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August 31, 2018

Star Bulk Carriers to buy up to seven dry bulk vessels from E.R. Capital

Global shipping company Star Bulk Carriers (SBLK) has signed an en bloc definitive agreement with entities affiliated with E.R. Capital to acquire up to seven dry bulk vessels.

Global shipping company Star Bulk Carriers (SBLK) has signed an en bloc definitive agreement with entities affiliated with E.R. Capital to acquire up to seven dry bulk vessels.

The acquisition will be completed in two stages, with the first stage seeing the purchase of three firm-operating dry bulk vessels. Delivery of these ships is scheduled to take place this year.

In the second stage of the deal, the shipping company will purchase four optional operating dry bulk vessels, which are expected to be delivered next year.

According to SBLK, any charterparties present at the time of the deliveries of each of the vessels will be novated to the company, following a third-party novation agreement with charterers and E.R.

The company is expected to issue a total of around 1.34 million of its common shares and $41.70m in cash to acquire the Step 1 vessels.

The shares will be subject to adjustments for Star Bulk’s cash, debt and remaining capital expenditures one business day before the delivery date of each of the Step 1 vessels.

Star Bulk plans to fund the cash portion of the Step 1 vessels acquisition through proceeds from a new five-year term loan of $41m from a European commercial bank.

“For the Step 2 vessels, E.R. has awarded four call options to SBLK for a total exercise price of $115.39m or $28.85m for each of the vessels.”

Upon completion of this portion of the deal, E.R. will own around 1.45% of common shares in SBLK.

For the Step 2 vessels, E.R. has awarded four call options to SBLK for a total exercise price of $115.39m or $28.85m for each of the vessels. The option can be exercised on 1 April.

SBLK has also offered four put options to E.R. with a total exercise price of $105.39m or $26.35m against each of the vessels. The put options can be exercised between 2-4 April, in case SBLK does not exercise the call options.

The number of Step 2 consideration shares to be issued to E.R. (if any) is also set to be determined by the net asset value of SBLK.

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