(Recasts; adds details, share movement)
Feb 12 (Reuters) - Greek dry bulk carrier Star Bulk Carriers Corp SBLK.O said it was suspending its cash dividends and share buyback, as part of its agreements with lenders to waive certain loan covenants, sending its shares down 19 percent.
Star Bulk joins a growing list of dry bulk shipping firms that have suspended dividends, share buyback programs and cut capital spending amidst falling freight rates, and weak asset values. This has put pressure on the shippers to obtain loan covenant waivers.
“The suspension of our dividend will reinforce our liquidity and balance sheet,” Chief Executive Akis Tsirigakis said in a statement.
The company said the lenders will waive the security-cover requirement, minimum asset coverage ratio and loan-to-value ratio covenants for debts totalling $305 million.
Star Bulk obtained a covenant waiver through Jan. 31, 2010 for its $120 million facility. Similarly, it obtained waivers through Feb. 28, 2010, for its $150 million and $35 million facilities.
The interest spread for each of the above loans will be adjusted to 2 percent per annum for the duration of the respective waiver period, the company added.
The company said it has time-chartered its Capesize vessel, Star Beta, for 13 to 15 months at a gross daily rate of $32,500.
Star Bulk said its fleet’s contracted operating days coverage is now 93 percent in 2009.
Shares of the company, which have lost more than 68 percent of their value in the past six months, were trading down 18 percent at $2.28 in morning trade on the New York Stock Exchange.
Recently, Star Bulk's peers DryShips Inc DRYS.O, Diana Shipping Inc DSX.N and Eagle Bulk Shipping Inc EGLE.O and Genco Shipping & Trading Ltd GNK.N had suspended their dividend payouts to preserve cash. (Reporting by Sakthi Prasad in Bangalore; Editing by Vinu Pilakkott and Chakradhar Adusumilli)
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