EX-99.1 2 d8857058_ex99-1.htm


Exhibit 99.1

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

The following is a discussion of the financial condition and results of operations of Star Bulk Carriers Corp. (“Star Bulk”) for the three-month periods ended March 31, 2020 and 2021. 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 herein. For additional information relating to our management’s discussion and analysis of financial conditions and results of operations, please see our Annual Report on Form 20‑F for the year ended December 31, 2020, which was filed with the U.S. Securities and Exchange Commission (the “Commission”) on April 1, 2021, as amended on April 2, 2021 (the “2020 Annual Report”). Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2020 Annual Report. 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 a global shipping company providing worldwide seaborne transportation solutions in the dry bulk sector. Our vessels transport major bulks, which include iron ore, coal and grain, and minor bulks which include bauxite, 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. We maintain offices in Athens, Oslo, New York, Limassol Singapore and Germany. Our common shares trade on the Nasdaq Global Select Market under the symbol “SBLK.”

Our Fleet

On May 19, 2021 we took delivery of the SBI Pegasus (tbr Star Athena), the seventh and final vessel pursuant to the previously announced transaction with Eneti Inc. (NYSE: NETI), formerly known as Scorpio Bulkers Inc. We issued to the relevant affiliates of Eneti Inc. 350,797 common shares representing the share consideration for the seventh vessel and we assumed the outstanding lease obligations associated with the vessel.

As of May 19, 2021, our owned (on a fully delivered basis following the delivery of the two Kamsarmax Resale Vessels) fleet consisted of 128 operating vessels with an aggregate carrying capacity of approximately 14.1 million dwt, consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels. As used herein, “Eneti Acquisition Vessels” refers to the seven vessels subject to our acquisition pursuant to the agreement entered into on February 2, 2021 among us and Eneti Inc.  and certain other parties; and “Kamsarmax Resale Vessels” refers to the two vessels subject to our acquisition pursuant to the definitive agreement entered into on March 3, 2021 between us and a third party. For additional information relating to the Eneti Acquisition Vessels and the Kamsarmax Resale Vessels, please see our 2020 Annual Report. We believe our Company is the largest US listed dry bulk operator in terms of number vessels and deadweight tonnage.

The following tables present summary information relating to our fleet as of May 19, 2021:



Operating Fleet:

 
 
 
 
Date
 
 
Wholly Owned Subsidiaries
Vessel Name
DWT
Delivered to Star Bulk
Year Built
1
Sea Diamond Shipping LLC
Goliath (1)
209,537
July 15, 2015
2015
2
Pearl Shiptrade LLC
Gargantua (1)
209,529
April 2, 2015
2015
3
Star Ennea LLC
Star Gina 2GR
209,475
February 26, 2016
2016
4
Coral Cape Shipping LLC
Maharaj (1)
209,472
July 15, 2015
2015
5
Star Castle II LLC
Star Leo
207,939
May 14, 2018
2018
6
ABY Eleven Ltd
Star Laetitia
207,896
August 3, 2018
2017
7
Domus Shipping LLC
Star Ariadne
207,812
March 28, 2017
2017
8
Star Breezer LLC
Star Virgo
207,810
March 1, 2017
2017
9
Star Seeker LLC
Star Libra (1)
207,765
June 6, 2016
2016
10
ABY Nine Ltd
Star Sienna
207,721
August 3, 2018
2017
11
Clearwater Shipping LLC
Star Marisa
207,709
March 11 2016
2016
12
ABY Ten Ltd
Star Karlie
207,566
August 3, 2018
2016
13
Star Castle I LLC
Star Eleni
207,555
January 3, 2018
2018
14
Festive Shipping LLC
Star Magnanimus
207,490
March 26, 2018
2018
15
New Era II Shipping LLC
Debbie H
206,861
May 28, 2019
2019
16
New Era III Shipping LLC
Star Ayesha
206,852
July 15, 2019
2019
17
New Era I Shipping LLC
Katie K
206,839
April 16, 2019
2019
18
Cape Ocean Maritime LLC
Leviathan
182,511
September 19, 2014
2014
19
Cape Horizon Shipping LLC
Peloreus
182,496
July 22, 2014
2014
20
Star Nor I LLC
Star Claudine
181,258
July 6, 2018
2011
21
Star Nor II LLC
Star Ophelia
180,716
July 6, 2018
2010
22
Christine Shipco LLC
Star Martha
180,274
October 31, 2014
2010
23
Sandra Shipco LLC
Star Pauline
180,233
December 29, 2014
2008
24
Pacific Cape Shipping LLC
Pantagruel
180,181
July 11, 2014
2004
25
Star Borealis LLC
Star Borealis
179,678
September 9, 2011
2011
26
Star Polaris LLC
Star Polaris
179,546
November 14, 2011
2011
27
Star Nor III LLC
Star Lyra
179,147
July 6, 2018
2009
28
Star Regg IV LLC
Star Bayonne
178,977
January 26, 2021
2010
29
Star Regg V LLC
Star Borneo
178,978
January 26, 2021
2010
30
Star Regg VI LLC
E.R. Buenos Aires
178,978
January 26, 2021
2010
31
Star Regg II LLC
Star Janni
178,978
January 7, 2019
2010
32
Star Regg I LLC
Star Marianne
178,906
January 14, 2019
2010
33
Star Trident V LLC
Star Angie
177,931
October 29, 2014
2007
34
Sky Cape Shipping LLC
Big Fish
177,662
July 11, 2014
2004
35
Global Cape Shipping LLC
Kymopolia
176,990
July 11, 2014
2006
36
Star Trident XXV Ltd.
Star Triumph
176,343
December 8, 2017
2004
37
ABY Fourteen Ltd
Star Scarlett
175,800
August 3, 2018
2014
38
ABY Fifteen Ltd
Star Audrey
175,125
August 3, 2018
2011
39
Sea Cape Shipping LLC
Big Bang
174,109
July 11, 2014
2007
40
ABY I LLC
Star Paola
115,259
August 3, 2018
2011




 
Wholly Owned Subsidiaries
Vessel Name
DWT
Delivered to Star Bulk
Year Built
41
ABM One Ltd
Star Eva
106,659
August 3, 2018
2012
42
Nautical Shipping LLC
Amami
98,681
July 11, 2014
2011
43
Majestic Shipping LLC
Madredeus
98,681
July 11, 2014
2011
44
Star Sirius LLC
Star Sirius (1)
98,681
March 7, 2014
2011
45
Star Vega LLC
Star Vega (1)
98,681
February 13, 2014
2011
46
ABY II LLC
Star Aphrodite
92,006
August 3, 2018
2011
47
Augustea Bulk Carrier Ltd
Star Piera
91,952
August 3, 2018
2010
48
Augustea Bulk Carrier Ltd
Star Despoina
91,945
August 3, 2018
2010
49
Star Nor IV LLC
Star Electra
83,494
July 6, 2018
2011
50
Star Alta I LLC
Star Angelina
82,981
December 5, 2014
2006
51
Star Alta II LLC
Star Gwyneth
82,790
December 5, 2014
2006
52
Star Trident I LLC
Star Kamila
82,769
September 3, 2014
2005
53
Star Nor VI LLC
Star Luna
82,687
July 6, 2018
2008
54
Star Nor V LLC
Star Bianca
82,672
July 6, 2018
2008
55
Grain Shipping LLC
Pendulum
82,619
July 11, 2014
2006
56
Star Trident XIX LLC
Star Maria
82,598
November 5, 2014
2007
57
Star Trident XII LLC
Star Markella
82,594
September 29, 2014
2007
58
Star Trident IX LLC
Star Danai
82,574
October 21, 2014
2006
59
ABY Seven Ltd
Star Jeanette
82,567
August 3, 2018
2014
60
Star Trident XI LLC
Star Georgia
82,298
October 14, 2014
2006
61
Star Trident VIII LLC
Star Sophia
82,269
October 31, 2014
2007
62
Star Trident XVI LLC
Star Mariella
82,266
September 19, 2014
2006
63
Star Trident XIV LLC
Star Moira
82,257
November 19, 2014
2006
64
Star Trident XVIII LLC
Star Nina
82,224
January 5, 2015
2006
65
Star Trident X LLC
Star Renee
82,221
December 18, 2014
2006
66
Star Trident II LLC
Star Nasia
82,220
August 29, 2014
2006
67
Star Trident XIII LLC
Star Laura
82,209
December 8, 2014
2006
68
Star Trident XV LLC
Star Jennifer
82,209
April 15, 2015
2006
69
Star Nor VIII LLC
Star Mona
82,188
July 6, 2018
2012
70
Star Trident XVII LLC
Star Helena
82,187
December 29, 2014
2006
71
Star Nor VII LLC
Star Astrid
82,158
July 6, 2018
2012
72
Star Zeus I LLC
Star Capoeira (1)
82,000
March 16, 2021
2015
73
Waterfront Two Ltd
Star Alessia
81,944
August 3, 2018
2017
74
Star Nor IX LLC
Star Calypso
81,918
July 6, 2018
2014
75
Star Gaia LLC
Star Charis
81,711
March 22, 2017
2013
76
Star Elpis LLC
Star Suzanna
81,711
May 15, 2017
2013
77
Star Zeus VII LLC
Star Macarena (1)
81,600
March 6, 2021
2016
78
Mineral Shipping LLC
Mercurial Virgo
81,545
July 11, 2014
2013
79
Star Nor X LLC
Stardust
81,502
July 6, 2018
2011
80
Star Nor XI LLC
Star Sky
81,466
July 6, 2018
2010
81
Star Zeus VI LLC
Star Lambada (1)
81,300
March 16, 2021
2016
82
Star Zeus II LLC
Star Carioca (1)
81,300
March 16, 2021
2015
83
ABY III LLC
Star Lydia
81,187
August 3, 2018
2013
84
ABY IV LLC
Star Nicole
81,120
August 3, 2018
2013
85
ABY Three Ltd
Star Virginia
81,061
August 3, 2018
2015
86
Star Nor XII LLC
Star Genesis
80,705
July 6, 2018
2010
87
Star Nor XIII LLC
Star Flame
80,448
July 6, 2018
2011




