Star Bulk Carriers Corporation
Star Bulk Carriers Corporation
11/20/2024 | Press release | Distributed by Public on 11/20/2024 15:11
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Form 6 K
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of operations of Star Bulk Carriers Corp. ("Star Bulk") for the nine-month periods ended September 30, 2023 and 2024. Unless otherwise specified herein, references to the "Company," "we," "us" or "our" shall include Star Bulk and its subsidiaries. You should read the following discussion and analysis together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere herein. For additional information relating to our management's discussion and analysis of financial conditions and results of operations, please see our Annual Report on Form 20-F for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission (the "Commission") on March 13, 2024 (the "2023 Annual Report"). Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2023 Annual Report. This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements.
Overview
We are a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Our vessels transport major bulks, which include iron ore, coal and grain, and minor bulks which include bauxite, fertilizers and steel products. We were incorporated in the Marshall Islands on December 13, 2006 and, on December 3, 2007, we commenced operations when we took delivery of our first vessel. We maintain offices in Athens, New York, Connecticut (Stamford), Limassol, Singapore, Germany and Denmark. Our common shares trade on the Nasdaq Global Select Market under the symbol "SBLK." On April 9, 2024, the previously announced Eagle Merger (as defined below) was completed following the approval of shareholders of Eagle Bulk Shipping Inc. (NYSE: EGLE) ("Eagle") and receipt of applicable regulatory approvals and satisfaction of customary closing conditions.
Eagle Merger
On December 11, 2023, we entered into a definitive agreement with Eagle (the "Eagle Merger Agreement") to combine in an all-stock merger (the "Eagle Merger"). The Eagle Merger was completed on April 9, 2024 following Eagle shareholders' approval and receipt of applicable regulatory approvals and satisfaction of customary closing conditions. Each Eagle shareholder received 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned, which resulted in the issuance of 28,082,319 shares of Star Bulk common stock. Eagle common stock has ceased trading and is no longer listed on the New York Stock Exchange.
Our Fleet
During the nine-month period ended September 30, 2024, the agreed to be sold vessels Star Glory, Big Fish, Pantagruel, Star Bovarius, Big Bang, Star Dorado, Star Audrey, Star Pyxis, Star Paola, Crowned Eagle, Star Iris and Star Triumph were delivered to their new owners.
Following the closing of the Eagle Merger, we acquired Eagle's fleet which consisted of 52 dry bulk Supramax/Ultramax vessels. Prior to the closing of the Eagle Merger, Eagle had agreed to sell the vessels Crested Eagle and Stellar Eagle, which were delivered to their new owners on April 18, 2024 and June 5, 2024, respectively.
In July 2024 and September 2024, we agreed to sell vessels Star Hydrus, Imperial Eagle and Diva, which are expected to be delivered to their new owners in the fourth quarter of 2024.
Overall, in connection with the sales that will be completed in the fourth quarter of 2024, we expect to collect total gross proceeds of $50.15 million, and recognize a gain on sale of approximately $10.5 million. The Company also expects to make debt prepayments of approximately $16.47 million in connection with these vessel sales.
1
On a fully delivered basis, taking into account the delivery of the vessels agreed to be sold or constructed as of November 18, 2024, as further discussed above, our owned fleet consists of 156 operating vessels with an aggregate carrying capacity of approximately 15.0 million dwt, 97% of which are fitted with Exhaust Gas Cleaning Systems ("scrubbers") consisting of Newcastlemax, Capesize, Mini Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels.
The following tables present summary information relating to our fleet as of November 18, 2024:
Operating Fleet:
|
Wholly Owned Subsidiaries
|
Vessel Name
|
DWT
|
Date Delivered to
Star Bulk
|
Year Built
|
|
|
1
|
Sea Diamond Shipping LLC
|
Goliath
|
209,537
|
July 15, 2015
|
2015
|
|
2
|
Pearl Shiptrade LLC
|
Gargantua
|
209,529
|
April 2, 2015
|
2015
|
|
3
|
Star Ennea LLC
|
Star Gina 2GR
|
209,475
|
February 26, 2016
|
2016
|
|
4
|
Coral Cape Shipping LLC
|
Maharaj
|
209,472
|
July 15, 2015
|
2015
|
|
5
|
Star Castle II LLC
|
Star Leo
|
207,939
|
May 14, 2018
|
2018
|
|
6
|
ABY Eleven LLC
|
Star Laetitia
|
207,896
|
August 3, 2018
|
2017
|
|
7
|
Domus Shipping LLC
|
Star Ariadne
|
207,812
|
March 28, 2017
|
2017
|
|
8
|
Star Breezer LLC
|
Star Virgo
|
207,810
|
March 1, 2017
|
2017
|
|
9
|
Star Seeker LLC
|
Star Libra
|
207,765
|
June 6, 2016
|
2016
|
|
10
|
ABY Nine LLC
|
Star Sienna
|
207,721
|
August 3, 2018
|
2017
|
|
11
|
Clearwater Shipping LLC
|
Star Marisa
|
207,709
|
March 11 2016
|
2016
|
|
12
|
ABY Ten LLC
|
Star Karlie
|
207,566
|
August 3, 2018
|
2016
|
|
13
|
Star Castle I LLC
|
Star Eleni
|
207,555
|
January 3, 2018
|
2018
|
|
14
|
Festive Shipping LLC
|
Star Magnanimus
|
207,526
|
March 26, 2018
|
2018
|
|
15
|
New Era II Shipping LLC
|
Debbie H
|
206,861
|
May 28, 2019
|
2019
|
|
16
|
New Era III Shipping LLC
|
Star Ayesha
|
206,852
|
July 15, 2019
|
2019
|
|
17
|
New Era I Shipping LLC
|
Katie K
|
206,839
|
April 16, 2019
|
2019
|
|
18
|
Cape Ocean Maritime LLC
|
Leviathan
|
182,511
|
September 19, 2014
|
2014
|
|
19
|
Cape Horizon Shipping LLC
|
Peloreus
|
182,496
|
July 22, 2014
|
2014
|
|
20
|
Star Nor I LLC
|
Star Claudine
|
181,258
|
July 6, 2018
|
2011
|
|
21
|
Star Nor II LLC
|
Star Ophelia
|
180,716
|
July 6, 2018
|
2010
|
|
22
|
Sandra Shipco LLC
|
Star Pauline
|
180,274
|
December 29, 2014
|
2008
|
|
23
|
Christine Shipco LLC
|
Star Martha
|
180,274
|
October 31, 2014
|
2010
|
|
24
|
Star Nor III LLC
|
Star Lyra
|
179,147
|
July 6, 2018
|
2009
|
|
25
|
Star Regg V LLC
|
Star Borneo
|
178,978
|
January 26, 2021
|
2010
|
|
26
|
Star Regg VI LLC
|
Star Bueno
|
178,978
|
January 26, 2021
|
2010
|
|
27
|
Star Regg IV LLC
|
Star Marilena
|
178,978
|
January 26, 2021
|
2010
|
|
28
|
Star Regg II LLC
|
Star Janni
|
178,978
|
January 7, 2019
|
2010
|
|
29
|
Star Regg I LLC
|
Star Marianne
|
178,906
|
January 14, 2019
|
2010
|
|
30
|
Star Trident V LLC
|
Star Angie
|
177,931
|
October 29, 2014
|
2007
|
|
31
|
Global Cape Shipping LLC
|
Kymopolia
|
176,990
|
July 11, 2014
|
2006
|
|
32
|
ABY Fourteen LLC
|
Star Scarlett
|
175,649
|
August 3, 2018
|
2014
|
|
33
|
ABM One LLC
|
Star Eva
|
106,659
|
August 3, 2018
|
2012
|
2
|
Wholly Owned Subsidiaries
|
Vessel Name
|
DWT
|
Date Delivered to
Star Bulk
|
Year Built
|
|
|
34
|
Nautical Shipping LLC
|
Amami
|
98,681
|
July 11, 2014
|
2011
|
|
35
|
Majestic Shipping LLC
|
Madredeus
|
98,681
|
July 11, 2014
|
2011
|
|
36
|
Star Sirius LLC
|
Star Sirius
|
98,681
|
March 7, 2014
|
2011
|
|
37
|
Star Vega LLC
|
Star Vega
|
98,681
|
February 13, 2014
|
2011
|
|
38
|
ABY II LLC
|
Star Aphrodite
|
92,006
|
August 3, 2018
|
2011
|
|
39
|
Augustea Bulk Carrier LLC
|
Star Piera
|
91,951
|
August 3, 2018
|
2010
|
|
40
|
Augustea Bulk Carrier LLC
|
Star Despoina
|
91,951
|
August 3, 2018
|
2010
|
|
41
|
Star Nor IV LLC
|
Star Electra
|
83,494
|
July 6, 2018
|
2011
|
|
42
|
Star Alta I LLC
|
Star Angelina
|
82,981
|
December 5, 2014
|
2006
|
|
43
|
Star Alta II LLC
|
Star Gwyneth
|
82,790
|
December 5, 2014
|
2006
|
|
44
|
Star Trident I LLC
|
Star Kamila
|
82,769
|
September 3, 2014
|
2005
|
|
45
|
Star Nor VI LLC
|
Star Luna
|
82,687
|
July 6, 2018
|
2008
|
|
46
|
Star Nor V LLC
|
Star Bianca
|
82,672
|
July 6, 2018
|
2008
|
|
47
|
Grain Shipping LLC
|
Pendulum
|
82,619
|
July 11, 2014
|
2006
|
|
48
|
Star Trident XIX LLC
|
Star Maria
|
82,598
|
November 5, 2014
|
2007
|
|
49
|
Star Trident XII LLC
|
Star Markella
|
82,594
|
September 29, 2014
|
2007
|
|
50
|
Star Trident IX LLC
|
Star Danai
|
82,574
|
October 21, 2014
|
2006
|
|
51
|
ABY Seven LLC
|
Star Jeanette
|
82,566
|
August 3, 2018
|
2014
|
|
52
|
Star Sun I LLC
|
Star Elizabeth
|
82,403
|
May 25, 2021
|
2021
|
|
53
|
Star Trident XI LLC
|
Star Georgia
|
82,298
|
October 14, 2014
|
2006
|
|
54
|
Star Trident VIII LLC
|
Star Sophia
|
82,269
|
October 31, 2014
|
2007
|
|
55
|
Star Trident XVI LLC
|
Star Mariella
|
82,266
|
September 19, 2014
|
2006
|
|
56
|
Star Trident XIV LLC
|
Star Moira
|
82,257
|
November 19, 2014
|
2006
|
|
57
|
Star Trident XVIII LLC
|
Star Nina
|
82,224
|
January 5, 2015
|
2006
|
|
58
|
Star Trident X LLC
|
Star Renee
|
82,221
|
December 18, 2014
|
2006
|
|
59
|
Star Trident II LLC
|
Star Nasia
|
82,220
|
August 29, 2014
|
2006
|
|
60
|
Star Trident XIII LLC
|
Star Laura
|
82,209
|
December 8, 2014
|
2006
|
|
61
|
Star Nor VIII LLC
|
Star Mona
|
82,188
|
July 6, 2018
|
2012
|
|
62
|
Star Trident XVII LLC
|
Star Helena
|
82,187
|
December 29, 2014
|
2006
|
|
63
|
Star Nor VII LLC
|
Star Astrid
|
82,158
|
July 6, 2018
|
2012
|
|
64
|
Waterfront Two LLC
|
Star Alessia
|
81,944
|
August 3, 2018
|
2017
|
|
65
|
Star Nor IX LLC
|
Star Calypso
|
81,918
|
July 6, 2018
|
2014
|
|
66
|
Star Elpis LLC
|
Star Suzanna
|
81,711
|
May 15, 2017
|
2013
|
|
67
|
Star Gaia LLC
|
Star Charis
|
81,711
|
March 22, 2017
|
2013
|
|
68
|
Mineral Shipping LLC
|
Mercurial Virgo
|
81,545
|
July 11, 2014
|
2013
|
3
|
Wholly Owned Subsidiaries
|
Vessel Name
|
DWT
|
Date Delivered to
Star Bulk |
Year Built
|
|
|
69
|
Star Nor X LLC
|
Stardust
|
81,502
|
July 6, 2018
|
2011
|
|
70
|
Star Nor XI LLC
|
Star Sky
|
81,466
|
July 6, 2018
|
2010
|
|
71
|
Star Zeus VI LLC
|
Star Lambada
|
81,272
|
March 16, 2021
|
2016
|
|
72
|
Star Zeus II LLC
|
Star Carioca
|
81,262
|
March 16, 2021
|
2015
|
|
73
|
Star Zeus I LLC
|
Star Capoeira
|
81,253
|
March 16, 2021
|
2015
|
|
74
|
Star Zeus VII LLC
|
Star Macarena
|
81,198
|
March 6, 2021
|
2016
|
|
75
|
ABY III LLC
|
Star Lydia
|
81,187
|
August 3, 2018
|
2013
|
|
76
|
ABY IV LLC
|
Star Nicole
|
81,120
|
August 3, 2018
|
2013
|
|
77
|
ABY Three LLC
|
Star Virginia
|
81,061
|
August 3, 2018
|
2015
|
|
78
|
Star Nor XII LLC
|
Star Genesis
|
80,705
|
July 6, 2018
|
2010
|
|
79
|
Star Nor XIII LLC
|
Star Flame
|
80,448
|
July 6, 2018
|
2011
|
|
80
|
Star Trident XX LLC
|
Star Emily
|
76,417
|
September 16, 2014
|
2004
|
|
81
|
Cape Town Eagle LLC
|
Cape Town Eagle
|
63,707
|
April 9, 2024
|
2015
|
|
82
|
Vancouver Eagle LLC
|
Star Vancouver
|
63,670
|
April 9, 2024
|
2020
|
|
83
|
Oslo Eagle LLC
|
Oslo Eagle
|
63,655
|
April 9, 2024
|
2015
|
|
84
|
Rotterdam Eagle LLC
|
Star Rotterdam
|
63,629
|
April 9, 2024
|
2017
|
|
85
|
Halifax Eagle LLC
|
Halifax Eagle
|
63,618
|
April 9, 2024
|
2020
|
|
86
|
Helsinki Eagle LLC
|
Helsinki Eagle
|
63,605
|
April 9, 2024
|
2015
|
|
87
|
Gibraltar Eagle LLC
|
Star Gibraltar
|
63,576
|
April 9, 2024
|
2015
|
|
88
|
Valencia Eagle LLC
|
Valencia Eagle
|
63,556
|
April 9, 2024
|
2015
|
|
89
|
Dublin Eagle LLC
|
Dublin Eagle
|
63,550
|
April 9, 2024
|
2015
|
|
90
|
Santos Eagle LLC
|
Santos Eagle
|
63,536
|
April 9, 2024
|
2015
|
|
91
|
Antwerp Eagle LLC
|
Antwerp Eagle
|
63,530
|
April 9, 2024
|
2015
|
|
92
|
Sydney Eagle LLC
|
Star Sydney
|
63,523
|
April 9, 2024
|
2015
|
|
93
|
Copenhagen Eagle LLC
|
Star Copenhagen
|
63,495
|
April 9, 2024
|
2015
|
|
94
|
Hong Kong Eagle LLC
|
Hong Kong Eagle
|
63,472
|
April 9, 2024
|
2016
|
|
95
|
Orion Maritime LLC
|
Idee Fixe
|
63,458
|
March 25, 2015
|
2015
|
|
96
|
Shanghai Eagle LLC
|
Shanghai Eagle
|
63,438
|
April 9, 2024
|
2016
|
|
97
|
Primavera Shipping LLC
|
Roberta
|
63,426
|
March 31, 2015
|
2015
|
|
98
|
Success Maritime LLC
|
Laura
|
63,399
|
April 7, 2015
|
2015
|
|
99
|
Singapore Eagle LLC
|
Star Singapore
|
63,386
|
April 9, 2024
|
2017
|
|
100
|
Westport Eagle LLC
|
Star Westport
|
63,344
|
April 9, 2024
|
2015
|
|
101
|
Hamburg Eagle LLC
|
Hamburg Eagle
|
63,334
|
April 9, 2024
|
2014
|
|
102
|
Fairfield Eagle LLC
|
Fairfield Eagle
|
63,301
|
April 9, 2024
|
2013
|
4
|
Wholly Owned Subsidiaries
|
Vessel Name
|
DWT
|
Date Delivered to
Star Bulk
|
Year Built
|
|
|
103
|
Greenwich Eagle LLC
|
Greenwich Eagle
|
63,301
|
April 9, 2024
|
2013
|
|
104
|
Groton Eagle LLC
|
Groton Eagle
|
63,301
|
April 9, 2024
|
2013
|
|
105
|
Madison Eagle LLC
|
Madison Eagle
|
63,301
|
April 9, 2024
|
2013
|
|
106
|
Mystic Eagle LLC
|
Star Mystic
|
63,301
|
April 9, 2024
|
2013
|
|
107
|
Rowayton Eagle LLC
|
Rowayton Eagle
|
63,301
|
April 9, 2024
|
