Report of Foreign Issuer (6-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of September 2014

Commission File Number: 001-33869

STAR BULK CARRIERS CORP.

(Translation of registrant’s name into English)

Star Bulk Carriers Corp.

c/o Star Bulk Management Inc.

40 Agiou Konstantinou Street,

15124 Maroussi,

Athens, Greece

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨.

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨.

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached as Exhibit 99.1 to this Form 6-K is a Management’s Discussion and Analysis of Financial Condition and Results of Operations and the unaudited interim condensed consolidated financial statements of Star Bulk Carriers Corp. (the “Company” or “Star Bulk”) as of and for the six months ended June 30, 2014 and 2013.

Attached as Exhibit 99.2 to this Form 6-K are the (i) Unaudited Pro Forma Condensed Combined Financial Information of the Company and Oceanbulk Shipping LLC and Oceanbulk Carriers LLC (collectively “Oceanbulk”); (ii) Summary Historical Combined Financial and Other Operating Data of Oceanbulk; (iii) Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk; and (iv) the Combined Financial Statements of Oceanbulk.

Attached as Exhibit 99.3 to this Form 6-K are descriptions of various agreements the Company has entered into or assumed in connection with the Company’s previously disclosed merger and other transactions involving certain of the Company’s subsidiaries completed in July 2014 including: (i) the Oaktree Shareholders Agreement by and among the Company and the parties named therein dated July 11, 2014; (ii) the Pappas Shareholder Agreement by and among the Company and the parties named therein dated July 11, 2014; (iii) the Amended and Restated Registration Rights Agreement dated July 11, 2014; (iv) the Agreement and Plan of Merger dated June 16, 2014; and (v) Certain Related Party Transactions.

Attached as Exhibit 99.4 is a description of the agreements entered into in connection with the Excel Transactions (as defined herein) including: (i) the Vessel Purchase Agreement by and among the Company, Excel Maritime Carriers Ltd and Christine Shipco Holdings Corp., dated August 19, 2014; (ii) the Amendment No. 1 to Amended and Restated Registration Rights Agreement dated August 28, 2014; and (iii) the Senior Secured Credit Agreement, dated August 19, 2014, among Unity Holding LLC, as Borrower, the initial lenders named therein, as Initial Lenders, and the other lenders from time to time party thereto, as Lenders, and Wilmington Trust, National Association, as Administrative Agent.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This Form 6-K, and the documents to which the Company refers in this Form 6-K, as well as information included in oral statements or other written statements made or to be made by the Company, contain statements that, in our opinion, may constitute forward-looking statements. Statements containing words such as “expect,” “anticipate,” “believe,” “estimate,” “likely” or similar words that are used herein or in other written or oral information conveyed by or on behalf of the Company, are intended to identify forward-looking statements. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such forward-looking statements are not guarantees of future events. Actual results may differ, even materially, from those contemplated by the forward-looking statements due to, among others, the following factors:

•

general dry bulk shipping market conditions, including fluctuations in charterhire rates and vessel values;

•

the strength of world economies;

•

the stability of Europe and the Euro;

•

fluctuations in interest rates and foreign exchange rates;

•

changes in demand in the dry bulk shipping industry, including the market for our vessels;

•

changes in the Company’s operating expenses, including bunker prices, dry docking and insurance costs;

•

changes in governmental rules and regulations or actions taken by regulatory authorities;

•

potential liability from pending or future litigation;

•

general domestic and international political conditions;

•

potential disruption of shipping routes due to accidents or political events;

•

the availability of financing and refinancing;

•

the Company’s ability to meet its requirements for additional capital and financing and to complete its newbuilding program and to grow its business;

•

vessel breakdowns and instances of off-hire;

•

risks associated with vessel construction;

•

potential exposure or loss from investment in derivative instruments;

•

potential conflicts of interest involving the Company’s Chief Executive Officer, his family and other members of our senior management;

•

the Company’s ability to complete acquisition transactions as planned (including the acquisitions of vessels from Excel Maritime Carriers Ltd.); and

•

the risk factors and other factors referred to in the Company’s reports filed with or furnished to the SEC.

Consequently, all of the forward-looking statements we make in this document are qualified by the information contained or referred to herein, including, but not limited to, (i) the information contained under this heading and (ii) the information disclosed in the Company’s annual report on Form 20-F for the fiscal year ended 2013, filed with the SEC on March 21, 2014.

You should carefully consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. Except as required by law, the Company undertakes no obligation to update any of these forward-looking statements, except as otherwise required by applicable law.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: September 5, 2014	STAR BULK CARRIERS CORP.
	(Registrant)

	By:	/s/ SIMOS SPYROU
		Name:	Simos Spyrou
		Title:	Co-Chief Financial Officer

iii


Exhibit No.		Name

99.1		Management’s Discussion and Analysis of Financial Condition and Results of Operations and our unaudited interim condensed consolidated financial statements of the Company as of and for the six months ended June 30, 2014 and 2013

99.2		(i) Unaudited Pro Forma Condensed Combined Financial Information of the Company and Oceanbulk, (ii) Summary Historical Combined Financial and Other Operating Data of Oceanbulk; (iii) Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk, and (iv) the Combined Financial Statements of Oceanbulk

99.3		Descriptions of various agreements the Company has entered into or assumed in connection with the merger and other transactions completed in July 2014 including: (i) the Oaktree Shareholders Agreement by and among the Company and the parties named therein dated July 11, 2014; (ii) the Pappas Shareholder Agreement by and among the Company and the parties named therein dated July 11, 2014; (iii) the Amended and Restated Registration Rights Agreement dated July 11, 2014; (iv) the Agreement and Plan of Merger dated June 16, 2014; and (v) Certain Related Party Transactions

99.4		Descriptions of the agreements the Company has entered into in connection with the Excel Transactions (as defined herein) including: (i) the Vessel Purchase Agreement by and among the Company, Excel Maritime Carriers Ltd and Christine Shipco Holdings Corp., dated August 19, 2014; (ii) the Amendment No. 1 to Amended and Restated Registration Rights Agreement dated August 28, 2014; and (iii) the Senior Secured Credit Agreement, dated August 19, 2014, among Unity Holding LLC, as Borrower, the initial lenders named therein, as Initial Lenders, and the other lenders from time to time party thereto, as Lenders, and Wilmington Trust, National Association, as Administrative Agent.

101		The Unaudited Interim Condensed Consolidated Financial Statements of the Company as of June 30, 2014, from this Form 6-K, formatted in XBRL (eXtensible Business Reporting Language)

Exhibit 99.1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of financial condition and results of operations of Star Bulk Carriers Corp. (“Star Bulk”) for the six month periods ended June 30, 2014 and 2013. 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 in this report. For additional information relating to our management’s discussion and analysis of financial condition and results of operation, please see our Annual Report on Form 20-F for the year ended December 31, 2013, which was filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 21, 2014. 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 an international company providing worldwide transportation of dry bulk commodities through our vessel-owning subsidiaries for a broad range of customers of major bulk cargoes including coal, iron ore, and grains, and minor bulk cargoes including, bauxite, phosphate, 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.

In July 2014, we completed a transaction in which we acquired Oceanbulk Shipping LLC (“Oceanbulk Shipping”) and Oceanbulk Carriers LLC, (“Oceanbulk Carriers”, and, together with Oceanbulk Shipping, “Oceanbulk”) from Oaktree Dry Bulk Holdings LLC (including affiliated funds, “Oaktree”) and Millennia Holdings LLC (“Millennia Holdings”, and together with Oaktree, the “Sellers”) through the merger of our wholly-owned subsidiaries into Oceanbulk’s holding companies (the “Merger”). Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding fuel-efficient Eco-type dry bulk vessels (one of which, Peloreus was delivered on July 22, 2014) at shipyards in Japan and China. Millennia Holdings is an entity that is affiliated with the family of Mr. Petros Pappas, who became our Chief Executive Officer in connection with the Merger.

The agreement governing the Merger also provided for the acquisition by us (the “Heron Transaction”) of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta. We issued 2,115,706 of our common shares into escrow as consideration for the Heron Vessels. The common shares will be released from escrow to the Sellers at the time Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to us, and we expect to pay $25.0 million in cash (for which we may seek financing).

In addition, concurrently with the Merger, we completed a transaction (the “Pappas Transaction”), in which we acquired all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively, the “Pappas Companies”), which were entities owned and controlled by affiliates of the family of Mr. Pappas (the “Pappas Shareholders”). The Pappas Companies owned and operated a dry bulk carrier vessel (Tsu Ebisu) and had a contract for the construction of a newbuilding dry bulk carrier vessel, HN 5016 tbn Indomitable).

We refer to the Merger, the Heron Transaction and the Pappas Transaction, together, as the “July 2014 Transactions”.

In August 2014, we entered into definitive agreements with Excel Maritime Carriers Ltd. (“Excel”), pursuant to which we will acquire 34 dry bulk carrier vessels, consisting of six Capesize vessels, 14 sistership Kamsarmax vessels, 12 Panamax vessels and two Handymax vessels (collectively, the “Excel Vessels”) for an aggregate of 29,917,312 common shares (the “Excel Vessel Share Consideration”) and $288.4 million in cash. The Excel Vessels will be transferred to us in a series of closings, on a vessel-by-vessel basis, in general upon reaching

port after their current voyages and cargoes are discharged. In the case of three Excel Vessels (Christine (tbn Star Martha), Sandra (tbn Star Pauline) and Lowlands Beilun (tbn Star Despoina)) which are being transferred subject to existing charters, we will receive the outstanding equity interests of the vessel-owning subsidiaries that own those Excel Vessels (although no liabilities of such vessel-owning subsidiaries will be transferred). We expect to complete all of the Excel Vessel closings by the end of 2014. As of September 5, 2014, five of the Excel Vessels had already been transferred to us.

Entities affiliated with Oaktree (the “Oaktree Excel Investors”) and entities affiliated with Angelo, Gordon & Co. (the “Angelo, Gordon Excel Investors”) are holders of 48.1% and 24.3%, respectively, of the outstanding equity of Excel. The Excel Transactions were approved by the disinterested members of our board of directors, based upon the recommendation of a transaction committee of disinterested directors, which considered the Excel Transactions on our behalf in coordination with our management team. The total consideration was determined based on the average of three vessel appraisals by independent vessel appraisers.

At the transfer of each Excel Vessel, we will pay the cash and share consideration for such Excel Vessel to Excel. We expect to use cash on hand, together with borrowings under a new $231.0 million secured bridge loan facility (the “Excel Vessel Bridge Facility”) extended to us by entities affiliated with Oaktree and entities affiliated with Angelo, Gordon & Co. to fund the cash consideration for the Excel Vessels. Excel will use the cash consideration to cause an amount of outstanding indebtedness under its senior secured credit agreement to be repaid, such that all liens and obligations with respect to the transferred Excel Vessels (or vessel-owning subsidiary) are released upon the transfer to us. We have been informed that Excel expects to distribute the Excel Vessel Share Consideration to its equity holders, including the Oaktree Excel Investors and the Angelo, Gordon Excel Investors.

We refer to the foregoing transactions relating to the acquisition of the Excel Vessels as the “Excel Transactions”, and we refer to the Excel Transactions and the July 2014 Transactions as the “Transactions”. For more information regarding the terms of the Excel Transactions, see Exhibit 99.4 to this Report on Form 6-K.

A total of 54,104,200 of our common shares were issued to the various selling parties in the July 2014 Transactions, of which 45,460,324 shares were issued to Oaktree, and 8,643,876 shares were issued to the owners of the Pappas Companies and Millennia Holdings. After the July 2014 Transactions, Oaktree was the beneficial owner of approximately 61.3% of our outstanding common shares, and the Pappas Shareholders, were the beneficial owners of approximately 12.6% of our outstanding common shares.

Giving effect to the completion of the Excel Transactions (which we expect to occur by the end of 2014), and assuming the full distribution of the Excel Vessel Share Consideration to Excel’s equity holders, Oaktree will beneficially own 57.3% of our outstanding common shares, and the Angelo Gordon Investors will beneficially own 7.8% of our outstanding common shares. As a result of the issuance of the Excel Vessel Share Consideration, the Pappas Shareholders will beneficially own 9.3% of our outstanding common shares.

Under the Oaktree Shareholders Agreement, with certain limited exceptions, Oaktree effectively cannot vote more than 33% of our outstanding common shares (subject to adjustment under certain circumstances), and the Pappas Shareholders are subject to a similar limitation under the Pappas Shareholders Agreement of 15% (subject to adjustment under certain circumstances). For more information regarding these voting limitations, see Exhibit 99.3 to this Report on Form 6-K.

Our Fleet

As of August 20, 2014, our operating fleet, after the completion of the July 2014 Transactions, consisted of 33 vessels, including the two Heron Vessels. Our operating fleet includes two Eco-type vessels, which we define as vessels that are designed to be more fuel-efficient than standard vessels of similar size and age, and has an aggregate carrying capacity of approximately 3.5 million dwt. Pursuant to the Excel Transactions, we agreed to acquire an additional 34 dry bulk carrier vessels, of which five (Star Kamila (ex Iron Bradyn), Star Nasia (ex Iron Anne), Star Natalie (ex Angela Star), Star Aline (ex Iron Knight) and Star Tatianna (ex Fortezza)) had been transferred to us as of September 5, 2014. In addition, we have contracts for the construction of 36 Eco-type vessels. By the end of the second quarter of 2016, we expect our 103-vessel fleet to have an average age of 7.8 years and an aggregate carrying capacity of 11.85 million dwt.

Our fleet carries a variety of dry bulk commodities including coal, iron ore, and grains, or major bulks, as well as bauxite, phosphate, fertilizers and steel products, or minor bulks.

After the completion of the July 2014 Transactions on July 11, 2014, all of the vessels owned by Oceanbulk, which were previously under our commercial and technical management, became our owned vessels. As of August 20, 2014, we provide commercial and technical management services to one Supramax third party vessel.

The following tables present summary information relating to our existing fleet, our newbuilding vessels and the third party vessels under our management as of August 20, 2014, including the vessels we acquired or are acquiring in the Transactions:


Existing Fleet
	Vessel Name	Dry bulk Vessel Type	Capacity (dwt.)		Year Built	Charter Type/ Month of Contract Expiry
1	Peloreus	Capesize		182,000	2014	—
2	Obelix	Capesize		181,433	2011	Voyage charter/ August 2014
3	Pantagruel	Capesize		180,181	2004	—
4	Star Borealis	Capesize		179,678	2011	Voyage charter/ October 2014
5	Star Polaris	Capesize		179,600	2011	Voyage charter/ October 2014
6	Big Fish	Capesize		177,662	2004	Dry dock
7	Kymopolia	Capesize		176,990	2006	Voyage charter/ October 2014
8	Big Bang	Capesize		174,109	2007	Time charter/ September 2014
9	Star Aurora	Capesize		171,199	2000	Time charter/ August 2014
10	Star Mega	Capesize		170,631	1994	—
11	Star Big	Capesize		168,404	1996	Time charter/ November 2015
12	Amami (1)	Post Panamax		98,681	2011	Time charter/ February 2016
13	Madredeus (1)	Post Panamax		98,681	2011	Time charter/ April 2016
14	Star Sirius (1)	Post Panamax		98,681	2011	Time charter/ June 2016
15	Star Vega (1)	Post Panamax		98,681	2011	Time charter/ August 2016
16	Pendulum	Kamsarmax		82,619	2006	—
17	Mercurial Virgo	Kamsarmax		81,545	2013	Time charter/ September 2014
18	Magnum Opus	Kamsarmax		81,022	2014	Voyage charter / October 2014
19	Tsu Ebisu	Kamsarmax		81,001	2014	Time charter/ October 2014
20	Star Challenger	Ultramax		61,462	2012	Time charter/ September 2014
21	Star Fighter	Ultramax		61,455	2013	Time charter/ August 2014
22	Maiden Voyage	Supramax		58,722	2012	Time charter/ September 2014
23	Strange Attractor	Supramax		55,742	2006	Time charter/ September 2014
24	Star Omicron	Supramax		53,489	2005	Time charter/ August 2014
25	Star Gamma	Supramax		53,098	2002	Time charter/ September 2014
26	Star Zeta	Supramax		52,994	2003	Time charter/ October 2014
27	Star Delta	Supramax		52,434	2000	Time charter/ September 2014
28	Star Theta	Supramax		52,425	2003	Time charter/ October 2014
29	Star Epsilon	Supramax		52,402	2001	Time charter/ August 2014
30	Star Cosmo	Supramax		52,247	2005	—
31	Star Kappa	Supramax		52,055	2001	Time charter/ August 2014
32	ABYO Angelina	Kamsarmax		82,987	2006	—
33	ABYO Gwyneth	Kamsarmax		82,790	2006	Time charter/ September 2014

	Total existing dwt:			3,487,100 dwt

(1)	These vessels were acquired subject to long-term charters to Glocal Japan Inc. that expire between February 2016 and August 2016, at a gross charterhire rate of $15,000 per day.

(2)	These vessels will be delivered to us by December 31, 2014.


Excel Vessels
	Vessel Name	Dry bulk Vessel Type	Capacity (dwt.)		Year Built	Shipyard
1	Christine (tbn Star Martha) (1)	Capesize		180,300	2010	Koyo Dock Japan
2	Sandra (tbn Star Pauline) (1)	Capesize		180,300	2008	Koyo Dock Japan
3	Iron Miner (tbn Star Angie)	Capesize		177,900	2007	SWS China
4	Lowlands Beilun (tbn Star Despoina) (1)	Capesize		170,200	1999	Halla Korea
5	Iron Beauty (tbn Star Monisha)	Capesize		164,900	2001	CSBC China
6	Kirmar (tbn Star Eleonora)	Capesize		164,200	2001	CSBC China
7	Star Kamila (ex Iron Bradyn) (2)	Kamsarmax		82,500	2005	Tsuneishi Japan
8	Iron Manolis (tbn Star Sophia)	Kamsarmax		82,500	2007	Tsuneishi Japan
9	Pascha (tbn Star Danai)	Kamsarmax		82,500	2006	Tsuneishi Japan
10	Coal Gypsy (tbn Star Renee)	Kamsarmax		82,500	2006	Tsuneishi Japan
11	Coal Hunter (tbn Star Georgia)	Kamsarmax		82,500	2006	Tsuneishi Japan
12	Star Nasia (ex Iron Anne) (2)	Kamsarmax		82,500	2006	Tsuneishi Japan
13	Iron Brooke (tbn Star Markella)	Kamsarmax		82,500	2007	Tsuneishi Japan
14	Iron Fuzeyya (tbn Star Laura)	Kamsarmax		82,500	2006	Tsuneishi Japan
15	Iron Vassilis (tbn Star Moira)	Kamsarmax		82,500	2006	Tsuneishi Japan
16	Ore Hansa (tbn Star Jennifer)	Kamsarmax		82,500	2006	Tsuneishi Japan
17	Santa Barbara (tbn Star Mariella)	Kamsarmax		82,500	2006	Tsuneishi Japan
18	Iron Bill (tbn Star Helena)	Kamsarmax		82,500	2006	Tsuneishi Japan
19	Iron Kalypso (tbn Star Nina)	Kamsarmax		82,500	2006	Tsuneishi Japan
20	Iron Lindrew (tbn Star Maria)	Kamsarmax		82,500	2007	Tsuneishi Japan
21	Grain Express (tbn Star Iris)	Panamax		76,500	2004	Tsuneishi Japan
22	Grain Harvester (tbn Star Emily)	Panamax		76,500	2004	Tsuneishi Japan
23	Star Aline (ex Iron Knight) (2)	Panamax		76,500	2004	Tsuneishi Japan
24	Isminaki (tbn Star Christianna)	Panamax		74,600	1998	Sasebo Japan
25	Star Natalie (ex Angela Star) (2)	Panamax		73,800	1998	Sumitomo Japan
26	Elinakos (tbn Star Nicole)	Panamax		73,800	1997	Sumitomo Japan
27	Rodon (tbn Star Elle)	Panamax		73,700	1993	Hyundai Heavy Industries Korea
28	Coal Pride (tbn Star Vanessa)	Panamax		72,500	1999	Imabari Japan
29	Happy Day (tbn Star Claudia)	Panamax		71,700	1997	Hitachi Korea
30	Birthday (tbn Star Monika)	Panamax		71,500	1993	Hitachi Korea
31	Powerful (tbn Star Julia)	Panamax		70,100	1994	Hudong China
32	Star Tatianna (ex Fortezza) (2)	Panamax		69,600	1993	Tsuneishi Japan
33	Emerald (tbn Star Michele)	Handymax		45,600	1998	Tsuneishi Japan
34	Princess 1 (tbn Star Kim)	Handymax		38,900	1994	I.H.I Japan

	Total acquired dwt:			3,158,100 dwt

(1)	These vessels are subject to long term charters that expire between August 2015 and November 2015.

(2)	These vessels had been delivered to us as of September 5, 2014.

Newbuilding Vessels

Vessel Name

Dry bulk
Vessel Type

Capacity
(dwt.)

Shipyard (1)

Expected Delivery Date

HN 214 (tbn Leviathan)

Capesize

182,000

JMU

September 2014

HN 5016 (tbn Indomitable)

Capesize

182,160

JMU

November 2014

HN 1061 (3)

Ultramax

64,000

Yangzijiang

January 2015

HN 1063 (3)

Ultramax

64,000

Yangzijiang

January 2015 (2)

HN 1062 (3)

Ultramax

64,000

Yangzijiang

February 2015 (2)

HN 5017

Capesize

182,000

JMU

March 2015

HN NE 164 (tbn Honey Badger)

Ultramax

61,000

NACKS

March 2015 (2)

HN NE 165

Ultramax

61,000

NACKS

March 2015 (2)

HN NE 166

Newcastlemax

209,000

NACKS

April 2015 (2)

HN 1064 (3)

Ultramax

64,000

Yangzijiang

April 2015 (2)

HN 1312

Capesize

180,000

SWS

April 2015 (2)

HN NE 167

Newcastlemax

209,000

NACKS

May 2015 (2)

HN 5040 ( tbn Star Acquarius)

Ultramax

60,000

JMU

June 2015

HN 1313

Capesize

180,000

SWS

June 2015 (2)

HN 1338 (tbn Star Aries)

Capesize

180,000

SWS

June 2015 (2)

HN 1080

Ultramax

64,000

Yangzijiang

July 2015

HN 5055

Capesize

182,000

JMU

July 2015

HN NE 184

Newcastlemax

209,000

NACKS

July 2015

HN 1372 (tbn Star Libra) (4)

Newcastlemax

208,000

SWS

July 2015 (2)

HN 1081

Ultramax

64,000

Yangzijiang

August 2015

HN 5056

Capesize

182,000

JMU

August 2015

HN 5043 (tbn Star Pisces)

Ultramax

60,000

JMU

September 2015

HN 1082

Ultramax

64,000

Yangzijiang

September 2015

HN 1359 (4)

Newcastlemax

208,000

SWS

September 2015 (2)

HN NE 196 (tbn Star Antares)

Ultramax

61,000

NACKS

September 2015 (2)

HN NE 197 (tbn Star Lutas)

Ultramax

61,000

NACKS

October 2015 (2)

HN 1083

Ultramax

64,000

Yangzijiang

November 2015

HN 1360 (4)

Newcastlemax

208,000

SWS

December 2015

HN 1339 (tbn Star Taurus)

Capesize

180,000

SWS

December 2015 (2)

HN 1371 (tbn Star Virgo) (4)

Newcastlemax

208,000

SWS

December 2015 (2)

HN 1342 (tbn Star Gemini)

Newcastlemax

208,000

SWS

January 2016

HN NE 198 (tbn Star Poseidon)

Newcastlemax

209,000

NACKS

February 2016 (2)

HN 1361 (4)

Newcastlemax

208,000

SWS

March 2016 (2)

HN 1343 ( tbn Star Leo)

Newcastlemax

208,000

SWS

April 2016

HN 1362 (4)

Newcastlemax

208,000

SWS

May 2016 (2)

HN 1363 (4)

Newcastlemax

208,000

SWS

June 2016 (2)

Total newbuilding dwt:

5,214,160 dwt

Total existing dwt:

3,487,100 dwt

Total acquired dwt:

3,158,100 dwt

Total fully delivered dwt:

11,859,360 dwt

(1)	As used herein, “JMU” refers to Japan Marine United, “SWS” refers to Shanghai Waigaoqiao Shipbuilding Co., Ltd., “NACKS” refers to Nantong COSCO KHI Ship Engineering Co., Ltd., and “Yangzijiang” refers to Jiangsu Yangzijiang Shipbuilding Co. Ltd.

(2)	The indicated expected delivery dates for the respective newbuilding vessels reflect delivery dates that are earlier than the respective contracted delivery dates.

(3)	We have entered into bareboat charters with affiliates of the Yangzijiang shipyard for these vessels with the option to purchase the vessels at any time and a purchase obligation upon the completion of the eighth year of the bareboat charterparty.

(4)	We have entered into bareboat charters with affiliates of the SWS shipyard for these vessels with the option to purchase the vessels at any time and a purchase obligation upon the completion of the tenth year of the bareboat charterparty.

Third Party Vessels Under Management


Vessel Name	Type	DWT	Year Built
Serenity I	Supramax	53,688	2006

Recent and Other Developments

On July 3, 2014, we received a notice of termination of the management agreement for the vessel Marto, one of the third-party-owned vessels under our management. The management agreement was terminated upon the vessel’s delivery to its new managers, on August 20, 2014. We are entitled to receive management fees for a period of three months following the termination date, in accordance with the terms of the management agreement.

On July 11, 2014, we completed the July 2014 Transactions. A total of 54,104,200 of our common shares were issued to the various selling parties in the July 2014 Transactions, of which 45,460,324 shares were issued to Oaktree, and 8,643,876 were issued to the owners of the Pappas Companies and Millennia Holdings. As a result, Oaktree became the beneficial owner of approximately 61.3% of our outstanding common shares, and the family of Mr. Pappas and their affiliates became the beneficial owners of approximately 12.6% of our outstanding common shares. With certain limited exceptions, Oaktree effectively cannot vote more than 33% of our outstanding common shares. The Pappas Shareholders are also subject to a similar voting limitation of 15% (subject to certain adjustments). For more information regarding these voting limitations, see Exhibit 99.3 to this Report on Form 6-K.

In July 2014 and in connection with the July 2014 Transactions, our Board of Directors, or the Board, increased the number of directors constituting the Board to nine and, following the resignation of Mrs. Milena - Maria Pappas, appointed Rajath Shourie, Emily Stephens, Renee Kemp and Stelios Zavvos pursuant to the terms and subject to the conditions of the Transactions.

Of the $208.2 million aggregate principal amount of vessel financing that we assumed, $20.0 million is outstanding under a facility (the “Dioriga Facility”) provided by HSBC Bank plc to Dioriga Shipping Co. (“Dioriga”) to partially finance the construction cost of Tsu Ebisu, which was delivered in April 2014. We assumed the Dioriga Facility when we purchased all of the outstanding equity of Dioriga in the Pappas Transaction. The Dioriga Facility will mature in March 2019 and will be repayable in 20 quarterly installments of $0.4 million each, commencing three months after the drawdown, plus a balloon payment of $13.0 million due together with the last installment. The loan bears interest at LIBOR plus a margin of 3.2% per annum (as long as ACR exceeds 143%) or 4.30% per annum (if ACR falls below 143%). The Dioriga Facility is secured by a first priority mortgage over the financed vessel and general and specific assignments. The Dioriga Facility includes certain negative covenants, including covenants against (i) changes in the management or legal or beneficial ownership of Dioriga and (ii) encumbrance on the assets of Dioriga. The Dioriga Facility includes the following financial maintenance covenants:

•

a market value of the vessel to loan (including interest rate swap exposure) ratio to exceed 130%; and

•

minimum liquidity to exceed $0.7 million, to be maintained in an account with HSBC Bank plc.

On July 11, 2014, 15,000 common shares were granted to our directors, Mr. Softeland and Mr. Schmitz, and vested on the same date. We plan to issue the shares in connection with these awards during the third quarter of 2014.

On July 16, 2014, we executed a binding term sheet with NIBC Bank N.V. (the “NIBC Facility”) for financing an aggregate amount of $32.0 million, which will be available in two tranches of $16.0 million, to partially finance the construction cost of two Ultramax bulk carriers currently under construction by Japan Marine United Corporation (Hulls HN 5040, tbn Star Acquarius and HN 5043, tbn Star Pisces), with expected delivery in June 2015 and September 2015, respectively. Execution of the definitive agreements relating to this facility is scheduled on or before September 15, 2014. The facility will mature six years after the signing date. Each tranche is expected to be drawn with the delivery of the relevant vessel and will be repayable in consecutive quarterly

installments of $0.268 million, commencing three months after the drawdown, plus a balloon payment of $10.65 million, for HN 5040, and $10.92 million, for HN 5043, both due in September 2020. The NIBC Facility will bear interest at LIBOR plus a margin of 2.80% per annum. It will be secured by first priority cross collateralized mortgage over the financed vessels and general and specific assignments and will be guaranteed by Star Bulk Carriers Corp. (the “Guarantor”). The definitive agreements of the NIBC Facility will contain negative and financial covenants customary for facilities of this type.

On July 22, 2014, Peloreus, a Capesize vessel with a capacity of 182,000 dwt, was delivered to us by JMU. The delivery installment payment of $34.6 million was partially financed by $32.5 million drawn under a loan facility with Deutsche Bank AG, and the remaining amount of $2.1 million was financed by existing cash.

In July 2014, Positive Shipping Company executed a binding term sheet with BNP Paribas (the “BNP Facility”) for financing an amount of $32.5 million, to partially finance the construction cost of its Capesize bulk carrier currently under construction by Japan Marine United Corporation (Hull HN 5016, tbn Indomitable), with expected delivery in October 2014. Execution of the definitive agreement relating to this facility is scheduled on or before September 30, 2014. The facility is expected to be drawn with the delivery of the vessel and will be repaid in 20 equal, consecutive, quarterly principal payments of $0.5 million each with the first becoming due and payable three months from the drawdown date together with a balloon installment of $21.8 million payable simultaneously with the 20^th installment. The BNP Facility will bear interest at LIBOR plus a margin of 2.50% per annum. It will be secured by first priority mortgage over the financed vessel and general and specific assignments and will be guaranteed by Star Bulk Carriers Corp. The definitive agreement for the BNP Facility will contain negative and financial covenants customary for facilities of this type.

During July 2014, the Company obtained the consent of the various relevant lenders to complete the July 2014 Transactions.

On August 4, 2014, pursuant to a termination agreement between us and Mr. Spyros Capralos, our former Chief Executive Officer and current Non-Executive Chairman, dated July 31, 2014, we made a severance payment of 168,842 common shares and €644,000 of cash to Mr. Capralos.

On September 5, 2014, Oceanbulk Shipping, which is now a subsidiary of ours as a result of the July 2014 Transactions, entered into a term sheet with ABY Group Holdings Limited (“ABY Group”) and Heron. The term sheet provides for the conversion of the existing convertible notes (the “Convertible Notes”) issued by Heron to Oceanbulk Shipping into 50% of the equity of Heron (with the remaining 50% of Heron’s equity to be held by ABY Group). Among other things, the term sheet contains customary governance provisions and provisions relating to the liquidation of Heron following the conversion of the Convertible Notes. Under the term sheet, as soon as practicable, Oceanbulk Shipping will receive as a distribution the ABYO Gwyneth and the ABYO Angelina (two Kamsarmax vessels of 82,790 dwt and 82,987 dwt, respectively), and ABY Group will receive as a distribution the ABYO Audrey (a Capesize vessel of 175,125 dwt) and the ABYO Oprah (a Kamsarmax vessel of 82,551 dwt). Subject to the lender’s approval, the remaining amount of debt under Heron’s existing credit facility (the “CiT Facility”), will be assigned to each equity holder based on the amount of the CiT Facility corresponding to the vessels being distributed to such equity holder. The conversion of the Convertible Notes is expected to occur during September 2014, as soon as all customary conditions precedent are satisfied.

As further discussed in the notes to our unaudited condensed combined pro forma financial statements contained in Exhibit 99.2 to this Report on Form 6-K, pursuant to the agreement governing the Merger, we expect the Sellers will remain as the ultimate beneficial owners of Heron until Heron is dissolved. In addition, upon the distribution of the Heron Vessels to its equity holders, we will be required to pay $25.0 million in cash in respect of the debt secured by the Heron Vessels and instruct the escrow agent to release the 2,115,706 common shares held in escrow in order to acquire the two vessels distributed to Oceanbulk Shipping. We expect that the transfer of the two Heron Vessels will be completed within the second half of 2014.

Operating Results

Factors Affecting Our Results of Operations

As of August 20, 2014 we chartered five of our vessels on medium- to long-term time charters, with an average remaining term of approximately 1.8 years, five of our vessels on voyage charters and our remaining vessels on short-term time charters, with one of our vessels under dry dock survey. Under time charters, the charterer typically pays us a fixed daily charter hire rate and bears all voyage expenses, including the cost of bunkers (fuel oil), port and canal charges. Under voyage charters, we pay voyage expenses such as port, canal and fuel costs. Under all of these types of charters, we remain responsible for paying the chartered vessel’s operating expenses, including the cost of crewing, insuring, repairing and maintaining the vessel, the costs of spares and consumable stores, tonnage taxes and other miscellaneous expenses, and we also pay commissions to affiliated and unaffiliated ship brokers and to in-house brokers associated with the charterer for the arrangement of the relevant charter. In addition, we are also responsible for the dry docking costs related to our vessels.

The following table reflects certain operating data for our fleet, including our ownership days, voyage days, and fleet utilization, which we believe are important measures for analyzing trends in our results of operations, for the periods indicated:


(TCE rates expressed in U.S. dollars)	Six month period ended June 30, 2013			Six month period ended June 30, 2014
Average number of vessels⁽¹⁾		13.6			16.4
Number of vessels in operation (as of the last day of the periods reported)		13			17
Average age of operational fleet (in years)⁽²⁾		10.5			9.2
Ownership days⁽³⁾		2,454			2,969
Available days⁽⁴⁾		2,454			2,939
Voyage days for fleet⁽⁵⁾		2,378			2,716
Fleet Utilization⁽⁶⁾		96.9	%		92.4	%
Daily Time charter equivalent rate⁽⁷⁾	$	14,301		$	14,172

(1)

Average number of vessels is the number of vessels that constituted our fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the period divided by the number of calendar days in that period.

(2)

Average age of operational fleet is calculated as at June 30, 2013 and 2014, respectively.

(3)

Ownership days are the total calendar days each vessel in the fleet was owned by us for the relevant period.

(4)

Available days for the fleet are the ownership days after subtracting for off-hire days as a result of major repairs, dry docking or special or intermediate surveys.

(5)

Voyage days are the total days the vessels were in our possession for the relevant period after subtracting all off-hire days incurred for any reason (including off-hire for dry docking, major repairs, special or intermediate surveys).

(6)

Fleet utilization is calculated by dividing voyage days by available days for the relevant period.

(7)

Please see the reconciliation of the time charter equivalent rate on the next page.

Time Charter Equivalent (TCE)

Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel on a per voyage basis. Our method of calculating TCE rate is determined by dividing voyage revenues (net of voyage expenses and amortization of fair value of above market acquired time charter agreements) by voyage days for the relevant time period. 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. We report TCE revenues, a non-GAAP measure, since our management believes it provides additional meaningful information in conjunction with voyage revenues, the most directly comparable U.S. GAAP measure, because it assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. The TCE rate is also included herein because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of charter types (i.e., voyage charters, time charters and bareboat charters), under which the vessels may be employed between the periods and because we believe that it presents useful information to investors.

The following table reflects the calculation of our TCE rates and reconciliation of TCE revenue as reflected in the unaudited interim condensed consolidated statement of operations:


(In thousands of U.S. Dollars, except as otherwise stated)	Six month period ended June 30, 2013			Six month period ended June 30, 2014
Voyage revenues	$	35,362		$	43,064
Less:
Voyage expenses		(4,505	)		(7,721	)
Amortization of fair value of below/above market acquired time charter agreements		3,150			3,149

Time Charter equivalent revenues	$	34,007		$	38,492
Fleet Voyage days		2,378			2,716
Daily Time charter equivalent (TCE) rate (in U.S. Dollars)	$	14,301		$	14,172

Voyage Revenues

Voyage revenues are driven primarily by the number of vessels in our fleet, the number of voyage days and the amount of daily charter hire and the level of 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 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 improvements in 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.

Vessel Voyage Expenses

Voyage expenses include hire paid for chartered-in vessels, port and canal charges, fuel (bunker) expenses and brokerage commissions payable to related and third parties. Our voyage expenses primarily consist of bunkers cost and commissions paid for the chartering of our vessels.

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 costs of spares and consumable stores, tonnage taxes, regulatory fees, technical management fees, 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, the location where the dry dock takes place, shipyard availability and the number of days the vessel is off-hire. 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 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, legal and accounting expenses.

Interest and Finance Costs

We incur interest expense and financing costs in connection with vessel-specific debt relating to the acquisition of our vessels. We defer financing fees and expenses incurred upon entering into our credit facilities and amortize them to interest and financing costs over the term of the underlying obligation using the effective interest method.

Gain or Loss arising from Derivatives

From time to time, we may 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, 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 an amount equal to the difference between the contracted rate and the settlement rate, multiplied by the number of days in the specified period. Conversely, if the contracted rate is greater than the settlement rate, the buyer is required to pay the seller the settlement sum. All of our FFAs are settled on a daily basis through London Clearing House (LCH), and there is also a margin maintenance requirement based on marking the contract to market. Freight options are treated as assets/liabilities until they are settled. In addition, we may 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, with changes in such fair value recognized in earnings, unless specific hedge accounting criteria are met.

Interest income

We earn interest income on our cash deposits.

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

Six month period ended June 30, 2013 compared to the six month period ended June 30, 2014.

Voyage Revenues: For the six month periods ended June 30, 2013 and 2014, our voyage revenues were approximately $35.4 million and $43.1 million, respectively. The increase in voyage revenues is mainly attributed to the increase in the average number of vessels from 13.6 vessels during the six month period ended June 30, 2013 to 16.4 vessels during the six month period ended June 30, 2014. The TCE rate of our fleet for the six month periods ended June 30, 2013 and 2014 was $14,301 and $14,172 per day, respectively.

Management fee income: For the six month periods ended June 30, 2013 and 2014, management fee income was approximately $0.5 million and $1.9 million, respectively. The increase was due to the increase in the average number of third party vessels under management from 3.4 vessels during the six month period ended June 30, 2013 to 13.7 vessels during the six month period ended June 30, 2014.

Voyage Expenses: For the six month periods ended June 30, 2013 and 2014, our voyage expenses were approximately $4.5 million and $7.7 million, respectively. The increase in voyage expenses are mainly due to an increased level of voyage charter activity during the six month period ended June 30, 2014, compared to the same period of 2013. Under voyage charter agreements, all voyage costs are borne and paid by us, as opposed to time charter agreements under which such costs are paid by the charterer. During the six month period ended June 30, 2013, we had our vessels under voyage charter agreements for a total of 149 days while during the six month period ended June 30, 2014, we had our vessels under voyage charter agreements for a total of 173 days. The revenue earned from the respective agreements for the six month periods ended June 30, 2013 and 2014 amounted to $4.2 million and $7.0 million, respectively. Consistent with dry bulk shipping industry practice, we paid broker commissions ranging from 0.625% to 1.75% of the total daily charter hire rate of each charter to ship brokers associated with the charterers, depending on the number of brokers involved with arranging the charter. Voyage expenses also consist of port, canal and fuel costs.

Vessel Operating Expenses: For the six month periods ended June 30, 2013 and 2014, our vessel operating expenses were approximately $13.7 million and $16.1 million, respectively. The increase in vessel operating expenses are mainly due to an increase in the average number of vessels from 13.6 vessels during the six month period ended June 30, 2013, to 16.4 vessels during the six month period ended June 30, 2014. In addition, vessel operating expenses for the six month period ended June 30, 2014 include an amount of $0.4 million related to one time, pre-delivery and pre-joining expenses incurred in connection with the delivery of Star Challenger, Star Fighter, Star Sirius, and Star Vega. Pre-joining and pre-delivery expenses relate to expenses for the initial crew manning as well as the initial supply of stores for the vessel before its delivery. Excluding this amount, our average daily operating expenses per vessel for the six month periods ended June 30, 2013 and 2014 amounted to $5,596 and $5,272, respectively.

Dry docking Expenses: For the six month periods ended June 30, 2013 and 2014, our dry docking expenses were approximately $0.6 million and $1.3 million, respectively. During the six month period ended June 30, 2013, none of our vessels underwent dry docking, so the respective expenses related to advance payments of forthcoming dry docking surveys. During the six month period ended June 30, 2014, one of our Supramax vessels underwent its periodic dry docking survey in mid-March 2014, the total cost of the dry docking amounted to $0.9 million, and the remaining amount of $0.4 million related to advance payments with respect to forthcoming dry docking surveys.

Depreciation: For the six month periods ended June 30, 2013 and 2014, depreciation was $8.1 million and $9.8 million, respectively. The increase was due to the increase in the average number of vessels from 13.6 vessels during the six month period ended June 30, 2013, to 16.4 vessels during the six month period ended June 30, 2014.

General and Administrative Expenses: For the six month periods ended June 30, 2013 and 2014, general and administrative expenses were $4.7 million and $10.2 million, respectively. The increase in general and administrative expenses was mainly attributable to (i) $2.4 million of costs incurred during the six month period ended June 30, 2014 in connection with the July 2014 Transactions, (ii) an increase in stock based compensation expense of $1.3 million for the six month period ended June, 30, 2014, compared to the same period in 2013 and (iii) an increase in the average number of employees of 38% during the six month period ended June, 30, 2014, compared to the same period in 2013, due to the increase in the average number of third party vessels under management from 3.4 vessels to 13.7 vessels and due to the increase in the average number of owned vessels from 13.6 vessels to 16.4 vessels, during the six month period ended June, 30, 2014, compared to the same period in 2013.

