations.

During the three months ended September 30, 2017 and in connection with the sale of five vessels (Gener8 Phoenix, Gener8 Horn, Gener8 Elektra, Gener8 Noble and Gener8 Theseus), the Company repaid $23.5 million and $100.5 million, of borrowings under the Refinancing Facility and the Korean Export Credit Facility, respectively. During the nine months ended September 30, 2017 and in connection with the sale of eight vessels (the Gener8 Phoenix, Gener8 Horn, Gener8 Elektra, Gener8 Noble, Gener8 Theseus, Gener8 Ulysses, Gener8 Orion and Gener8 Daphne), the Company repaid $62.7 million and $100.5 million, of borrowings under the Refinancing Facility and the Korean Export Credit Facility, respectively.

As of September 30, 2017 and 2016, the weighted average interest rate for the credit facilities are 4.21% and 4.14%, respectively.

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Refinancing Facility

On September 3, 2015, the Company entered into a term loan facility (the “Refinancing Facility”), by and among the Company’s wholly-owned subsidiary, Gener8 Maritime Subsidiary II Inc. (“Gener8 Maritime Sub II”), the Company, as parent, the lenders party thereto, and Nordea Bank Finland, PLC, New York Branch as Facility Agent and Collateral Agent in order to refinance the $508M Credit Facility and the $273M Credit Facility. The Refinancing Facility provided for term loans up to the aggregate approximate amount of $581.0 million, which were fully drawn on September 8, 2015. The loans under the Refinancing Facility will mature on September 3, 2020.

The Refinancing Facility bears interest at a rate per annum based on the 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 accrues at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount.

The Refinancing Facility is secured on a first lien basis by a pledge of the Company’s interest in Gener8 Maritime Sub II, a pledge by Gener8 Maritime Sub II of its interests in the 18 vessel-owning subsidiaries it owns (the “Gener8 Maritime Sub II Vessel Owning Subsidiaries”) and a pledge by such Gener8 Maritime Sub II Vessel Owning Subsidiaries of substantially all their assets, and is guaranteed by the Company and the Gener8 Maritime Sub II Vessel Owning Subsidiaries. In addition, the Refinancing Facility is secured by a pledge of certain of the Company’s and Gener8 Maritime Sub II Vessel Owning Subsidiaries’ respective bank accounts. As of September 30, 2017, the Gener8 Maritime Sub II Vessel Owning Subsidiaries owned four VLCCs, seven Suezmax vessels, two Aframax vessels and two Panamax vessels.

Gener8 Maritime Sub II is obligated to repay the Refinancing Facility in 20 consecutive quarterly installments, which commenced on September 3, 2015. Gener8 Maritime Sub II 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.

See Note 11, FINANCIAL INSTRUMENTS, for the Company’s interest rate risk management program related to the credit facility.

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 for 15 VLCC newbuildings owned by the Company at that time. The borrower under the Korean Export Credit Facility is Gener8 Maritime Subsidiary VIII Inc. (“Gener8 Maritime Sub VIII”), the Company’s wholly owned subsidiary, and the Korean Export Credit Facility is guaranteed by the Company and vessel-owning subsidiaries owned by Gener8 Maritime Sub VIII. 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”).

During the nine months ended September 30, 2017, the Company borrowed approximately $100.1 million under the Korean Export Credit Facility to fund the deliveries of Gener8 Hector and Gener8 Ethos and paid down $100.5 million related to the sale Gener8 Noble and Gener8 Theseus. As of September 30, 2017, the Company has an aggregate amount of up to approximately $63.0 million of available borrowings under the Korean Export Credit Facility (subject to borrowing limits and other conditions set forth in the applicable senior secured credit facilities) for the purpose of financing one future delivery of VLCC newbuilding vessel with remaining installment payments of $48.2 million.

On September 26, 2017, On September 26, 2017, Gener8 Maritime Subsidiary Inc. (formerly known as Navig8 Crude Tankers Inc.), which became our subsidiary as a result of the 2015 merger, entered into (i) an amendment agreement (the “Amendment Agreement”) with HHIC-Phil Inc. (the “Builder”) related to the shipbuilding contract dated

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March 25, 2014 between Gener8 Maritime Subsidiary Inc. and the Builder (the “Building Contract”) in relation to the construction of the Gener8 Nestor (the “Vessel”) and (ii) an outstanding works agreement (the “Outstanding Works Agreement”) with the Builder. The Amendment Agreement and the Outstanding Works Agreement provide that the Builder is obligated to physically deliver the Vessel on October 9, 2017 and, notwithstanding delivery, complete any outstanding works relating to the Vessel required to meet the specifications and requirements of the Building Contract. The Amendment Agreement further provides for a $19.3 million reduction in the contract price payable under the Building Contract for the Vessel, including $5.4 million in liquidated damages due to the Company under the Building Contract relating to the late delivery of the Vessel by the Builder based on the delivery schedule set forth in the Building Contract. As a result, the contract price for the Vessel has, in effect, been reduced from $96.4 million to $77.1 million, and the final installment due from the Company upon delivery of the Vessel by the Builder on October 9, 2017 was reduced from $48.2 million to $29.0 million. See Note 17, Subsequent Events, for additional information regarding the delivery of Gener8 Nestor, and the related borrowings under the Korean Export Credit Facility.

Each Korean Vessel Loan will mature, in respect of the Commercial Tranche, on the date falling 60 months from the date of borrowing of that Korean Vessel Loan and, in respect of the other tranches, on the date falling 144 months from the date of borrowing of that Korean Vessel Loan. KEXIM and K-Sure have the option of requiring prepayment of their respective tranches if the Commercial Tranche is not, upon its termination date, fully refinanced or renewed by the commercial lenders. Upon exercise of such option, all outstanding amounts under the relevant tranche must be repaid on the final repayment date in respect of the Commercial Tranche. Repayment dates are each date that a repayment installment is required to be made, on March 31, June 30, September 30, and December 31 of the applicable year.

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.

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 on a Korean Vessel Loan, interest accrues at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount. See Note 11, FINANCIAL INSTRUMENTS, for the Company’s interest rate risk management program related to the Korean Export Credit Facility. The Korean Export Credit Facility is secured on a first lien basis by a pledge of various assets, including, as of September 30, 2017, 12 VLCC vessels.

On March 24, 2017, the Company amended the Korean Export Credit Facility to change the dates on which amortization payments are due to the 15th day of each of April, July, October and January.

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 three VLCC newbuildings which are being built at Chinese shipyards and to refinance a credit facility. The borrower under the Sinosure Credit Facility is Gener8 Maritime Subsidiary VII Inc. (“Gener8 Maritime Sub VII”), the Company’s wholly owned subsidiary, and the Sinosure Credit Facility is guaranteed by the Company and vessel-owning subsidiaries owned by Gener8 Maritime Sub VII. The Sinosure Credit Facility provided term loans up to the aggregate approximate amount of $259.6 million. On June 29, 2016, the Company amended the Sinosure Credit Facility to, among other things, include (i) Gener8 Chiotis LLC and Gener8 Miltiades LLC as owner guarantors under the Sinosure Credit Facility and (ii) two additional term loan tranches having an aggregate amount of up to approximately $125.7 million, for purposes of financing deliveries of an additional two VLCC newbuilding vessels, the Gener8 Chiotis and the Gener8 Miltiades. As of September 30, 2017, the Sinosure Credit Facility funded the delivery of five VLCC newbuildings and refinanced a credit facility. The Sinosure Credit Facility provided for term loans up to the aggregate amount of approximately $385.2 million. Each loan under the Sinosure Credit Facility is referred to herein as a “Sinosure Vessel Loan.” Each Sinosure Vessel Loan will mature on the date falling 144 months from the date of borrowing of that Sinosure Vessel Loan.

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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 Sinosure Vessel Loan, interest accrues at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount. See Note 11, FINANCIAL INSTRUMENTS, for the Company’s interest rate risk management program related to the Sinosure Credit Facility. The Sinosure Credit Facility is secured on a first lien basis by a pledge of various assets, including, as of September 30, 2017, six VLCC vessels.

The Company is obligated to repay each Sinosure Vessel Loan 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 Sinosure Vessel Loan. The Company is also required to prepay the Sinosure Vessel 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 September 30, 2017 and December 31, 2016, the discount on the Senior Notes was $4.1 million and $4.9 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, net

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Refinancing Facility (1)	$	(3,760)	$	(5,355)	$	(12,298)	$	(16,680)
Korean Export Credit Facility (1)		(7,041)		(3,802)		(20,289)		(7,984)
Senior Notes		(5,326)		(4,744)		(15,361)		(13,729)
Sinosure Credit Facility (1)		(3,210)		(2,309)		(8,868)		(4,688)
Amortization of deferred financing costs and other		(5,597)		(2,945)		(11,920)		(8,081)
Capitalized interest		912		6,680		3,163		24,290
Commitment fees		(174)		(1,235)		(624)		(4,547)
Interest rate swaps		1,286		—		2,360		—
Interest income		368		11		797		64
Interest expense, net	$	(22,542)	$	(13,699)	$	(63,040)	$	(31,355)

(1)

Amounts include interest rate swaps settlements.

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

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maximum leverage ratio, minimum cash balance and an interest expense coverage ratio covenant. The lenders also require 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); compliance with ERISA: 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 September 30, 2017, 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 contain 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.

Under the Note and Guarantee Agreement, the Company is permitted to make dividend payments if, after giving effect to the dividends, the ratio of the Company’s secured indebtedness minus its cash to the Company’s aggregate fair market value of all of its vessels is less than 60%, and the Company satisfies certain conditions under the Note and Guarantee Agreement’s cumulative consolidated net income and net cash proceeds tests. In addition, in order to make dividend payments under the Note and Guarantee Agreement, the Company must have irrevocably elected to pay interest on the Senior Notes in cash rather than additional Senior Notes.

Guarantees

The Company may issue debt securities in the future. All or substantially all of the subsidiaries of the Company may be guarantors of such debt. Any such guarantees are expected to be full, unconditional and joint and several. Each of the Company’s subsidiaries is 100% owned by the Company. In addition, the Company has no independent assets or operations outside of its ownership of the subsidiaries and any such subsidiaries of the Company other than the subsidiary guarantors are expected to be minor. Other than restrictions contained under applicable provisions of the corporate, limited liability company and similar laws of the jurisdictions of formation of the subsidiaries of the Company, no restrictions exist on the ability of the subsidiaries to transfer funds to the Company through dividends, distributions or otherwise.

11. FINANCIAL INSTRUMENTS

Interest Rate Risk Management

On May 2, 2016, certain of the Company’s wholly-owned subsidiaries entered into six pay-fixed, receive-variable interest rate swap transactions having amortizing notional amounts to hedge a portion of the LIBOR floating rate interest expense on the Company’s credit facilities as discussed in Note 10, LONG TERM DEBT. Under each interest rate swap transaction, a subsidiary of the Company makes a fixed payment each period in an amount equal to the interest rate for such transaction multiplied by the relevant notional amount for that period in exchange for a payment from the respective swap counterparty in an amount equal to a variable rate based on the applicable LIBOR rate for that period multiplied by the same notional amount. In December 2016, the Company modified the two interest rate swap transactions hedging the Refinancing Facility to align the payment dates under those interest rate swap transactions to

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the principal and interest repayment dates under the Refinancing Facility. The swaps were dedesignated and the revised swaps were simultaneously redesignated with no interruption in hedge accounting. In April 2017, all six of the swap agreements were monetized (the current fair market value of $18.2 million was received from the swap counterparties) and dedesignated. The effective portion of the gain on the swaps at dedesignation was deferred in Other Comprehensive Income / (loss) and the Company is recognizing the gain over the original hedge periods (September 2, 2020 for the swaps hedging the Refinancing Facility, February 20, 2029 for the swaps hedging the Korean Export Credit Facility and May 6, 2028 for the swap hedging the Sinosure Credit Facility). Simultaneously, the revised swaps were designated in a cash flow relationship with a fair market value at designation of zero, which included changes to the notional amounts and maturity dates of, and increases in the fixed rates payable under, the interest rate swap transactions. The applicable period, LIBOR rate and notional amounts for each interest rate swap transaction is identified in the table below.

Two of the swaps effectively fix the interest rate on approximately 35% of the aggregate variable interest rate borrowings expected to be outstanding under the Refinancing Facility through September 3, 2020, three of the swaps effectively fix the interest rate on approximately 74% - 80% of the aggregate variable interest rate borrowings expected to be outstanding under the Korean Export Credit Facility through September 30, 2020, and the remaining swap effectively fixes the interest rate on approximately 100% of the aggregate variable interest rate borrowings expected to be outstanding under the Sinosure Credit Facility through March 21, 2022 (excluding the incremental increase in available borrowings pursuant to the June 2016 amendment to the Sinosure Credit Facility). Under certain limited circumstances, the relevant subsidiary of the Company has the right to transfer the related interest rate swap(s) to a qualifying third party, which would have the effect of terminating the subsidiary’s obligations under those interest rate swaps and/or to cause the novation of the related interest rate swap(s) to a third party replacement derivatives dealer prior to the relevant termination date for that interest rate swap. Otherwise, upon the termination of an interest rate swap transaction on the relevant termination date, the Company may elect to enter into a new swap to hedge the remaining borrowings outstanding under the applicable credit facility as of the swap termination date.

The Company’s objective in entering into the interest rate swap transactions is to limit the variability of cash flows associated with changes in LIBOR interest rate payments due on its credit facilities by using the interest rate swaps to offset the future variable rate interest payments made by the Company. The Company has elected to apply hedge accounting and designated the swaps as cash flow hedges. The Company uses regression analysis to test if the swaps are expected to be highly effective (defined as the swaps offsetting at least 80% and not more than 125% of the hedged interest exposure) on both a prospective and retrospective basis. In September 2017 the Company early adopted ASU 2017-12 which amends ASC 815 and hedge accounting. Under the new guidance, effectiveness is no longer measured and all changes in the fair market value of derivatives are recorded in AOCI for effective hedge relationships. The Company has elected to continue testing effectiveness quantitatively using regression analysis. All derivatives outstanding as of the prior year-end were dedesignated in April, 2017 as discussed above and thus there is no impact on the opening balance of equity as a result of adoption. The impact to the current year financials was a reversal of the cumulative ineffectiveness recognized from the new designation in April 2017 through adoption of $2.6 million. See Note 1, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES for more details on the recent adoption of ASU 2017-12.

The changes in fair market value of the swaps, including adjustments for non-performance risk, which are designated and qualify as cash flow hedges, are classified in Other Comprehensive Income (Loss) (“OCI”). These amounts are reclassified from AOCI to interest expense when the hedged interest payments are recognized in interest expense, net in the condensed consolidated statements of operations.

Amounts in Accumulated Other Comprehensive Income (Loss) expected to be reclassified into earnings in the next 12 months total a gain of $1.1 million.

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At September 30, 2017, the Company was a party to the following interest rate swaps, which are designated as cash flow hedges that effectively fix the interest rates for a portion of the Refinancing Facility, the Korean Export Credit Facility and the Sinosure Credit Facility (dollars in thousands):

September 30, 2017

Notional

Effective

Maturity

Fair Value

Fixed

Floating

Hedged Credit Facility

Amount

Date

Hierarchy

Interest Rate

Refinancing Facility

88,041

4/10/2017

9/3/2020

Level 2

1.6600%

1 mo. LIBOR

Refinancing Facility

22,010

4/18/2017

9/3/2020

Level 2

1.6480%

1 mo. LIBOR

Korean Export Credit Facility (1)

462,400

4/10/2017

9/30/2020

Level 2

1.8380%

3 mo. LIBOR

Korean Export Credit Facility (1)

86,700

4/10/2017

9/30/2020

Level 2

1.8645%

3 mo. LIBOR

Korean Export Credit Facility (1)

28,900

4/18/2017

9/30/2020

Level 2

1.8180%

3 mo. LIBOR

Sinosure Credit Facility

322,758

4/10/2017

3/21/2022

Level 2

2.0470%

3 mo. LIBOR

(1)

The initial aggregate notional amount of $599.7 million under the three interest rate swaps increased up to the maximum aggregate notional amount of $610.0 million in October 2017 in order to effectively fix the interest rate on the target percentage of expected borrowings. The swap notional will amortize down hereafter.

