Star Bulk Carriers Corp. announced on Wednesday that it has entered into an en bloc definitive agreement with E.R. Capital Holding GmbH & Cie. KG to acquire three dry bulk vessels within 2018 (“Step 1 Acquisition”), and four optional operating dry bulk vessels (“Step 2 Acquisition”).
The Step 1 Vessels will be acquired for an aggregate of approximately 1.34 million common shares of Star Bulk (the “Step 1 Consideration Shares”) and $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 $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 $115.39 million or $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 April 2, 2019 to April 4, 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 March 31, 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.
Petros Pappas, Chief Executive Officer of Star Bulk, 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.”
Sea News, August 30