 
Wholly Owned Subsidiaries
Vessel Name
DWT
Delivered to Star Bulk
Year Built
88
Star Trident III LLC
Star Iris
76,466
September 8, 2014
2004
89
Star Trident XX LLC
Star Emily
76,417
September 16, 2014
2004
90
Star Zeus III LLC
Star Athena (1)
63,371
May 19, 2021
2015
91
Orion Maritime LLC
Idee Fixe (1)
63,458
March 25, 2015
2015
92
Primavera Shipping LLC
Roberta (1)
63,426
March 31, 2015
2015
93
Success Maritime LLC
Laura (1)
63,399
April 7, 2015
2015
94
Ultra Shipping LLC
Kaley (1)
63,283
June 26, 2015
2015
95
Blooming Navigation LLC
Kennadi (1)
63,262
January 8, 2016
2016
96
Jasmine Shipping LLC
Mackenzie (1)
63,226
March 2, 2016
2016
97
STAR LIDA I SHIPPING LLC
Star Apus (1)
63,123
July 16, 2019
2014
98
Star Zeus V LLC
Star Bovarius (1)
61,600
March 16, 2021
2015
99
Star Nor XV LLC
Star Wave
61,491
July 6, 2018
2017
100
Star Challenger I LLC
Star Challenger (1)
61,462
December 12, 2013
2012
101
Star Challenger II LLC
Star Fighter (1)
61,455
December 30, 2013
2013
102
Star Axe II LLC
Star Lutas (1)
61,347
January 6, 2016
2016
103
Aurelia Shipping LLC
Honey Badger (1)
61,320
February 27, 2015
2015
104
Rainbow Maritime LLC
Wolverine (1)
61,292
February 27, 2015
2015
105
Star Axe I LLC
Star Antares (1)
61,258
October 9, 2015
2015
106
Star Zeus IV LLC
Star Subaru (1)
61,000
March 16, 2021
2015
107
ABY Five Ltd
Star Monica
60,935
August 3, 2018
2015
108
Star Asia I LLC
Star Aquarius
60,916
July 22, 2015
2015
109
Star Asia II LLC
Star Pisces (1)
60,916
August 7, 2015
2015
110
Star Nor XIV LLC
Star Glory
58,680
July 6, 2018
2012
111
STAR LIDA XI SHIPPING LLC
Star Pyxis (1)
56,615
August 19, 2019
2013
112
STAR LIDA VIII SHIPPING LLC
Star Hydrus (1)
56,604
August 8, 2019
2013
113
STAR LIDA IX SHIPPING LLC
Star Cleo (1)
56,582
July 15, 2019
2013
114
Star Trident VII LLC
Diva (1)
56,582
July 24, 2017
2011
115
STAR LIDA VI SHIPPING LLC
Star Centaurus (1)
56,559
September 18, 2019
2012
116
STAR LIDA VII SHIPPING LLC
Star Hercules (1)
56,545
July 16, 2019
2012
117
STAR LIDA X SHIPPING LLC
Star Pegasus (1)
56,540
July 15, 2019
2013
118
STAR LIDA III SHIPPING LLC
Star Cepheus (1)
56,539
July 16, 2019
2012
119
STAR LIDA IV SHIPPING LLC
Star Columba (1)
56,530
July 23, 2019
2012
120
STAR LIDA V SHIPPING LLC
Star Dorado (1)
56,507
July 16, 2019
2013
121
STAR LIDA II SHIPPING LLC
Star Aquila (1)
56,506
July 15, 2019
2012
122
Star Regg III LLC
Star Bright
55,783
October 10, 2018
2010
123
Glory Supra Shipping LLC
Strange Attractor
55,742
July 11, 2014
2006
124
Star Omicron LLC
Star Omicron
53,489
April 17, 2008
2005
125
Star Zeta LLC
Star Zeta
52,994
January 2, 2008
2003
126
Star Theta LLC
Star Theta
52,425
December 6, 2007
2003
 
 
Total dwt
13,908,404
 
 


Vessels to be delivered:

Vessels to be delivered:
 
 
 
Wholly Owned Subsidiary
Vessel Name
DWT
Expected delivery to Star Bulk
Star Sun I LLC
Hull YZJ2015-2263
82,000
May-21
Star Sun II LLC
Hull YZJ2014-2264
82,000
Jun-21
 
Total dwt
164,000
 

____________
(1)
Subject to a sale and leaseback financing transaction as further described in Notes 7 and 15 to our consolidated financial statements included elsewhere herein.




Liquidity and Capital Resources

Our principal sources of funds have been cash from operations, equity offerings, borrowings under secured credit facilities, debt securities or bareboat lease financings and proceeds from vessel sales. Our principal uses of funds have been capital expenditures to establish, grow our fleet, maintain the quality of our dry bulk carriers and comply with international shipping standards, environmental laws and regulations, fund working capital requirements, make principal and interest payments on outstanding indebtedness and make dividend payments when approved by the Board of Directors.

Our short-term liquidity requirements include paying operating costs, funding working capital requirements and the short-term equity portion of the cost of vessel acquisitions and vessel upgrades, interest and principal payments on outstanding indebtedness and maintaining cash reserves to strengthen our position against adverse fluctuations in operating cash flows. Our primary source of short-term liquidity is cash generated from operating activities, available cash balances as well as funds received from new debt and refinancings as well as equity financings.

Our medium- and long-term liquidity requirements are funding the equity portion of any newbuilding vessel installments and second hand vessel acquisitions, funding required payments under our vessel financing and other financing agreements and paying cash dividends when declared. Sources of funding for our medium and long-term liquidity requirements include cash flows from operations, new debt and refinancings, or bareboat lease financings, sale and lease back arrangements, equity issuances and vessel sales.

As of May 19, 2021, we had total cash of $223.2 million and $1,644.7 million of outstanding borrowings (including bareboat lease financing and 2022 Notes). In addition, following a number of interest rates swaps that we entered into during 2020 and 2021, we have converted a total of $978.9 million of such debt from floating to an average fixed rate of 44 bps with average maturity of 3.0 years. The remaining consideration to be paid for the two Kamsarmax Resale Vessels amounts to $44.0 million and we are in advanced negotiations with a major financing institution for its partial financing.

Our debt agreements contain financial covenants and undertakings requiring us to maintain various ratios, a summary of these terms included in Note 9 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report.

We believe that our current cash balance, together with the $30.0 million available under our HSBC Working Capital Facility, as defined in our 2020 Annual Report, and our operating cash flows to be generated over the short-term period will be sufficient to meet our liquidity needs for the foreseeable future (and at least through the end of the second quarter of 2022), including funding the operations of our fleet, capital expenditure requirements and any other present financial requirements. However, we may seek additional indebtedness to finance future vessel acquisitions in order to maintain our cash position or to refinance our existing debt on more favorable terms. Our practice has been to acquire dry bulk carriers using a combination of funds from operations and bank debt or lease financing secured by mortgages or title of ownership on our dry bulk carriers held by the relevant lenders, respectively. 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 acquisitions 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. However our ability to obtain bank or lease financing, to refinance our existing debt or to access the capital markets for offerings in the future, may be limited by our financial condition at the time of any such financing or offering, including the market value of our fleet, as well as by adverse market conditions resulting from, among other things, general economic conditions, weakness in the financial and equity markets and contingencies and uncertainties, that are beyond our control.




On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the “Covid-19”) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where we conduct a large part of our operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. There continues to be a high level of uncertainty relating to how the pandemic will evolve, including the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. At present, it is not possible to ascertain any future impact of Covid-19 on the Company’s operational and financial performance, which may take some time to materialize and may not be fully reflected in the Company’s results for 2020 and 2021.  However, an increase in the severity or duration or a resurgence of the Covid-19 pandemic and the timing of wide-scale vaccine distribution could have a material adverse effect on the Company’s business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and the Company’s ability to pay dividends.

Dividend Policy

In November 2019, our Board of Directors established a dividend policy, which was updated on May 19, 2021, pursuant to which our Board of Directors intends to declare a dividend in each of February, May, August and November in an amount equal to (a) our Total Cash Balance minus (b) the product of (i) the Minimum Cash Balance per Vessel and (ii) the Number of Vessels.

“Total Cash Balance” means (a) the aggregate amount of cash on our balance sheet as of the last day of the quarter preceding the relevant dividend declaration date minus (b) any proceeds received by us, including our subsidiaries, from vessel sales, or additional proceeds from vessel refinancings, or securities offerings in the last 12 months that have been earmarked for share repurchases, debt prepayment, vessel acquisitions and general corporate purposes.

“Minimum Cash Balance per Vessel” means:


a.
$1.40 million for March 31, 2021;

b.
$1.65 million for June 30, 2021

c.
$1.90 million for September 30, 2021

d.
$2.10 million for December 31, 2021 and thereafter

 “Number of Vessels” means the total number of vessels owned by us, or that are subject to sale and leaseback transactions and finance leases, as of the last day of the quarter preceding the relevant dividend declaration date.

As of March 31, 2021, we owned 125 vessels and our Total Cash Balance was at $206.6 million.  Adjusted for the Minimum Cash Balance per Vessel for March 31, 2021 of $1.40 million, resulted in total declared dividend amount of approximately $31.0 million or $0.30 per share.

