Form 6-K Star Bulk Carriers Corp. For: Sep 24

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 6-K

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For the month of September 2015

Commission File Number:  001-33869

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STAR BULK CARRIERS CORP.

(Translation of registrant's name into English)

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Star Bulk Carriers Corp.
c/o Star Bulk Management Inc.
40 Agiou Konstantinou Street,
15124 Maroussi,
Athens, Greece
(Address of principal executive office)

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40‑F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐.

Note:  Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐.

Note:  Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

The information contained in this Form 6-K (including the exhibits hereto) is hereby incorporated by reference into the registrant's Registration Statements on Form F-3 (File Nos. 333-197886 and 333-198832) and Registration Statement on Form S-8 (File No. 333-176922), to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

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INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached as Exhibit 99.1 to this Form 6-K is a Management's Discussion and Analysis of Financial Condition and Results of Operations and the unaudited interim condensed consolidated financial statements of Star Bulk Carriers Corp. (the "Company" or "Star Bulk") as of and for the six months ended June 30, 2014 and 2015.

 

 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of financial condition and results of operations of Star Bulk Carriers Corp.  ("Star Bulk") for the six month periods ended June 30, 2014 and 2015.  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 in this report.  For additional information relating to our management's discussion and analysis of financial condition and results of operation, please see our Annual Report on Form 20-F for the year ended December 31, 2014, which was filed with the U.S. Securities and Exchange Commission (the "Commission") on April 8, 2015.  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 an international company providing worldwide transportation of dry bulk commodities through our vessel-owning subsidiaries for a broad range of customers of major bulk cargoes including coal, iron ore, and grains, and minor bulk cargoes including, bauxite, phosphate, 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.

In July 2014, we completed a transaction in which we acquired Oceanbulk Shipping LLC ("Oceanbulk Shipping") and Oceanbulk Carriers LLC, ("Oceanbulk Carriers", and, together with Oceanbulk Shipping, "Oceanbulk") from Oaktree Dry Bulk Holdings LLC (including affiliated funds, "Oaktree") and Millennia Holdings LLC ("Millennia Holdings", and together with Oaktree, the "Sellers") through the merger of our wholly-owned subsidiaries into Oceanbulk's holding companies (the "Merger").  At the time of the Merger, Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding fuel-efficient Eco-type dry bulk vessels  at shipyards in Japan and China.  Millennia Holdings is an entity that is affiliated with the family of Mr. Petros Pappas, who became our Chief Executive Officer in connection with the Merger.

The agreement governing the Merger also provided for the acquisition by us (the "Heron Transaction") of two Kamsarmax vessels (the "Heron Vessels"), from Heron Ventures Ltd.  ("Heron"), a limited liability company incorporated in Malta, which was a joint venture between Oceanbulk Shipping and a third party.  We completed the Heron Transaction in December 2014.

In addition, concurrently with the Merger, we completed a transaction (the "Pappas Transaction"), in which we acquired all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively, the "Pappas Companies"), which were entities owned and controlled by affiliates of the family of Mr. Pappas (the "Pappas Shareholders").  At the time of the Pappas Transaction, 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,  Indomitable (ex-HN 5016), which was delivered to us in January 2015.

We refer to the Merger, the Heron Transaction and the Pappas Transaction, together, as the "July 2014 Transactions".

A total of 54,104,200 of our common shares were issued to the various selling parties in the July 2014 Transactions, of which 45,460,324 shares were issued to Oaktree, and 8,643,876 shares were issued to the owners of the Pappas Companies.

On August 19, 2014, we entered into definitive agreements with Excel Maritime Carriers Ltd.  ("Excel"), pursuant to which we acquired 34 dry bulk carrier vessels, consisting of six Capesize vessels, 14 sistership Kamsarmax vessels, 12 Panamax vessels and two Handymax vessels (collectively, the "Excel Vessels") for an aggregate of 29,917,312 common shares and $288.4 million in cash. We completed the acquisition of the last Excel Vessel in April 2015.

 

We refer to the foregoing transactions relating to the acquisition of the Excel Vessels as the "Excel Transactions", and we refer to the Excel Transactions and the July 2014 Transactions as the "Transactions".

Our Fleet

Our fleet carries a variety of dry bulk commodities including coal, iron ore, and grains, or major bulks, as well as bauxite, phosphate, fertilizers and steel products, or minor bulks. As of August 31, 2015, our operating fleet consisted of 70 vessels. Our operating fleet includes 13 Eco-type vessels, which we define as vessels that are designed to be more fuel-efficient than standard vessels of similar size and age, and has an aggregate carrying capacity of approximately 7.4 million dwt. In addition, we have contracts for the construction of 21 Eco-type vessels (including for one newbuilding vessel we expect to sell upon delivery, as further discussed below).  By the end of the third quarter of 2016, we expect our 90-vessel fleet to have an average age of 6.6 years and an aggregate carrying capacity of 10.5 million dwt.

During the six month period ended June 30, 2015, we entered into an agreement with a third party to sell one of our newbuilding vessels upon its delivery to us, which we expect will take place in 2016.

In addition, during the six month period ended June 30, 2015, we entered into a cancellation agreement with a shipyard for the cancellation of a shipbuilding contract for one of the vessels previously scheduled to be delivered to us in June 2016 under a bareboat agreement. Under this cancellation agreement, we have no obligation to compensate the shipbuilder or the bareboat charterer for this cancelled vessel.

After the completion of the July 2014 Transactions on July 11, 2014, all of the vessels owned by Oceanbulk, which were previously under our commercial and technical management, became our owned vessels.  As of August 31, 2015, we provide commercial and technical management services to one Supramax third party vessel.

The following tables present summary information relating to our existing fleet, our newbuilding vessels and the third party vessels under our management as of August 31, 2015, including the vessels we acquired in the Transactions, giving also effect to the sales of Star Claudia and Maiden Voyage discussed below:

 

 

 

 

 

 

 

Recent and Other Developments

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Negotiated vessel delivery delays

 

In July 2015, we reached an agreement in principle with certain shipyards to further defer the delivery of certain of our newbuilding vessels for periods ranging from one to five months. These agreements are subject to execution of final documentation by both parties. The table above gives effect to the negotiated dates.

 

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Agreement to reduce the purchase price of certain newbuilding vessels

 

In July 2015, we reached an agreement in principle with certain shipyards to reduce the purchase price of certain of our newbuilding vessels. The aggregate reduction agreed was $25.8 million and will be set off against the remaining newbuilding payments. These agreements are subject to execution of final documentation by both parties.

 

 

  

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Sale of Maiden Voyage and agreement to charter back the vessel for two years

 

On May 28, 2015, we entered into an agreement with a third party to sell the vessel Maiden Voyage, at market terms. We have agreed to charter back the vessel for a period of two years. The vessel was delivered to its new owners on September 15, 2015, and we became the charterers of the vessel on the same date.