Bad debt expense: For the six month period ended June 30, 2013, we had no bad debt expense. For the six month period ended June 30, 2014, bad debt expense was $ 0.2 million, reflecting a write-off of unpaid amounts from charterers that we determined were not recoverable.

Other operational loss: For the six month periods ended June 30, 2013 and 2014, other operational loss amounted to $0.6 million and $0.1 million, respectively. Other operational loss for the six month period ended June 30, 2013, represents the expense incurred by us to a third party, pursuant to the terms of the agreement to sell a 45% interest in the future proceeds related to the settlement of certain commercial claims. The expense of $0.6 million for the six month period ended June 30, 2013, was incurred in connection to the settlement amount of $1.2 million described in other operational gain below.

Other operational gain: For the six month periods ended June 30, 2013 and 2014, other operational gain amounted to $1.6 million and $0.4 million, respectively. Other operational gain for the six month period ended June 30, 2013, mainly consisted of $1.2 million non-recurring revenue related to the payment of installments due to us under settlement agreements for a commercial claim and of $0.4 million regarding gain from a hull and machinery claim. Other operational gain for the six month period ended June 30, 2014, mainly consisted of $0.2 million received as rebate from our previous manning agent and a gain derived from a hull and machinery claims, which amounted to $0.2 million.

Loss on sale of vessel: For the six month period ended June 30, 2013, loss on sale of vessel of $0.1 million represented a loss on sale of Star Sigma that concluded in March 2013. The vessel was delivered to its new owners in April 2013.

Gain / (loss) on derivative financial instruments: For the six month period ended June 30, 2013, gain on derivative financial instruments amounted to $0.4 million, representing the non-cash gain from the mark to market valuation of two interest rate swaps outstanding as of June 30, 2013. For the six month period ended June 30, 2014, loss on derivative financial instruments was $0.8 million, representing the non-cash loss from the mark to market valuation of four interest rate swaps outstanding as of June 30, 2014.

Interest and Finance Costs: For the six month periods ended June 30, 2013 and 2014, interest and finance costs were $3.8 million and $3.1 million, respectively. Even though the weighted average loan balance increased from $206.6 million during the six month period ended June 30, 2013 to $234.8 million during the six month period ended June 30, 2014 and the weighted average interest rates remained almost unchanged, interest and finance costs decreased mainly due to $1.3 million of interest being capitalized during the six month period ended June 30, 2014, relating to advances paid for our 11 newbuilding vessels.

Cash Flow

Net cash provided by operating activities for the six month periods ended June 30, 2013 and 2014, was $15.0 million and $10.5 million, respectively. The TCE rate for the six month periods ended June 30, 2013 and 2014 was $14,301 and $14,172, respectively. Although the TCE rate only marginally decreased during the six months ended June 30, 2014, the decrease in net cash provided by operating activities for the six month period ended June 30, 2014, of approximately $4.6 million was a result of (a) net income of $2.0 million for the six month period ended June 30, 2013 compared to net loss of $3.9 million for the same period in 2014 and (b) a positive movement of $1.6 million during the six month period ended June 30, 2013, compared to negative movement in working capital of $1.7 million during the six month period ended June 30, 2014. Both voyage revenues and management fee income increased due to a higher average number of owned vessels and a higher average number of third party vessels under our management during the six month period ended June 30, 2014, compared to the six month period ended June 30, 2013. In addition, during the six month period ended June 30, 2014, we incurred transaction costs of $2.4 million in connection with the July 2014 Transactions.

Net cash provided by investing activities for the six month period ended June 30, 2013, was $16.3 million. Net cash used in investing activities for the six month period ended June 30, 2014, was $78.0 million. For the six month period ended June 30, 2013, net cash provided by investing activities consisted of $8.3 million representing proceeds from the sale of vessel Star Sigma, which was delivered to its new owners in April 2013, a decrease of $7.6 million in restricted cash, insurance proceeds amounting to $1.2 million and was offset by additions to vessels cost and other fixed assets amounting to $0.8 million. For the six month period ended June 30, 2014, net cash used in investing activities consisted of $74.3 million paid for advances with respect to our 11 newbuilding vessels, acquisitions of second hand vessels and other fixed assets, $0.2 million paid to acquire 33% of the total outstanding common stock of Interchart Shipping Inc, a Liberian company that acts as a chartering broker to our fleet, and a net increase of $4.1 million in restricted cash, offset by insurance proceeds of $0.6 million.

Net cash used in financing activities for the six month period ended June 30, 2013 was $25.9 million. Net cash provided by financing activities for the six month period ended June 30, 2014 was $62.6 million. For the six month period ended June 30, 2013, net cash used in financing activities represented $25.6 million of loan installment payments and $0.3 million payment of financing fees. For the six month period ended June 30, 2014, net cash provided by financing activities consisted of loan proceeds amounting to $74.0 million, financing fees paid amounting to $0.9 million and loan installment payments amounting to $10.5 million.

Liquidity and Capital Resources

Our principal source of funds has been equity provided by our shareholders, additional debt under secured credit facilities and operating cash flow. Our principal use of funds has been capital expenditures to grow our fleet, maintain the quality of our dry bulk carriers, comply with international shipping standards and environmental laws and regulations, fund working capital requirements, make interest and principal repayments on outstanding indebtedness and pay dividends.

Our short-term liquidity requirements include servicing our debt, payment of operating costs, funding working capital requirements and maintaining cash reserves against fluctuations in operating cash flows and financing activities and paying cash dividends when we are able to do so. Sources of short-term liquidity include our revenues earned from our charters.

As of June 30, 2014, we had contracted to acquire nine newbuilding dry bulk carriers, from SWS, JMU and NACKS, six of which are scheduled to be delivered in 2015 and three in 2016. In addition, as of June 30, 2014, we have entered into two bareboat agreements, or the Bareboat Charters, with CSSC (Hong Kong) Shipping Company Limited, or CSSC, an affiliate of SWS, to bareboat charter for a period of 10 years, two 208,000 dwt Newcastlemax dry bulk vessels, Hull 1371 and 1372, to be built at SWS, which are scheduled to be delivered in 2015. We have the option to purchase the vessels at any time and we have a purchase obligation upon the completion of the tenth year of the bareboat charterparty.

As of August 20, 2014 and after the completion of the Transactions, we have contracts for the construction of 36 eco-vessels, including the 11 bareboat agreements with the option to purchase the associated newbuilding vessels at any time and the purchase obligation upon the passing of certain timing thresholds, as provided in each bareboat charterparty. The aggregate payments for the newbuilding vessels, including agreed extra costs and commissions, are expected to be approximately $1,556.2 million, of which, as of August 20, 2014, we had paid $224.5 million. As of August 20, 2014, we had obtained commitments for $562.7 million of secured debt for 17 newbuilding vessels, we were in final stages of negotiations for an additional $414.8 million of secured debt for newbuilding 16 vessels, and we targeted an additional $95.6 million secured debt for three remaining newbuilding vessels. The remaining payments for the newbuilding vessels are expected to be paid from cash on hand.

In the Excel Transactions, we agreed to acquire the 34 Excel Vessels (of which five had already been delivered as of September 5, 2014) for aggregate consideration of 29,917,312 common shares and $288.4 million of cash. At the transfer of each Excel Vessel, we will pay the cash and share consideration for such Excel Vessel to Excel. We expect to use cash on hand, together with borrowings under the $231.0 million Excel Vessel Bridge Facility to pay the cash consideration for the Excel Vessels. In addition we are in final stages of negotiations for an additional $27.5 million of financing. As of September 5, 2014, we had drawn $29.2 million under the Excel Vessel Bridge Facility, and issued 3,548,372 of common shares representing the Excel Vessel Share Consideration for the five Excel Vessels (Star Kamila (ex Iron Bradyn), Star Nasia (ex Iron Anne), Star Natalie (ex Angela Star), Star Aline (ex Iron Knight) and Star Tatianna (ex Fortezza)) delivered to us as of September 5, 2014.

Therefore, our liquidity requirements include funding the equity portion of investments in our newbuilding vessels and operating vessels (including the Excel Vessels, as we acquire them) and repayment of long-term debt balances. Potential sources of funding for liquidity requirements may include additional debt or equity issuances in the public and private markets or vessel sales. As of June 30, 2014, we had outstanding borrowings of $253.9 million of which $29.3 million is scheduled to be repaid in the next twelve months. As of August 20, 2014 and after the completion of the Transactions, we had $129.4, million in cash and outstanding borrowings of $489.2, million.

We may fund possible growth through our cash balances, operating cash flow, additional debt and the issuance of new equity. Our practice has been to acquire dry bulk carriers using a combination of funds received from equity investors and bank debt secured by mortgages on our dry bulk carriers. In the event that we determine to finance a portion of the purchase price for new vessel acquisitions with debt, and if the current conditions in the credit market continue, we may not be able to secure new borrowing capacity on favorable terms or at all. 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 transactions 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.

As of June 30, 2014, cash and cash equivalents decreased to $39.4 million compared to $44.3 million as of December 31, 2013 and restricted cash, due to minimum liquidity covenants and cash collateral requirements contained in our loan agreements, increased to $15.8 million as of June 30, 2014, compared to $11.7 million as of December 31, 2013. Our working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. Our working capital was $10.6 million as of June 30, 2014, compared to $24.7 million as of December 31, 2013.

Loan Facilities

For information relating to our loan agreements, please see Note 9 to our audited financial statements for the year ended December 31, 2013 included in our annual report on Form 20-F, which was filed with the Commission on March 21, 2014, and Note 8 to our unaudited interim condensed consolidated financial statements for the six month period ended June 30, 2014, included elsewhere herein. As a result of the July 2014 Transactions, we assumed an additional $208.2 million aggregate principal amount of vessel financing, all of which is secured by the vessels financed, some of which is guaranteed either by us or by certain of our subsidiaries. All of the vessel financing agreements have various negative and financial maintenance covenants. In addition, we also assumed bareboat charters with respect to four newbuilding vessels being built at New Yangzijiang and five newbuilding vessels being built at SWS. Heron also has an outstanding loan facility provided by CiT, which is secured by the vessels owned by Heron. See the Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk, under the caption, “Oceanbulk’s Borrowing Activities” (contained in Exhibit 99.2 to this Report on Form 6-K) for more information about such restrictions contained in the financing arrangements of Oceanbulk that we assumed.

In connection with the Excel Transactions, we entered into the new $231.0 Excel Vessel Bridge Facility, which was extended to us by entities affiliated with Oaktree and entities affiliated with Angelo, Gordon & Co. We expect to use cash on hand together with the Excel Vessel Bridge Facility to fund the cash consideration for the Excel Vessels.

Unity Holding LLC (“Unity”), which is one of our direct subsidiaries, is the borrower under the Excel Vessel Bridge Facility, and we are, and each individual vessel-owning subsidiary of Unity (with one exception) will be, a guarantor. The Excel Vessel Bridge Facility matures on February 28, 2016, with mandatory prepayments of $6.0 million each due in March, June and September 2015. Outstanding amounts under the Excel Vessel Bridge Facility bear interest at a rate equal to LIBOR (based on a one month interest period) plus an applicable margin of either 5.00% per annum through February 28, 2015 and 6.00% per annum thereafter.

The Excel Vessel Bridge Facility will be secured by 33 of the Excel Vessels as well as related bank accounts, earnings and insurance proceeds and the equity of each vessel-owning subsidiary of Unity. The Excel Vessels are divided into 22 “Core Collateral Vessels” and 11 “Non-Core Collateral Vessels.” As of September 5, 2014, five of the Excel Vessels had been delivered to us, and $29.2 million of borrowings were outstanding under the Excel Vessel Bridge Facility.

The Excel Vessel Bridge Facility contains customary affirmative and negative covenants applicable to Unity and its subsidiaries, including limitations on the incurrence of additional indebtedness and guarantee obligations, the incurrence of liens, fundamental changes, asset sales, transactions with affiliates and investments. The Excel Vessel Bridge Facility contains customary events of default.

The Excel Vessel Bridge Facility requires Unity and its subsidiaries to maintain in pledged accounts a minimum amount of cash or cash equivalents in an aggregate amount of not less than (i) $0.5 million multiplied by (ii) the number of Excel Vessels securing the Excel Vessel Bridge Facility at such time. The Excel Vessel Bridge Facility also requires Unity to maintain a ratio of (i) the aggregate outstanding principal amount of loans under the Excel Vessel Bridge Facility to (ii) the aggregate fair market value of the Core Collateral Vessels at such time of not greater than 0.75 to 1.0.

The Excel Vessel Bridge Facility also contains a restriction on distributions and other payments by Unity with various customary exceptions, including the ability to pay distributions to its members so long as:

•

no default or event of default shall have occurred and be continuing or would result from such payment;

•

on a pro forma basis after giving effect to such payment, Unity is in compliance with its financial maintenance covenants; and

•

either:

(1)

if the distribution is being made using the proceeds of a vessel disposition, (A) 25% of the net cash proceeds from sales of Core Collateral Vessels and (B) 100% of the net cash proceeds from sales of Non-Core Collateral Vessels may be distributed, in each case, within five business days after receipt, to the extent that the ratio of (x) the aggregate outstanding principal amount of loans under the Excel Vessel Bridge Facility (after taking account of mandatory prepayments) to (y) the aggregate fair market value of the Core Collateral Vessels is not greater than 0.55 to 1.00; or

(2)

if the distribution is being made from other sources, on a pro forma basis after giving effect to such payment, (x) the aggregate outstanding principal amount of loans under the Excel Vessel Bridge Facility (after taking account of mandatory prepayments) to (y) the aggregate fair market value of the Core Collateral Vessels is not greater than 0.70 to 1.00.

As of June 30, 2014, we were in compliance with financial and other covenants contained in our amended debt agreements.

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2014, on an historical basis:


			Twelve month periods ending June 30, (in thousands of U.S. Dollars)
	Total		2015		2016		2017		2018		2019		2020 and thereafter
Long term debt	$	253,882	$	29,250	$	41,252	$	82,257	$	9,477	$	46,714	$	44,932
Interest on long term debt		26,643		8,035		6,731		4,238		3,202		2,009		2,428
Shipbuilding contracts and agreed extra costs		303,934		81,747		222,187		—		—		—		—
Bareboat capital leases - upfront hire & handling fees		13,080		12,024		1,056		—		—		—		—
Bareboat commitments charterhire⁽¹⁾		124,739		—		6,588		9,266		9,249		9,232		90,404

Total	$	722,278	$	131,056	$	277,814	$	95,761	$	21,928	$	57,955	$	137,764

(1)	The bareboat charterhire is comprised of a fixed and a variable portion, and the variable portion is calculated based on the six-month LIBOR rate of 0.327%, as of June 30, 2014.

The following table sets forth our contractual obligations as of June 30, 2014 on an as-adjusted (pro forma) basis, giving effect to (i) the July 2014 Transactions (and the assumption of the long-term debt and other contractual commitments of Oceanbulk and the Pappas Companies) and (ii) the incurrence of the NIBC Facility and the BNP Facility, which were agreed subsequent to June 30, 2014 (the BNP Facility having been assumed pursuant to the July 2014 Transactions):


			Twelve month periods ending June 30, (in thousands of U.S. Dollars)
	Total		2015		2016		2017		2018		2019		2020 and thereafter
Long term debt⁽¹⁾	$	648,979	$	52,426	$	73,048	$	114,320	$	50,696	$	183,603	$	174,886
Interest on long term debt⁽²⁾		85,554		18,424		19,480		15,855		13,337		9,900		8,558
Shipbuilding contracts and agreed extra costs⁽³⁾		—		—		—		—		—		—		—
Purchase Commitments		716,179		312,838		403,341		—		—		—		—
Bareboat capital leases - upfront hire and handling fees⁽⁴⁾		58,679		44,132		14,547		—		—		—		—
Bareboat commitments charterhire⁽⁴⁾		540,665		3,600		22,392		39,925		40,678		42,183		391,887

Total	$	2,050,056	$	431,420	$	532,808	$	170,100	$	104,711	$	235,686	$	575,331

(1)

The historical outstanding balance of our long-term debt with commercial banks at June 30, 2014 was $253.9 million. The as-adjusted contractual obligations table includes also the expected repayments of the obligations arising under (i) the NIBC Facility and the BNP Facility, which were agreed subsequent to June 30, 2014 (the BNP Facility having been assumed pursuant to the July 2014 Transactions, as discussed under “—Recent Developments”), (ii) the as-adjusted long-term debt and other contractual commitments of Oceanbulk, which we assumed in the July 2014 Transactions (as discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk—Contractual Obligations”, contained in Exhibit 99.2 to this Report on Form 6-K) and (iii) the Dioriga Facility, which we assumed in the July 2014 Transactions (as discussed under “—Recent Developments”). The schedule of such expected repayments is based on (a) the actual drawdown dates, to the extent applicable, subsequent to June 30, 2014 and (b) the financed newbuilding vessels’ expected delivery dates (as described under “—Our Fleet”), for those drawdowns under the Deutsche Bank Facility, the CEXIM Facility, the NIBC facility and the BNP Facility that had not yet occurred (as of August 20, 2014) but are expected concurrently with the relevant vessel deliveries. As-adjusted long-term debt does not reflect the incurrence of any amounts under the $231.0 million Excel Vessel Bridge Facility, which had $29.2 million outstanding as of September 5, 2014, or any mandatory prepayments thereunder ($6.0 million each in March, June and September 2015), because it relates to a bridge loan, which shall be refinanced before or at its maturity with a new loan that shall have a longer maturity profile.

(2)

Our long-term debt outstanding as of June 30, 2014 bears interest at a variable rate of three-month LIBOR plus a margin. The historical calculation of interest payments has been made assuming interest rates based on the three-month LIBOR as of June 30, 2014 and our various applicable margin rates under our historical debt as of June 30, 2014.

The as-adjusted contractual obligations table includes also the expected interest payments under the as-adjusted long term debt discussed under footnote (1).

(3)

The amounts presented in the historical contractual obligations table represent our remaining obligations as of June 30, 2014 with respect to the pipeline of our newbuilding program, excluding those applicable under the bareboat lease agreements classified as capital leases, which are discussed under footnote (4) below.

The as-adjusted purchase commitments have been adjusted to exclude those commitments related to the financed vessels under the Deutsche Bank Facility, the CEXIM Facility, the NIBC facility and the BNP Facility, which payment obligations have been reflected in as-adjusted long term debt, as described under footnote (1) above.

(4)	The amounts presented in the historical contractual obligations table represent our commitments under the bareboat lease arrangements with respect to the upfront fee, the handling fees and the charterhire, gross of any address commissions we may be entitled to.

The as-adjusted bareboat commitments have been adjusted to include those Oceanbulk bareboat commitments assumed as a result of the Transactions, as discussed in Exhibit 99.2 to this Report to Form 6-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk- Contractual Obligations”.

Significant Accounting Policies and Critical Accounting Policies

There have been no material changes to our significant accounting policies since December 31, 2013. 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 Annual Report on Form 20-F for the year ended December 31, 2013, which was filed with the Commission on March 21, 2014 and Note 2 to the unaudited interim condensed consolidated financial statements for the six month period ended June 30, 2014, included elsewhere in this report.

STAR BULK CARRIERS CORP.

INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS


Consolidated Balance Sheets as of December 31, 2013 and June 30, 2014 (unaudited)			F-1
Unaudited Interim Condensed Consolidated Statements of Operations for the six month periods ended June 30, 2013 and 2014			F-2
Unaudited Interim Condensed Consolidated Statement of Stockholders’ Equity for the six month periods ended June 30, 2013 and 2014			F-3
Unaudited Interim Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2013 and 2014			F-4
Notes to Unaudited Interim Condensed Consolidated Financial Statements			F-5

STAR BULK CARRIERS CORP.

Consolidated Balance Sheets

As of December 31, 2013 and June 30, 2014 (unaudited)

(Expressed in thousands of U.S. dollars except for share and per share data)


	December 31, 2013			June 30, 2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	44,298		$	39,420
Restricted cash, current		1,862			2,442
Trade accounts receivable		3,203			4,211
Inventories (Note 4)		1,726			5,227
Due from managers		81			81
Due from related parties (Note 3)		486			1,953
Prepaid expenses and other receivables		2,773			3,061

Total Current Assets		54,429			56,395

FIXED ASSETS
Advances for vessels under construction and acquisition of vessels (Note 6)		67,932			81,794
Vessels and other fixed assets, net (Note 5)		326,674			377,302

Total Fixed Assets		394,606			459,096

OTHER NON-CURRENT ASSETS
Long term Investment (Note 3)		—			529
Deferred finance charges, net		1,114			1,744
Restricted cash, non-current		9,870			13,370
Derivative asset (Note 15)		91			—
Fair value of above market acquired time charter (Note 7)		7,978			4,829

TOTAL ASSETS	$	468,088		$	535,963


LIABILITIES & STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long term debt (Note 8)	$	18,286		$	29,250
Accounts payable		6,638			8,698
Due to related parties (Note 3)		559			1,476
Accrued liabilities		3,501			5,591
Derivative liabilities (Note 15)		—			642
Deferred revenue		750			804

Total Current Liabilities		29,734			46,461
NON-CURRENT LIABILITIES
Long term debt (Note 8)		172,048			224,632
Derivative liability (Note 15)		—			86
Other non-current liabilities		200			317

TOTAL LIABILITIES		201,982			271,496


STOCKHOLDERS’ EQUITY
Preferred Stock; $0.01 par value, authorized 25,000,000 shares; none issued or outstanding at December 31, 2013 and June 30, 2014 (Note 9)		—			—
Common Stock, $0.01 par value, 300,000,000 shares authorized; 29,059,671 shares issued and outstanding at December 31, 2013 and 29,493,769 shares issued and outstanding at June 30, 2014 (Note 9)		291			295
Additional paid in capital		668,219			670,446
Accumulated deficit		(402,404	)		(406,274	)

Total Stockholders’ Equity		266,106			264,467

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	468,088		$	535,963

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

F-1

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Operations

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data)


	2013			2014
Revenues:
Voyage revenues	$	35,362		$	43,064
Management fee income (Note 3)		456			1,861

		35,818			44,925


Expenses
Voyage expenses		4,505			7,721
Vessel operating expenses		13,732			16,062
Dry docking expenses		572			1,264
Depreciation		8,070			9,777
General and administrative expenses		4,709			10,215
Bad debt expense		—			215
Loss on sale of vessel (Note 5)		81			—
Other operational loss (Note 11)		562			94
Other operational gain (Note 10)		(1,647	)		(407	)

		30,584			44,941

Operating income/ (loss)		5,234			(16	)


Other Income / (Expenses)
Interest and finance costs (Note 8)		(3,794	)		(3,057	)
Gain/ (loss) on derivative financial instruments, net (Note 15)		438			(819	)
Interest and other income		86			21

Total other expenses, net		(3,270	)		(3,855	)


INCOME/ (LOSS) BEFORE EQUITY IN INCOME OF INVESTEE		1,964			(3,871	)
Equity in income of investee		—			1

Net Income / (loss)	$	1,964		$	(3,870	)

Earnings / (loss) per share, basic (Note 12)	$	0.36		$	(0.13	)

Earnings / (loss) per share, diluted (Note 12)	$	0.36		$	(0.13	)

Weighted average number of shares outstanding, basic (Note 12)		5,414,998			28,973,621

Weighted average number of shares outstanding, diluted (Note 12)		5,443,639			28,973,621

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

F-2

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data)


	Common Stock
	# of Shares		Par Value		Additional Paid-in Capital		Accumulated deficit			Total Stockholders’ Equity
BALANCE, January 1, 2013	$	5,400,810	$	54	$	520,946	$	(404,254	)	$	116,746
Net Income		—		—		—		1,964			1,964
Issuance of vested and non-vested shares and amortization of stock-based compensation (Note 13)		12,000		—		600		—			600


BALANCE, June 30, 2013	$	5,412,810	$	54	$	521,546	$	(402,290	)	$	119,310


BALANCE, January 1, 2014	$	29,059,671	$	291	$	668,219	$	(402,404	)	$	266,106
Net loss		—		—		—		(3,870	)		(3,870	)
Issuance of common stock - Acquisition of 33% of Interchart (Note 3)		22,598		—		328					328
Issuance of vested and non-vested shares and amortization of stock-based compensation (Note 13)		411,500		4		1,899		—			1,903


BALANCE, June 30, 2014	$	29,493,769	$	295	$	670,446	$	(406,274	)	$	264,467

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

F-3

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)


	2013			2014
Cash Flows from Operating Activities:
Net income / (loss)	$	1,964		$	(3,870	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		8,070			9,777
Amortization of fair value of above market acquired time charters (Note 7)		3,150			3,149
Amortization of deferred finance charges (Note 8)		292			284
Loss on sale of vessel (Note 5)		81			—
Stock-based compensation (Note 13)		600			1,903
Change in fair value of financial derivatives (Note 15)		(438	)		819
Bad debt expense		—			215
Gain from insurance claim (Note 10)		(397	)		(237	)
Changes in operating assets and liabilities:
(Increase)/Decrease in:
Trade accounts receivable		4,257			(1,223	)
Inventories (Note 4)		(112	)		(3,501	)
Prepaid expenses and other receivables		151			(602	)
Due from related parties (Note 3)		129			(1,467	)
Increase/(Decrease) in:
Accounts payable		(1,875	)		2,060
Due to related parties (Note 3)		139			917
Accrued liabilities and other liabilities		(608	)		2,207
Deferred revenue		(441	)		54

Net cash provided by Operating Activities		14,962			10,485


Cash Flows from Investing Activities:
Advances for vessels under construction and acquisition of vessels and other assets (Note 6)		(827	)		(74,267	)
Long term investment		—			(200	)
Cash proceeds from vessel sale (Note 5)		8,273			—
Insurance proceeds		1,230			550
Decrease in restricted cash		7,614			22
Increase in restricted cash		—			(4,102	)

Net cash provided by / (used in) Investing Activities		16,290			(77,997	)


Cash Flows from Financing Activities:
Proceeds from bank loans		—			74,000
Loan repayment		(25,601	)		(10,452	)
Financing fees paid		(271	)		(914	)

Net cash (used in) / provided by Financing Activities		(25,872	)		62,634


Net increase / (decrease) in cash and cash equivalents		5,380			(4,878	)
Cash and cash equivalents at the beginning of the period		12,950			44,298


Cash and cash equivalents at the end of the period	$	18,330		$	39,420

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest		3,369			2,540

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

F-4

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(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” or the “Company”) is a public 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 executive offices in Athens, Greece.

Star Bulk shares started trading on the NASDAQ Global Select Market on December 3, 2007, under the ticker symbol SBLK. The accompanying unaudited interim condensed consolidated financial statements include the accounts of Star Bulk and its subsidiaries, which are hereinafter collectively referred to as 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 complete financial statements.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only 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 six months ended June 30, 2014, are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2014.

The unaudited interim condensed consolidated financial statements presented in this report should be read in conjunction with the Company’s Annual Report on Form 20-F for the year ended December 31, 2013, filed with the SEC on March 21, 2014.

Below is the list of Star Bulk’s subsidiaries, all wholly owned, as of June 30, 2014:


Wholly Owned Subsidiaries	Vessel Name	DWT	Date Delivered to Star Bulk	Year Built
Star Bulk Management Inc.	—	—	—	—
Starbulk S.A.	—	—	—	—
Star Bulk Manning LLC	—	—	—	—

	Vessels in operation at June 30, 2014
Star Aurora LLC	Star Aurora	171,199	September 8, 2010	2000
Star Big LLC	Star Big	168,404	July 25, 2011	1996
Star Borealis LLC	Star Borealis	179,678	September 9, 2011	2011
Star Mega LLC	Star Mega	170,631	August 16, 2011	1994
Star Polaris LLC	Star Polaris	179,600	November 14, 2011	2011
Star Sirius LLC	Star Sirius	98,681	March 7, 2014	2011
Star Vega LLC	Star Vega	98,681	February 13, 2014	2011
Star Challenger I LLC	Star Challenger	61,462	December 12, 2013	2012
Star Challenger II LLC	Star Fighter	61,455	December 30, 2013	2013
Star Cosmo LLC	Star Cosmo	52,247	July 1, 2008	2005
Star Delta LLC	Star Delta (ex F Duckling)	52,434	January 2, 2008	2000
Star Epsilon LLC	Star Epsilon (ex G Duckling)	52,402	December 3, 2007	2001
Star Gamma LLC	Star Gamma (ex C Duckling)	53,098	January 4, 2008	2002
Star Kappa LLC	Star Kappa (ex E Duckling)	52,055	December 14, 2007	2001
Star Omicron LLC	Star Omicron	53,489	April 17, 2008	2005
Star Theta LLC	Star Theta (ex J Duckling)	52,425	December 6, 2007	2003
Star Zeta LLC	Star Zeta (ex I Duckling)	52,994	January 2, 2008	2003

F-5

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)


	Vessels disposed*
Lamda LLC	Star Sigma	184,403	April 15, 2008	1991
Star Alpha LLC	Star Alpha (ex A Duckling)	175,075	January 9, 2008	1992
Star Beta LLC	Star Beta (ex B Duckling)	174,691	December 28, 2007	1993
Star Ypsilon LLC	Star Ypsilon	150,940	September 18, 2008	1991

*	For vessels disposed refer to Note 5.

F-6

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

1.	Basis of Presentation and General Information — (continued):

Newbuildings at June 30, 2014


Wholly Owned Subsidiaries	Newbuildings Name	Type	DWT	Expected Delivery Date

STAR CAPE I LLC	HN 1338 (tbn Star Aries)	Capesize	180,000	June 2015⁽¹⁾
STAR ASIA I LLC	HN 5040 (tbn Star Aquarius)	Ultramax	60,000	June 2015
STAR SEEKER	HN 1372 (tbn Star Libra)	Newcastlemax	208,000	July 2015⁽¹⁾
STAR ASIA II LLC	HN 5043 (tbn Star Pisces)	Ultramax	60,000	September 2015
STAR AXE I LLC	HN NE 196 (tbn Star Antares)	Ultramax	61,000	September 2015⁽¹⁾
STAR AXE II LLC	HN NE 197 (tbn Star Lutas)	Ultramax	61,000	October 2015⁽¹⁾
STAR BREEZER	HN 1371 (tbn Star Virgo)	Newcastlemax	208,000	December 2015⁽¹⁾
STAR CAPE II LLC	HN 1339 (tbn Star Taurus)	Capesize	180,000	December 2015⁽¹⁾
STAR CASTLE I LLC	HN 1342 (tbn Star Gemini)	Newcastlemax	208,000	January 2016
STAR ENNEA LLC	HN NE 198 (tbn Star Poseidon)	Newcastlemax	209,000	February 2016⁽¹⁾
STAR CASTLE II LLC	HN 1343 (tbn Star Leo)	Newcastlemax	208,000	April 2016

(1)	The indicated expected delivery dates for the respective newbuilding vessels reflect delivery dates that are earlier than the respective contracted delivery dates.

Below is the list of the vessels which are under commercial and technical management by the Star Bulk’s wholly owned subsidiary Starbulk S.A. as of June 30, 2014. For each vessel Starbulk S.A. receives a fixed management fee of $0.75 per day.

Vessel Owning Company

Vessel Name

DWT

Effective Date
of Management Agreement

Year Built

Global Cape Shipping LLC*

Kymopolia

176,990

January 30, 2014

2006

OOCAPE1 Holdings LLC*

Obelix

181,433

October 19, 2012

2011

Pacific Cape Shipping LLC*

Pantagruel

180,181

October 24, 2013

2004

Sea Cape Shipping LLC*

Big Bang

174,109

August 30, 2013

2007

Sky Cape Shipping LLC*

Big Fish

177,662

October 18, 2013

2004

Majestic Shipping LLC*

Madredeus

98,681

February 4, 2014

2011

Nautical Shipping LLC*

Amami

98,681

February 4, 2014

2011

Grain Shipping LLC*

Pendulum

82,619

February 17, 2014

2006

Mineral Shipping LLC*

Mercurial Virgo

81,545

February 17, 2014

2011

Hamon Shipping Inc

Marto

74,470

August 2, 2013

2001

Glory Supra Shipping LLC*

Strange Attractor

55,742

September 24, 2013

2006

Premier Voyage LLC*

Maiden Voyage

58,722

September 28, 2012

2012

Serenity Maritime Inc.

Serenity I

53,688

June 11, 2011

2006

*	The respective companies are related parties, please refer to Note 3

F-7

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

2.	Significant Accounting Policies:

A summary of the Company’s significant accounting policies is identified in Note 2 on the Company’s consolidated financial statements included in the Annual Report on Form 20-F for the fiscal year ended December 31, 2013, filed with the SEC on March 21, 2014. There have been no changes to the Company’s significant accounting policies in the six month period ended June 30, 2014.

Revenue from Contracts with Customers: In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principles-based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 will also require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. Early application is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Presently, the Company is assessing what effect the adoption of ASU 2014-09 will have on its financial statements and accompanying notes.

F-8

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

3.	Transactions with Related Parties:

Transactions and balances with related parties are analyzed as follows:

Balance Sheet


	December 31, 2013		June 30, 2014
Assets
Combine Marine Ltd (c)	$	1	$	—
Oceanbulk Maritime S.A. (d)		9		176
Managed Vessels of Oceanbulk Shipping LLC (e)		420		1,752
Product Shipping & Trading S.A. (f)		56		25

Total Assets	$	486	$	1,953


Liabilities
Interchart Shipping Inc. (a)		58		77
Management and Directors Fees (b)		111		71
Managed Vessels of Oceanbulk Shipping LLC (e)		390		1,328

Total Liabilities	$	559	$	1,476

Capitalized Expenses


	December 31, 2013		June 30, 2014
Advances for vessels under construction and acquisition of vessels and other assets
Oceanbulk Maritime S.A.- commission fee for newbuilding vessels (d)	$	519	$	1,038

Statements of Operations


	Six month period ended June 30,
	2013			2014
Commission on sale of vessel - Oceanbulk Maritime S.A. (d)		(90	)		—
Executive directors consultancy fees (b)		(246	)		(286	)
Non-executive directors compensation (b)		(51	)		(71	)
Office rent - Combine Marine Ltd. (c)		(20	)		(21	)
Voyage expenses-Interchart (a)		(397	)		(385	)
Management fee income - Oceanbulk Maritime S.A. (d)		—			93
Management fee income - Managed Vessels of Oceanbulk Shipping LLC (e)		272			1,299
Management fee income Product Shipping & Trading S.A. (f)		40			62

F-9

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

3.	Transactions with Related Parties – (continued):

(a)

Interchart Shipping Inc. or Interchart: On February 25, 2014, the Company acquired 33% of the total outstanding common stock of Interchart for a consideration of $200 in cash and 22,598 of the Company’s restricted common shares. The common shares were issued on April 1, 2014, and the fair value per share of $14.51 was determined by reference to the closing price of the Company’s common share on the issuance date. This transaction is considered an equity method accounted investment. On February 25, 2014, the Company entered into a services agreement (the “Services Agreement”) with Interchart, for chartering, brokering and commercial services for all the Company’s vessels for an annual fee of €500,000 (approx. $685, using the exchange rate as of June 30, 2014, which was $1.37 per euro). This fee is adjustable for changes in Company’s fleet pursuant to the terms of the Services Agreement. Under the Services Agreement, all previously agreed upon brokerage commissions due to Interchart were cancelled retroactively from January 1, 2014. Previous to this Agreement, Interchart acted as chartering broker of all the Company’s vessels. As of December 31, 2013 and June 30, 2014, the Company had an outstanding payable of $58 and $77, respectively, to Interchart. During the six months ended June 30, 2013 and 2014, the brokerage commission charged by Interchart amounted to $397 and $385, respectively, and is included in “Voyage expenses” in the accompanying unaudited interim condensed consolidated statements of operations.

(b)

Management and Directors Fees: On February 7, 2011, Mr. Spyros Capralos was appointed as the Company’s President and Chief Executive Officer, to succeed Mr. Akis Tsirigakis who resigned from those positions on that date, and resigned from the Company’s Board of Directors on March 31, 2012. Effective February 7, 2011, the Company entered into a consulting agreement with a company owned and controlled by the Company’s Chief Executive Officer, Mr Spyros Capralos. This agreement had a term of three years unless terminated earlier in accordance with its terms. Under this agreement the Company paid the Chief Executive Officer a base fee at an annual rate of not less than €160,000 (approx. $219, using the exchange rate as of June 30, 2014, which was $1.37 per euro), additionally, the Chief Executive Officer was entitled to receive an annual discretionary bonus, as determined by the Company’s Board of Directors in its sole discretion and a minimum guaranteed incentive award of 28,000 shares of stock. These shares vested in three equal annual installments, the first installment of 9,333 shares vested on February 7, 2012, the second installment of 9,333 shares vested on February 7, 2013 and the last installment of 9,334 shares vested on February 7, 2014. During the six months ended June 30, 2013, the consultancy fees under the specific consulting agreement with the Company’s Chief Executive Officer amounted to $79.

On May 2, 2011, the Company entered into a consulting agreement with a company owned and controlled by Mr. Simos Spyrou, the Company’s Chief Financial Officer. This agreement had a term of three years unless terminated earlier in accordance with its terms. Under this agreement the Company paid the Chief Financial Officer a base fee at an annual rate of not less than €56,000 (approx. $77, using the exchange rate as of June 30, 2014, which was $1.37 per euro). Additionally, the Chief Financial Officer is entitled to receive an annual discretionary bonus, as determined by the Company’s Board of Directors in its sole discretion. During the six months ended June 30, 2013, the consultancy fees under the specific consulting agreement with the Chief Financial Officer amounted to $25.

F-10

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

3.	Transactions with Related Parties – (continued):

(b)

Management and Directors Fees – (continued):

On May 3, 2013, the Company entered into separate renewal consulting agreements with companies owned and controlled by the Company’s Chief Executive Officer and Chief Financial Officer. Under these agreements, each company controlled by the Company’s Chief Executive Officer and Chief Financial Officer will receive an annual consulting fee of not less than €174,600 (approx. $239, using the exchange rate as of June 30, 2014, which was $1.37 per euro) and €102,000 (approx. $140), respectively. The respective agreements have a term of three years and will be renewed for a successive year unless terminated earlier in accordance with their terms. Both the Company’s Chief Executive Officer and Chief Financial Officer are entitled to receive an annual discretionary bonus, as determined by the Company’s Board of Directors in its sole discretion. In addition, under his renewed consulting agreement the Company’s Chief Executive Officer is entitled to receive a minimum guaranteed incentive award of 28,000 shares of stock. These shares vest in three equal annual installments, the first installment of 9,333 shares vested on May 3, 2014, the second installment of 9,333 shares vests on May 3, 2015 and the last installment of 9,334 shares vests on May 3, 2016. On May 27, 2014, the Company issued the first installment of 9,333 shares. During the six months ended June 30, 2013 and 2014, the consultancy fees in aggregate, under the renewal consulting agreements with the Company’s Chief Executive Officer and Chief Financial Officer amounted to $63 and $202, respectively.

On July 1, 2011, the Company entered into a consulting agreement with a company owned and controlled by Mr. Zenon Kleopas, the Company’s Chief Operating Officer. This agreement has an indefinite term and each party may terminate the agreement giving one month’s notice. Under this agreement, the Company pays the Chief Operating Officer a base fee at an annual rate of not less than €117,519 (approx. $161, using the exchange rate as of June 30, 2014, which was $1.37 per euro). During the six months ended June 30, 2013 and 2014, the consultancy fees under the specific consulting agreement with the Chief Operating Officer amounted to $79, and $84, respectively.

The related expenses for the Company’s executive officers for the six months ended June 30, 2013 and 2014 were $246 and $286, respectively, and are included under “General and administrative expenses” in the accompanying unaudited interim condensed consolidated statements of operations. As of December 31, 2013 and June 30, 2014, Star Bulk had an outstanding payable balance of $111 and $71 respectively, with its Management and Directors, representing unpaid fees for their participation in the Board of Directors of the Company and the other special committees of the Board of Directors. The related expenses of Non-executive directors for the six months ended June 30, 2013 and 2014 amounted to $51 and $71, respectively and are included under “General and administrative expenses” in the accompanying unaudited interim condensed consolidated statements of operations.

(c)

Combine Marine Ltd., or Combine Ltd.: On January 1, 2012, Starbulk S.A., entered into a one year lease agreement for office space with Combine Ltd., a company controlled by one of the Company’s directors, Mrs. Milena - Maria Pappas and by Mr. Alexandros Pappas, children of the Company’s Chairman, Mr. Petros Pappas. The lease agreement provides for a monthly rental of €2,500 (approximately $3.4, using the exchange rate as of June 30, 2014, which was $1.37 per euro). On January 1, 2013, the agreement was renewed and unless terminated by either party, it will expire in eleven years. The related expense for the rent for the six months ended June 30, 2013 and 2014 was $20 and $21, respectively, and is included under “General and administrative expenses” in the accompanying unaudited interim condensed consolidated statements of operations. As of December 31, 2013 and as of June 30, 2014, the Company had an outstanding receivable of $1 and nil, respectively, with Combine Marine Ltd.

F-11

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

3.	Transactions with Related Parties – (continued):

(d)

Oceanbulk Maritime S.A., or Oceanbulk: Oceanbulk Maritime S.A., is a ship management company and is controlled by one of the Company’s directors, Mrs. Milena-Maria Pappas. During the six months ended June 30, 2013, the Company paid to Oceanbulk a brokerage commission of $90 relating to the sale of the vessel Star Sigma.

