Star Bulk Carriers plans to sell and lease back 16 ships by next month in exchange for $274m from four different buyers to refinance loan and lease agreements tied to the vessels.

The Petros Pappas-led owner of 116 bulkers announced the decision on Thursday as part of its second-quarter earnings report, after signing commitment letters in July.

Athens-based Star Bulk has signed a sale and leaseback agreement for three undisclosed newcastlemaxes in a $92.6m deal that includes a 10-year bareboat charter and purchase obligation.

The owner struck this deal, expected to close in September, with an undisclosed Chinese financial institution.

Star Bulk also penned an agreement with China Merchants Bank Leasing for seven ships in an $89m transaction that includes a purchase option at the end of a five-year bareboat charter.

The vessels involved in the deal, set to close next month, are the 63,399-dwt Laura, 63,458-dwt Idee Fixe, 63,246-dwt Roberta, 63,283-dwt Kaley (all built 2015), 56,582-dwt Diva, 98,681-dwt Star Sirius and 98,681-dwt Star Vega (all built 2011).

Star Bulk has also entered into a sale-and-leaseback deal for five ships with SPDB Financial Leasing in exchange for $76.5m. The transaction is expected to finalise later this month.

The deal, which includes a purchase obligation at the end of an eight-year bareboat charter, involves the 63,226-dwt Mackenzie, 63,262-dwt Kennadi (both built 2016) and the 61,300-dwt sisterships Honey Badger, Wolverine and Star Antares (all built 2015).

Finally, Star Bulk has signed a sale and leaseback deal worth $16m for the 61,347-dwt Star Lutas (built 2016) with an undisclosed Japanese financial institution.

That deal is expected to close by the end of September and carries a purchase obligation at the end of a seven-year bareboat charter.

The money from these deals will go toward refinancing the outstanding amounts owned under the loan and lease agreements for the vessels.

Paying off one loan with another

Last month, Star Bulk drew down $155m from a $70m loan with ING, a $35m loan with Alpha Bank and a $50.4m loan with Piraeus Bank to refinance $125m in prior loans, as well as loan and lease agreements on 14 vessels.

Star Bulk also took out a $17.6m loan with NTT Finance Corp to refinance an outstanding lease agreement on the 81,918-dwt Star Calypso (built 2014).

The facility, secured by a first-priority mortgage on the Star Calypso, will mature five years from the drawdown date and refinanced another facility with $10.7m outstanding.

"We continue taking proactive steps to strengthen our balance sheet via refinancings that improve our company’s liquidity," chief executive Pappas said in a statement.

"To date, we have completed transactions that have increased our cash balance by $37.4m and have received credit committee approval for another $75m of expected net proceeds that will be finalised over the next two months."

In the red

The company posted an adjusted net loss of $18.1m versus $20.5m for the same period last year.

Adjusted loss per share came in at $0.19 versus $0.22 a year ago, beating analysts' estimates by $0.13.

Revenue came in at $146m versus $158m during the same three-month period in 2019, primarily due to lower rates as a result of the pandemic.

Pappas still holds optimism for the future, despite Star Bulk landing in the loss column for the second quarter.

"We are optimistic about market fundamentals for the remainder of the year," he said.

"There is a record-low orderbook as a result of recent demand shocks and the uncertainty related to future decarbonisation regulations.

"Dry bulk trade and ton-miles are expected to recover, propelled by the global infrastructure stimulus response to Covid-19, which, we expect, will lead to a better balanced dry bulk market."