Greece-based shipping firm Star Bulk Carriers (SBLK) has agreed to acquire up to seven dry bulk carriers from Germany’s Erck Rickmers (E.R.) Capital Holding.
The company has inked an en bloc definitive agreement with entities affiliated with E.R. to acquire three firm operating dry bulk vessels within 2018, and four optional operating dry bulk vessels in 2019.
The bulkers in question are ER Bourgogne, ER Brandenburg, ER Brighton, ER America, ER Bayonne, ER Borneo and ER Buenos Aires, all of them constructed in 2010.
“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,” Petros Pappas, Chief Executive Officer of Star Bulk, commented.
Subject to agreeing a three party novation agreement with charterers and E.R., any charterparties existing at the time of the deliveries of each of the vessels shall be novated to Star Bulk, the company said.
As informed, the first three vessels will be acquired for an aggregate of approximately 1.34 million common shares of Star Bulk and USD 41.7 million in cash. The cash portion of the consideration for these vessels will be financed through proceeds of a new five-year term loan of USD 41 million from a major European commercial bank. Following the consummation of the first acquisition, E.R. will own approximately 1.45% of SBLK common shares.
In relation to the remaining four ships, the sellers have granted four call options to Star Bulk Carriers for an aggregate exercise price of USD 115.39 million or USD 28.85 million per vessel, to be exercised on April 1, 2019.
Concurrently, the company has granted four put options to E.R. with an aggregate exercise price of USD 105.39 million or USD 26.35 million per vessel exercisable by E.R. from April 2, 2019 to April 4, 2019, 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, or 100% cash, at the option of the company.
The number of consideration shares related to the second acquisition to be issued to E.R. will be determined by the net asset value of the company.
“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,“ Pappas added.
The deliveries of all seven vessels remain also subject to customary closing conditions, including the novation of any existing charter parties of the vessels.
The company expects to take delivery of the first three vessels in Q4 2018, while the remaining deliveries, subject to the exercise of the call or put option, are expected to take place between early April and mid July 2019.
Following the acquisitions, Star Bulk will have a fleet of 115 vessels with an aggregate cargo-carrying capacity of approximately 13.39 million deadweight tons and an average age of 7.5 years.