ATHENS, Greece, Aug. 05, 2020 (GLOBE NEWSWIRE) — Star Bulk Carriers Corp. (the “Company” or “Star Bulk”) (Nasdaq: SBLK), a global shipping company focusing on the transportation of dry bulk cargoes, today announced its unaudited financial and operating results for the second quarter and the first half of 2020.
Financial Highlights(1) EBITDA 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).
(2) 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.
(3) 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.
(4) Average daily OPEX per vessel is calculated by dividing vessel operating expenses by Ownership days.
(5) 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:“Star Bulk announced today its second quarter 2020 financial results, reporting TCE Revenues of $97.1 million, Adjusted EBITDA of $35.1 million, Net loss of $44.1 million and Adjusted Net Loss of $18.1 million during a period of unprecedented volatility. Our average TCE for the quarter, decreased to $9,402/ day per vessel, while daily Opex and Net Cash G&A expenses per vessel were $4,027/day and $1,048/day respectively. As of today, we have physical coverage of 60% of Q3 2020 days at an average TCE rate of $12,145/ day.We continue taking proactive steps to strengthen our balance sheet via refinancings that improve our Company’s liquidity. Despite the challenging market conditions, there has been significant interest from our lenders to engage with Star Bulk in new transactions. To date we have completed transactions that have increased our cash balance by $37.4 million and have received credit committee approval for another $75.0 million of expected net proceeds that will be finalized over the next two months.We are optimistic about market fundamentals for the remainder of the year. There is a record low orderbook as a result of recent demand shocks and the uncertainty related to future decarbonization regulations. Dry bulk trade and ton-miles are expected to recover, propelled by the global infrastructure stimulus response to Covid19, which, we expect, will lead to a better balanced dry bulk market“Recent DevelopmentsFinancing ActivitiesIn July 2020, we drew down $155.3 million in aggregate under the (i) ING $70.0 million Facility, (ii) Alpha Bank $35.0 million Facility and (iii) Piraeus Bank $50.4 million Facility, and used this amount to refinance the outstanding amounts under the loan and lease agreements of 14 vessels. The above facilities refinanced facilities with aggregate outstanding amounts of $124.9 million.In July 2020, we entered into a loan agreement with a wholly owned subsidiary of NTT Finance Corporation for an amount of $17.6 million (the “NTT $17.6 million Facility”). The drawn amount was used to refinance the outstanding lease agreement of the M/V Star Calypso. The facility will mature 5 years from the drawdown date. The NTT $17.6 million Facility is secured by a first priority mortgage on M/V Star Calypso. The above facility refinanced another facility with an outstanding amount of $10.7 million.In July 2020, we signed a commitment letter with CMBL to sell and leaseback the vessels M/V Laura, M/V Idee Fixe, M/V Roberta, M/V Kaley, M/V Diva, M/V Star Sirius and M/V Star Vega. We expect to receive $89.0 million in aggregate, pursuant to the seven sale and leaseback agreements, which will refinance the outstanding amounts under the loan and lease agreements of the aforementioned vessels. The sale and leaseback agreements are expected to be concluded by the end of August and the lease terms will be for 5 years with a purchase option at the expiration of the bareboat charters term. In July 2020, we signed a commitment letter with a Japanese financial institution to sell and leaseback the vessel M/V Star Lutas. We expect to receive $16.0 million pursuant to the sale and leaseback agreement, which will refinance the outstanding amount under the loan agreement of the vessel. The sale and leaseback agreement is expected to be concluded by the end of September 2020 and the lease term will be for 7 years with a purchase obligation at the expiration of the bareboat charter term.In July 2020, we signed a commitment letter with a Chinese financial institution to sell and leaseback three of our Newcastlemax vessels. We expect to receive up to $92.6 million in aggregate, pursuant to the three sale and leaseback agreements, which will refinance the outstanding amount under the loan agreement of the three vessels. The sale and leaseback agreements are expected to be concluded in September 2020 and the lease terms will be for 10 years with a purchase obligation at the expiration of the bareboat charters term.In July 2020, we signed a commitment letter with SPDB Financial Leasing Co. Ltd to sell and leaseback the vessels M/V Mackenzie, M/V Kennadi, M/V Honey Badger, M/V Wolverine and M/V Star Antares. We expect to receive up to $76.5 million in aggregate, pursuant to the five sale and leaseback agreements, which will refinance the outstanding amount under the loan agreement of the five vessels. The sale and leaseback agreements are expected to be concluded in September 2020 and the lease terms will be for 8 years with a purchase obligation at the expiration of the bareboat charters term.
Should we be able to draw down the full amounts under the above-mentioned debt refinancing transactions, we expect to increase our cash balance further by an aggregate of approximately $75.0 million.
During the second quarter of 2020, we drew down a net amount of $5.4 million under the HSBC Working Capital Facility. As of the date of this press release, $29.6 million is outstanding under this facility.Scrubber Financing ActivitiesDuring the second quarter of 2020 and July 2020, we drew down $15.0 million of scrubber financing under the lease agreements with CMBL. As of today we have completed all scrubber related drawdowns and our scrubber financing balance stands at $118.6 million.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 66% of our outstanding balance of vessel financings at an average 3-month USD LIBOR rate of 46bps and with an average remaining duration of 3.8 years.Hedging VLSFO-HSFO spread
As of the date of this press release, we have hedged approximately 71,000 metric tons of our estimated fuel consumption for the second half of 2020 by selling the 2020 Singapore spread between Very Low-Sulfur Fuel Oil (VLSFO) – High-Sulfur Fuel Oil (HSFO) at an average price of $232 per ton. In addition we have hedged approximately 24,000 metric tons of our estimated fuel consumption by selling the 2021 Singapore spread between VLSFO –HSFO at an average price of $106 per ton.Other Developments
On June 4, 2020, the Oslo BORS (“OSE”) granted our request for delisting our shares from the OSE. Our common shares were last listed on the OSE on July 31, 2020 and were delisted on August 3, 2020.Impact of COVID-19 and our proactive measures
While it is still 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 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 half of 2020.Significant delays and increased cost associated with crew testing positive on COVID-19, 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 tradeDaily 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 second quarter of 2020 our TCE rate was:
Capesize / Newcastlemax Vessels: $11,363 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $9,703 per day.
Ultramax / Supramax Vessels: $6,921 per day.For first half of 2020 our TCE rate was:
Capesize / Newcastlemax Vessels: $13,902 per day.
Post Panamax / Kamsarmax / Panamax Vessels: $9,079 per day.
Ultramax / Supramax Vessels: $7,501 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.Second Quarter 2020 and 2019 Results
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