International dry bulk shipping company Star Bulk announced Tuesday an agreement to acquire 34 vessels from recently bankrupt Excel Maritime Carriers.
The agreement includes the acquisition of 6 Capesize vessels, 14 sistership Kamsarmax vessels, 12 Panamax vessels and 2 Handymax vessels for a purchase price of $288.39 in cash and an aggregate of 29.917 million shares of Star Bulk common stock for a total consideration of $634.91 million. The vessels are to be acquired in a series of closings expected to be completed by the end of 2014.
Athens-based Star Bulk says the deal enhances its presence as the largest U.S. listed dry bulk shipping company, with a fleet of 103 vessels with a total cargo-carrying capacity of 11.85 million DWTs.
Star Bulk will finance the purchase through a combination of cash on hand and a $231 million new secured loan facility by entities of Star Bulk’s largest shareholder, Oaktree Capital Management, and Angelo Gordon & Co., which will pay the bulk of the cash portion of the consideration. Both Oaktree Capital and Angelo Gordon are current Excel shareholders. Upon completion of the transaction, Oaktree Capital will own 57.3% of Star Bulk’s outstanding shares of common stock while Angelo Gordon Investors will own 7.8%.
“We are excited to announce these vessel purchases that, when completed, will expand our presence as the largest U.S. listed drybulk shipping company, and one of the largest dry bulk owners and operators globally” said Petros Pappas, Chief Executive Officer of Star Bulk Carriers Corp. “These transactions mark an important next step in the evolution of Star Bulk following our recent merger transaction with Oceanbulk. We believe that these vessel purchases are accretive to earnings and cash flow per share. We also believe that after these transactions are completed, Star Bulk will be well positioned to capitalize on an improving dry bulk shipping market with significant operating leverage to rising rates. Furthermore, as with our recent merger transaction with Oceanbulk, these transactions will preserve our cash resources, as it will be funded primarily with new equity determined on a net asset value to net asset value basis and a bridge loan from Oaktree and Angelo Gordon. This is consistent with our strategy to be an active consolidator in the dry bulk shipping industry, using moderate levels of debt.”
Star Bulk acquired Oceanbulk Shipping in June of this year in an all-stock deal that included 15 existing dry bulk carriers with an aggregate capacity of 1.75 million DWTs, plus contracts for the construction of 26 fuel-efficient and eco-design newbuilds to be delivered in 2014, 2015 and 2016. Including the newbuilds, the deal boosted Star Bulk to its current role as the largest U.S. listed owner with 69 vessels with a capacity of approximately 8.7 million DWTs.
Excel Maritime filed for Chapter 11 bankruptcy protection in July 2013 after signing off on a restructuring plan that revealed that the company was insolvent. Excel, which at the time operated 38 dry bulk vessels, listed assets of $2.7 billion and debt of $1 billion. The company emerged from bankruptcy in February 2013 under the control of Oaktree and Angelo Gordon.
Following the completion of the transaction with Excel, Star Bulk’s fleet will include 67 operating vessels and 36 vessels under construction at shipyards in Japan and China with expected deliveries during 2014, 2015 and early 2016.