2013
|
|
108
|
Southport Eagle LLC
|
Southport Eagle
|
63,301
|
April 9, 2024
|
2013
|
|
109
|
Stonington Eagle LLC
|
Star Stonington
|
63,301
|
April 9, 2024
|
2012
|
|
110
|
Ultra Shipping LLC
|
Kaley
|
63,283
|
June 26, 2015
|
2015
|
|
111
|
Stockholm Eagle LLC
|
Stockholm Eagle
|
63,275
|
April 9, 2024
|
2016
|
|
112
|
Blooming Navigation LLC
|
Kennadi
|
63,262
|
January 8, 2016
|
2016
|
|
113
|
Jasmine Shipping LLC
|
Mackenzie
|
63,226
|
March 2, 2016
|
2016
|
|
114
|
New London Eagle LLC
|
New London Eagle
|
63,140
|
April 9, 2024
|
2015
|
|
115
|
Star Lida I Shipping LLC
|
Star Apus
|
63,123
|
July 16, 2019
|
2014
|
|
116
|
Star Zeus IV LLC
|
Star Subaru
|
61,571
|
March 16, 2021
|
2015
|
|
117
|
Stamford Eagle LLC
|
Stamford Eagle
|
61,530
|
April 9, 2024
|
2016
|
|
118
|
Star Nor XV LLC
|
Star Wave
|
61,491
|
July 6, 2018
|
2017
|
|
119
|
Star Challenger I LLC
|
Star Challenger (1)
|
61,462
|
December 12, 2013
|
2012
|
|
120
|
Star Challenger II LLC
|
Star Fighter (1)
|
61,455
|
December 30, 2013
|
2013
|
|
121
|
Star Axe II LLC
|
Star Lutas
|
61,347
|
January 6, 2016
|
2016
|
|
122
|
Aurelia Shipping LLC
|
Honey Badger
|
61,320
|
February 27, 2015
|
2015
|
|
123
|
Rainbow Maritime LLC
|
Wolverine
|
61,292
|
February 27, 2015
|
2015
|
|
124
|
Star Axe I LLC
|
Star Antares
|
61,258
|
October 9, 2015
|
2015
|
|
125
|
Tokyo Eagle LLC
|
Tokyo Eagle
|
61,225
|
April 9, 2024
|
2015
|
|
126
|
ABY Five LLC
|
Star Monica
|
60,935
|
August 3, 2018
|
2015
|
|
127
|
Star Asia I LLC
|
Star Aquarius
|
60,916
|
July 22, 2015
|
2015
|
|
128
|
Star Asia II LLC
|
Star Pisces
|
60,916
|
August 7, 2015
|
2015
|
|
129
|
Nighthawk Shipping LLC
|
Star Nighthawk
|
57,809
|
April 9, 2024
|
2011
|
|
130
|
Oriole Shipping LLC
|
Oriole
|
57,809
|
April 9, 2024
|
2011
|
|
131
|
Owl Shipping LLC
|
Owl
|
57,809
|
April 9, 2024
|
2011
|
|
132
|
Petrel Shipping LLC
|
Petrel Bulker
|
57,809
|
April 9, 2024
|
2011
|
|
133
|
Puffin Shipping LLC
|
Puffin Bulker
|
57,809
|
April 9, 2024
|
2011
|
|
134
|
Roadrunner Shipping LLC
|
Star Runner
|
57,809
|
April 9, 2024
|
2011
|
|
135
|
Sandpiper Shipping LLC
|
Star Sandpiper
|
57,809
|
April 9, 2024
|
2011
|
|
136
|
Crane Shipping LLC
|
Crane
|
57,809
|
April 9, 2024
|
2010
|
|
137
|
Egret Shipping LLC
|
Egret Bulker
|
57,809
|
April 9, 2024
|
2010
|
|
138
|
Gannet Shipping LLC
|
Gannet Bulker
|
57,809
|
April 9, 2024
|
2010
|
5
|
Date
|
|||||
|
Wholly Owned Subsidiaries
|
Vessel Name
|
DWT
|
Delivered to Star Bulk
|
Year Built
|
|
|
139
|
Grebe Shipping LLC
|
Grebe Bulker
|
57,809
|
April 9, 2024
|
2010
|
|
140
|
Ibis Shipping LLC
|
Ibis Bulker
|
57,809
|
April 9, 2024
|
2010
|
|
141
|
Jay Shipping LLC
|
Jay
|
57,809
|
April 9, 2024
|
2010
|
|
142
|
Kingfisher Shipping LLC
|
Kingfisher
|
57,809
|
April 9, 2024
|
2010
|
|
143
|
Martin Shipping LLC
|
Martin
|
57,809
|
April 9, 2024
|
2010
|
|
144
|
Bittern Shipping LLC
|
Bittern
|
57,809
|
April 9, 2024
|
2009
|
|
145
|
Canary Shipping LLC
|
Star Canary
|
57,809
|
April 9, 2024
|
2009
|
|
146
|
Star Lida VIII Shipping LLC
|
Star Hydrus (2)
|
56,604
|
August 8, 2019
|
2013
|
|
147
|
Star Lida IX Shipping LLC
|
Star Cleo
|
56,582
|
July 15, 2019
|
2013
|
|
148
|
Star Trident VII LLC
|
Diva (2)
|
56,582
|
July 24, 2017
|
2011
|
|
149
|
Star Lida X Shipping LLC
|
Star Pegasus
|
56,540
|
July 15, 2019
|
2013
|
|
150
|
Golden Eagle Shipping LLC
|
Star Goal
|
55,989
|
April 9, 2024
|
2010
|
|
151
|
Imperial Eagle Shipping LLC
|
Imperial Eagle (2)
|
55,989
|
April 9, 2024
|
2010
|
|
152
|
Glory Supra Shipping LLC
|
Strange Attractor
|
55,742
|
July 11, 2014
|
2006
|
|
153
|
Star Regg III LLC
|
Star Bright
|
55,569
|
October 10, 2018
|
2010
|
|
154
|
Star Omicron LLC
|
Star Omicron
|
53,489
|
April 17, 2008
|
2005
|
|
Total dwt
|
14,782,364
|
|
|
(1) |
Subject to a sale and leaseback financing transaction as further described in Note 7 to our consolidated financial statements included in the 2023 Annual Report.
|
|
|
(2) |
Vessels agreed to be sold, and expected to be delivered to their new owners in the fourth quarter of 2024.
|
Time charter-in vessels and time charter-in newbuilding vessels:
In addition, we have entered into long-term charter-in arrangements, the details of which are described in the below table.
|
#
|
Name
|
DWT
|
Built
|
Yard
|
Delivery / Estimated
Delivery
|
Minimum Period
|
|
1
|
Star Shibumi
|
180,000
|
2021
|
JMU
|
November 30, 2021
|
November 2028
|
|
2
|
Star Voyager
|
82,000
|
2024
|
Tsuneishi, Zhousan
|
January 11, 2024
|
January 2031
|
|
3
|
Stargazer
|
66,000
|
2024
|
Tsuneishi, Cebu
|
January 16, 2024
|
January 2031
|
|
4
|
Star Explorer
|
82,000
|
2024
|
JMU
|
March 8, 2024
|
March 2031
|
|
5
|
Star Earendel
|
82,000
|
2024
|
JMU
|
June 28, 2024
|
June 2031
|
|
6
|
Star Illusion
|
82,000
|
2024
|
Tsuneishi, Zhousan
|
October 11, 2024
|
October 2031
|
|
7
|
Star Thetis
|
66,000
|
2024
|
Tsuneishi, Cebu
|
November 12, 2024
|
November 2031
|
|
Total dwt
|
640,000
|
6
Vessels Under Construction:
In 2023, we entered into firm shipbuilding contracts for the construction of five 82,000 dwt Kamsarmax newbuilding vessels with expected deliveries between November 2025 and August 2026.
|
Wholly
Owned Subsidiaries
|
Vessel Name
|
DWT
|
Shipyard
|
Expected Delivery Date
|
|
|
1
|
Star Thundera LLC
|
Hull No 15
|
82,000
|
Qingdao Shipyard Co. Ltd.
|
November 2025
|
|
2
|
Star Caldera LLC
|
Hull No 16
|
82,000
|
Qingdao Shipyard Co. Ltd.
|
December 2025
|
|
3
|
Star Terra LLC
|
Hull No 17
|
82,000
|
Qingdao Shipyard Co. Ltd.
|
June 2026
|
|
4
|
Star Affinity LLC
|
Hull No 23
|
82,000
|
Qingdao Shipyard Co. Ltd.
|
April 2026
|
|
5
|
Star Nova LLC
|
Hull No 18
|
82,000
|
Qingdao Shipyard Co. Ltd.
|
August 2026
|
|
Total dwt
|
410,000
|
Liquidity and Capital Resources
Our principal sources of funds have been cash flow from operations, equity offerings, borrowings under secured credit facilities, debt securities or bareboat lease financings and proceeds from vessel sales. Our principal uses of funds have been capital expenditures to establish and grow our fleet, maintain the quality of our dry bulk carriers, comply with international shipping standards, environmental laws and regulations, fund working capital requirements, make principal and interest payments on outstanding indebtedness and make dividend payments when approved by our Board of Directors.
Our short-term liquidity requirements include paying operating costs, funding working capital requirements and the short-term equity portion of the cost of vessel acquisitions, our newbuilding program and vessel upgrades, interest and principal payments on outstanding indebtedness and maintaining cash reserves to strengthen our position against adverse fluctuations in operating cash flows. Our primary source of short-term liquidity is cash generated from operating activities, available cash balances and portions from new debt and refinancings as well as equity financings.
Our medium- and long-term liquidity requirements are funding the equity portion of our newbuilding vessel installments and secondhand vessel acquisitions, if any, funding required payments under our vessel financing and paying cash dividends when declared. Sources of funding for our medium- and long-term liquidity requirements include cash flows from operations, new debt and refinancings or bareboat lease financings, sale and leaseback arrangements, equity issuances and vessel sales. Please also refer to Note 12 to our unaudited interim condensed consolidated financial statements, included herein, for further discussion on our commitments as of September 30, 2024.
As of November 18, 2024, we had total cash of $432.5 million and outstanding borrowings (including lease financing agreements) of $1,295.9 million. We previously entered into a number of interest rates swaps, and we have converted a total of $118.3 million of such debt from floating to an average fixed rate of 63 bps with average maturity of 0.9 years.
Our debt agreements contain financial covenants and undertakings requiring us to maintain various ratios. A summary of these terms is included in Note 8 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
7
We believe that our current cash balance and our operating cash flows will be sufficient to meet our known short-term and long-term liquidity requirements, including funding the operations of our fleet, capital expenditure requirements and any other present financial requirements, including the cost for the installation of Energy Saving Devices ("ESD") as well as the cost of our newbuilding program. Furthermore, in October 2024, we signed with one of our existing lenders a committed term sheet for the post-delivery financing of the five Kamsarmax vessels currently under construction. The financing amount is up to $130.0 million, and the term of the loan is seven years from the draw-down date. In addition, we may sell and issue shares under our two effective At-the-Market offering programs of up to $150.0 million at any time and from time to time. As of November 18, 2024, cumulative gross proceeds under our At-the-Market offering programs were $33.6 million. We may seek additional indebtedness to finance future vessel acquisitions and our newbuilding program in order to maintain our cash position or to refinance our existing debt on more favorable terms. Our practice has been to fund the cash portion of the acquisition and construction cost of dry bulk carriers using a combination of funds from operations and bank debt or lease financing secured by mortgages or title of ownership on our dry bulk carriers held by the relevant lenders, respectively. We may also use the proceeds from potential equity or debt offerings to finance future vessel acquisitions. Our business is capital-intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition and construction of newer dry bulk carriers and the selective sale of older dry bulk carriers. These acquisitions and newbuilding contracts will be principally subject to management's expectation of future market conditions as well as our ability to acquire dry bulk carriers on favorable terms. However our ability to obtain bank or lease financing, to refinance our existing debt or to access the capital markets for offerings in the future, may be limited by our financial condition at the time of any such financing or offering, including the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, prevailing interest rates, weakness in the financial and equity markets and contingencies and uncertainties that are beyond our control. Our liquidity is also impacted by our dividend policy, as discussed below.
Dividend Policy
Our dividend policy is described in Item 8. Financial Information-A. Consolidated statements and other financial information-Dividend Policy of our 2023 Annual Report.
As of September 30, 2024, the aggregate amount of cash on our balance sheet was $472.5 million. Taking into account the Minimum Cash Balance per Vessel, as defined in our 2023 Annual Report, on November 19, 2024, pursuant to our dividend policy, our Board of Directors declared a quarterly cash dividend of $0.60 per share, payable on or about December 18, 2024 to all shareholders of record as of December 5, 2024.
Since Star Bulk is a holding company with no material assets other than the shares of its subsidiaries through which it conducts its operations, Star Bulk's ability to pay dividends in the future will depend on its subsidiaries' ability to distribute funds to it. Any future dividends declared will be at the discretion and remain subject to approval of our Board of Directors each quarter after its review of our financial condition and other factors, including but not limited to our earnings, the prevailing charter market conditions, capital requirements, limitations under our debt agreements and applicable provisions of Marshall Islands law, which generally prohibits the payment of dividends other than from operating surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend. Star Bulk's dividend policy and declaration and payment of dividends may be changed at any time and are subject to available funds and our Board of Directors' determination that each declaration and payment is at the time in the best interests of Star Bulk and its shareholders after its review of our financial performance. There can be no assurance that our Board of Directors will continue to declare or pay any dividend in the future.
Other Recent Developments
Please refer to Note 15 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for developments that took place after September 30, 2024.
