Greek global shipping company focusing on the transportation of dry bulk cargoes Star Bulk Carriers Corp. (Star Bulk), has entered into an en bloc definitive agreement with entities affiliated with E.R. Capital Holding GmbH & Cie. KG (E.R.or Sellers ), pursuant to which the company will acquire three firm operating dry bulk vessels (the Step 1 Vessels) within 2018 ( the Step 1 Acquisition), and four optional operating dry bulk vessels (the Step 2 Vessels) in 2019 (the Step 2 Acquisition). Subject to agreeing a three party novation agreement with charterers and E.R., any charterparties existing at the time of the deliveries of each of the Vessels shall be novated to Star Bulk.
The Step 1 vessels will reportedly be acquired for an aggregate of approximately 1.34 million common shares of Star Bulk (the Step 1 Consideration Shares) and US$41.70 million in cash. The number of Step 1 Consideration Shares to be issued is subject to adjustments for the company’s cash, debt and remaining capital expenditures as of one business day prior to the delivery date of each of the Step 1 Vessels.
The cash portion of the consideration for Step 1 Vessels will be financed through proceeds of a new five-year term loan of US$41.0 million from a major European commercial bank. Following the consummation of the Step 1 Acquisition, E.R. will own approximately 1.45% of SBLK common shares.
In relation to the Step 2 Vessels, the Sellers have granted four call options to the company for an aggregate exercise price of US$115.39 million or US$28.85 million per Step 2 Vessel (the Call Options), exercisable on April 1st 2019. Concurrently, the company has granted four put options to E.R. with an aggregate exercise price of $105.39 million or $26.35 million per Step 2 Vessel (the Put Options) exercisable by E.R. from 2 April 2019 to 4 April 2019 (inclusive), in the event that the company does not exercise the Call Options. The aggregate exercise price of the Call and Put Options is payable in either, 2/3 cash and 1/3 common shares of Star Bulk (the Step 2 Consideration Shares), or 100% cash, at the option of the company.
The number of Step 2 Consideration Shares to be issued to E.R. (if any), will be determined by the net asset value of the company, which will be based on the average vessel valuations by independent vessel appraisers as of 31 March 2019 and will be subject to adjustments for the company’s cash, debt and remaining capital expenditures as of one business day prior to the delivery date of each of the Step 2 Vessels.
According to Star Bulk, deliveries of Step 1 and Step 2 Vessels (subject to the exercise of the Call or Put Option) remain also subject to customary closing conditions, including the novation of any existing charter parties of the Vessels. The company expects to take delivery of Step 1 Vessels in 4Q18, while Step 2 Vessels deliveries, subject to the exercise of the Call or Put Option, are expected to take place between early April and mid July 2019. Following the effects of the Step 1 Acquisition and Step 2 Acquisition, Star Bulk will have a fleet of 115 vessels on a fully delivered basis, aggregate cargo-carrying capacity of approximately 13.39 million DWT and vessels with an average age of 7.5 years.
CEO of Star Bulk, Petros Pappas, commented: “I am very pleased that Star Bulk is acquiring a high quality, modern fleet from E.R. in a structured transaction that combines attractive prices with flexibility for the company. We are excited to expand our footprint in the capesize segment, especially in a period that the dry bulk market is tightening. It is also with great pleasure to welcome a prominent ship owner, Mr. Erck Rickmers, to our shareholder base and believe that this transaction validates once again Star Bulk’s ability to use our shares as currency in accretive acquisitions for our shareholders.”
Read the article online at: https://www.drybulkmagazine.com/shipping/30082018/star-bulk-to-gain-up-to-seven-vessels-in-next-two-years/