ATHENS, Greece, May 26, 2020 (GLOBE NEWSWIRE) — Star Bulk Carriers Corp. (the “Company” or “Star Bulk”) (Nasdaq and Oslo: SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the first quarter ended March 31, 2020.
Financial HighlightsEBITDA and Adjusted EBITDA are non-GAAP measures. Please see the table at the end of this release for a reconciliation of EBITDA and Adjusted EBITDA to Net Cash Provided by / (Used in) Operating Activities, which is the most directly comparable financial measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) as well as for the definition of each measure. To derive Adjusted EBITDA from EBITDA, we exclude non-cash gains / (losses).Adjusted Net income / (loss) and Adjusted earnings / (loss) per share basic and diluted are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Net income / (loss), which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of each measure.Daily Time Charter Equivalent Rate (“TCE”) and TCE Revenues are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of each measure.Average daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days.Average daily Net Cash G&A expenses per vessel is calculated by (1) deducting the Management fee Income (if any), from, and (2) adding the Management fee expense to, the General and Administrative expenses (net of stock-based compensation expense) and (3) then dividing the result by the sum of Ownership days and Charter-in days. Please see the table at the end of this release for a reconciliation to General and administrative expenses, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Petros Pappas, Chief Executive Officer of Star Bulk, commented:“COVID-19 caused an unprecedented disruption on global trade, including dry bulk shipping. Our three main priorities during the pandemic have been the physical health of our people, the financial health of our company and the uninterrupted service to our customers and we believe we have fared well on all three of our goals.Despite the difficult market conditions, Star Bulk reported a profitable first quarter for 2020, with TCE Revenues of $100.3 million and Net Income of $2.8 million. The average TCE for the quarter was $10,949/ day per vessel with daily Opex and Net Cash G&A expenses per vessel being $4,047/day and $1,057/day respectively. We have completed our investment in scrubbers, with 114 operational units that will serve to comply with environmental regulations and enhance our commercial performance in the future.Our next priority has been to increase our liquidity and strengthen our balance sheet through vessel refinancings. As of today we have received credit committee approval on financings that would release up to $27.5 million of net proceeds to be used for working capital purposes and we continue to work with lenders to significantly increase this figure in the coming months.While 2020 trade volumes are projected to contract, the bulk of the negative effect is expected to be concentrated on the first half of 2020. An expected synchronized global economic stimulus should expand trade activity in the medium term, providing opportunities to our Company.”Recent DevelopmentsScrubber UpdateBy early May, we had successfully completed the installation of scrubbers on 114 vessels out of the 116 vessels in our fleet.Financing ActivitiesIn March 2020, we borrowed $55.0 million under the DSF $55.0 million Facility. We used $51.6 of this amount to refinance the outstanding amounts under the lease agreements of the M/V Star Eleni and the M/V Star Leo, and also increased our cash position by $3.4 million.As of March 31, 2020, we had borrowed $24.2 million under the HSBC Working Capital Facility. As of the date of this press release, we borrowed an additional net amount of $4.5 million.In May 2020, we received credit committee approval from ING Bank N.V., London Branch for a loan of up to $70.0 million (the “ING 70.0 million Facility”). The facility will be used to refinance all outstanding amounts under the lease agreements of the vessels M/V Star Claudine, M/V Star Ophelia, M/V Star Lyra, M/V Star Bianca, M/V Star Flame and M/V Star Mona. We expect to draw down this facility in July 2020. The facility will mature 6 years after the drawdown. The ING 70.0 million Facility will be secured by first priority mortgages on the six vessels.In May 2020, we received credit committee approval from Alpha Bank for a loan of up to $35.0 million (the “Alpha Bank 35.0 million Facility”). The facility will be used to refinance the outstanding amount under the loan agreement of the vessel M/V Star Martha and the lease agreements of the vessels M/V Star Sky and M/V Stardust. We expect to draw down this facility in July 2020. The facility will mature 5 years after the drawdown. The Alpha Bank 35.0 million Facility will be secured by first priority mortgages on the three vessels.In May 2020, we received credit committee approval from Piraeus Bank for a loan of up to $50.4 million (the “Piraeus Bank $50.4 million Facility”). The facility will be used to refinance all outstanding amounts under the lease agreements of the vessels M/V Star Luna, M/V Star Astrid, M/V Star Genesis, M/V Star Electra and M/V Star Glory. We expect to draw down this facility in July 2020. The facility will mature 5 years after the drawdown. The Piraeus Bank $50.4 million Facility will be secured by first priority mortgages on the five vessels.
