Monday, January 11, 2010

After "careful" evaluation, Star Bulk Carriers decides not to get sued.... (SBLK)

Ah good stuff, this is funny. Star Bulk Carriers (SBLK), a greek shipping firm, has decided it will scrap a second extension of warrants that are due to expire worthless in March of this year. Warrants are basically an option to purchase securities in the future at a fixed price.

From the
November announcement, in which they disgustingly extended the warrants' expiration date from December 09 to March 2010:

"ATHENS, GREECE--(Marketwire - 11/25/09) - Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (NASDAQ:SBLK - News), today announced that it has extended the expiration date of its 5,916,150 outstanding warrants to purchase shares of common stock, par value $0.01 per share, of the Company (the "Existing Warrants") which were formerly scheduled to expire at 5 p.m. New York City time on December 15, 2009. The Existing Warrants are listed on the Nasdaq Global Market and trade under the symbol "SBLKW." Each Existing Warrant currently entitles the holder to purchase one share of common stock at an exercise price of $8.00 per share. The new expiration date for the Existing Warrants is set at 5 p.m. New York City time on March 15, 2010. All of the other terms of the Existing Warrants remain unchanged."

Most press releases include some sort of management commentary giving insight to this or that decision. But when you're arguably committing securities fraud, what are you gonna write? "Hello shareholders, we hate to rob you, but seeing as company directors hold 20% of these options that are currently underwater, we're going to change the structure to dilute you and enrich us. Cool?" And yes, company directors do hold 20% of these warrants.

Today the company released another comical release, in which they scrapped intentions to extend the warrants to 2011 in exchange for a small "fee" from the warrant holders. This is really similar to companies that reprice underwater stock options - usually legal, extremely shareholder-unfriendly. I love that management has "carefully evaluated market conditions, including the recent trading prices." Annddddd, they realized that they'll probably be sued if they proceed with this total ripoff.

"ATHENS, GREECE--(Marketwire - 01/11/10) - Star Bulk Carriers Corp. (the "Company" or "Star Bulk") (NASDAQ:SBLK - News), today announced that the Company has determined not to proceed with a previously announced plan to conduct an exchange offer to holders of its 5,916,150 outstanding warrants to purchase shares of common stock, par value $0.01 per share, of the Company (the "Existing Warrants"). Each Existing Warrant currently entitles the holder to purchase one share of common stock at an exercise price of $8.00 per share and expires at 5 p.m. New York City time on March 15, 2010.
The Company had planned to conduct the exchange offer whereby each Existing Warrant would have been eligible, upon payment of a fee per warrant, to be exchanged for a new warrant to purchase one share of common stock of the Company at an exercise price per share to be determined at a future date and with an expiration date of March 15, 2011. The Company has carefully evaluated current market conditions, including the recent trading prices of the Company's common stock on the Nasdaq Global Market, and determined that it currently would not be in the best interests of the Company's shareholders to effect the exchange offer. Directors of the Company currently own an aggregate of 1,132,500 Existing Warrants."



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