 

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Vessel deliveries

 

(i)

On July 15, 2015, we took delivery of the Newcastlemax vessels Goliath (ex HN 167) and Maharaj (ex HN 184). The delivery instalments of $75.4 million were partially financed by $60.6 million drawn under the DNB-CEXIM $227.5 million term loan facility, and the remaining amount was financed by existing cash.

(ii)

On July 22, 2015, we took delivery of the Ultramax vessel Star Aquarius (ex-HN 5040). The delivery instalment of $20.4 million was partially financed by $15.2 million drawn under the NIBC $32.0 million term loan facility. The remaining amount was financed by existing cash.

(iii)

On August 7, 2015, we took delivery of the Ultramax vessel Star Pisces (ex-HN 5043). The delivery instalment of $20.4 million was partially financed by $15.2 million drawn under the NIBC $32.0 million term loan facility and the remaining amount was financed by existing cash.

A description of the above facilities is included in our annual report for the year ended December 31, 2014, on form 20-F filed with the Commission on April 8, 2015.

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Financing of HN 1343 (tbn Star Leo)

 

On August 31, 2015, we entered into a 10-year lease arrangement with CSSC to finance up to $40.0 million for the delivery installment of the HN 1343 (tbn Star Leo).

Operating Results

Factors Affecting Our Results of Operations

As of August 31, 2015, we had 61 of our vessels employed in the spot market, under charter agreements of short duration, and nine vessels on medium- to long-term time charters, scheduled to expire from January 2016 to September 2016.  Under time charters, the charterer typically pays us a fixed daily charter hire rate and bears all voyage expenses, including the cost of bunkers (fuel oil), port and canal charges.  Under voyage charters, we pay voyage expenses such as port, canal and fuel costs.  Under all charters, we pay for the chartered vessel's operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, and commissions to affiliated and unaffiliated ship brokers and to in-house brokers associated with the charterer for the arrangement of the relevant charter. In addition, we also pay the dry docking costs related to our vessels.

The following table reflects certain operating data of our fleet, including our ownership days, voyage days, and fleet utilization, which we believe are important measures for analyzing trends in our results of operations, for the periods indicated:

(1)	Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

(2)	Average age of operational fleet is calculated as of June 30, 2014 and 2015, respectively.

(3)	Ownership days are the total calendar days each vessel in the fleet was owned by us for the relevant period.

(4)	Available days for the fleet are the ownership days after subtracting for off-hire days as a result of major repairs, dry docking or special or intermediate surveys.

(5)	Voyage days are the total days the vessels were in our possession for the relevant period after subtracting all off-hire days incurred for any reason (including off-hire for dry docking, major repairs, special or intermediate surveys).

(6)	Fleet utilization is calculated by dividing voyage days by available days for the relevant period.

(7)	Please see the reconciliation of the TCE rate on the next page.

Time Charter Equivalent (TCE) Rate

Time charter equivalent rate (the "TCE rate"), is a measure of the average daily revenue performance of a vessel on a per voyage basis.  Our method of calculating TCE rate is determined by dividing voyage revenues (net of voyage expenses and amortization of fair value of above or below market acquired time charter agreements) by voyage days for the relevant time period. 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. 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., spot charters, time charters and bareboat charters) under which the vessels may be employed between the periods and because we believe TCE rate is useful information for investors in evaluating our performance. We also report TCE revenues, a non-GAAP measure, since our management believes it provides additional meaningful information in conjunction with voyage revenues, the most directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rate and revenue, however, may not be comparable to those reported by other companies.

The following table reflects the calculation of our TCE rates and reconciliation of TCE revenue to voyage revenue as reflected in the unaudited interim condensed consolidated statement of operations:

 

Voyage Revenues

 

Voyage revenues are driven primarily by the number of vessels in our fleet, the number of voyage days and the amount of daily charter hire and the level of 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 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, 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.

Vessel Voyage Expenses

Voyage expenses include hire paid for port and canal charges, fuel (bunker) expenses and brokerage commissions payable to related and third parties.  Our voyage expenses primarily consist of bunkers cost and commissions paid for the chartering of our vessels.

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 costs of spares and consumable stores, tonnage taxes, regulatory fees, technical management fees, 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.

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, the location where the dry docking takes place, shipyard availability and the number of days the vessel is off-hire. 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 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.

General and Administrative Expenses

We incur general and administrative expenses, including our onshore personnel related expenses, directors and executives' compensation, legal and accounting expenses.

 

 

 

Gain or Loss arising from Derivatives

From time to time, we may take positions in freight derivatives, including freight forward agreements (the "FFAs") and freight options, with an objective to utilize those instruments as economic hedges that are highly effective in reducing 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, as reported by an identified index, for the specified route and time period, the seller of the FFA is required to pay the buyer an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period.  Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. FFAs are usually settled on a daily basis through London Clearing House (LCH), and there is also a margin maintenance requirement based on marking the contract to market. Freight options are treated as assets/liabilities until they are settled. In addition, from time to time, we may enter into interest rate swap transactions to manage interest costs and risk 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, with changes in such fair value recognized in earnings, unless specific hedge accounting criteria are met.

On August 31, 2014, we designated four of our outstanding interest rate swaps (with Credit Agricole and HSH) as accounting cash flow hedges. As part of the July 2014 Transactions, we acquired five swap agreements that Oceanbulk Shipping had entered during the third quarter of 2013, all of which were re-designated upon the acquisition of Oceanbulk as accounting cash flow hedges in accordance with ASC Topic 815 "Derivatives and Hedging". Changes in fair value of our outstanding swaps with Credit Agricole and HSH up to the date of their designation as cash flow hedges were reported in our earnings. For the period that an interest rate swap is designated as accounting cash flow hedge, changes in the fair value corresponding to the effective portion of these swaps are reported on our consolidated balance sheet in Accumulated Other Comprehensive Loss, with the outstanding fair value (based on Level 2 inputs of the fair value hierarchy) as of the same date being separately reflected as Derivative Assets or Liabilities within our consolidated balance sheet. Our hedge effectiveness test for the second quarter of 2015 indicated that the hedging relationship of those five interest rate swaps acquired from Oceanbulk no longer qualified for special hedge accounting. We, therefore, de-designated these swaps as accounting cash flow hedges as of April 1, 2015. Accordingly, we recorded realized and unrealized gains/losses from these swaps, from April 1, 2015, in our statement of operations under Gain / (Loss) on derivative financial instruments, net (as opposed to interest and finance costs and equity).

Inflation

Inflation does not have a material effect on our expenses given current economic conditions. In the event that significant global inflationary pressures appear, these pressures would increase our operating, voyage, administrative and financing costs.