After the completion of the above-mentioned debt refinancing transactions, we expect to strengthen our financial position by receiving aggregate net proceeds of $27.5 million.We are in the process of working towards obtaining further commitments for other debt refinancing transactions that will enable us further increase our cash position.Scrubber Financing ActivitiesDuring the first quarter of 2020, we drew down the following indebtedness to finance our scrubber installation program: (i) the last available tranche of $3.3 million under the Atradius Facility, (ii) $18.8 million under the DNB $310.0 million Facility, (iii) $1.3 million under the SEB Facility and (iv) $4.7 million under the lease agreements with CMBL.Subsequent to March 31, 2020 and as of May 26, 2020, we drew down (i) $10.9 million under the lease agreements with CMBL.As of the date of this press release we have paid approximately $200.0 million of CAPEX related to scrubber procurement installations and have an additional $12.0 million for remaining CAPEX to be paid.As of the date of this press release we have incurred $142.5 million of indebtedness related to scrubber procurement installations and have an additional $7.2 million of available scrubber-related financing under our debt and lease agreements.Interest rate derivative contracts
As of the date of this press release, we have agreed to fix the floating LIBOR related component of our interest cost on approximately 25% of our outstanding indebtedness at an average 3M USD LIBOR rate of 66.0bps.Hedging VLSFO-HSFO spread
As of the date of this press release, we have hedged approximately 151,000 metric tons of our estimated fuel consumption by selling the 2020 Singapore spread between Very Low-Sulfur Fuel Oil (VLSFO) – High-Sulfur Fuel Oil (HSFO) at an average price of $214 per ton, out of which 28,000 metric tons at an average price of $236 per ton were realized in first quarter of 2020 and the remaining 123,000 metric tons at an average price of $209 will be realized in the remainder of 2020. In addition we have hedged approximately 24,000 metric tons of our estimated fuel consumptions by selling the 2021 Singapore spread between VLSFO –HSFO at an average price of $106 per ton.Dividend update:
As of March 31, 2020, we owned 116 vessels and had total cash of $131.3 million. This cash balance includes $5.6 million from proceeds received from the sale of the M/V Star Cosmo and M/V Star Epsilon. According to our dividend policy, having reserved these sales proceeds for share repurchases, debt prepayment and vessel acquisitions and based on the minimum cash balance that needs to be maintained per vessel of $1.15 million as of March 31, 2020, or $133.4 million on a fleet wide basis, our Board of Directors (the “Board”) has decided not to declare any dividend for Q1 2020.Other Developments
Following the decision of the Annual General Meeting of our shareholders, held on May 12, 2020, we have applied to delist our shares from trading on the OSLO BORS.Impact of COVID-19 and our proactive measures
While it is still too early to fully assess the impact of COVID-19 on our financial condition and operations and on the dry bulk industry in general, we have identified the following adverse effects of the COVID-19 pandemic on our business:Significant delays and increased costs associated with sixteen vessels that had scrubbers retrofitted during the COVID-19 outbreak in China. All vessels have now completed the scrubber retrofits and commenced their respective employment.Significant reduction in market charter rates, as a result of the decreased demand for dry bulk commodities and the uncertainty with regard to the timing of a return to more normalized global trade patterns. Potential adverse impact on asset values reflecting the weaker freight markets environment and lack of liquidity in the second hand market. Star Bulk is fully compliant with all its financial covenants as of end of the first quarter of 2020.Potential for operational disruption and idle time for our vessels as crew rotation, supplying our vessels with spares or other supplies and overhauling or maintenance by attending engineers has been adversely affected by COVID-19 due to travel restrictions and quarantine rules.The Company has taken proactive measures to ensure the health and wellness of crew and onshore employees while maintaining effective business continuity and the uninterrupted service to our customers.Our business continuity plans onshore for our global offices in Athens, Limassol, Singapore, New York, Oslo and Manilla, have allowed for an efficient transition to a remote working environment. Additionally, we have also placed a temporary ban on all non-essential travel.The actual impact of these effects and the efficacy of any measures we take in response to the challenges presented by the COVID-19 will depend on how the outbreak will develop, the duration and extent of the restrictive measures that are associated with COVID-19 and their impact on global economy and trade.Q1 2020 Employment Overview
Daily Time Charter Equivalent Rate (“TCE”) and TCE Revenues are non-GAAP measures. Please see the table at the end of this release for a reconciliation to Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, as well as for the definition of the respective measures.For the first quarter of 2020 our TCE rate was:Capesize / Newcastlemax Vessels: $16,592 per day.Post Panamax / Kamsarmax / Panamax Vessels: $8,301 per day.Ultramax / Supramax Vessels: $8,209 per day.Amounts shown throughout the press release and variations in period–on–period comparisons are derived from the actual unaudited numbers in our books and records.First Quarter 2020 and 2019 Results
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