Star shuts off Eagle swoop

Star Bulk has ruled out the purchase of Eagle Bulk Shipping in the wake of its $634.91m move for Excel Maritime’s fleet.

Star has been tipped to takeover both Excel and Eagle ever since its merger with Oceanbulk in July.

Hamish Norton, president of Star Bulk, today killed off the idea of a swoop for Eagle, which like the previous two captures is backed by Oaktree Capital.

He said on a conference call: “In terms of other Oaktree affiliates, we have no intention of pursuing the acquisition of any other Oaktree affiliated companies.

“I don’t think that is likely to change.”

Financial expects this week had suggested the eventual "roll up" of the Eagle Bulk Shipping fleet into rapidly expanding Star Bulk remained more of a possibility than a foregone conclusion.

Speculation that Eagle's days as an independent company might be numbered has been rife ever since it became clear that private equity's Oaktree Capital Management was stockpiling a major ownership stake in all three companies.

The fans were flamed further this week when Arctic Securities analyst Erik Nikolai Stavseth opined in a research note that he believes Eagle will be next for 103-ship Star.

Not everyone was so sure.

New York-based Eagle is now navigating a pre-packaged Chapter 11 bankruptcy reorganisation in which Oaktree and other hedge funds will emerge with 99.5% control of the company.

As TradeWinds reported last week, current chief executive officer Sophocles Zoullas has been granted a three-year employment contract into 2017. But that is not why the finance man has doubts about a Star-Eagle combination.

"I don't think it's a foregone conclusion," he said. "While Star has different classes of ships, it has concentrated on the larger ones -- capesizes, panamaxes and kamsarmaxes. I don't know that they'll necessarily want to acquire a company that has all supramaxes. It changes their focus.

"I see the employment agreement as sort of an accommodation so that (Zoullas) would be willing to support the pre pack deal. The cost of breaking the contract is small enough that it would not be a deal-breaker if they really want Eagle."

Zoullas is guaranteed an $850,000 per year base salary under the new terms, with a target cash bonus set at 50% to 75% of that. In the event of termination without cause, Zoullas would receive two times his base pay plus bonus.

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