Results of Operations

Six month period ended June 30, 2014 compared to the six month period ended June 30, 2015

Voyage Revenues:  For the six month periods ended June 30, 2014 and 2015, our voyage revenues were approximately $43.1 million and $101.2 million, respectively.  The increase in voyage revenues was mainly due to the increase in the average number of vessels from 16.4 vessels, for the six month period ended June 30, 2014, to 67.5 vessels, for the six month period ended June 30, 2015, and a corresponding increase in Voyage Days, primarily as a result of the July 2014 Transactions and the Excel Transactions.  The TCE rate of our fleet for the six month periods ended June 30, 2014 and 2015 was $14,172 and $7,806 per day, respectively.

 

 

Management fee income:  For the six month periods ended June 30, 2014 and 2015, management fee income was approximately $1.9 million and $0.1 million, respectively. The decrease was due to the decrease in the average number of third party and related party vessels under management from 13.7 vessels, for the six month period ended June 30, 2014, to 1.0 vessels, for the six month period ended June 30, 2015. As a result of the July 2014 Transactions, 11 related party vessels under our management, which were part of the Oceanbulk fleet, became part of our fleet as of July 11, 2014. We, therefore, stopped receiving fees for the management of those vessels.

 

Voyage Expenses:  For the six month periods ended June 30, 2014 and 2015, our voyage expenses were approximately $7.7 million and $30.6 million, respectively. The increase in voyage expenses was mainly due to the above-described increase in the average number of vessels from 16.4, for the six month period ended June 30, 2014, to 67.5, for the six month period ended June 30, 2015.

Vessel Operating Expenses:  For the six month periods ended June 30, 2014 and 2015, our vessel operating expenses were approximately $16.1 million and $57.0 million, respectively. The increase in operating expenses was mainly due to the higher average number of vessels for the six months ended June 30, 2015 compared to the same period in 2014. In addition, vessel operating expenses for the six month periods ended June 30, 2014 and 2015 include $0.4 million and $3.6 million, respectively, of pre-delivery and pre-joining expenses, which relate to expenses for the initial crew manning and the initial supply of stores for our vessel upon delivery. Excluding these amounts, our average daily operating expenses per vessel for the six month periods ended June 30, 2014 and 2015 were $5,272 and $4,372, respectively.

Dry docking Expenses: For the six month periods ended June 30, 2014 and 2015, our dry docking expenses were approximately $1.3 million and $6.9 million, respectively. During the six months ended June 30, 2015, 14 of our vessels underwent dry docking surveys, compared to only one vessel in the first half of 2014. The amount of our dry docking expense is highly dependent on the size, age and overall condition of the dry docked vessels.

Depreciation: For the six month periods ended June 30, 2014 and 2015, depreciation was $9.8 million and $38.5 million, respectively. The increase was due to the increase in the average number of vessels from 16.4 vessels, for the six month period ended June 30, 2014, to 67.5 vessels, for the six month period ended June 30, 2015, the shift in the composition of our fleet to include larger and younger vessels and the depreciation of the fair values of the acquired vessels in the July 2014 Transactions. The increase was partially offset by an increase in the estimated scrap rate per light weight ton from $200 to $300, which became effective as of January 1, 2015, following our management's reassessment based on the historical average demolition prices prevailing in the market.

General and Administrative Expenses: For the six month periods ended June 30, 2014 and 2015, general and administrative expenses were $10.2 million and $11.2 million, respectively. General and administrative expenses for the first half of 2015 include an increase in wage expense compared to the same period in 2014, due to a 72% increase in our average number of employees. In addition, general and administrative expenses for the first half of 2014 include non-recurring transaction costs of $2.4 million related to the acquisition of Oceanbulk, Pappas Companies and the Heron Vessels, while stock based compensation expenses were $0.5 million higher in the first half of 2014 as compared to same period in 2015.

Management fee expense: Management fees for the first half of 2015 were $4.1 million. As of January 1, 2015, we engaged Ship Procurement Service ("SPS"), an unaffiliated company, to provide our fleet with certain procurement and vessel remote monitoring services at a daily fee of $295 per vessel. SPS will provide procurement and vessel remote monitoring services to a fleet of approximately 140 vessels, which in addition to our vessels also includes vessels of a product tanker company and a containership company (each of which is controlled by affiliates of Mr. Pappas and of Oaktree). We expect to benefit from lower operating expenses and dry docking costs through the economies of scale that SPS will enjoy in managing such a large fleet. In addition, three of the Excel Vessels (Christine (tbr Star Martha), Star Pauline and Star Despoina), which were acquired with attached time charter agreements, are managed by Maryville Maritime Inc., a subsidiary of Excel, until the expiration of their existing time charter agreements (two of which expired in August and one of which expires in October 2015) at a monthly fee of $17,500 per vessel. Total management fees to SPS and Maryville for the six month period ended June 30, 2015 were $3.7 million and $0.3 million, respectively, and are included in Management fees in the unaudited interim condensed statement of operations, included elsewhere herein.

Impairment Loss: During the first half of 2015, we recorded an impairment loss of an aggregate of $28.8 million, or $0.17 per basic and diluted share, relating to: (i) the sale of vessel Star Monika (which was delivered to its new owners in April 2015); (ii) an agreement to sell one of our newbuilding vessels upon its delivery to us in 2016; (iii) an agreement to sell the vessel Maiden Voyage (which was delivered to its new owners in early September 2015); and (iv) the cancellation of one of our newbuilding vessels. The impairment loss includes $18.2 million, which is attributed to the write-off of the fair value adjustment recognized upon the Merger in July 2014, in connection with these vessels.

Loss on time charter agreement termination: During the first half of 2015, we recognized a $2.1 million write-off of the unamortized fair value of the above market acquired time charter of the vessel Star Big, due to its redelivery prior to the end of its time charter in connection with its sale and delivery to its new owners in June 2015.

Loss on sale of vessel: During the first half of 2015 we recognized an aggregate loss on a sale of vessel of $13.4 million in connection with the sale of the vessels Star Kim, Star Julia, Star Tatianna, Rodon, Star Big, Star Mega and Star Christianna. Total sale proceeds from these sales were $36.1 million, of which $1.1 million was received in 2014 as an advance for the sale of the vessel Star Kim.

Interest and Finance Costs:  Interest and finance costs for the first half of 2015 and 2014 were $13.9 million and $3.1 million, respectively. The increase is attributable to the higher average balance of our outstanding indebtedness of $910.0 million for the first half of 2015, including $50.0 million under the 8.00% Senior Notes and our capital lease obligations, compared to $234.8 million for the first half of 2014. In addition, for the first half of 2015, interest and finance costs included $1.3 million of realized loss on hedging interest rate swaps. No realized interest swap loss was included in interest and finance costs for the first half of 2014, since at that time our interest rate swap agreements were not in effect. Interest and finance costs for the first half of 2015 and 2014, also included interest capitalized from general debt of $6.2 million and $1.3 million, respectively, in connection with the payments made for our newbuilding vessels.