On November 25, 2013, Company’s Board of Directors approved to pay Oceanbulk Maritime S.A. a commission fee relative to the negotiations with the shipyards on the construction of the Company’s contracted newbuilding vessels (Note 6). The agreement is to pay a commission of 0.5% of the shipbuilding contract price for the two newbuilding Capesize vessels and the three newbuilding Newcastlemax vessels and a flat fee of $200 per vessel for the four newbuilding Ultramax vessels. For the respective nine newbuilding vessels the total commission will amount to $2,077. The commission has been agreed to be paid in four equal installments, the first two installments will be paid in cash and the remaining two installments will be paid with the issuance of common shares. The first and the second installment of $519 each were paid in cash in December 2013 and in April 2014, respectively. The total amount of $1,038 was capitalized and is included in the “Advances for vessel under construction and acquisition of vessels” in the accompanying consolidated balance sheets. The last two installments, to be paid with the issuance of common shares are due in June 2015 and in April 2016, respectively.

On March 22, 2014, Starbulk S.A. entered into an agreement with Oceanbulk, under which, the Company provides certain management services including crewing, purchasing, arranging insurance, vessel telecommunications and Master general accounts supervision, to the vessels which are under the management of Oceanbulk. Pursuant to the terms of this agreement, Starbulk S.A. received a fixed management fee of $0.17 per day, per vessel, which as of June 1, 2014, was changed to $0.11 per day, per vessel, based on an addendum signed on May 22, 2014. As of June 30, 2014, the Company provided the respective services to six dry bulk carrier vessels. The related income for the six months ended June 30, 2014, was $93 and is included under “Management fee income” in the accompanying unaudited interim condensed consolidated statement of operations. As of December 31, 2013 and June 30, 2014, the Company had an outstanding receivable of $9 and $176, respectively, with Oceanbulk.

(e)

Managed vessels of Oceanbulk Shipping LLC: Oceanbulk Shipping LLC is a company minority owned by one of the Company’s directors, Mrs. Milena-Maria Pappas. Starbulk S.A. has entered into vessel management agreements with Maiden Voyage LLC, Premier Voyage LLC, OOCAPE1 Holdings LLC, Sea Cape Shipping LLC, Sky Cape Shipping LLC, Glory Supra Shipping LLC, Pacific Cape Shipping LLC, Global Cape Shipping LLC, Majestic Shipping LLC, Nautical Shipping LLC, Mineral Shipping LLC and Grain Shipping LLC, entities owned and controlled by Oceanbulk Shipping LLC. Pursuant to the terms of these agreements, Starbulk S.A. receives a fixed management fee of $0.75 per day, per vessel. The related income for the six months ended June 30, 2013 and 2014, was $272 and $1,299, respectively, and is included under “Management fee income” in the accompanying unaudited interim condensed consolidated statement of operations. As of December 31, 2013, and as of June 30, 2014, the Company had an outstanding receivable of $420 and $1,752, respectively, and an outstanding liability of $390 and $1,328, respectively, with the companies owned and controlled by Oceanbulk Shipping LLC.

F-12

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

3.	Transactions with Related Parties – (continued):

(f)

Product Shipping & Trading S.A.: Product Shipping & Trading S.A. is controlled by family members of the Company’s Chairman, Mr. Petros Pappas. On June 7, 2013, Starbulk S.A. entered into an agreement with Product Shipping & Trading S.A., a Marshall Islands company, under which, the Company provides certain management services including crewing, purchasing and arranging insurance to the vessels which are under the management of Product Shipping & Trading S.A. Pursuant to the terms of this agreement, Starbulk S.A. receives a fixed management fee of $0.13 per day, per vessel. In October, 2013 the Company decided to gradually cease providing the above mentioned services to the vessels managed by Product Shipping & Trading S.A., except for arranging insurance services, and, as a result, the management fee decreased to $0.02 per day, per vessel. As of June 30, 2014, the Company provided insurance services for 17 product tankers. The related income for the six months ended June 30, 2013 and 2014 was $40 and $62, respectively, and is included under “Management fee income” in the accompanying unaudited interim condensed consolidated statement of operations. As of December 31, 2013 and June 30, 2014, the Company had an outstanding receivable of $56 and $25, respectively, with Product Shipping & Trading S.A.

(g)

Merger Agreement with Oceanbulk: On June 16, 2014, the Company entered into an Agreement and Plan of Merger, (as amended from time to time, the “Merger Agreement”) among Oceanbulk, Star Synergy LLC, a Marshall Islands limited liability company and a wholly-owned subsidiary of the Company (“Oaktree Holdco Merger Sub”), Star Omas LLC, a Marshall Islands limited liability company and a wholly-owned subsidiary of the Company (“Pappas Holdco Merger Sub” and together with Oaktree Holdco Merger Sub, the “Merger Subs”), Oaktree and, Millennia, pursuant to which Oaktree and Millennia would merge with and into one of the Merger Subs (the “Merger”), with the Merger Subs continuing as the surviving companies and wholly-owned subsidiaries of the Company.

The Merger Agreement also provided for the acquisition (the “Heron Transaction”) by the Company of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta. The Merger Agreement provided that the Company would issue 2,115,706 of its common shares into escrow as consideration for the Heron Vessels, which common shares will be released from escrow when Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to the Company.

4.	Inventories:

The amounts shown in the accompanying consolidated balance sheets are analyzed as follows:


	December 31, 2013		June 30, 2014
Lubricants	$	1,726	$	2,099
Bunkers		—		3,128

Total	$	1,726	$	5,227

5.	Vessels and Other Fixed Assets, Net:

The amounts in the accompanying consolidated balance sheets are analyzed as follows:


	December 31, 2013			June 30, 2014
Cost
Vessels	$	481,086		$	541,141
Other fixed assets		1,083			1,433

Total Cost		482,169			542,574

Accumulated Depreciation		(155,495	)		(165,272	)

Vessels and other fixed asset, net	$	326,674		$	377,302

F-13

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(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):

Vessels acquired / disposed during the six month period ended June 30, 2013

On March 14, 2013, the Company entered into an agreement with a third party to sell the Star Sigma, for a contracted price of $9,044 less address commission of 3% and brokerage commission of 2%. The vessel was delivered to its purchasers on April 10, 2013. The net carrying amount of Star Sigma as of the date of its delivery was $8,354, and the resulting loss of $81 is included under “Loss on sale of vessel” in the accompanying unaudited interim condensed consolidated statement of operations for the six month period ended June 30, 2013.

No vessel acquisitions took place in the six month period ended June 30, 2013.

Vessels acquired / disposed during the six month period ended June 30, 2014

On January 24, 2014, the Company entered into two agreements to acquire from Glocal Maritime Ltd, or “Glocal”, an unaffiliated third party, two 98,000 dwt Post Panamax vessels, Star Vega and Star Sirius, built 2011, for an aggregate purchase price of $60,000. The vessels Star Vega and Star Sirius, were delivered to the Company on February 13, 2014 and March 7, 2014, respectively. The vessels, upon their delivery, were chartered back to Glocal for a daily rate of $15 less brokerage commission of 1.25% until at least June 2016.

No vessel disposals took place in the six month period ended June 30, 2014.

6.	Advances for Vessels Acquisitions:


	December 31, 2013		June 30, 2014
Pre-delivery Yard installments	$	66,780	$	66,780
Bareboat capital leases – upfront hire & handling fees		—		12,012
Capitalized interest and finance costs		633		1,885
Other capitalized costs (Note 3)		519		1,117

Total	$	67,932	$	81,794

On July 5, 2013, Star Bulk through two wholly-owned subsidiaries, Star Cape I LLC and Star Cape II LLC, contracted with Shanghai Waigaoqiao Shipbuilding Co. Ltd., or SWS, shipyard to build two 180,000 dwt eco-type, fuel efficient Capesize dry bulk vessels, Hull 1338 and Hull 1339.

On September 23, 2013, Star Bulk through two wholly-owned subsidiaries, Star Castle I LLC and Star Castle II LLC, contracted with SWS, to build two 208,000 dwt eco-type, fuel efficient Newcastlemax dry bulk vessels, Hull 1342 and Hull 1343

On September 27, 2013, Star Bulk through three wholly-owned subsidiaries, Star Axe I LLC, Star Axe II LLC and Star Ennea LLC, contracted with Nantong COSCO KHI Ship Engineering Co., or NACKS, shipyard to build two 61,000 dwt eco-type, fuel efficient Ultramax dry bulk vessels, Hull NE 196 and Hull NE 197 and one 209,000 dwt eco-type, fuel efficient Newcastlemax dry bulk vessel, Hull NE 198.

On October 22, 2013, Star Bulk through two wholly-owned subsidiaries, Star Asia I LLC and Star Asia II LLC, contracted with Japan Marine United Corporation, or JMU, shipyard to build two 60,000 dwt eco-type, fuel efficient Ultramax dry bulk vessels, Hull 5040 and Hull 5043.

F-14

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

6.	Advances for Vessels Acquisitions – (continued):

The total aggregate contracted price for all nine newbuilding vessels is $367,400 plus agreed extras costs of $3,314, payable in periodic installments up to their deliveries. During the year ended December 31, 2013, and for the six month period ended June 30, 2014, the Company paid advances to the shipyards amounting to $66,780.

On February 17, 2014, the Company entered into agreements, or the “Bareboat Charters”, with CSSC (Hong Kong) Shipping Company Limited, or CSSC, an affiliate of SWS, to bareboat charter for ten years, two fuel efficient newbuilding Newcastlemax dry bulk vessels, Hull 1372 and Hull 1371, or the “CSSC Vessels”, each with a cargo carrying capacity of 208,000 dwt, which are under construction. The vessels are being constructed pursuant to shipbuilding contracts entered into between two pairings of affiliates of SWS. Each pair has one shipyard party (each, an “SWS Builder”) and one ship-owning entity (each an “SWS Owner”). Delivery to the Company of each vessel is deemed to occur upon delivery of the vessel to the SWS Owner from the corresponding SWS Builder. An amount of $47,200 and $46,400, respectively, for the construction cost of each vessel will be financed by the relevant SWS Owner, to whom the Company will pay a daily bareboat charter hire rate payable monthly plus a variable amount corresponding to the LIBOR rate payable every six months. In addition, the Company will pay for Hull 1371 an installment of $300 plus an additional amount of $378 per vessel for agreed extra costs. In addition, the Company is also obliged to pay an amount of $936 representing handling fees in two installments. The first installment of $462 was paid upon the signing of the Bareboat Charters, and the second installment is due in one year. Under the terms of the Bareboat Charters, the Company has the option to purchase the CSSC Vessels at any time, such option exercisable on a monthly basis against a predetermined, amortizing balance payment whilst it has a respective obligation of purchasing the vessels at the expiration of the bareboat term. Upon the earlier of the exercise of the purchase options or the expiration of the Bareboat Charters, the Company will own the CSSC Vessels.

Based on ASC Topic 840, the Company determined that the bareboat charters should be classified as capital leases. In addition, based on the lease agreement provisions, the Company is deemed to have substantially all of the construction period risk and therefore is considered the owner of the vessels during the construction period. Therefore the amount of $12,012 paid during the six months ended June 30, 2014, representing the first installment of upfront hire and the handling fees for the two newbuilding vessels, has been capitalized and is included under “Advances for vessel acquisitions” in the accompanying unaudited consolidated balance sheets.

Each of the above Bareboat Charters is considered a sales type lease and will be accounted for as a sale and leaseback transaction upon the delivery of each newbuilding to the Company and the beginning of the lease term. At that time the financial liability and the financial asset will be recognized in accordance with the applicable capital lease accounting guidance.

The amounts of $67,932 and $81,794 are included in “Advances for vessel acquisitions” in the accompanying consolidated balance sheets, and represent amounts paid to shipyards for newbuilding vessels, upfront hire payments and handling fees payments for the bareboat charters, capitalized interest and finance costs and other capitalized costs, as analyzed in the table in this Note.

7.	Fair value of Above Market Acquired Time Charters:

The amortization of fair value of above-market acquired time charters related to the vessels Star Big and Star Mega, which were acquired in 2011, amounted to $3,150 and $3,149 for the six months ended June 30, 2013 and 2014, respectively, and is included under “Voyage revenues” in the accompanying unaudited interim condensed consolidated statements of operations.

F-15

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

7. Fair value of Above Market Acquired Time Charters – (continued)

The estimated aggregate amortization expense of the above market acquired time charters until their expiration is analyzed as follows:


Twelve month periods ending	Amount
June 30, 2015	$	3,525
June 30, 2016		1,304

Total	$	4,829

8.	Long-term Debt:

Details of the Company’s loan and credit facilities are discussed in Note 9 of the Company’s consolidated financial statements for the year ended December 31, 2013, included in the Company’s annual report on Form 20-F, except for two new loan agreements signed during the six months ended June 30, 2014, as noted below:

a)	HSH Nordbank AG $35,000 facility:

On February 6, 2014, the Company entered into a new $35,000 secured term loan agreement with HSH Nordbank AG. The borrowing under this new loan agreement is used to partially finance the acquisition of the vessels Star Challenger and Star Fighter, which also provide the security for this loan agreement. Under this senior secured credit facility, the wholly-owned subsidiaries that own these two vessels are the borrowers, and the Company is the corporate guarantor. This senior secured credit facility will mature in February 2021 and is repayable in 28 consecutive quarterly installments, which commence in May 2014 and amount to $312.5 and $291.7, and a final balloon payment of $8,750 and $9,332.4, payable together with the last installments, for Star Challenger and Star Fighter respectively. This senior secured credit facility bears interest at LIBOR plus a margin of 3.25%.

This loan agreement contains financial and other customary covenants, under which the Company, as corporate guarantor, shall ensure the following : (i) the market value adjusted leverage ratio shall not be greater than 75%, (ii) a ratio of EBITDA to interest expense, no less than 2.0:1.0, (iii) minimum liquidity of $500 shall be maintained for each of the Company’s vessels, (iv) a minimum market adjusted net worth shall not be less than $100,000, (v) an actual pledged amount of $300 shall be maintained per mortgaged vessel (the “ Mandatory Minimum Amount”), and (vi) an additional actual pledged amount of $600 shall be maintained per vessel (the “Additional Liquidity Amount”), in case there is no time charter employment in place (as defined in the loan agreement) on the drawdown date. The respective amounts pledged will be gradually reduced by $150 per annum per vessel on each anniversary of the drawdown date with respect to the relevant vessel. The borrowers may not pay any dividends or make similar distributions if breach of covenant and/or event of default or will occur after such dividend or distribution. This senior secured credit facility also requires the borrowers to maintain an aggregate charter-free fair market value of Star Challenger and Star Fighter of at least 125% of the amount outstanding including the Mandatory Minimum Amount and excluding the Additional Liquidity Amount.

As of December 31, 2013 and June 30, 2014, the Company had outstanding borrowings of $0 and $34,396, respectively, under this loan agreement.

b)	Deutsche Bank AG $39,000 facility:

On March 14, 2014, the Company entered into a new $39,000 secured term loan agreement with Deutsche Bank AG. The borrowings under this new loan agreement were used to partially finance the two Post Panamax vessels, Star Sirius and Star Vega, which are the collateral for this facility. Under this secured credit facility, the wholly-owned subsidiaries that own these two vessels are the borrowers, and the Company is the corporate guarantor. This senior secured credit facility consists of two tranches of $19,500 each. This senior secured credit facility will mature in March 2021. Each tranche is repayable in 28 consecutive installments of $390 each which commence in June 2014 and a final balloon payment of $8,580. Both tranches bear interest at LIBOR, plus a margin of 3.35%.

F-16

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

8.	Long-term Debt – (continued):

This loan agreement contains financial and other covenants under which the Company, as the corporate guarantor, shall maintain the following: (i) a market value adjusted leverage ratio of not greater than 70%; (ii) a minimum market adjusted net worth of not less than $100,000; (iii) a minimum interest coverage ratio of not less than 2.0:1.0; (iv) minimum liquidity of $500 per vessel for each of the Company’s vessels; (v) an actual pledged amount of $500 for each mortgaged vessel under this credit facility; and (vi) a minimum fair market value of the vessels plus the pledged amount of cash of no less than 130% of the outstanding amount under that facility. In addition, the borrowers will not pay any dividends or make similar distributions if the Company is in breach of a covenant and/or an event of default exists or will occur after such dividend or distribution.

As of December 31, 2013 and June 30, 2014, the Company had outstanding borrowings of $0 and $38,220, respectively, under this loan agreement.

The principal payments required to be made after June 30, 2014, for all outstanding debt, are as follows:


Twelve month periods ending	Amount
June 30, 2015	$	29,250
June 30, 2016		41,252
June 30, 2017		82,257
June 30, 2018		9,477
June 30, 2019		46,714
June 30, 2020 and thereafter		44,932

Total	$	253,882

As of June 30, 2014, the Company was in compliance with the amended financial and other covenants contained in its loan agreements.

At June 30, 2014, all of the Company’s vessels, having a net carrying value of $376,643, are first-priority mortgaged as collateral to its loan facilities.

Interest expense for the six month periods ended June 30, 2013 and 2014, amounted to $3,455, and $2,684, respectively, amortization of deferred finance fees amounted to $292 and $284, respectively, and other finance fees amounted to $47 and $89, respectively, and are included under “Interest and finance costs” in the accompanying unaudited interim condensed consolidated statements of operations as of June 30, 2013, and 2014, respectively.

9.	Preferred, Common Stock and Additional Paid in Capital:

Preferred Stock: Star Bulk is authorized to issue up to 25,000,000 shares of preferred stock, $0.01 par value with such designations, as voting, and other rights and preferences, as determined by the Board of Directors. As of June 30, 2014 the Company has not issued any preferred stock.

Common Stock: Until 2009, Star Bulk was authorized to issue 100,000,000 registered common shares, par value $0.01. On November 23, 2009 at the Company’s annual meeting of shareholders, the Company’s shareholders voted to approve an amendment to the Amended and Restated Articles of Incorporation increasing the number of common shares that the Company was authorized to issue from 100,000,000 registered common shares, par value $0.01 per share, to 300,000,000 registered common shares, par value $0.01 per share.

Each outstanding share of the Company’s common stock entitles the holder to one vote on all matters submitted to a vote of shareholders. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of shares of common stock are entitled to receive ratably all dividends, if any, declared by the Company’s Board of Directors out of funds legally available for dividends. Holders of common stock do not have conversion, redemption or preemptive rights to subscribe to any of the Company’s securities. All outstanding shares of common stock are fully paid and non-assessable. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of any shares of preferred stock which the Company may issue in the future.

F-17

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

10.

Other Operational Gain:

Other operational gain for the six month period ended June 30, 2013, totaled $1,647 and represented non-recurring revenue of $1,250 from the settlement of a commercial claim and a gain from hull & machinery claim of $397. For the six month period ended June 30, 2014, other operational gain totaling $407 consisted of a gain from a hull and machinery claim of $237 and a $170 rebate from Company’s previous manning agent.

11.

Other Operational Loss:

On September 29, 2010, the Company agreed with a third party to sell a 45% interest in the future proceeds related to the recovery of certain of the commercial claims against a consideration of $5,000. During the six month period ended June 30, 2013, an expense amounted to $562 incurred by the Company towards the third party based on the agreement mentioned above. The expense of $562 was incurred in connection to the settlement amount of $1,250, described in Note 10 “Other Operational Gain”, above. This amount is presented in “Other operational loss” in the accompanying unaudited interim condensed consolidated statement of operations for the period ended June 30, 2013. Other operational loss for the six month period ended June 30, 2014, amounted to $94.

12.

Earnings / Loss per Share:

All shares issued (including the restricted shares issued under the Company’s equity incentive plan) are the Company’s common stock and have equal rights to vote and participate in dividends, subject to forfeiture provisions set forth in the applicable award agreement. The calculation of basic earnings per share does not consider the non-vested shares as outstanding until the time-based vesting restriction has lapsed.

The Company calculates basic and diluted earnings per share as follows:


	Six month period ended June 30,
	2013		2014
Income:
Net income / (loss)	$	1,964	$	(3,870	)


Basic earnings / (loss) per share:
Weighted average common shares outstanding, basic		5,414,998		28,973,621

Basic earnings/ (loss) per share	$	0.36	$	(0.13	)


Effect of dilutive securities:
Dilutive effect of non-vested shares		28,641		—
Weighted average common shares outstanding, diluted		5,443,639		28,973,621

Diluted earnings / (loss) per share	$	0.36	$	(0.13	)

The weighted average diluted common shares outstanding for the six month period ended June 30, 2013 includes the effect of 28,641 shares being the number of incremental shares assumed to be issued under the treasury stock method and 6,807 shares has been excluded from this calculation due to their anti-dilutive effect. For the six month period ended June 30, 2014, and on the basis that the Company incurred a net loss, the effect of 412,834 non- vested shares would be anti-dilutive; therefore basic equals diluted loss per share.

F-18

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

13.

Equity Incentive Plan:

On March 21, 2013, the Company’s Board of Directors adopted the 2013 Equity Incentive Plan (the 2013 Plan) and reserved for issuance 240,000 common shares thereunder. The Plan is designed to provide certain key persons, whose initiative and efforts are deemed to be important to the successful conduct of the business of the Company with incentives to enter into and remain in the service of the Company, acquire an interest in the success of the Company, maximize their performance and enhance the long-term performance of the Company. As of June 30, 2014, all of the respective shares have been granted and vested.

On March 21, 2013, 239,333 restricted common shares were granted to certain directors, officers, employees of the Company, the respective shares were issued on September 11, 2013, and vested on March 21, 2014. Additionally, on the same day, 12,000 restricted common shares were granted to the Company’s former director Mr. Espig, the respective shares vested immediately and were issued on June 27, 2013. The fair value of each share was $6.46 and was determined by reference to the closing price of the Company’s common stock on the grant date.

On February 20, 2014, the Company’s Board of Directors adopted the 2014 Equity Incentive Plan (the 2014 Plan) and reserved for issuance 430,000 common shares thereunder. The terms and conditions of the 2014 Plan are substantially similar to the terms and conditions of Company’s previous equity incentive plans.

On February 20, 2014, 394,167 restricted common shares were granted to certain directors, officers, employees of the Company, the respective shares will vest on March 20, 2015. Additionally, on the same day, 8,000 restricted common shares were granted to two Company’s directors Mr. Softeland and Mr. Erhardt, which vested immediately. The fair value of each share was $10.86, based on the closing price of the Company’s common stock on the grant date. The respective shares were issued in May 2014 along with 9,333 common shares to the Company’s Chief Executive Officer, representing the first installment of his minimum guaranteed incentive award in accordance with his consultancy agreement dated May 3, 2013.

All non-vested shares vest based on upon the grantee’s continued service as an employee of the Company, or as a director until the applicable vesting date. The grantee does not have the right to vote such non-vested shares until they vest or exercise any right as a shareholder of these shares, although, the issued and non-vested shares pay dividends as declared. The dividends of these shares are forfeitable.

The Company estimates that there will be no forfeitures of non-vested shares. The shares which are issued in accordance with the terms of the Company’s equity incentive plans remain restricted until they vest. For the six month periods ended June 30, 2013 and 2014, stock based compensation cost was $600 and $1,903, respectively, and is included under “General and administrative expenses” in the accompanying unaudited interim condensed consolidated statements of operations.

F-19

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

13.

Equity Incentive Plan – (continued):

A summary of the status of the Company’s non-vested shares as of June 30, 2014 and the movement during the year ended December 31, 2013 and the six month period ended June 30, 2014, is presented below.


	Number of shares			Weighted Average Grant Date Fair Value
Unvested as at January 1, 2013		18,667		$	36.75
Granted		279,333			6.43
Vested		(21,333	)		19.71

Unvested as at June 30, 2013		276,667		$	7.46


Unvested as at January 1, 2014		276,667		$	7.46
Granted		402,167			10.86
Vested		(266,000	)		7.65

Unvested as at June 30, 2014		412,834		$	10.65

As of June 30, 2014, there was $2,917 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Equity Incentive Plans. The cost is expected to be recognized over a weighted-average period of 0.74 years.

14.

Commitments and Contingencies:

Future minimum contractual charter revenue

Future minimum contractual charter revenue, based on vessels committed to non-cancelable, time charter contracts net of address commission which amounted to $657, as of June 30, 2014, will be:


Twelve month periods ending	Amount*
June 30, 2015	$	24,419
June 30, 2016		14,541
June 30, 2017		765
June 30, 2018		—
June 30, 2019		—
June 30, 2020 and thereafter		—

Total	$	39,725

(*)	These amounts do not include any assumed off-hire except for the scheduled dry-docking intermediate and special surveys of the vessels.

F-20

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

14.

Commitments and Contingencies – (continued):

Contractual obligations

The following table sets forth the Company’s contractual obligations and their maturity as June 30, 2014.


	Twelve month periods ending June 30,
	Total		2015		2016		2017		2018		2019		2020 and thereafter
Shipbuilding contracts & agreed extra costs	$	303,934	$	81,747	$	222,187	$	—	$	—	$	—	$	—
Bareboat capital leases - upfront hire & handling fees		13,080		12,024		1,056		—		—		—		—
Bareboat commitments charter hire⁽¹⁾		124,739		—		6,588		9,266		9,249		9,232		90,404

Total	$	441,753	$	93,771	$	229,831	$	9,266	$	9,249	$	9,232	$	90,404

(1)	The bareboat charter hire is comprised of fixed and variable portion, the variable portion is calculated based on the 6-month Libor rate of 0.327%, as of June 30, 2014 (please refer to Note 6).

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 any such claims or contingent liabilities, for which it has not accrued for, requiring disclosure in the accompanying unaudited interim condensed consolidated financial statements.

The Company’s vessels are covered for pollution in the amount of $1 billion per vessel per incident, by the P&I Association in which the Company’s vessels are entered. The Company’s vessels are subject to calls payable to their P&I Association and may be subject to supplemental calls which are based on estimates of premium income and anticipated and paid claims. Such estimates are adjusted each year by the board of directors of the P&I Association until the closing of the relevant policy year, which generally occurs within three years from the end of the policy year. Supplemental calls, if any, are expensed when they are announced and according to the period they relate to. The Company is not aware of any supplemental calls in respect of any policy years other than those that have already been recorded in its condensed consolidated financial statements.

15.

Fair value measurements:

ASC 815, “Derivatives and Hedging” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on its consolidated balance sheets.

Changes in the fair value of derivative instruments that have not been designated as hedging instruments are reported in the accompanying unaudited interim condensed consolidated statements of operations.

F-21

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

15.

Fair value measurements – (continued):

Fair value on a recurring basis:

Interest rate swaps

The Company enters into interest rate swap transactions to manage interest costs and risk associated with changing interest rates with respect to its variable interest loans and credit facilities. The Company’s interest rate swaps did not qualify for hedge accounting, and therefore resulting gains or losses are recognized in the accompanying unaudited interim condensed consolidated statements of operations.

In June 2013, the Company entered into two interest rate swap agreements of $26,840 and $28,628 notional amount, which will be effective by November and August 2014, respectively, and mature in August and November 2018, respectively.

On April 28, 2014, the Company entered into two interest rate swap agreements to fix forward 50% of its floating interest rate liabilities for the $35,000 loan facility with HSH Nordbank AG (see Note 8 a)), which will be in effect by September 30, 2014 and mature in September 2018 respectively. Under the terms of the interest rate swap agreements, the Company will be paying on a quarterly basis a fixed rate of 1.765% per annum, while receiving a variable amount equal to the three month U.S. LIBOR rate, both applied on the notional amount of the swaps outstanding at each settlement date.

As of December 31, 2013, the Company had two interest rate swap transactions outstanding, and the Company had four interest rate swap transactions outstanding as of June 30, 2014.

The change in the fair market value of the respective swaps for the six month periods ended June 30, 2013 and 2014 resulted in a gain of $438 and in a loss of $819, respectively and are included in “Gain / (loss) on derivative financial instruments, net” in the accompanying unaudited interim condensed consolidated statement of operations.


	Six month period ended June 30,
	2013		2014
Gain/(loss) on interest rate swaps	$	438	$	(819	)

	$	438	$	(819	)

F-22

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

15.

Fair value measurements – (continued):

Fair value on a recurring basis – (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, 2013 and June 30, 2014.


	Significant Other Observable Inputs (Level 2)
	December 31, 2013		June 30, 2014
ASSETS
Interest rate swaps - asset position	$	91	$	—

Total	$	91	$	—

LIABILITIES
Interest rate swaps - liability position	$	—	$	728

Total	$	—	$	728

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 non-current restricted cash balances, bearing interest at variable interest rates, approximate their recorded values as of June 30, 2014.

F-23

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

16.

Subsequent Events:

On July 3, 2014, the Company received a notice of termination of the management agreement for the vessel Marto, one of the third-party owned vessels under the Company’s management. The management agreement was terminated upon the vessel’s delivery to its new managers, on August 20, 2014. The Company is entitled to receive management fees for a period of three months following the termination date, in accordance with the terms of the management agreement.

On July 11, 2014, the Company completed a transaction that resulted in the acquisition of Oceanbulk Shipping LLC (“Oceanbulk Shipping”) and Oceanbulk Carriers LLC (“Oceanbulk Carriers”, and, together with Oceanbulk Shipping, “Oceanbulk”) from Oaktree Dry Bulk Holdings LLC (including affiliated funds, “Oaktree”) and Millennia Holdings LLC (“Millennia Holdings”, and together with Oaktree, the “Sellers”) through the merger of the Company’s wholly-owned subsidiaries into Oceanbulk’s holding companies (the “Merger”). Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding fuel-efficient Eco-type dry bulk vessels (one of which, Peloreus was delivered on July 22, 2014) at shipyards in Japan and China. Millennia Holdings is an entity that is affiliated with the family of Mr. Petros Pappas, who became the Company’s Chief Executive Officer in connection with the Merger.

The agreement governing the Merger also provided for the acquisition (the “Heron Transaction”) by the Company of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd. (“Heron”), a limited liability the Company incorporated in Malta. The Company issued 2,115,706 of its common shares into escrow as consideration for the Heron Vessels. The common shares will be released from escrow to the Sellers at the time Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to the Company, and the Company expects to pay $25,000 in cash (for which it may seek financing).

In addition, concurrently with the Merger, the Company completed a transaction (the “Pappas Transaction”), in which it acquired all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively, the “Pappas Companies”), which were entities owned and controlled by affiliates of the family of Mr. Pappas (the “Pappas Shareholders”). The Pappas Companies owned and operated a dry bulk carrier vessel (Tsu Ebisu) and had a contract for the construction of a newbuilding dry bulk carrier vessel, HN 5016 (tbn Indomitable). The Merger, the Heron Transaction and the Pappas Transaction are referred to, together, as the “July 2014 Transactions”.

A total of 54,104,200 of the Company’s common shares were issued to the various selling parties in the July 2014 Transactions, of which 45,460,324 shares were issued to Oaktree, and 8,643,876 were issued to the Pappas Shareholders. As a result, Oaktree became the beneficial owner of approximately 61.3% of the Company’s outstanding common shares, and the Pappas Shareholders became the beneficial owners of approximately 12.6% of the Company’s outstanding common shares.

In July 2014 and in connection with the July 2014 Transactions, the Company’s Board of Directors, or the Board, increased the number of directors constituting the Board to nine and, following the resignation of Mrs. Milena - Maria Pappas, appointed Mr. Rajath Shourie and Mses. Emily Stephens and Renee Kemp and Mr. Stelios Zavvos pursuant to the terms and subject to the conditions of the July 2014 Transactions.

During July 2014, the Company obtained the consent of the various relevant lenders to complete the July 2014 Transactions.

In July 2014 and in connection with the July 2014 Transactions, Mr. Petros Pappas was appointed Chief Executive Officer, Mr. Hamish Norton was appointed President, Mr. Christos Begleris was appointed Co-Chief Financial Officer, Mr. Nicos Rescos was appointed Chief Operating Officer, and Sophia Damigou was appointed Co-General Counsel. Mr. Spyros Capralos resigned as Chief Executive Officer and will remain the Company’s Chairman and Zenon Kleopas will continue as the Company’s Executive Vice President – Technical Operations.

F-24

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

16.

Subsequent Events – (continued):

As a result of the July 2014 Transactions, the Company assumed an additional $208,237 aggregate principal amount of vessel financing, all of which is secured by the vessels financed, some of which is guaranteed either by the Company or by certain of its subsidiaries. All of the vessel financing agreements have various negative and financial maintenance covenants. In addition, the Company also assumed bareboat charters with respect to four newbuilding vessels being built at New Yangzijiang and five newbuilding vessels being built at SWS.

Of the $208,237 aggregate principal amount of vessel financing that the Company assumed, $20,000 is outstanding under a facility (the “Dioriga Facility”) provided by HSBC Bank plc to Dioriga Shipping Co. (“Dioriga”) to partially finance the construction cost of Tsu Ebisu, which was delivered in April 2014. The Company assumed the Dioriga Facility when it purchased all of the outstanding equity of Dioriga in the Pappas Transaction. The Dioriga Facility will mature in March 2019 and will be repayable in 20 quarterly installments of $350 each, commencing three months after the drawdown, plus a balloon payment of $13,000 due together with the last installment. The loan bears interest at LIBOR plus a margin of 3.2% per annum (as long as ACR exceeds 143%) or 4.30% per annum (if ACR falls below 143%). The Dioriga Facility is secured by a first priority mortgage over the financed vessel and general and specific assignments. The Dioriga Facility includes certain negative covenants, including covenants against (i) changes in the management or legal or beneficial ownership of Dioriga and (ii) encumbrance on the assets of Dioriga. The Dioriga Facility includes the following financial maintenance covenants:

•

a market value of the vessel to loan (including interest rate swap exposure) ratio to exceed 130%; and

•

minimum liquidity to exceed $700, to be maintained in an account with HSBC Bank plc.

On July 11, 2014, 15,000 common shares were granted to the Company’s directors, Mr. Softeland and Mr. Schmitz, and vested on the same date. The Company plans to issue the shares in connection with these grants during the third quarter of 2014.

On July 16, 2014, the Company executed a binding term sheet with NIBC Bank N.V. (the “NIBC Facility”) for financing an aggregate amount of $32,000, which will be available in two tranches of $16,000, to partially finance the construction cost of two Ultramax bulk carriers currently under construction by Japan Marine United Corporation (Hulls HN 5040, tbn Star Acquarius and HN 5043, tbn Star Pisces), with expected delivery in June 2015 and September 2015, respectively. Execution of the definitive agreements relating to this facility is scheduled on or before September 15, 2014. The facility will mature six years after the signing date. Each tranche is expected to be drawn with the delivery of the relevant vessel and will be repayable in consecutive quarterly installments of $268, commencing three months after the drawdown, plus a balloon payment of $10,650, for HN 5040, and $10,918, for HN 5043, both due in September 2020. The NIBC Facility will bear interest at LIBOR plus a margin of 2.80% per annum. It will be secured by a first priority cross collateralized mortgage over the financed vessels and general and specific assignments and will be guaranteed by the Company. The definitive agreements of the NIBC Facility will contain negative and financial covenants customary for facilities of this type.

On July 22, 2014, Peloreus, a Capesize vessel with a capacity of 182,000 dwt, was delivered to us by JMU. The delivery installment payment of $34,625 was partially financed by $32,500 drawn under a loan facility with Deutsche Bank AG, and the remaining amount of $2,125 was financed by existing cash.

In July, 2014, Positive Shipping Company executed a binding term sheet with BNP Paribas (the “BNP Facility”) for financing an amount of $32,500 to partially finance the construction cost of its Capesize bulk carrier currently under construction by Japan Marine United Corporation (Hull HN 5016, tbn Indomitable), with expected delivery in October 2014. Execution of the definitive agreement relating to this facility is scheduled on or before September 30, 2014. The facility is expected to be drawn with the delivery of the vessel and will be repaid in 20 equal, consecutive, quarterly principal payments of $537.5 each with the first becoming due and payable three months from the drawdown date together with a balloon installment of $21,750 payable simultaneously with the 20th installment. The BNP Facility will bear interest at LIBOR plus a margin of 2.50% per annum. It will be secured

F-25

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

by a first priority mortgage over the financed vessel and general and specific assignments and will be guaranteed by the Company. The definitive agreement of the BNP Facility will contain negative and financial covenants customary for facilities of this type.

On August 4, 2014, pursuant to a termination agreement between the Company and Mr. Spyros Capralos, former Chief Executive Officer and current Non-Executive Chairman, dated July 31, 2014, the Company made a severance payment of 168,842 common shares and €644,000 of cash to Mr. Capralos.

In August 2014, the Company entered into definitive agreements with Excel Maritime Carriers Ltd. (“Excel”), pursuant to which the Company will acquire 34 dry bulk carrier vessels, consisting of six Capesize vessels, 14 sistership Kamsarmax vessels, 12 Panamax vessels and two Handymax vessels (collectively, the “Excel Vessels”) for an aggregate of 29,917,312 common shares (the “Excel Vessel Share Consideration”) and $288,391 in cash. The Excel Vessels will be transferred to the Company in a series of closings, on a vessel-by-vessel basis, in general upon reaching port after their current voyages and cargoes are discharged. In the case of three Excel Vessels (Christine (tbn Star Martha), Sandra (tbn Star Pauline) and Lowlands Beilun (tbn Star Despoina)) which are being transferred subject to existing charters, the Company will receive the outstanding equity interests of the vessel-owning subsidiaries that own those Excel Vessels (although no liabilities and other assets of such vessel-owning subsidiaries will be transferred). The Company expects to complete all of the Excel Vessel closings by the end of 2014.

Entities affiliated with Oaktree (the “Oaktree Excel Investors”) and entities affiliated with Angelo, Gordon & Co. (the “Angelo, Gordon Excel Investors”) are holders of 48.1% and 24.3%, respectively, of the outstanding equity of Excel. The Excel Transactions were approved by the disinterested members of the Company’s board of directors, based upon the recommendation of a transaction committee of disinterested directors, which considered the Excel Transactions on the Company’s behalf in coordination with the Company’s management team. The total consideration was determined based on the average of three vessel appraisals by independent vessel appraisers.

At the transfer of each Excel Vessel, the Company will pay the cash and share consideration for such Excel Vessel to Excel. The Company expects to use cash on hand, together with borrowings under a new $231,000 secured bridge loan facility (the “Excel Vessel Bridge Facility”) extended to the Company by entities affiliated with Oaktree and entities affiliated with Angelo, Gordon & Co. to fund the cash consideration for the Excel Vessels. Excel will use the cash consideration to cause an amount of outstanding indebtedness under its senior secured credit agreement to be repaid, such that all liens and obligations with respect to the transferred Excel Vessels (or vessel-owning subsidiary) are released upon the transfer to the Company. The Company has been informed that Excel expects to distribute the Excel Vessel Share Consideration to its equity holders, including the Oaktree Excel Investors and the Angelo, Gordon Excel Investors.

The Company refers to the foregoing transactions relating to the acquisition of the Excel Vessels as the “Excel Transactions”, and the Company refers to the Excel Transactions and the July 2014 Transactions as the “Transactions”.

A total of 54,104,200 of the Company’s common shares were issued to the various selling parties in the July 2014 Transactions, of which 45,460,324 shares were issued to Oaktree, and 8,643,876 shares were issued to the owners of the Pappas Companies and Millennia Holding. After the July 2014 Transactions, Oaktree was the beneficial owner of approximately 61.3% of the Company’s outstanding common shares, and the Pappas Shareholders were the beneficial owners of approximately 12.6% of the Company’s outstanding common shares.

Giving effect to the completion of the Excel Transactions (which we expect to occur by the end of 2014), and assuming the full distribution of the Excel Vessel Share Consideration to Excel’s equity holders, Oaktree will beneficially own 57.3% of the Company’s outstanding common shares, and the Angelo Gordon Investors will beneficially own 7.8% of the Company’s outstanding common shares. As a result of the issuance of the Excel Vessel Share Consideration, the Pappas Shareholders will beneficially own 9.3% of the Company’s outstanding common shares.

F-26

STAR BULK CARRIERS CORP.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For the six month periods ended June 30, 2013 and 2014

(Expressed in thousands of U.S. dollars except for share and per share data, unless otherwise stated)

Under the Oaktree Shareholders Agreement, with certain limited exceptions, Oaktree effectively cannot vote more than 33% of the Company’s outstanding common shares (subject to adjustment under certain circumstances), and the Pappas Shareholders are subject to a similar limitation under the Pappas Shareholders Agreement of 15% (subject to adjustment under certain circumstances). For more information regarding these voting limitations, see Exhibit 99.3 to this Report on Form 6-K.

As of September 5, 2014, five Excel Vessels had been delivered to the Company in exchange for 3,548,372 common shares and 3,678 of cash. As of the same date, there was $29,240 of outstanding borrowings under the Excel Vessel Bridge Facility.

On September 5, 2014, Oceanbulk Shipping, which is now a subsidiary of the Company as a result of the July 2014 Transactions, entered into a term sheet with ABY Group Holdings Limited (“ABY Group”) and Heron. The term sheet provides for the conversion of the existing convertible notes (the “Convertible Notes”) issued by Heron to Oceanbulk Shipping into 50% of the equity of Heron (with the remaining 50% of Heron’s equity to be held by ABY Group). Among other things, the term sheet contains customary governance provisions and provisions relating to the liquidation of Heron following the conversion of the Convertible Notes. Under the term sheet, as soon as practicable, Oceanbulk Shipping will receive as a distribution the ABYO Gwyneth and the ABYO Angelina (two Kamsarmax vessels of 82,790 dwt and 82,987 dwt, respectively), and ABY Group will receive as a distribution the ABYO Audrey (a Capesize vessel of 175,125 dwt) and the ABYO Oprah (a Kamsarmax vessel of 82,551 dwt). Subject to the lender’s approval, the remaining amount of debt under Heron’s existing credit facility (the “CiT Facility”), will be assigned to each equity holder based on the amount of the CiT Facility corresponding to the vessels being distributed to such equity holder. The conversion of the Convertible Notes is expected to occur during September 2014, as soon as all customary conditions precedent are satisfied.

