United States-based private equity firm Kelso & Co. backed Delphin Shipping sold eleven (11) bulk carriers to Oaktree Capital Management backed shipowner and operator Star Bulk Carriers.
Sophocles Zoullas led private New York-based shipowner Delphin Shipping has already seen a profit of more than $15 million on its fleet sale to Star Bulk Carriers in May 2019. However, Delphin Shipping has to hold on to shares of Star Bulk Carriers for a while.
During the sale of eleven (11) bulk carriers, Delphin Shipping received 4.5 million new shares and $80 million cash. In May 2019, 4.5 million shares of Star Bulk Carriers was worth around $33.9 million. Currently, in July 2019, 4.5 million shares of Star Bulk Carriers is worth around $49 million. Under the terms of the (11) bulk carriers’ deal, Delphin Shipping can not sell more than half of the shares i.e. 2.25 million shares of NASDAQ listed Star Bulk Carriers before 23 November 2019. This seems like a good transaction for all stakeholders.
Star Bulk Carriers have positive sentiments on capesize freights rates through the rest of 2019. Furthermore, most of the fleet of Star Bulk Carriers will be installed scrubbers before IMO (International Maritime Organisation) 2020 scrubber deadline.
Private equity firm Kelso & Co. backed Delphin Shipping is not exiting the dry bulk sector, but merely transforming its interest into a leading New York-listed shipowner and operator Star Bulk Carriers.
Delphin Shipping deal grows Petros Pappas led shipowner and operator Star Bulk Carriers’ fleet to 120 bulk carriers.
After the latest transaction, Delphin Shipping will own about 4.6% of NASDAQ listed shipowner and operator Star Bulk Carriers.
Oaktree Capital Management backed shipowner and operator Star Bulk Carriers acquired eleven (11) bulk carriers from Sophocles Zoullas led Delphin Shipping for $140 million en-block. Delphin Shipping is backed by Kelso & Company (Kelso). After the transaction, privately owned Kelso & Company (Kelso) will own about 4.6% of Star Bulk Carriers’ outstanding shares. However, Kelso & Company (Kelso) will not be represented on the board of directors (BOD) of Star Bulk Carriers. After the acquisition, Star Bulk Carriers expanded the fleet to 120 bulk carriers. Star Bulk Carriers acquired eleven (11) bulk carriers:
- MV Aqulia (56K DWT built 2012)
- MV Cepheus (56K DWT built 2012)
- MV Columba (56K DWT built 2012)
- MV D. Centaurus (56K DWT built 2012)
- MV Hercules (56K DWT built 2012)
- MV Dorado (56K DWT built 2013)
- MV Hydrus (56K DWT built 2013)
- MV Pegasus (56K DWT built 2013)
- MV Pyxis (56K DWT built 2013)
- MV Leo (56K DWT built 2013)
- MV Apus (63K DWT built 2014)
After Delphin Shipping acquisition, Petros Pappas led shipowner and operator Star Bulk Carriers has doubled its supramax bulk carriers to 20 and increased ultaramax bulk carriers to 18 in the fleet. Currently, there is a $3 million gap between second-hand Japanese and Chinese built supramax bulk carriers. Moreover, World seaborne trade increased by 2% from 2018 to 5.32 billion tonnes per year.
Star Bulk Carriers will pay $139 million en-block to Delphin Shipping with a combination of cash and shares. 4.503 million new shares will be issued with $80 million cash. Cash will come from a 7-year capital lease of up to $93 million with China Merchants Bank Leasing, and an extra $15 million tranche to install scrubbers on newly acquired eleven (11) bulk carriers from Delphin Shipping.
A combination of cash and share payment is far above NAV (Net Asset Value). Delphin Shipping deal is enormously accretive to recent shareholders. The Latest Delphin Shipping deal implies a value on Star Bulk Carriers of $13.21 per share.
Currently, Star Bulk Carriers’ shares are trading at 45% discount to NAV (Net Asset Value). Market players assume that Star Bulk Carriers’ huge, scrubber fitted fleet provides substantial operating leverage when the dry bulk market recovers.
Newly acquired eleven (11) bulk carriers from Delphin Shipping will be chartered by the in-house chartering department of Star Bulk Carriers. However, technical management will be performed by George Youroukos led Technomar Shipping Inc.