Loss on debt extinguishment: During the first half of 2015, we recorded $1.0 million of loss on debt extinguishment, in connection with the non-cash write off of unamortized deferred finance charges due to prepayments of certain of our loan facilities.

Loss on derivative financial instruments: During the six month period ended June 30, 2015, we recorded a loss on derivative financial instruments of $0.7 million, which included realized and unrealized gains/losses from swaps that were de-designated as accounting cash flow hedges from April 1, 2015 (date of de-designation). Loss on derivative financial instruments of $0.8 million during the first half of 2014 represents the non-cash loss from the mark to market valuation of four interest rate swaps outstanding as of June 30, 2014, which at that time had not been designated as cash flow hedges.

Cash Flows

Net cash provided by operating activities for the six month period ended June 30, 2014 was $10.5 million, while net cash used in operating activities for the six month period ended June 30, 2015 was $9.5 million.  The decrease was heavily affected by the decrease of the TCE rate from $14,172 for the six month period ended June 30, 2014 to $7,806 for the six month period ended June 30, 2015.

 

Liquidity and Capital Resources

 

Our principal source of funds has been equity provided by our shareholders, additional debt under secured credit facilities or debt securities and operating cash flow. Our principal use of funds has been capital expenditures to grow our fleet, maintain the quality of our dry bulk carriers, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make interest and principal repayments on outstanding indebtedness and pay dividends.

Our short-term liquidity requirements include servicing our debt, payment of operating costs, funding working capital requirements and maintaining cash reserves against fluctuations in operating cash flows and financing activities and paying cash dividends when we are able to do so. Sources of short-term liquidity include our revenues earned from our charters.

As of June 30, 2015, we had outstanding borrowings of $858.1 million, of which $93.1 million is scheduled to be repaid in the next twelve months. As of June 30, 2015, cash and cash equivalents increased to $285.2 million compared to $86.0 million as of December 31, 2014. Legally restricted cash, due to cash collateral requirements contained in our loan agreements, was increased to $13.8 million as of June 30, 2015, compared to $14.0 million as of December 31, 2014. Our working capital, which is equal to current assets minus current liabilities, including the current portion of long-term debt, was a surplus of $193.3 million as of June 30, 2015, compared to a deficit of $5.8 million as of December 31, 2014.

 

 

 

 

As of August 31, 2015, we have agreed to sell three of our vessels, including one newbuilding vessel (see discussion above), from which we expect to receive $34.4 million of net equity proceeds. In addition, as of August 31, 2015, the total payments for our remaining 20 newbuilding vessels were expected to be $698.2 million. Up to that date, we had already paid $185.7 million for these newbuilding vessels. As of August 31, 2015, we have secured $649.2 million of debt financing for our remaining 20 newbuilding vessels. The remaining payments for the newbuilding vessels are expected to be paid from cash on hand, proceeds of vessel sales or the net proceeds of additional debt or equity financings. Based on market conditions, our growth strategy and our cash and liquidity position, we may, from time to time, seek to delay or cancel the construction of certain of our newbuilding vessels or seek to dispose of further existing vessels.

As of August 31, 2015, we had $246.7 million in cash and outstanding borrowings of $1,011.0 million, including the $50.0 million under the issued 2019 Notes and our capital lease obligations.

We may fund possible growth through our cash balances, operating cash flow, additional debt or equity issuances, or vessel sales. Our practice has been to acquire dry bulk carriers using a combination of funds received from equity investors and bank debt secured by mortgages on our dry bulk carriers.  In the event that we determine to finance a portion of the purchase price for new vessel acquisitions with debt, and if the current conditions in the credit market continue, we may not be able to secure new borrowing capacity on favorable terms or at all.  Further, our stock price and the stock price of shipping companies in general have recently been volatile, and we may not be able to raise additional equity financing. Our business is capital intensive and its future success will depend on our ability to maintain a high-quality fleet through the acquisition of newer dry bulk carriers and the selective sale of older dry bulk carriers. These transactions 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.

Loan Facilities

For information relating to our loan agreements, please see Note 9 to our audited financial statements for the year ended December 31, 2014 included in our annual report on Form 20-F, which was filed with the Commission on April 8, 2015, and Notes 8 and 15 to our unaudited interim condensed consolidated financial statements for the six month period ended June 30, 2015, included elsewhere herein.

Our credit facilities contain financial covenants requiring us (or the borrowing entity) to maintain various financial ratios, including:

 

 

During the six months ended June 30, 2015, based on our analysis of our future liquidity position and operating performance, the dry bulk market, our anticipated vessel deliveries and the market values of our vessels, we have obtained waivers from our lenders, amending or waiving all of the foregoing types of financial covenants (other than minimum liquidity and minimum equity ratios) contained in the various facility agreements. Most of the amendments and waivers are effective through December 31, 2016, and we have agreed not to pay any dividends on our common equity through such date. As a result, as of June 30, 2015, we were in compliance with the applicable financial and other covenants contained in our amended debt agreements.

In addition, as of June 30, 2015, we have also assumed bareboat charters with respect to 11 newbuilding vessels being built at New Yangzijiang, CSSC and SWS, as further disclosed in Note 5 and 6 to our unaudited interim condensed consolidated financial statements for the six month period ended June 30, 2015, included elsewhere herein.

 

 

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2015:

---

(1)	The outstanding balance of our long-term debt with commercial banks at June 30, 2015 was $858.1 million as further discussed in Note 8 to our unaudited interim condensed consolidated financial statements for the six-month period ended June 30, 2015, included elsewhere herein.

(2)

Our long-term debt outstanding as of June 30, 2015 bears interest at a variable rate of LIBOR plus a margin.  The calculation of interest payments has been made assuming interest rates based on the three-month LIBOR as of June 30, 2015 (i.e. 0.2832%) and our various applicable margin rates under our debt as of June 30, 2015.

(3)

The amounts presented in the contractual obligations table represent our remaining obligations as of June 30, 2015 with respect to the pipeline of our newbuilding program, excluding those applicable under the bareboat lease agreements classified as capital leases, which are discussed under footnote (5) below, giving effect to the renegotiated prices and delivery dates of certain of our newbuilding vessels disclosed in Notes 15(a) and (b) to our unaudited interim condensed consolidated financial statements for the six-month period ended June 30, 2015, included elswhere herein.