Since Star Bulk is a holding company with no material assets other than the shares of its subsidiaries through which it conducts its operations, Star Bulk’s ability to pay dividends will depend on its subsidiaries distributing their earnings and cash flow to it. Any future dividends declared will be at the discretion and remain subject to approval of our Board of Directors each quarter after its review of our financial condition and other factors, including but not limited to our earnings, the prevailing charter market conditions, capital requirements, limitations under our debt agreements and applicable provisions of Marshall Islands law, which generally prohibits the payment of dividends other than from operating surplus or while a company is insolvent or would be rendered insolvent upon the payment of such dividend. Star Bulk’s dividend policy and declaration and payment of dividends may be changed at any time and are subject to legally available funds and our Board of Directors’ determination that each declaration and payment is at the time in the best interests of Star Bulk and its shareholders after its review of our financial performance.




There can be no assurance that our Board of Directors will declare or pay any dividend in the future.

The dividend is payable on or about June 14, 2021, to all shareholders of record as of May 31, 2021 (“Record Date”). The ex-dividend date is expected to be May 30, 2021.

Other Recent Developments

Please refer to Note 15 to our unaudited interim condensed consolidated financial statements, included elsewhere herein, for developments that took place after March 31, 2021.
Operating Results

Factors Affecting Our Results of Operations

We deploy our vessels on a mix of short to medium time charters or voyage charters, contracts of affreightment or in dry bulk carrier pools, according to our assessment of market conditions. We adjust the mix of these charters to take advantage of the relatively stable cash flow and high utilization rates associated with medium to long-term time charters, or to profit from attractive spot charter rates during periods of strong charter market conditions, or to maintain employment flexibility that the spot market offers during periods of weak charter market conditions. The following table reflects certain operating data of our fleet, including our ownership days and TCE rates, which we believe are important measures for analyzing trends in our results of operations, for the periods indicated:


             
   
Three-month period ended March 31,
 
(TCE rates expressed in U.S. Dollars)
 
2020
   
2021
 
Average number of vessels (1)
   
116.0
     
119.3
 
Number of vessels (2)
   
116
     
125
 
Average age of operational fleet (in years) (3)
   
8.5
     
9.3
 
Ownership days (4)
   
10,556
     
10,737
 
Available days (5)
   
9,118
     
10,115
 
Charter-in days (6)
   
367
     
175
 
Time Charter Equivalent Rate  (TCE rate) (7)
 
$
10,949
   
$
15,461
 

(1)
Average number of vessels is the number of vessels that constituted our owned fleet for the relevant period, as measured by the sum of the number of days each operating vessel was a part of our owned fleet during the period divided by the number of calendar days in that period.
(2)
As of the last day of the periods reported.
(3)
Average age of our operational fleet is calculated as of the end of each period.
(4)
Ownership days are the total calendar days each vessel in the fleet was owned by us for the relevant period, including vessels subject to sale and leaseback transactions and finance leases.
(5)
Available days for the fleet are the Ownership days after subtracting off-hire days for major repairs, dry docking or special or intermediate surveys and scrubber/ Ballast Water Treatment System (“BWTS”)  installation. The available days for the first quarter 2021 were also decreased by off-hire days relating to disruptions in connection with crew changes as a result of COVID-19. Available Days as presented above may not necessarily be comparable to Available Days of other companies due to differences in methods of calculation.
(6)
Charter-in days are the total days that we charter-in vessels not owned by us.
(7)
Time charter equivalent rate represents the weighted average daily TCE rates of our operating fleet (including owned fleet and fleet under charter-in arrangements). TCE rate is a measure of the average daily net revenue performance of our vessels. Our method of calculating TCE rate is determined by dividing (a) TCE Revenues which consists of: voyage revenues (net of voyage expenses, charter-in hire expense, amortization of fair value of above/below market acquired time charter agreements, as well as adjusted for the impact of realized gain/(loss) on forward freight agreements (“FFAs”) and bunker swaps) by (b) Available days for the relevant time period. Available days do not include the Charter-in days as per the relevant definitions provided above. 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. In the calculation of TCE Revenues, we also include the realized gain/(loss) on FFAs and bunker swaps as we believe that this method better reflects the chartering result of our fleet and is more comparable to the method used by our peers. TCE Revenues and TCE rate, which are non-GAAP measures, provide additional meaningful information in conjunction with voyage revenues, the most directly comparable GAAP measure, because they assist our management in making decisions regarding the deployment and use of our vessels and because we believe that they provide useful information to investors regarding our financial performance. 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., voyage charters, time charters, bareboat charters and pool arrangements) under which its vessels may be employed between the periods. TCE Revenues and TCE rate, as presented above, may not necessarily be comparable to those of other companies due to differences in methods of calculation.




The following table reflects the calculation of our TCE rates as discussed in footnote (7) above. The table presents reconciliation of TCE Revenues to voyage revenues as reflected in the unaudited interim condensed consolidated statement of operations.

   
Three-month period ended March 31,
 
(In thousands of U.S. Dollars, except as otherwise stated)
 
2020
   
2021
 
Voyage revenues
 
$
160,862
   
$
200,467
 
Less:
               
Voyage expenses
   
(55,310
)
   
(40,052
)
Charter-in hire expenses
   
(8,774
)
   
(2,943
)
Realized gain/(loss) on FFAs/bunker swaps
   
3,545
     
(891
)
Amortization of fair value of below/above market acquired time charter agreements
   
(487
)
   
(187
)
Time charter equivalent revenues
 
$
99,836
   
$
156,394
 
Available days
   
9,118
     
10,115
 
Daily time charter equivalent rate ("TCE")
 
$
10,949
   
$
15,461
 

Voyage Revenues

Voyage revenues are driven primarily by the number of vessels in our operating fleet, the duration of our charters, the number of charter-in days, the amount of daily charter hire or 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 number of vessels chartered-in, 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 improved 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.

Voyage Expenses

Voyage expenses may include port and canal charges, agency fees, fuel (bunker) expenses and brokerage commissions payable to related and third parties. Voyage expenses are incurred for our owned and chartered-in vessels during voyage charters or when the vessel is unemployed. Bunker expenses, port and canal charges primarily increase in periods during which vessels are employed on voyage charters because these expenses are paid by the owners. Our voyage expenses primarily consist of bunkers cost, port expenses and commissions paid in connection with the chartering of our vessels.




Charter-in hire expenses

Charter-in hire expenses represent hire expenses for chartering-in third and related party vessels, either under time charters or voyage charters.

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 cost of spares and consumable stores, tonnage taxes, regulatory fees, vessel scrubbers and BWTS maintenance expenses, 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 and its condition, the location where the dry docking takes place, shipyard availability and the number of days the vessel is under dry-dock. 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, which is 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, share based compensation, legal, consulting, audit and accounting expenses.

Management Fees

Management fees include fees paid to third parties as well as related parties providing certain procurement services to our fleet.

(Gain) / Loss on Forward Freight Agreements and Bunker Swaps, net

From time to time, we 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 of the applicable FFA, 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 the settlement sum, which is an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period covered by the FFA. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. Our FFAs are settled on a daily basis mainly through reputable exchanges such as London Clearing House (LCH) or Singapore Exchange (SGX) so as to limit our exposure in over-the-counter transactions. Customary requirements for trading in FFAs include the maintenance of initial and variation margins based on expected volatility, open position and mark to market of the contracts. The fair value of the FFAs or freight options is treated as asset or liability until they are settled. Any such settlements by us or settlements to us under FFAs or freight options, if any, are recorded under (Gain)/Loss on forward freight agreements and bunker swaps, net.




Also, from time to time, we may enter into bunker swap contracts to manage our exposure to fluctuations of bunker prices associated with the consumption of bunkers by our vessels. Bunker swaps are agreements between two parties to exchange cash flows at a fixed price on bunkers, where volume, time period and price are agreed in advance. Our bunker swaps are settled through reputable clearing houses. Bunker price differentials paid or received under the swap agreements are recognized under (Gain)/Loss on forward freight agreements and bunker swaps, net.

The fair value of freight derivatives and bunker swaps is determined through Level 1 inputs of the fair value hierarchy (quoted prices from the applicable exchanges such as the London Clearing House (LCH) or the Singapore Exchange (SGX)). Our FFAs and bunker swaps do not qualify for hedge accounting and therefore unrealized gains or losses are recognized under (Gain)/Loss on forward freight agreements and bunker swaps, net.

Interest and Finance Costs

We incur interest expense and financing costs in connection with our outstanding indebtedness under our existing loan facilities (including sale and leaseback financing transactions) and the 2022 Notes. We also incur financing costs in connection with establishing those facilities, which are presented as a direct deduction from the carrying amount of that debt liability and amortize them to interest and financing costs over the term of the underlying obligation using the effective interest method.

Interest Income

We earn interest income on our cash deposits with our lenders and other financial institutions.

Gain / (Loss) on interest rate swaps, net

We 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 (Level 2), with changes in such fair value recognized in earnings under (gain)/loss on interest rate swaps, net, unless specific hedge accounting criteria are met. When interest rate swaps are designated and qualify as cash flow hedges, the effective portion of the unrealized gains/losses from those swaps is recorded in Other Comprehensive Income / (Loss) while any ineffective portion is recorded as Gain/(loss) on interest rate swaps, net.