As further discussed in the notes to the Company’s unaudited condensed combined pro forma financial statements contained in Exhibit 99.2 to this Report on Form 6-K, pursuant to the agreement governing the Merger, the Company expects the Sellers will remain as the ultimate beneficial owners of Heron until Heron is dissolved. In addition, upon the distribution of the Heron Vessels to its equity holders, the Company will be required to pay $25,000 in cash in respect of the debt secured by the Heron Vessels and instruct the escrow agent to release the 2,115,706 common shares held in escrow in order to acquire the two vessels distributed to Oceanbulk Shipping. The Company expects that the transfer of the two Heron Vessels will be completed within the second half of 2014.

F-27

Exhibit 99.2

STAR BULK CARRIERS CORP.

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL STATEMENTS

On July 11, 2014, pursuant to an Agreement and Plan of Merger, dated as of June 16, 2014 (as amended from time to time, the “Merger Agreement”), Star Bulk Carriers Corp. (“Star Bulk”) completed a transaction that resulted in a merger of two of its subsidiaries with Oceanbulk Shipping LLC (“Oceanbulk Shipping”) and Oceanbulk Carriers LLC (“Oceanbulk Carriers” and, together with Oceanbulk Shipping, “Oceanbulk”) (the “Merger”). Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding dry bulk vessels fuel-efficient Eco-type vessels (one of which, Peloreus was delivered on July 22, 2014) at shipyards in Japan and China. The consideration paid by Star Bulk in the Merger was 48,395,765 common shares.

The agreement governing the Merger also provides for the acquisition (the “Heron Transaction”) of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta. Star Bulk issued 2,115,706 of its common shares into escrow as consideration for the Heron Vessels. The common shares will be released from escrow to the sellers under the Merger Agreement at the time Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to Star Bulk, and Star Bulk expects to pay $25.0 million in cash (for which it may seek financing).

In addition, concurrently with the Merger, Star Bulk completed a transaction (the “Pappas Transaction”), in which it acquired all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively, the “Pappas Companies”), which are entities owned and controlled by affiliates of the family of Mr. Pappas (the “Pappas Shareholders”). The Pappas Companies owned and operated a dry bulk carrier vessel (Tsu Ebisu) and had a contract for the construction of a newbuilding dry bulk carrier vessel, HN 5016 (tbn Indomitable). The consideration paid by Star Bulk in the Pappas Transaction was 3,592,728 common shares.

The accompanying unaudited pro forma condensed combined financial statements of Star Bulk reflect:

•

the Merger; and

•

the Pappas Transaction.

In addition, the unaudited pro forma condensed combined balance sheet gives effect to changes in stockholders equity, debt issued and vessel acquisitions of Star Bulk, the Oceanbulk Companies and the Pappas Companies and the purchase of the two Heron Vessels, subsequent to June 30, 2014, as if such transactions occurred on June 30, 2014, all of which are discussed in Note 2a and Note 2i. We refer to all of the foregoing transactions as the “Pro Forma Transactions.”

The Merger and the Pappas Transaction have been reflected in the unaudited pro forma condensed combined financial information as purchases of businesses pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 805, “Business Combinations” (“ASC Topic 805”). In addition, Star Bulk will purchase two vessels from the Heron (the “Heron Transaction”). The Heron Transaction has been reflected in the Pro Forma Adjustments in the unaudited pro forma condensed combined financial information as a purchase of assets.

The accompanying unaudited pro forma condensed combined financial statements of Star Bulk do not reflect the acquisition of vessels (the “Excel Vessels”) from Excel Maritime Carriers Ltd. (“Excel”) pursuant to a vessel purchase agreement entered into on August 19, 2014. The Excel Vessels will be transferred to Star Bulk from Excel in separate closings that are expected to occur through the end of 2014. The financial statements of Star Bulk will reflect each Excel Vessel as a purchase of asset and therefore the operations of such Excel Vessel will be reflected in our financial statements from the date it is transferred to Star Bulk.

The unaudited pro forma condensed combined balance sheet as of June 30, 2014 is presented in thousands of U.S. dollars and gives effect to the Merger, the Pappas Transaction and the Heron Transaction as if such transactions were consummated on June 30, 2014. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2013, and six months ended June 30, 2014, are presented in thousands of U.S. dollars and give effect to the Merger and the Pappas Transaction as if such transactions closed on January 1, 2013.

These unaudited pro forma condensed combined financial statements are being presented for illustrative purposes only and, therefore, are not necessarily indicative of the financial position or results of operations that might have been achieved had the Pro Forma Transactions actually occurred on June 30, 2014 and January 1, 2013, respectively. They are not necessarily indicative of the results of operations or financial position of Star Bulk that may, or may not be expected to occur in the future. The unaudited pro forma condensed combined financial statements do not reflect any special items such as payments pursuant to change-of-control provisions or restructuring and integration costs that may be incurred as a result of the Pro Forma Transactions.

The following unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with Star Bulk’s audited consolidated financial statements and the related notes included in Star Bulk’s Annual Report on Form 20-F for the year ended December 31, 2013, filed with the SEC on March 21, 2014, Star Bulk’s unaudited interim condensed consolidated financial statements for the six months ended June 30, 2014 (contained in Exhibit 99.1 to this Report on Form 6-K) and in conjunction with Oceanbulk’s audited and unaudited combined financial statements and the related notes included in this Exhibit 99.2.

The cost of the acquisition of the Oceanbulk Companies and the Pappas Companies has been allocated to the estimated fair values of the identifiable assets and liabilities of the Oceanbulk Companies and the Pappas Companies pursuant to the acquisition method of accounting prescribed by ASC Topic 805, and is based on preliminary estimates of such respective fair values. Therefore, the cost of the business combination and the cost of the Heron Transaction are based on the average closing market price of Star Bulk’s common shares, as determined over a period of two trading days before and two trading days after, and inclusive, of July 11, 2014, (the “Market Price Per Common Share”). Accordingly, the purchase price allocation and resulting pro forma adjustments have been made solely for the purpose of preparing the unaudited pro forma condensed combined financial statements for this Exhibit 99.2. As a consequence, the purchase price allocation is preliminary and subject to revision based on the finalization of the balance sheets of Oceanbulk and the Pappas Companies as of July 11, 2014.

STAR BULK CARRIERS CORP

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 2014


	As of June 30, 2014
	Star Bulk		Oceanbulk		Pappas Companies		Total Adjustments				Pro Forma
	(in thousands of U.S. Dollars, except for share and per share data)
										Note
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	39,420	$	89,793	$	849	$	(9,000	)	2b	$	121,062
Restricted cash, current		2,442		191		—		—				2,633
Trade accounts receivable		4,211		5,184		827		—				10,222
Inventories		5,227		5,468		182		—				10,877
Due from managers		81		—		—		—				81
Due from related parties		1,953		29		—		(372	)	2c		1,610
Prepaid expenses and other receivables		3,061		1,239		81		—				4,381
Deferred finance charges, net, current		—		712		42		(754	)	2b		—


Total Current Assets		56,395		102,616		1,981		(10,126	)			150,866


FIXED ASSETS
Advances for vessels under construction and acquisition of vessels		81,794		142,705		14,854		183,603		2i		422,956
Vessels and other fixed assets, net		377,302		315,977		31,038		78,985		2j		803,302


Total Fixed Assets		459,096		458,682		45,892		262,588				1,226,258


OTHER NON-CURRENT ASSETS
Long term Investment		529		—		—		—				529
Convertible loan receivable		—		23,680		—		(23,680	)	2h		—
Deferred finance charges, net		1,744		2,104		126		(2,230	)	2b		1,744
Restricted cash, non-current		13,370		6,000		—		—				19,370
Fair value of above market acquired time charter		4,829		—		—		1,967		2d		6,796


TOTAL ASSETS	$	535,963		593,082		47,999		228,519				1,405,563


LIABILITIES & STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long term debt		29,250		17,451		1,400		—				48,101
Accounts payable		8,698		5,783		276		(2,034	)			12,723
Due to related parties		1,476		372		529		(372	)			2,005
Accrued liabilities		5,591		3,203		391		(1,713	)			7,472
Deferred revenue		804		1,120		97		—				2,021
Derivative financial liability		642		3,191		—		(155	)	2a		3,678


Total Current Liabilities		45,461		31,120		2,693		(4,274	)			76,000


NON-CURRENT LIABILITIES
Long term debt		224,632		170,786		18,600		—		2b		414,018
Derivative liability		86		2,835		—		(143	)	2a		2,778
Other non-current liabilities		317		—		—		—				317


TOTAL LIABILITIES		271,496		204,741		21,293		(4,417	)			493,113


	As of June 30, 2014
	Star Bulk			Oceanbulk			Pappas Companies			Total Adjustments				Pro Forma
	(in thousands of U.S. Dollars, except for share and per share data)
													Note

STOCKHOLDERS’ EQUITY
Preferred Stock;		—			—			—			—				—
Common Stock,		295			—			—			541				836
Members’ Capital		—			415,037			—			(415,037	)			—
Additional paid in capital		670,446			—			27,120			613,690				1,311,256
Accumulated Other Comprehensive income (loss)		—			(3,454	)		—			3,454				—
Accumulated deficit		(406,274	)		(23,242	)		(414	)		30,288				(399,642	)


Total Stockholders’ Equity		264,467			388,341			26,706			232,936		2b		912,450


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	535,963		$	593,082		$	47,999		$	228,519			$	1,405,563

STAR BULK CARRIERS CORP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2014


	Six Months Ended June 30, 2014
	Star Bulk			Oceanbulk			Pappas Companies			Total Adjustments				Pro forma
	(in thousands of U.S. Dollars, except for share and per share data)
													Note				Note
Revenues:

Voyage revenues	$	43,064		$	29,713		$	692		$	(583	)	2d	$	72,886
Management fee income		1,861			—			—			(1,299	)	2e		562

		44,925			29,713			692			(1,882	)			73,448

Expenses
Voyage expenses		7,721			10,490			(13	)		—				18,198
Vessel operating expenses		16,062			11,260			628			—				27,950
Dry docking expenses		1,264			914			—			—				2,178
Depreciation		9,777			5,235			202			2,295		2f		17,509
General and administrative expenses		10,215			5,808			18			(3,747	)			12,294
Management fees		—			1,353			—			(1,299	)	2e		54
Loss on bad debt		215			—			—			—				215
Other operational loss		94			—			—			—				94
Other operational gain		(407	)		—			—			—				(407	)


Operating income		(16	)		(5,347	)		(143	)		869				(4,637	)


Other Income / (Expenses):
Interest and finance costs		(3,057	)		(2,383	)		(228	)		—				(5,668	)
Interest on Members Loans					(1,816	)					1,816		2g		—
Loss on derivative financial instruments, net		(819	)		(1,149	)		—			—				(1,968	)
Interest and other income		21			(19	)		—			—				2


Total other expenses, net		(3,855	)		(5,367	)		(228	)		1,816				(7,634	)


Income/ (Loss) Before Equity in Income of Investee		(3,871	)		(10,714	)		(371	)		2,685				(12,271	)
Equity in income of investee		1			—			—			—				1


Net Income / (loss)	$	(3,870	)	$	(10,714	)	$	(371	)	$	2,685				(12,270	)


Earnings / (loss) per share, basic	$	(0.13	)	$	—		$	—		$	—			$	(0.15	)


Earnings / (loss) per share, diluted	$	(0.13	)	$	—		$	—		$	—			$	(0.15	)


Weighted average number of shares outstanding, basic		28,973,621			—			—			—				83,077,821		2k


Weighted average number of shares outstanding, diluted		28,973,621			—			—			—				83,077,821		2k

STAR BULK CARRIERS CORP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2013


	Year Ended December 31, 2013
	Star Bulk			Oceanbulk			Pappas Companies			Total Adjustments				Pro Forma
	(in thousands of U.S. Dollars, except for share and per share data)
													Note				Note
Revenues:
Voyage revenues	$	68,296		$	14,021		$	—		$	(1,165	)	2d	$	81,152
Management fee income		1,598			—			—			(660	)	2e		938

		69,894			14,021			—			(1,825	)			82,090

Expenses
Voyage expenses		7,549			4,017			—			—				11,566
Vessel operating expenses		27,087			6,142			—			—				33,229
Dry docking expenses		3,519			3,248			—			—				6,767
Depreciation		16,061			2,656			—			1,537		2f		20,254
General and administrative expenses		9,910			4,097			14			—				14,021
Management fees		—			660						(660	)	2e		—
Loss on sale of vessel		87			—			—			—				87
Other operational loss		1,125			—			—			—				1,125
Other operational gain		(3,787	)		—			—			—				(3,787	)


Operating income		8,343			(6,799	)		(14	)		(2,702	)			(1,172	)


Other Income / (Expenses):
Interest and finance costs		(6,814	)		(786	)		(30	)		—				(7,630	)
Interest on Members Loans		—			(1,412	)		—			1,412		2g		—
Loss on derivative financial instruments, net		91			(1,423	)		—			—				(1,332	)
Interest and other income		230			5			—			—				235


Total other expenses, net		(6,493	)		(3,616	)		(30	)		1,412				(8,727	)


Income/ (Loss) Before Equity in Income of Investee		1,850			(10,415	)		(44	)		(1,290	)			(9,899	)
Equity in income of investee		—			—			—			—				—


Net Income / (loss)	$	1,850		$	(10,415	)	$	(44	)	$	(1,290	)		$	(9,899	)

Preferential Deemed Dividend		—			(705	)		—			—				(705	)

Net Income / (loss) available to Members	$	1,850		$	(11,120	)	$	(44	)	$	(1,290	)		$	(10,604	)

Earnings / (loss) per share, basic	$	0.13			—			—			—			$	(0.15	)

Earnings / (loss) per share, diluted	$	0.13			—			—			—			$	(0.15	)

Weighted average number of shares outstanding, basic		14,051,344			—			—			—				68,155,544		2k


Weighted average number of shares outstanding, diluted		14,116,389			—			—			—				68,155,544		2k

Note 1—Basis of presentation:

Assumptions

The unaudited pro forma condensed combined balance sheet as of June 30, 2014, is presented in thousands of U.S. dollars and gives effect to the Merger, the Pappas Transaction and the Heron Transaction as if such transactions were consummated on June 30, 2014. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2013 and six months ended June 30, 2014, are presented in thousands of U.S. dollars and give effect to the Merger and the Pappas Transaction as if such transactions closed on January 1, 2013. All of the pro forma adjustments, including those related to the Heron Transaction, made to the unaudited pro forma condensed combined balance sheet and the unaudited pro forma condensed combined statements of income are discussed in Note 2, below.

With respect to the pro forma adjustments related to the unaudited pro forma condensed combined statements of income, only adjustments that are expected to have a continuing effect on the combined financial statements are taken into consideration. For example, the unaudited pro forma condensed combined financial statements do not reflect any restructuring expenses, payments pursuant to change-of-control provisions or integration costs that may be incurred as a result of the Merger.

Only adjustments that are factually supportable and that can be estimated reliably are taken into consideration. For example, the unaudited pro forma condensed combined financial statements do not reflect any cost savings potentially realizable from the elimination of certain expenses or from potential synergies, if any.

The cost of the acquisition of the Oceanbulk and the Pappas Companies has been allocated to the estimated fair values of the identifiable assets and liabilities of Oceanbulk and the Pappas Companies pursuant to the acquisition method of accounting prescribed by ASC Topic 805, and is based on preliminary estimates of such respective fair values. Therefore, the cost of the business combination and the cost of the Heron Transaction are based on the average closing market price of Star Bulk’s common shares, as determined over a period of two trading days before and two trading days after, and inclusive, of July 11, 2014, (the “Market Price Per Common Share”). Accordingly, the purchase price allocation and resulting pro forma adjustments have been made solely for the purpose of preparing the unaudited pro forma condensed combined financial statements for this Exhibit 99.2 to the Form 6-K. As a consequence, the purchase price allocation is preliminary and subject to revision based on the finalization of the balance sheets of Oceanbulk and the Pappas Companies as of July 11, 2014.

Note 2—Pro forma adjustments related to the Merger Agreement and Pappas Agreement:

Preliminary Purchase Price Allocation

Upon the completion of the Merger and the Pappas Transaction, all of the outstanding membership interests of Oceanbulk and all of the membership interests of the Pappas Companies were automatically converted into the right to receive an aggregate of 48,395,766 and 3,592,728, respectively, common shares of Star Bulk, which Star Bulk issued following the completion of the Merger. In addition, at the closing of the Merger, the Company issued and deposited into escrow an aggregate of 2,115,706 common shares, representing a portion of consideration for the acquisition of the two Heron Vessels. The shares issued for the two Heron Vessels were issued into escrow and will be released as described in “the Merger Agreement”, which is contained in Exhibit 99.3 to this Report on Form 6-K.

In accordance with ASC Topic 805, the cost of the acquisition has been allocated to the estimated fair value of the identifiable assets of Oceanbulk and the Pappas Companies pursuant to the acquisition method under ASC Topic 805 “Business Combinations” and is based on preliminary estimates of their respective fair values. The fair value of the share consideration is based on the Market Price Per Common Share of $11.854.


	Oceanbulk Companies			Pappas Entities			Total
	(in thousands of U.S. Dollars)
Preliminary Purchase Consideration
Amount to be paid in Star Bulk common shares	$	573,683		$	42,588		$	616,271		(i)
Total Preliminary Purchase Consideration		573,683			42,588			616,271

Less: Net Assets as of June 30, 2014 adjusted as follows:
Net Assets as of June 30, 2014	$	388,341		$	26,706		$	415,047
Adjustment to write-off of Oceanbulk Companies’ Convertible loan receivable from Heron (Note 2h)		(23,680	)		—			(23,680	)	(ii)

Adjusted Net Assets		364,661			26,706			391,367


		209,022			15,882			224,904


Allocation of Purchase Consideration to reflect estimated Fair Value
Advances for vessels under construction	$	148,723		$	9,800		$	158,523		(iii)
Vessels		76,273			2,712			78,985		(iii)

Fair value of above market acquired time charter		1,967			—			1,967		Note 2d
Write-off of deferred finance fees		(2,816	)		(168	)		(2,984	)	(v)
Interest Rate Swap as of July 11, 2014		298			—			298		(iv)

	$	224,445		$	12,344		$	236,789


Fair Value of Net Assets		589,106			39,050			628,156


Preliminary Estimated Goodwill/(Gain from Bargain Purchase)	$	(15,423	)	$	3,538		$	(11,885	)

(i)	The total amount to be paid in Star Bulk’s common shares is calculated based on the number of shares to be issued in the Pro Forma Transactions, as stated above, and the Market Price Per Common Share of $11.854.

(ii)	This amount represents the adjustment of a convertible loan receivable provided to Heron by Oceanbulk, since the total purchase consideration for the Oceanbulk Companies does not include this convertible loan receivable (See Note 2h).

(iii)

The amount indicates the estimated fair value of the vessels and newbuilding contracts of the Oceanbulk Companies and the Pappas Companies as quoted by independent vessel appraisers as of June 23, 2014, which, according to a third party appraiser and based on then current market trends would not be materially different from the values on July 11, 2014.

(iv)	The amount represents the market value of the Oceanbulk Companies’ interest rate swap agreement as of July 11, 2014.

(v)	Deferred financing fees relating to existing loan agreements were written off as part of the purchase price allocation.

Based on the aforementioned assumptions and adjustments and the preliminary allocation of the purchase price, the Company estimates that the Pro Forma Transactions will result in a gain from bargain purchase of $11,885. This gain from bargain purchase is based on the excess of the estimated fair value of the net assets acquired of $628,156 in the Pro Forma Transactions over the aggregate purchase consideration of $616,271. The gain from bargain purchase is primarily attributable to the estimations made under the Merger Agreement and agreement governing the Pappas Transaction of the value of the assets included in those agreements and the subsequent stability or slightly declined market value of dry bulk vessels since the signing of the agreements. This relative stability of the market for dry bulk vessels along with the simultaneous decline in stock prices for most U.S. listed shipping companies, including Star Bulk, which have decreased by a greater amount than their net asset values, has resulted in the gain from bargain purchase of $11,885.

Cash, Deferred Finance Charges, Long-Term Debt, Members’ loan and Stockholders Equity


	DR/ (CR)
							Long Term Debt
	Cash and cash equivalents			Deferred finance charges, net			Current portion			Long term			Stockholders’ equity
	(in thousands of U.S. dollars)
As per Star Bulk unaudited balance sheet as of June 30, 2014	$	39,420		$	1,744		$	(29,250	)	$	(224,632	)	$	(264,467	)
As per Oceanbulk Companies unaudited balance sheet as of June 30, 2014		89,793			2,816			(17,451	)		(170,786	)		(388,341	)
As per Pappas Companies unaudited balance sheet as of June 30, 2014		849			168			(1,400	)		(18,600	)		(26,706	)

Pro forma adjustments:
Estimated transaction costs		(9,000	)		—			—			—			9,000
Reversal of historically recognized transaction costs														(3,747	)
Write-off of deferred financing fees as part of the purchase price allocation exercise		—			(2,984	)		—			—			—
Reflect the consideration to be settled in Star Bulk’s common shares which will be held in escrow for Heron Vessels⁽¹⁾		—			—			—			—			(25,080	)
Reflect the consideration to be settled in Star Bulk’s common shares for the acquisition of Oceanbulk and Pappas Companies⁽²⁾		—			—			—			—			(616,271	)
Reversal of Oceanbulk Companies net assets as of June 30, 2014		—			—			—			—			388,341
Reversal of Pappas Companies net assets as of June 30, 2014		—			—			—			—			26,706
Gain from bargain purchase		—			—			—			—			(11,885	)

	$	(9,000	)	$	(2,984	)	$	0		$	0		$	(232,936	)

Unaudited pro forma amounts as of June 30, 2014	$	121,062		$	1,744		$	(48,101	)	$	(414,018	)	$	(912,450	)

(1)	This amount is calculated based on the 2,115,706 Star Bulk common shares issued at the Market Price Per Common Share of $11.854, for the acquisition of the Heron Vessels. Such common shares were deposited into escrow. Refer to Note 2h below.

(2)	This amount is calculated based on the 51,988,494 Star Bulk common shares issued at the Market Price Per Common Share of $11.854, for the acquisition of Oceanbulk and the Pappas Companies.

Due from related parties / Due to related parties

All intercompany balances arising from the management of Oceanbulk vessels from Star Bulk are eliminated.

Fair value of above market acquired time charters

The amount relates to assets arising from the fair value of Oceanbulk’s long term time charter contracts (“Charters Assumed”) at above market terms to be assumed by Star Bulk upon consummation of the Transactions. Fair value is determined by reference to market data. The preliminary estimated amounts reflected as an asset in the unaudited pro forma condensed combined balance sheet are based on the difference between the current fair value of charters with similar characteristics as the Charters Assumed and the net present value of future contractual cash flows from the Charters Assumed. The respective assets are amortized as a reduction of revenue over the period of the charters assumed. The remaining useful life of the Charters Assumed is two years. This reduction for the twelve months ended December 31, 2013, and six months ended June 30, 2014, was $1,165 and $583, respectively.

Management fee income/ Management fee

All intercompany revenues and expenses arising from Star Bulk’s management of Oceanbulk’s vessels are eliminated.

Depreciation

To record increased depreciation of vessels based on the preliminary fair values assigned to the vessels using Star Bulk’s estimated useful life of 25 years and net of adjustment of scrap value price of $200 per ton in line with Star Bulk’s accounting policy.

Interest on Members’ Loans

Interest expense with respect to the Members’ Loans is eliminated as a result of the conversion of the Members’ Loans into equity as if it had occurred on January 1, 2013.

Convertible loan receivable and acquisition of Heron Vessels

Reflects the assumption by Star Bulk (through its acquisition of Oceanbulk) of an outstanding loan receivable that is convertible into 50% of the equity interests of Heron. Pursuant to the Merger Agreement, Star Bulk issued 2,115,706 of its common shares into escrow. The escrowed common shares will be released to the Sellers at the time Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to Star Bulk, and Star Bulk expects to pay $25,000 in cash (for which it may seek financing) in respect of debt that is currently secured by the Heron Vessels. The completion of this transaction will ultimately result in a decrease in the convertible loan receivable and an increase in vessels and other fixed assets, net. Based on the provisions of the Merger Agreement, Star Bulk expects that the transfer of the two Heron Vessels will be completed within the second half of 2014, with the following key milestones occurring after the closing of the Merger:

•

Star Bulk will exercise its option to convert the convertible loan into a 50% equity interest in Heron, and the Oceanbulk Sellers will remain as ultimate beneficial owners of Heron, until Heron is dissolved.

•

The two Heron Vessels will be distributed to Star Bulk from Heron. Upon such distribution, Star Bulk will instruct the escrow agent to release the 2,115,706 common shares held in Escrow and to disburse $25,000 in cash to the former owners of Oceanbulk. Star Bulk expects that the $25,000 cash payment will be financed by a debt facility.

•

Giving effect to all of the above transactions by the end of the second half of 2014, Star Bulk will have acquired:

The two Heron Vessels in exchange for 2,115,706 common shares and $25,000 in cash; and

50% of the equity capital of Heron. This investment is estimated to have zero value for Starbulk since the $5,000 in cash that will be retained by Heron will be used to satisfy future liabilities. Heron will have no vessels or other operating expenses.

•

Heron will be liquidated, and any remaining cash will be distributed to Star Bulk and further transferred to the former owners of Oceanbulk as per the Merger Agreement.

Based on the above expected sequence of events, Star Bulk assessed that after the completion of the aforementioned events and prior to the final liquidation of Heron, the accounting effect on its financial position will be:

•

Star Bulk will have acquired the two Heron Vessels for a total consideration of 2,115,706 common shares and $25,000 in cash;

•

Under the Merger Agreement, Star Bulk has agreed to incur new debt of $25,000 to finance the $25,000 cash payment in respect of the two Heron Vessels; and

•

Star Bulk will also own the 50% of the equity capital of Heron, and per the provisions of the Merger Agreement, any cash left after the final liquidation of Heron will be transferred to the former owners of Oceanbulk, and Star Bulk will have no economic benefit from the Heron liquidation process.

Consequently for the purposes of preparation of these unaudited pro forma condensed combined financial statements and the allocation of the purchase price in the Pro Forma Transactions, Star Bulk has elected to make the following pro forma adjustments to reflect:

•

the acquisition by Star Bulk of the two Heron Vessels; and

•

the conversion of the $23,680 outstanding convertible loan into a 50% equity interest in Heron, for which based on the sequence of events stated above Star Bulk estimates has a fair value equal to $0, as no economic benefit will be provided to Star Bulk from the process described above.

Advances for vessels under construction and acquisition of vessels

The pro forma adjustments to Advances for vessels under construction and acquisition of vessels are as follows:


Pro forma adjustment to reflect fair values of Advances for vessels under construction	$	158,523	Note 2a
Advances for Heron Vessels paid in common shares held in escrow		25,080	Note 2a

	$	183,603

Vessels and other fixed assets, net

Reflects the write-up of the carrying values of the vessels acquired to their respective fair market values. See Note 2a.

Pro forma weighted average number of shares outstanding, basic and diluted

Pro forma weighted average number of shares outstanding, basic and diluted for the six months ended June 30, 2014 and for the year ended December 31, 2013, includes (i) 51,988,494 Star Bulk common shares to be issued upon the consummation of the Merger and the Pappas Transaction and (ii) 2,115,706 common shares to be issued and will be held in escrow pending the transfer of the Heron Vessels from Heron.

Pro forma weighted average number of shares outstanding, diluted for the year ended December 31, 2013, does not include the dilutive effect of 65,045 non vested issuable under Star Bulk’s equity incentive plan which was included in the historical year ended December 31, 2013, since the pro forma result is net loss and therefore their effect would be anti-dilutive.

SUMMARY HISTORICAL COMBINED FINANCIAL AND OTHER OPERATING DATA OF OCEANBULK

The financial statements that are discussed in this Summary Historical Combined Financial and Other Operating Data of Oceanbulk are the combined results of Oceanbulk Shipping and Oceanbulk Carriers and their wholly owned, consolidated subsidiaries for the periods and as of the dates indicated. The historical results of operations, assets and liabilities of Oceanbulk Shipping and Oceanbulk Carriers have been combined because they were under common control by the members of Oaktree OBC Holdings LLC (the “Oaktree Holdco”) and Millennia Limited Liability Company (the “Pappas Holdco” and, together with the Oaktree Holdco, the “Oceanbulk Holdcos”).

The summary historical combined financial data of Oceanbulk as of and for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012 were derived from the audited historical financial statements of Oceanbulk, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Oceanbulk’s summary historical combined financial data presented below as of and for the six month periods ended June 30, 2014 and 2013 have been prepared on the same basis as its audited combined financial statements. Such data are derived from Oceanbulk’s unaudited interim condensed combined financial statements included in this Exhibit 99.2 and, in the opinion of management, include all adjustments (consisting of only normal, recurring adjustments) necessary for a fair presentation thereof. The historical results of operations, assets and liabilities of Oceanbulk have been combined because they were under common control by the members of the Oceanbulk Holdcos.

Oceanbulk’s historical results are not necessarily indicative of future operating results. The summary combined financial data presented below is qualified in its entirety by reference to, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk” and the historical combined financial statements of Oceanbulk included elsewhere in this Exhibit 99.2.


	Six month period ended June 30, 2014			Six month period ended June 30, 2013			Year ended December 31, 2013			Period from October 4, 2012 through December 31, 2012
	($ in thousands, except per day amounts)
Income Statement Data:
Voyage revenues	$	29,713		$	3,541		$	14,021		$	1,975
Voyage expenses		(10,490	)		(1,706	)		(4,017	)		(1,431	)
Vessel operating expenses		(11,260	)		(1,001	)		(6,142	)		(574	)
Management fees⁽¹⁾		(1,353	)		(136	)		(660	)		(76	)
Depreciation		(5,235	)		(662	)		(2,656	)		(271	)
Dry docking and special survey costs		(914	)		—			(3,248	)		—
General and administrative expenses to related parties⁽²⁾		(2,257	)		(1,963	)		(3,683	)		(860	)
General and administrative expenses		(3,551	)		(2	)		(414	)		(4	)

Operating loss		(5,347	)		(1,929	)		(6,799	)		(1,241	)
Interest on long-term debt		(1,930	)		—			(628	)		—
Amortization of deferred financing fees		(136	)		—			(23	)		—
Other bank and financing charges		(317	)		(7	)		(135	)		—
Interest on Members’ Loans⁽³⁾		(1,816	)		(427	)		(1,412	)		(167	)
Loss on derivative financial instruments		(1,149	)		—			(1,423	)		—
Other, net		(19	)		—			5			—

Net loss	$	(10,714	)	$	(2,363	)	$	(10,415	)	$	(1,408	)


	Six month period ended June 30, 2014			Six month period ended June 30, 2013			Year ended December 31, 2013			Period from October 4, 2012 through December 31, 2012
	($ in thousands, except per day amounts)
Cash Flow Data:
Net Cash used in/provided by Operating activities	$	(1,582	)	$	693		$	(3,895	)	$	(4,352	)
Net Cash used in Investing activities		(224,177	)		(19,400	)		(202,229	)		(62,302	)
Net Cash provided by Financing activities		285,573			19,400			234,955			67,802
Other Data:
Number of vessels at the end of the year		12			1			6			1
Average number of vessels in operation⁽⁴⁾		9.7			1.0			2.4			0.2
Average age of vessels in operation at end of period (years)		5.4			2.0			6.3			1.5
Ownership Days⁽⁵⁾		1,757			181			880			73
Available Days⁽⁶⁾		1,746			181			797			73
Time Charter Equivalent Rate per day⁽⁷⁾	$	11,010		$	10,138		$	12,552		$	7,442
Fleet Utilization⁽⁸⁾		99	%		100	%		91	%		100	%
Operating Expenses per day⁽⁹⁾	$	5,083		$	5,420		$	5,377		$	5,783
Adjusted EBITDA⁽¹⁰⁾	$	2,186		$	(1,267	)	$	(895	)	$	(970	)


	June 30, 2014		December 31, 2013
	($ in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	89,793	$	29,979
Restricted cash		6,191		6,193
Total current assets		102,616		38,002
Advances for vessel acquisition and vessels under construction		142,705		110,189
Vessels, net		315,977		151,994
Total assets		593,082		306,713
Total current liabilities		31,120		15,953
Long-term debt, excluding current portion		170,786		76,688
Members’ Loans		—		226,005
Total Members’ / Stockholders equity	$	388,341	$	(12,528	)

(1)

Management fees include mainly technical management fees that were paid to Starbulk S.A. by Oceanbulk Shipping and Oceanbulk Carriers of $0.7 million and $0.1 million, respectively, in the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, as well as for the six month periods ended June 30, 2014 and 2013 of $1.3 million and $0.1 million, respectively.

(2)

Oceanbulk Maritime S.A., an entity affiliated with the family of Mr. Pappas, has historically provided commercial management and administrative services to Oceanbulk. During the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, $3.7 million and $0.9 million, respectively, as well as for the six month periods ended June 30, 2014 and 2013 of $2.3 million and $2.0 million, respectively, of fees were recorded as General and administrative expenses. In addition $0.1 million and $nil, respectively, relating to the supervision of Oceanbulk’s newbuilding vessels, by Oceanbulk Maritime, during the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012 as well as $0.4 million and $0.1 million, respectively, for the six month periods ended June 30, 2014 and 2013, were capitalized within advances for vessels under construction.

(3)	Represents interest on loans (provided in the form of convertible notes) by the Oceanbulk Holdcos. On May 28, 2014 such loans (together with accrued interest) were converted into membership units of Oceanbulk. Accordingly no further interest on Members’ Loans was recorded following May 28, 2014.

(4)	Represents the average number of vessels that constituted Oceanbulk’s fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of Oceanbulk’s fleet during the period divided by the number of calendar days in the period.

(5)	Ownership Days are the total calendar days each vessel was owned by Oceanbulk for the relevant period. Ownership Days are an indicator of the size of Oceanbulk’s fleet over a period and affect both the amount of revenues and the amount of expenses that Oceanbulk records during a period.

(6)

Available Days are the total number of Oceanbulk’s Ownership Days less the aggregate number of days that Oceanbulk’s vessels were off-hire due to scheduled repairs or repairs under guarantees, vessel upgrades or special surveys and the aggregate amount of time that Oceanbulk spent positioning its vessels for such events. The shipping industry uses Available Days to measure the number of days in a period during which vessels should be capable of generating revenues.

(7)

Time Charter Equivalent Rate per day is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during that period. Under a time charter, the charterer pays substantially all of the vessel voyage-related expenses. However, Oceanbulk may incur voyage-related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable U.S. GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and assists Oceanbulk’s management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Oceanbulk’s calculation of TCE rates may not be comparable to that reported by other companies. The following table reflects the calculation of Oceanbulk’s TCE rates for the periods indicated (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars and Available Days):


	Six month period ended June 30, 2014			Six month period ended June 30, 2013			Year ended December 31, 2013			Period from October 4, 2012 through December 31, 2012
Voyage Revenues	$	29,713		$	3,541		$	14,021		$	1,975
Voyage Expenses		(10,490	)		(1,706	)		(4,017	)		(1,431	)

Time charter equivalent revenues	$	19,223		$	1,835		$	10,004		$	544

Total Available Days		1,746			181			797			73
Time charter equivalent rate per day	$	11,010		$	10,138		$	12,552		$	7,442

(8)

Fleet Utilization (which reflects off-hire days during which vessels are unavailable due to scheduled maintenance and dry docking) is the percentage of time that Oceanbulk’s vessels were available for revenue generation, and is determined by dividing Available Days by fleet Ownership Days during that period. The shipping industry uses Fleet Utilization to measure a company’s efficiency in finding employment for its vessels.

(9)

Operating Expenses include crew costs, provisions, deck and engine stores, lubricating oil, insurance, and maintenance and repairs, and are calculated by dividing vessel operating expenses, excluding any one-off expenses incurred in the period of the vessel’s delivery, by fleet Ownership Days for the relevant time period.

(10)

EBITDA is a non-GAAP performance measure that is calculated by adding depreciation and amortization expense, interest and taxes to net income (loss). Adjusted EBITDA is calculated by further adjusting EBITDA to exclude dry docking and special survey costs (for comparability purposes, as a number of Oceanbulk’s peers use the deferral method of accounting for such costs, which records them as amortization expense for the respective period), other bank and financing charges, expenses relating to the merger with Star Bulk Carriers Corp. and the effects of various items that in Oceanbulk’s management’s opinion do not directly reflect the ordinary-course of operations of Oceanbulk’s, such as gain (loss) on derivative financial instruments and other income (expense). Oceanbulk expects in the future that it may further adjust EBITDA to eliminate the effects of other such items, including non-cash compensation expense.

Oceanbulk believes that Adjusted EBITDA assists its management and investors by providing useful information that increases the comparability of its operating performance from period to period and against the operating performance of other companies in its industry that provide EBITDA-based information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, depreciation and amortization and taxes, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income/loss between periods. In addition, Oceanbulk presents Adjusted EBITDA as a supplemental measure of its performance because Oceanbulk believes it represents a meaningful presentation of the financial performance of its core operations, without the impact of the various items excluded, in order to provide period-to-period comparisons that are more consistent and more easily understood. Oceanbulk believes that including Adjusted EBITDA as a measure of operating performance may help investors in (a) selecting between investing in Oceanbulk and other investment alternatives and (b) monitoring Oceanbulk’s ongoing financial and operational strength in assessing whether to continue to hold interests in Oceanbulk.

EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP. Oceanbulk’s EBITDA-based measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of Oceanbulk’s results as reported under U.S. GAAP. Some of these limitations are:

•

they do not reflect every expenditure, future requirements for capital expenditures or contractual commitments;

•

they do not reflect the significant interest expense or the amounts necessary to service interest or principal payments on Oceanbulk’s debt;

•

they do not reflect income tax expense, and because the payment of taxes is part of Oceanbulk’s operations, tax expense is a necessary element of Oceanbulk’s costs and ability to operate;

•

although depreciation and amortization are eliminated in the calculation of EBITDA-based measures, the assets being depreciated and amortized will often have to be replaced or will require improvements in the future, and Oceanbulk’s EBITDA-based measures do not reflect any costs of such replacements or improvements;

•

they do not reflect the impact of earnings or charges resulting from matters Oceanbulk considers not to be indicative of its ongoing operations; and

•

other companies in Oceanbulk’s industry may calculate these measures differently from the way it does, limiting their usefulness as comparative measures.

Oceanbulk compensates for these limitations by using its EBITDA-based measures along with other comparative tools, together with U.S. GAAP measures, to assist in the evaluation of operating performance. Such U.S. GAAP measures include operating income/loss, net income/loss, cash flows from operations and other cash flow data. Oceanbulk has significant uses of cash, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in its EBITDA-based measures.

Oceanbulk’s EBITDA-based measures are not measures of financial performance under U.S. GAAP and are not intended as alternatives to net income/loss as indicators of its operating performance or as alternatives to any other measure of performance in conformity with U.S. GAAP.

The following table reconciles EBITDA and Adjusted EBITDA to Oceanbulk’s net loss, the most directly comparable U.S. GAAP measure, for the periods presented:


	Six month period ended June 30, 2014			Six month period ended June 30, 2013			Year ended December 31, 2013			Period from October 4, 2012 through December 31, 2012
Net loss	$	(10,714	)	$	(2,363	)	$	(10,415	)	$	(1,408	)
Interest on long-term debt		1,930			—			628			—
Interest on Members’ Loans		1,816			427			1,412			167
Depreciation		5,235			662			2,656			271
Amortization of deferred financing fees		136			—			23			—

EBITDA	$	(1,597	)	$	(1,274	)	$	(5,696	)	$	(970	)
Expenses relating to the merger with Star Bulk Carriers Corp.		1,384			—			—			—
Loss on derivative financial instruments		1,149			—			1,423			—
Dry docking and special survey costs		914			—			3,248			—
Other bank and financing costs		317			7			135			—
Other, net		19			—			(5	)		—

Adjusted EBITDA	$	2,186		$	(1,267	)	$	(895	)	$	(970	)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS OF OCEANBULK

The following discussion and analysis should be read in conjunction with the “Summary Historical Combined Financial and Other Operating Data of Oceanbulk” and the accompanying combined financial statements and related notes included elsewhere in this Exhibit 99.2. The following discussion contains forward-looking statements that reflect Oceanbulk’s future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside Oceanbulk’s control. Oceanbulk’s actual results could differ materially from those discussed in these forward-looking statements. Please read “Cautionary Statements Regarding Forward-Looking Statements”, included in this Report on Form 6-K. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

The financial statements that are discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk are the combined results of Oceanbulk Shipping and Oceanbulk Carriers and their wholly owned, consolidated subsidiaries for the periods and as of the dates indicated. The historical results of operations, assets and liabilities of Oceanbulk Shipping and Oceanbulk Carriers have been combined because they were under common control by the Oceanbulk Holdcos. All vessel statistics discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk do not include the vessels owned by Heron JV. References to “eco-vessels” are to vessels that are designed to be more fuel efficient than standard vessels of similar size.