(4)

The amounts presented in the contractual obligations table as "Capital lease obligations of delivered vessels" represent the present value of our commitments for minimum payments under the bareboat lease arrangements with respect to vessels delivered to us up to June 30, 2015, as further discussed in Note 5 to our unaudited interim condensed consolidated financial statements for the six-month period ended June 30, 2015, included elsewhere herein. Interest on these commitments is also presented in the historical contractual obligations table as "Interest on capital lease obligation of delivered vessels".

(5)	The amounts represent the Company's commitments under the bareboat lease arrangements for the upfront hire and handling fees for those vessels under construction as of June 30, 2015.

 

(6)

The amounts represent the Company's commitments under the bareboat lease arrangements for the charter hire for those vessels, under construction as of June 30, 2015. The bareboat charter hire is comprised of a fixed and a variable portion.  The variable portion is based on the 6-month Libor rate of 0.44485% as of June 30, 2015 (please refer to Note 6 to our unaudited interim condensed consolidated financial statements for the six-month period ended June 30, 2015, included elsewhere herein).

 

 

Significant Accounting Policies and Critical Accounting Policies

There have been no material changes to our significant accounting policies since December 31, 2014 other than those reflected in our unaudited interim condensed consolidated financial statements for the six-month period ended June 30, 2015 included elsewhere herein.  For a description of our critical accounting policies and all of our significant accounting policies, see Note 2 to our audited financial statements and "Item 5 — Operating and Financial Review and Prospects," included in our Annual Report on Form 20-F for the year ended December 31, 2014, which was filed with the Commission on April 8, 2015 and Note 2 to the unaudited interim condensed consolidated financial statements for the six month period ended June 30, 2015, included elsewhere in this report.

 

 

 

 

 

STAR BULK CARRIERS CORP.
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

Consolidated Balance Sheets as of December 31, 2014 and June 30, 2015 (unaudited)	F-2
Unaudited Interim Condensed Consolidated Statements of Operations for the six month periods ended June 30, 2014 and 2015	F-3
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income/(Loss) for the six month periods ended June 30, 2014 and 2015	F-4
Unaudited Interim Condensed Consolidated Statement of Stockholders’ Equity for the six month periods ended June 30, 2014 and 2015	F-5
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2014 and 2015	F-6
Notes to Unaudited Interim Condensed Consolidated Financial Statements	F-7

 

 

 

 

 

		December 31, 2014				June 30, 2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	86,000			$	285,203
Restricted cash, current (Note 8)			3,352				2,769
Trade accounts receivable			24,765				18,316
Inventories (Note 4)			14,368				16,691
Due from managers			81				81
Due from related parties (Note 3)			245				671
Other current assets			1,269				1,524
Prepaid expenses and other receivables			4,350				5,164
Total Current Assets			134,430				330,419
FIXED ASSETS
Advances for vessels under construction and acquisition of vessels (Note 6)			454,612				337,671
Vessels and other fixed assets, net (Note 5)			1,441,851				1,772,664
Total Fixed Assets			1,896,463				2,110,335
OTHER NON-CURRENT ASSETS
Long term Investment (Note 3)			634				847
Deferred finance charges, net			8,029				13,002
Restricted cash, non-current (Note 8 )			10,620				11,020
Fair value of above market acquired time charter (Note 7)			11,908				2,723
TOTAL ASSETS		$	2,062,084			$	2,468,346
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt (Note 8)		$	88,317			$	93,128
Lease commitments short term (Note 5)			-				4,380
Excel Vessel Bridge Facility from related parties, current portion (Note 3 and Note 8)			8,168				-
Accounts payable			18,487				10,898
Due to buyers (Note 5)			1,100				-
Due to related parties (Note 3)			2,166				900
Due to managers			-				4,539
Accrued liabilities			13,738				14,171
Derivative liability, current (Note 14)			5,722				7,247
Deferred revenue			2,500				1,863
Total Current Liabilities			140,198				137,126
NON-CURRENT LIABILITIES
8.00% 2019 Notes (Note 8)			50,000				50,000
Long term debt (Note 8)			667,315				714,940
Lease commitments long term (Note 5)			-				77,300
Excel Vessel Bridge Facility from related parties, non current portion (Note 3 and Note 8)			47,993				-
Derivative liability, non current (Note 14)			2,010				3,653
Other non-current liabilities			266				300
TOTAL LIABILITIES			907,782				983,319
COMMITMENTS & CONTINGENCIES (Note 13)			-				-
STOCKHOLDERS' EQUITY
Preferred Shares; $0.01 par value, authorized 25,000,000 shares; none issued or outstanding at December 31, 2014 and June 30, 2015 (Note 9)			-				-
Common Shares, $0.01 par value, 300,000,000 shares authorized; 109,426,236 and 218,934,541 shares issued and outstanding at December 31, 2014 and June 30, 2015, respectively (Note 9)			1,094				2,189
Additional paid in capital  (Note 9)			1,567,713				2,005,649
Accumulated other comprehensive loss (Note 14)			(378	)			(3,487	)
Accumulated deficit			(414,127	)			(519,324	)
Total Stockholders' Equity			1,154,302				1,485,027
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	2,062,084			$	2,468,346

 

 

The accompanying condensed notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

 

 

 

		Six months ended June 30,
		2014				2015
Revenues:
Voyage revenues		$	43,064			$	101,182
Management fee income (Note 3)			1,861				136
			44,925				101,318
Expenses
Voyage expenses			7,721				30,637
Vessel operating expenses			16,062				56,964
Dry docking expenses			1,264				6,945
Depreciation			9,777				38,519
Management fees (Note 3 and Note 10 )			-				4,063
General and administrative expenses			10,215				11,153
Vessel impairment loss (Note 5 and Note 6)			-				28,829
Loss on time charter agreement termination (Note 7)			-				2,114
Other operational loss			94				-
Other operational gain			(407	)			(590	)
Bad debt expense			215				-
Loss on sale of vessel (Note 5)			-				13,389
			44,941				192,023
Operating  income / (loss)			(16	)			(90,705	)
Other Income/ (Expenses):
Interest and finance costs (Note 8)			(3,057	)			(13,871	)
Interest and other income/(loss)			21				828
Gain / (Loss) on derivative financial instrument, net (Note 14)			(819	)			(688	)
Loss on debt extinguishment (Note 8)			-				(974	)
Total other expenses, net			(3,855	)			(14,705	)
INCOME/(LOSS) BEFORE EQUITY IN INCOME OF INVESTEE			(3,871	)			(105,410	)
Equity in income of investee			1				213
Net  income / (loss)		$	(3,870	)		$	(105,197	)
Earnings / (Loss) per share, basic and diluted  (Note 11)		$	(0.13	)		$	(0.61	)
Weighted average number of shares outstanding, basic and diluted  (Note 11)			28,973,621				171,736,658

The accompanying condensed notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