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The tables below provide quantitative information about the impact of derivatives on the Company’s condensed consolidated balance sheet and statement of operations (dollars in thousands):


		September 30, 2017				December 31, 2016
	Balance Sheet	Fair Value of Derivatives				Fair Value of Derivatives
	Location	Asset		Liability		Asset		Liability
Derivatives designated as hedging instruments

Interest rate swap contracts - current	Current assets	$	—	$	—	$	—	$	—
Interest rate swap contracts - non-current	Non-current assets		234		1,025		19,585		—
Interest rate swap contracts - current	Current liabilities		(203)		(3,280)		(1,552)		—
Interest rate swap contracts - non-current	Non-current liabilities		—		(166)		—		—
Total derivatives designated as hedging instruments		$	31	$	(2,421)	$	18,033	$	—

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	Offsetting of Derivative Assets
	September 30, 2017
							Gross Amounts Not Offset
	Gross		Gross		Net Amounts		in the Balance Sheet
	Amounts of		Amounts		of Assets				Cash
	Recognized		Offset in the		presented in the		Financial		Collateral
	Assets		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
Counterparty 1	$	—	$	22	$	22	$	(22)	$	—	$	—
Counterparty 2		—		9		9		(9)		—		—
Counterparty 3		—		—		—		—		—		—
Total	$	—	$	31	$	31	$	(31)	$	—	$	—


	Offsetting of Derivative Assets
	December 31, 2016
							Gross Amounts Not Offset
	Gross		Gross		Net Amounts		in the Balance Sheet
	Amounts of		Amounts		of Assets				Cash
	Recognized		Offset in the		presented in the		Financial		Collateral
	Assets		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
Counterparty 1	$	15,577	$	1,314	$	16,891	$	(1,314)	$	—	$	15,577
Counterparty 2		975		80		1,055		(80)		—		975
Counterparty 3		1,481		158		1,639		(158)		—		1,481
Total	$	18,033	$	1,552	$	19,585	$	(1,552)	$	—	$	18,033


	Offsetting of Derivative Liabilities
	September 30, 2017
							Gross Amounts Not Offset
	Gross		Gross		Net Amounts		in the Balance Sheet
	Amounts of		Amounts		of Liabilities				Cash
	Recognized		Offset in the		presented in the		Financial		Collateral
	Liabilities		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
Counterparty 1	$	(2,226)	$	(22)	$	(2,248)	$	22	$	—	$	(2,226)
Counterparty 2		(8)		(9)		(17)		9		—		(8)
Counterparty 3		(157)		—		(157)		—		—		(157)
Total	$	(2,391)	$	(31)	$	(2,422)	$	31	$	—	$	(2,391)


	Offsetting of Derivative Liabilities
	December 31, 2016
							Gross Amounts Not Offset
	Gross		Gross		Net Amounts		in the Balance Sheet
	Amounts of		Amounts		of Liabilities				Cash
	Recognized		Offset in the		presented in the		Financial		Collateral
	Liabilities		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
Counterparty 1	$	—	$	(1,314)	$	(1,314)	$	1,314	$	—	$	—
Counterparty 2		—		(80)		(80)		80		—		—
Counterparty 3		—		(158)		(158)		158		—		—
Total	$	—	$	(1,552)	$	(1,552)	$	1,552	$	—	$	—

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The following table provides the effect of fair value and cash flow hedge accounting on the condensed consolidated statements of operations (dollars in thousands):


	For the nine months ended September 30,
	2017		2016

Interest expense, net (where the effects of fair value or cash flow hedges are recorded)	$	(63,040)	$	(31,355)

The effects of fair value and cash flow hedging
Gain / (loss) on cash flow hedging relationships in Subtopic 815-20:
Interest rate contracts:
Amount reclassified from AOCI to net (loss) income on derivative	$	(1,228)	$	1,502
Amount reclassified from AOCI to net (loss) income as a result that a forecasted transaction is no longer probable of occurring		—		—

The following table provides the effect of derivatives on the condensed consolidated statements of operations (dollars in thousands):


	Location of Gain or
	(Loss) Reclassified	Three Months Ended				Nine Months Ended
Derivatives in Cash Flow	from AOCI to	September 30,				September 30,
Hedging Relationships	Income	2017		2016		2017		2016
Interest rate swap contracts (Effective Portion)
Amount recognized in other comprehensive income (loss) on derivative	Interest Expense, net	$	(2,003)	$	(5,207)	$	(6,359)	$	8,901
Amount reclassified from AOCI to net (loss) income on derivative	Interest Expense, net		(319)		1,342		(1,228)		1,502

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

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


	September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Cash and cash equivalents	$	184,677	$	184,677	$	94,681	$	94,681
Restricted cash		1,464		1,464		1,457		1,457
Long-term debt, including current portion, excluding discount		1,412,896		1,402,519		1,581,951		1,564,364

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity. Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar

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techniques with significant unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation.

The Company uses the following methods and assumptions in estimating fair values for its financial instruments:

The carrying amounts of the Company’s other financial instruments as of September 30, 2017 and December 31, 2016 (principally Due from charterers, net, Due from Navig8 pools, net, Accounts payable and accrued expenses) approximate fair values because of the relatively short maturity of these instruments.

Cash and cash equivalents: The carrying amounts reported in the balance sheet approximate fair value due to the short-term maturity or variable rates of these instruments.

Restricted cash: The carrying amounts of the Company’s other financial instruments as of September 30, 2017 and December 31, 2016 approximate fair value and are considered to be Level 1 items.

Long-term debt, including current portion, excluding discount: The carrying amount of the variable rate borrowings under the Refinancing Facility, Korean Export Credit Facility and Sinosure Credit Facility as of September 30, 2017 and December 31, 2016 approximates the fair value estimated based on current market rates and the Company’s credit spreads. The fair value of the Senior Notes, included in the table above as a component of long-term debt, was based on the income approach using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount. Level 2 inputs include futures contracts on LIBOR, LIBOR cash and swap rates and the Company’s credit spreads. The Company’s credit spread is estimated as the spread over LIBOR which varies from 1.5% to 3.75%.

Derivatives: The Company has elected to use the income approach to value the interest rate swap derivatives using observable Level 2 market expectations at measurement date and standard valuation techniques to convert future amounts to a single present amount (discounted) reflecting current market expectations about those future amounts. Level 2 inputs for the derivative valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically futures contracts) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR cash and swap rates, implied volatility for floors, basis swap adjustments and credit risk at commonly quoted intervals). Mid-market pricing is used as a practical expedient for fair value measurements. The credit effect on the derivative's fair value is calculated by applying a continuously compounded discount factor based on credit default swap rates of the counterparty when the swap is in an asset position pre-credit and based on the spread over LIBOR of 2% when the swap is in a liability position pre-credit.

Assets held for sale: As of September 30, 2017, the Company classified the Gener8 Poseidon and Gener8 Pericles as Current assets – assets held for sale, in the condensed consolidated balance sheet. These vessels are expected to be sold within one year. As of December 31, 2016, the Company classified the Gener8 Ulysses as Current assets – assets held for sale, in the condensed consolidated balance sheet. The vessel was subsequently sold during the first quarter of 2017. The fair value of a vessel held for sale for the periods ended September 30, 2017 and December 31, 2016 was determined based on the selling price, net of estimated costs to sell, of such asset based on the contract of sale finalized within a short period of time of its classification as held for sale, and measured on a nonrecurring basis. See Note 17, Subsequent Events for more updates on recent vessel sales.

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

September 30, 2017

December 31, 2016

Significant

Other

Significant

Other

Significant

Observable

Unobservable

Observable

Unobservable

Inputs

Total

(Level 2)

(Level 3)

Total

(Level 2)

(Level 3)

Assets held for sale

31,530

—

30,195

—

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


	September 30, 2017						December 31, 2016
			Significant						Significant
			Other		Significant				Other		Significant
			Observable		Unobservable				Observable		Unobservable
			Inputs		Inputs				Inputs		Inputs
	Total		(Level 2)		(Level 3)		Total		(Level 2)		(Level 3)
Interest rate swaps - Assets	$	1,259	$	1,259	$	—	$	19,585	$	19,585	$	—
Interest rate swaps - Liabilities		3,649		3,649		—		1,552		1,552		—

13. 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 September 30, 2017 and 2016, the Company recorded expense associated with this lease of $0.5 million and $0.5 million, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded expense associated with this lease of $1.5 million and $1.5 million, respectively. After the lease amendment, future minimum rental payments on this lease for the next five years are as follows: 2017— $0.4 million (from October 1, 2017 to December 31, 2017), 2018— $1.5 million, 2019— $1.5 million, 2020—$1.7 million, 2021—$2.2 million and thereafter—$8.2 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 September 30, 2017 and December 31, 2016, 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 $1.5 million as of September 30, 2017 and December 31, 2016.

14. RELATED PARTY TRANSACTIONS

The following are related party transactions not disclosed elsewhere in these condensed consolidated financial statements.

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. Nicolas Busch, a member of the Company’s Board of Directors, is a director and beneficial owner of Navig8 Limited.

The Company’s relevant newbuilding and vessel owning subsidiaries have entered into pool agreements with VL8 Pool, Inc. for the Company’s existing and newbuilding VLCC vessels and with V8 Pool Inc. for the Company’s Suezmax and Aframax vessels, in each case for VL8 Pool, Inc. and V8 Pool Inc. to act as pool managers (“Pool Managers”). The Pool Managers act as the time charterer of the pool vessels and will enter the pool vessels into employment contracts such as voyage charters. The Pool Managers allocate the revenue of applicable 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 VLCC vessel in the VL8 Pool and per Suezmax vessel in the Suez8 Pool, and $250.00 per day per Aframax vessel in the V8 Pool. In addition, for the vessels in the VL8 Pool and Suez8 Pool, VL8 Pool Inc. incurs a commercial management fee charged by a related party equal to 1.25% of all hire revenues, which is deducted from distribution to pool participants. For the vessels in the V8 Pool, V8 Pool Inc. incurs a commercial management fee charged by a related party equal to 2.0% of all hire revenues, which is deducted from distribution to pool participants.

Navig8 Pools

As of September 30, 2017, 22 of the Company’s VLCC vessels have entered into the VL8 Pool, seven of the Company’s Suezmax vessels have entered into the Suez8 Pool and one of the Company’s Aframax vessels have entered into the V8 Pool.

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During the three months ended September 30, 2017 and 2016, the Company earned net pool distributions of $47.9 million (which is comprised of $39.8 million from VL8 Pool, $7.3 million from Suez8 Pool and $0.8 million from V8 Pool) and $65.6 million (which is comprised of $42.6 million from VL8 Pool, $18.4 million from Suez8 Pool and $4.6 million from V8 Pool), respectively, from Navig8 pools. During the nine months ended September 30, 2017 and 2016, the Company earned net pool distributions of $238.6 million (which is comprised of $186.8 million from VL8 Pool, $42.6 million from Suez8 Pool and $9.2 million from V8 Pool) and $271.0 million (which is comprised of $167.6 million from VL8 Pool, $82.3 million from Suez8 Pool and $21.1 million from V8 Pool), respectively, from Navig8 pools. These amounts are included in Navig8 pool revenues on the condensed consolidated statement of operations.

As of September 30, 2017 and December 31, 2016, a balance of $27.9 million ($17.0 million from VL8 pool, $8.9 million from Suez8 pool and $2.0 million from V8 pool) and $60.7 million ($40.9 million from VL8 pool, $16.1 million from Suez8 pool and $3.7 million from V8 pool), 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. Navig8 charterhire expenses during the three and nine months ended September 30, 2017 included $6 thousand and $19 thousand, respectively, of profit share adjustments related to the profit share plan for the Nave Quasar. Navig8 charterhire expenses for the three and nine months ended September 30, 2016 were $19 thousand and $3.2 million, respectively, 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.

Working Capital at Navig8 Pools

The Company is required to provide working capital to each of VL8 Pool Inc. and V8 Pool Inc. upon delivery of each vessel into the applicable Navig8 pool. 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, $0.9 million and $0.7 million to VL8 Pool Inc. in respect of the VL8 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 September 30, 2017, the working capital associated with the Company’s owned vessels entered into the Navig8 pools totaled $27.0 million, and is included in Working capital at Navig8 pools on the condensed consolidated balance sheet as noncurrent assets. Additionally, as of September 30, 2017, the working capital associated with the Gener8 Pericles ($0.7 million) and Gener8 Poseidon ($1.0 million), two vessels classified as assets held for sale as of September 30, 2017, and is included in Prepaid expenses and other current assets on the condensed consolidated balance sheet.

As of December 31, 2016, the working capital associated with the Company’s owned vessels entered into the Navig8 pools totaled $33.1 million, and is included in Working capital at Navig8 pools on the condensed consolidated balance sheet as noncurrent assets. Additionally, as of December 31, 2016, the working capital associated with the Gener8 Spyridon and Gener8 Ulysses, two vessels sold during the first quarter of 2017, was $0.9 million and $1.0 million, respectively, and was included in Prepaid expenses and other current assets on the condensed consolidated balance sheet.

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 September 30, 2017 and 2016, the Company recorded supervision fees of $0.2 million and $0.9 million, respectively. During the nine months ended

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September 30, 2017 and 2016, the Company recorded supervision fees of $0.7 million and $2.6 million, respectively. These amounts are included in Vessels under construction on the condensed consolidated balance sheet as noncurrent assets. As of September 30, 2017 and December 31, 2016, $0.3 million and $1.3 million, respectively, remained outstanding.

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 September 30, 2017 and 2016, the Navig8 Limited subsidiary billed the Company a total of $0.3 million and $0.3 million, respectively, for corporate administration fees. During the nine months ended September 30, 2017 and 2016, the Navig8 Limited subsidiary billed the Company a total of $0.9 million and $0.9 million, respectively, for corporate administration fees, which amounts were included in general and administrative expenses on the condensed consolidated statements of operations. A payable balance of $0.1 million and $0.1 million, remained outstanding as of September 30, 2017 and December 31, 2016, respectively.

Other Related Party Transactions

During the three months ended September 30, 2017 and 2016, the Company incurred office expenses totaling approximately $2 thousand and $1 thousand, respectively, on behalf of Peter C. Georgiopoulos, the Chairman of the Company’s Board and Chief Executive Officer. During the nine months ended September 30, 2017 and 2016, the Company incurred office expenses totaling approximately $5 thousand and $4 thousand, respectively, on behalf of Mr. Georgiopoulos. As of September 30, 2017 and December 31, 2016, a balance due from Mr. Georgiopoulos of approximately $4 thousand and $4 thousand, respectively, remains outstanding.

The Company incurred certain business, travel, and entertainment costs totaling $26 thousand and $73 thousand, during the three and nine months ended September 30, 2016, respectively, on behalf of Genco Shipping & Trading Limited (“Genco”), an owner and operator of dry bulk vessels. Mr. Georgiopoulos was previously the chairman of Genco’s board of directors. On October 13, 2016, Mr. Georgiopoulos resigned as chairman of the board of directors and a director of Genco. As of September 30, 2017 and December 31, 2016, no balance was due from Genco.