Overview

On July 11, 2014, pursuant to an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”), dated as of June 16, 2014, among Star Bulk Carriers Corp., two merger subsidiaries of Star Bulk Carriers Corp., Oaktree OBC Holdings LLC (the “Oaktree Holdco”), Millennia Limited Liability Company (the “Pappas Holdco”), Oaktree Dry Bulk Holdings LLC (the “Oaktree Seller”) and Millennia Holdings LLC (the “Pappas Seller” and, together with the Oaktree Seller, the “Sellers”), the parties thereto completed a transaction that resulted in a merger (the “Merger”) of the Oaktree Holdco and the Pappas Holdco into the two merger subsidiaries of Star Bulk Carriers Corp.

The Oaktree Holdco and the Pappas Holdco were the equity holders of Oceanbulk Shipping and Oceanbulk Carriers. Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding dry bulk vessels fuel-efficient Eco-type vessels (one of which, Peloreus was delivered on July 22, 2014) at shipyards in Japan and China. The consideration paid by Star Bulk Carriers Corp. in the Merger to the Sellers was 48,395,765 common shares.

Prior to the Merger, on a fully delivered basis, Oceanbulk was expected to have a fleet of 37 vessels consisting primarily of Newcastlemax/Capesize as well as Kamsarmax and Ultramax vessels with a carrying capacity between 55,000 dwt and 209,000 dwt. Prior to the Merger, Oceanbulk’s fleet consisted of 12 existing vessels, including the newly built and delivered Eco-type vessel, Magnum Opus, and 25 vessels under construction in Japan and China. Oceanbulk’s vessels transport a broad range of major and minor bulk commodities, including ores, coal, grains and fertilizers, along worldwide shipping routes.

As of August 20, 2014, Oceanbulk’s existing fleet of 13 vessels has an aggregate capacity of approximately 1.6 million dwt, and Oceanbulk had under contract 24 Eco-type vessels, 21 of which were scheduled to be delivered during 2014 and 2015.

Historically, Oceanbulk has primarily employed its vessels under spot or voyage charters. The vessel owner benefits from any fuel savings that can be achieved in a spot or voyage charter (particularly for eco-vessels) because fuel is paid for by the vessel owner. Two of Oceanbulk’s Post-Panamax vessels, Amami and Madredeus, were acquired subject to long-term charters to Glocal Japan Inc. through April and June 2016, respectively, at a gross charterhire rate of $15,000 per day.

Oceanbulk Shipping was formed in October 2012, and Oceanbulk Carriers was formed in April 2013. While Oceanbulk did have historical vessel operations during the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, as well as during the six month periods ended June 30, 2014 and 2013, such operations are likely not to be indicative of Oceanbulk’s vessel operations once its fleet is fully built. The following table indicates the number of wholly owned vessels (and the aggregate capacity of those vessels) that were in operation as of the dates specified:


Date	Number of Vessels in Operation		Aggregate Capacity (dwt)
December 31, 2012⁽¹⁾		1		181,433
June 30, 2013		1		181,433
December 31, 2013		6		827,849
March 31, 2014		11		1,366,365
June 30, 2014		12		1,447,387

(1)	There was one vessel in operation until two additional vessels were acquired in July 2013.

Profits Interests

Pursuant to an agreement (the “Profits Interest Agreement”) among affiliates of Oaktree, Oceanbulk Maritime S.A. and Messrs. Petros Pappas and Hamish Norton, Messrs. Pappas and Norton are eligible for a share of the profits of Oaktree, subject to Oaktree and its affiliates achieving certain internal rate of return and capital multiples on their original investment in Oceanbulk. This award will be payable only by affiliates of Oaktree so Oceanbulk will not be responsible for making such payments. Nevertheless, when award payments vest or are deemed probable to vest and are required to be made under the agreement with respect to Oceanbulk, a non-cash compensation expense will be reflected in Oceanbulk’s General and administrative expenses with a corresponding increase in Oceanbulk’s equity as a deemed contribution from Oceanbulk’s stockholders. As of June 30, 2014 and December 31, 2013, no awards had vested, and no payments had yet been made under the Profits Interest Agreement. While Oceanbulk is, as of June 30, 2014, a party to a side letter to the Profits Interest Agreement, the Profits Interest Agreement is expected to be amended following the Merger, to remove Oceanbulk Carriers and Oceanbulk Shipping as parties.

Key Performance Indicators

Oceanbulk believes that the following are the most important measures for analyzing its results of operations:

•

Average number of vessels: Average number of vessels is the average number of vessels that constituted Oceanbulk’s fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of Oceanbulk’s fleet during the period divided by the number of calendar days in the period.

•

Ownership Days: Ownership Days are the total calendar days each vessel in Oceanbulk’s fleet was owned by Oceanbulk for the relevant period. Ownership Days are an indicator of the size of Oceanbulk’s fleet over a period and affect both the amount of revenues and the amount of expenses that Oceanbulk records during a period.

•

Available Days: Available Days are the total number of Oceanbulk’s Ownership Days less the aggregate number of days that Oceanbulk’s vessels were off-hire due to scheduled repairs or repairs under guarantees, vessel upgrades or special surveys and the aggregate amount of time that Oceanbulk spent positioning its vessels for such events. The shipping industry uses Available Days to measure the number of days in a period during which vessels should be capable of generating revenues.

•

Time charter equivalent rates: Time charter equivalent rate per day is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total voyage revenues, less any voyage expenses, by the number of Available Days during that period. Under a time charter, the

charterer pays substantially all of the vessel voyage-related expenses. However, Oceanbulk may incur voyage-related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable U.S. GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, TCE rate is a standard shipping industry performance measure used primarily to compare period-to-period changes in a company’s performance and assists Oceanbulk’s management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. Oceanbulk’s calculation of TCE rates may not be comparable to that reported by other companies. The following table reflects the calculation of Oceanbulk’s TCE rates for the periods indicated (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars, and Available Days):


	6 month period ended June 30, 2014			6 month period ended June 30, 2013			Year ended December 31, 2013			Period from October 4, 2012 through December 31, 2012
Voyage Revenues	$	29,713		$	3,541		$	14,021		$	1,975
Voyage Expenses		(10,490	)		(1,706	)		(4,017	)		(1,431	)

Time charter equivalent revenues	$	19,223		$	1,835		$	10,004		$	544

Total Available Days		1,746			181			797			73
Time charter equivalent rate per day	$	11,010		$	10,138		$	12,552		$	7,442

•

Fleet Utilization: Fleet Utilization (which reflects off-hire days during which vessels are unavailable due to scheduled maintenance and dry docking) is the percentage of time that Oceanbulk’s vessels were available for revenue generating, and is determined by dividing Available Days by fleet Ownership Days during that period. The shipping industry uses Fleet Utilization to measure a company’s efficiency in finding employment for its vessels.

•

Daily Vessel Operating expenses: Daily vessel operating expenses include crew costs, provisions, deck and engine stores, lubricating oil, insurance, and maintenance and repairs, and are calculated by dividing vessel operating expenses, excluding any one-off expenses incurred in the period of the vessel’s delivery, by fleet Ownership Days for the relevant time period.

•

Adjusted EBITDA: EBITDA is a non-GAAP performance measure that is calculated by adding depreciation and amortization expense, interest and taxes to net income (loss). Adjusted EBITDA is calculated by further adjusting EBITDA to exclude dry docking and special survey costs (for comparability purposes, as a number of Oceanbulk’s peers use the deferral method of accounting for such costs, which records them as amortization expense for the respective period), other bank and financing charges, expenses relating to the merger with Star Bulk Carrier Corp. and the effects of various items that in Oceanbulk’s management’s opinion do not directly reflect the ordinary-course of operations of Oceanbulk, such as gain (loss) on derivative financial instruments and other income (expense). Oceanbulk expects in the future that it may further adjust EBITDA to eliminate the effects of other such items, including non-cash compensation expense. For more information regarding the uses and limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss, see note (10) to “Summary Historical Combined Financial and Other Operating Data of Oceanbulk,” which is included in this Exhibit 99.2.

Presentation of Financial information

Voyage Revenues

Voyage revenues consist primarily of revenues from voyage and time charters of Oceanbulk’s vessels. Oceanbulk’s revenues are driven primarily by the number of vessels in its fleet, the number of days during which its vessels operate and the daily charterhire rates that its vessels earn under charters, which, in turn, are affected by a number of factors, including:

•

the duration of its charters;

•

its decisions relating to vessel acquisitions and disposals;

•

the amount of time that it spends positioning its vessels;

•

the amount of time that its vessels spend in dry dock undergoing repairs and maintenance;

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maintenance and upgrade work;

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the age, condition and specifications of its vessels;

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levels of supply and demand in the dry bulk shipping industry; and

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other factors affecting spot market charter rates for dry bulk carriers.

Oceanbulk has historically chartered its vessels to charterers primarily under voyage or time charters. A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed freight per ton of cargo or a specified total amount. Under spot market voyage charters, Oceanbulk pays specific voyage expenses, such as port, canal and bunker fuel costs, as well as operating expenses, such as crew, insurance, repair services, spares, stores and lubricants. As a result of this arrangement, any cost savings due to reduced fuel consumption are directly for the account of the shipowner, and therefore spot market voyage charters may be more advantageous for more fuel-efficient vessels. Spot charter rates are volatile and fluctuate on a seasonal and year-to-year basis. Fluctuations may result from imbalances in the availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes. Vessels operating in the spot market generate revenue that is less predictable, but operating in this market may enable Oceanbulk to capture increased profit margins during periods of improvements in dry bulk vessel charter rates. In addition, the vessel owner benefits from any fuel savings than can be achieved in a spot or voyage charter (particularly for eco-vessels) because fuel is paid for by the vessel owner.

Time charters give Oceanbulk fixed revenue for a known period of time and stable cash flows. Under time charters, Oceanbulk covers operating expenses, but the charterer covers voyage expenses, including port, canal and bunker fuel costs. As a result, negotiation of a time charter rate depends in part on the anticipated fuel consumption of a vessel, and there is no guarantee that a time charter will fully compensate Oceanbulk for the savings realized by the charterer when chartering a ship that is more fuel efficient than a typical vessel. Oceanbulk also entered into time charter contracts with profit-sharing agreements, which enabled it to benefit from spot market rate increases.

Voyage Expenses

Voyage expenses, primarily consisting of port, canal and bunker fuel expenses that are unique to a particular charter, are paid for by the charterer under the time charter arrangements or by the owner under voyage charter arrangements, except for commissions, which are always paid by the owner, regardless of charter type. Voyage expenses are also paid by Oceanbulk during periods when its ships are off-hire, and such voyage expenses are recognized when incurred. Oceanbulk may incur voyage-related expenses for a vessel when positioning or repositioning the vessel before or after the period of a charter, during periods of commercial waiting time or while the vessel is off-hire during a period of dry docking.

Vessel Operating Expenses

Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricant costs, statutory and classification expenses,

forwarding and communications expenses and other miscellaneous expenses. Vessel operating expenses also include all peripheral expenses incurred while vessels perform their classification special survey and dry docking, such as spare parts, port dues, tugs, service engineer attendance etc. Vessel operating expenses are paid by Oceanbulk for its vessels under spot and time charters and are recognized when incurred.

Dry docking and special survey costs

Oceanbulk must periodically dry dock each of its vessels for inspection, repairs and maintenance and any modifications required to comply with industry certification or governmental requirements. Oceanbulk dry docks its vessels at least once every 60 months until the vessel is 15 years old, after which it dry docks its vessels at least once every 30 months, as required for the renewal of certifications required by classification societies. The number of dry dockings undertaken in a given period and the nature of the work performed during that period determine the level of dry docking expenditures.

Two of Oceanbulk’s wholly owned vessels underwent dry docking during 2013 and none did during the first six months of 2014. Oceanbulk’s dry docking schedule for its existing wholly owned vessels as of August 20, 2014 was as follows (in number of vessels):


Remainder of 2014	2015	2016	2017	2018
2	2	7	4	2

Oceanbulk estimates the cost to dry dock a vessel is between $0.5 million and $1.5 million, depending on the size and condition of the vessel.

Depreciation

Oceanbulk’s depreciation expenses include a depreciation charge for the acquisition cost of each of its vessels, less an estimated residual value. Oceanbulk depreciates its vessels on a straight-line basis over their remaining economic useful life from the time when they are ready for their intended use.

Interest and Finance Costs

Oceanbulk incurs interest expense on outstanding indebtedness under its existing credit facilities, including ship financing. The amount of interest expense depends on Oceanbulk’s overall level of borrowings and may significantly increase when it acquires or refinances ships. During construction of a newbuilding vessel, interest expense incurred related to the financing of these newbuilding vessels is capitalized in the cost of the newbuilding. Oceanbulk’s bank loan arrangements provide for a variable interest rate per annum. Interest expense relating to Oceanbulk’s bank loan arrangements may change depending on the prevailing interest rates. While Oceanbulk has entered into interest rate swap agreements, they were not designated as accounting hedges for its exposure to variable interest-rate expenses related to its bank loan arrangements up to March 31, 2014. On April 1, 2014, Oceanbulk designated the swaps as cash flow hedges in accordance with ASC Topic 815 “Derivatives and Hedging”, and accordingly, the effective portion of these cash flow hedges during the second quarter of 2014 were reported in Accumulated Other Comprehensive Income (loss) on the June 30, 2014 combined balance sheet, with the outstanding fair value (based on Level 2 inputs of the fair value hierarchy) as of the same date and as of December 31, 2013 being reflected as Derivative Financial Instruments within current and non-current liabilities. Any ineffective portion of these cash flow hedges is reported as gain or loss in the statement of operations for the relevant period.

Oceanbulk also incurs financing costs and legal costs in connection with establishing credit facilities, which are deferred and amortized to interest and finance costs using the effective interest method. Oceanbulk will incur additional interest expense in the future on its outstanding borrowings and under future borrowings. For a description of its existing credit facilities see “—Oceanbulk’s Borrowing Activities.”

Interest on Members’ Loans

Pursuant to the constituent documents of Oceanbulk Shipping and Oceanbulk Carriers, the Oceanbulk Holdcos have been permitted, as members, to lend amounts to them as Members’ Loans, evidenced by Convertible Notes due December 2042 (the “Convertible Notes”). There were $409.2 million and $223.1 million aggregate principal amount of Members’ Loans outstanding as of May 28, 2014 and December 31, 2013, respectively. The Convertible Notes bear interest at a rate of 2.0% per annum, accruing quarterly in arrears. There was $5.8 million and $2.9 million of total accrued interest outstanding as of May 28, 2014 and December 31, 2013, respectively. On May 28, 2014, the total outstanding Members’ Loans of $415.0 million were converted into 373,533 and 41,504 Class A Units issued by Oceanbulk Shipping and Oceanbulk Carriers to Oaktree and Millennia Limited Liability Company (“Millennia”), respectively. During construction of a newbuilding vessel, interest expense on the Members’ Loans incurred related to the financing of these newbuilding vessels was capitalized in the cost of the newbuilding. During the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, Oceanbulk incurred $2.7 million and $0.2 million, respectively, of interest accrued on the Convertible Notes, of which $1.3 million and $0.04 million, was capitalized to vessel cost and the remaining $1.4 million and $0.17 million, respectively, was expensed in Oceanbulk’s historical results of operations. In addition, during the six month periods ended June 30, 2014 and 2013, Oceanbulk incurred $3.0 million and $0.7 million, respectively, of interest accrued on the Convertible Notes, of which $1.2 million and $0.3 million, respectively, was capitalized to vessel cost and the remaining $1.8 million and $0.4 million, respectively, was expensed in Oceanbulk’s historical results of operations.

Vessel Lives and Impairment

Vessels are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, Oceanbulk compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds the asset’s fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals. To date, Oceanbulk has not recorded any vessel impairment charges.

Critical Accounting Policies

The discussion and analysis of Oceanbulk’s financial condition and results of operations is based upon Oceanbulk’s combined financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of those financial statements requires Oceanbulk to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure at the date of Oceanbulk’s financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. Oceanbulk has described below what it believes are its most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application.

Voyage Revenues and related expenses

Oceanbulk generates revenues from charterers for the charterhire of its vessels. Vessels are chartered using either voyage charters, under which parties contract in the spot market for the use of a vessel for a specific voyage for a specified charter rate, or time charters, under which parties contract for the use of a vessel for a specific period of time at a specified daily charterhire rate and, where applicable, such parties agree to any profit share over the daily charterhire rate. If a charter agreement exists and collection of the related revenue is reasonably assured, revenue is recognized as it is earned ratably over the duration of the period of each voyage or time charter. Revenue on any profit share is recognized following the same criteria. Time charter revenues are recorded over the term of the charter as service is provided. Under a voyage charter, the revenues are recognized proportionately over the duration of the voyage. A voyage is deemed to commence upon the completion of discharge of the vessel’s previous

cargo and the vessel’s sail to the next fixed loading port and is deemed to end upon the completion of discharge of the current cargo. A voyage charter contract with a charterer consists of sailing to the load port (the positioning leg), loading the cargo, sailing to the discharge port and discharging the cargo. The charter contract therefore requires the relevant vessel to proceed to the port or place as ordered by the charterer and is not cancellable in the positioning leg, provided that Oceanbulk fulfils its contractual commitment. Performance under the contract begins upon sailing to the load port (the positioning leg). Non-cancelable voyage contracts are generally arranged prior to the completion of an existing contract. Assuming, therefore, that a non-cancelable voyage charter agreement is in place, voyage revenue recognition, under the discharge-to-discharge method, commences once the discharge of the previous charter’s cargo is complete and the vessel sails for loading. The voyage is deemed complete at the point the vessel has left the discharge terminal. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeded the stipulated time in the voyage charter and is recognized as it is earned. Unearned revenue includes cash received prior to the balance sheet date that is related to revenue earned after such date. Voyage expenses, primarily consisting of port, canal and bunker expenses that are unique to a particular charter, are paid for by the charterer under the time charter arrangements or by Oceanbulk under voyage charter arrangements, except for commissions, which are always paid for by Oceanbulk, regardless of charter type. All voyage and vessel operating expenses are expensed as incurred, except for commissions. Commissions paid to brokers are deferred and amortized over the related voyage charter period to the extent revenue has been deferred because commissions are earned as Oceanbulk’s revenues are earned.

Depreciation

The cost of each of Oceanbulk’s vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessel’s remaining economic useful life, after considering the estimated residual value, which is equal to the product of its lightweight tonnage and estimated scrap rate. Effective January 1, 2013 and following Oceanbulk’s reassessment of the residual value of the vessels, the estimated scrap value per light weight ton was increased to $300 from $200, which is based on the historical average demolition prices prevailing in the market. The effect of this change in accounting estimate, which did not require retrospective application as per ASC 250 “Accounting Changes and Error Corrections,” was to decrease net loss for the year ended December 31, 2013 by $0.2 million. Oceanbulk estimates the useful life of its vessels to be 25 years from the date of initial delivery from the shipyard. However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, her remaining useful life is adjusted at the date such regulations become effective.

Dry docking and special survey costs

Oceanbulk must periodically dry docks each of its vessels for inspection, repairs and maintenance and any modifications required to comply with industry certification or governmental requirements. Special survey and dry docking costs (mainly shipyard costs, paints and class renewal expense) are expensed as incurred. The number of dry dockings undertaken in a given period and the nature of the work performed determine the level of dry docking expenditures. Oceanbulk expenses costs related to routine repairs and maintenance performed during dry docking or as otherwise incurred.

Impairment of Long-lived Assets

The carrying value of Oceanbulk’s vessels represents their historical acquisition or construction cost, including capitalized interest, supervision, technical and delivery cost, net of accumulated depreciation and impairment loss, if any. Expenditures for subsequent conversions and major improvements are capitalized provided that such costs increase the earnings capacity or improve the efficiency or safety of the vessels. Oceanbulk depreciates the original cost, less an estimated residual value, of its vessels on a straight-line basis over their estimated useful lives. The carrying values of Oceanbulk’s vessels may not represent their market value at any point in time because the market prices of secondhand vessels tend to fluctuate with changes in charterhire rates and the cost of newbuilding vessels. Both charterhire rates and newbuilding costs tend to be cyclical in nature.

Oceanbulk reviews vessels for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable, which occurs when the asset’s carrying value is greater than the future undiscounted net operating cash flows the asset is expected to generate over its remaining useful life. Oceanbulk determines undiscounted projected net operating cash flows for each vessel and compares it to the

vessel’s carrying value. In developing estimates of future cash flows, Oceanbulk must make assumptions about future charter rates, vessel operating expenses, fleet utilization, and the estimated remaining useful life of the vessels. These assumptions are based on historical trends as well as future expectations. The projected net operating cash flows are determined by considering the charter revenues from existing charters for the fixed fleet days and the historical 10-year average of charter rates for the unfixed days. If the estimated future undiscounted cash flows of an asset exceed the asset’s carrying value, no impairment is recognized even though the fair value of the asset may be lower than its carrying value. If the estimated future undiscounted cash flows of an asset are less than the asset’s carrying value and the fair value of the asset is less than its carrying value, the asset is written down to its fair value.

Oceanbulk determines the fair value of its vessels based on its estimates and assumptions and by making use of available market data and taking into consideration third-party valuations. Oceanbulk’s estimates of basic market value are inherently uncertain because Oceanbulk obtains information from various industry and other sources. In addition, vessel values are highly volatile and, as such, Oceanbulk’s estimates may not be indicative of the current or future basic market value of its vessels or prices that Oceanbulk could achieve if it were to sell them.

Illustrative Comparison of Possible Excess of Carrying Value Over Estimated Charter-Free Market Value of Oceanbulk’s Vessels

Oceanbulk’s policy for impairing the carrying values of its vessels is discussed under the caption “—Impairment of Long-lived Assets”. During the past few years, the market values of vessels have experienced particular volatility, with substantial declines in many vessel classes also affecting their charter-free market value, or basic market value. Oceanbulk’s estimates of basic market value assume that its vessels are all in good and seaworthy condition without the need for repair and, if inspected, would be certified in class without notations of any kind. The fair values are determined through Level 2 inputs of the fair value hierarchy as defined in ASC Topic 820 “Fair value measurements and disclosures” and are derived principally from various industry sources, including:

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reports by industry analysts and data providers that focus on Oceanbulk’s industry and related dynamics affecting vessel values;

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news and industry reports of similar vessel sales;

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news and industry reports of sales of vessels that are not similar to Ocanbulk’s vessels, which can be used, after certain adjustments, to derive information used to inform Oceanbulk’s estimates;

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approximate market values for Oceanbulk’s vessels or similar vessels that Oceanbulk has received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;

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offers that Oceanbulk may have received from potential purchasers of its vessels; and

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vessel sale prices and values of which Oceanbulk becomes aware through both formal and informal communications with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.

The carrying value of Oceanbulk vessels as of June 30, 2014 and December 31, 2013 was $316.0 million and $152.0 million, respectively.

Oceanbulk’s estimates of basic market value are inherently uncertain because it obtains information from various industry and other sources. In addition, vessel values are highly volatile and, as such, Oceanbulk’s estimates may not be indicative of the current or future basic market value of its vessels or prices that Oceanbulk could realize if it were to sell them. The market values of Oceanbulk’s vessels may decline, which could limit the amount of funds that it can borrow, cause a breach of certain financial covenants in its credit facilities (including ship financing facilities) or result in an impairment charge, and Oceanbulk may incur a loss if it sells vessels following a decline in their market value.”

Recent Accounting Pronouncements

Revenue from Contracts with Customers: The FASB and the International Accounting Standards Board (IASB) (collectively, the Boards) jointly issued a standard that will supersede virtually all of the existing revenue recognition guidance in US GAAP and IFRS and is effective for annual periods beginning on or after December 15, 2016. The standard establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates. Management is in the process of accessing the impact of the new standard on Oceanbulk’s financial position and performance.

Results of Operations of Oceanbulk for the six month periods ended June 30, 2014 and 2013

As of June 30, 2014 and June 30, 2013, Oceanbulk’s fleet consisted of twelve vessels and one vessel, respectively, and on an average basis during the six month periods ended June 30, 2014 and 2013, Oceanbulk had 9.7 vessels and 1.0 vessel, respectively. In the six month period ended June 30, 2014 its fleet Available Days totaled 1,746 days, compared to 181 days in the six month period ended June 30, 2013. In the six month period ended June 30, 2014, its fleet Ownership Days totaled 1,757 days, compared to 181 days in the six month period ended June 30, 2013. Ownership Days are the primary driver of vessel operating expenses.

Voyage revenues

Voyage revenues increased by $26.2 million to $ 29.7 million in the six month period ended June 30, 2014, compared to $3.5 million for the six month period ended June 30, 2013, which was primarily attributable to the growth of Oceanbulk’s fleet, which resulted in more Available Days, and the improved charter agreements Oceanbulk entered into, reflecting both the implementation of Oceanbulk’s chartering strategy and improved prevailing market conditions compared to the respective period in 2013. The TCE rate per ship for the six month period ended June 30, 2014 was $11,010, compared to a TCE rate per ship of $10,138 for the six month period ended June 30, 2013.

Voyage expenses

Voyage expenses increased by $8.8 million to $10.5 million for the six month period ended June 30, 2014, compared to $1.7 million for the six month period ended June 30, 2013. This increase was primarily driven by the increase in Available Days as well as the different mix of voyage and time charters used between 2014 and 2013. In particular, in 2013 almost all of Oceanbulk’s revenues were derived from voyage charter agreements, while in 2014, 65% of its revenues were derived from short-term time charter agreements and 35% were derived from voyage charter agreements, leading to lower voyage expenses as a percentage of revenue in 2014 (35.3%) as compared to 2013 (48.6%). Bunkering costs and port expense, which are at the expense of the owner when the vessel is under a voyage charter and at the expense of the chartering party when the vessel is under a time charter, decreased as a percentage of total revenues from 43% in 2013 to 31% in 2014, reflecting the effects of the different chartering mix. Brokerage commissions slightly increased as a percentage of total revenues, from 1.1% to 1.3% during the six month period ended June 30, 2014, compared to June 30, 2013.

Vessel operating expenses

Vessel operating expenses increased by $10.3 million to $11.3 million for the six month period ended June 30, 2014 as compared to $1.0 million for the six month period ended June 30, 2013, due to the growth of Oceanbulk’s fleet, which resulted in an increase in Ownership Days and expenses for initial supplies acquired upon delivery of Oceanbulk’s vessels. Daily vessel operating expenses per vessel decreased by $337 per day, or 6.22%, to $5,083 for the six month period ended June 30, 2014, compared to $5,420 for the six month period ended June 30, 2013, mainly due the decrease in daily crew costs, which are the major component of vessel operating expenses.

Management fees

Management fees increased by $1.3 million to $1.4 million for the six month period ended June 30, 2014 from $0.1 million for the six month period ended June 30, 2013, which was directly attributable to the growth of Oceanbulk’s fleet, which resulted in an increase in fleet Ownership Days in 2014.

Depreciation

Depreciation expenses increased by $4.5 million to $5.2 million for the six month period ended June 30, 2014 from $0.7 million for the six month period ended June 30, 2013, which was due to the growth of Oceanbulk’s fleet, which resulted in an increase in fleet Ownership Days in 2014.

Dry docking and special survey costs

During the six month period ended June 30, 2014, Oceanbulk incurred dry docking and special survey costs of approximately $0.9 million, relating to the additional 11 days of the dry docking of its vessel Pantagruel, which had begun in 2013. None of Oceanbulk’s vessels underwent dry docking in the six month period ended June 30, 2013.

General and administrative expenses, including general and administrative expenses to related parties

General and administrative expenses increased to $5.8 million in the six month period ended June 30, 2014 from $2.0 million in the six month period ended June 30, 2013 due to the increased fees charged by Oceanbulk Maritime as part of Oceanbulk’s fleet’s growth, additional needs in administrative services and $1.4 million of expenses relating to the Merger.

Interest and finance costs

Interest and finance costs increased to $2.4 million in the six month period ended June 30, 2014 from an insignificant amount in the six month period ended June 30, 2013 due to the secured debt incurred in mid 2013 for six of Oceanbulk’s operating vessels, as well as the additional secured debt that was incurred during the six-month period ended June 30, 2014 for the six additional vessels acquired. Interest and finance costs in the six month period ended June 30, 2014 included interest of $1.9 million on long-term debt (bank financing), $0.1 million of amortization of deferred finance fees and $0.4 million of other bank and finance charges.

Interest on Members’ Loans

Interest on Members’ Loans during the six month period ended June 30, 2014 was $1.8 million, compared to $0.4 million in the six month period ended June 30, 2013. The amount of interest on Members’ Loans increased during 2014 due to an increase in the outstanding amount of Members’ Loans, from $87.2 million as of June 30, 2013 to $409.2 million as of May 28, 2014, when the Members’ Loans (including accrued interest) were converted into membership units of Oceanbulk Shipping and Oceanbulk Carriers. Accordingly, no further interest on Members’ Loans was recorded following May 28, 2014.

Loss on derivative financial instruments

Loss on derivative financial instruments was $1.15 million for the six month period ended June 30, 2014 and was related primarily to the unrealized loss attributable to the mark-to-market valuation of Oceanbulk’s derivative financial instruments. Prior to April 1, 2014, Oceanbulk’s interest rate swaps were not designated as hedges under ASC Topic 815, so changes in their fair value were recorded as gains or losses on derivative instruments within the statement of operations. On April 1, 2014, Oceanbulk designated the swaps as cash flow hedges in accordance with ASC Topic 815, and accordingly, from that date, gains or losses will only be recorded in Oceanbulk’s statement of operations to the extent that the swaps are ineffective cash flow hedges, otherwise such changes will be reported within other comprehensive income (loss). No corresponding losses existed in the six month period ended June 30, 2013, since Oceanbulk entered into the swap agreements during the third quarter of 2013.

Results of Operations for the Year Ended December 31, 2013 and the Period from October 4, 2012 (date of Oceanbulk’s inception) through December 31, 2012

As of December 31, 2013 and December 31, 2012, Oceanbulk’s fleet consisted of six vessels and one vessel, respectively, and on an average basis during the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, Oceanbulk had 2.4 vessels and 0.2 vessels, respectively. In the year ended December 31, 2013, Oceanbulk’s fleet Available Days totaled 797 days, compared to 73 days in the period from October 4, 2012 through December 31, 2012. In the year ended December 31, 2013, Oceanbulk’s fleet Ownership Days totaled 880 days, compared to 73 days in the period from October 4, 2012 through December 31, 2012. Ownership Days are the primary driver of vessel operating expenses.

Voyage revenues

Voyage revenues increased by $12.0 million to $14.0 million in the year ended December 31, 2013, compared to $2.0 million for the period from October 4, 2012 through December 31, 2012, which was primarily attributable to the growth of Oceanbulk’s fleet, which resulted in more Available Days, and the improved charter agreements Oceanbulk entered into, reflecting both its management’s core competences and improved prevailing market conditions compared to the period in 2012. TCE per vessel for the year ended December 31, 2013 was $12,552, compared to TCE rate per vessel of $7,442 for the period from October 4, 2012 through December 31, 2012.

Voyage expenses

Voyage expenses increased by $2.6 million to $4.0 million for the year ended December 31, 2013, compared to $1.4 million for the period from October 4, 2012 through December 31, 2012. This increase was primarily driven by the increase in Oceanbulk’s fleet Available Days as well as the different mix of spot and time charters Oceanbulk used between 2013 and 2012. In particular, in 2012 almost all of Oceanbulk’s revenues were derived from voyage charter agreements, while in 2013 68% of Oceanbulk’s revenues were derived from short-term time charter agreements and 32% were derived from voyage charter agreements, leading to lower voyage expenses as a percentage of revenue in 2013 (28%) as compared to 2012 (72%). Bunkering costs and port expense, which are at the expense of the owner when the vessel is under a voyage charter and at the expense of the chartering party when the vessel is under a time charter, decreased as a percentage of total revenues from 69% in 2012 to 24% in 2013, reflecting the effects of the different chartering mix. Commissions remained at the same levels as a percentage of total revenues, approximately 4%, in both periods.

Vessel operating expenses

Vessel operating expenses increased by $5.5 million to $6.1 million for the year ended December 31, 2013 as compared to $0.6 million for the period from October 4, 2012 through December 31, 2012, due to the growth of Oceanbulk’s fleet, which resulted in an increase in Ownership Days and expenses for initial supplies acquired upon delivery of its vessels. Daily vessel operating expenses per vessel decreased by $406 per day, or 7%, to $5,377 for the year ended December 31, 2013, compared to $5,783 for the period from October 4, 2012 through December 31, 2012, despite the increase in the average age of the fleet, due to efficiency gains from its cost management programs.

Management fees

Management fees increased by $0.6 million to $0.7 million for the year ended December 31, 2013 from $0.1 million for the period from October 4, 2012 through December 31, 2012, which was directly attributable to the growth of Oceanbulk’s fleet, which resulted in an increase in fleet Ownership Days in 2013.

Depreciation

Depreciation expenses increased by $2.4 million to $2.7 million for the year ended December 31, 2013 from $0.3 million for the period from October 4, 2012 through December 31, 2012, which was due to the growth of Oceanbulk’s fleet, which resulted in an increase in fleet Ownership Days in 2013.

Dry docking and special survey costs

During the year ended December 31, 2013, Oceanbulk incurred dry docking and special survey costs of approximately $3.2 million relating to its vessels Pantagruel and Strange Attractor, which lasted 61 and 22 days, respectively. None of Oceanbulk’s vessels underwent dry docking in the period from October 4, 2012 through December 31, 2012.

General and administrative expenses, including general and administrative expenses to related parties

General and administrative expenses increased to $4.1 million in the year ended December 31, 2013 from $0.9 million in the period from October 4, 2012 through December 31, 2012 due to the increased fees charged by Oceanbulk Maritime as part of Oceanbulk’s fleet growth and additional needs in administrative services.

Interest and finance costs

Interest and finance costs increased to $0.8 million in the year ended December 31, 2013 from $nil in the period from October 4, 2012 through December 31, 2012 due to the secured debt incurred in 2013 for Oceanbulk’s operating vessels. Interest and finance costs in 2013 included interest of $0.6 million on long-term debt (bank financing), $0.02 million of amortization of deferred finance fees and $0.1 million of other bank and finance charges.

Interest on Members’ Loans

Interest on Members’ Loans during the year ended December 31, 2013 was $1.4 million, compared to $0.2 million in the period from October 4, 2012 through December 31, 2012. The amount of interest on Members’ Loans increased during 2013 due to an increase in the outstanding principal amount of Members’ Loans, from $67.8 million as of December 31, 2012 to $223.1 million as of December 31, 2013, excluding accrued interest.

Loss on derivative financial instruments

Loss on derivative financial instruments was $1.4 million for the year ended December 31, 2013 and was related to the unrealized loss attributable to the mark-to-market valuation of its derivative financial instruments because Oceanbulk’s outstanding interest rate swaps were not designated as hedges for purposes of ASC Topic 815. Oceanbulk had no corresponding losses in the period from October 4, 2012 through December 31, 2012, since Oceanbulk entered into the swap agreements during the third quarter of 2013.

Liquidity and Capital Resources

Prior to the Merger, Oceanbulk has historically financed the purchase of dry bulk carriers through a combination of Members’ Loans and borrowings from commercial banks. As a stand- alone entity, Oceanbulk would finance its capital and other cash requirements from borrowings under ship financing and other credit facilities (including acquisition facilities), other debt or equity financings and cash from operations. Oceanbulk’s liquidity requirements related to servicing its debt and funding capital expenditures and working capital. Oceanbulk’s revenues are generated from chartering its vessels, and Oceanbulk receives charter payments monthly or semi-monthly and in advance when it employs vessels under time charter arrangements or in partial installments during the voyage period when it employs the vessels in the spot market. The majority of Oceanbulk’s operating costs are paid on a monthly basis. Oceanbulk’s short-term liquidity requirements relate to funding working capital, including vessel operating expenses and payments under its management agreements. Oceanbulk’s long-term liquidity requirements relate to funding capital expenditures, including the acquisition of its newbuilding and secondhand vessels or any possible future acquisition of additional vessels and the service of its long-term debt and capital leases under bareboat charter agreements.

Prior to the Merger, Oceanbulk’s principal uses of funds were capital expenditures to establish and grow its fleet, comply with international shipping standards, environmental laws and regulations and fund working capital requirements. Cash and cash equivalents were held primarily in U.S. dollars.

As of June 30, 2014, Oceanbulk had cash and cash equivalents of $89.8 million which increased by $59.8 million compared to $30.0 million, as of December 31, 2013, due primarily to amounts borrowed under Oceanbulk’s loan facilities, as well as the proceeds from Members’ Loans, partially offset by capital payments towards Oceanbulk’s newbuilding vessels as well as its investment in Heron. More specifically, as of June 30, 2014 and December 31, 2013, Oceanbulk had an aggregate of $nil million and $226.0 million, respectively of indebtedness outstanding under Members’ Loans, including principal and capitalized accrued interest. The decrease was due to the fact that on May 28, 2014, the entire $415.0 million amount of Members’ Loans outstanding (including principal and accrued interest thereon) was converted into 373,533 and 41,504 Class A Units issued by Oceanbulk Shipping and Oceanbulk Carriers to Oaktree and Millennia, respectively. In addition, as of June 30, 2014 and December 31, 2013, Oceanbulk had an aggregate of $188.2 million and $86.6 million, respectively, of indebtedness outstanding under credit agreements with commercial banks. See “—Oceanbulk’s Borrowing Activities.” In addition, as of June 30, 2014, Oceanbulk had restricted cash, relating to bank balances that are required under its borrowing arrangements, of $6.2 million.

As of June 30, 2014 Oceanbulk had a working capital surplus of $71.5 million primarily due to the proceeds from the HSBC Facility of $86.6 million, which was drawn down in order to finance the acquisition of operating vessels in the first half of 2014. See “—Oceanbulk’s Borrowing Activities.” As of December 31, 2013, Oceanbulk had a working capital surplus of $22.0 million.

Cash Flows

The following table summarizes Oceanbulk’s net cash flows from operating, investing and financing activities and its cash and cash equivalents for the six month periods ended June 30, 2014 and 2013:


	6 month period ended June 30, 2014			6 month period ended June 30, 2013			Year ended December 31, 2013			Period from October 4 to December 31, 2012
	($ in thousands)						($ in thousands)
Cash Flow Data:
Net Cash used in/provided by Operating activities	$	(1,582	)	$	693		$	(3,895	)	$	(4,352	)
Net Cash used in Investing activities		(224,177	)		(19,400	)		(202,229	)		(62,302	)
Net Cash provided by Financing activities		285,573			19,400			234,955			67,802

Net increase in cash and cash equivalents		59,814			693			28,831			1,148
Cash and cash equivalents at beginning of period		29,979			1,148			1,148			—

Cash and cash equivalents at end of the period	$	89,793		$	1,841		$	29,979		$	1,148

Net cash used in/provided by operating activities

Net cash used in operating activities was $1.6 million for the six month period ended June 30, 2014, compared to net cash provided by operating activities of $0.7 million for the six month period ended June 30, 2013, a net decrease in operating cash flows of $2.3 million. The decrease in operating cash flows was primarily attributable to the increased needs of Oceanbulk’s newly delivered vessels for initial supplies upon delivery and costs of dry docking surveys incurred during the first six month period of 2014.

Net cash flows used in operating activities decreased by $0.5 million to $3.9 million for the year ended December 31, 2013, compared to $4.4 million for the period from October 4, 2012 through December 31, 2012. The decrease was primarily attributable to the increased needs of Oceanbulk’s newly delivered vessels for initial supplies upon delivery in 2013 and costs of dry docking surveys incurred in 2013.

Net cash used in investing activities

Net cash flows used in investing activities increased by $204.8 million to $224.2 million for the six month period ended June 30, 2014, compared to $19.4 million for the six month period ended June 30, 2013. Net cash flows used in investing activities for the six month period ended June 30, 2014 consisted of $160.0 million used for acquisitions of secondhand vessels, as well as of the newbuilding vessel, Magnum Opus, $40.5 million in advances paid for newbuilding vessels, and a $23.7 million investment in Heron. Net cash flows used in investing activities for the six month period ended June 30, 2013 consisted of $19.4 million of advances paid for newbuilding vessels.

Net cash flows used in investing activities increased by $139.9 million to $202.2 million for the year ended December 31, 2013, compared to $62.3 million for the period from October 4, 2012 through December 31, 2012. Net cash flows used in investing activities for the year ended December 31, 2013 consisted of $119.0 million paid to acquire secondhand vessels, $80.3 million in advances paid for new building vessels, $0.1 million in capitalized expenses and $2.8 million in advances for acquisition of secondhand vessels. Net cash flows used in investing activities for the period from October 4, 2012 through December 31, 2012 consisted of $36.6 million in acquisitions of secondhand vessels and $25.7 million in advances paid for new building vessels.

Net cash provided by financing activities

Net cash flows provided by financing activities increased by $266.2 million to $285.6 million for the six month period ended June 30, 2014, compared to $19.4 million for the six month period ended June 30, 2013. Net cash flows provided by financing activities for the six month period ended June 30, 2014 consisted primarily of loan proceeds of $106.6 million, $4.9 million repayment of long term debt, $2.2 million payments of financing fees and $186.1 million of proceeds from Members’ Loans.

Net cash flows provided by financing activities for the six month period ended June 30, 2013 consisted only of proceeds from Members’ Loans of $19.4 million.

Net cash flows provided by financing activities increased by $167.2 million to $235.0 million for the year ended December 31, 2013, compared to $67.8 million for the period from October 4, 2012 through December 31, 2012. Net cash flows provided by financing activities for the year ended December 31, 2013 consisted of:

•

a $6.2 million increase in restricted cash;

•

$87.5 million of proceeds from long-term debt;

•

a $0.9 million repayment of long-term debt;

•

$173.3 million of proceeds from Members’ Loans;

•

an $18.0 million repayment of Members’ Loans; and

•

a $0.8 million payment of financing fees.