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

The three-month period ended March 31, 2021 compared to the three-month period ended March 31, 2020

Voyage revenues net of Voyage expenses: Voyage revenues for the three months ended March 31, 2021 increased to $200.5 million from $160.9 million in the corresponding period in 2020. Time charter equivalent revenues (“TCE Revenues”) (as defined above) were $156.4 million compared to $99.8 million for the corresponding period in 2020, which is indicative of improved market conditions prevailing during the three month period ended March 31, 2021 compared to the corresponding period in 2020. As a result, the TCE rate for the first quarter of 2020 was $15,461 compared to $10,949 for the corresponding period in 2020. Please refer to the table above for the calculation of the TCE Revenues and TCE and their reconciliation with Voyage Revenues, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Charter-in hire expenses: Charter-in hire expenses for the three months ended March 31, 2021 and 2020 were $2.9 million and $8.8 million, respectively. This decrease is attributable to the decrease in charter-in days from 367 in the first quarter of 2020 to 175 in the corresponding period in 2021.

Vessel operating expenses: For the three months ended March 31, 2021 and 2020, vessel operating expenses were $47.4 million and $42.7 million, respectively. Vessel operating expenses for the first quarter of 2021 included pre-delivery and pre-joining expenses of $0.5 million and additional crew expenses related to the increased number of crew changes performed during the period as a result of COVID-19 restrictions imposed during 2020 of $1.3 million. The average number of our vessels also increased to 119.3 from 116.0.

Dry docking expenses: During the first quarter of 2021, we incurred $12.2 million dry docking expenses mainly attributable to 13 of our vessels that completed their periodic dry docking surveys within such period. During the first quarter of 2020, 15 of our vessels completed their periodic dry docking surveys expenses and we incurred $13.4 million dry docking expenses in connection therewith.

Depreciation: Depreciation expense increased to $36.2 million for the three month period ended March 31, 2021, compared to $34.6 million for the corresponding period in 2020. The increase was mainly driven by the higher average number of vessels in 2021 compared to 2020 as discussed above.

Management fees: Management fees for the three month period ended March 31, 2021 and 2020 were $4.7 million and $4.6 million, respectively. The increase is attributable to the management agreements entered into in connection with the fleet we acquired during the first quarter of 2021.

General and administrative expenses: General and administrative expenses for the three month period ended March 31, 2021 were $7.3 million compared to $6.0 million in the corresponding period in 2020. The increase is primarily attributable to the reversal in the first quarter of 2020, of previously recognized stock based compensation expenses of $1.2 million, following the reassessment of the probability of achieving the performance conditions for some of our outstanding awards.

(Gain)/Loss on forward freight agreements and bunker swaps, net: For the three month period ended March 31, 2021, we incurred a loss on FFAs and bunker swaps of $2.1 million, consisting of a realized loss of $0.9 million and an unrealized loss of $1.2 million. For the three month period ended March 31, 2020, (Gain)/Loss on FFAs and bunker swaps amounted to a $27.6 million gain, consisting of realized gain of $3.6 million and unrealized gain of $24.0 million.

(Gain)/Loss on time charter agreement termination: Within the first quarter of 2021 the time charter agreement assumed on the acquisition of the vessel Star Karlie was early terminated. As a result the unamortized balance, at the time of termination, of the corresponding fair value of below market acquired time charters, amounting to $1.1 million, was written off to earnings as a gain and separately presented under (Gain)/Loss on time charter agreement termination.



Interest and finance costs net of interest and other income/(loss): Interest and finance costs net of interest and other income/(loss) for the first quarters of 2021 and 2020 were $12.7 million and $20.1 million, respectively. Despite the increase in the weighted average balance of our outstanding indebtedness to $1,604.5 million during the first quarter of 2021, from $1,593.2 million for the same period in 2020, the interest and finance costs net of interest and other income/ (loss) decreased due to the decrease in the average interest rate on our outstanding indebtedness, mainly driven by the refinancing of certain of our debt agreements, the interest rate swap agreements that we entered into in 2020 and 2021 and the lower LIBOR rates during the first quarter of 2021 compared to the same period in 2020.

Loss on debt extinguishment: During the three months ended March 31, 2020, we recorded a $0.5 million loss on debt extinguishment representing expenses and the non-cash write-off of unamortized deferred finance charges in connection with the refinancing of certain credit facilities and lease financings.

Cash Flows
Net cash provided by operating activities for the first quarters of 2021 and 2020 was $79.2 million and $32.1 million, respectively. This increase was primarily driven by the higher charter rates due to the reopening of the global economy as well as a decrease in our interest payments due to our recent loan refinancing arrangements.

Net cash used in investing activities for the first quarters of 2021 and 2020 was $60.3 million and $31.9 million, respectively. The increase was primarily attributable to i) the equity portion paid in 2021 in connection with the acquisition of vessels as opposed to no vessel acquisitions in 2020 and ii) lower capital expenditures for BWTS and Scrubbers paid in 2021 compared to relevant payments in 2020.

Net cash used in financing activities for the first quarter of 2021 was $7.9 million compared to net cash provided by financing activities of $4.9 million in the first quarter of 2020. The decrease was primarily driven by higher debt repayments compared to debt proceeds in 2021 when in 2020 the debt proceeds exceeded the debt repayments and prepayments as well as the dividend payments made during the corresponding period.

Significant Accounting Policies and Critical Accounting Policies

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 2020 Annual Report. There have been no material changes from the “Critical Accounting Policies” previously disclosed in our 2020 Annual Report.





STAR BULK CARRIERS CORP.
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 2020 and March 31, 2021 (unaudited)
F-2
Unaudited Interim Condensed Consolidated Statements of Operations for the three-month periods ended March 31, 2020 and 2021
F-3
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income/(Loss) for the three-month periods ended March 31, 2020 and 2021
F-4
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity for the three-month periods ended March 31, 2020 and 2021
F-5
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2020 and 2021
F-6
Notes to Unaudited Interim Condensed Consolidated Financial Statements
F-7

F-1

STAR BULK CARRIERS CORP.
Consolidated Balance Sheets
As of December 31, 2020 and March 31, 2021 (unaudited)
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated) 
   
December 31, 2020
   
March 31, 2021
 
ASSETS
           
CURRENT ASSETS
           
Cash and cash equivalents
 
$
183,211
   
$
189,127
 
Restricted cash, current (Notes 8 and 13)
   
7,299
     
12,419
 
Trade accounts receivable, net
   
38,090
     
43,314
 
Inventories (Note 4)
   
47,294
     
60,072
 
Due from managers
   
358
     
-
 
Due from related parties (Note 3)
   
481
     
751
 
Prepaid expenses and other receivables
   
17,687
     
20,089
 
Derivatives, current asset portion (Note 13)
   
-
     
156
 
Other current assets (Note 14)
   
12,991
     
15,013
 
Total Current Assets
   
307,411
     
340,941
 
 
               
FIXED ASSETS
               
Advances for vessels under construction and acquisition of vessels (Note 6)
   
-
     
11,012
 
Vessels and other fixed assets, net (Note 5)
   
2,877,119
     
3,036,813
 
Total Fixed Assets
   
2,877,119
     
3,047,825
 
 
               
OTHER NON-CURRENT ASSETS
               
Long term investment (Note 3)
   
1,321
     
1,476
 
Restricted cash, non-current (Notes 8 and 13)
   
5,021
     
5,021
 
Leased buildings, right-of-use assets
   
886
     
803
 
Derivatives, non-current asset portion (Note 13)
   
-
     
3,506
 
Other non-current assets (Note 3)
   
35
     
75
 
TOTAL ASSETS
 
$
3,191,793
   
$
3,399,647
 
                 
LIABILITIES & SHAREHOLDERS' EQUITY
               
CURRENT LIABILITIES
               
Current portion of long-term bank loans (Note 8)
 
$
144,900
   
$
154,148
 
Lease financing short term (Note 7)
   
44,873
     
53,440
 
Accounts payable
   
32,853
     
42,361
 
Due to managers
   
7,813
     
14,892
 
Due to related parties (Note 3)
   
1,439
     
1,199
 
Accrued liabilities
   
20,940
     
27,800
 
Derivatives, current liability portion (Note 13)
   
1,939
     
2,832
 
Deferred revenue
   
11,675
     
14,447
 
Total Current Liabilities
   
266,432
     
311,119
 
                 
NON-CURRENT LIABILITIES
               
8.30% 2022 Notes, net of unamortized notes issuance costs of $768 and $667, as of December 31, 2020 and March 31, 2021, respectively (Note 8)
   
49,232
     
49,333
 
Long-term bank loans, net of current portion and unamortized loan issuance costs of $13,761 and $12,890, as of December 31, 2020 and March 31, 2021, respectively (Note 8)
   
938,699
     
937,126
 
Lease financing long term, net of unamortized lease issuance costs of $6,181 and $6,117, as of December 31, 2020 and March 31, 2021, respectively (Note 7)
   
382,417
     
446,624
 
Derivatives, non-current liability portion (Note 13)
   
2,265
     
368
 
Fair value of below market time charters acquired
   
1,289
     
-
 
Leased buildings, operating lease liabilities
   
886
     
803
 
Other non-current liabilities
   
1,046
     
964
 
TOTAL LIABILITIES
   
1,642,266
     
1,746,337
 
                 
COMMITMENTS & CONTINGENCIES (Note 12)
               
                 
SHAREHOLDERS' EQUITY
               
Preferred Shares; $0.01 par value, authorized 25,000,000 shares; none issued or outstanding at December 31, 2020 and March 31, 2021, respectively (Note 9)
   
-
     
-
 
Common Shares, $0.01 par value, 300,000,000 shares authorized; 97,146,687 shares issued and 97,139,716 shares (net of treasury shares) outstanding as of December 31, 2020;  101,888,919 shares issued and outstanding as of March 31, 2021 (Note 9)
   