8
Operating Results
Factors Affecting Our Results of Operations
We deploy our vessels on a mix of short to medium time charters or voyage charters, contracts of affreightment or in dry bulk carrier pools, according to our assessment of market conditions. We adjust the mix of these charters to take advantage of the relatively stable cash flow and high utilization rates associated with medium to long-term time charters, or to profit from attractive spot charter rates during periods of strong charter market conditions, or to maintain employment flexibility that the spot market offers during periods of weak charter market conditions. The following table reflects certain operating data of our fleet, including our ownership days and TCE rates, which we believe are important measures for analyzing trends in our results of operations, for the periods indicated:
|
Nine-month period ended
September 30,
|
||||||||
|
(TCE rates expressed in U.S. Dollars)
|
2023
|
2024
|
||||||
|
Average number of vessels (1)
|
125.1
|
141.3
|
||||||
|
Number of vessels (2)
|
120
|
154
|
||||||
|
Average age of operational fleet (in years) (3)
|
11.7
|
11.9
|
||||||
|
Ownership days (4)
|
34,159
|
38,708
|
||||||
|
Available days (5)
|
32,867
|
37,210
|
||||||
|
Charter-in days (6)
|
633
|
1,793
|
||||||
|
Time Charter Equivalent Rate (TCE rate) (7)
|
$
|
15,035
|
$
|
19,209
|
|
(1)
|
Average number of vessels is the number of vessels that constituted our owned fleet for the relevant period, as measured by the sum of the number of days each operating vessel was a part of our owned fleet during the period divided by the number of calendar days in that period.
|
|
(2)
|
As of the last day of each period reported.
|
|
(3)
|
Average age of our operational fleet is calculated as of the end of each period.
|
|
(4)
|
Ownership days are the total calendar days each vessel in the fleet was owned by us for the relevant period, including vessels subject to sale and leaseback transactions and finance leases.
|
|
(5)
|
Available days are the Ownership days after subtracting off-hire days for major repairs, dry docking or special or intermediate surveys, change of management and vessels' improvements and upgrades. The available days for the nine-month period ended September 30, 2023 were also decreased by off-hire days relating to disruptions in connection with crew changes as a result of COVID-19. Available Days, as presented above, may not necessarily be comparable to Available Days of other companies, due to differences in methods of calculation.
|
|
(6)
|
Charter-in days are the total days that we charter-in third party vessels.
|
|
(7)
|
Time charter equivalent rate represents the weighted average daily TCE rates of our operating fleet (including owned fleet and charter-in vessels). TCE rate is a measure of the average daily net revenue performance of our operating fleet. Our method of calculating TCE rate is determined by dividing (a) TCE Revenues, which consists of: voyage revenues (net of voyage expenses, charter-in hire expense, amortization of fair value of above/below market acquired time charter agreements, if any, as well as adjusted for the impact of realized gain/(loss) on forward freight agreements ("FFAs") and bunker swaps) by (b) Available days for the relevant time period. Available days do not include the Charter-in days as per the relevant definitions provided above. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, as well as commissions. In the calculation of TCE Revenues, we also include the realized gain/(loss) on FFAs and bunker swaps as we believe that this method better reflects the chartering result of our fleet and is more comparable to the method used by some of our peers. TCE Revenues and TCE rate, which are non-GAAP measures, provide additional meaningful information in conjunction with voyage revenues, the most directly comparable GAAP measure, because they assist our management in making decisions regarding the deployment and use of our vessels and because we believe that they provide useful information to investors regarding our financial performance. TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types (i.e., voyage charters, time charters, bareboat charters and pool arrangements) under which its vessels may be employed between the periods. TCE Revenues and TCE rate, as presented above, may not necessarily be comparable to those of other companies due to differences in methods of calculation.
|
9
The following table reflects the calculation of our TCE rates as discussed in footnote (7) above. The table presents reconciliation of TCE Revenues to voyage revenues as reflected in the unaudited interim condensed consolidated income statements.
|
Nine-month period ended
September 30,
|
||||||||
|
2023
|
2024
|
|||||||
|
(In thousands of U.S. Dollars, except for "TCE rate")
|
||||||||
|
Voyage revenues
|
$
|
685,808
|
$
|
956,542
|
||||
|
Less:
|
||||||||
|
Voyage expenses
|
(186,222
|
)
|
(199,940
|
)
|
||||
|
Charter-in hire expenses
|
(13,926
|
)
|
(31,812
|
)
|
||||
|
Realized gain/(loss) on FFAs/bunker swaps
|
8,508
|
(10,017
|
)
|
|||||
|
Time charter equivalent revenues ("TCE Revenues")
|
$
|
494,168
|
$
|
714,773
|
||||
|
Available days
|
32,867
|
37,210
|
||||||
|
Daily time charter equivalent rate ("TCE rate")
|
$
|
15,035
|
$
|
19,209
|
Voyage Revenues
Voyage revenues are driven primarily by the number of vessels in our operating fleet, the duration of our charters, the number of charter-in days, the amount of daily charter hire or freight rates that our vessels earn under time and voyage charters, respectively, which, in turn, are affected by a number of factors, including our decisions relating to vessel acquisitions and disposals, the number of vessels chartered-in, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in dry dock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels and levels of supply and demand in the seaborne transportation market.
Vessels operating on time charters for a certain period of time provide more predictable cash flows over that period of time, but can yield lower profit margins than vessels operating in the spot charter market during periods characterized by favorable market conditions. Vessels operating in the spot charter market generate revenues that are less predictable, but may enable us to capture increased profit margins during periods of improvements in charter rates, although we would be exposed to the risk of declining vessel rates, which may have a materially adverse impact on our financial performance. If we employ vessels on period time charters, future spot market rates may be higher or lower than the rates at which we have employed our vessels on period time charters.
Voyage Expenses
Voyage expenses may include port and canal charges, agency fees, fuel (bunker) expenses and brokerage commissions payable to related and third parties. Voyage expenses are incurred for our owned and chartered-in vessels during voyage charters or when the vessel is unemployed. Bunker expenses, port and canal charges primarily increase in periods during which vessels are employed on voyage charters because these expenses are paid by the owners.
Charter-in Hire Expenses
Charter-in hire expenses represent hire expenses for chartering-in third and related party vessels, either under time charters or voyage charters.
Vessel Operating Expenses
Vessel operating expenses include crew wages and related costs, the cost of insurance and vessel registry, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes, regulatory fees, maintenance expenses, lubricants and other miscellaneous expenses. Other factors beyond our control, some of which may affect the shipping industry in general, including, for instance, developments relating to market prices for crew wages, lubricants and insurance, may also cause these expenses to increase.
10
Dry Docking Expenses
Dry docking expenses relate to regularly scheduled intermediate survey or special survey dry docking necessary to preserve the quality of our vessels as well as to comply with international shipping standards and environmental laws and regulations. Dry docking expenses can vary according to the age of the vessel and its condition, the location where the dry docking takes place, shipyard availability and the number of days the vessel is under dry dock. We utilize the direct expense method, under which we expense all dry docking costs as incurred.
Depreciation
We depreciate our vessels on a straight-line basis over their estimated useful lives, which is determined to be 25 years from the date of their initial delivery from the shipyard. Depreciation is calculated based on a vessel's cost less the estimated residual value.
Management Fees
Management fees include fees paid to third parties as well as related parties providing certain procurement services to our fleet.
General and Administrative Expenses
We incur general and administrative expenses, including our onshore personnel related expenses, directors' and executives' compensation, share based compensation, legal, consulting, audit and accounting expenses.
(Gain) / Loss on Forward Freight Agreements and Bunker Swaps, net
When deemed appropriate from a risk management perspective, we take positions in freight derivatives, including FFAs and freight options with an objective to utilize those instruments as economic hedges to reduce the risk on specific vessels trading in the spot market and to take advantage of short-term fluctuations in the market prices. Upon the settlement, if the contracted charter rate is less than the average of the rates, for the specified route and time period, as reported by an identified index, the seller of the FFA is required to pay the buyer the settlement sum. The settlement amount is an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period covered by the FFA. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. Our FFAs are settled mainly through reputable exchanges such as European Energy Exchange ("EEX") or Singapore Exchange ("SGX") so as to limit our exposure in over-the-counter transactions. Customary requirements for trading in FFAs include the maintenance of initial and variation margins based on expected volatility, open position and mark to market of the contracts. The fair value of the FFAs or freight options is treated as an asset or liability until they are settled with the change in their fair value being reflected in earnings. Any such settlements by us or settlements to us under FFAs or freight options, if any, are recorded under (Gain)/Loss on forward freight agreements and bunker swaps, net.
Also, when deemed appropriate from a risk management perspective, we enter into bunker swap contracts to manage our exposure to fluctuations of bunker prices associated with the consumption of bunkers by our vessels. Bunker swaps are agreements between two parties to exchange cash flows at a fixed price on bunkers, where volume, time period and price are agreed in advance. Our bunker swaps are settled mainly through reputable exchanges such as Intercontinental Exchange ("ICE") so as to limit our counterparty exposure in over-the-counter transactions. Bunker price differentials paid or received under the swap agreements as well as changes in their fair value are recognized under (Gain)/Loss on forward freight agreements and bunker swaps, net.
The fair value of freight derivatives and bunker swaps is determined through Level 1 inputs of the fair value hierarchy (quoted prices from the applicable exchanges such as EEX, SGX or ICE). Our FFAs and bunker swaps do not qualify for hedge accounting and therefore unrealized gains or losses are recognized under (Gain)/Loss on forward freight agreements and bunker swaps, net.
11
Impairment Loss
When indicators of impairment are present for the Company's vessels and the undiscounted cash flows estimated to be generated by those vessels are less than their carrying value, the carrying value is reduced to its estimated fair value and the difference is recorded under "Impairment loss". Furthermore, vessels agreed to be sold or actively marketed as of reporting day are measured at the lower of their carrying amount or fair value less cost to sell and the difference, if any, is recorded under "Impairment loss" in the unaudited interim consolidated income statements.
Other Operational Gain
Other operational gain includes gain from all other operating activities which are not related to the principal activities of the Company, such as gain from insurance claims.
Gain on Sale of Vessels
Gain on sale of vessels represents net gains from the sale of our vessels concluded during the period.
Loss on Write-Down of Inventory
Loss on write-down of inventory results from the valuation of the bunkers remaining onboard our vessels following the decrease of bunkers' net realizable value compared to their historical cost as of each period end.
Interest and Finance Costs
We incur interest expense and financing costs in connection with our outstanding indebtedness under our existing loan facilities (including sale and leaseback financing transactions). We also incur financing costs in connection with establishing those facilities, which are presented as a direct deduction from the carrying amount of the relevant debt liability and amortize them to interest and financing costs over the term of the underlying obligation using the effective interest method.
Interest Income
We earn interest income on our cash deposits with our lenders and other financial institutions.
Gain / (Loss) on Derivative Financial Instruments, net
We enter into interest rate swap transactions to manage interest costs and risks associated with changing interest rates with respect to our variable interest loans and credit facilities. Interest rate swaps are recorded in the balance sheet as either assets or liabilities, measured at their fair value (Level 2), with changes in such fair value recognized in earnings under "Gain/(Loss) on derivative financial instruments, net", unless specific hedge accounting criteria are met. When interest rate swaps are designated and qualify as cash flow hedges, the effective portion of the unrealized gains/losses from those swaps is recorded in Other Comprehensive Income / (Loss) while any ineffective portion is recorded under "Gain/(loss) on derivative financial instruments, net".
12
Results of Operations
The nine-month period ended September 30, 2024 compared to the nine-month period ended September 30, 2023
Voyage revenues net of Voyage expenses: Voyage revenues for the nine months ended September 30, 2024 increased to $956.5 million from $685.8 million in the corresponding period in 2023 which resulted from stronger market conditions and the increase in the average number of vessels in our fleet to 141.3 in the nine months ended September 30, 2024 from 125.1 for the corresponding period of 2023. Time charter equivalent revenues ("TCE Revenues") (as defined above) were $714.8 million compared to $494.2 million for the corresponding period in 2023. As a result, the TCE rate for the nine months ended September 30, 2024 was $19,209 compared to $15,035 for the corresponding period in 2023, which is indicative of the stronger market conditions prevailing during the recent period. Please refer to the table above for the calculation of the TCE Revenues and TCE rate and their reconciliation with Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Charter-in hire expenses: Charter-in hire expenses for the nine months ended September 30, 2024 and 2023 were $31.8 million and $13.9 million, respectively. This increase is mainly attributable to the increase in charter-in days to 1,793 in the nine months ended September 30, 2024 from 633 in the corresponding period in 2023.
Vessel operating expenses: For the nine months ended September 30, 2024 and 2023, vessel operating expenses were $202.2 million and $167.2 million, respectively. The increase in our operating expenses was primarily driven by the acquisition of the Eagle fleet which resulted in an increase in the average number of vessels in our fleet to 141.3 in the nine months ended September 30, 2024 from 125.1 for the corresponding period of 2023. Additionally, the increase for the nine months ended September 30, 2024 was also related to the Eagle legacy daily operating expenses which were substantially higher than the daily operating expenses of our fleet prior to the Eagle Merger. It is expected that the daily operating expenses of the Eagle legacy fleet will be reduced within the following quarters as a result of the synergies and economies of scale from the Eagle Merger.
Dry docking expenses: Dry docking expenses for the nine months ended September 30, 2024 and 2023 were $42.5 million and $30.5 million, respectively. During the nine months ended September 30, 2024, 29 vessels completed their periodic dry docking surveys while during the corresponding period in 2023, 24 vessels completed their periodic dry docking surveys.
Depreciation: Depreciation expense increased to $120.0 million for the nine-month period ended September 30, 2024 compared to $104.5 million for the corresponding period in 2023. The fluctuation is primarily driven by the increase in the average number of vessels in our fleet to 141.3 from 125.1.
Impairment loss: During the nine months ended September 30, 2023, an impairment loss of $7.7 million was incurred in connection with the agreement to sell two vessels. During the nine months ended September 30, 2024, no impairment loss was incurred.
Other operational gain: Other operational gain for the nine-month period ended September 30, 2024, decreased to $4.4 million from $33.8 million in the nine-month period ended September 30, 2023. During the nine-month period ended September 30, 2023, other gains from insurance claims relating to various vessels also included an aggregate gain of $30.9 million from insurance proceeds and daily detention compensation relating to Star Pavlina which became a constructive total loss due to its prolonged detainment in Ukraine following the ongoing conflict between Russia and Ukraine.
General and administrative expenses: General and administrative expenses for the nine-month periods ended September 30, 2024 and 2023 were $51.8 million and $36.3 million, respectively, which included the share-based compensation expense of $13.3 million for the nine months ended September 30, 2024 and $12.7 million for the corresponding period in 2023. The increase in the general and administrative expenses was mainly driven by the increased Eagle's general and administrative costs. We expect that the overall general and administrative expenses will be reduced during the following quarters as a result of the synergies and economies of scale from the Eagle Merger.
13
(Gain)/Loss on forward freight agreements and bunker swaps, net: For the nine-month period ended September 30, 2024, we incurred a net loss on FFAs and bunker swaps of $4.2 million, consisting of an unrealized gain of $5.8 million and a realized loss of $10.0 million. For the nine-month period ended September 30, 2023, we incurred a net gain on FFAs and bunker swaps of $6.4 million, consisting of an unrealized loss of $2.1 million and a realized gain of $8.5 million.
Gain on sale of vessels: Our results for the nine-month periods ended September 30, 2024 and 2023 include aggregate net gain of $32.0 million and $18.8 million, respectively, which resulted from the completion of the sale of certain vessels.
Loss on write-down of inventory: Our results for the nine months ended September 30, 2024 include a loss on write-down of inventories of $4.6 million compared to a loss of $5.6 million included in our results during the corresponding period in 2023, in connection with the valuation of the bunkers remaining on board our vessels, as a result of the bunkers' lower net realizable value compared to their historical cost.
Interest and finance costs: Interest and finance costs for the nine-month periods ended September 30, 2024 and 2023 were $70.5 million and $49.8 million, respectively. The driving factor for this increase are a) the higher base interest rates and the lower outstanding notional amount of our interest rate swaps during the nine-month period ended September 30, 2024 compared to the corresponding period in 2023 and b) the increase in our outstanding indebtedness as a result of the new debt drawn in order to refinance the previously outstanding debt of the Eagle fleet.
