Company: TEN-PE
Filing Date: 2025-04-11
Form Type: 20-F
Source: 0001193125-25-079101
Chunk: 30

Company: TSAKOS ENERGY NAVIGATION LTD
Filing Date: 2025-04-11
Form: 20-F
Item: Item 3
Chunk 30
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  Table of Contents      17  

We are exposed to volatility in interest rates, including the Secured Overnight Funding Rate (“ SOFR”), and selectively enter into derivative contracts, which can result in higher than market interest rates and charges against our income.

Over the past 16 years we have selectively entered derivative contracts both for investment purposes and to hedge our overall interest expense and, more recently, our bunker expenses and our exposure to European Union Allowances within the context of EU’s Emissions Trading Scheme. Our board of directors monitors the status of our derivatives to assess whether such derivatives are within reasonable limits and reasonable in light of our particular investment strategy at the time we entered into the derivative contracts.

Loans advanced under our secured credit facilities are, generally, advanced at a floating rate, previously based on the London interbank offered rate (“ LIBOR”) and now based on SOFR. Interest rates in the last two years after a long period of stability at historically low levels, and have been volatile in past years, which can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. Interest rates were at historically low levels for an extended period of time and benchmark interest rates, including SOFR, may continue to increase from current high levels. Our financial condition could be materially adversely affected at any time that we have not entered into interest rate hedging arrangements to hedge our interest rate exposure and the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future, including those we enter into to finance a portion of the amounts payable with respect to our newbuildings, increase. Moreover, even if we have entered into interest rate swaps or other derivative instruments for purposes of managing our interest rate or bunker cost exposure, our hedging strategies may not be effective, and we may incur substantial loss.

We have a risk management policy and the Audit Committee oversees all our derivative transactions. It is our policy to monitor our exposure to business risk, and to manage the impact of changes in interest rates, foreign exchange rate movements and bunker prices on earnings and cash flows through derivatives. Derivative contracts are executed when management believes that the action is not likely to significantly increase overall risk. Entering swaps and derivatives transactions is inherently risky and presents various possibilities for incurring significant expenses. The derivatives strategies that we employ in the future may not be successful or effective, and we could, as a result, incur substantial additional interest costs. See “ Item 11. Quantitative and