 

STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income
For the six month periods ended June 30, 2014 and 2015
(Expressed in thousands of U.S. dollars except for share and per share data)

 

 

		Six months ended June 30,
		2014				2015
Net income/ (loss):		$	(3,870	)		$	(105,197	)
Other comprehensive loss:
Unrealized losses from cash flow hedges:
Unrealized losses from cash flow hedges during the period before reclassifications			-				(4,827	)
Less:
Reclassification adjustments of losses from cash flow hedges included in net loss during the period			-				1,718
Other comprehensive loss			-				(3,109	)
Comprehensive income / (loss)		$	(3,870	)		$	(108,306	)

 

The accompanying condensed notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

 

 

 

		Common Shares
		# of Shares				Par Value				Additional Paid-in Capital				Other Comprehensive loss				Accumulated deficit				Total Stockholders' Equity
BALANCE, January 1, 2014			29,059,671			$	291			$	668,219			$	-			$	(402,404	)		$	266,106
Net  income / (loss)			-				-				-				-				(3,870	)			(3,870	)
Other comprehensive loss			-				-				-				-				-				-
Issuance of common shares - Acquisition of 33% of Interchart (Note 9)			22,598				-				328				-				-				328
Issuance of vested and non-vested shares and amortization of stock-based compensation (Note 12)			411,500				4				1,899				-				-				1,903
BALANCE, June 30, 2014			29,493,769			$	295			$	670,446			$	-			$	(406,274	)		$	264,467
BALANCE, January 1, 2015			109,426,236			$	1,094			$	1,567,713			$	(378	)		$	(414,127	)		$	1,154,302
Net income / (loss)			-				-				-				-				(105,197	)			(105,197	)
Other comprehensive loss			-				-				-				(3,109	)			-				(3,109	)
Amortization of stock-based compensation (Note 12)			-				-				1,407				-				-				1,407
Issuance of common shares (Note 9)			105,250,418				1,053				416,744				-				-				417,797
Shares for commission to Oceanbulk Maritime (Note 3)			-				-				519				-				-				519
Issuance of common shares for Excel Transactions (Note 1)			4,257,887				42				19,266				-				-				19,308
BALANCE, June 30, 2015			218,934,541			$	2,189			$	2,005,649			$	(3,487	)		$	(519,324	)		$	1,485,027

 

The accompanying condensed notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

 

 

		Six months ended June 30,
		2014				2015
Cash Flows from Operating Activities:
Net income / (loss)		$	(3,870	)		$	(105,197	)
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
Depreciation			9,777				38,519
Amortization of  fair value of above market acquired time charters (Note 7)			3,149				7,071
Amortization of deferred finance charges (Note 8)			284				1,199
Loss on debt extinguishment (Note 8)			-				974
Loss on time charter agreement termination (Note 7)			-				2,114
Vessel impairment loss (Note 5 and Note 6)			-				28,829
Loss on sale of vessel (Note 5)			-				13,389
Stock-based compensation (Note 12)			1,903				1,407
Change in fair value of derivatives			819				59
Other non-cash charges			215				34
Gain from insurance claim			(237	)			-
Equity of income of investee			-				(213	)
Changes in operating assets and liabilities:
(Increase)/Decrease in:
Trade accounts receivable			(1,223	)			6,449
Inventories			(3,501	)			(2,323	)
Prepaid expenses and other current assets			(602	)			(1,069	)
Due from related parties			(1,467	)			(426	)
Increase/(Decrease) in:
Accounts payable			2,060				(3,814	)
Due to related parties			917				(1,266	)
Accrued liabilities			2,207				863
Due to managers			-				4,539
Deferred revenue			54				(637	)
Net cash provided by/(used in) Operating Activities		$	10,485			$	(9,499	)
Cash Flows from Investing Activities:
Advances for vessels under construction and acquisition of vessels and other assets (Note 5 and Note 6)		$	(74,267	)		$	(317,538	)
Long-term investment			(200	)			-
Cash proceeds from vessel sale (Note 5)			-				38,831
Hull and Machinery Insurance proceeds			550				-
Decrease in restricted cash			22				3,487
Increase in restricted cash			(4,102	)			(3,304	)
Net cash provided by/(used in) Investing Activities		$	(77,997	)		$	(278,524	)
Cash Flows from Financing Activities:
Proceeds from bank loans		$	74,000			$	266,181
Loan prepayments and repayments			(10,452	)			(188,226	)
Financing fees paid			(914	)			(8,526	)
Proceeds from issuance of common shares (Note 9)			-				418,771
Offering expenses paid related to the issuance of common shares (Note 9)			-				(974	)
Net cash  provided by/(used in) Financing Activities		$	62,634			$	487,226
Net  (decrease) / increase in cash and cash equivalents		$	(4,878	)		$	199,203
Cash and cash equivalents at beginning of period			44,298				86,000
Cash and cash equivalents at end of the period		$	39,420			$	285,203
Cash paid during the period for:
Interest		$	2,540			$	19,844

 

 

The accompanying condensed notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

STAR BULK CARRIERS CORP.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

1.	Basis of Presentation and General Information:

 

Star Bulk Carriers Corp. (“Star Bulk”) is a 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 executive offices in Athens, Greece.

Star Bulk’s common shares started trading on the NASDAQ Global Select Market on December 3, 2007, under the ticker symbol “SBLK.” The accompanying unaudited interim condensed consolidated financial statements include the accounts of Star Bulk and its subsidiaries, which are hereinafter collectively referred to as 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 and, in the opinion of management, reflect all adjustments, which include only 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 six months ended June 30, 2015, are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2015.

The unaudited interim condensed consolidated financial statements presented in this report should be read in conjunction with the Company’s Annual Report on Form 20-F for the year ended December 31, 2014, filed with the SEC on April 8, 2015.  The balance sheet as of December 31, 2014 has been derived from the audited 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.

The 2014 Transactions

On July 11, 2014, the Company, as part of its growth strategy, completed a transaction that resulted in the acquisition of Oceanbulk Shipping LLC (“Oceanbulk Shipping”) and Oceanbulk Carriers LLC (“Oceanbulk Carriers”, and, together with Oceanbulk Shipping, “Oceanbulk”) from Oaktree Dry Bulk Holdings LLC (including affiliated funds, “Oaktree”) and Millennia Holdings LLC (“Millennia Holdings”, and together with Oaktree, the “Sellers”) through the merger of the Company’s wholly-owned subsidiaries, Star Synergy LLC and Star Omas LLC, into Oceanbulk’s holding companies (the “Merger”).  At the time of the Merger, Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding fuel-efficient Eco-type dry bulk vessels at shipyards in Japan and China.  Millennia Holdings is an entity that is affiliated with the family of Mr. Petros Pappas, who became the Company’s Chief Executive Officer in connection with the Merger.