971
     
1,019
 
Additional paid in capital
   
2,548,956
     
2,610,974
 
Treasury shares (6,971 and nil shares at December 31, 2020 and March 31, 2021, respectively)
   
(93
)
   
-
 
Accumulated other comprehensive income/(loss)
   
(3,993
)
   
1,868
 
Accumulated deficit
   
(996,314
)
   
(960,551
)
Total Shareholders' Equity
   
1,549,527
     
1,653,310
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
3,191,793
   
$
3,399,647
 


The accompanying notes are integral part of these unaudited interim condensed consolidated financial statements.
F-2





STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Operations
For the three-month periods ended March 31, 2020 and 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
 
 
Three months ended March 31,
 
   
2020
   
2021
 
             
Revenues:
           
Voyage revenues (Note 14)
 
$
160,862
   
$
200,467
 
                 
Expenses
               
Voyage expenses (Note 3)
   
55,310
     
40,052
 
Charter-in hire expenses (Note 3)
   
8,774
     
2,943
 
Vessel operating expenses
   
42,718
     
47,354
 
Dry docking expenses
   
13,361
     
12,191
 
Depreciation (Note 5)
   
34,637
     
36,233
 
Management fees (Notes 3)
   
4,606
     
4,667
 
General and administrative expenses (Note 3)
   
6,033
     
7,297
 
(Gain)/Loss on time charter agreement termination
   
-
     
(1,102
)
Other operational loss
   
51
     
1,340
 
Other operational gain
   
(477
)
   
(1,017
)
(Gain)/Loss on forward freight agreements and bunker swaps, net (Note 13)
   
(27,586
)
   
2,085
 
Total operating expenses
   
137,427
     
152,043
 
Operating income / (loss)
   
23,435
     
48,424
 
                 
Other Income/ (Expenses):
               
Interest and finance costs (Note 8)
   
(20,553
)
   
(14,440
)
Interest and other income/(loss)
   
447
     
1,750
 
Loss on debt extinguishment (Note 8)
   
(542
)
   
-
 
Total other expenses, net
   
(20,648
)
   
(12,690
)
                 
 Income / (loss) before taxes and equity in income of investee
 
$
2,787
   
$
35,734
 
Income taxes
   
(43
)
   
-
 
Income/(Loss) before equity in income of investee
   
2,744
     
35,734
 
Equity in income of investee
   
11
     
29
 
Net income/(loss)
   
2,755
     
35,763
 
Earnings / (Loss) per share, basic and diluted
 
$
0.03
   
$
0.36
 
Weighted average number of shares outstanding, basic (Note 10)
   
95,797,142
     
98,712,581
 
Weighted average number of shares outstanding, diluted  (Note 10)
   
95,916,479
     
99,019,944
 

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

F-3


STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income / (Loss)
For the three-month periods ended March 31, 2020 and 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
 
 
 
Three months ended March 31,
 
 
 
2020
   
2021
 
 Net income / (loss)
 
$
2,755
   
$
35,763
 
 Other comprehensive income / (loss):
               
 Unrealized gains / losses from cash flow hedges:
               
 Unrealized gain / (loss) from hedging interest rate swaps recognized in Other comprehensive income/(loss) before reclassifications
   
(1,839
)
   
5,419
 
 Less:
               
 Reclassification adjustments of interest rate swap gain/(loss)
   
(9
)
   
442
 
 Other comprehensive income / (loss)
   
(1,848
)
   
5,861
 
 Total comprehensive income / (loss)
 
$
907
   
$
41,624
 

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



F-4

STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity
For the three-month periods ended March 31, 2020 and 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
   
Common Stock
                               
 
 
# of Shares
   
Par Value
   
Additional Paid-in Capital
   
Accumulated Other Comprehensive income/(loss)
   

Accumulated deficit
   
Treasury stock
   
Total Shareholders' Equity
 
 Balance January 1, 2020
   
96,073,197
   
$
961
   
$
2,544,342
   
$
-
   
$
(1,001,170
)
 
$
(93
)
 
$
1,544,040
 
                                                         
 Net income / (loss)
   
-
     
-
     
-
     
-
     
2,755
     
-
     
2,755
 
 Other comprehensive income / (loss)
   
-
     
-
     
-
     
(1,848
)
   
-
     
-
     
(1,848
)
 Issuance of vested and non-vested shares and amortization of share-based compensation (Note 11)
   
1,300
     
-
     
(902
)
   
-
     
-
     
-
     
(902
)
 Dividend declared and paid ($0.05 per share)
   
-
     
-
     
-
     
-
     
(4,749
)
   
-
     
(4,749
)
 BALANCE, March 31, 2020
   
96,074,497
   
$
961
   
$
2,543,440
   
$
(1,848
)
 
$
(1,003,164
)
 
$
(93
)
 
$
1,539,296
 
                                                         
 Balance January 1, 2021
   
97,146,687
   
$
971
   
$
2,548,956
   
$
(3,993
)
 
$
(996,314
)
 
$
(93
)
 
$
1,549,527
 
 Net income / (loss)
   
-
     
-
     
-
     
-
     
35,763
     
-
     
35,763
 
 Other comprehensive income / (loss)
   
-
     
-
     
-
     
5,861
     
-
     
-
     
5,861
 
 Issuance of vested and non-vested shares and amortization of share-based compensation (Note 11)
   
-
     
-
     
313
     
-
     
-
     
-
     
313
 
 Acquisition of Eneti vessels (Note 9)
   
2,649,203
     
27
     
39,646
     
-
     
-
     
-
     
39,673
 
 Acquisition of ER vessels (Note 9)
   
2,100,000
     
21
     
22,152
     
-
     
-
     
-
     
22,173
 
 Cancellation of treasury stock (Note 9)
   
(6,971
)
   
-
     
(93
)
   
-
     
-
     
93
     
-
 
 BALANCE, March 31, 2021
   
101,888,919
   
$
1,019
   
$
2,610,974
   
$
1,868
   
$
(960,551
)
 
$
-
   
$
1,653,310
 



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

F-5

STAR BULK CARRIERS CORP.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
For the three-month periods ended March 31, 2020 and 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)
       Three months ended March 31,  
 
     
2020
   
2021
 
Cash Flows from Operating Activities:
           
Net income / (loss)
 
$
2,755
   
$
35,763
 
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
               
Depreciation (Note 5)
   
34,637
     
36,233
 
Amortisation of fair value of below market time charters
   
(487
)
   
(187
)
Amortization of debt (loan, lease & notes) issuance costs (Note 8)
   
1,725
     
1,815
 
Loss on debt extinguishment (Note 8)
   
542
     
-
 
Share-based compensation (Note 11)
   
(902
)
   
313
 
(Gain)/Loss on time charter agreement termination
   
-
     
(1,102
)
Change in fair value of forward freight derivatives and bunker swaps (Note 13)
   
(24,041
)
   
1,194
 
Other non-cash charges
   
(77
)
   
(208
)
Gain on hull and machinery claims
   
(9
)
   
-
 
Equity in income of investee
   
(11
)
   
(29
)
Changes in operating assets and liabilities:
               
(Increase)/Decrease in:
               
Trade accounts receivable
   
22,861
     
(5,224
)
Inventories
   
(15,470
)
   
(12,778
)
Prepaid expenses and other receivables
   
(4,263
)
   
(8,710
)
Derivatives asset
   
(1,936
)
   
1
 
Accrued income
   
(171
)
   
-
 
Due from related parties
   
338
     
(270
)
Due from managers
   
32
     
358
 
Increase/(Decrease) in:
               
Accounts payable
   
2,507
     
13,483
 
Due to related parties
   
(5
)
   
(240
)
Accrued liabilities
   
(4,503
)
   
8,913
 
Due to managers
   
5,634
     
7,079
 
Deferred revenue
   
12,941
     
2,772
 
Net cash provided by / (used in) Operating Activities
   
32,097
     
79,176
 
                   
Cash Flows from Investing Activities:
               
Advances for vessels & vessel upgrades and other fixed assets
   
(33,976
)
   
(64,831
)
Hull and machinery insurance proceeds
   
2,032
     
4,544
 
Net cash provided by / (used in) Investing Activities
   
(31,944
)
   
(60,287
)
                   
Cash Flows from Financing Activities:
               
Proceeds from bank loans, leases and notes
   
107,282
     
39,000
 
Loan and lease prepayments and repayments
   
(96,883
)
   
(46,416
)
Financing and debt extinguishment fees paid
   
(763
)
   
(1,340
)
Dividends paid
   
(4,749
)
   
-
 
Refund of financing premia
   
-
     
903
 
Net cash provided by / (used in) Financing Activities
   
4,887
     
(7,853
)
                   
Net increase/(decrease) in cash and cash equivalents and restricted cash
   
5,040
     
11,036
 
Cash and cash equivalents and restricted cash at beginning of period
   
126,262
     
195,531
 
                   
Cash and cash equivalents and restricted cash at end of period
 
$
131,302
   
$
206,567
 
                   
SUPPLEMENTAL CASH FLOW INFORMATION:

               
                   
Cash paid during the period for:
               
Interest
 
$
17,714
   
$
12,283
 
Non-cash investing and financing activities:
               
Shares issued in connection with vessel acquisitions
   
-
     
61,977
 
Vessel upgrades
   
3,773
     
2,876
 
Assumed debt upon acquisition
   
-
     
86,929
 
                   
                   
Reconciliation of (a) cash and cash equivalents, and restricted cash reported within the consolidated balance sheets to (b) the total amount of such items reported in the statements of cash flows:
 
Cash and cash equivalents
 
$
123,048
   
$
189,127
 
Restricted cash, current (Note 8)
   
7,233
     
12,419
 
Restricted cash, non-current (Note 8)
   