Aegean Marine Petroleum Network, Inc. (“Aegean”) supplies bunkers and lubricating oils to the Company’s vessels and the Company provides office space to Aegean, each of which was deemed to be a related party transaction. Bunkers and lubricating oils supplied by Aegean aggregated $0.6 million and $2.5 million, respectively, for the three and nine months ended September 30, 2017, and $1.8 million and $3.7 million, respectively, for the three and nine months ended September 30, 2016. Rent and other expenses incurred by Aegean in its New York office aggregated $50 thousand and $0.2 million, respectively, for the three and nine months ended September 30, 2017, and $50 thousand and $0.2 million, respectively, for the three and nine months ended September 30, 2016. Mr. Georgiopoulos was previously the chairman of Aegean’s board of directors, and John Tavlarios, the Company’s Chief Operating Officer, was previously on Aegean’s board of directors. On June 19, 2017, Mr. Georgiopoulos resigned as chairman of Aegean’s board of directors and Mr. Tavlarios resigned as a director of Aegean. Therefore, as of the resignation date, transactions with Aegean no longer qualify as related party transactions. As of September 30, 2017 and December 31, 2016, a balance of $0.2 million and $0, respectively, remains outstanding for supplied bunkers and lubricating oils, and no balance remains outstanding in either period for rent and other expenses.

The Company provided office space and other expenses to Chemical Transportation Group, Inc. (“Chemical”), an owner and operator of chemical vessels for $20 thousand and $15 thousand, during the three months ended September 30, 2017 and 2016, respectively, and $64 thousand and $47 thousand, during the nine months ended September 30, 2017 and 2016, respectively. Mr. Georgiopoulos is chairman of Chemical’s board of directors. As of September 30, 2017 and December 31, 2016, a balance of $2 thousand and $0.1 thousand, respectively, remains outstanding.

Amounts due from the related parties described above as of September 30, 2017 and December 31, 2016 are included in Prepaid expenses and other current assets on the condensed consolidated balance sheets (except as otherwise

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indicated above); and amounts due to the related parties described above as of September 30, 2017 and December 31, 2016 are included in Accounts payable and accrued expenses on the condensed consolidated balance sheets (except as otherwise indicated above).

15. STOCK‑BASED COMPENSATION

Stock Options

2017 Stock Options

Mr. Georgiopoulos received stock options to purchase 500,000 shares of common stock. Mr. Vrondissis received stock options to purchase 25,000 shares of common stock. The stock options are exercisable at an exercise price of $4.69 per share of common stock. The exercise price is equal to the closing trading price of the Company’s common stock on the New York Stock Exchange on January 5, 2017. The stock options were fully vested upon grant, have a 7-year term, subject to earlier termination upon the occurrence of certain events related to termination of employment, and are subject to the provisions of stock option grant agreements.

During the first quarter of 2017, the Company valued the granted options using “Black Scholes Model” and during the three and nine months ended September 30, 2017 recorded $0 and $1.3 million, respectively of related compensation expense, which is included in the Company’s condensed consolidated statements of operations as a component of general and administrative expense. In accordance with FASB ASC Topic 718, the Company used the following assumptions for the Black Scholes Model: stock price volatility of 49.48%; contractual option term of 7 years; expected option life of 3.5 years; dividend yield of 0%; and risk free interest rate of 2.26%. The actual amount realized by the named executives in the agreements will likely vary based on a number of factors, including the Company’s performance, stock price fluctuations and applicable vesting. There was no such expense during the three and nine months ended September 30, 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 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. The option agreement expired on July 8, 2017.

The following table summarizes certain information of the stock options outstanding:


	Options Exercisable,
	September 30, 2017
				Weighted Average
		Weighted		Remaining
	Number of	Average		Contractual Life
Exercise Price	Options	Exercise Price		(years)
	(‘000)
$4.69	525	$	4.69	6.3

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Restricted Stock Units

2017 Restricted Stock Units

On May 16, 2017, in accordance with the Company’s amended 2012 Equity Incentive Plan, the Company granted certain non-employee directors 44,856 RSUs, which remain outstanding as of September 30, 2017. The RSUs, which were valued at $5.35 per share, will generally vest on the earlier of (a) the date of the Company’s next annual meeting of shareholders and (b) the date that is 30 days following the first anniversary of the grant date, subject to the director’s continued service with the Company through the applicable vesting date. The RSUs are amortized over a one-year period from the grant date and valued at the grant price of $5.35 per share.

2016 Restricted Stock Units

On September 9, 2016, in accordance with the Company’s amended 2012 Equity Incentive Plan, the Company granted certain non-employee directors 28,752 RSUs. The RSUs were valued at $6.26 per share. On May 16, 2017 (the date of the Company’s annual meeting of shareholders), the RSUs vested and the Company issued 28,752 shares.

2015 Restricted Stock Units

On June 24, 2015, in connection with the pricing of the Company’s IPO, the Company granted members of management 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 (loss) income per share for the three and nine months ended September 30, 2017 and 2016, because the impact is anti-dilutive. As of September 30, 2017, 44,919 RSUs have been forfeited and 635,518 shares remain to be issued in future years, following the vesting date for each increment.

Stock options granted to management prior to the IPO 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 $22.0 million 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 are amortized over the vesting period using a graded amortization schedule.

For the three months ended September 30, 2017 and 2016, compensation expense in connection with the RSUs was $0.8 million and $1.4 million, respectively, and for the nine months ended September 30, 2017 and 2016, compensation expense in connection with the RSUs was $2.3 million and $4.2 million, respectively. Compensation expense is included in the Company’s condensed consolidated statements of operations as a component of general and administrative expense.

The following table summarizes certain information of the outstanding unvested and vested RSUs:


		Weighted-
		Average
		Remaining
	Number of	Contractual
	RSU's	Term (years)
	(‘000)
Outstanding, December 31, 2016	664
Granted	45
Vested	(29)
Forfeited	—
Outstanding, September 30, 2017	680		1.1

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16. 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. See Note 13, Lease commitments, for lease commitments.

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 and the amount of the counterclaim cannot be reasonably estimated at this time. Submissions in this arbitration have closed but the claim remains pending.

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 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 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 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.

An arbitration hearing took place in December 2016 with respect to these claims. As a result, the arbitration tribunal’s decision was published on May 9, 2017 (the “Decision”) and the tribunal ruled that GMR Atlas LLC had been in breach of certain customer eligibility requirements as claimed by the Atlas Claimant. The Decision stated that the Atlas Claimant was entitled to recover the sum of $3.3 million in respect of the Subsequent Atlas Claims (the “Declaratory Sum”). However the Declaratory Sum represents the loss suffered by the entire 2011 VLCC Pool as a result of the breach of certain customer eligibility requirements, not just the loss suffered by the Atlas Claimant alone which was just one participant in the 2011 VLCC Pool at the relevant time. The Declaratory Sum is therefore subject to distribution among all of the members (at the relevant time) of the 2011 VLCC Pool, which includes our 2011 VLCC Pool Subs, to whom a portion of the Declaratory Sum will be payable. The tribunal has reserved the right to make further

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decisions in regard to the sums to be distributed among the members of the 2011 VLCC Pool, as well as in respect of any questions of interest and legal costs.

The Atlas Claimant is challenging the Decision on grounds of serious procedural irregularity and also by seeking permission to appeal those aspects of the Decision which contain a ruling on a point of law. An application to challenge the Decision on procedural grounds as well as on certain points of law was filed with the High Court of England and Wales on October 6, 2017. A hearing of the procedural challenge is not expected to take place before March 2018.

As of September 30, 2017 and December 31, 2016, an amount due from the 2011 VLCC Pool dispute of $1.9 million and $3.4 million, respectively, was included in Other assets (noncurrent). During the nine months ended September 30, 2017, the Company recorded as general and administrative expenses a write-off of assets of $1.5 million and litigation loss of $0.4 million, both of which are related to the Atlas charter dispute. There was no such expense during the three months ended September 30, 2017. The Company may incur further charges in connection with this legal proceeding.

17. SUBSEQUENT EVENTS

In preparing the condensed consolidated financial statements, the Company has evaluated events and transactions occurring after September 30, 2017 for recognition or disclosure purposes. Based on this evaluation, from September 30, 2017 through the date the condensed consolidated financial statements were available to be issued, no material events have been identified other than the following:

Delivery of Vessels

On October 9, 2017, the Company took delivery of the Gener8 Nestor, a 2017-built VLCC newbuilding. Upon delivery, the Gener8 Nestor entered into the VL8 Pool. On October 9, 2017, the Company borrowed $48.0 million under the Korean Export Credit Facility, which had previously been pre-positioned on September 29, 2017 at the Korea Development Bank for the benefit of the Builder in order to satisfy the final installment payment for the Gener8 Nestor. $29.0 million of the pre-positioned funds was released to the Builder on October 9, 2017 upon delivery of the Gener8 Nestor, and the remaining balance was released to the Company. At the time of the delivery, the Company has made all shipyard installment payments and there is no outstanding payable balance. See Note 10, LONG TERM DEBT, for additional information regarding the recent Building Contract amendment related to the Gener8 Nestor.

Sale of Vessels

On October 25, 2017 the Company entered into an agreement for the sale of the 2010-built VLCC tanker the Gener8 Zeus for gross proceeds of $53.0 million. On November 7, 2017, the sale was finalized. The Company used the net proceeds to repay $34.3 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On October 18, 2017 the Company entered into an agreement for the sale of the 2000-built Suezmax tanker the Gener8 Argus for gross proceeds of $11.0 million. On October 30, 2017, the sale was finalized and the Company used the net proceeds to repay $7.7 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On August 21, 2017 the Company entered into an agreement for the sale of the 2003-built Aframax tanker the Gener8 Pericles for gross proceeds of $11.0 million. As of September 30, 2017, the Company classified the Gener8 Pericles as Current assets - held for sale, in the condensed consolidated balance sheet. On October 18, 2017, the sale was finalized and the Company used the net proceeds to repay $7.8 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

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Other Information

On November 8, 2017, the Company amended the Sinosure Credit Facility in order to conform certain financial covenants to those in our Refinancing Facility and Korean Export Credit Facility. Pursuant to the amendment, the debt service coverage ratio under the Sinosure Credit Facility was replaced with a conforming interest expense coverage ratio, which tests consolidated EBITDA to cash interest expense, each as defined in the Sinosure Credit Facility. The amendment also revised the consolidated leverage ratio under the Sinosure Credit Facility from 0.65 to 0.60 to conform to the other two credit facilities.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, our management may make forward looking statements to analysts, investors, representatives of the media and others. These forward-looking statements are not historical facts and are based on our management’s current beliefs, expectations, estimates and projections about future events, many of which, by their nature, are inherently uncertain and beyond our control. Actual results may differ materially from those currently anticipated and expressed in such forward-looking statements due to a number of factors, including: (i) loss or reduction in business from our significant customers or the significant customers of the commercial pools in which we participate; (ii) changes in the values of our vessels, newbuildings or other assets; (iii) the failure of our significant customers, shipyards, pool managers or technical managers to perform their obligations owed to us; (iv) the loss or material downtime of significant vendors and service providers; (v) our failure, or the failure of the commercial pools in which we participate, to successfully implement a profitable chartering strategy; (vi) termination or change in the nature of our relationship with any of the commercial pools in which we participate; (vii) changes in demand for our services; (viii) a material decline or prolonged weakness in rates in the tanker market; (ix) changes in production of or demand for oil and petroleum products, generally or in particular regions; (x) greater than anticipated levels of tanker newbuilding orders or lower than anticipated rates of tanker scrapping; (xi) adverse weather and natural disasters, acts of piracy, terrorist attacks and international hostilities and instability; (xii) changes in rules and regulations applicable to the tanker industry, including, without limitation, legislation adopted by international organizations such as the International Maritime Organization and the European Union or by individual countries; (xiii) actions taken by regulatory authorities; (xiv) actions by the courts, the U.S. Coast Guard, the U.S. Department of Justice or other governmental authorities and the results of the legal proceedings to which we or any of our vessels may be subject; (xv) changes in trading patterns significantly impacting overall tanker tonnage requirements; (xvi) any non-compliance with the U.S. Foreign Corrupt Practices Act of 1977 or other applicable regulations relating to bribery; (xvii) the highly cyclical nature of our industry; (xviii) changes in the typical seasonal variations in tanker charter rates; (xix) changes in the cost of other modes of oil transportation; (xx) changes in oil transportation technology; (xxi) increases in costs including without limitation: crew wages, fuel, insurance, provisions, repairs and maintenance; (xxii) the adequacy of insurance to cover our losses, including in connection with maritime accidents or spill events; (xxiii) changes in general political conditions; (xxiv) changes in the condition of our vessels or applicable maintenance or regulatory standards (which may affect, among other things, our anticipated drydocking or maintenance and repair costs); (xxv) changes in the itineraries of our vessels; (xxvi) adverse changes in foreign currency exchange rates affecting our expenses; (xxvii) the fulfillment of the closing conditions under, or the execution of customary additional documentation for, our agreements to acquire vessels and borrow under our existing financing arrangements; (xxviii) the effect of our indebtedness on our ability to finance operations, pursue desirable business operations and successfully run our business in the future; (xxix) financial market conditions; (xxx) sourcing, completion and funding of financing on acceptable terms; (xxxi) our ability to generate sufficient cash to service our indebtedness and comply with the covenants and conditions under our debt obligations; (xxxii) the impact of electing to take advantage of certain exemptions applicable to emerging growth companies; and (xxxiii) other factors listed from time to time in our filings with the Securities and Exchange Commission, or the “SEC,” including without limitation, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, or our “2016 Annual Report on Form 10-K,” and our subsequent reports on Form 10-Q and Form 8-K. Accordingly, you are cautioned not to place undue reliance on forward looking statements, which speak only as of the date on which they are made. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following is a discussion of our financial condition and results of operations for the three and nine months ended September 30, 2017 and 2016. You should consider the foregoing when reviewing our financial condition and results of operations and this discussion. In addition, you should read the following discussion together with the condensed consolidated financial statements including the notes to those financial statements for the periods mentioned above.

General

We are Gener8 Maritime, Inc., a leading U.S.-based provider of international seaborne crude oil transportation services, resulting from a transformative merger in 2015 between General Maritime Corporation, a well-known tanker

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owner, and Navig8 Crude Tankers Inc., a company sponsored by the Navig8 Group, an independent vessel pool manager, which we refer to as the “2015 merger.” As of September 30, 2017, we owned a fleet of 34 tankers, including 33 vessels on the water, consisting of 22 VLCC vessels, 7 Suezmax vessels, 2 Aframax vessels and 2 Panamax vessels, with an aggregate carrying capacity of 8.1mm DWT, which includes 18 “eco” VLCC newbuildings delivered from 2015 through 2017 equipped with advanced, fuel-saving technology, that were constructed at highly reputable shipyards.

In March 2014 and February 2015, we acquired a total of 21 “eco” newbuilding VLCCs, which we refer to as our “VLCC newbuildings.” During the nine months ended September 30, 2017, we took delivery of two VLCC newbuildings, and one additional VLCC newbuilding was delivered on October 9, 2017. These three vessels entered the VL8 Pool upon delivery to us.

On September 26, 2017, Gener8 Maritime Subsidiary Inc. (formerly known as Navig8 Crude Tankers Inc.), which became our subsidiary as a result of the 2015 merger, entered into (i) an Amendment Agreement with the Builder related to the Building Contract in relation to the construction of the Gener8 Nestor and (ii) an Outstanding Works Agreement with the Builder. The Amendment Agreement and the Outstanding Works Agreement provide that the Builder is obligated to physically deliver the Gener8 Nestor on October 9, 2017 and, notwithstanding delivery, complete any outstanding works relating to the Gener8 Nestor required to meet the specifications and requirements of the Building Contract. The Amendment Agreement further provides for a reduction in the contract price payable under the Building Contract, including liquidated damages due to the Company relating to the late delivery of the Gener8 Nestor by the Builder.