Interest income and other income/(loss): Interest income and other income/(loss) for the nine-month period ended September 30, 2024 amounted to $14.4 million compared to interest income and other income/(loss) of $10.3 million in the nine-month period ended September 30, 2023. The increase in interest income and other income was primarily attributable to both higher interest rates earned and higher cash balances maintained during the nine-month period ended September 30, 2024 as well as to the strengthening of the Euro/USD exchange rate which resulted in a realized foreign exchange gain of $0.5 million in the nine-month period ended September 30, 2024, compared to the realized foreign exchange loss of $0.5 million in the corresponding period in 2023.
Loss on debt extinguishment: Loss on debt extinguishment for the nine-month periods ended September 30, 2024 and 2023 was $1.0 million and $5.2 million, respectively. The decrease was mainly attributable to the decreased write-offs of unamortized debt issuance costs and other expenses incurred in connection with the loan and lease prepayments in the nine months ended September 30, 2024 compared to the corresponding period in 2023.
Cash Flows
Net cash provided by operating activities for the nine months ended September 30, 2024 and 2023 was $394.9 million and $247.2 million, respectively. This increase was primarily driven by the higher charter rates due to the stronger market conditions prevailing during the recent period compared to the corresponding period in 2023 as well as the increase in the average number of vessels in our fleet to 141.3 in the nine-month period ended September 30, 2024 from 125.1 for the corresponding period of 2023, partially offset by the increase in our interest payments for the reasons outlined above under "Interest and finance costs".
Net cash provided by investing activities for the nine months ended September 30, 2024 was $313.6 million and net cash provided by investing activities for the nine months ended September 30, 2023 was $186.0 million, respectively. The increase was mainly attributable to a) the increased vessel sale proceeds of $253.5 million in the nine months ended September 30, 2024 compared to the $198.1 million received in connection with vessel sale proceeds of certain vessels and insurance proceeds related to Star Pavlina's constructive total loss in the corresponding period of 2023 and b) the cash acquired related to the Eagle Merger of $104.3 million that we received during the nine-month period ended September 30, 2024, partially offset by the greater amount of cash paid in the nine-month period ended September 30, 2024 of $47.7 million compared to $12.7 million in the corresponding period in 2023, in connection with the advances for vessels under construction and vessel upgrades and other fixed assets.
14
Net cash used in financing activities for the nine months ended September 30, 2024 and 2023 was $497.7 million and $417.2 million, respectively. The increase was primarily driven by greater net debt outflows of $268.4 million in the nine-month period ended September 30, 2024 compared to $260.2 million in the corresponding period of 2023, the greater dividends paid of $206.2 million in the nine-month period ended September 30, 2024 compared to $139.6 million in the corresponding period of 2023, and the $19.2 million paid in connection with the repurchase of our common shares in the nine-month period ended September 30, 2024 compared to the $13.1 million in the corresponding period of 2023.
Significant Accounting Policies and Critical Accounting Estimates
For a description of all our significant accounting policies and our critical accounting estimates, see Note 2 to our audited financial statements and "Item 5 - Operating and Financial Review and Prospects," included in our 2023 Annual Report and Note 2 to our unaudited interim condensed consolidated financial statements for the nine-month period ended September 30, 2024. There have been no material changes from the "Critical Accounting Estimates" previously disclosed in our 2023 Annual Report.
15
STAR BULK CARRIERS CORP.
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
Unaudited Consolidated Balance Sheets as of December 31, 2023 and September 30, 2024
|
F-2
|
|
Unaudited Interim Condensed Consolidated Income Statements for the nine-month periods ended September 30, 2023 and 2024
|
F-3
|
|
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income for the nine-month periods ended September 30, 2023 and 2024
|
F-4
|
|
Unaudited Interim Condensed Consolidated Statements of Shareholders' Equity for the nine-month periods ended September 30, 2023 and 2024
|
F-5
|
|
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2023 and 2024
|
F-6
|
|
Notes to Unaudited Interim Condensed Consolidated Financial Statements
|
F-7
|
F-1
STAR BULK CARRIERS CORP.
Unaudited Consolidated Balance Sheets
As of December 31, 2023 and September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
|
December 31, 2023
|
September 30, 2024
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS
|
||||||||
|
Cash and cash equivalents
|
$
|
227,481
|
$
|
453,564
|
||||
|
Restricted cash, current (Notes 8 and 13)
|
32,248
|
14,367
|
||||||
|
Trade accounts receivable, net
|
68,624
|
85,805
|
||||||
|
Inventories (Note 4)
|
62,362
|
80,035
|
||||||
|
Due from managers
|
23
|
-
|
||||||
|
Due from related parties (Note 3)
|
38
|
36
|
||||||
|
Prepaid expenses and other receivables
|
19,296
|
17,846
|
||||||
|
Derivatives, current asset portion (Note 13)
|
6,305
|
2,898
|
||||||
|
Accrued income
|
-
|
121
|
||||||
|
Other current assets
|
22,830
|
46,137
|
||||||
|
Vessel held for sale (Note 5)
|
15,190
|
-
|
||||||
|
Total Current Assets
|
454,397
|
700,809
|
||||||
|
FIXED ASSETS
|
||||||||
|
Advances for vessels under construction (Note 5)
|
-
|
26,970
|
||||||
|
Vessels and other fixed assets, net (Note 5)
|
2,539,743
|
3,287,229
|
||||||
|
Total Fixed Assets
|
2,539,743
|
3,314,199
|
||||||
|
OTHER NON-CURRENT ASSETS
|
||||||||
|
Long-term investment (Note 3)
|
1,736
|
1,772
|
||||||
|
Restricted cash, non-current (Notes 8 and 13)
|
2,021
|
4,606
|
||||||
|
Operating leases, right-of-use assets (Note 6)
|
27,825
|
134,575
|
||||||
|
Derivatives, non-current asset portion (Note 13)
|
2,533
|
615
|
||||||
|
Other non-current assets
|
-
|
373
|
||||||
|
TOTAL ASSETS
|
$
|
3,028,255
|
$
|
4,156,949
|
||||
|
LIABILITIES & SHAREHOLDERS' EQUITY
|
||||||||
|
CURRENT LIABILITIES
|
||||||||
|
Current portion of long-term bank loans (Note 8)
|
$
|
249,125
|
$
|
224,196
|
||||
|
Lease financing short term (Note 7)
|
2,731
|
2,731
|
||||||
|
Accounts payable
|
39,317
|
61,363
|
||||||
|
Due to managers
|
7,386
|
18,420
|
||||||
|
Due to related parties (Note 3)
|
1,659
|
1,692
|
||||||
|
Accrued liabilities
|
31,372
|
61,236
|
||||||
|
Operating lease liabilities, current (Note 6)
|
5,251
|
20,969
|
||||||
|
Derivatives, current liability portion (Note 13)
|
5,784
|
102
|
||||||
|
Deferred revenue
|
16,738
|
20,785
|
||||||
|
Other current liabilities
|
-
|
2,000
|
||||||
|
Total Current Liabilities
|
359,363
|
413,494
|
||||||
|
NON-CURRENT LIABILITIES
|
||||||||
|
Long-term bank loans, net of current portion and unamortized loan issuance costs of $8,508 and $8,563, as of December 31, 2023 and September 30, 2024, respectively (Note 8)
|
970,039
|
1,104,022
|
||||||
|
Lease financing long term, net of unamortized lease issuance costs of $98 and $62, as of December 31, 2023 and September 30, 2024, respectively (Note 7)
|
15,208
|
13,196
|
||||||
|
Operating lease liabilities, non-current (Note 6)
|
22,574
|
113,606
|
||||||
|
Other non-current liabilities
|
1,001
|
937
|
||||||
|
TOTAL LIABILITIES
|
1,368,185
|
1,645,255
|
||||||
|
COMMITMENTS & CONTINGENCIES (Note 12)
|
||||||||
|
SHAREHOLDERS' EQUITY
|
||||||||
|
Preferred Shares; $0.01 par value, authorized 25,000,000 shares; none issued or outstanding at December 31, 2023 and September 30, 2024, respectively (Note 9)
|
-
|
-
|
||||||
|
Common Shares, $0.01 par value, 300,000,000 shares authorized; 84,016,892 shares issued and outstanding as of December 31, 2023; 117,892,303 shares issued and outstanding as of September 30, 2024 (Note 9)
|
840
|
1,179
|
||||||
|
Additional paid in capital (Note 9)
|
2,287,055
|
3,084,883
|
||||||
|
Accumulated other comprehensive income/(loss)
|
5,393
|
2,836
|
||||||
|
Accumulated deficit
|
(633,218
|
)
|
(577,204
|
)
|
||||
|
Total Shareholders' Equity
|
1,660,070
|
2,511,694
|
||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
3,028,255
|
$
|
4,156,949
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-2
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Income Statements
For the nine-month periods ended September 30, 2023 and 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Nine months ended September 30, | ||||||||
|
2023
|
2024
|
|||||||
|
Revenues:
|
||||||||
|
Voyage revenues (Note 14)
|
$
|
685,808
|
$
|
956,542
|
||||
|
Expenses/(Income)
|
||||||||
|
Voyage expenses (Note 3)
|
186,222
|
199,940
|
||||||
|
Charter-in hire expenses (Note 6)
|
13,926
|
31,812
|
||||||
|
Vessel operating expenses
|
167,225
|
202,235
|
||||||
|
Dry docking expenses
|
30,466
|
42,472
|
||||||
|
Depreciation (Note 5)
|
104,549
|
120,020
|
||||||
|
Management fees (Note 3)
|
12,738
|
13,676
|
||||||
|
General and administrative expenses (Note 3)
|
36,320
|
51,792
|
||||||
|
Impairment loss
|
7,700
|
-
|
||||||
|
Loss on write-down of inventory
|
5,565
|
4,602
|
||||||
|
Other operational loss
|
609
|
1,392
|
||||||
|
Other operational gain
|
(33,824
|
)
|
(4,410
|
)
|
||||
|
Loss on bad debt
|
300
|
-
|
||||||
|
(Gain)/Loss on forward freight agreements and bunker swaps, net (Note 13)
|
(6,377
|
)
|
4,239
|
|||||
|
Gain on sale of vessels (Note 5)
|
(18,833
|
)
|
(31,999
|
)
|
||||
|
Total operating expenses, net
|
506,586
|
635,771
|
||||||
|
Operating income
|
179,222
|
320,771
|
||||||
|
Other Income/ (Expenses):
|
||||||||
|
Interest and finance costs (Note 8)
|
(49,789
|
)
|
(70,511
|
)
|
||||
|
Interest income and other income/(loss)
|
10,265
|
14,410
|
||||||
|
Gain/(Loss) on derivative financial instruments, net (Note 13)
|
(507
|
)
|
(1,602
|
)
|
||||
|
Loss on debt extinguishment, net (Note 8)
|
(5,177
|
)
|
(1,012
|
)
|
||||
|
Total other expenses, net
|
(45,208
|
)
|
(58,715
|
)
|
||||
|
Income before taxes and equity in income/(loss) of investee
|
$
|
134,014
|
$
|
262,056
|
||||
|
Income tax (expense)/refund
|
(181
|
)
|
116
|
|||||
|
Income before equity in income/(loss) of investee
|
133,833
|
262,172
|
||||||
|
Equity in income/(loss) of investee (Note 3)
|
16
|
36
|
||||||
|
Net income
|
133,849
|
262,208
|
||||||
|
Earnings per share, basic
|
$
|
1.31
|
$
|
2.54
|
||||
|
Earnings per share, diluted
|
1.30
|
2.48
|
||||||
|
Weighted average number of shares outstanding, basic (Note 10)
|
102,434,767
|
103,364,099
|
||||||
|
Weighted average number of shares outstanding, diluted (Note 10)
|
102,825,781
|
105,545,672
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-3
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income
For the nine-month periods ended September 30, 2023 and 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Nine months ended September 30, | ||||||||
|
2023
|
2024
|
|||||||
|
Net income
|
$
|
133,849
|
$
|
262,208
|
||||
|
Other comprehensive income / (loss):
|
||||||||
|
Unrealized gains / losses from cash flow hedges:
|
||||||||
|
Unrealized gain / (loss) from hedging interest rate swaps recognized in Other comprehensive income/(loss) before reclassifications
|
4,436
|
1,997
|
||||||
|
Unrealized gain / (loss) from hedging foreign currency forward contracts recognized in Other comprehensive income/(loss) before reclassifications
|
20
|
(267
|
)
|
|||||
|
Less:
|
||||||||
|
Reclassification adjustments of interest rate swap gain/(loss) (Note 13)
|
(20,056
|
)
|
(4,287
|
)
|
||||
|
Other comprehensive income / (loss)
|
(15,600
|
)
|
(2,557
|
)
|
||||
|
Total comprehensive income
|
$
|
118,249
|
$
|
259,651
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Shareholders' Equity
For the nine-month periods ended September 30, 2023 and 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
|
Common Stock
|
||||||||||||||||||||||||||||
|
# of Shares
|
Par Value
|
Additional Paid-in Capital
|
Accumulated Other Comprehensive income/(loss)
|
Accumulated
deficit
|
Treasury
stock
|
Total
Shareholders' Equity
|
||||||||||||||||||||||
|
BALANCE, January 1, 2023
|
102,857,416
|
$
|
1,029
|
$
|
2,646,073
|
$
|
20,962
|
$
|
(648,722
|
)
|
$
|
-
|
$
|
2,019,342
|
||||||||||||||
|
Net income
|
-
|
-
|
-
|
-
|
133,849
|
-
|
133,849
|
|||||||||||||||||||||
|
Other comprehensive income / (loss)
|
-
|
-
|
-
|
(15,600
|
)
|
-
|
-
|
(15,600
|
)
|
|||||||||||||||||||
|
Issuance of vested and non-vested shares and amortization of stock-based compensation
|
971,372
|
9
|
12,692
|
-
|
-
|
-
|
12,701
|
|||||||||||||||||||||
|
Dividend declared ($1.35 per share)
|
-
|
-
|
-
|
-
|
(139,556
|
)
|
-
|
(139,556
|
)
|
|||||||||||||||||||
|
Cancellation of Songa shares
|
(6,706
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
|
Offering Expenses
|
-
|
-
|
(114
|
)
|
-
|
-
|
-
|
(114
|
)
|
|||||||||||||||||||
|
Repurchase and cancellation of common shares
|
(638,572
|
)
|
(6
|
)
|
(13,050
|
)
|
-
|
-
|
(185,000
|
)
|
(198,056
|
)
|
||||||||||||||||
|
BALANCE, September 30, 2023
|
103,183,510
|
$
|
1,032
|
$
|
2,645,601
|
$
|
5,362
|
$
|
(654,429
|
)
|
$
|
(185,000
|
)
|
$
|
1,812,566
|
|||||||||||||
|
BALANCE, January 1, 2024
|
84,016,892
|
$
|
840
|
$
|
2,287,055
|
$
|
5,393
|
$
|
(633,218
|
)
|
$
|
-
|
$
|
1,660,070
|
||||||||||||||
|
Net income
|
-
|
-
|
-
|
-
|
262,208
|
-
|
262,208
|
|||||||||||||||||||||
|
Other comprehensive income / (loss)
|
-
|
-
|
-
|
(2,557
|
)
|
-
|
-
|
(2,557
|
)
|
|||||||||||||||||||
|
Issuance of vested and non-vested shares and amortization of share-based compensation (Note 9)
|
754,812
|
8
|
13,263
|
-
|
-
|
-
|
13,271
|
|||||||||||||||||||||
|
Dividends declared ($1.90 per share) (Note 9)
|
-
|
-
|
-
|
-
|
(206,194
|
)
|
-
|
(206,194
|
)
|
|||||||||||||||||||
|
Offering expenses
|
-
|
-
|
(85
|
)
|
-
|
-
|
-
|
(85
|
)
|
|||||||||||||||||||
|
Issuance of common stock for Eagle Merger (Note 1)
|
28,082,319
|
281
|
665,270
|
-
|
-
|
-
|
665,551
|
|||||||||||||||||||||
|
Convertible Notes conversion (Note 8)
|
5,971,284
|
59
|
138,620
|
-
|
-
|
- |
138,679
|
|||||||||||||||||||||
|
Repurchase and cancellation of common shares (Note 9)
|
(933,004
|
)
|
(9
|
)
|
(19,240
|
)
|
-
|
-
|
-
|
(19,249
|
)
|
|||||||||||||||||
|
BALANCE, September 30, 2024
|
117,892,303
|
$
|
1,179
|
$
|
3,084,883
|
$
|
2,836
|
$
|
(577,204