1,021
     
5,021
 
Cash and cash equivalents and restricted cash at end of period shown in the statement of cash flows
 
$
131,302
   
$
206,567
 
 
The accompanying notes are integral part of these unaudited interim condensed consolidated financial statements.
F-6



STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

1. Basis of Presentation and General Information:
Star Bulk Carriers Corp. (“Star Bulk”) is a global 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 offices in Athens, Oslo, New York, Limassol, Singapore and Germany. Star Bulk’s common shares trade on the NASDAQ Global Select Market under the ticker symbol “SBLK”.
The unaudited interim condensed consolidated financial statements include the accounts of Star Bulk and its wholly owned subsidiaries (collectively, 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 for the year ended December 31, 2020 and, in the opinion of management, reflect all 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 three-month period ended March 31, 2021 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2021.
The unaudited interim condensed consolidated financial statements presented in this report should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2020 (the “2020 Annual Report”).  The balance sheet as of December 31, 2020 has been derived from the audited consolidated 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.
Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2020 Annual Report.
On March 11, 2020, the World Health Organization declared the 2019 Novel Coronavirus (the “Covid-19”) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. There continues to be a high level of uncertainty relating to how the pandemic will evolve, including the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public's and government's responses to such measures. At present, it is not possible to ascertain any future impact of Covid-19 on the Company’s operational and financial performance, which may take some time to materialize and may not be fully reflected in the Company’s results for 2020 and 2021.  However, an increase in the severity or duration or a resurgence of the Covid-19 pandemic and the timing of wide-scale vaccine distribution could have a material adverse effect on the Company’s business, results of operations, cash flows, financial condition, the carrying value of the Company’s assets, the fair values of the Company’s vessels, and the Company’s ability to pay dividends.
As of March 31, 2021, the Company owned a modern fleet of 125 dry bulk vessels consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax vessels with a carrying capacity between 52,000 deadweight tonnage (“dwt”) and 210,000 dwt, and a combined carrying capacity of 13.8 million dwt.
F-7


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

2. Significant accounting policies and recent accounting pronouncements:
A summary of the Company’s significant accounting policies and recent accounting pronouncements is included in Note 2 to the Company’s consolidated financial statements included in the 2020 Annual Report. There have been no changes to the Company’s significant accounting policies and recent accounting pronouncements in the three-month period ended March 31, 2021.
3. Transactions with Related Parties:
Details of the Company’s transactions with related parties did not change in the three-month period ended March 31, 2021 and are discussed in Note 3 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report.
Transactions and balances with related parties are analyzed as follows:
Balance Sheets
 
 
December 31, 2020
   
March 31, 2021
 
Due from related parties
           
Oceanbulk Maritime and its affiliates
 
$
426
   
$
692
 
Interchart
   
3
     
3
 
Starocean
   
34
     
34
 
Coromel Maritime Limited
   
1
     
1
 
Product Shipping & Trading S.A.
   
17
     
21
 
Due from related parties
 
$
481
   
$
751
 
                 
Due to related parties
               
Management and Directors Fees
 
$
252
   
$
42
 
Augustea Technoservices Ltd. and affiliates
   
1,187
     
1,157
 
Due to related parties
 
$
1,439
   
$
1,199
 

Statements of Operations

 
 
Three months ended March 31,
 
   
2020
   
2021
 
 Voyage expenses:
           
 Voyage expenses-Interchart
   
(945
)
   
(945
)
 Voyage expenses- Augustea Technoservices Ltd. and affiliates
   
-
     
(66
)
 General and administrative expenses:
               
 Consultancy fees
   
(165
)
   
(136
)
 Directors compensation
   
(43
)
   
(45
)
 Office rent - Combine Marine Ltd. &  Alma Properties
   
(10
)
   
(11
)
 General and administrative expenses - Oceanbulk Maritime and its affiliates
   
(72
)
   
(49
)
 Management fees:
               
 Management fees- Augustea Technoservices Ltd. and affiliates
   
(1,638
)
   
(1,620
)
 Charter-in hire expenses:
               
 Charter - in hire expenses - AOM
   
(515
)
   
(1,761
)
 Charter - in hire expenses - Sydelle
   
(539
)
   
-
 
 Charter - in hire expenses - Coromel
   
(249
)
   
-
 


F-8


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

4. Inventories:
The amounts shown in the consolidated balance sheets are analyzed as follows:
   
December 31, 2020
   
March 31, 2021
 
 Lubricants
 
$
11,877
   
$
12,458
 
 Bunkers
   
35,417
     
47,614
 
 Total
 
$
47,294
   
$
60,072
 

5. Vessels and other fixed assets, net:
The amounts in the consolidated balance sheets are analyzed as follows:
 
 
Cost
   
Accumulated depreciation
   
Net Book Value
 
 Balance, December 31, 2020
 
$
3,464,808
   
$
(587,689
)
 
$
2,877,119
 
 - Acquisitions, improvements and other vessel costs
   
195,927
     
-
     
195,927
 
 - Depreciation for the period
   
-
     
(36,233
)
   
(36,233
)
 Balance, March 31, 2021
 
$
3,660,735
   
$
(623,922
)
 
$
3,036,813
 

As of March 31, 2021, 88 of the Company’s 125 vessels, having a net carrying value of $2,175,856, were subject to first-priority mortgages as collateral to their loan facilities (Note 8). Title of ownership is held by the relevant lenders for another 37 vessels with a carrying value of $860,657 to secure the relevant sale and lease back financing transactions (Note 7). In addition, certain of the Company’s vessels having a net carrying value of $677,701 are subject to second-priority mortgages as collateral to certain of the Company’s loan facilities (Note 8).
Vessels acquired / delivered / disposed of during the three-month period ended March 31, 2021
As further discussed in Notes 5 and 21(a) of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report, on December 17, 2020, the Company entered into a definitive agreement with entities affiliated with E.R. Capital Holding GmbH & Cie. KG, pursuant to which the Company agreed to acquire three Capesize drybulk vessels, the Star Bayonne (ex- E.R. Bayonne), the E.R. Buenos Aires and the Star Borneo (ex- E.R. Borneo), (“E.R. Acquisition Vessels”). The E.R. Acquisition Vessels are retrofitted with exhaust gas cleaning systems. The acquisition was concluded with the delivery of the vessels to the Company on January 26, 2021. Consideration for the acquisition was payable in the form of $39,000 in cash, which was financed by SEB $39,000 Facility (Note 8) and 2,100,000 of the Company’s common shares, which shares were issued on January 26, 2021 to E.R. Schiffahrt GmbH & Cie. KG.
F-9


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

5. Vessels and other fixed assets, net - continued:
In addition, as further discussed in Note 21 (b) of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report, on February 2, 2021, the Company entered into an agreement with Eneti Inc. (NYSE: NETI), formerly known as Scorpio Bulkers Inc., and certain other parties to acquire seven vessels, consisting of three Ultramax vessels, the Star Athena (ex- SBI Pegasus), the Star Bovarius (ex- SBI Ursa) and the Star Subaru (ex- SBI Subaru), and four Kamsarmax vessels, the Star Capoeira (ex- SBI Capoeira), the Star Carioca (ex- SBI Carioca), the Star Lambada (ex- SBI Lambada) and the Star Macarena (ex- SBI Macarena), (the “Eneti Acquisition Vessels”) by assuming the outstanding lease obligations of the Eneti Acquisition Vessels (Note 7). As consideration for this transaction the Company agreed to issue to Eneti Inc. 3,000,000 newly issued common shares of the Company. To facilitate the issuance of these common shares, the Company issued to Eneti Inc. a warrant to purchase up to 3,000,000 of the Company’s common shares (the “Eneti Warrant”). The Eneti Warrant was issued on February 2, 2021 and, subject to its terms and conditions, was agreed to be exercised at an exercise price of $0.01 per share in connection with the delivery date of each of the Eneti Acquisition Vessels. Six out of seven vessels were delivered to the Company on March 16, 2021 on which date the warrant was partially exercised with the Company issuing 2,649,203 of its common shares and assuming the outstanding lease obligations attributable to these six vessels (Note 7).
In addition, during the three months ended March 31, 2021 the Company installed ballast water management system to certain of its vessels.
6. Advances for vessels under construction and acquisition of vessels:
As further discussed in Note 21(d) of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report, on March 3, 2021 the Company entered into a definitive agreement with a third party to acquire two ECO type resale 82,000 dwt Kamsarmax vessels (the “Kamsarmax Resale Vessels”) at a price of $55,000 in aggregate. The vessels are expected to be delivered to the Company in June and September 2021, respectively, directly from YAMIC yard (a joint venture between Mitsui and New Yangzijiang). An advance payment of $11.0 million in aggregate, was paid on March 17, 2021 and is included under “Advances for vessels under construction and acquisition of vessels” in the unaudited interim condensed consolidated balance sheet.
7. Lease financing:
Details of the Company’s lease financings are discussed in Note 7 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report and the only new activity during the three-month period ended March 31, 2021, is the assumption of the lease obligations of the six Eneti Acquisition Vessels upon their delivery to the Company, on March 16, 2021 (Note 5).
On March 16, 2021, the delivery date of six of the Eneti Acquisition Vessels to the Company, six tripartite novation agreements between China Merchants Bank Leasing (“CMBL”), Eneti Inc. and the Company were executed, which resulted in an increase of the Company’s lease financing obligations by $83,929. The remaining lease terms are for five years and pursuant to the terms of each bareboat charter, the Company pays CMBL a fixed bareboat charter hire rate in quarterly installments plus interest and has options to purchase each vessel starting on May 2022, at a pre-determined, amortizing purchase price which is considered to be at significantly lower level compared to the expected fair value of each vessel at any date between May 2022 and the expiration of the bareboat charter term.
All of the Company’s lease financings bear interest at LIBOR plus a margin. The corresponding interest expense of the Company’s bareboat lease financing activities is included within “Interest and finance costs” in the unaudited interim condensed consolidated statements of operations (Note 8).
Some of the Company’s lease financings contain financial and other covenants similar to those included in its credit facilities described Note 8, with which as further discussed in Note 8, as of March 31, 2021, the Company was in compliance.
F-10