For the three and nine months ended September 30, 2017, we recorded a loss of $36.9 million and $114.6 million, respectively, as Loss on disposal of vessels, net, in the condensed consolidated statement of operations, primarily related to the sale and the expected sale of the vessels listed below.

On October 25, 2017, we entered into an agreements for the sale of the 2010-built VLCC tanker the Gener8 Zeus for gross proceeds of $53.0 million. On November 7, 2017, the sale was finalized. We used the net proceeds to repay $34.3 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On October 4, 2017, we entered into an agreement for the sale of the 2002-built VLCC tanker the Gener8 Poseidon for gross proceeds of $21.5 million. As a result, we recorded a net loss of $12.9 million, as Loss on vessel disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017. The sale is expected to be finalized during 2017. We intend to use the net proceeds to repay approximately $14.1 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel. The sale of the vessel is subject to risks outside of our control and therefore may not be consummated.

On August 21, 2017, we entered into an agreement for the sale of the 2003-built Aframax tanker the Gener8 Pericles for gross proceeds of $11.0 million. On October 18, 2017, the sale was finalized and the Company recorded a net loss of $6.6 million, as Loss on vessel disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017. We used the net proceeds to repay $7.8 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On July 27, 2017, we entered into an agreement for the sale of the 2002-built Aframax tanker the Gener8 Elektra for gross proceeds of $10.5 million. On August 15, 2017, the sale was finalized and we recorded a net loss of $1.0 million and $5.9 million, as Loss on vessel disposal of vessels, net, on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017, respectively. We used the net proceeds from the sale to repay $7.6 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On July 20, 2017 we entered into an agreement for the disposition, demolition and scrapping of the 1999-built Suezmax tankers the Gener8 Phoenix and Gener8 Horn for $7.8 million and $8.0 million, respectively, in gross proceeds. During the third quarter of 2017, the disposition of the Gener8 Phoenix and Gener8 Horn was finalized and we recorded a net loss of $8.2 million and $8.0 million, respectively, as Loss on vessel disposal of vessels, net, on the

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condensed consolidated statement of operations for the three and nine months ended September 30, 2017. We used the net proceeds, along with available cash, to repay $7.6 million and $8.2 million, respectively, of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with these vessels.

On May 25, 2017, the Company entered into an agreement for the sale of the 2002-built Suezmax tanker Gener8 Orion for gross proceeds of $13.0 million. On June 13, 2017, the sale was finalized and we recorded a net loss of $10.1 million, as Loss on vessel disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. We used the net proceeds to repay $11.1 million of the related portion of the senior secured debt outstanding under the Refinancing Facility associated with the vessel.

On May 2, 2017, we entered into an agreement for the sale of the 2016-built VLCC tanker the Gener8 Theseus for $81.0 million in gross proceeds. As a result of the sale, we recorded a loss of $31.9 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. On August 7, 2017, the sale of the Gener8 Theseus was finalized. We used the net proceeds to repay $50.1 million of the related portion of the senior secured debt outstanding under the Korean Export Credit Facility associated with the vessel.

On May 2, 2017, we entered into an agreement for the sale of the 2016-built VLCC tanker the Gener8 Noble for $81.0 million in gross proceeds. As a result of the sale, we recorded a loss of $25.4 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the nine months ended September 30, 2017. On September 15, 2017, the sale of the Gener8 Noble was finalized. We used the net proceeds to repay $50.4 million of the related portion of the senior secured debt outstanding under the Korean Export Credit Facility associated with the vessel.

As of December 31, 2016, we classified the Gener8 Ulysses as Current assets - held for sale, in the condensed consolidated balance sheet, as all the criteria of ASC 360-10 have been met and the transaction was qualified as assets held for sale. This vessel was written down to its fair value, less cost to sell, of $30.2 million on the condensed consolidated balance sheet. As a result of the expected sale in 2017, we recorded a loss of $6.9 million as Loss on disposal of vessels, net, on the condensed consolidated statement of operations for the year ended December 31, 2016. The Gener8 Ulysses vessel was sold during the first quarter of 2017.

We have a significant amount of outstanding indebtedness under our Refinancing Facility, the Korean Export Credit Facility, and the Sinosure Credit Facility, which we refer to collectively as our “senior secured credit facilities,” and our senior notes. As of September 30, 2017, we owed an aggregate outstanding principal amount of $1.4 billion under our senior secured credit facilities and our senior notes. As of September 30, 2017, no additional amounts may be borrowed under our Refinancing Facility or our Sinosure Credit Facility. Under the Korean Export Credit Facility, the remaining available borrowings were drawn down in connection with the delivery of the Gener8 Nestor. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Financings—Korean Export Credit Facility”, for additional information regarding borrowings under the Korean Export Credit Facility for the delivery of this vessel.

On April 10, 2017, the Company modified the interest rate swaps agreements, initially entered into on May 2, 2016. During the second quarter of 2017 and in connection with the modifications, the Company received payments totaling $18.2 million from the swap counterparties. See Note 11, Financial InstrumentS, to the condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 included in Part I, Item 1 of this Quarterly Report for more information regarding these swap transactions for more details. We may from time to time enter into additional interest rate swaps, caps or similar agreements for all or a significant portion of our remaining variable rate debt under the refinancing facility, the Korean Export Credit Facility and the Sinosure Credit Facility.

For further description of our businesses, see the “Business” section found in our 2016 Annual Report on Form 10-K. You should read the following discussion in conjunction with our financial statements and related Notes included elsewhere in this Quarterly Report and in our 2016 Annual Report on Form 10-K, including the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2016 Annual Report on Form 10-K.

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Pool, Spot and Time Charter Deployment

We seek to employ our vessels in a manner that maximizes fleet utilization and earnings upside through our chartering strategy in line with our goal of maximizing shareholder value and returning capital to shareholders when appropriate, taking into account fluctuations in freight rates in the market and our own views on the direction of those rates in the future. As of September 30, 2017, all of our owned and operating vessels were employed in the spot market (either directly or through spot market focused pools), given our expectation of continued favorable near term charter rates.

A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed upon freight per ton of cargo or a specified total amount. Under spot market voyage charters, we pay voyage expenses such as port and fuel costs. A time charter is generally a contract to charter a vessel for a fixed period of time at a set daily or monthly rate. Under time charters, the charterer pays voyage expenses such as port and fuel costs. Vessels operating on time charters provide more predictable cash flows, but can yield lower profit margins than vessels operating in the spot market during periods characterized by favorable market conditions. Vessels operating in the spot market generate revenues that are less predictable but may enable us to capture increased profit margins during periods of improvements in tanker rates although we are exposed to the risk of declining tanker rates and lower utilization. Pools generally consist of a number of vessels which may be owned by a number of different ship owners which operate as a single marketing entity in an effort to produce freight efficiencies. Pools typically employ experienced commercial charterers and operators who have close working relationships with customers and brokers while technical management is typically the responsibility of each ship owner. Under pool arrangements, vessels typically enter the pool under a time charter agreement whereby the cost of bunkers and port expenses are borne by the charterer (i.e., the pool) and operating costs, including crews, maintenance and insurance are typically paid by the owner of the vessel. Pools, in return, typically negotiate charters with customers primarily in the spot market. Since the members of a pool typically share in the revenue generated by the entire group of vessels in the pool, and since pools operate primarily in the spot market, including the pools in which we participate, the revenue earned by vessels placed in spot market related pools is subject to the fluctuations of the spot market and the ability of the pool manager to effectively charter its fleet. We believe that vessel pools can provide cost‑effective commercial management activities for a group of similar class vessels and potentially result in lower waiting times.

As of September 30, 2017, we employed all of our VLCCs, Suezmax and one Aframax vessels on the water, in Navig8 Group commercial crude tanker pools, including the VL8 Pool, the Suez8 Pool and the V8 Pool. We refer to the VL8 Pool, the Suez8 Pool and the V8 Pool as the “Navig8 pools.” Our newbuilding and VLCC, Suezmax and Aframax owning subsidiaries have entered into pool agreements regarding the deployment of our vessels into the VL8 Pool, the Suez8 Pool and V8 Pool, respectively. VL8 Pool Inc. acts as the time charterer of the pool vessels in the VL8 Pool, and V8 Pool Inc. acts as the time charterer of the pool vessels in the Suez8 Pool and the V8 Pool, and in each case enters the pool vessels into employment contracts such as voyage charters. VL8 Pool Inc. and V8 Pool Inc. allocate the revenue of VL8 Pool, Suez8 Pool and V8 Pool vessels, as applicable, between all the pool participants based on pool results and a pre-determined allocation method. All of the vessels deployed in the Navig8 pools during the three and nine months ended September 30, 2017 were deployed on spot market voyages. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Party Transactions—Related Party Transactions of Navig8 Crude Tankers, Inc.” in our 2016 Annual Report on Form 10-K for further information regarding these pool agreements.

Additionally, one chartered-in VLCC vessel (the Nave Quasar), which we had the right to operate at a gross rate of $26,397 per day pursuant to a time charter that expired in March 2016 and under which we had agreed to share 50% of net pool earnings received in respect of such vessel over $30,000 per day, was also deployed in the VL8 Pool between May 2015 and March 2016, the month in which the time charter expired, and the vessel was returned to its owner.

As of September 30, 2017, we have taken delivery of 20 of our VLCC newbuildings which we deployed in the VL8 Pool in spot market voyages. On October 9, 2017, our remaining VLCC newbuilding was delivered and was deployed in the VL8 Pool in spot market voyages.

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We are constantly evaluating opportunities to increase the number of our vessels deployed on time charters, but only expect to enter into additional time charters if we can obtain contract terms that satisfy our criteria. We may also consider deploying our vessels on time charter for customers to use as floating storage. We believe that historically, during certain periods of higher charter rates, we benefited from greater cash flow stability through the use of time charters for part of our fleet, while maintaining the flexibility to benefit from improvements in market rates by deploying the balance of our vessels in the spot market. We may utilize a similar strategy to the extent that time charter rates rise and market conditions become favorable. We may also utilize time charters to lock in contracted rates when we believe the rate environment could weaken or decline in the future.

Non-U.S. operations accounted for a majority of our revenues and results of operations. Vessels regularly move between countries in international waters, over hundreds of trade routes. It is therefore impractical to assign revenues, earnings or assets from the transportation of international seaborne crude oil and petroleum products by geographical area. Each of our vessels serves the same type of customer, has similar operations and maintenance requirements, operates in the same regulatory environment, and is subject to similar economic characteristics. Based on this, we have determined that we operate in one reportable segment, the transportation of crude oil and petroleum products with our fleet of vessels.

Net Voyage Revenues as Performance Measure

We evaluate performance using net voyage revenues. Net voyage revenues are voyage revenues minus voyage expenses. Voyage expenses primarily consist of port and fuel costs that are unique to a particular voyage. Consequently, spot charter rates are generally higher than time charter rates to allow spot charter vessel owners the ability to recoup voyage expenses. Voyage expenses typically are paid by the charterer when a vessel is under a time charter and by the vessel owner when a vessel is under a spot charter. We believe that utilizing net voyage revenues neutralizes the variability created by unique costs associated with particular voyages or the manner in which vessels are deployed and presents a more accurate representation of the revenues generated by our vessels on a comparable basis whether on spot or time charters.

Our voyage revenues are recognized ratably over the duration of the spot market voyages and the lives of the time charters, while direct vessel operating expenses are recognized when incurred. We recognize the revenues of time charters that contain rate escalation schedules at the average rate during the life of the contract.

As of September 30, 2017, all of our vessels, with the exception of three vessels (the Gener8 Companion, Gener8 Compatriot and Gener8 Defiance) that remained in the spot market, were deployed in the Navig8 pools, and all of our vessels in the Navig8 pools have been chartered on the spot voyage market. The pool operators of the Navig8 pools act as the time charterer of the pool vessels, and enter the pool vessels into employment contracts. We generally recognize revenue from the Navig8 pools based on our portion of the net distributions reported by the relevant pool, which represents the net voyage revenue of the pool after pool manager fees. See Note 14, RELATED PARTY TRANSACTIONS, to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for more information on the Navig8 pools.

The following table shows the calculation of net voyage revenues:


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
(dollars in thousands)	2017		2016		2017		2016
Income Statement Data:
Voyage revenues	$	51,026	$	72,259	$	248,987	$	302,261
Voyage expenses		(3,133)		(3,159)		(6,987)		(9,710)
Net voyage revenues	$	47,893	$	69,100	$	242,000	$	292,551

As used in this Quarterly Report, we refer to charter hire rates as a measure of the average daily revenue performance of a vessel on a per voyage basis, determined by dividing voyage revenue by total operating days for the applicable fleet.

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We calculate time charter equivalent, or “TCE,” rates by dividing net voyage revenue by total operating days for fleet for the relevant time period. Total operating days for fleet are the total number of days our vessels are in our possession for the relevant period net of off hire days associated with major repairs, drydocking and special or intermediate surveys. We also generate demurrage revenue, which represents fees charged to charterers associated with our spot market voyages when the charterer exceeds the agreed upon time required to load or discharge a cargo. We calculate daily direct vessel operating expenses, or “DVOE,” and daily general and administrative expenses for the relevant period by dividing the total expenses by the aggregate number of calendar days that the vessels are in our possession for the period including offhire days associated with major repairs, drydockings and special or intermediate surveys.

Seasonality

We operate our vessels in markets that have historically exhibited seasonal variations in tanker demand and, as a result, in charter rates. Tanker markets are typically stronger in the fall and winter months (the fourth and first quarters of the calendar year) in anticipation of increased oil consumption in the Northern Hemisphere during the winter months. Unpredictable weather patterns and variations in oil reserves disrupt vessel scheduling and could adversely impact charter rates.

Results of Operations

Set forth below are selected historical consolidated financial and other data of Gener8 Maritime, Inc. at the dates and for the periods shown.