Net cash flows provided by financing activities for the period from October 4, 2012 through December 31, 2012 consisted only of proceeds from Members’ Loans of $67.8 million.

Oceanbulk’s Borrowing Activities

Loan financings from commercial banks

ABN Facility. On August 1, 2013, Oceanbulk entered into a $34.5 million credit facility with ABN Amro N.V. (the “ABN Facility”) in order to partially finance the acquisition cost of the vessels Obelix and Maiden Voyage. On August 6, 2013, Oceanbulk drew down the available amount fully in order to finance the vessel acquisitions and pay an arrangement fee of $0.2 million.

On December 18, 2013, the ABN Facility was amended to add an additional credit facility of $53.0 million to partially finance the acquisition cost of the vessels Big Bang, Strange Attractor, Big Fish and Pantagruel. On December 20, 2013, Oceanbulk drew down the entire available amount to finance the vessel acquisitions and pay an arrangement fee of $0.6 million.

The following table describes the various tranches of loans under the ABN Facility as of June 30, 2014:


Vessel	Date Drawn	Principal Amount		Quarterly Installments	Balloon Payment
Obelix	August 2013	$	19.2 million	17 x $0.38 million through August 2018	$12.8 million due August 2018
Maiden Voyage	August 2013	$	13.1 million	13 x $0.25 million through September 2017	$9.9 million due September 2017
Big Bang	December 2013	$	15.1 million	18 x $0.45 million through December 2018	$7.0 million due December 2018
Strange Attractor	December 2013	$	9.4 million	18 x $0.30 million through December 2018	$4.0 million due December 2018
Big Fish	December 2013	$	12.4 million	18 x $0.55 million through December 2018	$2.5 million due December 2018
Pantagruel	December 2013	$	12.4 million	18 x $0.55 million through December 2018	$2.5 million due December 2018

Loans outstanding under the ABN Facility bear interest at three-month LIBOR plus a margin ranging from 3.75% to 3.9% per annum.

The ABN Facility is secured by a first-priority ship mortgage on the financed vessels, general assignments, charter assignments, and operating account assignments and is guaranteed by Oceanbulk Shipping the “Guarantor”. The ABN Facility contains a number of negative covenants, including limitations on additional indebtedness, additional liens on the collateral, restricted payments and changes in management and ownership. In addition, the ABN Facility contains the following financial maintenance covenants:

•

aggregate vessel value must exceed 140% of the aggregate principal amount of outstanding loans under the ABN Facility;

•

maximum consolidated adjusted market value leverage ratio of the Guarantor (defined as the Guarantor’s total liabilities to market value adjusted total assets, excluding Members’ Loans and available cash) of 70%;

•

minimum consolidated EBITDA to interest coverage ratio of 2.0x, applicable after September 30, 2016; and

•

minimum liquidity of the higher of $1.0 million per collateral vessel or $0.5 million per other vessel owned by the Guarantor.

The ABN Facility also prohibits the Guarantor from paying dividends while a default has occurred and is continuing. The ABN Facility also contains cross-default provisions triggered by a payment default or the acceleration or cancelation by reason of default of indebtedness in excess of $5.0 million for the Guarantor’s indebtedness and $1.0 million for any borrower’s indebtedness.

Deutsche Bank Facility. On May 20, 2014, Oceanbulk entered into a loan agreement with Deutsche Bank AG Filiale Deutschlandgeschäft for financing in an aggregate amount of $85.0 million, which will partially finance the construction cost of one Kamsarmax bulk carrier Magnum Opus, which was delivered on May 27, 2014, and two Capesize bulk carriers, one of which had been delivered to Oceanbulk on July 22, 2014 (i.e. Hull HN 213-JMU (named Peloreus)) and one of which is currently under construction at JMU (i.e. HN 214-JMU (to be named Leviathan)), with expected delivery in September 2014. One loan, which matures five years after the drawdown date, can be drawn for each vessel being financed. Each loan is subject to 19 quarterly amortization payments equal

to 1/60th of the loan amount, with the 20th payment equal to the remaining amount outstanding on the loan. The loans bear interest at three-month LIBOR plus a margin of 3.4% per annum. The Deutsche Bank Facility is secured by first priority cross-collateralized ship mortgages on the financed vessels, charter assignments, insurance and earnings assignments and is guaranteed by the Guarantor. The Deutsche Bank Facility includes certain negative covenants, including limitations on changes of ownership or control, additional indebtedness and the payment of dividends or other distributions until March 31, 2015, after which Oceanbulk may only pay dividends if no event of default has occurred or is continuing. The Deutsche Bank Facility also requires that the aggregate fair market value of the financed vessels exceeds 130% of the outstanding loans under the Deutsche Bank Facility. The Deutsche Bank Facility includes also the following financial maintenance covenants, which are applicable to the Guarantor:

•

maximum ratio of total liabilities to total assets (on a market value adjusted basis) of less than 70%;

•

minimum EBITDA to interest ratio of 2.0x, tested annually for 2014 and 2015, and 2.5x thereafter; and

•

minimum liquidity of the greater of (x) $10 million and (y) $0.5 million in unencumbered cash per vessel directly or indirectly owned by the Guarantor.

The Deutsche Bank Facility also contains cross-default provisions triggered by a payment default or the acceleration or cancelation by reason of a default or indebtedness in excess of $10.0 million on a consolidated basis.

On July 4, 2014, Oceanbulk executed an amendment to the facility with Deutsche Bank AG in order to add ITF International Transport Finance Suisse AG as a lender and align the loan terms with the effects of the Merger.

HSBC Facility. On April 1, 2014, Oceanbulk executed a binding term sheet and on June 16, 2014, Oceanbulk entered into a loan agreement with HSBC Bank plc. for financing in an aggregate amount of $86.6 million, to partially finance the acquisition cost of the secondhand vessels Kymopolia, Mercurial Virgo, Pendulum, Amami and Madredeus, all of which have been delivered. The loan, which was drawn in June 2014, matures in the second quarter of 2019 (59 months from the drawdown date) and is repayable in 20 quarterly installments, commencing three months after the drawdown, of $1.6 million plus a balloon payment of $55.5 million due together with the last installment. The loan bears interest at LIBOR plus a margin of 3.3% per annum, as long as the ratio of the fair value of the vessels to the outstanding loan (including any interest rate swap exposure) (the “ACR”) exceeds 143% or 4.10% per annum, as long as the ACR falls below 143%. The HSBC Facility is secured by first priority mortgage over the financed vessels, and general and specific assignments and is guaranteed by the Guarantor. The HSBC Facility includes certain negative covenants, including limitations on changes of ownership or control, other than as part of an initial public offering and as long as the borrowers are not in an event of default and shareholding thresholds applicable to the Pappas family interests. It also includes dividend restrictions if an event of default has occurred or is continuing or if the ACR falls below 143% while it also requires that the aggregate ACR exceeds 135% and minimum free liquidity to be maintained by the borrowers in the aggregate of $2.5 million. In addition, a portion of 10% of the initial HSBC Facility shall be prepaid from the proceeds of the first capital increase of the Guarantor after January 1, 2016. The HSBC Facility includes the following financial maintenance covenants, which are applicable to the Guarantor:

•

maximum leverage ratio (calculated based on long term debt net of available cash divided by total assets net of available cash) not to exceed 70%;

•

minimum EBITDA to interest expense ratio of 2.0x, in relation to the preceding four fiscal quarters, effective from the second anniversary of the execution date; and

•

minimum liquidity to exceed $0.5 million in free cash balances per vessel owned by the Guarantor.

CEXIM Facility. On March 21, 2014, Oceanbulk executed a binding term sheet and on June 26, 2014 entered into a loan agreement with the Export-Import Bank of China for financing in an aggregate amount of $57.4 million, which will be available in two tranches of $28.7 million to partially finance the construction cost of two Capesize bulk carriers currently under construction at SWS (HN 1312-SWS and HN 1313-SWS), with expected delivery in April and June 2015. Each tranche will mature 10 years from the delivery date of the last delivered vessel and will be repayable in 20 semi-annual installments of $1.1 million plus a balloon payment of $5.7 million, the first installment being due on the first January 21 or July 21 six months after the delivery of each vessel. The loans will bear interest at six-month LIBOR plus a margin of 3.25% per annum. The CEXIM Facility will be secured by first priority cross-collateralized ship mortgages on the financed vessels, charter assignments, insurance and earnings assignments and will be guaranteed by the Guarantor. The CEXIM Facility will include certain negative covenants,

including limitations on changes of ownership or control. The CEXIM Facility also requires that the aggregate value of the financed vessels exceeds 125% of the outstanding loans under the CEXIM Facility and that each vessel owning subsidiary must maintain minimum cash of not less than $0.5 million. The CEXIM Facility will include the following financial maintenance covenants, which are applicable to the Guarantor:

•

minimum equity ratio calculated based on book value of equity to total book value of assets of no less than 30%;

•

minimum book value of equity of not less than $250 million after December 31, 2015; and

•

minimum liquidity of $0.5 million in unencumbered cash per vessel directly or indirectly owned by the Guarantor.

As of June 30, 2014, no amounts had been drawn under the CEXIM Facility. In addition as of June 30, 2014, Oceanbulk was in compliance with the applicable covenants under the existing loan facilities.

Members’ Loans

According to the provisions of the limited liability agreements of Oceanbulk Shipping and Oceanbulk Carriers, the Oceanbulk Holdcos, as members, could, from time to time, make investments in Oceanbulk Shipping and Oceanbulk Carriers either in the form of capital contributions in exchange for the companies’ Class A Units or in the form of Members’ Loans, evidenced by Convertible Notes. The Convertible Notes bore fixed interest at 2% per annum, accruing quarterly in arrears and maturing on December 31, 2042. On May 28, 2014, the entire $415.0 million principal amount of Members’ Loans was converted into 373,533 Class A Units issued by Oceanbulk Shipping and Oceanbulk Carriers to Oaktree OBC Holdings LLC (the “Oaktree Holdco”) and 41,504 Class A Units issued by Oceanbulk Shipping and Oceanbulk Carriers to Millennia Limited Liability Company (the “Pappas Holdco”), respectively.

During the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, Oceanbulk incurred $2.7 million and $0.2 million, respectively, of interest accrued on the Convertible Notes, of which $1.3 million and $0.04 million, respectively, was capitalized to vessel cost and the remaining $1.4 million and $0.2 million, respectively, was expensed in its historical results of operations.

In addition, during the six month periods ended June 30, 2014 and 2013, Oceanbulk incurred $3.0 million and $0.7 million, respectively, of interest accrued on the Convertible Notes, of which $1.2 million and $0.3 million, respectively, was capitalized to vessel cost and the remaining $1.8 million and $0.4 million was expensed in Oceanbulk’s historical results of operations.

Bareboat charters

On May 17, 2013, Oceanbulk entered into separate bareboat charter party contracts with affiliates of New Yangzijiang shipyards for eight-year bareboat charters of four newbuilding 64,000 dwt Ultramax vessels (HN 1061, HN 1062, HN 1063 and HN 1064) being built at New Yangzijiang. The vessels are being constructed pursuant to four shipbuilding contracts entered into between four pairings of affiliates of New Yangzijiang. Each pair has one shipyard party (each, a “New YJ Builder”) and one ship-owning entity (each a “New YJ Owner”). Delivery to Oceanbulk of each vessel is deemed to occur upon delivery of the vessel to the New YJ Owner from the corresponding New YJ Builder. An amount of $20.7 million for each vessel will be financed by the relevant New YJ Owner, to whom Oceanbulk will pay a pre-agreed daily bareboat charter hire rate. After each vessel’s delivery, Oceanbulk has monthly purchase options to acquire the vessel at pre-determined, amortizing-during-the-charter-period prices. On the eighth anniversary of the delivery of a vessel, Oceanbulk has the obligation to purchase the vessel at a purchase price of $6.0 million.

On December 27, 2013, Oceanbulk entered into separate bareboat charter party contracts with affiliates of SWS shipyards for ten-year bareboat charters of five newbuilding 208,000 dwt Newcastlemax vessels (Hulls HN 1359, HN 1360, HN 1361, HN 1362 and HN 1363) being built at SWS. The vessels are being constructed pursuant to shipbuilding contracts entered into between five pairings of affiliates of SWS. Each pair has one shipyard party (each, an “SWS Builder”) and one ship-owning entity (each an “SWS Owner”). Delivery to Oceanbulk of each vessel is deemed to occur upon delivery of the vessel to the SWS Owner from the corresponding SWS Builder. An

amount of $46.4 million for each vessel will be financed by the relevant SWS Owner, to whom Oceanbulk will pay a daily bareboat charter hire rate payable monthly plus a variable amount corresponding to the LIBOR rate payable every six months and a one-time handling fee of $0.5 million. After each vessel’s delivery, Oceanbulk has monthly purchase options to acquire the vessel at pre-determined, amortizing-during-the-charter-period prices. At the end of the ten-year charter period for each vessel, Oceanbulk has the obligation to purchase the vessel at a purchase price of $13.9 million.

Off-balance sheet arrangements

Investment in Heron Ventures and Guarantee of CiT Facility by Oceanbulk Shipping. On February 19, 2014, Oceanbulk Shipping provided $3.1 million and €14.9 million of capital in the form of a convertible loan (each a “Convertible Loan”) to Heron Ventures Ltd. a limited liability company incorporated in Malta whose sole stockholder was ABY Group Holding Limited (itself a joint venture between Augustea-Bunge and York). The Convertible Loan is convertible into 50% of the outstanding equity of Heron, so upon conversion of the Convertible Loan, Heron would be a 50-50 joint venture between Oceanbulk Shipping and ABY Group Holding Limited. The purpose of the Convertible Loan was to partially finance the acquisition out of bankruptcy of Deiulemar Shipping S.p.A., an operator of 12 dry bulk vessels, for which Heron had bid €82.5 million and was the sole and winning bidder. On February 13, 2014, Heron entered into a $95.2 million loan agreement with CiT Finance LLC, which is severally guaranteed on a 50-50, unsecured basis by Oceanbulk Shipping and ABY Group Holding Limited. On March 10, 2014, deeds of transfer in respect of the vessels in the Ex-Deiulemar fleet were executed in favor of Heron.

The CiT Facility was divided into two portions, a “Core Portion” of $65.2 million and a “Non-Core Portion” of $30.0 million. The Core Portion is secured by four vessels (the “Core Heron Vessels”), consisting of three Kamsarmax vessels and one Capesize vessel intended to be retained by Heron (or its equityholders), and matures in June 2019. The Non-Core Portion was secured by eight vessels (the “Non-Core Heron Vessels”) of various sizes but was repaid in full during the second quarter of 2014. Interest accrues on the CiT Facility at a rate of 4.25% per annum. The Core Portion is subject to scheduled quarterly amortization payments of $1.6 million, beginning on June 30, 2014, and the Non-Core Portion is not subject to scheduled amortization and is repayable in full on June 30, 2015. Heron may voluntarily prepay the outstanding principal amount of the loans under the CiT Facility at any time, subject to a prepayment premium of 2% during the first year and 1% during the second year.

Upon a sale or loss of a Core Heron Vessel, the Core Portion must be prepaid based on a scheduled release price for the Core Heron Vessel. Upon a sale or loss of a Non-Core Heron Vessel, the net proceeds must be used to prepay the Non-Core Portion and then applied to the budgeted cost of intermediate surveys during 2014 of the Core Heron Vessels. As of June 30, 2014 the outstanding balance of the Core Portion was $63.6 million, while the Non- Core Portion had been fully repaid within the second quarter of 2014. As of August 20, 2014, one Non-Core Heron Vessel was still owned by Heron. The CiT Facility contains the following financial covenants that Heron must comply with:

•

a minimum cash balance at all times of $1.0 million per Core Heron Vessel;

•

minimum liquidity at all times of $185,000 per Non-Core Heron Vessel;

•

a minimum Fixed Charge Coverage Ratio (as defined therein and calculated based on annualized EBITDA less capital expenditures divided by the debt service for the relevant period) of 1.10x, measured quarterly after the quarter ending March 31, 2015;

•

Core Portion minimum asset coverage test (tested semiannually starting on September 30, 2014), which requires that each Core Heron Vessel’s charter-free fair market value be not less than 140% (150% after the quarter ending March 31, 2016) of the Core Portion balance outstanding against it.

Under the CiT Facility, Heron may only make quarterly distributions to its members from accumulated unrestricted excess cash in operating accounts so long as no event of default has occurred and is continuing or would occur as a result of such distribution, so long as (i) the Non-Core Portion has been paid in full, (ii) an amount corresponding to the budgeted cost of all 2014 Core Heron Vessel intermediate surveys has been deposited in a restricted account at CiT and (iii) the outstanding amount under the CiT Facility does not exceed 60% of the combined fair market value of the vessels owned by Heron.

In connection with the distribution of the Core Heron Vessels to the Heron equity holders (and discussions with CiT to appropriately refinance the CiT Facility with new vessel financing), Oceanbulk expects that the Convertible Loan will be converted into Heron equity during September 2014.

Contractual Obligations

The following table sets forth Oceanbulk’s contractual obligations and their maturity dates as of June 30, 2014 on an historical basis.


Historical contractual obligations for the twelve month periods ended June 30,
	2015		2016		2017		2018		2019		2020 and thereafter		Total
	($ in thousands)
Long term debt⁽¹⁾	$	17,451	$	17,451	$	17,451	$	26,607	$	109,277	$	—	$	188,237
Interest on long term debt⁽²⁾		6,980		6,308		5,603		4,616		2,958		—		26,465
Management fees⁽³⁾		405		—		—		—		—		—		405
Purchase commitments⁽⁴⁾		367,015		197,154		—		—		—		—		564,169
Bareboat commitments – upfront fee⁽⁵⁾		32,108		13,491		—		—		—		—		45,599
Bareboat commitments – charterhire⁽⁵⁾	$	3,600	$	15,804	$	30,659	$	31,429	$	32,951	$	301,483	$	415,926


Total	$	427,559	$	250,208	$	53,713	$	62,652	$	145,186	$	301,483	$	1,240,801

The following table sets forth Oceanbulk’s contractual obligations and their maturity dates as of June 30, 2014 on an as-adjusted basis, giving effect to (i) the incurrence subsequent to June 30, 2014 of the Deutsche Bank Facility and the CEXIM Facility, and the interest thereon:


Pro-forma contractual obligations for the twelve month periods ended June 30,
	2015		2016		2017		2018		2019		2020 and thereafter		Total
	($ in thousands)
Long term debt⁽¹⁾	$	20,701	$	26,373	$	26,373	$	35,529	$	118,199	$	83,421	$	310,596
Interest on long term debt⁽²⁾		9,023		10,422		9,385		8,077		6,099		5,147		48,153
Management fees⁽³⁾		405		—		—		—		—		—		405
Purchase commitments⁽⁴⁾		244,655		197,154		—		—		—		—		441,809
Bareboat commitments – upfront fee⁽⁵⁾		32,108		13,491		—		—		—		—		45,599
Bareboat commitments – charterhire⁽⁵⁾	$	3,600	$	15,804	$	30,659	$	31,429	$	32,951	$	301,483	$	415,926


Total	$	310,492	$	263,244	$	66,417	$	75,035	$	157,249	$	390,051	$	1,262,488

(1)	The historical outstanding balance of Oceanbulk’s long-term debt with commercial banks at June 30, 2014 was $188.2 million.

The as-adjusted contractual obligations table includes also the expected repayment of the obligations arising under the Deutsche Bank Facility and the CEXIM Facility discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oceanbulk—Oceanbulk’s Borrowing Activities—Loan financings from commercial banks,” for the portion of the facilities that were entered into subsequent to June 30, 2014 and will be fully utilized to pay part of the purchase obligations discussed in footnote (5). Such expected repayment is based on (i) the actual drawdown dates, to the extent applicable, subsequent to June 30, 2014 and (ii) the financed newbuilding vessels’ expected delivery dates, for those drawdowns under the Deutsche Bank Facility and the CEXIM Facility that had not yet occurred subsequently to June 30, 2014 but are expected concurrently with the relevant vessel deliveries.

(2)

Oceanbulk’s historical long-term debt outstanding as of June 30, 2014 bears interest at a variable rate of three-month LIBOR plus a margin. The calculation of interest payments has been made assuming interest rates based on the 3-month LIBOR as of June 30, 2014, and Oceanbulk’s various applicable margin rates under its historical debt as of June 30, 2014 ranging from 3.4% to 3.9% per annum.

The as-adjusted contractual obligations table includes also the expected interest payments under the Deutsche Bank Facility and the CEXIM Facility as discussed under footnote (1) above. The calculation of such interest payments has been made assuming interest rates based on the 3-month LIBOR as of June 30, 2014 and Oceanbulk’s various applicable margin rates under the respective facilities ranging from 3.25% to 3.4% per annum.

(3)

The amounts represent amounts payable within two months under Oceanbulk’s management agreements discussed in Note 3 to Oceanbulk’s unaudited interim combined financial statements for those vessels in operation as of June 30, 2014. The management agreements are terminable at either party’s option upon two months’ notice, and the relevant fees will be payable at half rate for a further period of three calendar months from the termination date.

(4)

The amounts presented in the historical contractual obligations table represent Oceanbulk’s remaining obligations as of June 30, 2014 with respect to the pipeline of its newbuilding program, excluding those applicable under the bareboat lease agreements classified as capital leases which are discussed under footnote (5) below.

The as adjusted purchase commitments have been adjusted to exclude those commitments under the financed vessels under the Deutsche Bank Facility and the CEXIM Facility which payment obligation has been reflected in the as adjusted Long term debt under footnote (1) above.

(5)	The amounts presented in the historical and as-adjusted contractual obligations table represent Oceanbulk’s commitments under the bareboat lease arrangements under the upfront fee and the charterhire, gross of any address commissions Oceanbulk may be entitled to.

Quantitative and Qualitative Disclosures About Market Risk

Oceanbulk is exposed to various market risks, including changes in interest rates, foreign-currency fluctuations, inflation and credit risk. Other than interest rate risk, Oceanbulk does not currently hedge its exposure to those risks through derivative contracts, but its management monitors fluctuations on a continuous basis and will seek to enter into hedge transactions when appropriate.

Interest Rate Risk

The international shipping industry is capital intensive, requiring significant amounts of capital provided in the form of long-term debt. Oceanbulk’s debt from commercial banks bears interest at floating rates based on LIBOR. Increasing interest rates could increase Oceanbulk’s interest expense and adversely impact its future earnings. Oceanbulk uses interest rate swaps to manage net exposure to interest rate fluctuations related to these borrowings and to lower its overall borrowing costs.

During the third quarter of 2013, Oceanbulk entered into five interest rate swaps with Goldman Sachs Bank USA, effective from October 1, 2014 and maturing on April 1, 2018. Under their terms, Oceanbulk will make quarterly payments to the counterparty at fixed rates for each swap, ranging from 1.79% to 2.07% per annum, based on a changing notional amount beginning, in the aggregate of the five swaps at $186.3 million and extending up to $461.3 million, during the life of the instruments. The counterparty will make quarterly floating rate payments at three-month U.S. dollar LIBOR to Oceanbulk based on the same notional amount. During the three month period ended March 31, 2014, the swaps were not designated as accounting hedges and accordingly changes in their fair value in the three month period ended March 31, 2014 of $1,118 were reported in earnings as a Loss on Derivative Financial Instruments. On April 1, 2014, Oceanbulk designated the swaps as cash flow hedges in accordance with ASC Topic 815, and accordingly, since the effective portion of these cash flow hedges during the second quarter of 2014 were reported in Accumulated Other Comprehensive Income (loss) on the June 30, 2014 combined balance sheet, with the outstanding fair value (based on Level 2 inputs of the fair value hierarchy) as of the same date and as of December 31, 2013 being separately reflected as Derivative Financial Instruments within current and non-current liabilities. Any ineffective portion of these cash flow hedges is reported as gain or loss in the Statement of Operations for the relevant period.

As an indication of the extent of Oceanbulk’s sensitivity to interest rate changes, an increase in three-month LIBOR of 1% would have increased its net loss and decreased its cash flows during the period ended June 30, 2014 by approximately $0.5 million based upon its debt level during 2014.

Inflation and Cost Increases

Although inflation has had a moderate impact on operating expenses, interest costs, dry docking expenses and overhead, Oceanbulk does not expect inflation to have a significant impact on direct costs in the current and foreseeable economic environment, other than potentially affecting insurance costs and crew costs. It is anticipated that insurance costs will continue to rise over the next few years and rates may increase at a rate that exceeds the general rate of inflation. Recently, there has been an increased demand for qualified crews, which has, and may continue to, put inflationary pressure on crew costs.

Foreign Currency Exchange Risk

Oceanbulk generates all of its revenue in U.S. dollars, and the majority of its expenses are denominated in U.S. dollars. However, a portion of Oceanbulk’s ship operating and administrative expenses are denominated in currencies other than U.S. dollars. For the year ended December 31, 2013 and the six month period ended June 30, 2014, Oceanbulk incurred approximately 33% of its operating expenses and the majority of its General and administrative expenses in currencies other than U.S. dollars. For accounting purposes, expenses incurred in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. Because a significant portion of Oceanbulk’s expenses are incurred in currencies other than U.S. dollars, its expenses may, from time to time, increase relative to its revenues as a result of fluctuations in exchange rates, which could affect the amount of net income/loss that Oceanbulk reports in future periods. As of June 30, 2014 and December 31, 2013, the net effect of a 1% adverse movement in U.S. dollar/Euro exchange rates would not have had a material effect on Oceanbulk’s net loss.

Oceanbulk does not currently hedge movements in currency exchange rates, but its management monitors exchange-rate fluctuations on a continuous basis. It may seek to hedge this currency fluctuation risk in the future.

Concentration of Credit Risk

During the six month periods ended June 30, 2014 and 2013, charterers that individually accounted for more than 10% of Oceanbulk’s voyage revenues were as follows:


Charterer	2014			2013
A		44	%		—
B		15	%		—
C		14	%		—
D		—			57	%
E		—			29	%
F		—			14	%

As Oceanbulk continues to get delivery of its new building vessels and its fleet expands, its credit risk arising for concentration to a small number of charterers will spread out.

Oceanbulk performs ongoing credit evaluations of its charterers, and it generally does not require collateral in its business agreements. Oceanbulk maintains provisions for potential credit losses when necessary.

In addition, Oceanbulk has bank deposits that expose it to credit risk arising from possible default by the counterparty. It manages the risk by using credit-worthy financial institutions.

Lack of Historical Operating Data for Vessels Before Their Acquisition

Consistent with shipping industry practice, other than inspection of the physical condition of the vessels and examinations of classification society records, there is no historical financial due diligence process when Oceanbulk acquires vessels. Accordingly, Oceanbulk will not obtain the historical operating data for the vessels from the sellers because that information is not material to its decision to make acquisitions, nor does Oceanbulk believes it would be helpful to potential investors in its common shares in assessing its business or profitability. Most vessels are sold under a standardized agreement, which, among other things, provides the buyer with the right to inspect the vessel and the vessel’s classification society records. The standard agreement does not give the buyer the right to inspect, or receive copies of, the historical operating data of the vessel. Prior to the delivery of a purchased vessel, the seller typically removes from the vessel all records, including past financial records and accounts related to the vessel. In addition, the technical management agreement between the seller’s technical manager and the seller is automatically terminated and the vessel’s trading certificates are revoked by its flag state following a change in ownership.

Consistent with shipping industry practice, Oceanbulk treats the acquisition of a vessel (whether acquired with or without charter) as the acquisition of an asset rather than a business. Although vessels are generally acquired free of charter, Oceanbulk may, in the future, acquire vessels with existing time charters, such as the two Post-Panamax vessels acquired in 2014. Where a vessel has been under a voyage charter, the vessel is delivered to the buyer free of charter, and it is rare in the shipping industry for the last charterer of the vessel in the hands of the seller to continue as the first charterer of the vessel in the hands of the buyer. In most cases, when a vessel is under time charter and the buyer wishes to assume that charter, the vessel cannot be acquired without the charterer’s consent and the buyer’s entering into a separate direct agreement with the charterer to assume the charter. The purchase of a vessel itself does not transfer the charter, because it is a separate service agreement between the vessel owner and the charterer.

When Oceanbulk purchases a vessel and assumes or renegotiates a related time charter, Oceanbulk must take the following steps before the vessel will be ready to commence operations:

•

obtain the charterer’s consent to Oceanbulk as the new owner;

•

obtain the charterer’s consent to a new technical manager;

•

obtain the charterer’s consent to a new flag for the vessel;

•

arrange for a new crew for the vessel;

•

replace all hired equipment on board, such as gas cylinders and communication equipment;

•

negotiate and enter into new insurance contracts for the vessel through Oceanbulk’s own insurance brokers;

•

register the vessel under a flag state and perform the related inspections in order to obtain new trading certificates from the flag state;

•

implement a new planned maintenance program for the vessel; and

•

ensure that the new technical manager obtains new certificates for compliance with the safety and vessel security regulations of the flag state.

INDEX TO OCEANBULK FINANCIAL STATEMENTS

Index to Combined Financial Statements of

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC


	Page
Report of Independent Registered Public Accounting Firm		F-2

Audited Combined Financial Statements:
Combined Balance Sheets as of December 31, 2013 and 2012		F-3
Combined Statements of Operations for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012		F-4
Combined Statements of Members’ Equity for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012		F-5
Combined Statements of Cash Flows for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012		F-6
Notes to Combined Financial Statements		F-7

Index to Unaudited Interim Combined Financial Statements of

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC


	Page
Unaudited Interim Combined Financial Statements:
Combined Balance Sheets as of June 30, 2014 and December 31, 2013		F-29
Combined Statements of Operations for the six month periods ended June 30, 2014 and 2013		F-30
Combined Statements of Members’ Equity for the six month periods ended June 30, 2014 and 2013		F-32
Combined Statements of Cash Flows for the six month periods ended June 30, 2014 and 2013		F-33
Notes to Combined Financial Statements		F-34

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC

We have audited the accompanying combined balance sheets of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC (together, the “Company”), as of December 31, 2013 and 2012, and the related combined statements of operations, members’ equity, and cash flows for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC at December 31, 2013 and 2012, and the combined results of their operations and their cash flows for the year ended December 31, 2013, and the period from October 4, 2012 through December 31, 2012, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.

Athens, Greece

April 2, 2014

F-2

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Combined Balance Sheets

December 31, 2013 and 2012

(Expressed in thousands of U.S. Dollars, unless otherwise stated)


	2013			2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2(f))	$	29,979		$	1,148
Restricted Cash (Notes 2(g) and 7)		193			—
Accounts receivable trade (Note 2(h))		2,966			1,926
Inventories (Notes 2(i) and 4)		3,736			1,810
Prepayments and other		722			21
Due from related parties (Note 3)		181			—
Current portion of deferred charges, net (Note 2(n))		225			—

Total current assets		38,002			4,905


FIXED ASSETS:
Advances for vessels’ acquisitions (Notes 2(k) and 5)		2,750			—
Advances for vessels under construction (Notes 2(k) and 6)		107,439			25,700
Vessels, net (Notes 2(j) and 5)		151,994			36,371

Total fixed assets, net		262,183			62,071


OTHER NON CURRENT ASSETS:
Restricted Cash (Notes 2(g) and 7)		6,000			—
Deferred charges, net (Note 2(n))		528			—

Total other non-current assets		6,528			—

Total assets	$	306,713		$	66,976


LIABILITIES AND MEMBERS’ EQUITY:
CURRENT LIABILITIES:
Current portion of long-term debt (Note 7)	$	9,897		$	—
Accounts payable, trade and other		957			94
Accrued liabilities		4,123			133
Due to related parties (Note 3)		148			147
Derivative financial instruments (Note 10)		828			—

Total current liabilities		15,953			374


Long-term debt (Note 7)		76,688			—
Members’ Loans (Notes 3 and 8)		226,005			68,010
Derivative financial instruments (Note 10)		595			—

Total non-current liabilities		303,288			68,010

Total liabilities		319,241			68,384

Commitments and contingencies (Note 12)		—			—

MEMBERS’ EQUITY:
Members’ Capital Contributions (Note 11)		—			—
Accumulated deficit		(12,528	)		(1,408	)

Total Members’ equity		(12,528	)		(1,408	)

Total liabilities and Members’ equity	$	306,713		$	66,976

The accompanying notes are an integral part of these combined financial statements.

F-3

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Combined Statements of Operations

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of U.S. Dollars, unless otherwise stated)


	2013			2012
REVENUES:
Voyage revenues (Note 2(o))	$	14,021		$	1,975

Total revenues		14,021			1,975


EXPENSES:
Voyage expenses (Note 14)		(4,017	)		(1,431	)
Vessel operating expenses (Note 14)		(6,142	)		(574	)
Management fees (Note 3)		(660	)		(76	)
Depreciation (Note 5)		(2,656	)		(271	)
Dry docking and special survey costs (Note 2(m))		(3,248	)		—
General and administrative expenses to related parties (Note 3)		(3,683	)		(860	)
General and administrative expenses		(414	)		(4	)

Total Expenses		(20,820	)		(3,216	)

Operating loss		(6,799	)		(1,241	)

OTHER INCOME (EXPENSES):
Interest and finance costs (Note 15)		(786	)		—
Interest on Members’ Loans (Notes 3 & 8)		(1,412	)		(167	)
Loss on derivative financial instruments (Note 10)		(1,423	)
Other, net		5			—

Total other income (expenses), net		(3,616	)		(167	)

Net loss	$	(10,415	)	$	(1,408	)

Preferential Deemed Dividend (Notes 3 & 5)		(705	)		—

Net loss available to Members	$	(11,120	)	$	(1,408	)

The accompanying notes are an integral part of these combined financial statements.

F-4

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Combined Statements of Members’ Equity

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of U.S. Dollars, unless otherwise stated)


	Members’ Capital Contributions		Accumulated Deficit			Total Members’ Equity
Balance, October 4, 2012	$	—	$	—		$	—

- Net loss		—		(1,408	)		(1,408	)

Balance, December 31, 2012	$	—	$	(1,408	)	$	(1,408	)

- Net loss		—		(10,415	)		(10,415	)

- Preferential Deemed Dividend (Note 5)		—		(705	)		(705	)

Balance, December 31, 2013	$	—	$	(12,528	)	$	(12,528	)

The accompanying notes are an integral part of these combined financial statements.

F-5

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Combined Statements of Cash Flows

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of U.S. Dollars, unless otherwise stated)


	2013			2012
Cash Flows used in Operating Activities:
Net loss	$	(10,415	)	$	(1,408	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,656			271
Amortization of deferred financing fees		23			—
Loss on derivative financial instruments		1,423			—
Accrued interest expense on Members’ Loans		1,412			167
Changes in operating assets and liabilities:
Increase in:
Accounts receivable, trade		(1,040	)		(1,926	)
Inventories		(1,926	)		(1,810	)
Prepayments and other		(701	)		(21	)
Due from related parties		(181	)		—
Increase in:
Accounts payable, trade and other		863			94
Accrued liabilities		3,990			133
Due to related parties		1			147

Net Cash used in Operating Activities	$	(3,895	)	$	(4,352	)


Cash Flows used in Investing Activities:
Acquisition of vessels		(118,984	)		(36,642	)
Advances for vessel acquisitions and vessels under construction		(83,245	)		(25,660	)

Net cash used in Investing Activities	$	(202,229	)	$	(62,302	)


Cash Flows used in Financing Activities:
Increase in Restricted Cash		(6,193	)		—
Proceeds from long-term debt		87,458			—
Repayment of long-term debt		(873	)		—
Proceeds from Members’ Loans		173,339			67,802
Return of Members’ Loans		(18,000	)		—
Payment of financing fees		(776	)		—

Net cash from Financing Activities	$	234,955		$	67,802

Net increase in cash and cash equivalents		28,831			1,148
Cash and cash equivalents at beginning of year/period		1,148			—

Cash and cash equivalents at end of the year/period	$	29,979		$	1,148

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Bank loan Interest	$	426		$	—

The accompanying notes are an integral part of these combined financial statements.

F-6

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

1.	Basis of Presentation and General Information:

The accompanying combined financial statements include the consolidated accounts of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC and their wholly owned subsidiaries. Oceanbulk Shipping LLC and Oceanbulk Carriers LLC were formed under the laws of the Republic of the Marshall Islands on October 4, 2012 and April 5, 2013, respectively, in view of separate limited liability agreements entered between Oaktree OBC Holdings LLC (“Oaktree”) and Millennia Limited Liability Company (“Millennia” and, together with Oaktree, the “Members”) with Oceanbulk Shipping LLC dated October 9, 2012 and with Oceanbulk Carriers LLC dated April 11, 2013. Oceanbulk Shipping LLC and Oceanbulk Carriers LLC and their wholly owned subsidiaries are herein referred to collectively as the “Company”. Oaktree currently exerts control over the Company’s operations through its 90% ownership interest. The Company is engaged in the ocean transportation of dry bulk cargoes worldwide through the ownership and operation of the following bulk carrier vessels:


	Vessel name	Type	DWT		Built/Delivery
Existing fleet
1.	Obelix	Capesize		181,433	2011⁽²⁾
2.	Maiden Voyage	Supramax		58,722	2012⁽²⁾
3.	Big Bang (ex Cape Shanghai)	Capesize		174,109	2007⁽²⁾
4.	Strange Attractor (ex Tokiwa Glory)	Supramax		55,742	2006⁽²⁾
5.	Big Fish (ex Shining Star)	Capesize		177,662	2004⁽²⁾
6.	Pantagruel (ex Pacific Confidence)	Capesize		180,181	2004⁽²⁾
7.	Kymopolia (ex Shiga) (Note 16)	Capesize		176,990	2006⁽²⁾
8.	Mercurial Virgo (ex Mineral Pearl) (Note 16)	Kamsarmax		81,545	2013⁽²⁾
9.	Pendulum (ex Christina Victory) (Note 16)	Kamsarmax		82,619	2006⁽²⁾
10.	Amami (ex GL Xiushan) (Note 16)	Post-Panamax		98,681	2011⁽²⁾
11.	Madredeus (ex GL Zoushan) (Note 16)	Post-Panamax		98,681	2011⁽²⁾
Newbuilding fleet
12.	HN 207-JMU (tbn Magnum Opus)	Kamsarmax		81,022	2014⁽³⁾
13.	HN 213-JMU (tbn Peloreus)	Capesize		182,000	2014⁽³⁾
14.	HN 214-JMU (tbn Leviathan)	Capesize		182,000	2014⁽³⁾
15.	HN 5017-JMU	Capesize		182,000	2015⁽³⁾
16.	HN 5055-JMU	Capesize		182,000	2015⁽³⁾
17.	HN 5056-JMU	Capesize		182,000	2015⁽³⁾
18.	HN 1312-SWS	Capesize		180,000	2015⁽³⁾
19.	HN 1313-SWS	Capesize		180,000	2015⁽³⁾
20.	HN NE166-NACKS	Newcastlemax		209,000	2015⁽³⁾
21.	HN NE167-NACKS	Newcastlemax		209,000	2015⁽³⁾
22.	HN NE184-NACKS	Newcastlemax		209,000	2015⁽³⁾
23.	HN NE164-NACKS (tbn Honey Badger)	Ultramax		61,000	2015⁽³⁾
24.	HN NE165-NACKS	Ultramax		61,000	2015⁽³⁾
25.	HN 1359⁽¹⁾	Newcastlemax		208,000	2015⁽³⁾
26.	HN 1360⁽¹⁾	Newcastlemax		208,000	2015⁽³⁾
27.	HN 1361⁽¹⁾	Newcastlemax		208,000	2016⁽³⁾
28.	HN 1362⁽¹⁾	Newcastlemax		208,000	2016⁽³⁾
29.	HN 1363⁽¹⁾	Newcastlemax		208,000	2016⁽³⁾
30.	HN 1061⁽¹⁾	Ultramax		64,000	2015⁽³⁾
31.	HN 1062⁽¹⁾	Ultramax		64,000	2015⁽³⁾
32.	HN 1063⁽¹⁾	Ultramax		64,000	2015⁽³⁾
33.	HN 1064⁽¹⁾	Ultramax		64,000	2015⁽³⁾
34.	HN 1080	Ultramax		64,000	2015⁽³⁾
35.	HN 1081	Ultramax		64,000	2015⁽³⁾
36.	HN 1082	Ultramax		64,000	2015⁽³⁾
37.	HN 1083	Ultramax		64,000	2015⁽³⁾

F-7

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

(1)	Chartered under bareboat lease arrangement that qualifies as an accounting capital lease (Note 6).

(2)	Year of construction.

(3)	Year of expected delivery.

2.	Significant Accounting policies:

Principles of Combination: The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been presented using the historical carrying costs of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC and their consolidated subsidiaries listed in Note 1 for all periods presented, as each is under common control of the Members for the respective periods. All intercompany balances and transactions have been eliminated.

Use of Estimates: The preparation of the accompanying combined financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other Comprehensive Income (Loss): The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 220, “Comprehensive Income”, which requires separate presentation of certain transactions, which are recorded directly as components of Members’ equity. The Company has no such transactions which affect other comprehensive loss and, accordingly, for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, comprehensive loss equals net loss.

Concentration of Credit Risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, restricted cash, accounts receivable and derivative contracts (interest rate swaps). The Company places its cash, restricted cash and cash equivalents consisting mostly of deposits, with well-known financial institutions and performs periodic evaluations of the relative credit standing of those financial institutions. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition. The Company does not obtain rights to collateral to reduce its credit risk. The Company is exposed to credit risk in the event of non-performance by counterparties to derivative instruments; however, the Company limits its exposure by constantly monitoring the counterparties’ credit ratings. During the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, charterers that individually accounted for more than 10% of the Company’s voyage revenues were as follows:


Charterer	2013			2012
A		22	%		—
B		19	%		—
C		18	%		—
D		15	%		100	%
E		11	%		—

The outstanding accounts receivable balance of these charterers as of December 31, 2013, amounted to $2.9 million.

