14-09-2016 Star Bulk makes good on restructuring deal with banks, By John Gallagher, Senior Editor, IHS Maritime
Star Bulk has finalised an agreement with 15 banks to defer USD223.9 million in debt payments until June 2018 and relax financial covenants until the end of 2019. “This agreement assists our company to successfully weather current market conditions even if they were to last well into 2019, and positions us to take advantage of a subsequent market upturn,” Star Bulk CEO Petros Pappas confirmed in a 14 September statement. Pappas added that the deal was “based on the strong relationships” with its lenders and credit agencies “and their faith in Star Bulk’s high quality management and low cost operations.”
The NASDAQ-listed bulk vessel operator announced in June it had made a standstill agreement with the group of lenders to give the company time to finalise the restructuring. The final agreement, executed on 31 August, waives 100% of principle repayments for 25 months for the period starting 1 June 2016 and ending 30 June 2018. The agreement will also waive or “substantially relax” financial covenants until 31 December 2019.
To comply with the conditions of the restructuring, Star Bulk also announced on 14 September it agreed to raise USD51.5 million, and noted that three major shareholders intend to buy “at least their pro rata share” of the stock sale.
The agreement was announced at the same time Star Bulk revealed a net loss of USD32.9 million during 2Q16, which follows a loss of USD48.8 million in 1Q16 and compares with a loss of USD65 million in 2Q15.
The loss included several non-cash items, including a loss of USD200,000 on the vessels Indomitable, Obelix, Star Taurus and Star Michele, the company stated. Voyage revenues fell 5.6% to USD52.6 million in the quarter.
The dry bulk major had USD1.01 billion of average total debt during 2Q16, up 5.8% from an average of USD958.8 million in the same period last year.
Star Bulk also announced it had agreed on 26 July and 10 August to sell the vessels Star Aline and Star Monisha, respectively, to third parties. The 2004-built, 76,417dwt Star Aline is expected to be delivered at the end of September, the company said. IHS data lists the 2001-built, 164,218dwt Star Monisha as being sold for USD6.9 million and scheduled to be broken up.
Star Bulk has a 73-vessel fleet consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels with carrying capacities of between 52,055 and 209,537 dwt, and aggregate capacity of 8.2 million dwt. The fleet includes five newbuildings under construction in China that are expected to be delivered in 2017 and 2018.