The agreement governing the Merger also provided for the acquisition (the “Heron Transaction”) by the Company of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd.  (“Heron”), a limited liability company incorporated in Malta, which was a joint venture between Oceanbulk Shipping and a third party. The Heron Transaction has been reflected in the Company’s consolidated financial statements as a purchase of assets.

In addition, concurrently with the Merger, the Company completed a transaction (the “Pappas Transaction”), in which it acquired all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively, the “Pappas Companies”), which were entities owned and controlled by affiliates of the family of Mr. Pappas.  At the time of the Merger, 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 (Indomitable), which was delivered in January 2015. The Merger, the Heron Transaction and the Pappas Transaction are referred to, together, as the “July 2014 Transactions”.

 

 

A total of 54,104,200 of the Company’s common shares were issued to the various selling parties in the July 2014 Transactions, consisting of 48,395,766 common shares consideration for the Merger with Oceanbulk, 3,592,728 common shares consideration for the acquisition of Pappas Companies and 2,115,706 common shares partial consideration for the acquisition of the Heron Vessels.

The results of operations of Oceanbulk and the Pappas Companies have been reflected in the Company’s consolidated statement of operations since the acquisition date (July 11, 2014).  As a result, no financial information of Oceanbulk and the Pappas Companies are included in the accompanying statement of operations for the period ended June 30, 2014.

The following unaudited pro forma consolidated financial information reflects the results of operations for the six month period ended June 30, 2014, as if the Merger and the Pappas Transaction had been consummated on January 1, 2013 and after giving effect to purchase accounting adjustments, including the nonrecurring pro forma reversal of:  (i)  all acquisition-related transaction costs of $2,363 incurred in the six month period ended June 30, 2014 and (ii) the interest expense of $1,816 incurred in the six month period ended June 30, 2014, with respect to the convertible loan owed by Oceanbulk to its members, which was converted into equity because of the Merger, as if the conversion had taken place on January 1, 2013.  These unaudited 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 Merger and the Pappas Transaction actually taken place on January 1, 2013. 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:

		Six month period ended June 30,  2014
Pro forma revenues		$	73,448
Pro forma operating loss			(4,637	)
Pro forma net loss			(12,270	)
Pro forma loss per share, basic and diluted		$	(0.15	)

In addition, on August 19, 2014, the Company entered into definitive agreements with Excel Maritime Carriers Ltd.  (“Excel”) pursuant to which (the “Excel Transactions”) the Company acquired 34 operating dry bulk vessels, consisting of six Capesize vessels, 14 sistership Kamsarmax vessels, 12 Panamax vessels and two Handymax vessels (the “Excel Vessels”) for an aggregate consideration of 29,917,312 of its common shares (the “Excel Vessel Share Consideration”) and $288,391 in cash. The last Excel Vessel was delivered to the Company in April 2015. The delivery of each Excel Vessel has been reflected in the Company’s financial statements as a purchase of assets.

The Excel Transactions along with the July 2014 Transactions are herein collectively referred to as the “2014 Transactions”.

 

Subsidiaries, Owned Vessels and Newbuilding Contracts

Below is the list of Star Bulk’s subsidiaries, all of which are wholly owned, as of June 30, 2015:

Vessels in operation at June 30, 2015

								Date
		Wholly Owned Subsidiaries		Vessel Name		DWT		Delivered to Star Bulk		Year Built
1		Pearl Shiptrade LLC		Gargantua (1)		209,529		April 2, 2015		2015
2		L.A. Cape Shipping LLC		Deep Blue (1)		182,608		May 27, 2015		2015
3		Cape Ocean Maritime LLC		Leviathan (1)		182,511		September 19, 2014		2014
4		Cape Horizon Shipping LLC		Peloreus (1)		182,496		July 22, 2014		2014
5		Positive Shipping Company		Indomitable (1)		182,476		January 8, 2015		2015
6		OOCAPE1 Holdings LLC		Obelix (1)		181,433		July 11, 2014		2011
7		Sandra Shipco LLC		Star Pauline (2)		180,274		December 29, 2014		2008
8		Christine Shipco LLC		Christine (tbr Star Martha) (2)		180,274		October 31, 2014		2010
9		Pacific Cape Shipping LLC		Pantagruel (1)		180,181		July 11, 2014		2004
10		Star Borealis LLC		Star Borealis		179,678		September 9, 2011		2011
11		Star Polaris LLC		Star Polaris		179,600		November 14, 2011		2011
12		Star Trident V LLC		Star Angie (2)		177,931		October 29, 2014		2007
13		Sky Cape Shipping LLC		Big Fish (1)		177,643		July 11, 2014		2004
14		Global Cape Shipping LLC		Kymopolia (1)		176,990		July 11, 2014		2006
15		Sea Cape Shipping LLC		Big Bang (1)		174,109		July 11, 2014		2007
16		Star Aurora LLC		Star Aurora		171,199		September 8, 2010		2000
17		Lowlands Beilun Shipco LLC		Star Despoina (2)		170,162		December 29, 2014		1999
18		Star Trident VII LLC		Star Eleonora (2)		164,218		December 3, 2014		2001
19		Star Trident VI LLC		Star Monisha (2)		164,218		February 2, 2015		2001
20		Nautical Shipping LLC		Amami (1)		98,681		July 11, 2014		2011
21		Majestic Shipping LLC		Madredeus (1)		98,681		July 11, 2014		2011
22		Star Sirius LLC		Star Sirius		98,681		March 7, 2014		2011
23		Star Vega LLC		Star Vega		98,681		February 13, 2014		2011
24		Star Alta II LLC		Star Angelina (3)		82,981		December 5, 2014		2006
25		Star Alta I LLC		Star Gwyneth (3)		82,790		December 5, 2014		2006
26		Star Trident I LLC		Star Kamila (2)		82,769		September 3, 2014		2005
27		Grain Shipping LLC		Pendulum (1)		82,619		July 11, 2014		2006
28		Star Trident XIX LLC		Star Maria (2)		82,598		November 5, 2014		2007
29		Star Trident XII LLC		Star Markella (2)		82,594		September 29, 2014		2007
30		Star Trident IX LLC		Star Danai (2)		82,574		October 21, 2014		2006
31		Star Trident XI LLC		Star Georgia (2)		82,298		October 14, 2014		2006
32		Star Trident VIII LLC		Star Sophia (2)		82,269		October 31, 2014		2007
33		Star Trident XVI LLC		Star Mariella (2)		82,266		September 19, 2014		2006
34		Star Trident XIV LLC		Star Moira (2)		82,257		November 19, 2014		2006
35		Star Trident XVIII LLC		Star Nina (2)		82,224		January 5, 2015		2006
36		Star Trident X LLC		Star Renee (2)		82,221		December 18, 2014		2006
37		Star Trident II LLC		Star Nasia  (2)		82,220		August 29, 2014		2006
38		Star Trident XIII LLC		Star Laura (2)		82,209		December 8, 2014		2006
39		Star Trident XV LLC		Star Jennifer (2)		82,209		April 15, 2015		2006
40		Star Trident XVII LLC		Star Helena (2)		82,187		December 29, 2014		2006
41		Mineral Shipping LLC		Mercurial Virgo (1)		81,545		July 11, 2014		2013
42		KMSRX Holdings LLC		Magnum Opus (1)		81,022		July 11, 2014		2014
43		Dioriga Shipping Co.		Tsu Ebisu (1)		81,001		July 11, 2014		2014
44		Star Trident III LLC		Star Iris (2)		76,466		September 8, 2014		2004

