NASDAQ-listed Star Bulk has priced a heavily discounted equity offering to raise funds for its newbuilding programme.
The bulker owner is selling 56.25 million shares at USD3.20/share, a 15.1% discount versus the closing price on 12 May, immediately prior to the offering announcement.
Star Bulk initially said it would offer USD150 million in shares. However, because the number of shares was increased, gross proceeds will total USD180 million.
Three major shareholders in Star Bulk – Oaktree Capital, the family of founder Petros Pappas, and Monarch Alternative Capital – will acquire an aggregate 21,562,500 shares in the offering. As a result, their ownership shares will be 52.5%, 5.8%, and 5.2% respectively.
Star Bulk said that net proceeds would be used for its newbuilding programme and generate corporate purposes, “including additions to working capital, capital expenditures, repayment of debt, or the financing of possible acquisitions and investments”.
As of 30 April, Star Bulk had 27 newbuildings on order costing USD1.21 billion. Of that amount, USD258.1 million has already been paid, a maximum of USD765 million in debt had been secured, and negotiations were underway for an additional USD65 million in debt.
A caveat to its secured debt is that the credit facilities contain loan-to-value ratios, which limit the amount of debt that can be extended. Given the historic drop in dry bulk rates, there is a risk that the company may not be able to draw the maximum amounts.