	Three Months Ended				Nine Months ended
	September 30,				September 30,
(dollars and shares in thousands, except per share data)	2017		2016		2017		2016
Income Statement Data:
Voyage revenues	$	51,026	$	72,259	$	248,987	$	302,261
Voyage expenses		3,133		3,159		6,987		9,710
Direct vessel operating expenses		26,324		26,980		83,225		77,041
Navig8 charterhire expenses		6		19		6		3,240
General and administrative expenses		6,936		7,128		24,988		22,240
Depreciation and amortization		25,653		23,118		80,127		60,622
Goodwill impairment		—		26,291		—		26,291
Loss on disposal of vessels, net		36,941		10,756		114,644		10,177
Total operating expenses		98,993		97,451		309,977		209,321
OPERATING (LOSS) / INCOME		(47,967)		(25,192)		(60,990)		92,940
Interest expense, net		(22,542)		(13,699)		(63,040)		(31,355)
Other financing costs		—		(2)		(55)		(8)
Other income (expense), net		3,041		1,542		936		(75)
Total other expenses		(19,501)		(12,159)		(62,159)		(31,438)
NET (LOSS) / INCOME	$	(67,468)	$	(37,351)	$	(123,149)	$	61,502

(LOSS) / INCOME PER COMMON SHARE:
Basic	$	(0.81)	$	(0.45)	$	(1.48)	$	0.74
Diluted	$	(0.81)	$	(0.45)	$	(1.48)	$	0.74

Weighted-average shares outstanding—basic		82,989		82,682		82,976		82,681

Weighted-average shares outstanding—diluted		82,989		82,682		82,976		82,681

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	September 30,		December 31,
(dollars in thousands)	2017		2016
Balance Sheet Data, at end of year / period:
Cash and cash equivalents	$	184,677	$	94,681
Total current assets		274,050		215,285
Vessels, net of accumulated depreciation		2,322,111		2,523,710
Vessels under construction		62,537		177,133
Total assets		2,704,944		2,992,669
Current liabilities (including current portion of long-term debt)		168,687		216,566
Total long-term debt less unamortized discount and debt financing costs		1,222,243		1,337,782
Total liabilities		1,392,206		1,555,258
Shareholders’ equity		1,312,738		1,437,411


	For the Period Ended
	September 30,
(dollars in thousands)	2017		2016
Cash Flow Data:
Net cash provided by operating activities	$	142,873	$	237,118
Net cash provided by (used in) investing activities		132,169		(751,447)
Net cash (used in) provided by financing activities		(185,046)		456,840


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands except fleet data and daily results)	2017			2016			2017			2016
Fleet Data:
Total number of owned vessels at end of period		33			37			33			37
Average number of vessels (1)		35.5			35.2			38.1			33.1
Average number of owned and chartered-in vessels (1)		35.5			35.2			38.1			33.4
Total operating days for fleet (2)		3,039			3,157			9,901			8,823
Total time charter days for fleet		—			—			—			218
Total spot market days for fleet		186			213			538			692
Total Navig8 pool days for fleet		2,853			2,944			9,363			7,913
Total calendar days for fleet (3)		3,266			3,242			10,396			9,072
Fleet utilization (4)		93.1	%		97.4	%		95.2	%		97.3	%
Average Daily Results:
Time charter equivalent (5)	$	15,757		$	21,887		$	24,441		$	33,159
VLCC		19,063			27,493			29,762			42,047
Suezmax		10,615			18,281			17,640			28,880
Aframax		5,712			12,549			11,654			19,332
Panamax		(907)			11,259			8,094			15,222
Handymax		—			—			—			4,603

Daily direct vessel operating expenses (6)	$	8,060		$	8,322		$	8,005		$	8,492
Daily general and administrative expenses (7)		2,124			2,199			2,404			1,666
Total daily vessel operating expenses (8)	$	10,184		$	10,521		$	10,409		$	10,158

Other Data:
EBITDA (9)	$	(19,273)		$	(534)		$	20,018		$	153,479
Adjusted EBITDA (9)	$	15,933		$	34,895		$	140,246		$	192,192

(1)

Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was part of our fleet during the period divided by the number of calendar days in that period. Total number and average number of vessels exclude our VLCC newbuildings prior to delivery.

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Number of owned and chartered-in vessels includes the Nave Quasar chartered-in from Navig8 Inc. for the period from May 8, 2015 to March 8, 2016.

(2)

Total operating days for fleet are the total days our vessels were in our possession for the relevant period net of off hire days associated with major repairs, drydockings or special or intermediate surveys.

(3)

Total calendar days for owned fleet are the total days the vessels were in our possession for the relevant period including off hire days associated with major repairs, drydockings or special or intermediate surveys.

(4)

Fleet utilization is the percentage of time that our vessels were available for revenue generating voyages, and is determined by dividing total operating days for fleet by total calendar days for fleet for the relevant period.

(5)

Time Charter Equivalent, or “TCE,” is a measure of the average daily revenue performance of a vessel. We calculate TCE by dividing net voyage revenue by total operating days for fleet. Net voyage revenues are voyage revenues minus voyage expenses. We evaluate our performance using net voyage revenues. We believe that presenting voyage revenues, net of voyage expenses, neutralizes the variability created by unique costs associated with particular voyages or deployment of vessels on time charter or on the spot market and presents a more accurate representation of the revenues generated by our vessels.

(6)

Direct vessel operating expenses, which is also referred to as “direct vessel expenses” or “DVOE,” include crew costs, provisions, deck and engine stores, lubricating oil, insurance and maintenance and repairs incurred during the relevant period. Daily DVOE is calculated by dividing DVOE by the total calendar days for owned fleet for the relevant period.

(7)

Daily general and administrative expense is calculated by dividing general and administrative expenses by total calendar days for owned fleet for the relevant time period.

(8)

Total Vessel Operating Expenses, or “TVOE,” is a measurement of our total expenses associated with operating our vessels. Daily TVOE is the sum of daily direct vessel operating expenses, and daily general and administrative expenses.

(9)

See the EBITDA and Adjusted EBITDA reconciliation section below.

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EBITDA and Adjusted EBITDA Reconciliation

EBITDA represents net income (loss) plus net interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude the items set forth in the table below, which represent certain non-cash, one-time and other items that we believe are not indicative of the ongoing performance of our core operations. EBITDA and Adjusted EBITDA are used by analysts in the shipping industry as common performance measures to compare results across peers. EBITDA and Adjusted EBITDA are not items recognized by accounting principles generally accepted in the United States of America (“GAAP”), and should not be considered in isolation or used as alternatives to net income, operating income, cash flow from operating activity or any other indicator of our operating performance or liquidity required by GAAP. Our presentation of EBITDA and Adjusted EBITDA is intended to supplement investors’ understanding of our operating performance by providing information regarding our ongoing performance that exclude items we believe do not directly affect our core operations and enhancing the comparability of our ongoing performance across periods. We present Adjusted EBITDA in addition to EBITDA because Adjusted EBITDA eliminates the impact of additional non-cash, one-time and other items not associated with the ongoing performance of our core operations, including charges associated with stock-based compensation, gains and losses on the sale of vessels and costs associated with our financing activities, that we believe further reduce the comparability of the ongoing performance of our core operations across periods. Our management considers EBITDA and Adjusted EBITDA to be useful to investors because such performance measures provide information regarding the profitability of our core operations and facilitate comparison of our operating performance to the operating performance of our peers. Additionally, our management uses EBITDA and Adjusted EBITDA as performance measures and they are also presented for review at our board meetings. While we believe these measures are useful to investors, the definitions of EBITDA and Adjusted EBITDA used by us may not be comparable to similar measures used by other companies. In addition, these definitions are also not the same as the definitions of EBITDA and Adjusted EBITDA used in the financial covenants in our debt instruments. See Note 16, COMMITMENTS AND CONTINGENCIES to the condensed consolidated financial statements in Item 1 for more information relating to the Atlas charter dispute.

Set forth below is the EBITDA and Adjusted EBITDA reconciliation.


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2017		2016		2017		2016
Net (loss) / income	$	(67,468)	$	(37,351)	$	(123,149)	$	61,502
Interest expense, net		22,542		13,699		63,040		31,355
Depreciation and amortization		25,653		23,118		80,127		60,622
EBITDA		(19,273)		(534)		20,018		153,479
Adjustments
Goodwill impairment		—		26,291		—		26,291
Stock-based compensation		772		1,444		3,607		4,299
Loss on disposal of vessels, net		36,941		10,756		114,644		10,177
Other financing costs		—		2		55		8
Professional fees related to interest rate swaps		—		—		260		327
Impact of interest rate swaps fair value		(2,639)		(1,560)		(530)		—
Loss on litigation		—		—		400		—
Non-cash G&A expenses, excluding stock-based compensation expense (1)		132		(1,504)		1,792		(2,389)
Adjusted EBITDA	$	15,933	$	34,895	$	140,246	$	192,192

(1)

Non-cash G&A expenses, excluding stock-based compensation expense, include all accounts receivable reserves (including revenue offsets), amortization of lease assets that were recorded in connection with fresh start accounting and amortization of straight line rent expense.

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Three and Nine Months Ended September 30, 2017 Compared to the Three and Nine Months Ended September 30, 2016

Total voyage revenues. Total voyage revenues decreased by $21.3 million, or 29.4%, to $51.0 million for the three months ended September 30, 2017, compared to $72.3 million for the prior year period, and decreased by $53.3 million, or 17.6%, to $249.0 million for the nine months ended September 30, 2017, compared to $302.3 million for the prior year period. The decreases were primarily attributable to decreases in Navig8 pool revenues of $17.6 million for the three months ended September 30, 2017 and $32.4 million for the nine months ended September 30, 2017 compared to the respective prior year periods, decreases in spot charter revenues of $3.6 million for the three months ended September 30, 2017 and $11.6 million for the nine months ended September 30, 2017 compared to the respective prior year periods, and decreases in time charter revenues of $9.3 million for the nine months ended September 30, 2017 compared to the respective prior year periods.

During the three and nine months ended September 30, 2017, we finalized the sale of five and eight vessels, respectively. Additionally, we contracted to sell four additional vessels, which have been or are expected to be sold subsequent to September 30, 2017. These vessel sales and expected vessel sales had the effect and are expected to have the effect of decreasing the size of our fleet. We expect this to have a corresponding effect of decreasing our revenues and associated expenses for the remainder of the year.

Navig8 pool revenues. Our Navig8 pool revenues (which are distributed on a net basis after deduction of voyage expenses, which are the responsibility of the pool, and certain administrative expenses) decreased by $17.6 million, or 26.9%, to $47.9 million for the three months ended September 30, 2017, compared to $65.5 million during the prior year period. The decrease was primarily the result of a decline in our average daily Navig8 pool charter hire rates, which decreased by $5,470, or 24.6%, to $16,785 for the three months ended September 30, 2017 compared to $22,255 for the prior year period, primarily due to a decrease in rates in the spot charter market. The decline in our average daily Navig8 pool charter hire rates resulted in decreases in Navig8 pool revenues of approximately $16.1 million for the three months ended September 30, 2017, compared to the prior year period. Our Navig8 pool revenues were also negatively impacted by the declines in our vessel operating days in Navig8 pool of 91, or 3.1% to 2,853 days for the three months ended September 30, 2017, compared to 2,944 days during the prior year period. The decrease in our vessel operating days was primarily the result of drydocks and intermediate surveys during the three months ended September 30, 2017, compared to the prior year period. The decreases in vessel operating days resulted in decreases in Navig8 pool revenues of approximately $1.5 million during the three months ended September 30, 2017, compared to the prior year period.

Our Navig8 pool revenues decreased by $32.4 million, or 11.9%, to $238.6 million for the nine months ended September 30, 2017, compared to $271.0 million during the prior year period. The decrease was primarily the result of a decline in our average daily Navig8 pool charter hire rates, which decreased by $8,765, or 25.6%, to $25,479 for the nine months ended September 30, 2017 compared to $34,244 for the prior year period, primarily due to a decrease in rates in the spot charter market. The decline in our average daily Navig8 pool charter hire rates resulted in decreases in Navig8 pool revenues of approximately $69.4 million for the nine months ended September 30, 2017, compared to the prior year period. The decline in our average daily Navig8 pool charter hire rates were partially offset by an increases in our vessel operating days in Navig8 pool of 1,450 to 9,363 days for the nine months ended September 30, 2017, compared to 7,913 days during the prior year period. The increases in our vessel operating days were primarily the result of the deployment of five additional VLCC newbuilding vessels since the end of prior year period. The increases in vessel operating days resulted in increases in Navig8 pool revenues of approximately $37.0 million during the nine months ended September 30, 2017, compared to the respective prior year period.

Time charter revenues. We had no time charter revenues for the three and nine months ended September 30, 2017 compared to $0 and $9.3 million, for the respective prior year periods. The decrease was the result of the sale of our two vessels that were previously operated on time charters (the Genmar Victory and Genmar Vision) in August 2016. During the three and nine months ended September 30, 2017, we did not operate vessels on time charter outside of the Navig8 pool.

Spot charter revenues. Spot charter revenues decreased by $3.6 million, or 53.4%, to $3.1 million for the three months ended September 30, 2017 compared to $6.7 million for the prior year period. Spot charter revenues decreased by $11.6 million, or 52.7%, to $10.4 million for the nine months ended September 30, 2017 compared to $22.0 million

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for the prior year period. The decreases in spot charter revenues in both periods were primarily the result of decreases in our average daily spot charter hire rates, which decreased by $14,785, or 46.7% to $16,860 for the three months ended September 30, 2017 compared to $31,645 for the prior year period, and decreased by $12,468, or 39.2% to $19,353 for the nine months ended September 30, 2017 compared to $31,821 for the prior year period, primarily due to decreases in rates in the spot charter market. The decreases in our average daily spot charter hire rates resulted in decreases in spot charter revenues of approximately $3.1 million and $8.6 million, during the three and nine months ended September 30, 2017, respectively, compared to the respective prior year periods. Spot charter revenues in both periods were also negatively impacted by decreases in our spot market days of 27 days, or 12.5%, to 186 days for the three months ended September 30, 2017 compared to 213 days for the prior year period, and of 154 days, or 22.2%, to 538 days for the nine months ended September 30, 2017 compared to 692 days for the prior year period, in each case primarily due to vessel drydocking during 2017 and the transition of our vessels from the spot market into the Navig8 pools. The decreases in our spot market days resulted in decreases in our spot charter revenues of approximately $0.4 million and $3.0 million for the three and nine months ended September 30, 2017, respectively, compared to the respective prior year periods.

Voyage expenses. Substantially all of our voyage expenses relate to spot charter voyages, under which the vessel owner is responsible for voyage expenses such as fuel and port costs. No material voyage expenses were associated with our vessels deployed in the Navig8 pools as Navig8 pool revenues are presented on a net basis after deduction of voyage expenses, as such expenses are the responsibility of the pool. Voyage expenses was $3.1 million for the three months ended September 30, 2017, substantially flat as compared to $3.2 million for the prior year period and decreased by $2.7 million, or 28.0%, to $7.0 million for the nine months ended September 30, 2017 compared to $9.7 million for the prior year period. The decreases in voyage expenses in the nine months ended September 30, 2017 was primarily the result of lower port costs. Port costs, which can vary depending on the geographic regions in which the vessels operate and their trading patterns, decreased by $0.8 million, or 32.9%, to $1.7 million for the nine months ended September 30, 2017 compared to $2.5 million for the prior year period. The decrease in port costs was primarily due to the decrease in our spot market days discussed above during the nine months ended September 30, 2017 as compared to the prior year period. Also contributing to the decrease in port costs were vessel drydocking during 2017 and differences in the ports visited during the nine months ended September 30, 2017 as compared to the respective prior year period.

Net voyage revenues. Net voyage revenues, which are voyage revenues minus voyage expenses, decreased by $21.2 million, or 30.7%, to $47.9 million for the three months ended September 30, 2017 compared to $69.1 million for the prior year period. Net voyage revenues, decreased by $50.6 million, or 17.3%, to $242.0 million for the nine months ended September 30, 2017 compared to $292.6 million for the prior year period. The decrease in net voyage revenues in each period was primarily attributable to the decrease in our average daily fleet TCE rate of $6,130, or 28.0%, to $15,757 for the three months ended September 30, 2017 compared to $21,887 for the prior year period, and decrease in our average daily fleet TCE rate of $8,718, or 26.3%, to $24,441 for the nine months ended September 30, 2017 compared to $33,159 for the prior year period, in each case primarily due to a decrease in rates in the spot charter market. The decreases in our average daily fleet TCE rate resulted in decreases in net voyage revenue of approximately $19.4 million and $76.9 million during the three and nine months ended September 30, 2017, respectively, compared to the respective prior year periods. The decrease in net voyage revenues during the nine months ended September 30, 2017 was partially offset by an increase in our vessel operating days of 1,078 days, or 12.2%, to 9,901 days, for the nine months ended September 30, 2017 compared to 8,823 days for prior year period, as a result of the deployment of our VLCC newbuildings discussed above. The increases in our vessel operating days resulted in increases in net voyage revenue of approximately $26.4 million, during the nine months ended September 30, 2017, compared to the prior year period.

