China Merchants Bank Leasing enters into sale and leaseback agreements worth $15 million USD with Star Bulk Carriers Corp. to provide scrubbers to Delphin Shipping's 11 dry bulk carriers (Linked to Project ID#90952)

In July 2019, CMB Financial Leasing Co., Ltd. (CMBF or CMBFL) entered into seven-year sale and leaseback agreements and bareboat charter party contracts worth an aggregate $91.431 million USD with Star Bulk Carriers Corp. in order to partially finance the acquisition of the 11 dry bulk carriers of Delphin Shipping, LLC, owned by private equity firm Kelso & Co. The acquisition of the Delphin vessels stemmed from a May 27, 2019 en bloc definitive agreement in which Star Bulk acquired the ships for an aggregate of 4,503,370 of its common shares (cost of shares being calculated by Star Bulk's closing share market prices on the delivery date of each vessel) and a cash consideration of $80 million USD for the total acquisition cost of $127.532 million USD. CMBF's lease financed the cash consideration portion of the acquisition. Per the terms of each bareboat charter for each vessel, Star Bulk would pay CMBL a fixed bareboat charter hire rate in quarterly installments plus interest, and Star Bulk would have the option to purchase each vessel beginning one year after each vessel's delivery to Star Bulk for a pre-determined, amortizing purchase price. Star Bulk had the obligation to purchase each vessel at the expiration of the respective bareboat term at a price ranging from $975,000 USD to $3,379,000 USD. The $91.431 million USD sale and leaseback agreements are captured via Project ID#90952. Additionally, CMBL provided an additional aggregate value of $15,000,000 USD under the bareboat charters that Star Bulk used to finance the acquisition and installation of scrubber equipment on the Delphin vessels. This amount was to be repaid in 12 equal quarterly installments plus interest. The funds were disbursed in the second and third quarters of 2020. This financing arrangement is captured via this project. The 628,500 deadweight-tonnage (DWT) Delphin fleet consisted of 10 56,100 DWT bulkers (Aquila, Cepheus, Columba, D. Centaurus, Dorado, Hercules, Hydrus, Leo, Pegasus, and Pyxis) and one 63,100 DWT bulker (Apus) built between 2012 and 2014 by Chinese shipbuilder Jiangsu Hantong Group Co., Ltd.; with these 11 vessels, Star Bulk's fleet grew to 120 vessels. The scrubbers were intended to allow Star Bulk to comply with the International Maritime Organization's 2020 regulations that would require shipowners to have secured exhaust gas cleaning units on all vessels. The acquisition was expected to be completed in June 2019. Star Bulk received all 11 Delphin vessels in the third quarter of 2019. By May 2020, Star Bulk had completed its scrubber installation programme for its fleet, which now included the Delphin vessels.

Additional details

1. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products. 2. Star Bulk Carriers was incorporated in 2006 and is based in Marousi, Greece. 3. Given that Star Bulk Carriers drew down the $15 million USD to acquire and install the scrubbers in 2020 and its fleet-wide scrubber programme was completed the same year, AidData has assumed that the scrubbers for the Delphin vessels were acquired and installed sometime in 2020, so it has coded 2020 as the actual_implementation_start_date and actual_implementation_completion_date, while also marking the actual_implementation_start_date_estimated? and actual_implementation_completion_date? fields as True.

Number of official sources

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