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

7. Lease financing – (continued):
The principal payments required to be made after March 31, 2021, for the Company’s outstanding bareboat lease obligations recognized on the balance sheet, as of that date, are as follows:
Twelve month periods ending
 
Amount
 
March 31, 2022
 
$
53,440
 
March 31, 2023
   
53,440
 
March 31, 2024
   
49,917
 
March 31, 2025
   
48,440
 
March 31, 2026
   
82,943
 
March 31, 2027 and thereafter
   
218,001
 
Total bareboat lease minimum payments
 
$
506,181
 
Unamortized lease issuance costs
   
(6,117
)
Total bareboat lease minimum payments, net
 
$
500,064
 
Lease financing short term
   
53,440
 
Lease financing long term, net of unamortized lease issuance costs
   
446,624
 

8. Long-term bank loans and 2022 Notes:
Details of the Company’s credit facilities and debt securities are discussed in Note 9 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report and are supplemented by the below new activity.
New Financing Activity
(i) SEB $39,000 Facility:
On January 22, 2021, the Company entered into a loan agreement with Skandinaviska Enskilda Banken AB (SEB), (the “SEB $39,000 Facility”), for the financing of an amount of $39,000. The amount was drawn on January 25, 2021 and used to finance the cash consideration for the E.R. Acquisition Vessels (Note 5), which were delivered to the Company on January 26, 2026. The facility is repayable in 20 equal quarterly principal payments of $1,950 with the last installment due in January 2026. The SEB $39,000 Facility is secured by a first priority mortgage on the E.R. Acquisition Vessels.
The Company’s credit facilities including SEB $39,000 Facility described above, contain financial covenants and undertakings, a summary of these terms included in Note 9 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report.
As of December 31, 2020 and March 31, 2021, the Company was required to maintain minimum liquidity, not legally restricted, of $58,000 and $62,500, respectively which is included within “Cash and cash equivalents” in the consolidated balance sheets. In addition, as of December 31, 2020 and March 31, 2021, the Company was required to maintain a minimum liquidity, legally restricted, of $12,320 and $17,440, which is included within “Restricted cash, current and non-current” in the consolidated balance sheets. The increase in restricted cash is attributable to the increase in collateral required under certain of the Company’s financial instruments (Note 13).
As of March 31, 2021, the Company was in compliance with the applicable financial and other covenants contained in its debt agreements, including the 2022 Notes and lease financings included in Note 7.
F-11


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

8. Long-term bank loans and 2022 Notes - continued:
The principal payments required to be made after March 31, 2021 for all of the then-outstanding bank debt, are as follows:
Twelve month periods ending
 
Amount
 
March 31, 2022
 
$
154,148
 
March 31, 2023
   
180,060
 
March 31, 2024
   
337,988
 
March 31, 2025
   
162,608
 
March 31, 2026
   
167,615
 
March 31, 2027 and thereafter
   
101,745
 
Total Long-term bank loans
 
$
1,104,164
 
Unamortized loan issuance costs
   
(12,890
)
Total Long-term bank loans, net
 
$
1,091,274
 
Current portion of long-term bank loans
   
154,148
 
Long-term bank loans, net of current portion and unamortized loan issuance costs
   
937,126
 

The 2022 Notes mature in November 2022 and are presented in the consolidated balance sheets as of March 31, 2021 net of unamortized debt issuance costs of $667.
All of the Company’s bank loans and applicable lease financings  bear interest at LIBOR plus a margin, except for the DSF $55,000 Facility (Note 13).The weighted average interest rate (including the margin) related to the Company’s existing bank loans, 2022 Notes and lease financings for the three-month periods ended March 31, 2020 and 2021 was 4.51% and 3.06%, respectively.
The commitment fees incurred during the three-month periods ended March 31, 2020 and 2021 with regards to the Company’s unused amounts under its credit facilities were $75 and $3, respectively. There are no undrawn portions as of March 31, 2021, other than the available amount under the HSBC Working Capital Facility.
The amounts of “Interest and finance costs” included in the unaudited interim condensed consolidated statements of operations are analyzed as follows:
 
Three months ended March 31,
 
   
2020
   
2021
 
Interest on financing agreements
 
$
18,170
   
$
11,850
 
Reclassification adjustments of interest rate swap loss/(gain) transferred to Interest and finance costs from Other Comprehensive Income (Note 13)
   
(9
)
   
442
 
Amortization of debt (loan, lease & notes) issuance costs
   
1,725
     
1,815
 
Other bank and finance charges
   
667
     
333
 
Interest and finance costs
 
$
20,553
   
$
14,440
 

During the three-month period ended March 31, 2020, the Company incurred expenses of $29 and wrote-off an amount of $513 of unamortized debt issuance costs in connection with the refinancing of certain credit facilities and lease financings. Both amounts are included under “Loss on debt extinguishment” in the unaudited interim condensed consolidated statement of operations. No such expenses or write-offs were incurred during the three-month period ended March 31, 2021.
F-12


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

9. Preferred and Common Shares and Additional Paid-in Capital:
Details of the Company’s Preferred and Common Shares are discussed in Note 10 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report.
During the three months ended March 31, 2021, and as further discussed in Note 5, the Company issued 2,100,000 and 2,649,203 of its common shares in connection with the delivery of the three E.R. Acquisition Vessels and six Eneti Acquisition Vessels. In addition, during the three months ended March 31, 2021, the Company cancelled its 6,971 treasury shares.
During the three months ended March 31, 2020 the Company paid a cash dividend of $ 4,749 (or $0.05 per common share) for the fourth quarter of 2019, in line with the dividend policy established in November 2019.
10. Earnings / (Loss) per Share:
The computation of basic earnings/(loss) per share is based on the weighted average number of common shares outstanding for the three-month periods ended March 31, 2020 and 2021. The calculation of basic earnings per share does not consider the non-vested shares as outstanding until the time-based vesting restriction has lapsed. Diluted earnings/(loss) per share gives effect to stock awards, stock options and restricted stock units using the treasury stock method, unless the impact is anti-dilutive.  Diluted earnings per share for the three months ended March 31, 2020 does not include the effect of the 104,250 non-vested share options outstanding as of that date, as their effect was anti-dilutive. The options expired in April 2020 without being exercised.
The Company calculates basic and diluted earnings / (loss) per share as follows:
 
 
Three months ended March 31,
 
 
 
2020
   
2021
 
Income / (Loss) :
           
Net income / (loss)
 
$
2,755
   
$
35,763
 
                 
 
               
Basic earnings / (loss) per share:
               
Weighted average common shares outstanding, basic
   
95,797,142
     
98,712,581
 
Basic earnings / (loss) per share
 
$
0.03
   
$
0.36
 
 
               
Effect of dilutive securities:
               
Dillutive effect of non vested shares
   
119,337
     
307,363
 
Weighted average common shares outstanding, diluted
   
95,916,479
     
99,019,944
 
 
               
Diluted earnings / (loss) per share
 
$
0.03
   
$
0.36
 

F-13


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

11. Equity Incentive Plans:
Details of the Company’s Equity Incentive Plans and share awards granted through December 31, 2020 are discussed in Note 13 of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report.
For the three-month periods ended March 31, 2020 and 2021, the share-based compensation cost recognized was $333 and $313, respectively. In addition, as of December 31, 2019, the Company had recognized compensation cost of $1,235 for the 400,000 RSUs, which at that time were considered probable to vest. As of March 31, 2020, the Company determined that the then likelihood of vesting for any of the 4,000,000 RSUs did not meet a “more likely than not” threshold under US GAAP and as a result, the previously recognized expense of $1,235 was reversed during the three-month period ended March 31, 2020. These amounts are included under “General and administrative expenses” in the unaudited interim condensed consolidated statements of operations.
A summary of the status of the Company’s non-vested restricted shares as of March 31, 2021 and the movement during the three-month period ended March 31, 2021 is presented below.
   
Number of shares
   
Weighted Average Grant Date Fair Value
 
Unvested as at January 1, 2021
   
415,889
   
$
7.09
 
Granted
   
-
     
-
 
Vested
   
(71,500
)
   
12.49
 
Unvested as at March 31, 2021
   
344,389
   
$
5.97
 

As of March 31, 2021 the estimated compensation cost relating to non-vested restricted share awards not yet recognized is $887 and is expected to be recognized over the weighted average period of 1.64 years.
F-14


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

12. Commitments and Contingencies:
a) Commitments:
The following table sets forth inflows and outflows related to the Company’s charter party arrangements and other commitments, as at March 31, 2021.
   
