Nasdaq-listed Star Bulk will acquire Norwegian shipowner Songa Bulk’s fleet of 15 vessels for $145m in cash and 13.725m shares in Star Bulk, worth $182.95m based on yesterday’s closing price of $13.33 per share.
Songa Bulk has a fleet of three capesizes, 10 kamsarmaxes, one ultramax and one supramax totalling 1.48m dwt. The acquisition would give Star Bulk a fully delivered fleet of 108 bulkers totalling 12.26m dwt with an average age of 7.1m dwt.
Songa Bulk - an investment vehicle
Songa Bulk was founded in 2016 by the Blystad Group, and former Golden Ocean ceo Herman Billung as an investment vehicle to acquire dry bulk vessels at historically low values. The deal requires the approval of Songa Bulk’s shareholders and Arne Blystad, Magnus Roth and Herman Billung, owning 29% of Songa Bulk’s shares have committed to the transaction.
Blystad said: "The transaction further enhances Songa shareholders’ exposure to an expected continued strengthening of the dry bulk market, allowing for economies of scale from a 108 vessels combined fleet, attractive leverage profile and increased stock liquidity. A dual listing of the combined entity will open the company to a wider investor base and should benefit all stakeholders."
Blystad would join the board of Star Bulk and Billung its senior management, with Songa Bulk holding a 14.9% stake in the shipowner.
"Through the acquisition we will also add further industry and capital markets expertise to Star Bulk’s board and management through appointing Mr. Arne Blystad to our Board and including Mr. Herman Billung as part of our management team, expanding our presence in the Scandinavian investor market," commented Petro Pappas ceo of Star Bulk.
Star Bulk will finance the cash portion of the deal through proceeds of a new five-year capital lease of $180m with China Merchants Bank Leasing. It also plans a secondary listing of its shares on the Oslo Bors.
Adding three more newbuilds from Oceanbulk Container Carriers
Star Bulk is also acquiring three newcastlemax newbuilds from Oceanbulk Container Carriers (OCC), a company owned by Oaktree Capital Management and members of ceo Pappas’ family in share deal. The Nasdaq-listed shipowner is acquiring the three vessels to be delivered by Shanghai Waigaoqiao Shipbuilding in Q1 2019 for 3.39m shares in Star Bulk.
“The combined Songa and OCC fleet is on average two years younger than our existing fleet with a similar fleet composition. Star Bulk will continue to be a consolidator in the dry bulk industry and expect that the acquisitions will provide Star Bulk with further synergies and economies of scale,” said Pappas.