|
)
|
$
|
-
|
$
|
2,511,694
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the nine-month periods ended September 30, 2023 and 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
| Nine months ended September 30, | |||||||||
|
2023
|
2024
|
||||||||
|
Cash Flows from Operating Activities:
|
|||||||||
|
Net income
|
$
|
133,849
|
$
|
262,208
|
|||||
|
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
|
|||||||||
|
Depreciation
|
104,549
|
120,020
|
|||||||
|
Amortization of debt (loans & leases) issuance costs
|
2,801
|
2,664
|
|||||||
|
Noncash lease expense
|
7,914
|
11,961
|
|||||||
|
Loss on debt extinguishment, net
|
5,177
|
1,012
|
|||||||
|
Impairment loss
|
7,700
|
-
|
|||||||
|
Gain on sale of vessels
|
(18,833
|
)
|
(31,999
|
)
|
|||||
|
Loss on bad debt
|
300
|
-
|
|||||||
|
Share-based compensation
|
12,701
|
13,271
|
|||||||
|
Gain from insurance proceeds relating to vessel total loss
|
(28,163
|
)
|
-
|
||||||
|
Loss on write-down of inventory
|
5,565
|
4,602
|
|||||||
|
Change in fair value of forward freight derivatives and bunker swaps
|
1,624
|
(5,778
|
)
|
||||||
|
Other non-cash charges
|
5
|
(103
|
)
|
||||||
|
Change in fair value of interest rate swaps not designated as cash flow hedges
|
507
|
1,880
|
|||||||
|
Gain on hull and machinery claims
|
(200
|
)
|
(898
|
)
|
|||||
|
Equity in income/(loss) of investee
|
(16
|
)
|
(36
|
)
|
|||||
|
Changes in operating assets and liabilities:
|
|||||||||
|
(Increase)/Decrease in:
|
|||||||||
|
Trade accounts receivable
|
15,206
|
27,406
|
|||||||
|
Inventories
|
(14,601
|
)
|
2,407
|
||||||
|
Prepaid expenses and other receivables
|
(3,868
|
)
|
(12,491
|
)
|
|||||
|
Derivatives asset
|
1,118
|
1,225
|
|||||||
|
Accrued income
|
-
|
(121
|
)
|
||||||
|
Due from related parties
|
283
|
2
|
|||||||
|
Due from managers
|
31
|
23
|
|||||||
|
Other non-current assets
|
-
|
(19
|
)
|
||||||
|
Increase/(Decrease) in:
|
|||||||||
|
Accounts payable
|
32,967
|
1,632
|
|||||||
|
Operating lease liability
|
(7,916
|
)
|
(11,961
|
)
|
|||||
|
Due to related parties
|
(81
|
)
|
33
|
||||||
|
Accrued liabilities
|
(6,055
|
)
|
(4,952
|
)
|
|||||
|
Due to managers
|
2,563
|
11,034
|
|||||||
|
Deferred revenue
|
(7,954
|
)
|
(166
|
)
|
|||||
|
Other current liabilities
|
-
|
2,000
|
|||||||
|
Net cash provided by / (used in) Operating Activities
|
247,173
|
394,856
|
|||||||
|
Cash Flows from Investing Activities:
|
|||||||||
|
Advances for vessels acquisitions, vessels under construction & vessel upgrades and other fixed assets
|
(12,674
|
)
|
(47,700
|
)
|
|||||
|
Cash proceeds from vessel sales
|
143,078
|
253,549
|
|||||||
|
Cash proceeds from vessel total loss
|
55,000
|
-
|
|||||||
|
Cash acquired related to the Eagle Merger
|
-
|
104,325
|
|||||||
|
Hull and machinery insurance proceeds
|
558
|
3,420
|
|||||||
|
Net cash provided by / (used in) Investing Activities
|
185,962
|
313,594
|
|||||||
|
Cash Flows from Financing Activities:
|
|||||||||
|
Proceeds from bank loans
|
142,000
|
388,120
|
|||||||
|
Loan and lease prepayments and repayments
|
(402,207
|
)
|
(656,560
|
)
|
|||||
|
Financing and debt extinguishment fees paid
|
(4,289
|
)
|
(3,695
|
)
|
|||||
|
Dividends paid
|
(139,556
|
)
|
(206,194
|
)
|
|||||
|
Offering expenses paid
|
(55
|
)
|
(85
|
)
|
|||||
|
Repurchase of common shares
|
(13,056
|
)
|
(19,249
|
)
|
|||||
|
Net cash provided by / (used in) Financing Activities
|
(417,163
|
)
|
(497,663
|
)
|
|||||
|
Net increase/(decrease) in cash and cash equivalents and restricted cash
|
15,972
|
210,787
|
|||||||
|
Cash and cash equivalents and restricted cash at beginning of period
|
286,344
|
261,750
|
|||||||
|
Cash and cash equivalents and restricted cash at end of period
|
$
|
302,316
|
$
|
472,537
|
|||||
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
||||||||
|
Cash paid during the period for:
|
|||||||||
|
Interest
|
$
|
41,935
|
$
|
65,819
|
|||||
|
Non-cash investing and financing activities:
|
|||||||||
|
Shares issued in connection with Eagle Merger
|
-
|
665,551
|
|||||||
|
Vessel upgrades
|
3,422
|
5,254
|
|||||||
|
Assumed bank loans and Convertible notes debt related to Eagle Merger
|
-
|
514,180
|
|||||||
|
Right-of-use assets and lease obligations for charter-in contracts
|
-
|
115,257
|
|||||||
|
Reconciliation of (a) cash and cash equivalents, and restricted cash reported within the consolidated balance sheets to (b) the total amount of such items reported in the statements of cash flows:
|
|||||||||
|
Cash and cash equivalents
|
$
|
287,910
|
$
|
453,564
|
|||||
|
Restricted cash, current
|
12,385
|
14,367
|
|||||||
|
Restricted cash, non-current
|
2,021
|
4,606
|
|||||||
|
Cash and cash equivalents and restricted cash at end of period shown in the statement of cash flows
|
$
|
302,316
|
$
|
472,537
|
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-6
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information:
Star Bulk Carriers Corp. ("Star Bulk") is a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Star Bulk was incorporated in the Marshall Islands on December 13, 2006 and maintains offices in Athens, New York, Connecticut (Stamford), Limassol, Singapore, Germany and Denmark. Star Bulk's common shares trade on the NASDAQ Global Select Market under the ticker symbol "SBLK".
The unaudited interim condensed consolidated financial statements include the accounts of Star Bulk and its wholly owned subsidiaries (collectively, the "Company") and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the U.S. Securities and Exchange Commission (the "SEC") for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for annual financial statements.
These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements for the year ended December 31, 2023 and, in the opinion of management, reflect all normal recurring adjustments considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. Operating results for the nine-month period ended September 30, 2024 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2024.
The unaudited interim condensed consolidated financial statements presented in this report should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2023 included in the Company's Annual Report on Form 20-F for the year ended December 31, 2023 (the "2023 Annual Report"). The balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements as of that date, but, pursuant to the requirements for interim financial information, does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2023 Annual Report.
As of September 30, 2024, following the completion of the Eagle Merger (as described below), the Company owned a modern fleet of 154 dry bulk vessels consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels with a carrying capacity between 53,489 deadweight tonnage ("dwt") and 209,537 dwt, a combined carrying capacity of 14.8 million dwt and an average age of 11.9 years. Also, the Company has entered into firm shipbuilding contracts for the construction of five 82,000 dwt Kamsarmax newbuilding vessels with expected deliveries between November 2025 and August 2026. In addition, through certain of its subsidiaries, the Company charters-in a number of third-party vessels on both a short-term and long-term basis to increase its operating capacity in order to satisfy its clients' needs. Lastly, the Company entered into long-term charter-in arrangements with respect to six newbuilding vessels, with an approximate duration of seven years per vessel, plus additional years at the Company's option. Four of those vessels were delivered during the nine-month period ended September 30, 2024, while the remaining two were delivered in October 2024 and November 2024, respectively (Note 15).
Eagle Merger
On December 11, 2023, the Company entered into a definitive agreement with Eagle Bulk Shipping Inc. (NYSE: EGLE) ("Eagle") (the "Eagle Merger Agreement") to combine in an all-stock merger (the "Eagle Merger"). Pursuant to the Eagle Merger Agreement, each share of Eagle common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (as defined below) of the Eagle Merger (excluding Eagle common stock owned by Eagle, Star Bulk, Star Infinity Corp., a wholly owned subsidiary of Star Bulk, or any of their respective direct or indirect wholly owned subsidiaries) would be converted into the right to receive 2.6211 shares, par value $0.01 per share, of Star Bulk common stock.
F-7
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information-continued:
Eagle Merger - continued
The Eagle Merger was completed on April 9, 2024 (the "Effective Time"), following Eagle shareholders' approval and receipt of applicable regulatory approvals and satisfaction of customary closing conditions. Eagle common stock has ceased trading and is no longer listed on the New York Stock Exchange.
At the Effective Time, each share of Eagle common stock issued and outstanding immediately prior to the Effective Time was cancelled in exchange for the right to receive 2.6211 shares of Star Bulk common stock, which resulted in the issuance of 28,082,319 shares of Star Bulk common stock. The pre-merger Star Bulk shareholders and the former Eagle shareholders owned approximately 75% and 25%, respectively, of the 112,469,211 issued and outstanding common stock of the Company immediately following the Effective Time. In addition, at the time of the Eagle Merger's completion, 1,341,584 shares of Star Bulk common stock were issued in exchange for the 511,840 loaned shares of Eagle common stock (the "Eagle loaned shares") outstanding in connection with Eagle's 5.00% Convertible Senior Notes due 2024 (the "Convertible Notes") (Note 8). While Eagle's share lending agreement with Jefferies Capital Services, LLC ("JCS") (the "Share Lending Agreement") did not require cash payment upon return of the shares, physical settlement was required (i.e., the Eagle loaned shares were required to be returned at the end of the arrangement). Due to this share return provision and other contractual undertakings of JCS in the Share Lending Agreement, which had the effect of substantially eliminating the economic dilution that otherwise would result from the issuance of borrowed shares, the shares of Star Bulk common stock issued to replace the Eagle loaned shares were not considered issued and outstanding for accounting purposes and for the purpose of computing the basic and diluted weighted average shares or earnings per share. Upon the maturity date of the Convertible Notes on August 1, 2024, the issued 1,341,584 shares of Star Bulk common stock were cancelled upon return and 5,971,284 shares of Star Bulk common stock were issued for settlement of such Convertible Notes.
Following the closing of the Eagle Merger, Star Bulk is the largest U.S. listed dry bulk shipping company with a global market presence and combined fleet of 156 owned vessels on a fully delivered basis, 97% of which are fitted with scrubbers, ranging from Newcastlemax/Capesize to Ultramax/Supramax vessels. In accordance with the terms of the Eagle Merger Agreement, one director of Eagle has joined the Company's Board of Directors while the senior management of Star Bulk remain in their current roles and continue to lead the Company.
The following financial information reflects the results of operations of Star Bulk and Eagle since April 9, 2024 included in the Company's consolidated income statements for the nine-month period ended September 30, 2024:
|
Star Bulk
|
Eagle
|
|||||||
|
Voyage revenues
|
$
|
771,214
|
$
|
185,328
|
||||
|
Operating income
|
$
|
279,437
|
$
|
41,334
|
||||
|
Net income
|
$
|
235,060
|
$
|
27,148
|
The following unaudited supplemental pro forma consolidated financial information reflects the results of operations for the nine-month periods ended September 30, 2023 and 2024, as if the Eagle Merger had been consummated on January 1, 2023. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been, had the Eagle Merger actually taken place on January 1, 2023. In addition, these results are not intended to be a projection of future results and do not reflect any synergies that might be achieved from the combined operations:
F-8
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information - continued:
Eagle Merger - continued
|
Nine-month periods ended
|
||||||||
|
September 30, 2023
|
September 30, 2024
|
|||||||
|
Pro forma voyage revenues
|
$
|
975,018
|
$
|
1,059,940
|
||||
|
Pro forma operating income
|
199,694
|
306,708
|
||||||
|
Pro forma net income
|
137,745
|
246,732
|
||||||
|
Pro forma income per share, basic
|
1.23
|
2.17
|
||||||
|
Pro forma income per share, diluted
|
$
|
1.22
|
$
|
2.13
|
Accounting for the Eagle Merger
The Eagle Merger was accounted for as an acquisition of Eagle by Star Bulk under the asset acquisition method of accounting in accordance with U.S. GAAP. Star Bulk is treated as the acquiror for accounting purposes. Based on the terms of the Eagle Merger Agreement, the Eagle Merger was determined to not meet the requirements of a business combination under the guidelines of ASC 805, Business Combinations, and ASU 2017-01, Business Combinations (Topic 805). The Eagle Merger consists of acquiring vessels and associated assets and liabilities, which are concentrated in a group of similar identifiable assets, and therefore not considered a business. As a result, the Eagle Merger is treated as an asset acquisition, whereby all assets acquired and liabilities assumed are recorded at the cost of the acquisition, including transaction costs, on the basis of their relative fair value.
The following table presents a summary of how the consideration paid by Star Bulk for the net assets acquired was determined:
|
(Dollars in thousands, except per share and share data)
|
Amounts
|
|||||
|
Eagle common stock
|
10,476,091
|
(a)
|
||||
|
Equity awards of Eagle employees and not vested to be replaced
|
237,853
|
(b)
|
||||
|
Eagle shares exchanged with Star Bulk shares
|
|
10,713,944
|
||||
|
Fixed exchange ratio
|
|
2.6211
|
(c)
|
|||
|
Total Star Bulk common stock issued to Eagle shareholders
|
28,082,319
|
|||||
|
Star Bulk closing price per share
|
$
|
23.70
|
(d)
|
|||
|
Consideration transferred related to value of net assets acquired
|
|
$
|
665,551
|
(a) Issued and outstanding shares as of April 9, 2024.
(b) Under the Eagle Merger Agreement, the Company is obligated to replace the equity awards of Eagle employees not vested, based on the agreed exchange ratio.
(c) The exchange ratio is fixed based on the Eagle Merger Agreement.
(d) Share price of Star Bulk as of April 9, 2024, represents the closing price of Star Bulk common stock for the calculation of the fair value of the Eagle Merger consideration transferred.