F-8

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

Foreign Currency Translation: The functional currency of the Company is the U.S. Dollar, since the Company’s vessels operate in international shipping markets and therefore primarily transact business in U.S. Dollars. The Company’s accounting records are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies, are translated into U.S. Dollars at the year-end exchange rates. Resulting gains or losses are reflected within “Other, net” line item in the accompanying combined statements of operations.

Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents.

Restricted Cash: Restricted Cash includes bank balances that are required under the Company’s borrowing arrangements to be maintained and used to fund the loan installments coming due. The funds can only be used for the purposes of loan repayment. In addition, Restricted Cash also includes minimum deposits required to be maintained with certain banks under the Company’s borrowing arrangements. In the event that the obligation is expected to be terminated within the next twelve months from the balance sheet date, these deposits are classified as current assets, otherwise are classified as non-current assets.

Accounts receivable trade: Accounts receivable trade include receivables from charterers for hire, freight and demurrage billings, net of any provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts primarily based on the aging of such balances and any amounts in disputes. The provision for doubtful accounts was $nil at December 31, 2013 and 2012, respectively.

Inventories: Inventories consist of lubricants and bunkers, which are stated at the lower of cost or market. Cost is determined by the first in, first out method. Inventories include bunkers when the vessel operates under freight charter or when, on the balance sheet date, a vessel has been redelivered by its previous charterers and has not yet been delivered to its new charterers, or remains idle.

Vessels, net: Vessels are stated at cost, which consists of the contract price and any material expenses incurred upon acquisition (initial repairs, improvements, delivery expenses and other expenditures to prepare the vessel for its initial voyage). Subsequent expenditures for major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Otherwise these amounts are charged to expense as incurred. The cost of each of the Company’s vessels is depreciated beginning when the vessel is ready for its intended use, on a straight-line basis over the vessel’s remaining economic useful life, after considering the estimated residual value (vessel’s residual value is equal to the product of its lightweight tonnage and estimated scrap rate). Effective January 1, 2013, and following management’s reassessment of the residual value of the vessels, the estimated scrap value per light weight tonnage was increased to $0.3 from $0.2, which is based on the historical average demolition prices prevailing in the market. The effect of this change in accounting estimate, which did not require retrospective application as per ASC 250 “Accounting Changes and Error Corrections”, was to decrease net loss for the year ended December 31, 2013, by $236. Management estimates the useful life of the Company’s vessels to be 25 years from the date of initial delivery from the shipyard.

However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations become effective.

F-9

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

Advances for vessels under construction and Advances for vessel acquisitions: Advances made to shipyards during the construction period, are classified as “Advances for vessels under construction” until the date of delivery and acceptance of the vessel, at which date they are reclassified to “Vessels, net”. Advances for vessels under construction also include supervision costs, amounts paid under engineering contracts, capitalized interest and other expenses directly related to the construction of the vessel. Financing costs incurred during the construction period of the vessel are also capitalized to the extent applicable in accordance with guidance under ASC 835, “Interest”. “Advances for vessel acquisitions” include any advance payment made to the seller of a secondhand vessel before the delivery and acceptance of the vessel, at which date are reclassified to “Vessels, net”.

When a vessel is acquired as part of a capital lease arrangement, any pre-delivery advance paid as part of the capital lease arrangement is also included within “Advances for vessels under construction” until the vessel’s delivery, when the Company takes possession of or controls the physical use of the vessel and the lease term begins, at which date these advances are reclassified to “Vessels, net” along with the recognition of the corresponding to the lease obligation, asset value.

Impairment of Long-Lived Assets: The Company follows the guidance under ASC 360-10-40, “Impairment or Disposal of Long-Lived Assets”, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that long-lived assets and certain identifiable intangibles held and used or disposed of by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Company should evaluate the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset which is determined based on management estimates and assumptions and by making use of available market data. The fair values are determined through Level 2 inputs of the fair value hierarchy as defined in ASC 820 “Fair value measurements and disclosures” and are derived principally from or by corroborated or observable market data. Inputs, considered by management in determining the fair value, include independent broker’s valuations, FFA indices, average charter hire rates and other market observable data that allow value to be determined. The Company evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events have occurred which would require modification to their carrying values or useful lives. In evaluating useful lives and carrying values of long-lived assets, management reviews certain indicators of potential impairment, such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions.

In developing estimates of future undiscounted cash flows, the Company makes assumptions and estimates about the vessels’ future performance, with the significant assumptions being related to charter rates, fleet utilization, vessels’ operating expenses, vessels’ capital expenditures, vessels’ residual value and the estimated remaining useful life of each vessel. The assumptions used to develop estimates of future undiscounted cash flows are based on historical trends as well as future expectations and taking into consideration growth rates for vessel expenses while these assumptions are always subject to changes based on the economic conditions applicable by the time the Company is performing the tests. Market conditions have been improved since the acquisition of the Company’s vessels, accordingly as of December 31, 2013 and 2012, the Company concluded that there were no events or changes in circumstances indicating that the carrying amount of its vessels may not be recoverable and accordingly there is no impairment loss for 2013 and the period from October 4, 2012 through December 31, 2012.

F-10

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

Accounting for Dry Docking and Special Survey Costs: The Company follows the direct expense method under which the dry docking and special survey costs are expensed as incurred and are separately reflected in the accompanying combined statements of operations. All repair and maintenance expenses including underwater inspection expenses are expensed in the period incurred. Such costs are included in vessel operating expenses in the accompanying combined statements of operations.

Financing Costs: Direct and incremental costs related to the issuance of debt such as legal and bankers are recorded as deferred financing costs and classified within “Deferred Charges, net” in the accompanying combined balance sheets, which are amortized to interest and finance costs if the financed vessel is in operation or capitalized to vessel cost if the vessel is under construction, using the effective interest method over the life of the related debt. Unamortized fees relating to loans repaid or extinguished before maturity are expensed as interest and finance costs in the period the repayment or extinguishment is made. Accumulated amortization of deferred financing fees amounted to $23 and $nil as of December 31, 2013 and 2012, respectively. Loan commitment fees are charged to finance charges in the period incurred.

Accounting for Revenues and Expenses: The Company generates its revenues from charterers for the charterhire of its vessels. Vessels are chartered using either voyage charters, for which a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate, or time charters, for which a contract is entered into for the use of a vessel for a specific period of time and a specified daily charterhire rate and any profit share over the daily charterhire rate, where applicable. If a charter agreement exists and collection of the related revenue is reasonably assured, revenue is recognized ratably over the duration of the period of each voyage or time charter. Revenue on any profit share is recognized following the same criteria. Time charter revenues are recorded over the term of the charter as service is provided. Under a voyage charter the revenues are recognized proportionately over the duration of the voyage. A voyage is deemed to commence upon the completion of discharge of the vessel’s previous cargo and the vessel’s departure to the next fixed loading port and is deemed to end upon the completion of discharge of the cargo pursuant to the charter. A voyage charter contract with a charterer consists of sailing to the load port (the positioning leg), loading the cargo, sailing to the discharge port and discharging the cargo. The charter contract therefore generally requires the relevant vessel to proceed to the port or place as ordered by the charterer and is not cancellable in the positioning leg, provided that the Company fulfils its contractual commitment. Performance under the contract begins upon sailing to the load port (the positioning leg). Non-cancelable voyage contracts are generally arranged prior to the completion of an existing contract. Assuming, therefore, that a non-cancelable voyage charter agreement is in place, voyage revenue recognition, under the discharge-to-discharge method, commences once the discharge of the previous charter’s cargo is complete and the vessel sails for loading. The voyage is deemed complete at the point the vessel has left the discharge terminal. Demurrage income represents payments by the charterer to the vessel owner when loading or discharging time exceeds the stipulated time in the voyage charter and is recognized as it is earned. Unearned revenue includes cash received prior to the balance sheet date and is related to revenue earned after such date. Voyage expenses, primarily consisting of port, canal and bunker expenses that are associated with a particular charter, are paid for by the charterer under the time charter arrangements or by the Company under voyage arrangements, except for commissions, which are always paid for by the Company, regardless of charter type. All voyage and vessel operating expenses are expensed as incurred, except for commissions. Commissions paid to brokers are deferred and amortized over the related charter period to the extent revenue has been deferred since commissions are earned as the Company’s revenues are earned.

Accounting for leases: Leases of assets under which substantially all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments

F-11

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

under an operating lease are recognized as an expense on a straight-line method over the lease term. Leases that meet the criteria for capital lease classification under ASC 840 “Leases” are classified as capital leases. As of December 31, 2013 the Company was the lessee under certain capital lease arrangements as further disclosed in Note 6. As of December 31, 2013 the Company held no operating lease arrangements acting as lessee.

Financial Instruments: The principal financial assets of the Company consist of cash and cash equivalents and restricted cash, accounts receivable, trade and other, and prepayments and other. The principal financial liabilities of the Company consist of accounts payable, accrued liabilities, unearned revenue and long-term debt. The carrying amounts reflected in the accompanying combined balance sheets of financial assets and liabilities, with the exception of the Members Loan (Note 8), approximate their respective fair values.

Fair Value Measurements: The Company follows the provisions of ASC 820, “Fair Value Measurements and Disclosures” which defines, and provides guidance as to the measurement of fair value. ASC 820 creates a hierarchy of measurement and indicates that, when possible, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets and the lowest priority (Level 3) to unobservable data, for example, the reporting entity’s own data. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy. ASC 820 applies when assets or liabilities in the financial statements are to be measured at fair value, but does not require additional use of fair value beyond the requirements in other accounting principles.

Intangible assets/liabilities related to time charter acquired: The Company records identified assets or liabilities associated with the acquisition of a vessel at fair value, determined by reference to market data, by comparing existing charter rates in the acquired time charter agreements with the market rates for equivalent time charter agreements prevailing at the time the foregoing vessels are delivered. Such intangible assets or liabilities are recognized ratably as adjustments to revenue over the remaining term of the assumed time charter.

Derivatives: The Company enters into derivative financial instruments to manage risk related to fluctuations of interest rates. In case the instruments are eligible for hedge accounting, at the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy undertaken for the hedge. The documentation includes identification of the hedging instrument, hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting exposure to changes in the hedged item’s cash flows attributable to the hedged risk. A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a highly probable forecasted transaction that could affect profit or loss. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine whether they actually have been highly effective throughout the financial reporting periods for which they were designated. All derivatives are recorded on the balance sheet as assets or liabilities and measured at fair value. For derivatives designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in Accumulated Other Comprehensive Income / (Loss) and subsequently recognized in earnings when the hedged items impact earnings.

The changes in fair value of derivatives not qualifying for hedge accounting are recognized in earnings. The Company discontinues cash flow hedge accounting if the hedging instrument expires and it no longer meets the criteria for hedge accounting or designation is revoked by the Company. At that time, any cumulative gain or loss on the hedging instrument recognized in

F-12

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

equity is kept in equity until the forecasted transaction occurs. When the forecasted transaction occurs, any cumulative gain or loss on the hedging instrument is recognized in profit or loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is transferred to net profit or loss for the year as financial income or expense.

The Company follows the accounting guidance about derivative instruments and hedging activities codified as ASC 815, “Derivatives and Hedging”. ASC 815 intends to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

ASC 815 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. ASC 815 relates to disclosures only and its adoption did not have any effect on the financial condition, results of operations or liquidity of the Company. There were no outstanding accounting hedges during the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012.

Pension and retirement benefit obligations to crew: The Company employs the crew on board under short-term contracts and accordingly, is not liable for any pension or post-retirement benefits.

Segment Reporting: The Company has determined that it operates under one reportable segment relating to its operations of dry bulk vessels. The Company reports financial information and evaluates its operations and operating results by total charter revenues and not by the type of vessel, length of vessel employment, customer or type of charter. As a result, management, including the Chief Executive Officer, who is the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet, and thus, the Company has determined that it operates under one reportable segment. Furthermore, when the Company charters a vessel to a charterer, the charterer is free to trade the vessel worldwide, subject to restrictions as per the charter agreement, and, as a result, the disclosure of geographic information is impracticable.

Variable Interest Entities: ASC 810-10-50 “Consolidation of Variable Interest Entities”, addresses the consolidation of business enterprises (variable interest entities) to which the usual condition (ownership of a majority voting interest) of consolidation does not apply. The guidance focuses on financial interests that indicate control. It concludes that in the absence of clear control through voting interests, a company’s exposure (variable interest) to the economic risks and potential rewards from the variable interest entity’s assets and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the value of the variable interest entity’s assets and liabilities. The Company evaluates financial instruments, service contracts, and other arrangements to determine if any variable interests relating to an entity exist, as the primary beneficiary would be required to include assets, liabilities, and the results of operations of the variable interest entity in its financial statements. The Company’s evaluation did not result in an identification of any variable interest entities as of December 31, 2013 and 2012.

Commitments and Contingencies: Commitments are recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle this obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the present value of the expenditure expected to be required to

F-13

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

settle the obligation. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when an inflow of economic benefits is probable.

Recent Accounting Standards Updates: There are no recent accounting pronouncements issued, whose adoption would have a material impact on the Company’s financial statements in the current year or are expected to have a material impact on future years.

3.	Transactions with Related Parties:

Transactions and balances with related parties are as follows:


Balance Sheets

	2013		2012
Assets
StarBulk S.A	$	181	$	—

Total Assets	$	181	$	—


Liabilities
Members’ Loans (Note 8)	$	226,005	$	68,010
StarBulk S.A		—		147
Oceanbulk Maritime S.A and its affiliated entities		148		—

Total Liabilities	$	226,153	$	68,157


Statements of Operations
Interest on Members’ Loans (Note 8)	$	1,412	$	167
Management fees to StarBulk S.A		660		76
Administrative Expenses to Oceanbulk Maritime S.A and its affiliated entities		3,683		860

Total Expenses to Related Parties	$	5,755	$	1,103

Management Agreements with StarBulk S.A

Each of the Company’s existing vessels is subject to a vessel management and operating agreement with StarBulk S.A, a subsidiary of Star Bulk Carriers Corp, (“Star Bulk”) which was founded by the Company’s Chief Executive Officer (who currently is the non-executive chairman of Star Bulk’s board of directors). In addition, affiliates of Oaktree beneficially own approximately 19.9% of Star Bulk’s outstanding voting common stock. Pursuant to the terms of these agreements, StarBulk S.A provides management services, including but not limited to technical, crew and accounting services, to the Company’s vessels in exchange for a fixed daily management fee of $0.75 per vessel, for a period beginning upon vessel’s delivery and until the termination of the agreement. The agreement will terminate upon the expiration of a two month period from the delivery of a written notice by either party to the other. During 2013 and the period from October 4, 2012 through December 31, 2012, Management fees under these agreements amounted to $660 and $76, respectively and are separately reflected in the accompanying combined statements of operations. As of December 31, 2013, an amount of $181 was due from StarBulk S.A while as of December 31, 2012, an amount of $147 was due to StarBulk S.A which are included in Due from and Due to related parties, respectively, in the accompanying combined balance sheets.

F-14

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

Commercial Management Agreements with Oceanbulk Maritime S.A and its affiliated entities

Provision of certain guarantees by Oceanbulk Maritime

Oceanbulk Maritime has provided performance guarantees under the bareboat charter agreements relating to the newbuilding vessels with hull numbers HN 1061, HN 1062, HN 1063 and HN 1064 discussed in Note 6. In addition, Oceanbulk Maritime has also provided performance guarantees under the shipbuilding contracts for the newbuilding vessels with hull numbers HN 207-JMU (tbn Magnum Opus), HN 213-JMU (tbn Peloreus), HN 214-JMU (tbn Leviathan), HN 5017-JMU, HN 5055-JMU, HN 5056-JMU, HN NE164-NACKS (tbn Honey Badger), HN NE165-NACKS, HN NE166-NACKS, HN NE167-NACKS and HN NE184-NACKS, discussed in Note 6. All of the performance guarantees described above have been counter-guaranteed by the Company.

Acquisition of vessel from a related party

In August 2013, the Company acquired from Maiden Voyage LLC (an entity under common control with the Company) the Supramax dry bulk carrier, named Maiden Voyage, at a purchase price of $27,300 (Note 5). The Company recorded a preferential deemed dividend of $705 in connection with that purchase.

Awarded profit interests

Pursuant to an agreement with affiliates of Oaktree, Oceanbulk Maritime S.A. and certain members of the Company’s senior management are eligible for a share of the profits of Oaktree, subject to Oaktree and its affiliates achieving certain internal rate of return and capital multiples on their original investment in the Company. This award will be payable only by affiliates of Oaktree, so the Company will not be responsible for making such payments. Nevertheless, when award payments vest or are deemed probable to vest and are required to be made under the agreement with respect to the Company, a non-cash compensation expense will be reflected in the Company’s General and administrative expenses, with a corresponding increase in the Company’s equity as a deemed contribution from the Company’s stockholders. As of December 31, 2013 and 2012, this award had not vested.

4.	Inventories:

The amounts shown in the accompanying combined balance sheets are analyzed as follows:


	2013		2012
Bunkers	$	2,961	$	1,635
Lubricants		775		175

	$	3,736	$	1,810

F-15

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

5.	Vessels, net and Advances for vessels’ acquisitions:

The amounts in the accompanying combined balance sheets are analyzed as follows:


	Vessels’ Cost		Accumulated Depreciation			Net Book Value
Balance, October 4, 2012	$	—	$	—		$	—
- Acquisitions		36,642		—			36,642
- Depreciation for the period		—		(271	)		(271	)


Balance, December 31, 2012	$	36,642	$	(271	)	$	36,371

- Acquisitions, improvements and other vessels’ costs		118,279		—			118,279
- Depreciation for the year		—		(2,656	)		(2,656	)

Balance, December 31, 2013	$	154,921	$	(2,927	)	$	151,994

In October 2012, the Company entered into a Memorandum of Agreement (“MOA”) with an unrelated party for the acquisition of the Capesize dry bulk carrier, named Obelix. The Company took delivery of the vessel on October 19, 2012.

In July 2013, the Company entered into a MOA with Maiden Voyage LLC (an entity under common control with the Company), for the acquisition of the Supramax dry bulk carrier, named Maiden Voyage, for cash consideration of $27,300 (including $626 in respect of the value of bunkers on board of the vessel at the time of its delivery to the Company on August 6, 2013). The Company recorded the acquisition at historical cost due to the fact that at the date the MOA was concluded the Company and Maiden Voyage LLC were under common control. The purchase price in excess of vessel’s historical book value at the date of acquisition of $705 is considered a preferential deemed dividend and is reflected as a reduction in net income available to Members in the accompanying 2013 combined statement of operations.

In July 2013, the Company entered into a MOA with an unrelated party for the acquisition of the Capesize dry bulk carrier, named Big Bang (ex Cape Shanghai). The Company took delivery of the vessel on August 30, 2013.

In August 2013, the Company entered into a MOA with an unrelated party for the acquisition of the Supramax dry bulk carrier, named Strange Attractor (ex Tokiwa Glory). The Company took delivery of the vessel on September 24, 2013.

In August 2013, the Company entered into a MOA with an unrelated party for the acquisition of the Capesize dry bulk carrier, named Big Fish (ex Shining Star). The Company took delivery of the vessel on October 18, 2013.

In August 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Capesize dry bulk carrier, named Pantagruel (ex Pacific Confidence). The Company took delivery of the vessel on October 24, 2013.

In October 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Capesize dry bulk carrier, Kymopolia (ex Shiga), of which an advance of $2,750 was paid up to December 31, 2013, which is included within advances for vessel acquisition in the 2013 accompanying combined balance sheet. The remaining portion of the purchase price was paid in January 2014 upon the delivery of the vessel (Note 16(c)).

In December 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Kamsarmax dry bulk carrier, Mercurial Virgo (ex Mineral Pearl). The vessel was delivered in February 2014 (Note 16(f)).

F-16

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

In December 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Kamsarmax dry bulk carrier, Pendulum (ex Christina Victory). The vessel was delivered in February 2014 (Note 16(f)).

6.	Advances for vessels under construction:

As of December 31, 2013 and 2012, Advances for vessels under construction reflect the advances paid to the shipyard for newbuilding vessels, capitalized interest and other capitalized costs relating to the supervision of the construction of these vessels. The amounts shown in the accompanying combined balance sheets are analyzed as follows:


	2013		2012
Advances to the shipyards	$	95,667	$	25,660
Bareboat capital leases—upfront fee		10,340		—
Capitalized interest on Members’ Loans		1,284		40
Other (Note 3)		148		—

Total	$	107,439	$	25,700

In September 2012, the Company agreed with a Japanese shipyard the construction of an 80,800 DWT Kamsarmax vessel (Hull HN 207-JMU (tbn Magnum Opus)). The vessel is expected to be delivered in May 2014.

In December 2012, the Company agreed with a Japanese shipyard the construction of two 182,000 DWT Capesize vessels (Hulls HN 213-JMU (tbn Peloreus) and HN 214-JMU (tbn Leviathan)). The vessels are expected to be delivered in July and August 2014.

In March 2013, the Company agreed with a Japanese shipyard the construction of an 182,000 DWT Capesize vessel (Hull HN 5017-JMU). The vessel is expected to be delivered in March 2015.

In May 2013, the Company agreed with a Chinese shipyard the construction of two 180,000 DWT Capesize vessels (Hulls HN 1312-SWS and HN 1313-SWS). The vessels are expected to be delivered in April and June 2015.

On May 17, 2013, the Company entered into separate bareboat charter party contracts with affiliates of New Yangzijiang shipyards for eight-year bareboat charters of four newbuilding 64,000 dwt Ultramax vessels (Hulls HN 1061, HN 1062, HN 1063 and HN 1064) being built at New Yangzijiang. The vessels are being constructed pursuant to four shipbuilding contracts entered into between four pairings of affiliates of New Yangzijiang. Each pair has one shipyard party (each, a “New YJ Builder”) and one ship-owning entity (each a “New YJ Owner”). Delivery to the Company of each vessel is deemed to occur upon delivery of the vessel to the New YJ Owner from the corresponding New YJ Builder. An amount of $20,680 for each vessel will be financed by the relevant New YJ Owner, to whom the Company will pay a pre-agreed daily bareboat charter hire rate on a 30-days advance basis. After each vessel’s delivery, the Company has monthly purchase options to acquire the vessel at pre-determined, amortizing-during-the-charter-period prices. On the eighth anniversary of the delivery of a vessel, the Company has the obligation to purchase the vessel at a purchase price of $6,000.

Based on the applicable lease accounting guidance (ASC 840 “Leases”), the Company determined that the bareboat charters should be classified as capital leases. In addition, based on the lease agreement provisions, the Company is deemed to have substantially all of the construction period risk and accordingly is considered the owner of the vessels during the construction period, which will result in a deemed sale-leaseback transaction of the vessels to occur when construction of the asset is complete and the lease term begins. The financial liability related to these capital leases will be recognized upon each vessel’s delivery in 2015, concurrently with the recognition of the leased asset, pursuant to the applicable capital lease accounting guidance.

F-17

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

In June 2013, the Company agreed with a Chinese shipyard the construction of two 61,000 DWT Ultramax vessels (Hulls HN NE164-NACKS (tbn Honey Badger) and HN NE165-NACKS). The vessels are expected to be delivered in March 2015.

In June and July 2013, the Company agreed with a Chinese shipyard the construction of three 209,000 DWT Newcastlemax vessels (Hulls HN NE166-NACKS, HN NE167-NACKS and HN NE184-NACKS). The vessels are expected to be delivered in April, June and July 2015.

In July 2013, the Company agreed with a Chinese shipyard the construction of four 64,000 DWT Ultramax vessels (Hulls HN 1080, HN 1081, HN 1082 and HN 1083). The vessels are expected to be delivered during the third and fourth quarters of 2015.

In October 2013, the Company agreed with a Japanese shipyard the construction of two 182,000 DWT Capesize vessels (Hulls HN 5055-JMU and HN 5056-JMU). The vessels are expected to be delivered in July and August 2015.

On December 27, 2013, the Company entered into separate bareboat charter party contracts with affiliates of SWS shipyards for ten-year bareboat charters of five newbuilding 208,000 dwt Newcastlemax vessels (Hulls HN 1359, HN 1360, HN 1361, HN 1362 and HN 1363) being built at SWS. The vessels are being constructed pursuant to shipbuilding contracts entered into between five pairings of affiliates of SWS. Each pair has one shipyard party (each, an “SWS Builder”) and one ship-owning entity (each an “SWS Owner”). Delivery to the Company of each vessel is deemed to occur upon delivery of the vessel to the SWS Owner from the corresponding SWS Builder. An amount of $46,400 for each vessel will be financed by the relevant SWS Owner, to whom the Company will pay a daily bareboat charter hire rate payable monthly plus a variable amount corresponding to the LIBOR rate payable every six months and a one-time handling fee of $464. After each vessel’s delivery, the Company has monthly purchase options to acquire the vessel at pre-determined, amortizing-during-the-charter-period prices. At the end of the ten-year charter period for each vessel, the Company has the obligation to purchase the vessel at a purchase price of $13,919. Based on ASC 840, the Company determined that the bareboat contracts should be classified as capital leases. In addition, based on the lease agreement provisions, the Company is deemed to have substantially all of the construction period risk and accordingly is considered the owner of the vessels during the construction period, which will result in a deemed sale-leaseback transaction of the vessels to occur when construction of the asset is complete and the lease term begins. The financial liability related to these capital leases will be recognized upon each vessel’s delivery in 2015 and 2016, concurrently with the recognition of the leased asset, pursuant to the applicable capital lease accounting guidance.

Total purchase price of the aforementioned vessels is $1,078,677 (of which $393,400 is related to bareboat charter contracts discussed above) while the Company has also agreed to pay for extras under these contracts amounting to $11,848. As of December 31, 2013 and 2012, the Company has paid $106,007 (of which $10,340 is related to bareboat contracts discussed above) and $25,660, respectively.

7.	Long-term debt:

On August 1, 2013, the Company entered into a $34,458 credit facility with ABN Amro N.V (the “ABN Facility”) in order to partially finance the acquisition cost of the vessels Obelix and Maiden Voyage. The loans under the ABN Facility were available in two tranches of $20,350 and $14,108, On August 6, 2013, the Company drew down the available tranches and paid an arrangement fee of $204.

On December 18, 2013, the ABN Facility was amended to add an additional loan of $53,000 to partially finance the acquisition cost of the vessels Big Bang (ex Cape Shanghai), Strange Attractor (ex Tokiwa Glory), Big Fish (ex Shining Star) and Pantagruel (ex Pacific Confidence). On December 20, 2013, the Company drew down the available tranches and paid an arrangement fee of $572.

F-18

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

The following table describes the various tranches of loans under the ABN Facility as of December 31, 2013:


Vessel	Date Drawn	Principal Amount		Quarterly Installments	Balloon Payment
Obelix	August 2013	$	19,973	19 x $377 through August 2018	$12,813 due August 2018
Maiden Voyage	August 2013	$	13,612	15 x $248 through September 2017	$9,900 due September 2017
Big Bang	December 2013	$	16,000	20 x $450 through December 2018	$7,000 due December 2018
Strange Attractor	December 2013	$	10,000	20 x $300 through December 2018	$4,000 due December 2018
Big Fish	December 2013	$	13,500	20 x $550 through December 2018	$2,500 due December 2018
Pantagruel	December 2013	$	13,500	20 x $550 through December 2018	$2,500 due December 2018

Loans outstanding under the ABN Facility bear interest at three-month LIBOR plus a margin ranging from 3.75% to 3.9% per annum.

The ABN Facility is secured by a first-priority ship mortgage on the financed vessels, general assignments, charter assignments, and operating account assignments and is guaranteed by Oceanbulk Shipping LLC (the “Guarantor”). The ABN Facility contains a number of negative covenants, including limitations on additional indebtedness, additional liens on the collateral, restricted payments and changes in management and ownership. In addition, the ABN Facility contains the following financial maintenance covenants:

•

aggregate vessel value must exceed 140% of the aggregate principal amount of outstanding loans under the ABN Facility;

•

minimum consolidated EBITDA of the Guarantor to interest coverage ratio of 2.0x, applicable after September 30, 2016; and

•

minimum liquidity of the higher of $1.0 million per collateral vessel or $0.5 million per other vessel owned by the Guarantor.

As of December 31, 2013, the Company was in compliance with the applicable covenants under the ABN Facility.

F-19

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

As of December 31, 2013, the following aggregate principal payments are required over the next five years and throughout the term of the ABN Facility:


	Amount
Year ending December 31,
2014	$	9,897
2015		9,897
2016		9,897
2017		19,550
2018		37,344

Total Debt	$	86,585
Less: Long-term debt—current portion	$	(9,897	)

Long-term debt—non-current portion	$	76,688

Interest expense for the year ended December 31, 2013 and the period from October 4, 2012 through December 31, 2012, amounted to $628 and $nil, respectively, and is included in Interest and finance costs in the accompanying combined statements of operations.

8.	Members’ Loans:

On October 9, 2012, the Members entered into a limited liability company agreement (the “Oceanbulk Shipping LLC Agreement”) with respect to Oceanbulk Shipping LLC, a limited liability company that was formed under the laws of the Republic of the Marshall Islands on October 4, 2012. On April 11, 2013, the Members entered into a similar limited liability company agreement (the “Oceanbulk Carriers LLC Agreement”) with respect to Oceanbulk Carriers LLC, a limited liability company that was formed under the laws of the Republic of the Marshall Islands on April 5, 2013.

According to the provisions of the Oceanbulk Shipping LLC Agreement and the Oceanbulk Carriers LLC Agreement, the Members could, from time to time, make investments in Oceanbulk Shipping LLC and Oceanbulk Carriers LLC either in form of capital contributions in exchange for the companies’ Class A Units or in the form of members’ loans (the “Members’ Loans”), evidenced by convertible notes (the “Convertible Notes”).

The Convertible Notes bear fixed interest at 2% per annum, accruing quarterly in arrears. The Convertible Notes are able to be converted, at any time following the election of the majority holders, in whole or in part (based on the principal amount converted, plus any accrued and unpaid interest) into Class A Units at a conversion price of $1 per Class A Unit. The conversion price is subject to certain adjustments triggered by reorganizations, recapitalizations, stock splits or other similar changes in the relevant capitalization of the Company. The Convertible Notes mature on December 31, 2042.

Based on the applicable accounting guidance for debt instruments (ASC 470 “Debt”) and for derivatives and hedging instruments (ASC 815 “Derivatives and Hedging”), the Company determined that all proceeds from any Members’ Loan should be reflected as debt within the Company’s non-current liabilities, with no bifurcation of any of the embedded features.

The amounts shown in the accompanying combined balance sheets are analyzed as follows:

F-20

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)


	2013		2012
Members’ Loans by Oaktree OBC Holdings LLC	$	200,828	$	61,022
Members’ Loans by Millennia LLC		22,314		6,780

Principal of Members’ Loans	$	223,142	$	67,802
Accrued Interest on Members’ Loans		2,863		208

Total	$	226,005	$	68,010

The Members had not exercised their conversion rights under the Convertible Notes as of December 31, 2013. Out of the total accrued interest as of December 31, 2013 and 2012, an amount of $1,284 and $40, respectively, has been capitalized and is reflected within “Advances for vessels under construction” in the accompanying combined balance sheets (Note 6). The remaining accrued interest of $1,412 and $167 in 2013 and for the period from October 4, 2012 through December 31, 2012, respectively, has been expensed and is separately reflected in the accompanying statements of operations.

On December 27, 2013, an amount of $18,000 was returned to the Members, representing funds contributed for vessel acquisitions as Members’ Loans that was not needed as a result of debt financing concluded subsequent to the vessel deliveries.

9.	Fair Value of Financial Instruments:

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

•

Cash and cash equivalents, restricted cash, accounts receivable, due from/to related parties and accounts payable: The carrying values reported in the combined balance sheets for those financial instruments are reasonable estimates of their fair values due to their short-term nature. The carrying value of these instruments is separately reflected in the accompanying balance sheets.

•

Long-term debt: The fair value of the ABN Facility discussed in Note 7 approximates the recorded value due to the variable interest rates payable. The carrying value of the loans as of December 31, 2013 and 2012 amounted to $86,585 and $nil, respectively.

•

Members’ Loans: Members’ Loans have a fixed rate. Interest is accrued quarterly and if not paid in cash, determined at the option of the majority of the holders, it increases the outstanding principal amount. The fair value of a Members’ Loan is not able to be reliably estimated due to the interest settlement options held by the Members (Note 8).

•

Derivative financial Instruments: The fair values of the Company’s derivative financial instruments presented in combined balance sheet equates to the amount that would be paid or received by the Company if the agreements were cancelled at the reporting date and is determined by primarily by observable inputs (i.e., LIBOR swap yield curves).

A fair value hierarchy that prioritizes the inputs used to measure fair value has been established by U.S. GAAP. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

F-21

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data;

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

10.

Derivative Financial Instruments:

Interest Rate Swaps

The Company is exposed to interest rate fluctuations associated with its current and expected variable rate borrowings and its objective is to manage the impact in the cash flows of its borrowings. In this respect, the Company uses interest rate swaps to manage net exposure to interest rate fluctuations related to these borrowings and to lower its overall borrowing costs.

11.

Members’ Equity:

Members’ equity consists of one Class B unit of no par value, held by Oaktree OBC Holdings LLC.

According to the provisions of the Oceanbulk Shipping LLC Agreement and the Oceanbulk Carriers LLC Agreement, except as otherwise provided under the laws of Marshall Islands or mutually agreed between the Members in writing, no Member shall have any personal liability whatsoever in such Member’s capacity as a Member, whether to the Company, to any of the other Members, to the creditors of the Company or to any other third party, for the debts, liabilities, commitments or other obligations of the Company or for any losses of the Company.

12.

Commitments and Contingencies:

Various claims, suits, and complaints, including those involving government regulations and product liability, may arise in the ordinary course of our shipping activities. 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. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying combined financial statements. The Company is a member of a protection and indemnity association, or P&I Club that is a member of the International Group of P&I Clubs, which covers its third party liabilities in connection with its shipping activities. A member of a P&I Club that is a member of the International Group is typically subject to possible supplemental amounts or calls, payable to its P&I Club based on its claim records as well as the claim records of all other members of the individual associations, and members of the International Group. Currently, management is not aware of any such supplementary calls for 2013 and the period from October 4, 2012 through December 31, 2013. The Company accrues for

F-22

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

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 any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying combined financial statements. The Company’s protection and indemnity (P&I) insurance coverage for pollution is $1 billion per vessel per incident.

The following table sets forth the future, minimum, non-cancellable charter revenue and purchase commitments as of December 31, 2013:


(+):collections, (-):payments	2014			2015			2016			2017			2018			2019 and thereafter			Total
Future, minimum, non-cancellable charter revenue⁽¹⁾	$	3,518		$	—		$	—		$	—		$	—		$	—		$	3,518
Purchase commitments⁽²⁾		(219,069	)		(454,370	)		—			—			—			—			(673,439	)
Bareboat capital leases—upfront fee⁽³⁾		(49,515	)		(24,315	)		—			—			—			—			(73,830	)
Bareboat capital leases—charterhire⁽³⁾		—			(9,033	)		(25,304	)		(31,444	)		(31,413	)		(318,732	)		(415,926	)

Total	$	(265,066	)	$	(487,718	)	$	(25,304	)	$	(31,444	)	$	(31,413	)	$	(318,732	)	$	(1,159,677	)

(1)

The amounts represent the minimum contractual gross charter revenues to be generated from the existing, as of December 31, 2013, non-cancellable time and freight charter until their expiration, assuming no off-hire days other than those related to scheduled interim and special surveys of the vessels.

(2)

The amounts represent the Company’s remaining obligations up to December 31, 2013 under the concluded acquisition of secondhand vessels discussed in Note 5 for vessels Kymopolia (ex Shiga), Mercurial Virgo (ex Mineral Pearl) and Pendulum (ex Christina Victory) as well as under the pipeline of the Company’s newbuilding program discussed in Note 6, excluding those applicable under the bareboat lease agreements classified as capital leases.

(3)	The amounts represent the Company’s commitments under the bareboat lease arrangements under the upfront fee and the charter hire, gross of any address commissions the Company may be entitled to, respectively, discussed in Note 6.

13.

Income Taxes

Effective January 1, 2013 onwards, each foreign flagged vessel managed in Greece by Greek or foreign ship management companies are subject to Greek tonnage tax, under the laws of the Greek Republic, Oceanbulk Maritime (Note 3), the commercial manager of the Company’s vessels, which is established in Greece under Greek Law 89/67 is responsible for the filing and payment of the respective tonnage tax on behalf the Company. In addition, under the laws of the Marshall Islands, the country of the vessels’ registration, the shipowning companies are subject to registration tonnage taxes. Registration and tonnage taxes are included in vessel operating expenses in the accompanying combined statements of operations.

Under the laws of Marshall Islands, the country of the Company’s incorporation, the Company is not subject to tax on its international shipping income.

Pursuant to Section 883 of the Internal Revenue Code of the United States (the “Code”), U.S. source income from the international operations of ships is generally exempt from U.S. tax if the Company operating the ships meets both of the following requirements, (a) the Company is organized in a foreign country that grants an equivalent exception to corporations organized in the United States and exempts the type of income earned by the

F-23

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

vessel owing Company and (b) either (i) more than 50% of the value of the Company’s stock is owned, directly or indirectly, by individuals who are “residents” of the Company’s country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States (50% Ownership Test) or (ii) the Company’s stock is “primarily and regularly traded on an established securities market” in its country of organization, in another country that grants an “equivalent exemption” to United States corporations, or in the United States (Publicly-Traded Test). Additionally, the Company must meet all of the documentation requirements as outlined in the Section 883 regulations.

Oceanbulk Shipping LLC and Oceanbulk Carriers LLC and their consolidated subsidiaries are limited liability companies and have made an election to be treated as disregarded entities for U.S. federal income tax purposes and accordingly are not subject to U.S. federal income taxes on their U.S. source income. Any U.S. source Shipping Income generated by the Company is passed through to its Members in proportion to their ownership of the Company and it is the Members that are subject to U.S. federal income taxes. The Company generated no U.S. source Shipping Income during 2013 and 2012.

14.

Voyage and Vessel Operating expenses:

The amounts in the accompanying combined statements of operations are analyzed as follows:


	2013		2012
*Voyage expenses*
Bunkers	$	2,999	$	1,222
Commissions		614		74
Port Expenses		369		135
Cargo Expenses		35		—

	$	4,017	$	1,431


	2013		2012
*Vessel Operating expenses*
Crew wages and related costs	$	2,611	$	268
Stores, Spares, Repairs and Maintenance		1,672		156
Insurances		407		39
Lubricants		459		36
Tonnage taxes		119		1
Other		874		74

	$	6,142	$	574

15.

Interest and Finance Costs:

The amounts in the accompanying combined statements of operations are analyzed as follows:


	2013		2012
Interest on long-term debt (Note 7)	$	628	$	—
Amortization of deferred finance fees		23		—
Other bank and finance charges		135		—

	$	786	$	—

16.

Subsequent Events:

The following events and transactions occurred after the balance sheet date and up to the date these financial statements were evaluated, April 2, 2014:

F-24

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

Loan payments: Subsequent to December 31, 2013, the Company paid regular loan installments amounting to $2,474 in total.

Payment for newbuilding vessels: On January 14, 2014, the Company paid $3,090 for scheduled capital commitments under one of its newbuilding Kamsarmax (Hull HN 207-JMU (tbn Magnum Opus)) discussed in Note 6. In addition, on March 7, 2014, the Company paid $3,090 and $4,870, respectively, for scheduled capital commitments under two of its newbuilding vessels (Hull No HN 207-JMU (tbn Magnum Opus) and HN 213-JMU (tbn Peloreus)) discussed in Note 6.

Delivery of vessel Kymopolia: On January 30, 2014 the Company took delivery of vessel Kymopolia (ex Shiga).

Payment of upfront amounts under the bareboat charter agreements: On January 29, 2014, the Company paid an upfront amount of $29,000 and an arrangement fee of $1,160 under its bareboat charter agreements relating to the newbuilding vessels Hulls HN 1359, HN 1360, HN 1361, HN 1362 and HN 1363, discussed in Note 6.

Acquisition of two secondhand vessels: On January 24, 2014, the Company entered into two MOAs with an unrelated party for the acquisition of two Post-Panamax dry bulk carriers, named Amami (ex GL Xiushan) and Madredeus (ex GL Zoushan). On February 13, 2014 and February 21, the Company took delivery of the vessels.

Delivery of vessels Mercurial Virgo and Pendulum: On February 28, 2014 the Company took delivery of the Mercurial Virgo (ex Mineral Pearl) and on March 20, 2014 the Company took delivery of the Pendulum (ex Christina Victory).

During the period from January 1, 2014 to March 20, 2014, the Company paid in aggregate, the amount of $135,013 with respect to the acquisition of vessels Kymopolia, Amami, Madredeus, Mercurial Virgo and Pendulum, discussed in Notes 16c), e) and f) above, as well as an amount of $1,825 for bunkers on board.

