Star Bulk Carriers Corp. (SBLK) reached an agreement with its lenders to defer up to $24 million of repayment obligations over the next two years.
The agreement accounts for more than 35% of the shipping company’s total repayment obligations for 2013 and 2014.
Star Bulk said its agreement with Commerzbank AG allows the deferral of $16.7 million which will be added to the loan’s final installment due in the fourth quarter of 2016. The company also agreed to make a $2 million prepayment on the loan.
For its loan facility with HSH Nordbank AG, Star Bulk agreed to release about approximately $7.4 million of pledged cash already held by HSH and it will be applied as prepayment to the loan. In exchange, the company can defer at least $3.5 million of the subsequent eight consecutive quarterly installments. Star Bulk may increase the deferral up to $7 million under certain conditions.
The company also said all of its lenders, including ABN AMRO Bank N.V. and Credit Agricole C.I.B., agreed to waive or amend certain existing financial covenants, including reducing minimum liquid funds per fleet vessel to $500,000. The reduction will result in $7 million restricted cash being reclassified as free cash.
An oversupply of available ships has continued to weaken the U.S. shipping industry, which has also grappled with aging fleets.
“We are pleased to have the support of our lenders during this adverse market environment,” said President and Chief Executive Spyros Capralos. “We believe our agreements with our lenders provide the company with significant liquidity and financial flexibility for the next two years and will help us withstand the current low freights and low asset values.”
Shares closed Wednesday at $6.16 and were inactive premarket. The stock has fallen 31% over the past three months.
– Melodie Warner, (c) Dow Jones & Company