45		Star Trident IV LLC		Star Aline (2)		76,429		September 4, 2014		2004
46		Star Trident XX LLC		Star Emily (2)		76,417		September 16, 2014		2004
47		Star Trident XXII LLC		Star Natalie  (2)		73,798		August 29, 2014		1998
48		Star Trident XXIII LLC		Star Nicole (2)		73,751		January 14, 2015		1997
49		Star Trident XXV LLC		Star Vanessa (2)		72,493		November 7, 2014		1999
50		Star Trident XXVI LLC		Star Claudia (2)		71,662		January 20, 2015		1997
51		Spring Shipping LLC		Idee Fixe (1)(4)		63,458		March 25, 2015		2015
52		Orion Maritime LLC		Roberta (1)(4)		63,426		March 31, 2015		2015
53		Success Maritime LLC		Laura (1)(4)		63,399		April 7, 2015		2015
54		Ultra Shipping LLC		Kaley (1)(4)		63,283		June 26, 2015		2015
55		Star Challenger I LLC		Star Challenger		61,462		December 12, 2013		2012
56		Star Challenger II LLC		Star Fighter		61,455		December 30, 2013		2013
57		Aurelia Shipping LLC		Honey Badger (1)		61,297		February 27, 2015		2015
58		Rainbow Maritime LLC		Wolverine (1)		61,297		February 27, 2015		2015
59		Premier Voyage LLC		Maiden Voyage (1)		58,722		July 11, 2014		2012
60		Glory Supra Shipping LLC		Strange Attractor (1)		55,742		July 11, 2014		2006
61		Star Omicron LLC		Star Omicron		53,489		April 17, 2008		2005
62		Star Gamma LLC		Star Gamma (ex C Duckling)		53,098		January 4, 2008		2002
63		Star Zeta LLC		Star Zeta (ex I Duckling)		52,994		January 2, 2008		2003
64		Star Delta LLC		Star Delta (ex F Duckling)		52,434		January 2, 2008		2000
65		Star Theta LLC		Star Theta (ex J Duckling)		52,425		December 6, 2007		2003
66		Star Epsilon LLC		Star Epsilon (ex G Duckling)		52,402		December 3, 2007		2001
67		Star Cosmo LLC		Star Cosmo		52,246		July 1, 2008		2005
68		Star Kappa LLC		Star Kappa (ex E Duckling)		52,055		December 14, 2007		2001
69		Star Trident XXX LLC		Star Michele (2)		45,588		October 14, 2014		1998

(2)	Vessels acquired pursuant to the Excel Transactions

(3)	Vessels acquired from Heron

(4)	Vessels subject to a capital bareboat lease (Note 5)

 

Newbuildings at June 30, 2015

		Wholly Owned Subsidiaries		Newbuildings Name		Type		DWT		Expected Delivery Date
1		Sea Diamond Shipping LLC		HN NE 167 (tbn Goliath) (Note 15)		Newcastlemax		209,000		July 2015
2		Coral Cape Shipping LLC		HN NE 184 (tbn Maharaj) (Note 15)		Newcastlemax		209,000		July 2015
3		Star Ennea LLC		HN NE 198 (tbn Star Poseidon)		Newcastlemax		209,000		March 2016
4		Clearwater Shipping LLC		HN 1359 (tbn Star Marisa) (1) (2)		Newcastlemax		208,000		November 2015
5		Star Seeker LLC		HN 1372 (tbn Star Libra) (2)		Newcastlemax		208,000		November 2015
6		Domus Shipping LLC		HN 1360 (tbn Star Ariadne) (1) (2)		Newcastlemax		208,000		February 2016
7		Star Castle I LLC		HN 1342 (tbn Star Gemini) (1)		Newcastlemax		208,000		March 2016
8		Star Breezer LLC		HN 1371 (tbn Star Virgo) (2)		Newcastlemax		208,000		February 2016
9		Festive Shipping LLC		HN 1361 (tbn Star Magnanimus) (1) (2)		Newcastlemax		208,000		May 2016
10		Star Castle II LLC		HN 1343 (tbn Star Leo)		Newcastlemax		208,000		March 2016
11		White Sand Shipping LLC		HN 1363 (tbn Star Chaucer) (1) (2)		Newcastlemax		208,000		September 2016
12		Cape Confidence Shipping LLC		HN 5055 (tbn Behemoth)		Capesize		182,000		January 2016
13		Cape Runner Shipping LLC		HN 5056 (tbn Megalodon)		Capesize		182,000		January 2016
14		Olympia Shiptrade LLC		HN 1312 (tbn Bruno Marks)		Capesize		180,000		September 2015
15		Victory Shipping LLC		HN 1313 (tbn Jenmark)		Capesize		180,000		October 2015
16		Star Cape I LLC		HN 1338 (tbn Star Aries)		Capesize		180,000		November 2015
17		Star Cape II LLC		HN 1339 (tbn Star Taurus)		Capesize		180,000		March 2016
18		Blooming Navigation LLC		HN 1080 (tbn Kennadi)		Ultramax		64,000		January 2016

19		Jasmine Shipping LLC		HN 1081 (tbn Mackenzie)		Ultramax		64,000		February 2016
20		Oday Marine LLC		HN 1082 (tbn Night Owl)		Ultramax		64,000		March 2016
21		Searay Maritime LLC		HN 1083 (tbn Early Bird)		Ultramax		64,000		April 2016
22		Star Axe I LLC		HN NE 196 (tbn Star Antares)		Ultramax		61,000		October 2015
23		Star Axe II LLC		HN NE 197 (tbn Star Lutas)		Ultramax		61,000		January 2016
24		Star Asia I LLC		HN 5040 (tbn Star Aquarius) (Note 15)		Ultramax		60,000		July 2015
25		Star Asia II LLC		HN 5043 (tbn Star Pisces) (Note 15)		Ultramax		60,000		August 2015