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The following is additional data pertaining to net voyage revenues:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net voyage revenue (dollars in thousands):
Time charter:
VLCC	$	—		$	—		$	—		$	9,278
Total		—			—			—			9,278
Spot charter:
VLCC		(102)			1,502			(99)			3,152
Suezmax		(154)			57			(394)			1,194
Aframax		206			(43)			396			(521)
Panamax		(107)			2,072			3,362			8,296
Handymax		162			(16)			162			192
Total		5			3,572			3,427			12,313
Navig8 pools:
VLCC		39,846			42,583			186,834			167,581
Suezmax		7,333			18,357			42,569			82,290
Aframax		708			4,588			9,170			21,089
Total		47,887			65,528			238,573			270,960
Total Net Voyage Revenue	$	47,892		$	69,100		$	242,000		$	292,551
Vessel operating days:
Time charter:
VLCC		—			—			—			218
Total		—			—			—			218
Spot charter:
VLCC		—			29			—			105
Aframax		68			—			123			—
Panamax		118			184			415			545
Handymax		—			—			—			42
Total		186			213			538			692
Navig8 pools:
VLCC		2,085			1,575			6,274			3,958
Suezmax		676			1,007			2,391			2,891
Aframax		92			362			698			1,064
Total		2,853			2,944			9,363			7,913
Total Operating Days for Fleet		3,039			3,157			9,901			8,823
Total Calendar Days for Fleet		3,266			3,242			10,396			9,139
Fleet Utilization		93.1	%		97.4	%		95.2	%		96.5	%
Average Number of Owned Vessels		35.5			35.2			38.1			33.1
Average Number of Owned and Chartered-in Vessels		35.5			35.2			38.1			33.4
Time Charter Equivalent (TCE):
Time charter:
VLCC	$	—		$	—		$	—		$	42,563
Combined		—			—			—			42,563
Spot charter:
Aframax		3,025			—			3,228			—
VLCC		—			52,361			—			29,927
Panamax		(907)			11,259			8,094			15,222
Handymax		—			—			—			4,603
Combined		29			16,795			6,367			17,792
Navig8 pools:
VLCC		19,112			27,040			29,777			42,341
Suezmax		10,842			18,223			17,805			28,467
Aframax		7,706			12,668			13,135			19,822
Combined		16,784			22,255			25,479			34,244
Fleet TCE	$	15,757		$	21,887		$	24,441		$	33,159

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Direct Vessel Operating Expenses. Direct vessel operating expenses, which include crew costs, provisions, deck and engine stores, lubricating oil, insurance, maintenance and repairs for owned vessels were $26.3 million for the three months ended September 30, 2017, substantially flat as compared to the prior year period. Direct vessel operating expenses increased by $6.2 million, or 8.0%, to $83.2 million for the nine months ended September 30, 2017 compared to $77.0 million for the prior year period. The increase was primarily due to increases in our average fleet size to 38.8 vessels for the nine months ended September 30, 2017 from 33.1 vessels for the prior year period, and associated increases in crew costs and other costs, associated with our newly delivered vessels.

Crew costs increased by $4.9 million, or 12.4%, to $44.5 million for the nine months ended September 30, 2017, compared to $39.6 million for the prior year period.

The increase in direct vessel operating expenses was partially offset by a decrease in daily direct vessel operating expenses per vessel of $425, or 5.0%, to $8,005 per day for the nine months ended September 30, 2017 compared to $8,430 per day for the prior year period, primarily as a result of lower operating costs, including crew cost, repair and maintenance, insurance and other costs, associated with our newly delivered vessels. We estimate that this decrease in daily direct vessel operating expenses per vessel resulted in a decrease in direct vessel operating expenses of approximately $3.9 million for the nine months ended September 30, 2017, compared to prior year period.

Navig8 charterhire expenses. Navig8 charterhire expenses during the three and nine months ended September 30, 2017 included profit share adjustments related to the profit share plan for the Nave Quasar. Navig8 charterhire expenses were $3.2 million for the nine months ended September 30, 2016. These charterhire expenses were related to the Nave Quasar, a vessel chartered-in by Gener8 Maritime Subsidiary Inc. (formerly known as Navig8 Crude Tankers, Inc.), which became our subsidiary as a result of the 2015 merger. The time charter under which this vessel had been chartered-in expired, and the vessel was redelivered to its owner, in March 2016.

General and Administrative Expenses. General and administrative expenses of $6.9 million for the three months ended September 30, 2017, substantially flat as compared to $7.1 million in the prior year period and increased by $2.8 million, or 11.0%, to $25.0 million for the nine months ended September 30, 2017, compared to $22.2 million in the prior year period. During the nine months ended September 30, 2017, we recorded as general and administrative expenses a write-off of assets of $1.5 million and litigation loss of $0.4 million, both of which are related to the Atlas charter dispute. On May 9, 2017, the arbitration tribunal before which the dispute is being heard ruled that GMR Atlas LLC (one of our subsidiaries) had been in breach of certain customer eligibility requirements as claimed by the Atlas claimant. See Note 16, COMMITMENTS AND CONTINGENCIES to the condensed consolidated financial statements in Item 1 for more information relating to the Atlas charter dispute.

Depreciation and Amortization. Depreciation and amortization, which includes depreciation of vessels as well as amortization of drydock and special survey costs, increased by $2.5 million, or 11.0%, to $25.6 million for the three months ended September 30, 2017 compared to $23.1 million for the prior year period. Depreciation and amortization increased by $19.5 million, or 32.2%, to $80.1 million for the nine months ended September 30, 2017 compared to $60.6 million for the prior year period. The increases in depreciation and amortization in both periods were primarily due to increases in vessel depreciation of $2.9 million, or 14.0%, to $23.7 million for the three months ended September 30, 2017 compared to $20.8 million in the prior year period and increase of $20.3 million, or 37.1%, to $74.7 million for the nine months ended September 30, 2017 compared to $54.4 million in the prior year period. The increases in vessel depreciation in both periods were primarily due to increases in depreciation related to new vessel deliveries, partially offset by a decrease due to sale of older vessels since September 30, 2016.

Goodwill Impairment. For the three and nine months ended September 30, 2016, we recorded a goodwill impairment of $23.3 million. Additionally, during the three and nine months ended September 30, 2016, in connection with the sale of the Genmar Victory and Genmar Vision, we wrote-off $3.0 million of related goodwill.

Loss on Disposal of Vessels, Net. Loss on disposal of vessels, net, which includes losses associated with the disposal of vessels and certain vessel equipment, increased by $26.1 million to $36.9 million, for the three months ended September 30, 2017 compared to $10.8 million for the prior year period, primarily related to the sale of the Gener8 Horn, Gener8 Phoenix, Gener8 Pericles and the expected sales of the Gener8 Poseidon. Loss on disposal of vessels, net increased by $104.4 million, to $114.6 million, for the nine months ended September 30, 2017 compared to $10.2

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million for the prior year period, primarily related to the sale of the Gener8 Horn, Gener8 Phoenix, Gener8 Elektra, Gener8 Daphne, Gener8 Theseus, Gener8 Noble, Gener8 Orion, Gener8 Pericles and the expected sales of the Gener8 Poseidon.

During the three and nine months ended September 30, 2016, we recorded losses associated with the disposal of vessels and certain vessel equipment of $10.8 million in each period, primarily related to the sale of the Genmar Victory and Genmar Vision. Additionally, during the nine months ended September 30, 2016, following the liquidation of foreign subsidiaries, we recorded a $0.7 million gain related to the write-off of the accumulated translation adjustment component of equity.

Interest Expense, Net. Interest expense, net increased by $8.8 million, or 64.6%, to $22.5 million for the three months ended September 30, 2017 compared to $13.7 million for the prior year period and increased by $31.7 million to $63.0 million for the nine months ended September 30, 2017 compared to $31.3 million for the prior year period.

The increases in interest expense, net, in the three and nine months ended September 30, 2017, were primarily attributable to the decrease in capitalized interest of $5.8 million, or 86.3%, to $0.9 million for the three months ended September 30, 2017 compared to $6.7 million in the prior year period, and a decrease of $21.1 million, or 87.0%, to $3.2 million for the nine months ended September 30, 2017 compared to $24.3 million, in the prior year period, in each case related to the capitalization of interest expense associated with vessels under construction as a result of the funding of the acquisition of our VLCC newbuildings. Capitalized interest results in a reduction of interest expense, net. We do not capitalize interest expense associated with the funding of our VLCC newbuildings after delivery of the vessels.

Also contributing to the increases in interest expense, net during the three and nine months ended September 30, 2017, was an increase of $2.6 million in amortization of deferred financing costs, primarily related to the write-off of deferred financing costs associated with the recent sales of the Gener8 Noble and Gener8 Theseus.

Other income (expense), net. Other income (expense), net increased by $1.5 million, or 97.4%, to $3.0 million for the three months ended September 30, 2017 compared to $1.5 million for the prior year period. Other income (expense), net increased by $1.0 million, to $0.9 million for the nine months ended September 30, 2017 compared to an income of $0.1 million for the prior year period. Other income (expense), net primarily included the impact of our interest rate swap agreements. During the three and nine months ended September 30, 2017, we recognized in earnings $2.6 million and $0.5 million, respectively, as other income (expense), net, related to the impact of our interest rate swap agreements. During the three and nine months ended September 30, 2016, we recognized in earnings $1.5 million and $0, respectively, as other income (expenses), net related to the interest rate swaps.

Liquidity and Capital Resources

Sources and Uses of Funds; Cash Management

Since 2012, our principal sources of funds have been cash flow from operations, equity financings, issuance of long‑term debt, long‑term bank borrowings and sales of our older vessels. Our principal uses of funds have been capital expenditures for vessel acquisitions and construction, maintenance of the quality of our vessels, compliance with international shipping standards and environmental laws and regulations, funding working capital requirements and repayments on outstanding indebtedness. Our practice has been to acquire vessels or newbuilding contracts using a combination of available cash, issuances of equity securities, bank debt secured by mortgages on our vessels and long‑term debt securities.

Under our senior secured credit facilities, we are subject to collateral maintenance covenants pursuant to which the aggregate appraised value of vessels pledged as collateral under each senior secured credit facility may not be less than certain specified amounts. Under the Sinosure Credit Facility, the appraised value of pledged vessels may not be less than 135% of the aggregate principal amount of outstanding loans under the credit facility. As of September 30, 2017, we are in compliance with our collateral maintenance covenants. We estimate that we would not have been in compliance with the collateral maintenance covenant as of that date if the valuation of our collateral under the Sinosure Credit Facility from November 2017 appraisals were to decline by approximately 4.2%.

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In the event of continued weakness in vessel values, if the current market environment declines further or does not recover sufficiently, there is a possibility that we may not comply with this covenant as early as the fourth quarter of 2017 absent waivers or amendments to the Sinosure Facility. To address this issue, we may pursue alternatives which may include waivers or amendments from our lenders, reduction of the debt outstanding under the Sinosure Facility, and/or other options. Any such actions may be subject to conditions. If market or other conditions are not favorable, we may be unable to take any such actions or obtain waivers or amendments from our lenders on acceptable terms or at all.

Absent such waivers or amendments, if we do not comply with this covenant and fail to cure our non-compliance following applicable notice and expiration of applicable cure periods, we would be in default of one or more of our senior secured credit facilities. If such a default occurs, we may also be in default under our unsecured senior notes. Each of our current debt facilities contain cross default provisions that could be triggered by our failure to comply with this covenant. As a result, some or all of our indebtedness could be declared immediately due and payable. We may not have sufficient assets available to satisfy our obligations. Substantially all of our assets are pledged as collateral to our lenders, and our lenders may seek to foreclose on their collateral if a default occurs. We may have to seek alternative sources of financing on terms that may not be favorable to us or that may not be available at all. Therefore, we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

We believe that our current cash balance and operating cash flows will be sufficient to meet our liquidity needs for the next year.

Our business is capital intensive and our future success will depend on our ability to maintain a high‑quality fleet through the acquisition of newer vessels and the selective sale of older vessels. These acquisitions will be principally subject to management’s expectation of future market conditions as well as our ability to acquire vessels on favorable terms. In the future, we may engage in additional debt or equity financing transactions to fund such acquisitions or raise funds for other corporate purposes. However, there is no assurance that we will be able to obtain any such financing on terms acceptable to us, or at all.

Debt Financings

The following description is a summary of our various debt financings. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Financings” in our 2016 Annual Report on Form 10-K for further information regarding our debt financings.

Refinancing Facility. On September 3, 2015, we entered into the Refinancing Facility to refinance our former senior secured credit facilities. As of September 30, 2017, $273.1 million of borrowings were outstanding under the Refinancing Facility, and no further borrowings were available under this facility. The loans under the Refinancing Facility will mature on September 3, 2020.

The Refinancing Facility bears interest at a rate per annum based on 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, interest accrues at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount. The Refinancing Facility is secured on a first lien basis by a pledge of various assets, including, as of September 30, 2017, four VLCCs, seven Suezmax vessels, two Aframax vessels and two Panamax vessels.

We are obligated to repay the Refinancing Facility in 20 consecutive quarterly installments, which commenced on December 31, 2015. We are also required to prepay the Refinancing Facility upon the occurrence of certain events, such as a sale or total loss of a vessel pledged as collateral under the Refinancing Facility.

We are also subject to various collateral maintenance, financial and other covenants, restrictions on payments of dividends, events of default and remedies under the Refinancing Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Financings—Refinancing Facility” in our 2016 Annual Report on Form 10-K for further information regarding the Refinancing Facility.

Korean Export Credit Facility. On September 3, 2015, we entered into the Korean Export Credit Facility to fund a portion of the remaining installment payments due under shipbuilding contracts for 15 VLCC newbuildings built

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at Korean shipyards. 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 from a syndicate of commercial lenders up to the aggregate approximate amount of $282.0 million, which we refer to as the “commercial tranche,” a tranche of term loans fully guaranteed by the Export-Import Bank of Korea, which we refer to as “KEXIM” up to the aggregate approximate amount of $139.7 million, which we refer to as the “KEXIM guaranteed tranche,” a tranche of term loans from KEXIM up to the aggregate approximate amount of $197.4 million, which we refer to as the “KEXIM funded tranche” and a tranche of term loans insured by Korea Trade Insurance Corporation, which we refer to as “K-Sure” up to the aggregate approximate amount of $344.6 million, which we refer to as the “K-Sure tranche.”

Borrowings under each term loan will be available to be drawn 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. Our ability to utilize these funds is subject to the actual delivery of the vessel and other borrowing conditions. As of September 30, 2017, $627.9 million of borrowings were outstanding under the Korean Export Credit Facility, and up to $63.0 million of borrowings were available (subject to borrowing limits and conditions) to fund the delivery of one vessel, which has an aggregate of $48.2 million (which was subsequently reduced to $29.0 million) of remaining installment payments due prior to the delivery of the vessel. 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. See Note 17, SUBSEQUENT EVENTS, to the condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 included in Part I, Item 1 of this Quarterly Report for more information regarding amendment of the Gener8 Nestor contract.

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 accrues at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount. The Korean Export Credit Facility is secured on a first lien basis by a pledge of various assets, including, as of September 30, 2017, 12 VLCC vessels.

We are 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 are obligated to repay the other tranches of each loan in 48 equal consecutive quarterly installments. We are also required to prepay 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 us.

On March 24, 2017, we amended the Korean Export Credit Facility to revise the dates on which amortization payments are due on April 15, July 15, October 15 and January 15. Prior to entry into this amendment, the payment dates were March 31, June 30, September 30 and December 31.

On June 1, 2017, we amended the Korean Export Credit Facility to extend the date by which we are permitted to borrow for the delivery of the Gener8 Nestor from June 30, 2017 to September 30, 2017. The amendment also provides that the Commercial Tranche must be repaid no later than June 30, 2022.

