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Star Bulk Carriers Corp. Reports Profitable First Quarter, Despite Traditionally Weak Period of the Year for Dry Bulk Trade

Star Bulk Carriers Corp., a global shipping company focusing on the transportation of dry bulk cargoes, announced its unaudited financial and operating results for the first quarter ended March 31, 2018.

Petros Pappas, Chief Executive Officer of Star Bulk, commented:

“We are happy to report another profitable quarter, especially during the seasonally weak period of the year. We achieved $81.6 million in TCE Revenues, $46.4 million in Adjusted EBITDA and $9.9 million in Net Income for the quarter ended March 31, 2018. Our average TCE for the quarter was $12,586/ day per vessel with 100% fleet utilization, with essentially flat y-o-y average daily Opex and Net Cash G&A expenses per vessel, at $3,991/day and $1,101/day respectively.

We have been busy on the financing front. We have obtained commitments of $561.0 million from ten financing institutions, refinancing almost all of our debt maturities due in 2018 and 2019. Those commitments include competitive financing terms, reducing our interest cost by $2.4 million per year and pushing out our average debt maturity by 3 years.

Finally, our recently announced acquisitions should improve the liquidity of our share and provide economies of scale. At closing of the acquisition of the Songa fleet and our debut in the Oslo Stock Exchange we will be adding hundreds of new Star Bulk shareholders. We are honored to be adding Raffaele Zagari and Arne Blystad in our board of directors and Herman Billung in our management team upon the completion of the Augustea and Songa transactions.”

Image: Star Bulk

Recent Developments

Vessel Deliveries and Acquisitions

On May 14, 2018, we took delivery of the Newcastlemax vessel Star Leo (ex- HN 1343), with carrying capacity of 207,939 deadweight tons, built at Shanghai Waigaoqiao Shipbuilding Co., Ltd. (“SWS”). The vessel is partially financed under a bareboat charter in the amount of $30.0 million.

On April 20, 2018, we entered into a definitive agreement to acquire 16 vessels (the “Augustea Vessels”), with an aggregate capacity of 1.94 million dwt., from entities affiliated with Augustea Atlantica SpA and York Capital Management in an all-share transaction (the “Augustea Vessel Acquisition”). As consideration for the Augustea Vessel Acquisition, we have agreed to issue approximately 10.5 million common shares to the sellers of the Augustea Vessels. Under the terms of the agreement governing the Augustea Vessel Acquisition, the consideration was determined based on the average vessel valuations by independent vessel appraisers and is subject to adjustments for cash, debt and capital expenditures on the closing date. As part of the transaction, we will assume debt of $310.0 million. An entity affiliated with family members of our CEO, Mr. Petros Pappas, is a passive minority investor in three of the Augustea Vessels. The Augustea Vessel Acquisition was approved by the disinterested members of our Board of Directors. The Augustea Vessel Acquisition, which is expected to be completed in the third quarter of 2018, remains subject to the execution of definitive financing agreements and customary closing conditions. Upon completion of the Augustea Vessel Acquisition, Mr. Raffaele Zagari will be appointed to our Board of Directors.

On May 14, 2018, we entered into a definitive agreement with Oceanbulk Container Carriers LLC (“OCC”), an entity affiliated with Oaktree Capital Management L.P. and with family members of our CEO, Mr. Petros Pappas, (the “OCC Vessel Acquisition”), pursuant to which we will acquire three Newcastlemax vessels, with an aggregate capacity of 0.62 million dwt. (the “OCC Vessels”), for an aggregate of 3.39 million of our common shares subject to adjustments for cash, debt and capital expenditures on the closing date. CSSC (Hong Kong) Shipping Company Limited has agreed to provide a ten-year capital lease of $104.4million to finance the remaining $103.8 million capital expenditures on the OCC Vessels. The OCC Vessel Acquisition was approved by the disinterested members of our Board of Directors. The OCC Vessel Acquisition is expected to be completed in the second quarter of 2018.

On May 14, 2018, we entered into a definitive agreement with Songa Bulk ASA (“Songa”) pursuant to which we will acquire 15 operating vessels, with an aggregate capacity of 1.48 million dwt. (the “Songa Vessels”), for an aggregate of our 13.725 million common shares and $145.0 million in cash (the “Songa Vessel Acquisition”). The cash portion of the consideration will be financed through proceeds of a new five‐ year capital lease of $180.0 million with China Merchants Bank Leasing with a margin of 280 basis points, thus offering approximately $35.0 million of additional liquidity. On June 5, 2018 the shareholders of Songa approved the transaction. The Songa Vessel Acquisition remains subject to customary closing conditions, including the approval by the stock exchange Oslo Børs of the secondary listing for the Company’s common shares, and is expected to be completed in the third quarter of 2018. Companies controlled by Messrs. Arne Blystad, Magnus Roth and Herman Billung represent approximately 29% of the outstanding shares of Songa. Upon completion of the Songa Vessel Acquisition, Mr. Arne Blystad will be appointed to our Board of Directors and Mr. Herman Billung will join our management team.
Financing Activities

