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Stellar Acquisition- Sharp shooters with a hunting license

Stellar Acquisition- Sharp shooters with a hunting license
The words “blank cheque company” and “hunting license” and “optionality” are often grouped together when the conversation comes to investment strategies in beleaguered shipping markets.

So it is with Stellar Acquisition III Inc., a public offering launched by two Greek shipping veterans at a time that pundits suggested that “only established companies can raise money, and then for follow-ons only.” In this particular flavor of offering, also known as Special Purpose Acquisition Corp, or SPAC, the entity raised a top line $ 65m amount (and $76m if the underwriters choose to exercise their over-allotment options in the next few weeks), which can be used in the future to pursue investment opportunities in a specific sector.

An additional $3.8m was added to the company’s coffers, deposited in a trust account, from an investment by the company’s sponsors. Here, this Nasdaq-listed SPAC (with the symbol “STLR”) will set its sights on “international oil and gas logistics, land and maritime oil and gas transportation, terminal and energy storage industries”. Collectively, these segments comprise what’s called “the energy logistics” sector.

Messrs. Akis Tsirigakis and George Syllantavos, the principals of Stellar, have been there before, albeit in a more benign marketplace for energy logistics, with Nautilus Marine Acquisition Corp, a previous SPAC, launched in 2011 that bought a half dozen OSVs in 2013 from Vega Offshore, and ultimately sold them onwards, in 2015, to Dryships.

Previously, the pair launched another successful SPAC that bought drybulk vessels ultimately absorbed into the entity that is now Star Bulk (“SBLK”). Stellar’s ultimate business voyage is not known at the outset, but the composition of its proposed Board of Directors points strongly in the direction of energy assets, but there is also considerable expertise in the drybulk sector- which arguably presents a different visage of energy logistics than those highlighted in the offering documents.    

Unlike traditional equity offerings, the underwriting group, led by New York veterans Maxim Securities, also have considerable skin in the game in the form of a deferral on part of their compensation, subject to completion of an acquisition within the allotted timeframe that could stretch out to early 2018.

A “hunting license” held by a well-seasoned and highly experienced pack of deal pursuers, at a time when many prey are hobbled by too much debt and poor market prospects - against the backdrop of a continued low oil prices and continued drybulk vessel oversupply - will make Stellar a player to watch closely.