Performance Shipping Inc., a global shipping company specializing in the ownership of tanker vessels, announced that, through a separate wholly-owned subsidiary, it has entered into a sale and leaseback agreement with an unaffiliated third party for its previously announced LR1 tanker newbuilding vessel, to be named M/T P. San Francisco (the “Vessel”), currently under construction at Jiangsu New Yangzi Shipbuilding Co., Ltd. and scheduled for delivery in early 2027.

The bareboat financing amount totals US$37.8 million. As part of this agreement, the Vessel will be sold and then chartered back to the Company on a bareboat basis for a ten-year period starting from delivery from the shipyard. The bareboat charter includes 120 monthly installments equivalent to US$5,451 per day, with an implied interest rate of Term SOFR plus 2.00% per annum. Additionally, a balloon payment of approximately US$18.1 million will be due together with the last installment. The Company has continuous options to repurchase the Vessel at predetermined rates following the second anniversary of the bareboat charter.

Andreas Michalopoulos, the Company’s Chief Executive Officer, stated: “We are pleased to announce the new financing arrangement for our LR1 newbuilding, secured almost one year ahead of the vessel’s expected delivery date. The financing represents 70% of the vessel’s contract price and an even lower leverage level when considering current market values for modern LR1 newbuilding tankers, while maintaining a conservative cashflow breakeven level of US$22,200 per day.

“As previously announced, the vessel has been chartered to Mercuria Energy Trading S.A. for a firm period of four years upon delivery, at a daily gross charter rate of US$23,750, providing coverage above the vessel’s daily cashflow breakeven, with options to extend the charter for up to three additional one-year periods. This financing is consistent with our strategy of fleet renewal, fleet deployment and balanced financial management.”

Performance Shipping Inc. press release