On April 19 2018, we entered into a loan agreement with the National Bank of Greece for the refinancing of the Commerzbank $120.0 million Facility (as defined in our annual report on Form 20-F, filed with the U.S. Securities and Exchange Commission on March 22, 2018 (the “2017 20-F“)). On May 3, 2018, we drew $30.0 million under the new facility (the “NBG $30,000 Facility”), which we used with cash on hand to fully repay the $34.7 million outstanding under the Commerzbank $120.0 million Facility. The NBG $30,000 Facility is secured by a first priority mortgage on the vessels previously pledged under the Commerzbank $120.0 million Facility. The NBG $30,000 Facility matures on December 31, 2022 and is repayable in 19 equal quarterly installments of $0.9 million, commencing in August 2018, and a final balloon payment of $12.0 million, payable together with the last installment.

In April, 2018, we entered into a committed term-sheet with DNB Bank ASA, or the “DNB $310,000 Facility,” for a loan of $310.0 million, a tranche of $240.0 million of which, will refinance all amounts outstanding under the ABN $87,458 Facility, the DNB-SEB-CEXIM $227,500 Facility, the DNB $120,000 Facility, the Deutsche Bank AG $39,000 Facility and the ABN AMRO Bank N.V. $30,844 Facility (each as defined in the 2017 20-F). The loan will be secured by a first priority mortgage on the vessels previously pledged under the refinanced facilities. The drawdown of the tranche of $240.0 million is expected to be consummated in the third quarter of 2018 and will be repayable in 20 equal quarterly installments of $8.7 million and a balloon payment along with the last installment in an amount of $66.1 million. The tranche of $70.0 million will be repayable in 12 quarterly installments, each being equal to 5.55% of that tranche and the remaining balance will be repaid in the form of a balloon installment at the final repayment date. The completion of the transaction is subject to the execution of customary definitive documentation.

In April 2018, we entered into a committed term sheet with ING Bank N.V., London Branch, or the “ING $45,000 Facility,” for a loan of $45.0 million to refinance all amounts outstanding under the Deutsche Bank $85,000 Facility (as defined in the 2017 20-F). The drawdown of the facility is expected to be consummated in the third quarter of 2018 and will be repayable in 28 equal quarterly installments of $0.9 million and a balloon payment along with the last installment in an amount of $18.8 million. The facility will be secured by a first priority mortgage on the vessels previously pledged under the refinanced Deutsche Bank $85,000 Facility. The completion of the transaction is subject to the execution of customary definitive documentation.

In April 2018, we entered into a committed term sheet with Citibank N.A., London Branch, or the “Citi $130,000 Facility,” for a loan of approximately $130.0 million to refinance in full the approximately $65.2 million outstanding under the Citi Facility (as defined in the 2017 20-F) and provide $64.8 million to refinance the existing indebtedness of 5 of the Augustea Vessels. The total loan amount is expected to be drawn in the third quarter of 2018 and will be repayable in 20 equal quarterly installments of $3.65 million each, and a balloon payment along with the last installment in an amount of $57.0 million. The facility will be secured by a first priority mortgage on the vessels previously pledged under the refinanced Citi Facility and the 5 applicable Augustea Vessels. The completion of the transaction is subject to the execution of customary definitive documentation.

On May 17, 2018, we paid an aggregate amount of $30.0 million in total to all parties under our Supplemental Agreements (as defined in the 2017 20-F) which consisted of (i) an amount of $25.9 million representing the excess cash for the quarter ended March 31, 2018, pursuant to the cash sweep mechanism in the Supplemental Agreements, and (ii) an additional amount of $4.1 million paid to the parties under our Supplemental Agreements due to the improved market conditions.

In May 2018, we entered into a committed term sheet with Credit Agricole Corporate and Investment Bank, or the “Credit Agricole $43,000 Facility,” for a loan of $43.0 million to refinance all outstanding amounts under the Credit Agricole $70,000 Facility (as defined in the 2017 20-F) that is expected to be drawn in the third quarter of 2018. The facility will be secured by the two vessels previously securing the Credit Agricole $70,000 Facility and will be available in two tranches, each being repayable in 20 equal quarterly installments of $0.6 million and a balloon payment along with the last installment in an amount of $9.0 million. The completion of the transaction is subject to the execution of customary definitive documentation.
Employment update

As of today, we have covered approx. 88% of the days in Q2 2018 at average TCE rates of $ 12,758 per day.

More specifically:

Capesize Vessels: approx. 74%of Q2 2018 days at approximately $15,825 per day

Panamax Vessels: approx. 94% of Q2 2018 days at approximately $ 12,387 per day

Supramax Vessels: approx. 96% of Q2 2018 days at approximately $ 10,876 per day

Full Report

Source: Star Bulk Carriers Corp.

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