On October 9, 2017, the Company borrowed $48.0 under the Korean Export Credit Facility, in connection with the delivery of the Gener8 Nestor. which had previously been pre-positioned on September 29, 2017 at the Korea Development Bank for the benefit of HHIC in order to satisfy the final installment payment for the Gener8 Nestor. $29.0 million of the pre-positioned funds was released to HHIC on October 9, 2017 upon delivery of the Gener8 Nestor, and the balance was released to the Company.

We are also subject to various collateral maintenance, financial and other covenants, restrictions on payments of dividends, events of default and remedies under the Korean Export Credit Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources—Debt Financings—Korean Export Credit Facility” in our 2016 Annual Report on Form 10-K for further information regarding the Korean Export Credit Facility.

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Sinosure Credit Facility. On December 1, 2015, we entered into the Sinosure Credit Facility to fund a portion of the remaining installment payments due under shipbuilding contracts for three VLCC newbuildings built at Chinese shipyards and to refinance a credit facility. On June 29, 2016, we amended the Sinosure Credit Facility. As of September 30, 2017, $322.8 million of borrowings were outstanding under the Sinosure Credit Facility, and no further borrowings were available under this facility. 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 accrues at a rate 2.00% higher than the interest rate that would otherwise have been applied to such amount. The Sinosure Credit Facility is secured on a first lien basis by a pledge of various assets, including, as of September 30, 2017, six VLCC vessels.

We are obligated to repay each loan 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, until the loan’s maturity date. On the respective maturity date, we are obligated to repay the remaining amount that is outstanding under each loan. We are also required to prepay 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 us.

We are also subject to various collateral maintenance, financial and other covenants, restrictions on payments of dividends, events of default and remedies under the Sinosure Credit Facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Financings—Sinosure Credit Facility” in our 2016 Annual Report on Form 10-K for further information regarding the Sinosure Credit Facility.

Senior Notes. On May 13, 2014, we issued senior unsecured notes due 2020 in the aggregate principal amount of $131.6 million for proceeds of approximately $125 million (before fees and expenses), after giving effect to original issue discount. We refer to these notes as the “senior notes.” Interest on the senior notes accrues at the rate of 11.0% per annum in the form of an automatic increase in the principal amount of each outstanding senior note.

If we at any time irrevocably elect 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. We are also subject to various financial and other covenants, restrictions on payments of dividends, events of default and remedies under the senior notes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Financings— Senior Notes” in our 2016 Annual Report on Form 10-K for information regarding the senior notes.

Interest Rate Swap Agreements

In May 2016, we entered into six interest rate swap transactions, which are intended to be cash flow hedges that effectively fix the interest rates for the Refinancing Facility, the Korean Export Credit Facility and the Sinosure Credit Facility. The interest rate swap transactions were each confirmed under an ISDA Master Agreement, as published by the International Swaps and Derivatives Associations, Inc. (“ISDA”), including the Schedule thereto and related documentation containing customary representations, warranties and covenants. We may modify or terminate any of the foregoing interest rate swap transactions or enter into additional swap transactions in accordance with their terms in the future from time to time.

In December 2016, the principal and interest repayment dates under the Refinancing Facility were modified and the payment dates on the two related swap agreements were similarly modified.

On April 10, 2017, the Company modified the interest rate swaps agreements, initially entered into on May 2, 2016. In this connection, all six of the swap agreements were monetized (the current fair market value of $18.2 million was received from the swap counterparties) and dedesignated. See Note 11, Financial InstrumentS, to the condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 included in Part I, Item 1 of this Quarterly Report for more information regarding these swap transactions for more details.

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Dividend Policy

We have not declared or paid any dividends since the fourth quarter of 2010. In order to pay dividends, we will be required to satisfy certain financial and other requirements under our debt instruments.

While we currently intend to retain future earnings, if any, for use in the operation and expansion of our business, we will evaluate the option to adopt a policy to pay cash dividends from time to time. However, any future dividend policy is subject to the discretion of our board of directors, and restrictions under our debt instruments and under Marshall Islands law. Any determination to pay or not pay cash dividends will also depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, statutory and contractual restrictions on our ability to pay dividends and other factors our board of directors may deem relevant. Any such determination will also be subject to review, modification or termination at any time and from time to time. In addition, Marshall Islands law generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of shares above the par value of the shares), when a company is insolvent or if the payment of the dividend would render the company insolvent.

Cash and Working Capital

Our cash and cash equivalents increased by $90.0 million to $184.7 million as of September 30, 2017 from $94.7 million as of December 31, 2016. This increase was primarily due to $142.9 million of net cash provided by operating activities, $238.8 million of proceeds from the sale of the Gener8 Ulysses, Gener8 Daphne, Gener8 Orion, Gener8 Noble, Gener8 Theseus, Gener8 Horn, Gener8 Phoenix and Gener8 Elektra, partially offset by the payments in respect of the VLCC newbuildings, including capitalized interest, of $99.2 million, the net debt payments of $183.6 million and the payment of $7.4 million and $1.4 million for purchases of vessel improvement and deferred financing costs, respectively, during the nine months ended September 30, 2017.

Working capital is current assets minus current liabilities.

Our working capital increased by $106.6 million to $105.3 million as of September 30, 2017 from $(1.3) million as of December 31, 2016. This increase was primarily due to an increase in cash and cash equivalents, which was net cash proceeds of $238.8 million, as a result of the sale of eight vessels, and a decrease of $42.7 million in Long-term debt, current portion as a result of the paydown of the related debt, partially offset by $32.8 million decrease in Due from Navig8 pools, net as a result of lower charter hire rates during the nine months ended September 30, 2017.

Cash Flows from Operating Activities. Net cash provided by operating activities was $142.9 million for the nine months ended September 30, 2017 which resulted from net loss of $123.1 million, plus non-cash charges to operations of $242.3 million, including $114.6 million from the loss on disposal of vessels, net as a result of the recent and expected sale of vessels, and a change in various assets and liabilities balances (adjusted to exclude non-cash or non-operating activities) of $23.7 million, including a decrease in Due from Navig8 pools and in Working capital at Navig8 pools as a result of the recent sale of vessels.

Net cash provided by operating activities was $237.1 million for the nine months ended September 30, 2016 which resulted from net income of $61.5 million, plus non-cash charges to operations of $120.7 million, including $26.3 million of goodwill impairment, and a change in various assets and liabilities balances (adjusted to exclude non-cash or non-operating activities) of $54.8 million, including a decrease in due from charterers and in accounts payable and other current and non-current liabilities.

Cash Flows from Investing Activities. Net cash provided by investing activities was $132.2 million for the nine months ended September 30, 2017, which primarily consisted of $238.8 million net proceeds from the sale of the Gener8 Ulysses, Gener8 Daphne, Gener8 Theseus, Gener8 Noble, Gener8 Elektra, Gener8 Horn, Gener8 Phoenix and Gener8 Orion, during the nine months ended September 30, 2017, partially offset by capital spending on the VLCC newbuildings (including payments of capitalized interest) of $99.2 million and $7.4 million of purchase of vessel improvements and other fixed assets.

Net cash used in investing activities was $751.4 million for the nine months ended September 30, 2016, which primarily consisted of capital spending on the VLCC newbuildings (including payments of capitalized interest) of

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$816.1 million, partially offset by $72.5 million net proceeds from the sale of the Gener8 Consul, Genmar Victory and Genmar Vision during the nine months ended September 30, 2016.

Cash Flows from Financing Activities. Net cash used in financing activities was $185.0 million for the nine months ended September 30, 2017, which primarily consisted of net debt payments of $183.6 million and the payment of deferred financing costs of $1.4 million related to the Sinosure Credit Facility and the Korean Export Credit Facility.

Net cash provided by financing activities was $456.8 million for the nine months ended September 30, 2016, which primarily consisted of net proceeds from borrowings of $477.6 million and the payment of deferred financing costs of $20.7 million related to the Sinosure Credit Facility and the Korean Export Credit Facility.

Capital Expenditures and Drydocking

Drydocking. We incur expenditures to fund our drydock program of regularly scheduled in-water surveys or drydocking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Management anticipates that vessels which are younger than 15 years are required to undergo in-water surveys approximately 2.5 years after a drydock and that vessels are to be drydocked approximately every five years, while vessels 15 years or older are to be drydocked approximately every 2.5 years in which case the additional drydocks take the place of these in-water surveys.

During the three months ended September 30, 2017 and 2016, we incurred $1.8 million and $2.0 million, respectively, of drydock related costs. During the nine months ended September 30, 2017 and 2016, we incurred $5.0 million and $5.4 million, respectively, of drydock related costs. Accumulated amortization as of September 30, 2017 and December 31, 2016 was $11.5 million and $13.9 million, respectively.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016, we previously anticipated that the expenditures to complete drydocks of vessels during 2017 would aggregate approximately $37.4 million, and that such vessels will be off-hire for approximately 574 days in 2017 to effect these drydocks. As a result of our recent vessel sales, we currently anticipate that the expenditures to complete drydocks of vessels during 2017 will aggregate approximately $18.9 million, and that such vessels will be off-hire for approximately 280 days in 2017 to effect these drydocks.

For information regarding certain anticipated drydocking expenditures for the year ended December 31, 2017, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Expenditures and Drydocking—Drydocking” in our 2016 Annual Report on Form 10-K.

Capital Improvements. During the nine months ended September 30, 2017 and the year ended December 31, 2016, we capitalized $8.6 million and $9.3 million, respectively, relating to capital projects including environmental compliance equipment upgrades, satisfying requirements of oil majors and vessel upgrades.

Certain vessels in our fleet will require the installation of a Ballast Water Management System to meet regulatory requirements. In July 2017, at its 71st session, the International Maritime Organization’s Marine Environment Protection Committee (“MEPC”) discussed draft amendments it approved, and expects to adopt at the next MEPC Session. These amendments extend the date of compliance with certain ballast water standards until the first International Oil Pollution Prevention renewal survey following entry into force of the Ballast Water Management Convention on September 8, 2017, which will be conducted after September 8, 2019 for our applicable vessels. Such surveys typically take place every five years.

In December 2016, the United States Coast Guard (“USCG”) first approved technology for ballast water treatment. The USCG previously provided waivers to vessels that could not install the as-yet unapproved technology and vessels now requiring a waiver will need to show why they cannot install the approved technology. Our capital improvements budget for the year ending December 31, 2017 mentioned below includes $6.1 million for purchase of Ballast Water Management Systems equipment.

For information regarding our capital improvements budget for the year ended December 31, 2017 and other capital improvements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—

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Liquidity and Capital Resources—Capital Expenditures and Drydocking—Capital Improvements” in our 2016 Annual Report on Form 10-K.

Vessel Acquisitions and Disposals. During the three months ended September 30, 2017, we completed the sale of five vessels (the Gener8 Theseus, Gener8 Noble, Gener8 Elektra, Gener8 Horn and Gener8 Phoenix) for an aggregate amount of $187.8 million, in gross proceeds. We used the net proceeds from the sales to repay an aggregate of $23.5 million and $100.5 million of borrowings under the Refinancing Facility and the Korean Export Credit Facility, respectively, which represents the portion of the secured debt outstanding under those credit facilities and associated with these vessels. During the nine months ended September 30, 2017, we completed the sale of eight vessels (the Gener8 Ulysses, Gener8 Daphne, Gener8 Theseus, Gener8 Noble, Gener8 Elektra, Gener8 Horn, Gener8 Phoenix and Gener8 Orion) for an aggregate amount of $242.3 million, in gross proceeds. We used the net proceeds from the sales to repay an aggregate of $163.2 million, which represents the portion of the secured debt outstanding under the credit facilities associated with these vessels.

Other Commitments. In July 2015, we entered into an amendment to such lease, which, among other things, extended the term of the lease for an additional 5-year period (from October 1, 2020 through September 30, 2025). The monthly rental is $0.1 million per month from October 1, 2016 to September 30, 2020; and $0.2 million per month from October 1, 2020 to September 30, 2025. The monthly straight-line rental expense is approximately $0.2 million, including amortization of the lease asset recorded on May 17, 2012 associated with fresh-start accounting, for the period from May 18, 2012 to September 30, 2025. We recorded expenses associated with this lease of approximately $0.5 million and $1.5 million during the three and nine months ended September 30, 2017 and 2016, respectively.

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The following is a tabular summary of our future contractual obligations as of September 30, 2017 for the categories set forth below:

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS


(dollars in thousands)	Total		2017 (6)		2018-2019		2020-2021		Thereafter
Refinancing facility	$	273,082	$	21,006	$	105,032	$	147,044	$	—
Korean Export Credit Facility		627,893		13,581		108,650		178,305		327,357
Sinosure Credit Facility		322,758		5,894		47,158		47,158		222,548
Interest expenses, except for senior notes (1)		255,940		12,970		94,093		67,697		81,180
Senior notes		131,600		—		—		131,600		—
Interest expense of senior notes (1)		115,450		—		—		115,450		—
Shipbuilding contracts		28,987		28,987		—		—		—
Supervision Agreements (2)		250		250		—		—		—
Senior officer compensation agreements (3)		9,669		569		4,550		4,550		—
Office Leases (4)		15,513		384		3,072		3,878		8,179
Corporate Administration Agreement (5)		32		32		—		—		—
Total commitments	$	1,781,174	$	83,673	$	362,555	$	695,682	$	639,264

(1)

Future interest payments on our Refinancing Facility are based on our outstanding balance using a borrowing LIBOR rate of 1.66% as of September 30, 2017, plus the applicable margin of 3.75%. Future interest payments on our Korean Export Credit Facility are based on our outstanding balance using a borrowing LIBOR rate of 1.84% as of September 30, 2017, plus the applicable blended margin of 2.08%. Future interest payments on our Sinosure Credit Facility are based on our outstanding balance using a borrowing LIBOR rate of 2.04% as of September 30, 2017, plus the applicable margin of 2.0%. 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 we at any time irrevocably elect 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. The amount of senior notes listed above represents its face value upon issuance. The interest expense of senior notes listed above assumes the balloon repayment in 2020 and accordingly includes the payment-in-kind interest of $57.6 million which has accrued as of September 30, 2017. Interest expense for the Refinancing Facility, Korean Export Credit Facility, and Sinosure Credit Facility include estimated effects related to our interest rate swaps.

(2)

Refers to supervision agreements of each of our VLCC newbuilding owning subsidiaries with Navig8 Shipmanagement Pte Ltd.

(3)

Senior officer employment agreements are evergreen and renew for subsequent terms of one year. This table excludes future renewal periods.

(4)

Reflects the July 2015 amendment to the lease for our office space in New York, New York. See “Other Commitments” above for further information regarding this amendment.

(5)

Assumes termination of the Corporate Administration Agreement upon delivery of the last of our VLCC newbuilding in the remainder of 2017. Amounts are estimates and may vary based on actual delivery.

(6)

Represents the remaining period in 2017.

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Related Party Transactions

For information about transactions with our related parties see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Party Transactions” and Note 18, Related party transactions, to the consolidated financial statements in Item 8 of our 2016 Annual Report on Form 10-K, and Note 14, Related party transactions, to the condensed consolidated financial statements in Item 1 of this Quarterly Report.

Off-Balance-Sheet Arrangements

As of September 30, 2017, other than as described above, we did not have any material off-balance-sheet arrangements as defined in Item 303(a)(4) of SEC Regulation S-K.

Effects of Inflation

We do not consider inflation to be a significant risk to the cost of doing business in the current or foreseeable future. Inflation has a moderate impact on operating expenses, drydocking expenses and corporate overhead.