F-9
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information - continued:
Accounting for the Eagle Merger - continued
The following table presents the fair values of the tangible and intangible assets acquired and liabilities assumed as well as the calculation of the excess of the net assets acquired over the consideration transferred by Star Bulk:
|
(Dollars in thousands)
|
Fair Value
|
|||
|
Vessels and vessel improvements
|
$
|
1,157,000
|
||
|
Advances for BWTS and other assets
|
1,252
|
|||
|
Vessels held for sale
|
29,254
|
|||
|
Inventories
|
25,783
|
|||
|
Cash
|
104,325
|
|||
|
Derivative assets
|
289
|
|||
|
Operating lease right-of use assets
|
3,454
|
|||
|
Other current assets (Accounts receivable, Prepaid expenses, Other current assets)
|
56,130
|
|||
|
Long-term debt
|
(375,500
|
)
|
||
|
Convertible Notes
|
(138,680
|
)
|
||
|
Operating lease liabilities
|
(3,454
|
)
|
||
|
Derivative liabilities
|
(48
|
)
|
||
|
Accounts payable, Accrued liabilities, Unearned charter hire revenue and Other non-current liabilities
|
(54,041
|
)
|
||
|
Net asset value acquired
|
$
|
805,764
|
||
|
Consideration transferred
|
$
|
665,551
|
||
|
Excess of net asset value acquired over consideration transferred
|
$
|
140,213
|
The total value of $1,213,289 of the 52 vessels acquired in the Eagle Merger (including the two held for sale vessels at the Effective Time) is comprised of (i) $1,157,000 in vessel fair values using an average of current valuations obtained from third-party vessel appraisals for 50 vessels, (ii) $29,254 fair value of the 2 vessels held for sale using the sale prices that were agreed upon in the respective contracts, (iii) $25,783 fair value of the initial bunker and lubricant inventories on board the vessels on the acquisition date and (iv) $1,252 of advances for ballast water treatment system installations.
In accordance with the requirements of accounting for the Eagle Merger as an asset acquisition, the value of the vessels was adjusted down by $129,664 after the allocation of the excess amount of $140,213 of net assets acquired over the consideration transferred by Star Bulk and the capitalization of approximately $10,549 of legal, advisory and other professional fees directly related to the Eagle Merger which are presented under "Vessels and other fixed assets, net" in the unaudited consolidated balance sheets. Of this amount, $8,084 was paid during the nine-month period ended September 30, 2024 and is included in expenditures for vessel acquisitions and vessel upgrades in the accompanying unaudited interim condensed consolidated statement of cash flows.
The long-term debt assumed bears interest at variable interest rates and its fair value approximates its outstanding balance due to the variable interest rate nature thereof. Unamortized deferred financing costs associated with long-term debt of Eagle were eliminated as part of its fair value measurement.
The Convertible Notes' estimated fair value, based on market data on the date of acquisition, was $138,680. The excess fair value amount of $69,311 over its principal amount of $69,369 was allocated to equity under ASC 470-20.
F-10
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information - continued:
Accounting for the Eagle Merger - continued
Operating lease right-of-use assets and operating lease liabilities, of which Eagle was the lessee (time charter-in agreements of remaining duration of less than twelve months and long-term office rentals) were reassessed on the acquisition date, and, considering the acquisition date as the inception date, and the initial recognition was performed after considering the terms and conditions of the lease agreements.
The working capital amounts acquired from Eagle approximated their fair values due to their short-term maturities.
2. Significant accounting policies and recent accounting pronouncements:
A summary of the Company's significant accounting policies and recent accounting pronouncements is included in Note 2 to the Company's consolidated financial statements included in the 2023 Annual Report. There have been no changes to the Company's significant accounting policies in the nine-month period ended September 30, 2024, except for the below update for the accounting policy for "Evaluation of purchase transactions" and the accounting policy for the recognition of convertible debt issued at a substantial premium.
Evaluation of purchase transactions: When the Company enters into an acquisition transaction, it determines whether the acquisition transaction was a purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Business Combinations (Topic 805): Clarifying the Definition of a Business, if substantially all of the fair value of the gross assets acquired in an acquisition transaction are concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. To be considered a business, a set must include an input and a substantive process that together significantly contribute to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the net assets acquired should be measured following a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the qualifying assets acquired. Based on this, the excess amount of net assets acquired over the consideration transferred associated with asset acquisition, if any, is allocated over the value of the identifiable assets acquired. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized.
Convertible debt: The fair value of the Convertible Notes assumed from Eagle exceeded its principal amount on the acquisition date. ASC 470-20-25-13 states that when convertible debt is issued at a substantial premium, there is a presumption that the premium represents paid-in capital. Paid-in capital is increased by reclassifying part of the debt proceeds to the additional paid in capital. Pursuant to the Eagle Merger, there was a new obligor to Eagle's convertible debt, and it was treated as a deemed issuance on acquisition date which invoked the 470-20 guidance.
F-11
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
3. Transactions with Related Parties:
Details of the Company's transactions with related parties did not change in the nine-month period ended September 30, 2024 and are discussed in Note 3 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
Transactions and balances with related parties are analyzed as follows:
|
Balance Sheets
|
||||||||
|
December 31, 2023
|
September 30, 2024
|
|||||||
|
Long-term investment
|
||||||||
|
Interchart
|
$
|
1,380
|
$
|
1,435
|
||||
|
Starocean
|
231
|
212
|
||||||
|
CCL Pool
|
125
|
125
|
||||||
|
Long-term investment
|
$
|
1,736
|
$
|
1,772
|
||||
|
Due from related parties
|
||||||||
|
Interchart
|
3
|
-
|
||||||
|
Oceanbulk Maritime S.A. and its affiliates
|
-
|
2
|
||||||
|
Starocean
|
35
|
34
|
||||||
|
Due from related parties
|
$
|
38
|
$
|
36
|
||||
|
Due to related parties
|
||||||||
|
Management and Directors Fees
|
172
|
147
|
||||||
|
Oceanbulk Maritime S.A. and its affiliates
|
15
|
-
|
||||||
|
Iblea Ship Management Limited and its affiliates
|
1,472
|
1,545
|
||||||
|
Due to related parties
|
$
|
1,659
|
$
|
1,692
|
F-12
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
3. Transactions with Related Parties - continued:
|
Income statements
|
||||||||
| Nine months ended September 30, | ||||||||
|
2023
|
2024
|
|||||||
|
Voyage expenses:
|
||||||||
|
Voyage expenses - Interchart
|
$
|
(3,105
|
)
|
$
|
(3,105
|
)
|
||
|
General and administrative expenses:
|
||||||||
|
Consultancy fees
|
$
|
(422
|
)
|
$
|
(594
|
)
|
||
|
Directors compensation
|
(157
|
)
|
(129
|
)
|
||||
|
Office rent - Combine Marine Ltd. & Alma Properties
|
(28
|
)
|
(28
|
)
|
||||
|
General and administrative expenses - Oceanbulk Maritime S.A. and its affiliates
|
(148
|
)
|
(130
|
)
|
||||
|
Management fees:
|
||||||||
|
Management fees - Iblea Ship Management Limited and affiliates
|
$ |
(2,121
|
)
|
$
|
(1,865
|
)
|
||
|
Equity in income/(loss) of investee
|
||||||||
|
Interchart
|
$
|
(9
|
)
|
$
|
55
|
|||
|
Starocean
|
25
|
(19
|
)
|
4. Inventories:
The amounts shown in the consolidated balance sheets are analyzed as follows:
|
December 31, 2023
|
September 30, 2024
|
|||||||
|
Lubricants
|
$
|
13,945
|
$
|
18,373
|
||||
|
Bunkers
|
48,417
|
61,662
|
||||||
|
Total
|
$
|
62,362
|
$
|
80,035
|
F-13
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
5. Vessels and other fixed assets, net and Advances for vessels under construction:
The amounts in the consolidated balance sheets are analyzed as follows:
|
Cost
|
Accumulated depreciation
|
Net Book Value
|
||||||||||
|
Balance, December 31, 2023
|
$
|
3,508,701
|
$
|
(968,958
|
)
|
$
|
2,539,743
|
|||||
|
- Acquisition of vessels and other fixed assets, vessel improvements and other vessel costs
|
1,043,509
|
-
|
1,043,509
|
|||||||||
|
- Vessel sales
|
(259,506
|
)
|
83,503
|
(176,003
|
)
|
|||||||
|
- Depreciation for the period
|
-
|
(120,020
|
)
|
(120,020
|
)
|
|||||||
|
Balance, September 30, 2024
|
$
|
4,292,704
|
$
|
(1,005,475
|
)
|
$
|
3,287,229
|
Following the completion of Eagle Merger (Note 1), the Company acquired Eagle's fleet which consisted of 52 dry bulk Supramax/Ultramax vessels. Prior to the closing of the Eagle Merger, Eagle had agreed to sell the vessels Crested Eagle and Stellar Eagle, which were delivered to their new owners on April 18, 2024 and June 5, 2024, respectively.
During the nine-month period ended September 30, 2024, the vessels Big Fish (classified as held for sale as of December 31, 2023), Star Glory, Star Bovarius and Star Dorado were delivered to their new owners. These vessels had been agreed to be sold in 2023.
Additionally, during the nine-month period ended September 30, 2024, the Company decided to opportunistically sell certain vessels and renew its fleet taking advantage of the elevated vessel market values, and agreed to sell the vessels Big Bang, Pantagruel, Star Audrey, Star Pyxis, Star Paola, Crowned Eagle, Star Iris, Star Hydrus, Star Triumph, Imperial Eagle and Diva. All the previously mentioned vessels, except for Star Hydrus, Imperial Eagle and Diva, were delivered to their new owners by September 30, 2024. The vessels Star Hydrus, Imperial Eagle and Diva are expected to be delivered to their new owners in the fourth quarter of 2024 and given their employment as of September 30, 2024, they did not meet the criteria to be classified as held for sale as of September 30, 2024.
In connection with the aforementioned deliveries of the sold vessels, a net gain of $31,999 was recognized and reflected separately in the unaudited interim condensed consolidated income statement for the nine-month period ended September 30, 2024. In connection with the completion of the sale of the vessels Star Hydrus, Imperial Eagle and Diva, the Company expects to collect total gross proceeds of $50,150 and recognize a gain on sale of approximately $10,500, in the fourth quarter of 2024.
As of September 30, 2024, 152 of the Company's vessels, having a net carrying value of $3,246,176, serve as collateral under certain of the Company's loan facilities and were subject to first-priority mortgages (Note 8). Title of ownership is held by the relevant lenders for another 2 vessels with a carrying value of $40,283 to secure the relevant sale and leaseback financing transactions (Note 7).
In the table above, "Acquisition of vessel and other fixed assets, vessel improvements and other vessel costs", other than capitalized costs in connection with the Eagle fleet (Note 1), includes also additions related to the Company's continued technical upgrades to its fleet, such as the installation of ballast water treatment systems ("BWTS") and Energy Saving Devices ("ESD").
F-14
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
5. Vessels and other fixed assets, net and Advances for vessels under construction - continued:
Vessels under construction:
During 2023, the Company entered into five firm shipbuilding contracts with Qingdao Shipyard Co., Ltd. for the construction of five 82,000 dwt Kamsarmax newbuilding vessels. Delivery of these vessels is scheduled progressively from November 2025 through August 2026, respectively.
The amounts shown in the consolidated balance sheets are analyzed as follows:
|
Balance, December 31, 2023
|
$
|
-
|
||
|
- Pre-delivery yard installments and capitalized expenses
|
26,109
|
|||
|
- Capitalized interest and finance costs
|
861
|
|||
|
Balance, September 30, 2024
|
$
|
26,970
|
As of September 30, 2024, the total aggregate remaining contracted price, including scrubber installation costs, for the five vessels under construction was $156,700, payable in periodic installments up to their deliveries, of which $32,240 is payable during the next twelve months ending September 30, 2025, and the remaining $124,460 is payable until their expected delivery from the shipyard in August 2026.
F-15
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
6. Operating leases:
a) Time charter-in vessel agreements
The carrying value of the assets and liabilities recognized on the balance sheet as of December 31, 2023 and September 30, 2024 in connection with the time charter-in vessel arrangements with an initial term exceeding 12 months, amounted to $27,548 and $131,445, respectively and are included under "Operating leases, right-of-use assets" and "Operating lease liabilities current and non-current" in the consolidated balance sheets. The weighted average discount rate that was used for the recognition of these leases, which is the estimated annual incremental borrowing rate for this type of asset, is approximately 5.3%.
The time charter-in hire payments required to be made after September 30, 2024, for these outstanding operating lease liabilities are as follows:
|
Twelve-month periods ending
|
Amount
|
|||
|
September 30, 2025
|
$
|
26,636
|
||
|
September 30, 2026
|
25,808
|
|||
|
September 30, 2027
|
26,004
|
|||
|
September 30, 2028
|
26,709
|
|||
|
September 30, 2029
|
20,337
|
|||
|
September 30, 2030 and thereafter
|
29,521
|
|||
|
Total undiscounted lease payments
|
$
|
155,015
|
||
|
Discount based on incremental borrowing rate
|
(23,570
|
)
|
||
|
Present value of lease liability
|
$ |
131,445
|
||
|
Operating lease liabilities, current
|
19,907
|
|||
|
Operating lease liabilities, non-current
|
111,538
|
The weighted average remaining lease term of these charter-in vessel arrangements as of September 30, 2024 is 6.08 years. The charter-in hire expenses for these long-term charter-in arrangements for the nine-month periods ended September 30, 2023 and 2024, were $8,830 and $15,905, respectively and are included under "Charter-in hire expenses" in the unaudited interim condensed consolidated income statements.
F-16
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
6. Operating leases - continued:
b) Office rental arrangements
The carrying value of the assets and liabilities recognized on the balance sheet as of December 31, 2023 and September 30, 2024 in connection with the office rental arrangements, amounted to $277 and $3,130, respectively, and are included under "Operating leases, right-of-use assets" and "Operating lease liabilities current and non- current" in the consolidated balance sheets. The weighted average discount rate that was used for the recognition of these leases, which is the estimated annual incremental borrowing rate for this type of asset, is approximately 6.7%.
The office rental payments required to be made after September 30, 2024, for these outstanding operating lease liabilities are as follows:
|
Twelve-month periods ending
|
Amount
|
|||
|
September 30, 2025
|
$
|
1,062
|
||
|
September 30, 2026
|
972
|
|||
|
September 30, 2027
|
740
|
|||
|
September 30, 2028
|
553
|
|||
|
September 30, 2029
|
139
|
|||
|
September 30, 2030 and thereafter
|
-
|
|||
|
Total undiscounted lease payments
|
$
|
3,466
|
||
|
Discount based on incremental borrowing rate
|
(336
|
)
|
||
|
Present value of lease liability
|
$ |
3,130
|
||
|
Operating lease liabilities, current
|
1,062
|
|||
|
Operating lease liabilities, non-current
|
2,068
|
The weighted average remaining lease term of these office rental arrangements as of September 30, 2024 is 3.56 years. The lease expenses for these office rental arrangements for the nine-month periods ended September 30, 2023 and 2024, were $418 and $979, respectively and are included under "General and administrative expenses" in the unaudited interim condensed consolidated income statements.
F-17
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
7. Lease financings:
Details of the Company's lease financings are discussed in Note 7 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
The Company's lease financings bear interest at Secured Overnight Finance Rate ("SOFR") plus a margin. The corresponding interest expense of the Company's bareboat lease financing activities is included within "Interest and finance costs" in the unaudited interim condensed consolidated income statements (Note 8).
