On July 11, 2014, Star Bulk Carrier Corporation (SBLK) completed its subsidiary merger of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC from Oaktree Dry Bulk Holdings LLC and Millennia Holdings LLC. This was accomplished through the merger of Star Bulk’s wholly owned subsidiaries into Oceanbulk’s holding companies. The family of Petros Pappas, Star Bulk’s chief executive officer, has an affiliation with Millennia Holdings.
What did Star Bulk agree to in the merger?
As part of the merger, Star Bulk (SBLK) agreed to take two Kamsarmax vessels from Heron Ventures Ltd., a limited liability company incorporated in Malta. Heron Ventures was formed by Oceanbulk and Augustea-Bunge-York in order to acquire 12 bulkers that were auctioned when Italy’s Deiulemar Shipping went bankrupt. Oceanbulk owns indebtedness in Heron that is convertible into 50% of the equity of the Heron joint venture, for an aggregate of 2.1 million shares of common stock of the company.
Star Bulk issued 2.1 million of its common shares into escrow as consideration for the Heron vessels, and it expects to pay $25.0 million in cash for which it may seek financing.
In addition, Star Bulk also completed a transaction to acquire all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively called the Pappas Companies), which were entities owned and controlled by affiliates of Petros Pappas (or the Pappas shareholders).
The Pappas Companies owned and operated a dry bulk carrier vessel, Tsu Ebisu, and had a contract for the construction of a newbuilding dry bulk carrier vessel, HN 5016, to be named Indomitable.
In both the above-mentioned transactions, Star Bulk issued a total of 54.1 million common shares to the entities involved, of which 45.5 million shares (61.3% shareholding) were issued to Oaktree and 8.6 million (12.6% shareholding) were issued to Pappas shareholders. With certain limited exceptions, Oaktree effectively cannot vote more than 33% of outstanding common shares, while Pappas shareholders are also subject to a similar voting limitation of 15%.
Star Bulk’s (SBLK) peers include Diana Shipping Inc. (DSX), Knightsbridge Shipping Ltd (VLCCF), Navios Maritime Holdings (NM), and Eagle Bulk Shipping Inc. (EGLE). The Guggenheim Shipping exchange-traded fund (or ETF) (SEA) helps investors keep track of shipping industry dynamics and is a tracker of shipping companies.