Three month periods ending March 31,
 
+ inflows/ - outflows
 
Total
   
2022
   
2023
   
2024
   
2025
   
2026
   
2027 and thereafter
 
Future, minimum, non-cancellable charter revenue (1)
 
$
52,950
   
$
52,950
   
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
Acquisition of second-hand vessels (2)
   
(64,579
)
   
(53,338
)
   
(1,283
)
   
(1,283
)
   
(1,283
)
   
(1,408
)
   
(5,984
)
Vessel BWTS (3)
   
(26,883
)
   
(26,883
)
   
-
     
-
     
-
     
-
     
-
 
Office rent (4)
   
(839
)
   
(339
)
   
(303
)
   
(163
)
   
(34
)
   
-
     
-
 
Total
 
$
(39,351
)
 
$
(27,610
)
 
$
(1,586
)
 
$
(1,446
)
 
$
(1,317
)
 
$
(1,408
)
 
$
(5,984
)
_________________
(1)
The amounts represent the minimum contractual charter revenues to be generated from the existing, as of March 31, 2021, non-cancellable time charter agreements, until their expiration, net of address commission, assuming no off-hire days other than those related to scheduled interim and special surveys of the vessels.
(2)
The amount reflects i) the remaining consideration as of March 31, 2021 to be paid for the two Kamsarmax Resale Vessels discussed in Note 6 as well as ii) the consideration paid upon the delivery of the seventh Eneti Acquisition Vessel, SBI Pegasus (Note 5), on May 19, 2021, in form of 350,797 of the Company’s common shares valued at $22.54 per share, based on the closing price of the Company’s common shares on the issuance date and the assumed lease obligations of the vessel.
(3)
The amounts represent the Company’s commitments as of March 31, 2021, for installation of Ballast Water Treatment System (“BWTS”) on its vessels so as to comply with environmental regulations.
(4)
The amount reflects the minimum rental payments under the office rental agreements that the Company is party to as of March 31, 2021.

b) Legal proceedings
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. In addition, losses may arise from disputes with charterers, agents, insurance and other claims with suppliers relating to the operations of the Company’s vessels.  The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure.  Currently, management is not aware of, and has not accrued for, any such claims or contingent liabilities requiring disclosure in the unaudited interim condensed consolidated financial statements.
F-15


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

13. Fair value measurements and Hedging:
Fair value measurements
The Company recognizes all derivative instruments as either assets or liabilities at fair value on its consolidated balance sheets in accordance with ASC Topic 815, “Derivatives and Hedging”.
Interest rate swaps
The Company from time to time enters into interest rate derivative contracts to manage interest costs and risks associated with changing interest rates with respect to certain of its credit facilities. Details of the Company’s interest rate swaps are discussed in Note 20 and 21(c) of the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Annual Report.
The Company’s interest rate swaps were designated and qualified as cash flow hedges. The effective portion of the unrealized gains/losses from those swaps is recorded in Other Comprehensive Income / (Loss). No portion of the cash flow hedges was ineffective during the three-month period ended March 31, 2021.
A loss of approximately $1,649 in connection with the interest rate swaps is expected to be reclassified into earnings during the following 12-month period when realized.
Freight Derivatives and Bunker Swaps
During the year ended December 31, 2020 and the three-month period ended March 31, 2021, the Company entered into a certain number of freight derivatives, including freight forward agreements (“FFAs”), freight options and bunker swaps, the results of which for the three-month periods ended March 31, 2020 and 2021 and the valuation of their open positions as at December 31, 2020 and March 31, 2021 are presented in the tables below.
The amounts of Gain / (Loss) on interest rate swaps, freight derivatives and bunker swaps recognized in the unaudited interim condensed consolidated statements of operations, are analyzed as follows:
 
 
Three months ended March 31,
 
   
2020
   
2021
 
Consolidated Statement of Operations
           
 
           
Interest and finance costs
           
Reclassification adjustments of interest rate swap loss/(gain) transferred to Interest and finance costs from Other comprehensive income/(loss) (Note 8)
   
9
     
(442
)
Total Gain/(loss) recognized
 
$
9
   
$
(442
)
 
               
Gain/(loss) on forward freight agreements and bunker swaps, net
               
Realized gain/(loss) on forward freight agreements and freight options
   
1,431
     
(891
)
Realized gain/(loss) on bunker swaps
   
2,114
     
-
 
Unrealized gain/(loss) on forward freight agreements and freight options
   
8,018
     
(1,194
)
Unrealized gain/(loss) on bunker swaps
   
16,023
     
-
 
Total Gain/(loss) recognized
 
$
27,586
   
$
(2,085
)
                 

F-16


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

13. Fair value measurements and Hedging - continued:
The guidance for fair value measurements applies to all assets and liabilities that are being measured and reported on a fair value basis.  This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.  The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1:
Quoted market prices in active markets for identical assets or liabilities

Level 2:
Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3:
Unobservable inputs that are not corroborated by market data
The following table summarizes the valuation of the Company’s financial instruments as of December 31, 2020 and March 31, 2021. The fair value of freight derivatives and bunker swaps was determined through Level 1 inputs of the fair value hierarchy (quoted prices from the applicable exchanges such as London Clearing House (LCH) or Singapore Exchange (SGX)), while the fair value of the interest rate swaps was determined through Level 2 inputs of the fair value hierarchy (such as interest rate curves).
 
   
Significant Other Observable Inputs (Level 2)
 
     
December 31, 2020
 
March 31, 2021
 
Balance Sheet Location
(not designated as cash flow hedges)
 
(designated as cash flow hedges)
 
(not designated as cash flow hedges)
 
(designated as cash flow hedges)
 
ASSETS
                 
Interest rate swaps - current
Derivatives, current asset portion
 
$
-
     
-
   
$
-
     
156
 
Interest rate swaps - non-current
Derivatives, non-current asset portion
 
$
-
     
-
   
$
-
     
3,506
 
Total
 
 
$
-
     
-
   
$
-
     
3,662
 
LIABILITIES
                                 
Interest rate swaps - current
Derivatives, current liability portion
 
$
-
     
1,727
   
$
-
     
1,426
 
Interest rate swaps - non-current
Derivatives, non-current liability portion
 
$
-
     
2,265
   
$
-
     
368
 
Total
 
 
$
-
     
3,992
   
$
-
     
1,794
 

 
 
                       
 
  
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
      
December 31, 2020
   
March 31, 2021
 
Balance Sheet Location
 
(not designated as cash flow hedges)
   
(designated as cash flow hedges)
   
(not designated as cash flow hedges)
   
(designated as cash flow hedges)
 
ASSETS
                         
Freight derivatives - current
Derivatives, current asset portion
 
$
-
     
-
   
$
-
     
-
 
Total
   
$
-
     
-
   
$
-
     
-
 
LIABILITIES
 
                               
Freight derivatives - current
Derivatives, current liability portion
 
$
212
     
-
   
$
1,406
     
-
 
Bunker swaps - current
Derivatives, current liability portion
 
$
-
     
-
   
$
-
     
-
 
Total
   
$
212
     
-
   
$
1,406
     
-
 

Certain of the Company’s financial instruments discussed above require the Company to periodically post additional collateral depending on the level of any open position under such financial instruments, which as of December 31, 2020 and March 31, 2021 amounted to $895 and $4,823, respectively, and are included within “Restricted cash, current” in the consolidated balance sheets (Note 8). The carrying values of temporary cash investments, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. The fair value of long-term bank loans and financing under bareboat leases (Level 2), bearing interest at variable interest rates, approximates their recorded values as of March 31, 2021, due to the variable interest rate nature thereof. The fair value of the DSF $55,000 Facility (Note 8), measured through level 2 inputs (such as interest rate curves) is $53,257, which is $372 higher than the loan’s book value of $52,885. The 2022 Notes have a fixed rate, and their estimated fair value, determined through Level 1 inputs of the fair value hierarchy (quoted price on NASDAQ under the ticker symbol SBLKZ) was $51,760 as of March 31, 2021.
F-17


STAR BULK CARRIERS CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements March 31, 2021
(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

14. Voyage revenues:
The following table shows the voyage revenues earned from time charters, voyage charters and pool agreements for the three-month periods ended March 31, 2020 and 2021, as presented in the consolidated statement of operation:
   
Three months ended March 31,
 
 
 
2020
   
2021
 
             
Time charters
 
$
61,646
   
$
95,087
 
Voyage charters
   
100,773
     
105,897
 
Pool revenues
   
(1,557
)
   
(517
)
   
$
160,862
   
$
200,467
 

As of March 31, 2021, trade accounts receivable, net increased by $5,224, and deferred revenue increased by $2,772 compared to December 31, 2020. These changes were mainly attributable to the timing of collections along with the significant improvement in charter hire rates during the three months ended March 31, 2021.
Further, as of March 31, 2021, deferred assets related to revenue contracts (included within “Other current assets”) decreased by $422 compared to December 31, 2020, from $2,187 to $1,765. This change was mainly attributable to the timing of commencement of revenue recognition.
Under ASC 606, unearned voyage charter revenue represents the consideration received for undelivered performance obligations. The Company recorded $11,675 as unearned revenue related to voyages in progress as of December 31, 2020, which were recognized in earnings in the three month period ended March 31, 2021 as the performance obligations were satisfied in that period. In addition, the Company recorded $14,447 as unearned revenue related to voyages in progress as of March 31, 2021, which will be recognized in earnings during the remaining of the year ending December 31, 2021 as the performance obligations will be satisfied in that period.
The adjustment to Company’s revenues from the vessels operating in the CCL Pool, deriving from the allocated pool result for those vessels as determined in accordance with the agreed-upon formula, for the three-month periods ended March 31, 2020 and 2021 was ($1,963) and ($320), respectively, and is included within “Pool Revenues” in the table above, while the corresponding adjustment to Company’s revenues from the Short Pool for the three-month periods ended March 31, 2020 and 2021 was nil and ($171) and is included within “Pool Revenues” in the table above. Pool Revenues also include other minor participation adjustments.
15. Subsequent Events:

The seventh Eneti Acquisition Vessel (Note 5), the SBI Pegasus, was delivered to the Company on May 19, 2021, upon which the remaining 350,797 common shares were issued and the Company assumed the vessel’s then outstanding lease obligations.




F-18