The principal payments required to be made after September 30, 2024, for the Company's outstanding finance lease obligations recognized on the balance sheet, as of that date, are as follows:
|
Twelve-month periods ending
|
Amount
|
|||
|
September 30, 2025
|
$
|
2,731
|
||
|
September 30, 2026
|
2,731
|
|||
|
September 30, 2027
|
2,731
|
|||
|
September 30, 2028
|
2,731
|
|||
|
September 30, 2029
|
4,042
|
|||
|
September 30, 2030 and thereafter
|
1,023
|
|||
|
Total bareboat lease minimum payments
|
$
|
15,989
|
||
|
Unamortized lease issuance costs
|
(62
|
)
|
||
|
Total bareboat lease minimum payments, net
|
$
|
15,927
|
||
|
Lease financing short term
|
2,731
|
|||
|
Lease financing long term, net of unamortized lease issuance costs
|
13,196
|
8. Long-term bank loans and Convertible Notes:
Details of the Company's credit facilities are discussed in Note 8 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report and supplemented by the new activities presented below during the nine-month period ended September 30, 2024.
Long-term bank loans
New Financing activities during the nine-month period ended September 30, 2024
i) ABN AMRO $94,100 Facility:
In April 2024, the Company entered into a loan agreement with ABN AMRO Bank N.V. for a loan amount of up to $94,100 (the "ABN AMRO $94,100 Facility"). The full amount of the loan was drawn on April 12, 2024. The ABN AMRO $94,100 Facility is repayable in 20 consecutive quarterly installments of $3,906 and a balloon payment of $16,000 payable together with the last installment in April 2029. The ABN AMRO $94,100 Facility is secured by first priority mortgages on the vessels Star Copenhagen , Crane, Star Gibraltar, Greenwich Eagle (to be renamed or "tbr" Star Greenwich), Hong Kong Eagle (tbr Star Hong Kong), Helsinki Eagle (tbr Star Helsinki), Ibis Bulker, Star Mystic, Star Nighthawk, Puffin Bulker (tbr Star Puffin), Stamford Eagle (tbr Star Stamford) and Star Westport.
F-18
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
8. Long-term bank loans and Convertible Notes - continued:
Long-term bank loans (continued)
ii) ING $94,000 Facility
In April 2024, the Company entered into a loan agreement with ING Bank N.V., London Branch for a loan amount of up to $94,000 (the "ING $94,000 Facility"). The full amount of the loan was drawn by the Company on April 12, 2024. The ING $94,000 Facility is repayable in 20 consecutive quarterly installments of $3,917 and a balloon payment of $15,667 payable together with the last installment in April 2029. The ING $94,000 Facility is secured by first priority mortgages on the vessels Dublin Eagle (tbr Star Dublin), Egret Bulker, Groton Eagle (tbr Groton), Jay, New London Eagle (tbr Star New London), Oriole (tbr Star Oriole), Oslo Eagle (tbr Star Oslo), Star Runner, Star Rotterdam, Rowayton Eagle (tbr Star Rowayton), Star Sandpiper and Shanghai Eagle (tbr Star Shanghai).
iii) DNB $100,000 Facility
In April 2024, the Company entered into a loan agreement with DNB Bank ASA for a loan amount of up to $100,000 (the "DNB $100,000 Facility"). The full amount of the loan was drawn by the Company on April 12, 2024. The DNB $100,000 Facility (after being adjusted with the prepayment made in connection with the sale of the vessel Crowned Eagle mentioned below) is repayable in 20 consecutive quarterly installments of $3,301 and a balloon payment of $28,203 payable together with the last installment in April 2029. The DNB $100,000 Facility is secured by first priority mortgages on the vessels Gannet Bulker, Grebe Bulker, Halifax Eagle (tbr Star Halifax), Hamburg Eagle (tbr Star Hamburg), Imperial Eagle (tbr Star Imperial), Kingfisher, Owl (tbr Star Owl), Santos Eagle (tbr Star Santos), Star Singapore, Southport Eagle (tbr Star Southport), Stockholm Eagle (tbr Star Stockholm) and Valencia Eagle (tbr Star Valencia).
iv) ESUN $100,000 Facility
In April 2024, the Company entered into a loan agreement with E.SUN commercial Bank Ltd. for a loan amount of up to $100,000 (the "ESUN $100,000 Facility"). The full amount of the loan was drawn by the Company on April 23, 2024 in 13 tranches and is repayable in aggregate installments as follows: i) 13 consecutive quarterly installments of $3,024, ii) one installment of $8,024, iii) one installment of $4,852, iv) one installment of $2,352, v) one installment of $4,182, vi) three installments of $2,129, vii) one installment of $4,050, viii) two installments of $1,936, ix) one installment of $3,985, x) three installments of $1,711 and xi) a balloon payment of $17,850 payable together with the last installment in April 2031. The ESUN $100,000 Facility is secured by first priority mortgages on the vessels Antwerp Eagle (tbr Star Antwerp), Bittern (tbr Star Bittern), Star Canary, Cape Town Eagle (tbr Star Cape Town), Fairfield Eagle (tbr Star Fairfield), Star Goal, Madison Eagle (tbr Star Madison), Martin, Petrel Bulker (tbr Star Petrel), Star Stonington, Star Sydney, Tokyo Eagle (tbr Star Tokyo) and Star Vancouver.
All amounts drawn under the abovementioned facilities, were used to refinance the assumed debt upon completion of the Eagle Merger, as described below.
F-19
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
8. Long-term bank loans and Convertible Notes - continued:
Long-term bank loans (continued)
Repayments
In addition to the scheduled repayments during the nine-month period ended September 30, 2024 and in connection with the sale of vessels described in Note 5, the Company prepaid the following amounts: i) $9,111 corresponding to the outstanding loan amount of the vessel Star Bovarius under the ING Facility, ii) an aggregate amount of $35,682 corresponding to the outstanding loan amount of the vessels Big Fish, Big Bang, Pantagruel, Star Iris and Star Triumph under the NBG $151,085 Facility and iii) $11,450 corresponding to the outstanding loan amounts of the vessels Star Dorado and Star Pyxis under the Citi $100,000 Facility, iv) $6,340 corresponding to the outstanding amount of the vessel Star Audrey under the ABN $67,897 Facility, v) $4,888 corresponding to the outstanding loan amount of the vessel Star Paola under the ABN AMRO $97,150 Facility, and vi) $5,769 corresponding to the outstanding loan amount of the vessel Crowned Eagle under the DNB $100,000 Facility. In addition, the Company prepaid the outstanding loan amount of $58,500 under the latest drawn tranche of ING Facility of $62,000, with original maturity in November 2024.
By April 15, 2024, and as a result of $388,120 borrowed under the abovementioned drawdowns, the assumed outstanding debt of Eagle at the acquisition date of $375,500 was repaid in full, including all accrued interest and fees and all available commitments under Eagle's debt facility were cancelled.
The principal payments required to be made after September 30, 2024 for the Company's then-outstanding bank loans, are as follows:
|
Twelve-month periods ending
|
Amount
|
|||
|
September 30, 2025
|
$
|
224,196
|
||
|
September 30, 2026
|
293,695
|
|||
|
September 30, 2027
|
321,009
|
|||
|
September 30, 2028
|
227,596
|
|||
|
September 30, 2029
|
167,458
|
|||
|
September 30, 2030 and thereafter
|
102,827
|
|||
|
Total Long-term bank loans
|
$
|
1,336,781
|
||
|
Unamortized loan issuance costs
|
(8,563
|
)
|
||
|
Total Long-term bank loans, net
|
$
|
1,328,218
|
||
|
Current portion of long-term bank loans
|
224,196
|
|||
|
Long-term bank loans, net of current portion and unamortized loan issuance costs
|
1,104,022
|
As of September 30, 2024, all of the Company's bank loans bear interest at SOFR plus a margin. In addition, the Company previously entered into a number of interest rate swaps (Note 13), and has converted a total of $118,343 of its outstanding debt as of September 30, 2024 from floating benchmark rate to an average fixed rate of 62 bps with average maturity of 1.0 years. The weighted average interest rate (including the margin) related to the Company's outstanding bank loans and lease financings (Note 7) for the nine-month periods ended September 30, 2023 and 2024 was 4.89% and 6.59%, respectively.
F-20
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
8. Long-term bank loans and Convertible Notes - continued:
As of December 31, 2023, and September 30, 2024, the Company was required to maintain minimum liquidity, not legally restricted, of $58,000 and $77,000, respectively, which is included within "Cash and cash equivalents" in the consolidated balance sheets. In addition, as of December 31, 2023 and September 30, 2024, the Company was required to maintain a minimum liquidity, legally restricted (including the cash collateral required under certain of the Company's freight derivatives and bunker swaps, as described in Note 13, and not limited to loan agreements covenants), of $34,269 and $18,973, respectively, and is presented under "Restricted cash, current and non-current" in the consolidated balance sheets. The decrease in restricted cash is mainly attributable to the decrease in collateral required under certain of the Company's financial instruments (Note 13).
Convertible Notes
In April 2024 and in connection with the Eagle Merger, the Company entered into a first supplemental indenture (the "Supplemental Indenture") with the trustee of the Convertible Notes previously held by Eagle, which amended and supplemented the existing base indenture (as amended by the Supplemental Indenture, the "Indenture") governing the Convertible Notes. The Supplemental Indenture provided that, among other things, from and after the Effective Time, the right to convert each $1,000 principal amount of Convertible Notes into shares of Eagle common stock would be changed into a right to convert such principal amount of Convertible Notes into the kind and amount of shares of Star Bulk common stock that a holder of a number of shares of Eagle common stock equal to the conversion rate immediately prior to the Effective Time would have been entitled to receive at the Effective Time. Accordingly, from and after the Effective Time, each $1,000 principal amount of Convertible Notes became convertible subject to the terms and conditions of the Indenture. In addition, the Convertible Notes were guaranteed by the Company pursuant to the Supplemental Indenture.
The Convertible Notes bore interest at a rate of 5.00% per annum on the outstanding principal amount thereof, payable semi-annually in arrears on February 1 and August 1 of each year.
On August 1, 2024, the outstanding Convertible Notes matured (the "Maturity Date") and had a conversion ratio of 86.0801 shares of Star Bulk common stock per $1,000 principal amount of Convertible Notes. Based on the abovementioned conversion ratio, on the Maturity Date, the Company issued 5,971,284 new shares of Star Bulk common stock and the 1,341,584 shares that were previously issued under the Share Lending Agreement were returned to the Company and canceled, as described below.
As of September 30, 2024, the Company was in compliance with the applicable financial and other covenants contained in its bank loan agreements and lease financings (Note 7), which are described above and in Note 8 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
F-21
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
8. Long-term bank loans and Convertible Notes - continued:
Share Lending Agreement
In connection with the issuance of the Convertible Notes by Eagle, certain persons had entered into an arrangement to borrow up to 511,840 shares of Eagle common stock through JCS, an initial purchaser of the Convertible Notes.
Upon closing of the Eagle Merger, the Eagle shares lent to JCS were exchanged for 1,341,584 shares of Star Bulk common stock.
On the Maturity Date of the Convertible Notes, the shares lent under the Share Lending Agreement were returned to the Company and canceled.
The amounts of "Interest and finance costs" included in the unaudited interim condensed consolidated income statements are analyzed as follows:
| Nine months ended September 30, | ||||||||
|
2023
|
2024
|
|||||||
|
Interest on financing agreements
|
$
|
65,825
|
$
|
71,388
|
||||
|
Reclassification adjustments of interest rate swap loss/(gain) transferred to Interest and finance costs from Other Comprehensive Loss (Note 13)
|
(20,056
|
)
|
(4,287
|
)
|
||||
|
Amortization of debt (loan & lease) issuance costs
|
2,801
|
2,664
|
||||||
|
Other bank and finance charges
|
1,219
|
746
|
||||||
|
Interest and finance costs
|
$
|
49,789
|
$
|
70,511
|
During the nine-month period ended September 30, 2024, the Company wrote off an amount of $954 of unamortized debt issuance costs and incurred other expenses of $58, mainly in connection with the loan prepayments discussed above, which are included under "Loss on debt extinguishment, net" in the unaudited interim condensed consolidated income statement for the corresponding period.
F-22
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
9. Preferred and Common Shares and Additional Paid-in Capital:
Details of the Company's preferred shares and common shares are discussed in Note 9 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report. Furthermore, details for the shares issued in connection with the Eagle Merger are included in the above section "Eagle Merger" under Note 1.
During the nine-month period ended September 30, 2024, the Company issued 370,000 common shares pursuant to the Performance Incentive Program and 384,812 common shares pursuant to the Company's equity incentive plans, as discussed below in Note 11.
In September 2024, under the Share Repurchase Program, as described in the 2023 Annual Report, the Company repurchased 933,004 common shares in open market transactions at an average price of $20.63 per share for an aggregate consideration of $19,249 including commissions. All repurchased shares under the Share Repurchase Program were cancelled and removed from the Company's share capital as of September 30, 2024.
Pursuant to its dividend policy, during the nine-month period ended September 30, 2024, the Company declared and paid cash dividends of $206,194 or $1.90 per common share.
F-23
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
10. Earnings per Share:
The computation of basic earnings per share is based on the weighted average number of common shares outstanding for the nine-month periods ended September 30, 2023 and 2024. The calculation of basic earnings per share does not consider the non-vested shares as outstanding until the time-based vesting restriction has lapsed. Diluted earnings per share gives effect to stock awards and restricted stock units using the treasury stock method, unless the impact is anti-dilutive.
The Company calculates basic and diluted earnings per share as follows:
| Nine months ended September 30, | ||||||||
|
2023
|
2024
|
|||||||
|
Income:
|
||||||||
|
Net income
|
$
|
133,849
|
$
|
262,208
|
||||
|
Basic earnings per share:
|
||||||||
|
Weighted average common shares outstanding, basic
|
102,434,767
|
103,364,099
|
||||||
|
Basic earnings per share
|
$
|
1.31
|
$
|
2.54
|
||||
|
Effect of dilutive securities:
|
||||||||
|
Dillutive potential common shares
|
391,014
|
2,181,573
|
||||||
|
Weighted average common shares outstanding, diluted
|
102,825,781
|
105,545,672
|
||||||
|
Diluted earnings per share
|
$
|
1.30
|
$
|
2.48
|
F-24
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
11. Equity Incentive Plans:
Details of the Company's equity incentive plans and share awards granted through December 31, 2023, are discussed in Note 11 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
On May 28, 2024, the Company's Board of Directors adopted the 2024 Equity Incentive Plan (the "2024 Plan") and reserved for issuance 575,000 common shares thereunder. On the same date, all of the 575,000 restricted common shares were granted to certain directors, officers and employees, of which 372,559 restricted common shares vest in November 2024, 143,441 restricted common shares vest in May 2025 and the remaining 59,000 common shares vest in May 2027. The fair value of each share was $26.96 based on the closing price of the Company's common shares on the grant date.
The stock-based compensation cost for the nine-month periods ended September 30, 2023 and 2024, which is included under "General and administrative expenses" in the unaudited interim condensed consolidated income statements, amounted to $12,701 and $13,271, respectively, and include an amount of $3,640 and $2,860, respectively, recognized in connection with the Company's Performance Incentive Program. The respective charges were calculated based on the fuel market prices at each period end and assuming 5% of Excess Savings to be awarded by the Board of Directors.
