Star Bulk to buy seven ER Capital Holding-linked ships

Greece-based dry bulk company has unveiled plan to acquire seven more ships, expanding its fleet to 115 vessels. Star Bulk will acquire three vessels this year with an option for four more ships in 2019

News ID: 80187

Date: 31 August 2018 - 13:52

The deal marks the fourth fleet acquisition since April this year, totalling 31 dry bulk vessels and more than $1bn of capital

STAR Bulk Carriers has entered into an en bloc definitive agreement with entities affiliated with ER Capital Holding to acquire three dry bulk vessels in 2018 with the option for another four in 2019, according to a company release.

The first three ships — 2010-built, 180,000 dwt ER Bourgogne and ER Brandenburg and 2010-built, 55,500 dwt ER Brighton — will be acquired for about 1.34m common shares of Star Bulk and $41.7m in cash.

The number of shares to be issued is subject to adjustments for the company’s cash, debt and remaining capital expenditures as of one business day before the delivery date of each ship.

The cash portion of the deal will be financed through proceeds of a new five-year term loan of $41m from a major European commercial bank.

ER Capital Holding will own about 1.45% of Star Bulk common shares after these three ships are acquired.

For the remaining four vessels, ER Capital Holding has given four call options to Star Bulk for an aggregate exercise price of $115.39m, or $28.85m per ship, exercisable on April 1, 2019.

Concurrently, Star Bulk has granted four put options to ER Capital Holding with total exercise price of $105.39m, or $26.4m per vessel, exercisable by seller from April 2 to April 4, 2019 in case Star Bulk does not exercise the call options.

The aggregate exercise price of the call and put options is payable in either two thirds cash and one third common shares of Star Bulk or all cash, at Star Bulk’s option.

The number of shares issued to ER Capital holding, if any, will be determined by Star Bulk’s net asset value as of March 31, 2019.

The four other vessels are 2010-built, 180,000 dwt ER America, ER Bayonne, ER Borneo and ER Buenos Aries.

Star Bulk expects to take delivery of the first three vessels in the fourth quarter of 2018, while the remaining four vessel deliveries are subject to the exercise of the call or put option, expected to take place between early April and mid-July next year.

The deal marks the owner’s fourth fleet acquisition since April this year, totalling 31 dry bulk vessels and more than $1bn of capital.

Star Bulk’s chief executive Petros Pappas said: “We are excited to expand our footprint in the capesize segment, especially in a period that the dry bulk market is tightening.”

Upon the acquisition of all the seven vessels, Star Bulk will have a live fleet of 115 vessels with an aggregate cargo-carrying capacity of approximately 13.39m dwt and an average age of 7.5 years.