Critical Accounting Policies

Our condensed consolidated financial statements have been prepared in accordance with GAAP. Preparation of these statements requires management to make judgments and estimates. Some accounting policies have a significant impact on amounts reported in these condensed consolidated financial statements. Our critical accounting policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2016 Annual Report on Form 10-K.

Vessels Carrying Value

The carrying value of each of our vessels does not represent the fair market value of such vessel or the amount we could obtain if we were to sell any of our vessels, which could be more or less. Under U.S. GAAP, we would not record a loss if the fair market value of a vessel (excluding its charter) is below our carrying value unless and until we determine to sell that vessel or the vessel is impaired.

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Pursuant to our senior secured credit facilities, we regularly submit to the lenders valuations of our vessels on an individual charter free basis in order to calculate our compliance with the collateral maintenance covenants. Such a valuation is not necessarily the same as the amount any vessel may bring upon sale, which may be more or less, and should not be relied upon as such. In the chart below, we list each of our vessels, the year it was built, the year we acquired it, and its carrying value at September 30, 2017. All of our vessels had valuations for covenant compliance purposes under such facilities as of the most recent compliance testing date lower than their carrying values at September 30, 2017. The most recent compliance testing date was November 1, 2017 under such facilities for the three months ended September 30, 2017. The amount by which the carrying value at September 30, 2017 of these vessels exceeded the valuation of such vessels ranged, on an individual vessel basis, from $3.8 million to $30.8 million per vessel, with an average of $18.1 million.



		Year
Vessels (1)	Year Built	Acquired	Carrying Value
			(in thousands)
Gener8 Defiance	2002	2004		14,720
Gener8 Compatriot	2004	2008		15,665
Gener8 Companion	2004	2008		15,011
Gener8 Harriet G	2006	2006		33,341
Gener8 Kara G	2007	2007		36,295
Gener8 George T	2007	2007		35,622
Gener8 Hercules	2007	2010		52,760
Gener8 Atlas	2007	2010		52,485
Gener8 St. Nikolas	2008	2008		37,585
Gener8 Maniate	2010	2010		44,669
Gener8 Spartiate	2011	2011		48,628
Gener8 Neptune	2015	2015		102,217
Gener8 Athena	2015	2015		102,980
Gener8 Strength	2015	2015		100,863
Gener8 Apollo	2016	2016		104,054
Gener8 Ares	2016	2016		104,254
Gener8 Hera	2016	2016		104,730
Gener8 Supreme	2016	2016		101,777
Gener8 Success	2016	2016		96,987
Gener8 Constantine	2016	2016		108,894
Gener8 Nautilus	2016	2016		100,109
Gener8 Andriotis	2016	2016		97,729
Gener8 Chiotis	2016	2016		99,259
Gener8 Macedon	2016	2016		102,388
Gener8 Perseus	2016	2016		108,419
Gener8 Oceanus	2016	2016		110,339
Gener8 Miltiades	2016	2016		101,164
Gener8 Ethos	2017	2017		105,716
Gener8 Hector	2017	2017		99,818

(1)

Excludes assets held for sale.

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Recent Accounting Pronouncements

For information regarding recently adopted and recently issued accounting standards applicable to us, see Note 1, basis of presentation and summary of significant accounting policies, to the condensed consolidated financial statements in Item 1 of this Quarterly Report.

JOBS Act

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Glossary Of Shipping Terms

The following are abbreviations and definitions of certain terms commonly used in the shipping industry and this Quarterly Report. The terms are taken from the Marine Encyclopedic Dictionary (Ninth Edition) published by Lloyd’s of London Press Ltd. and other sources, including information supplied by us.

Aframax tanker. Tanker ranging in size from 80,000 DWT to 120,000 DWT.

American Bureau of Shipping. American classification society.

Annual survey. The inspection of a vessel pursuant to international conventions, by a classification society surveyor, on behalf of the flag state, that takes place every year.

Bareboat charter. Contract or hire of a vessel under which the shipowner is usually paid a fixed amount for a certain period of time during which the charterer is responsible for the complete operation and maintenance of the vessel, including crewing.

Bunker Fuel. Fuel supplied to ships and aircraft in international transportation, irrespective of the flag of the carrier, consisting primarily of residual fuel oil for ships and distillate and jet fuel oils for aircraft.

Cabotage. The transport of cargo by sea between ports in the same country, sometimes reserved for national flag vessels.

CAGR. Compound average growth rate.

Charter. The hire of a vessel for a specified period of time or to carry a cargo from a loading port to a discharging port. A vessel is “chartered in” by an end user and “chartered out” by the provider of the vessel.

Charterer. The individual or company hiring a vessel.

Charterhire. A sum of money paid to the shipowner by a charterer under a charter for the use of a vessel.

Classification society. A private, self-regulatory organization which has as its purpose the supervision of vessels during their construction and afterward, in respect to their seaworthiness and upkeep, and the placing of vessels in grades or “classes” according to the society’s rules for each particular type of vessel.

Daewoo. Daewoo Shipbuilding & Marine Engineering Co., Ltd.

Demurrage. The delaying of a vessel caused by a voyage charterer’s failure to load, unload, etc. before the time of scheduled departure. The term is also used to describe the payment owed by the voyage charterer for such delay.

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DNV GL. Norwegian classification society.

Double-hull. Hull construction design in which a vessel has an inner and outer side and bottom separated by void space, usually several feet in width.

Double-sided. Hull construction design in which a vessel has watertight protective spaces that do not carry any oil and which separate the sides of tanks that hold any oil within the cargo tank length from the outer skin of the vessel.

Drydock. Large basin where all the fresh/sea water is pumped out to allow a vessel to dock in order to carry out cleaning and repairing of those parts of a vessel which are below the water line.

DWT. Deadweight ton. A unit of a vessel’s capacity, for cargo, fuel oil, stores and crew, measured in metric tons of 1,000 kilograms. A vessel’s DWT or total deadweight is the total weight the vessel can carry when loaded to a particular load line.

Gross ton. Unit of 100 cubic feet or 2.831 cubic meters.

Handymax tanker. Tanker ranging in size from 40,000 DWT to 60,000 DWT.

HHI. Hyundai Heavy Industries Co., Ltd.

HHIC Phil Inc. Hanjin Heavy Industries (Philippines).

HSHI. Hyundai Samho Heavy Industries

Hull. Shell or body of a vessel.

IMO. International Maritime Organization, a United Nations agency that sets international standards for shipping.

Intermediate survey. The inspection of a vessel by a classification society surveyor which takes place approximately two and half years before and after each special survey. This survey is more rigorous than the annual survey and is meant to ensure that the vessel meets the standards of the classification society.

Lightering. To put cargo in a lighter to partially discharge a vessel or to reduce her draft. A lighter is a small vessel used to transport cargo from a vessel anchored offshore.

LWT. Lightweight tons.

Net voyage revenues. Voyage revenues minus voyage expenses.

Newbuilding. A new vessel under construction or just completed.

OECD. Organization for Economic Co-operation and Development.

Off hire. The period a vessel is unable to perform the services for which it is immediately required under its contract. Off hire periods include days spent on repairs, drydockings, special surveys and vessel upgrades. Off hire may be scheduled or unscheduled, depending on the circumstances.

Panamax tanker. Tanker ranging in size from 60,000 DWT to 80,000 DWT.

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P&I Insurance. Third-party indemnity insurance obtained through a mutual association, or P&I Club, formed by shipowners to provide protection from third-party liability claims against large financial loss to one member by contribution towards that loss by all members.

Scrapping. The disposal of old vessel tonnage by way of sale as scrap metal.

SIRE discharge reports. A hydrocarbon discharge ship inspection report carried out under the Ship Inspection Report Program (SIRE) of the Oil Companies International Marine Forum, a voluntary association of oil companies (including all the oil majors) having an interest in the shipment of crude oil and oil products and the operation of terminals.

Sister ship. Ship built to same design and specifications as another.

Special survey. The inspection of a vessel by a classification society surveyor that takes place every four to five years.

Spot market. The market for immediate chartering of a vessel, usually on voyage charters.

Suezmax tanker. Tanker ranging in size from 120,000 DWT to 200,000 DWT.

SWS. China’s Shanghai Waigaoqiao Shipbuilding

Tanker. Vessel designed for the carriage of liquid cargoes in bulk with cargo space consisting of many tanks. Tankers carry a variety of products including crude oil, refined products, liquid chemicals and liquid gas. Tankers load their cargo by gravity from the shore or by shore pumps and discharge using their own pumps.

TCE. Time charter equivalent. TCE is a measure of the average daily revenue performance of a vessel on a per voyage basis determined by dividing net voyage revenue by total operating days for fleet.

Time charter. Contract for hire of a vessel under which the shipowner is paid charterhire on a per day basis for a certain period of time. The shipowner is responsible for providing the crew and paying operating costs while the charterer is responsible for paying the voyage expenses.

VLCC. Acronym for Very Large Crude Carrier, or a tanker ranging in size from 200,000 DWT to 320,000 DWT.

Voyage charter. A Charter under which a customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. The shipowner pays all voyage expenses, and all vessel expenses, unless the vessel to which the Charter relates has been time chartered in. The customer is liable for demurrage, if incurred.

Worldscale. Industry name for the Worldwide Tanker Nominal Freight Scale published annually by the Worldscale Association as a rate reference for shipping companies, brokers, and their customers engaged in the bulk shipping of oil in the international markets. Worldscale is a list of calculated rates for specific voyage itineraries for a standard vessel, as defined, using defined voyage cost assumptions such as vessel speed, fuel consumption and port costs. Actual market rates for voyage charters are usually quoted in terms of a percentage of Worldscale.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. We are exposed to various market risks, including changes in interest rates. The exposure to interest rate risk relates primarily to our debt. As of September 30, 2017 and December 31, 2016, we had $1.2 billion and $1.4 billion, respectively, of floating rate debt with a margin over LIBOR from 1.5% to 3.75%. As of September 30, 2017 and December 31, 2016, we were party to interest rate swaps.

We have entered into six interest rate swap transactions that effectively fix the interest rates on an initial aggregate amount of approximately $1.0 billion as of September 30, 2017, and a maximum aggregate amount of approximately $1.0 billion (based on future draws under the Korean Export Credit Facility), of our outstanding variable rate debt to fixed rates ranging from 3.34 % to 5.41%. On April 10, 2017, the Company modified the interest rate swaps agreements, initially entered into on May 2, 2016. A 100 basis point (one percent) increase in LIBOR would have increased interest expense on $212.9 million of our outstanding floating rate indebtedness as of September 30, 2017 that is not hedged by approximately $2.1 million for the three months ended September 30, 2017.

We may from time to time enter into additional interest rate swaps, caps or similar agreements for all or a significant portion of our remaining floating rate debt, including the Refinancing Facility, the Korean Export Credit Facility and the Sinosure Credit Facility. Increased interest rates may increase the risk that the counterparties to our existing and future swap agreements will default on their obligations, which could further increase our exposure to interest rate fluctuations. Conversely, if interest rates are lower than our swapped fixed rates, we will be required to pay more for our debt than we would had we not entered into the swap agreements.

Commodity Risk. Fuel costs represent the largest component of our voyage expenses. An increase in the price of fuel may adversely affect our profitability if these increases cannot be passed onto customers. The price and supply of fuel is unpredictable and fluctuates as a result of events outside our control, including geo-political developments, supply and demand for oil and gas, actions by members of OPEC and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns and regulations. We do not currently hedge our fuel costs; thus an increase in the price of fuel may adversely affect our profitability and cash flows.

During the three and nine months ended September 30, 2017, fuel costs amounted to approximately 69.7%, and 77.1%, respectively, of our voyage expenses. The potential additional expenses from a 10% increase in fuel price would have been approximately $0.2 million and $0.5 million, for the three and nine months ended September 30, 2017, respectively.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to ensure that the material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting or in other factors that could have significantly affected internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We have not been involved in any legal proceedings which may have, or have had, a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant effect on our financial position, results of operations or liquidity. From time to time in the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury and property casualty claims. While we expect that these claims would be covered by our existing insurance policies, those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our 2016 Annual Report on Form 10-K, which could materially affect our business, financial condition, operating results or liquidity or future results. The risks described in our 2016 Annual Report on Form 10-K are not the only risks we face.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Pursuant to this Item 5 of our Quarterly Report, we are reporting information relating to the below-described amendment to the Sinosure Credit Facility that would otherwise be required to be disclosed pursuant to Item 1.01 of a Current Report on Form 8-K.

On November 8, 2017, we amended the Sinosure Credit Facility in order to conform certain financial covenants to those in our Refinancing Facility and Korean Export Credit Facility. Pursuant to the amendment, the debt service coverage ratio under the Sinosure Credit Facility was replaced with a conforming interest expense coverage ratio, which tests consolidated EBITDA to cash interest expense, each as defined in the Sinosure Credit Facility. The amendment also revised the consolidated leverage ratio under the Sinosure Credit Facility from 0.65 to 0.60 to conform to the other two credit facilities.

For more information on the Sinosure Credit Facility, the Refinancing Facility and the Korean Export Credit Facility, see Note 10, LONG-TERM DEBT, to the condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 included in Part I, Item 1 of this Quarterly Report.

ITEM 6. EXHIBITS

An exhibit index has been filed as part of this Quarterly Report on Page E-1.

II-1

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Exhibit Index


Exhibit Number		Description
10.1		Amendment Agreement, dated as of September 26, 2017, to the Shipbuilding Contract, dated as of March 25, 2014, among Gener8 Maritime Subsidiary Inc. and HHIC-Phil Inc.
10.2		Outstanding Works Agreement, dated as of September 26, 2017, among Gener8 Maritime Subsidiary Inc. and HHIC-Phil Inc.
10.3		Second Supplemental Agreement, dated as of November 8, 2017, to the Facility Agreement, dated as of November 30, 2015, among Gener8 Maritime Subsidiary VII Inc., as Borrower; the Owner Guarantors and Hedge Guarantors listed therein; Gener8 Maritime, Inc., as Parent Guarantor; Citibank, N.A. and Nordea Bank AB Bank AB (publ), New York Branch, as global co-ordinators; Citibank, N.A. as bookrunner; Citibank, N.A., The Export-Import Bank of China and Bank of China, New York Branch, as mandated lead arrangers; the banks and financial institutions named therein as original lenders; the banks and financial institutions named therein as hedge counterparties; Citibank, N.A., London Branch, as ECA co-ordinator and ECA agent; and Nordea Bank Finland Plc, New York Branch, as facility agent and security agent.
31.1		Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2		Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*		Certification of Chief Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.
32.2*		Certification of Chief Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.
101		The following materials from Gener8 Maritime, Inc.’s Quarterly Report on Form 10‑Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2017 and 2016, (iv) Condensed Consolidated Statement of Shareholders’ Equity (unaudited) for the nine months ended September 30, 2017 and 2016, (v) Condensed Consolidated Statements of Cash Flows (unaudited) for the year to date period ended September 30, 2017 and 2016 and (vi) Notes to Condensed Consolidated Financial Statements (unaudited).
		101. INS XBRL Instance Document.
		101. SCH XBRL Taxonomy Extension Schema.
		101. CAL XBRL Taxonomy Extension Calculation Linkbase.
		101. DEF XBRL Taxonomy Extension Definition Linkbase.
		101. LAB XBRL Taxonomy Extension Label Linkbase.
		101. PRE XBRL Taxonomy Extension Presentation Linkbase.

* Furnished herewith

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Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	GENER8 MARITIME, INC.


Date: November 9, 2017	By:	/s/ Leonard J. Vrondissis
		Leonard J. Vrondissis
		Chief Financial Officer, Secretary and Executive Vice President (Principal Financial Officer and Principal Accounting Officer)

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Euronav MI II Inc. Reports

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