A summary of the status of the Company's non-vested restricted shares as of September 30, 2024 and the movement during the nine-month period ended September 30, 2024 is presented below.
|
Number of
shares
|
Weighted Average Grant
Date Fair Value
|
|||||||
|
Unvested as at January 1, 2024
|
364,001
|
$
|
20.11
|
|||||
|
Granted
|
945,000
|
24.73
|
||||||
|
Vested
|
(577,651
|
)
|
20.22
|
|||||
|
Unvested as at September 30, 2024
|
731,350
|
$
|
25.99
|
As of September 30, 2024, the estimated compensation cost relating to non-vested restricted share awards not yet recognized is $8,978 and is expected to be recognized over the weighted average period of 0.84 year. During the nine-month period ended September 30, 2024, the Company paid $1,224 for dividends to shareholders of non-vested shares.
F-25
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
12. Commitments and Contingencies:
a) Commitments:
The following tables set forth inflows and outflows related to the Company's charter party arrangements and other commitments, as at September 30, 2024.
Charter party arrangements:
|
Twelve-month periods ending September 30,
|
||||||||||||||||||||||||||||
|
+ inflows/ - outflows
|
Total
|
2025
|
2026
|
2027
|
2028
|
2029
|
2030 and thereafter
|
|||||||||||||||||||||
|
Future, minimum, non-cancellable charter revenues (1)
|
$
|
121,567
|
$
|
116,971
|
$
|
4,596
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
|
Total
|
$
|
121,567
|
$
|
116,971
|
$
|
4,596
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
| (1) |
The amounts represent the minimum contractual charter revenues to be generated from the existing, as of September 30, 2024, non-cancellable time charter agreements, until their expiration, net of address commission, assuming no off-hire days, other than those related to scheduled interim and special surveys of the vessels. Future inflows also include revenues deriving from index linked charter agreements using i) the index rates at the commencement date of each agreement, in compliance with ASC 842, and do not reflect relevant index charter rate information prevailing as of September 30, 2024 and ii) the remaining minimum duration of each non-cancellable time charter agreement.
|
Other commitments:
|
|
Twelve-month periods ending September 30,
|
|||||||||||||||||||||||||||
|
+ inflows/ - outflows
|
Total
|
2025
|
2026
|
2027
|
2028
|
2029
|
2030 and thereafter
|
|||||||||||||||||||||
|
Charter-in expense newbuilding vessels (1)
|
$
|
(69,203
|
)
|
$
|
(9,101
|
)
|
$
|
(9,809
|
)
|
$
|
(9,809
|
)
|
$
|
(9,836
|
)
|
$
|
(9,809
|
)
|
$
|
(20,839
|
)
|
|||||||
|
Future minimum charter-in hire payments (2)
|
(11,311
|
)
|
(11,311
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
|
Vessel BWTS upgrades and ESD (3)
|
(18,437
|
)
|
(16,608
|
)
|
(1,829
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||
|
Total
|
$
|
(98,951
|
)
|
$
|
(37,020
|
)
|
$
|
(11,638
|
)
|
$
|
(9,809
|
)
|
$
|
(9,836
|
)
|
$
|
(9,809
|
)
|
$
|
(20,839
|
)
|
|
|
(1) |
The amounts represent minimum contractual charter-in payments, to be made from the expected delivery date of the two charter-in newbuilding vessels (Note 1) until the end of their lease term.
|
|
|
(2) |
The amounts represent the Company's commitments under the existing, as of September 30, 2024, time-charter-in arrangements for third party vessels.
|
|
|
(3) |
The amounts represent the Company's commitments as of September 30, 2024 for installation of BWTS upgrades and ESD on its vessels to comply with environmental regulations.
|
The Company has outstanding commitments under vessel construction contracts as of September 30, 2024, see the Note 5 "Vessels and other fixed assets, net and Advances for vessels under construction".
F-26
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
12. Commitments and Contingencies - continued:
b) Legal proceedings
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company's vessels. The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure.
The Company is involved in non-material legal proceedings and may become involved in other legal matters arising in the ordinary course of its business, principally personal injury and property casualty claims. Generally, we expect that such claims would be covered by insurance, subject to customary deductibles.
Certain routine non-material commercial claims have been asserted against the Company, or by the Company against charterers, that relate to contractual disputes with certain of our charterers. The nature of these disputes involves disagreements over losses claimed by charterers, or by the Company, during or as a result of the performance of certain charters, including, but not limited to, delays in the performance of the charters and off-hire during the charters. The related legal proceedings are at various stages of resolution.
In March 2021, the U.S. government began investigating an allegation that one of the vessels acquired pursuant to the Eagle Merger may have improperly disposed of ballast water that entered the engine room bilges during a repair. The Company does not believe that this matter will have a material impact on the Company, our financial condition or results of operations. The Company has posted a surety bond as security for any potential fines, penalties or associated costs that may be incurred, and the Company is cooperating fully with the U.S. government in its investigation of this matter.
Currently, other than as disclosed above, management is not aware of, and has not accrued for, any such claims or contingent liabilities requiring disclosure in the unaudited interim condensed consolidated financial statements.
In accordance with U.S. GAAP, the Company accrues for contingent liabilities when it is probable that such a liability has been incurred and the amount of loss can be reasonably estimated. The Company evaluates its outstanding legal proceedings to assess its contingent liabilities and adjusts such liabilities, as appropriate, based on management's best judgment after consultation with counsel. There is no assurance that the Company's contingent liabilities will not need to be adjusted in the future.
F-27
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
13. Fair value measurements and Hedging:
Fair value on a recurring basis:
Interest rate swaps
Details of the Company's interest rate swaps are discussed in Note 18 of the Company's consolidated financial statements for the year ended December 31, 2023, included in the 2023 Annual Report.
The following table summarizes the interest rate swaps in place as of September 30, 2024:
|
Counterparty
|
Trading Date
|
Inception
|
Expiry
|
Fixed Rate
|
Initial Notional
|
Current Notional
|
|||||||||
|
ING
|
Mar-20
|
Mar-20
|
Mar-26
|
0.7000
|
%
|
$
|
29,960
|
$
|
20,330
|
||||||
|
ING
|
Mar-20
|
Apr-20
|
Oct-25
|
0.7000
|
%
|
$
|
39,375
|
$
|
23,438
|
||||||
|
SEB
|
Mar-20
|
Apr-20
|
Jan-25
|
0.7270
|
%
|
$
|
58,885
|
$
|
39,542
|
||||||
|
ING
|
Jul-20
|
Jul-20
|
Jul-26
|
0.3700
|
%
|
$
|
70,000
|
$
|
23,333
|
||||||
|
SEB
|
Feb-21
|
Apr-21
|
Jan-26
|
0.4525
|
%
|
$
|
37,050
|
$
|
11,700
|
The above interest rate swaps were designated and qualified as cash flow hedges while they are in effect, with the exception of the SEB swap with current notional amount of $39,542 as of September 30, 2024, which was de-designated from cash flow hedge on September 30, 2024 since it no longer meets the hedging relationship criteria.
For the nine-month period ended September 30, 2024, the losses from the de-designated interest rate swaps amounting to $1,705 are separately reflected under "Gain/(Loss) on derivative financial instruments, net" in the unaudited interim condensed consolidated income statement for the corresponding period. The effective portion of the unrealized gains/losses from all other swaps (designated as cash flow hedges) is recorded in "Other Comprehensive Income/(Loss)" and no portion of these cash flow hedges was ineffective during the nine-month period ended September 30, 2024.
A gain of approximately $2,452 in connection with the interest rate swaps is expected to be reclassified into earnings during the following 12-month period ending September 30, 2025, when realized.
Freight Derivatives and Bunker Swaps
The results of the Company's freight derivatives and bunker swaps for the nine-month periods ended September 30, 2023 and 2024 and the valuation of their open positions as at December 31, 2023 and September 30, 2024 are presented in the tables below.
F-28
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
13. Fair value measurements and Hedging - continued:
Fair value on a recurring basis - continued:
The amounts of Gain / (Loss) on interest rate swaps, freight derivatives and bunker swaps recognized in the unaudited interim condensed consolidated income statements, are analyzed as follows:
|
Nine months ended September 30, |
||||||||
|
2023
|
2024
|
|||||||
|
Consolidated Income Statement
|
||||||||
|
Gain/(Loss) on derivative financial instruments rate swaps, net
|
||||||||
|
Realized gain/(loss) of de-designated accounting hedging relationship of interest rate swaps
|
-
|
175
|
||||||
|
Unrealized gain/(loss) of de-designated accounting hedging relationship of interest rate swaps
|
(507
|
)
|
(1,880
|
)
|
||||
|
Realized gain/(loss) of foreign exchange forward contracts
|
-
|
103
|
||||||
|
Total Gain/(loss) recognized
|
$
|
(507
|
)
|
$
|
(1,602
|
)
|
||
|
Interest and finance costs
|
||||||||
|
Reclassification adjustments of interest rate swap loss/(gain) transferred to Interest and finance costs from Other comprehensive income/(loss) (Note 8)
|
20,056
|
4,287
|
||||||
|
Total Gain/(loss) recognized
|
$
|
20,056
|
$
|
4,287
|
||||
|
Gain/(Loss) on FFAs and bunker swaps, net
|
||||||||
|
Realized gain/(loss) on FFAs
|
3,355
|
(10,080
|
)
|
|||||
|
Realized gain/(loss) on bunker swaps
|
5,153
|
63
|
||||||
|
Unrealized gain/(loss) on FFAs
|
237
|
5,809
|
||||||
|
Unrealized gain/(loss) on bunker swaps
|
(2,368
|
)
|
(31
|
)
|
||||
|
Total Gain/(loss) recognized
|
$
|
6,377
|
$
|
(4,239
|
)
|
F-29
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
13. Fair value measurements and Hedging - continued:
Fair value on a recurring basis - continued:
The following table summarizes the valuation of the Company's financial instruments as of December 31, 2023 and September 30, 2024, based on Level 1 quoted market prices in active markets.
|
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)
|
|||||||||||||||||
|
December 31, 2023
|
September 30, 2024
|
||||||||||||||||
|
|
Balance Sheet Location |
(not designated as cash flow hedges)
|
(designated as cash flow hedges)
|
(not designated as cash flow hedges)
|
(designated as cash flow hedges)
|
||||||||||||
|
ASSETS
|
|||||||||||||||||
|
Forward freight agreements - current
|
Derivatives, current asset portion
|
$
|
-
|
$
|
-
|
$
|
336
|
$
|
-
|
||||||||
|
Bunker swaps - current
|
Derivatives, current asset portion
|
-
|
-
|
1
|
-
|
||||||||||||
|
Total
|
$
|
-
|
$
|
-
|
$
|
337
|
$
|
-
|
|||||||||
|
LIABILITIES
|
|||||||||||||||||
|
Forward freight agreements - current
|
Derivatives, current liability portion
|
$
|
5,784
|
$
|
-
|
$
|
102
|
$
|
-
|
||||||||
|
Total
|
$
|
5,784
|
$
|
-
|
$
|
102
|
$
|
-
|
Certain of the Company's derivative financial instruments discussed above require the Company to periodically post additional collateral depending on the level of any open position under such financial instruments, which as of December 31, 2023 and September 30, 2024 amounted to $13,496 and $3,037, respectively, and are included within "Restricted cash, current" in the consolidated balance sheets.
The following table summarizes the valuation of the Company's derivative financial instruments as of December 31, 2023 and September 30, 2024, based on Level 2 observable market based inputs or unobservable inputs that are corroborated by market data.
|
Significant Other Observable Inputs (Level 2)
|
|||||||||||||||||
|
December 31, 2023
|
September 30, 2024
|
||||||||||||||||
|
|
Balance Sheet Location
|
(not designated as cash flow hedges)
|
(designated as cash flow hedges)
|
(not designated as cash flow hedges)
|
(designated as cash flow hedges)
|
||||||||||||
|
ASSETS
|
|||||||||||||||||
|
Interest rate swaps - current
|
Derivatives, current asset portion
|
$
|
1,356
|
$
|
4,682
|
$
|
-
|
$
|
2,561
|
||||||||
|
Foreign exchange forward contracts - current
|
Derivatives, current asset portion
|
-
|
267
|
-
|
-
|
||||||||||||
|
Interest rate swaps - non-current
|
Derivatives, current non-liability portion
|
|
- |
$
|
2,533
|
$
|
-
|
$
|
615
|
||||||||
|
Total
|
$
|
1,356
|
$
|
7,482
|
$
|
-
|
$
|
3,176
|
The carrying values of temporary cash investments, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. The fair value of long-term bank loans and lease financings (Level 2), bearing interest at variable interest rates, approximates their recorded values as of September 30, 2024, due to the variable interest rate nature thereof.
F-30
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
14. Voyage revenues:
The following table shows the voyage revenues earned from time charters, voyage charters and pool agreements for the nine-month periods ended September 30, 2023 and 2024, as presented in the consolidated income statements:
|
Nine months ended September 30,
|
||||||||
|
2023
|
2024
|
|||||||
|
Time charters
|
$
|
353,761
|
$
|
527,321
|
||||
|
Voyage charters
|
329,769
|
429,891
|
||||||
|
Pool revenues
|
2,278
|
(670
|
)
|
|||||
| Total | $ | 685,808 | $ | 956,542 |
As of September 30, 2024, trade accounts receivable from voyage charter agreements increased to $24,643 from $24,223 as of December 31, 2023 and are presented under "Trade accounts receivable, net" in the consolidated balance sheets. The outstanding balance is mainly affected by the timing of commencement of revenue recognition. No write-off was recorded in periods presented in connection with the voyage charter agreements.
Further, as of September 30, 2024, capitalized contract fulfilment costs which are recorded under "Other current assets" increase by $1,225 compared to December 31, 2023, to $5,500 from $4,275. The outstanding balance is mainly affected by the timing of commencement of revenue recognition.
Under ASC 606, unearned voyage charter revenue represents the consideration received for undelivered performance obligations. The Company recorded $5,556 as unearned revenue related to voyages charter agreements in progress as of December 31, 2023, which were recognized in earnings in the nine-month period ended September 30, 2024 as the performance obligations were satisfied in that period. In addition, the Company recorded $7,098 as unearned revenue related to voyage charter agreements in progress as of September 30, 2024, which is presented under "Deferred revenue" in the consolidated balance sheets and will be recognized in earnings within one year and as the performance obligations will be satisfied.
The amount invoiced to charterers in connection with the additional revenue for scrubber-fitted vessels under time-charter contracts (included within "Time charters" in the above table) was $39,875 and $41,741 for the nine-month periods ended September 30, 2023 and 2024, respectively, and did not include the fuel cost savings from the scrubber-fitted vessels which were employed under voyage charter agreements.
Demurrage income for the nine-month periods ended September 30, 2023 and 2024 amounted to $9,940 and $16,179, respectively, and is included within "Voyage charters" in the above table.
The adjustment to Company's revenues from the vessels operating in the CCL Pool, deriving from the allocated pool result for those vessels as determined in accordance with the agreed-upon formula, for the nine-month periods ended September 30, 2023 and 2024 was $2,970 and $(649), respectively, and is included within "Pool Revenues" in the table above. Pool revenues also include other minor participation adjustments.
F-31
STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
September 30, 2024
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
15. Subsequent Events:
|
|
a) |
On October 11, 2024 and November 12, 2024, the Company took delivery of the vessels Star Illusion and the Star Thetis, a newbuilding Kamsarmax and a newbuilding Ultramax vessel built in Tsuneishi Zhousan and Tsuneishi Cebu, respectively, both subject to seven-year charter-in agreements.
|
|
|
b) |
In October 2024, the Company signed with one of its existing lenders a committed term sheet for the post-delivery financing of the five Kamsarmax vessels currently under construction (Note 5). The financing amount is up to $130,000 and the term of the loan is seven years from the draw-down date.
|
|
|
c) |
On November 19, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.60 per share payable on or about December 18, 2024 to all shareholders of record as of December 5, 2024.
|
F-32