Investment in Heron Ventures Ltd: On February 19, 2014, Oceanbulk Shipping LLC provided $3,149 and €14.9 million of capital in the form of a convertible loan (each a “Convertible Loan”) to Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta whose sole stockholder was ABY Group Holding Limited (itself a joint venture between Augustea Bunge Maritime Limited and York Capital Management). The Convertible Loan is convertible into 50% of the outstanding equity of Heron, so upon conversion of the Convertible Note, Heron would be a 50-50 joint venture between Oceanbulk Shipping LLC and ABY Group Holding Limited. The purpose of the Convertible Loan was to partially finance the acquisition out of bankruptcy of Deiulemar Shipping SpA (“Deiulemar”), an operator of 12 dry bulk vessels (the “Deiulemar Fleet”). On February 13, 2014, Heron entered into a $95,200 loan agreement (the “CiT Facility”) with CiT Finance LLC, which is severally guaranteed on a 50-50, unsecured basis by Oceanbulk Shipping LLC and ABY Group Holding Limited. The CiT Facility is divided into two portions, a “Core Portion” of $65,200 and a “Non-Core Portion” of $30,000. The Core Portion is secured by four vessels (the “Core Vessels”), consisting of three Kamsarmax vessels and one Capesize vessel intended to be retained by Heron (or its equity holders), and matures in June 2019. The Non-Core Portion is secured by eight vessels (the “Non-Core Vessels”) of various sizes. Interest accrues on the CiT Facility at a rate of 5.50% per annum so long as the Non-Core Portion is outstanding and 4.25% per annum if the Non-Core Portion is no longer outstanding. The Core Portion is subject to scheduled quarterly amortization payments of $1,563, beginning on June 30, 2014, and the Non-Core Portion is not subject to scheduled amortization. Heron may voluntarily prepay the outstanding principal amount of the loans under the CiT Facility at any time, subject to a prepayment premium of 2% during the first year and 1% during the second year.

F-25

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

•

a minimum cash balance at all times of $1,000 per Core Vessel;

•

minimum liquidity at all times of $185 per Non-Core Vessel;

•

minimum Fixed Charge Coverage Ratio (as defined therein and calculated based on annualized EBITDA less capital expenditures divided by the debt service for the relevant period) of 1.10x, measured quarterly after the quarter ending on March 31, 2015;

Core Portion minimum asset coverage test (tested semiannually starting on September 30, 2014), which requires that each Core Vessel’s charter-free FMV be not less than 140% (150% after the quarter ending March 31, 2016) of the Core Portion balance outstanding against it; and

Non-Core Portion minimum asset coverage test (tested semiannually starting on September 30, 2014), which requires that the aggregate of the charter-free FMVs of the Core Vessels be not less than 140% of the Non-Core Portion outstanding.

Under the CiT Facility, Heron may only make quarterly distributions to its members from accumulated unrestricted excess cash in operating accounts so long as no event of default has occurred and is continuing or would occur as a result of such distribution, so long as (i) the Non-Core Portion has been paid in full, (ii) an amount corresponding to the budgeted cost of all 2014 Core Vessel intermediate surveys has been deposited in a restricted account at CiT and (iii) the outstanding amount under the CiT Facility does not exceed 60% of the combined FMV of the vessels owned by Heron.

On March 10, 2014, deeds of transfer in respect of the vessels in the Deiulemar Fleet were executed in favor of Heron.

Additional Members’ Loans: Subsequent to December 31, 2013, the Company received a total amount of $181,200 in the form of Members’ Loans to fund part of the aforesaid subsequent events and transactions.

Deutsche Bank Facility Term Sheet: On March 11, 2014, the Company executed a binding term sheet with Deutsche Bank AG Filiale Deutschlandgeschäft (the “Deutsche Bank Facility”) for financing in an aggregate amount of $85,000, which will partially finance the construction cost of one Kamsarmax bulk carrier currently under construction at JMU (Hull HN 207-JMU (tbn Magnum Opus)) with expected delivery in June 2014, and two Capesize bulk carriers currently under construction at JMU (Hulls HN 213-JMU (tbn Peloreus) and HN 214-JMU (tbn Leviathan)), with expected deliveries in July and August 2014, respectively. The definitive documentation is expected to be concluded no later than May 25, 2014. One loan, which matures five years after the drawdown date, can be drawn for each vessel being financed. Each loan is subject to 19 quarterly amortization payments equal to 1/60th of the loan amount, with the 20th payment equal to the remaining amount outstanding on the loan. The loans will bear interest at three-month LIBOR plus a margin of 3.4% per annum. The Deutsche Bank Facility will be secured by first priority cross-collateralized ship mortgages on the financed vessels, charter assignments and insurance and earnings assignments and is guaranteed by Oceanbulk Shipping LLC (the “Guarantor”). The Deutsche Bank Facility will include certain negative covenants, including limitations on

F-26

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

changes of ownership or control, additional indebtedness and the payment of dividends or other distributions until March 31, 2015, after which the Company may only pay dividends if no event of default has occurred or is continuing. The Deutsche Bank Facility also requires that the aggregate fair market value of the financed vessels exceeds 130% of the outstanding loans under the Deutsche Bank Facility. The Deutsche Bank Facility will include also the following financial maintenance covenants, which are applicable to the Guarantor:

•

maximum ratio of total liabilities to total assets (on a market value adjusted basis) of less than 70%;

•

minimum EBITDA to interest ratio of 2.0x, tested annually for 2014 and 2015, and 2.5x thereafter; and

•

minimum liquidity of the greater of (x) $10,000 and (y) $500 in unencumbered cash per vessel directly or indirectly owned by the Guarantor.

CEXIM Facility Term Sheet: On March 21, 2014, the Company executed a binding term sheet with the Export-Import Bank of China (the “CEXIM Facility”) for financing in an aggregate amount of $57,360, which will be available in two tranches of $28,680, to partially finance the construction cost of two Capesize bulk carriers currently under construction at SWS (Hulls HN 1312-SWS and HN 1313-SWS), with expected delivery in April and June 2015, respectively. Each tranche will mature ten years from the delivery date of the last delivered financed vessel and will be repayable in 20 semi-annual installments of $1,147 plus a balloon payment of $5,736, the first installment being due on the first January 21 or July 21 six months after the delivery of each vessel. The loan will bear interest at six-month LIBOR plus a margin of 3.25% per annum. The CEXIM Facility will be secured by first priority cross-collateralized ship mortgages on the financed vessels, charter assignments and insurance and earnings assignments and will be guaranteed by the Guarantor. The CEXIM Facility will include certain negative covenants, including limitations on changes of ownership or control. The CEXIM Facility also requires that the aggregate value of the financed vessels exceeds 125% of the outstanding loans under the CEXIM Facility and that each vessel owning company must maintain minimum cash of not less than $500. The CEXIM Facility will include the following financial maintenance covenants, which are applicable to the Guarantor:

•

minimum equity ratio calculated based on book value of equity to total book value of assets of no less than 30%;

•

minimum book value of equity of not less than $250,000 after December 31, 2015; and

•

minimum liquidity of $500 in unencumbered cash per vessel directly or indirectly owned by the Guarantor.

HSBC Facility: On April 1, 2014, the Company executed a binding term sheet with HSBC Bank plc. (the “HSBC Facility”) for financing in an aggregate amount of $86,600, to partially finance the acquisition cost of the second hand vessels Kymopolia (ex Shiga), Mercurial Virgo (ex Mineral Pearl), Pendulum (ex Christina Victory), Amami (ex GL Xiushan) and Madredeus (ex GL Zaishan), all of which have been delivered. The loan will be available in five tranches, will mature 59 months from the drawdown date and will be repayable in 20 quarterly installments, commencing three months after the drawdown, of $1,555 plus a balloon payment of $55,500 due together with the last installment. The loan will bear interest at LIBOR plus a margin of 3.3% per annum, as long as the fair value of the vessels to the outstanding loan ratio (“ACR”) exceeds 143% or 4.10% per annum, as long as the ACR falls below 143%. The HSBC Facility will be

F-27

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the year ended December 31, 2013 and the period from

October 4, 2012 through December 31, 2012

(Expressed in thousands of United States Dollars, unless otherwise stated)

secured by first priority mortgage over the financed vessels and general and specific assignments and will be guaranteed by the Guarantor.

The HSBC Facility will include certain negative covenants, including limitations on changes of ownership or control, other than as part of an initial public offering and as long as the borrowers are not in an event of default and shareholding thresholds applicable to the Pappas family interests. It will also include dividend restrictions if the ACR falls below 143% while it will also require that the aggregate ACR exceeds 135% and minimum free liquidity to be maintained by the borrowers in the aggregate of $2,500. In addition, a portion of 10% of the initial HSBC Facility shall be prepaid from the proceeds of the first capital increase of the Guarantor after January 1, 2016. The HSBC Facility will include the following financial maintenance covenants, which are applicable to the Guarantor:

•

maximum leverage ratio (calculated based on long term debt net of any free deposit balances divided by market value adjusted total assets) not to exceed 70%;

•

minimum EBITDA to interest ratio of 2.0x, in relation to the proceeding four fiscal quarters, effective from the second anniversary of the execution date; and

•

minimum liquidity to exceed $500 in free cash balances per vessel owned by the Guarantor.

F-28

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)


	June 30, 2014			December 31, 2013
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	89,793		$	29,979
Restricted Cash (Note 8)		191			193
Accounts receivable trade		5,184			2,966
Inventories (Note 5)		5,468			3,736
Prepayments and other		1,239			722
Due from related parties (Note 3)		29			181
Current portion of deferred charges, net		712			225

Total current assets		102,616			38,002


FIXED ASSETS:
Advances for vessels’ acquisitions (Note 6)		—			2,750
Advances for vessels under construction (Note 7)		142,705			107,439
Vessels, net (Note 6)		315,977			151,994

Total fixed assets, net		458,682			262,183


OTHER NON CURRENT ASSETS:
Convertible Loan receivable (Note 4)		23,680			—
Restricted Cash (Note 8)		6,000			6,000
Deferred charges, net		2,104			528

Total other non current assets		31,784			6,528

Total assets	$	593,082		$	306,713


LIABILITIES AND MEMBERS’ EQUITY:

CURRENT LIABILITIES:
Current portion of long-term debt (Note 8)	$	17,451		$	9,897
Accounts payable, trade		5,464			883
Accounts payable, other		319			74
Unearned revenue		1,120			—
Accrued liabilities		3,203			4,123
Due to related parties (Note 3)		372			148
Derivative financial instruments (Note 11)		3,191			828

Total current liabilities		31,120			15,953

Long-term debt (Note 8)		170,786			76,688
Members’ Loans (Notes 3, 9 and 16)		—			226,005
Derivative financial instruments (Note 11)		2,835			595

Total non current liabilities		173,621			303,288

Total liabilities		204,741			319,241

Commitments and contingencies (Note 13)		—			—

MEMBERS’ EQUITY:
Members’ Capital (415,037 Class A Units and 1 Class B Units as of June 30, 2014 and nil Class A Units and 1 Class B Units as of December 31, 2013 (Notes 9 and 12))		415,037			—
Accumulated other comprehensive loss		(3,454	)
Accumulated deficit		(23,242	)		(12,528	)

Total Members’ equity		388,341			(12,528	)

Total liabilities and Members’ equity	$	593,082		$	306,713

The accompanying notes are an integral part of these unaudited interim combined financial statements.

F-29

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)


	2014			2013
REVENUES:
Voyage revenues	$	29,713		$	3,541

Total revenues		29,713			3,541


EXPENSES:
Voyage expenses (Note 14)		(10,490	)		(1,706	)
Vessel operating expenses (Note 14)		(11,260	)		(1,001	)
Management fees (Note 3)		(1,353	)		(136	)
Depreciation (Note 6)		(5,235	)		(662	)
Dry docking and special survey costs		(914	)		—
General and administrative expenses to related parties (Note 3)		(2,257	)		(1,963	)
General and administrative expenses		(3,551	)		(2	)

Total Expenses		(35,060	)		(5,470	)

Operating loss		(5,347	)		(1,929	)

OTHER INCOME (EXPENSES):
Interest and finance costs (Note 15)		(2,383	)		(7	)
Interest on Members’ Loans (Notes 3 & 9)		(1,816	)		(427	)
Loss on derivative financial instruments (Note 11)		(1,149	)		—
Other, net		(19	)		—

Total other expenses, net		(5,367	)		(434	)

Net loss	$	(10,714	)	$	(2,363	)

The accompanying notes are an integral part of these unaudited interim combined financial statements.

F-30

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)


	2014			2013

Net loss	$	(10,714	)	$	(2,363	)

Other Comprehensive loss:

Unrealized losses from hedging interest rate swaps, net (Note 11)		(3,454	)		—

Comprehensive loss	$	(14,168	)	$	(2,363	)

The accompanying notes are an integral part of these unaudited interim combined financial statements.

F-31

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)


	Members’ Capital Contributions		Accumulated Other Comprehensive Income / (Loss)			Accumulated Deficit			Total Members’ Equity
Balance, December 31, 2012	$	—	$	—		$	(1,408	)	$	(1,408	)

- Net loss		—		—			(2,363	)		(2,363	)

Balance, June 30, 2013	$	—	$	—		$	(3,771	)	$	(3,771	)


Balance, December 31, 2013	$	—	$	—		$	(12,528	)	$	(12,528	)

- Conversion of Members’ Loans		415,037		—			—			415,037
- Net loss		—		—			(10,714	)		(10,714	)
- Other Comprehensive Loss		—		(3,454	)		—			(3,454	)

Balance, June 30, 2014	$	415,037	$	(3,454	)	$	(23,242	)	$	388,341

The accompanying notes are an integral part of these unaudited interim combined financial statements.

F-32

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)


	June 30, 2014			June 30, 2013
Cash Flows used in/provided by Operating Activities:
Net loss	$	(10,714	)	$	(2,363	)
Adjustments to reconcile net loss to net cash used in/provided by operating activities:
Depreciation		5,235			662
Amortization of deferred financing fees		136			—
Loss on derivative financial instruments		1,149			—
Accrued interest expense on Members’ Loans		1,816			427
Changes in operating assets and liabilities:
(Increase)/Decrease in:
Accounts receivable, trade		(2,218	)		529
Inventories		(1,732	)		1,701
Prepayments and other		(517	)		(42	)
Due from related parties		152			(48	)
Increase/(Decrease) in:
Accounts payable, trade		4,490			23
Accounts payable, other		197			28
Unearned revenue		1,120			—
Accrued liabilities		(920	)		(77	)
Due to related parties		224			(147	)

Net Cash used in/provided by Operating Activities	$	(1,582	)	$	693

Cash Flows used in Investing Activities:
Acquisition of vessels		(159,983	)		—
Advances for vessels under construction		(40,514	)		(19,400	)
Investment in Convertible loan in Heron		(23,680	)		—

Net cash used in Investing Activities	$	(224,177	)	$	(19,400	)

Cash Flows from Financing Activities:
Increase in Restricted cash		2			—
Proceeds from long-term debt		106,600			—
Repayment of long-term debt		(4,949	)		—
Payment of financing fees		(2,150	)		—
Proceeds from Members’ Loans		186,070			19,400

Net cash provided by Financing Activities	$	285,573		$	19,400

Net increase in cash and cash equivalents		59,814			693
Cash and cash equivalents at beginning of period		29,979			1,148

Cash and cash equivalents at end of the period	$	89,793		$	1,841


SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Bank loan Interest	$	1,824		$	—

The accompanying notes are an integral part of these unaudited interim combined financial statements.

F-33

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

1.	Basis of Presentation and General Information:

The accompanying unaudited interim combined financial statements include the consolidated accounts of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC and their wholly owned subsidiaries. Oceanbulk Shipping LLC and Oceanbulk Carriers LLC were formed under the laws of the Republic of the Marshall Islands on October 4, 2012 and April 5, 2013, respectively, in view of separate limited liability agreements entered between Oaktree OBC Holdings LLC (“Oaktree”) and Millennia Limited Liability Company (“Millennia” and, together with Oaktree, the “Members”) with Oceanbulk Shipping LLC dated October 9, 2012 and with Oceanbulk Carriers LLC dated April 11, 2013 with Oaktree holding a 90% ownership interest and Millennia holding the remaining 10% ownership interest in both companies and Oaktree exerting control over their operations. Oceanbulk Shipping LLC and Oceanbulk Carriers LLC and their wholly owned subsidiaries are herein referred to collectively as the “Company”. As of June 30, 2014, the Company was engaged in the ocean transportation of dry bulk cargoes worldwide through the ownership and operation of the following bulk carrier vessels:


	Vessel name	Type	DWT		Built/ Delivery
Existing fleet
1.	Obelix	Capesize		181,433	2011⁽²⁾
2.	Maiden Voyage	Supramax		58,722	2012⁽²⁾
3.	Big Bang (ex Cape Shanghai)	Capesize		174,109	2007⁽²⁾
4.	Strange Attractor (ex Tokiwa Glory)	Supramax		55,742	2006⁽²⁾
5.	Big Fish (ex Shining Star)	Capesize		177,662	2004⁽²⁾
6.	Pantagruel (ex Pacific Confidence)	Capesize		180,181	2004⁽²⁾
7.	Kymopolia (ex Shiga)	Capesize		176,990	2006⁽²⁾
8.	Mercurial Virgo (ex Mineral Pearl)	Kamsarmax		81,545	2013⁽²⁾
9.	Pendulum (ex Christina Victory)	Kamsarmax		82,619	2006⁽²⁾
10.	Amami (ex GL Xiushan)	Post-Panamax		98,681	2011⁽²⁾
11.	Madredeus (ex GL Zoushan)	Post-Panamax		98,681	2011⁽²⁾
12.	Magnum Opus (ex HN 207-JMU)	Kamsarmax		81,022	2014⁽²⁾
Newbuilding fleet
13.	HN 213-JMU (tbn Peloreus) (Note 16)	Capesize		182,000	2014⁽²⁾
14.	HN 214-JMU (tbn Leviathan)	Capesize		182,000	2014⁽³⁾
15.	HN 5017-JMU	Capesize		182,000	2015⁽³⁾
16.	HN 5055-JMU	Capesize		182,000	2015⁽³⁾
17.	HN 5056-JMU	Capesize		182,000	2015⁽³⁾
18.	HN 1312-SWS	Capesize		180,000	2015⁽³⁾
19.	HN 1313-SWS	Capesize		180,000	2015⁽³⁾
20.	HN NE166-NACKS	Newcastlemax		209,000	2015⁽³⁾
21.	HN NE167-NACKS	Newcastlemax		209,000	2015⁽³⁾
22.	HN NE184-NACKS	Newcastlemax		209,000	2015⁽³⁾
23.	HN NE164-NACKS (tbn Honey Badger)	Ultramax		61,000	2015⁽³⁾
24.	HN NE165-NACKS	Ultramax		61,000	2015⁽³⁾
25.	HN 1359⁽¹⁾	Newcastlemax		208,000	2015⁽³⁾
26.	HN 1360⁽¹⁾	Newcastlemax		208,000	2015⁽³⁾
27.	HN 1361⁽¹⁾	Newcastlemax		208,000	2016⁽³⁾
28.	HN 1362⁽¹⁾	Newcastlemax		208,000	2016⁽³⁾

F-34

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

1.	Basis of Presentation and General Information – continued:


	Vessel name	Type	DWT		Built/ Delivery
Newbuilding fleet (continued)
29.	HN 1363⁽¹⁾	Newcastlemax		208,000	2016⁽³⁾
30.	HN 1061⁽¹⁾	Ultramax		64,000	2015⁽³⁾
31.	HN 1062⁽¹⁾	Ultramax		64,000	2015⁽³⁾
32.	HN 1063⁽¹⁾	Ultramax		64,000	2015⁽³⁾
33.	HN 1064⁽¹⁾	Ultramax		64,000	2015⁽³⁾
34.	HN 1080	Ultramax		64,000	2015⁽³⁾
35.	HN 1081	Ultramax		64,000	2015⁽³⁾
36.	HN 1082	Ultramax		64,000	2015⁽³⁾
37.	HN 1083	Ultramax		64,000	2015⁽³⁾

(1)	Chartered under bareboat lease arrangement that qualifies as an accounting capital lease (Note 7).

(2)	Year of construction

(3)	Year of expected delivery

During the six month periods ended June 30, 2014 and 2013, charterers that individually accounted for more than 10% of the Company’s voyage revenues were as follows:


Charterer	2014			2013
A		44	%		—
B		15	%		—
C		14	%		—
D		—			57	%
E		—			29	%
F		—			14	%

The outstanding accounts receivable balance of these three charterers that accounted for more than 10% of the Company’s six month period ended June 30, 2014 revenue was $0.3 million.

2.	Significant Accounting policies:

The accompanying unaudited interim combined financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These unaudited interim combined financial statements have been prepared on the same basis and should be read in conjunction with the financial statements for the year ended December 31, 2013 and, in the opinion of management, reflect all adjustments, which include only 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 six month period ended June 30, 2014 are not necessarily indicative of the results that might be expected for the fiscal year ending December 31, 2014. A discussion of the Company’s significant accounting policies can be found in the audited combined financial statements for the fiscal year ended December 31, 2013. There have been no material changes to these policies in the six month period ended June 30, 2014.

The combined balance sheet as of December 31, 2013 has been derived from the audited combined financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

F-35

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

2.	Recent Accounting Pronouncements:

Revenue from Contracts with Customers: The FASB and the International Accounting Standards Board (IASB) (collectively, the Boards) jointly issued a standard that will supersede virtually all of the existing revenue recognition guidance in US GAAP and IFRS and is effective for annual periods beginning on or after December 15, 2016. The standard establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates. Management is in the process of accessing the impact of the new standard on Company’s financial position and performance.

3.	Transactions with Related Parties:

Transactions and balances with related parties are as follows:


	June 30, 2014		December 31, 2013
Balance Sheet
Assets
Starbulk S.A.	$	—	$	181
Oceanbulk Maritime S.A and its affiliated entities		24		—
Polygon Invest & Finance		4		—
Oceanbulk Container Carriers		1		—

Total Assets	$	29	$	181

Liabilities
Members’ Loans (Note 9)	$	—	$	226,005
Oceanbulk Maritime S.A and its affiliated entities		—		148
Starbulk S.A.		372		—

Total Liabilities	$	372	$	226,153


	June 30, 2014			June 30, 2013
Statement of Operations
Interest on Members’ Loans (Note 9)	$	(1,816	)	$	(427	)
Management fees to Starbulk S.A.		(1,299	)		(136	)
Management fees to Oceanbulk Maritime S.A.		(54	)		—
Administrative Expenses to Oceanbulk Maritime S.A. and its affiliated entities		(2,257	)		(1,963	)

Total Expenses to Related Parties	$	(5,426	)	$	(2,526	)

Management Agreements with Starbulk S.A

Each of the Company’s existing vessels is subject to a vessel management and operating agreement with Starbulk S.A, a subsidiary of Star Bulk Carriers Corp, (“Star Bulk”) which was founded by the Company’s Chief Executive Officer. In addition, as of June 30, 2014, affiliates of Oaktree beneficially owned 19.9% of Star Bulk’s outstanding voting common stock. Pursuant to the terms of these agreements, Starbulk S.A provides management services, including but not limited to technical, crew and accounting services, to the

F-36

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

3.	Transactions with Related Parties – continued:

Company’s vessels in exchange for a fixed daily management fee of $0.75 per vessel, for a period beginning upon vessel’s delivery and until the termination of the agreement. The agreement will terminate upon the expiration of a two month period from the delivery of a written notice by either party to the other. During the six month periods ended June 30, 2014 and 2013, Management fees under these agreements amounted to $1,299 and $136, respectively, and are separately reflected in the accompanying combined statements of operations.

As of June 30, 2014, an amount of $372 was due to Starbulk S.A, while as of December 31, 2013, an amount of $181 was due from Starbulk S.A, such amounts included in Due to and Due from related parties, respectively, in the accompanying unaudited interim combined balance sheets.

Merger Agreement with Star Bulk

On June 16, 2014, the Company entered into an Agreement and Plan of Merger, (as amended from time to time, the “Merger Agreement”) among Star Bulk, Star Synergy LLC, a Marshall Islands limited liability company and a wholly-owned subsidiary of Star Bulk (“Oaktree Holdco Merger Sub”), Star Omas LLC, a Marshall Islands limited liability company and a wholly-owned subsidiary of Star Bulk (“Pappas Holdco Merger Sub” and together with Oaktree Holdco Merger Sub, the “Merger Subs”), Oaktree and, Millennia, pursuant to which Oaktree and Millennia would merge with and into one of the Merger Subs (the “Merger”), with the Merger Subs continuing as the surviving companies and wholly-owned subsidiaries of Star Bulk.

The Merger Agreement also provided for the acquisition (the “Heron Transaction”) by Star Bulk of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta. The Merger Agreement provided that Star Bulk would issue 2,115,706 of its common shares into escrow as consideration for the Heron Vessels, which common shares will be released from escrow when Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to Star Bulk.

Commercial Management Agreements with Oceanbulk Maritime S.A and its affiliated entities

The Company has entered into a management agreement with Oceanbulk Maritime S.A (“Oceanbulk Maritime”), the parent company of Millennia. Pursuant to the terms of the agreement, Oceanbulk Maritime provides commercial and administrative services to the Company. During the six month periods ended June 30, 2014 and 2013, administrative fees under the respective agreements amounted to $2,257 and $1,963, respectively and are included in General and administrative expenses to related parties in the accompanying unaudited interim combined statements of operations, while $407 and $148, respectively, were capitalized within Advances for vessels under construction. During the first half of 2014, the Company entered into a management agreement with Oceanbulk Maritime S.A. for the vessel Magnum Opus, certain services of which were sub-contracted from Oceanbulk Maritime S.A. to Star Bulk. Under the management agreement with Oceanbulk Maritime S.A. a fixed daily management fee of $0.75 per vessel was agreed, for a period beginning upon vessel’s delivery and until the termination of the agreement. During the six month periods ended June 30, 2014 and 2013, Management fees under these agreements amounted to $54 and $nil, respectively, reflected in the accompanying combined statements of operations. Following the completion of the Merger on July 11, 2014, the commercial agreement with Oceanbulk Maritime was terminated. As of June 30, 2014 and December 31, 2013, an amount of $24 and $148, respectively, were due from and due to Oceanbulk Maritime and both amounts included in Due from and due to related parties in the combined balance sheets.

Provision of certain guarantees by Oceanbulk Maritime

Oceanbulk Maritime has provided performance guarantees under the bareboat charter agreements relating to the newbuilding vessels with hull numbers HN 1061, HN 1062, HN 1063 and HN 1064 discussed in Note 7. In addition, Oceanbulk Maritime has also provided performance guarantees under the shipbuilding contracts for the newbuilding vessels with hull numbers HN 207-JMU (named Magnum Opus – Note 16), HN 213-JMU (named Peloreus), HN 214-JMU (to be named Leviathan), HN 5017-JMU, HN 5055-JMU, HN 5056-JMU, HN NE164-NACKS (to be named Honey Badger), HN NE165-NACKS, HN NE166-NACKS, HN NE167-NACKS and HN NE184-NACKS, discussed in Note 7. All of the performance guarantees described above have been counter-guaranteed by the Company. Following the completion of the Merger, Star Bulk is expected to provide counter-guarantees to Oceanbulk Maritime in exchange for the counter-guarantees provided by the Company.

F-37

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

3.	Transactions with Related Parties – continued:

Awarded profit interests

Pursuant to an agreement with affiliates of Oaktree, Oceanbulk Maritime S.A. and certain members of the Company’s senior management are eligible for a share of the profits of Oaktree, subject to Oaktree and its affiliates achieving certain internal rate of return and capital multiples on their original investment in the Company. This award will be payable only by affiliates of Oaktree so the Company will not be responsible for making such payments. Nevertheless, when award payments vest or are deemed probable to vest and are required to be made under the agreement with respect to the Company, a non-cash compensation expense will be reflected in the Company’s General and administrative expenses, with a corresponding increase in the Company’s equity as a deemed contribution from the Company’s stockholders. As of June 30, 2014 and December 31, 2013, this award had not vested. The agreement is expected to be amended, as a result of the Merger, to remove Oceanbulk as a party.

4.	Convertible Loan receivable:

On February 19, 2014, Oceanbulk Shipping LLC provided $3,149 and €14.9 million of funds in the form of a convertible loan (each a “Heron Convertible Loan”) to Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta whose sole stockholder was ABY Group Holding Limited (itself a joint venture between Augustea Bunge Maritime Limited and York Capital Management). At the option of Oceanbulk Shipping LLC, the Convertible Loan is convertible into 50% of the outstanding equity of Heron, so upon conversion of the Heron Convertible Loan, Heron would be a 50-50 joint venture between Oceanbulk Shipping LLC and ABY Group Holding Limited. The use of the Convertible Loan proceeds was to partially finance the acquisition out of bankruptcy of Deiulemar Shipping SpA (“Deiulemar”), an operator of 12 dry bulk vessels the Deiulemar fleet, (the “Deiulemar Fleet”). On February 13, 2014, Heron entered into a $95,200 loan agreement (the “CiT Facility”) with CiT Finance LLC, which is severally guaranteed on a 50-50, unsecured basis by Oceanbulk Shipping LLC and ABY Group Holding Limited. The CiT Facility is divided into two portions, a “Core Portion” of $65,200 and a “Non-Core Portion” of $30,000. The Core Portion is secured by four vessels (the “Core Vessels”), consisting of three Kamsarmax vessels and one Capesize vessel intended to be retained by Heron (or its equityholders), and matures in June 2019. The Non-Core Portion was secured by eight vessels (the “Non-Core Vessels”) of various sizes. Interest accrues on the CiT Facility at a rate 4.25% per annum. The Core Portion is subject to scheduled quarterly amortization payments of $1,563, beginning on June 30, 2014. Heron may voluntarily prepay the outstanding principal amount of the loans under the CiT Facility at any time, subject to a prepayment premium of 2% during the first year and 1% during the second year.

Upon a sale or loss of a Core Vessel, the Core Portion must be prepaid based on a scheduled release price for the Core Vessel. Upon a sale or loss of a Non-Core Vessel, the net proceeds must be used to prepay the Non-Core Portion and then applied to the budgeted cost of intermediate surveys during 2014 of the Core Vessels. As of June 30, 2014, Heron had sold five of the Non-Core Vessels and had agreed to sell another two Non-Core Vessels. As of June 30, 2014 the outstanding balance of the Core Portion was $63,637 while the Non Core Portion had been fully repaid. The CiT Facility contains the following financial covenants that Heron must comply with:

•

a minimum cash balance at all times of $1,000 per Core Vessel;

•

minimum liquidity at all times of $185 per Non-Core Vessel;

•

F-38

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

4.	Convertible Loan receivable – continued:

Under the CiT Facility, Heron may only make quarterly distributions to its members from accumulated unrestricted excess cash in operating accounts so long as no event of default has occurred and is continuing or would occur as a result of such distribution, so long as (i) the Non-Core Portion has been paid in full, (ii) an amount corresponding to the budgeted cost of all 2014 Core Vessel intermediate surveys has been deposited in a restricted account at CiT and (iii) the outstanding amount under the CiT Facility does not exceed 60% of the unaudited interim combined FMV of the vessels owned by Heron.

On March 10, 2014, deeds of transfer in respect of the vessels in the Deiulemar Fleet were executed in favor of Heron.

5.	Inventories:

The amounts shown in the accompanying combined balance sheets are analyzed as follows:


	June 30, 2014		December 31, 2013
Bunkers	$	3,840	$	2,961
Lubricants		1,628		775

	$	5,468	$	3,736

6.	Vessels, net and Advances for vessels’ acquisitions:

The amounts in the accompanying combined balance sheets are analyzed as follows:


	Vessels’ Cost		Accumulated Depreciation			Net Book Value
Balance, December 31, 2012	$	36,642	$	(271	)	$	36,371
- Acquisitions		118,279		—			118,279
- Depreciation for the year		—		(2,656	)		(2,656	)

Balance, December 31, 2013		154,921		(2,927	)		151,994
- Acquisitions, improvements and other vessels’ costs		159,983		—			159,983
- Transfer from Advances for vessels under construction		6,418		—			6,418
- Transfer from Advances for vessel acquisitions		2,750		—			2,750
- Capitalized Members’ Loan interest until vessel delivery		67					67
- Depreciation for the period		—		(5,235	)		(5,235	)

Balance, June 30, 2014	$	324,139	$	(8,162	)	$	315,977

In October 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Capesize dry-bulk carrier, Kymopolia (ex Shiga), of which an advance of $2,750 was paid up to December 31, 2013, and is included within Advances for vessel acquisition in the 2013 accompanying combined balance sheet. On January 30, 2014 the Company took delivery of the vessel Kymopolia.

F-39

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

6.	Vessels, net and Advances for vessels’ acquisitions – continued:

In December 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Kamsarmax dry bulk carrier, Mercurial Virgo (ex – Mineral Pearl). In addition, in December 2013, the Company entered into an MOA with an unrelated party for the acquisition of the Kamsarmax dry bulk carrier, Pendulum (ex – Christina Victory). On February 28, 2014, the Company took delivery of the Mercurial Virgo and on March 20, 2014 the Company took delivery of the vessel Pendulum.

On January 24, 2014, the Company entered into two MOAs with an unrelated party for the acquisition of two post-Panamax dry-bulk carriers, named Amami (ex GL Xiushan) and Madredeus (ex GL Zoushan), respectively. On February 13, 2014 and February 21, 2014 the Company took delivery of the vessels.

On May 27, 2014, Magnum Opus (ex HN 207-JMU) was delivered from the shipyard at a total cost of $30,980. The delivery installment of $18,620 was financed by the loan facility with Deutsche Bank AG Filiale Deutschlandgeschäft discussed in Note 8. Under the loan facility, the Company drew down an amount of $20,000 representing the first available tranche relating to the delivered vessel. An amount of $6,180 had been paid for the construction of the vessel up to December 31, 2013 and is included within Advances for vessel acquisition in the 2013 accompanying combined balance sheet.

7.	Advances for vessels under construction:

As of June 30, 2014 and December 31, 2013, Advances for vessels under construction reflect the advances paid to the shipyards for newbuilding vessels, capitalized interest and other capitalized costs relating to the supervision of the construction of these vessels. The amounts shown in the accompanying combined balance sheets are analyzed as follows:


	June 30, 2014		December 31, 2013
Advances to the shipyards	$	99,227	$	95,667
Bareboat capital leases – upfront and handling fees		40,500		10,340
Capitalized interest on Members’ Loans		2,207		1,284
Other		771		148

Total	$	142,705	$	107,439

In September 2012, the Company agreed with a Japanese shipyard the construction of an 80,800 DWT Kamsarmax vessel (Hull HN 207-JMU (named Magnum Opus)). The vessel was delivered in May 2014 (Note 6).

In December 2012, the Company agreed with a Japanese shipyard the construction of two 182,000 DWT Capesize vessels (Hulls HN 213-JMU (named Peloreus) and HN 214-JMU (to be named Leviathan)). Hulls HN 213-JMU (named Peloreus was delivered on July 22, 2014 (Note 16) while HN 214-JMU (to be named Leviathan) is expected to be delivered in September 2014.

In March 2013, the Company agreed with a Japanese shipyard the construction of an 182,000 DWT Capesize vessel (Hull HN 5017-JMU). The vessel is expected to be delivered in March 2015.

F-40

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

7.	Advances for vessels under construction - continued

entity (each a “New YJ Owner”). Delivery to the Company of each vessel is deemed to occur upon delivery of the vessel to the New YJ Owner from the corresponding New YJ Builder. An amount of $20,680 for the construction cost of each vessel will be financed by the relevant New YJ Owner, to whom the Company will pay a pre-agreed daily bareboat charter hire rate on a 30-days advance basis. After each vessel’s delivery, the Company has monthly purchase options to acquire the vessel at pre-determined, amortizing-during-the-charter-period prices. On the eighth anniversary of the delivery of a vessel, the Company has the obligation to purchase the vessel at a purchase price of $6,000. Based on the applicable lease accounting guidance (ASC Topic 840 “Leases”), the Company determined that the bareboat charters should be classified as capital leases. In addition, based on the lease agreement provisions, the Company is deemed to have substantially all of the construction period risk and accordingly is considered the owner of the vessels during the construction period, which will result in a deemed sale-leaseback transaction of the vessels to occur when construction of the assets is complete and the lease term begins. The financial liability related to these capital leases will be recognized upon each vessel’s delivery (expected in the first four months of 2015), concurrently with the recognition of the leased asset, pursuant to the applicable capital lease accounting guidance.

In June 2013, the Company agreed with a Chinese shipyard the construction of two 61,000 DWT Ultramax vessels (Hulls HN E164-NACKS (tbn Honey Badger) and HN NE165-NACKS). The vessels are expected to be delivered in March 2015.

On December 27, 2013, the Company entered into separate bareboat charter party contracts with affiliates of a chinese shipyard (“SWS) for ten-year bareboat charters of five newbuilding 208,000 dwt Newcastlemax vessels (Hulls HN 1359, HN 1360, HN 1361, HN 1362 and HN 1363) being built at SWS.

The vessels are being constructed pursuant to shipbuilding contracts entered into between five pairings of affiliates of SWS. Each pair has one shipyard party (each, an “SWS Builder”) and one ship-owning entity (each an “SWS Owner”). Delivery to the Company of each vessel is deemed to occur upon delivery of the vessel to the SWS Owner from the corresponding SWS Builder. An amount of $46,400 for the construction cost of each vessel will be financed by the relevant SWS Owner, to whom the Company will pay a daily bareboat charter hire rate payable monthly plus a variable amount corresponding to the LIBOR rate payable every six months and a one-time handling fee of $464. After each vessel’s delivery, the Company has monthly purchase options to acquire the vessel at pre-determined, amortizing-during-the-charter-period prices. At the end of the ten-year charter period for each vessel, the Company has the obligation to purchase the vessel at a purchase price of $13,919. Based on ASC Topic 840, the Company determined that the bareboat contracts should be classified as capital leases. In addition, based on the lease agreement provisions, the Company is deemed to have substantially all of the construction period risk and accordingly is considered the owner of the vessels during the construction period, which will result in a deemed sale-leaseback transaction of the vessels to occur when construction of the asset is complete and the lease term begins. The financial liability related to these capital leases will be recognized upon each vessel’s delivery in December 2015 and first six months of 2016, concurrently with the recognition of the leased asset, pursuant to the applicable capital lease accounting guidance.

Total purchase price of the aforementioned vessels is $1,078,677 (of which $393,400 is related to the bareboat charter contracts discussed above) while the Company has also agreed to pay for extras under these contracts amounting to $14,198. As of June 30, 2014 and December 31, 2013, the Company has paid $140,498 and $106,155 (of which amounts, $40,500 and $10,340, respectively, relate to the bareboat contracts discussed above).

F-41

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

8.	Long-term debt:

ABN Facility

On August 1, 2013, the Company entered into a $34,458 credit facility with ABN Amro N.V (the “ABN Facility”) in order to partially finance the acquisition cost of the vessels Obelix and Maiden Voyage. The loans under the ABN Facility were available in two tranches of $20,350 and $14,108. On August 6, 2013, the Company drew down the available tranches and paid an arrangement fee of $204.

On December 18, 2013, the ABN Facility was amended to add an additional loan of $53,000 to partially finance the acquisition cost of the vessels Big Bang (ex Cape Shanghai), Strange Attractor (ex Tokiwa Glory), Big Fish (ex Shining Star) and Pantagruel (ex Pacific Confidence). On December 20, 2013, the Company drew down the available tranches and paid an arrangement fee of $572.

The following table describes the various tranches of loans under the ABN Facility as of June 30, 2014:


Vessel	Date Drawn	Principal Amount		Quarterly Installments	Balloon Payment
Obelix	August 2013	$	19,219	17 x $377 through August 2018	$12,813 due August 2018
Maiden Voyage	August 2013	$	13,118	13 x $248 through September 2017	$9,900 due September 2017
Big Bang	December 2013	$	15,100	18 x $450 through December 2018	$7,000 due December 2018
Strange Attractor	December 2013	$	9,400	18 x $300 through December 2018	$4,000 due December 2018
Big Fish	December 2013	$	12,400	18 x $550 through December 2018	$2,500 due December 2018
Pantagruel	December 2013	$	12,400	18 x $550 through December 2018	$2,500 due December 2018

		$	81,637

Loans outstanding under the ABN Facility bear interest at three-month LIBOR plus a margin ranging from 3.75% to 3.9% per annum.

The ABN Facility is secured by a first-priority ship mortgage on the financed vessels, general assignments, charter assignments and, operating account assignments and is guaranteed by Oceanbulk Shipping LLC (the “Guarantor”). The ABN Facility contains a number of negative covenants, including limitations on additional indebtedness, additional liens on the collateral, restricted payments and changes in management and ownership. In addition, the ABN Facility contains the following financial maintenance covenants:

•

aggregate vessel value must exceed 140% of the aggregate principal amount of outstanding loans under the ABN Facility;

•

minimum consolidated EBITDA of the Guarantor to interest coverage ratio of 2.0x, applicable after September 30, 2016; and

•

minimum liquidity of the higher of $1.0 million per collateral vessel or $0.5 million per other vessel owned by the Guarantor.

F-42

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

8.	Long-term debt – continued:

Deutsche Bank Facility

On May 20, 2014, Oceanbulk entered into a loan agreement with Deutsche Bank AG Filiale Deutschlandgeschäft for financing in an aggregate amount of $85,000, which will partially finance the construction cost of one Kamsarmax bulk carrier Magnum Opus, which was delivered on May 27, 2014 (Note 6), one Capesize bulk carrier Hull HN 213-JMU (named Peloreus), which was delivered on July 22, 2014 (Note 16) and one Capesize bulk carrier currently under construction at JMU HN 214-JMU (to be named Leviathan), with expected delivery in September 2014. One loan, which matures five years after the drawdown date, can be drawn for each vessel being financed. Each loan is subject to 19 quarterly amortization payments equal to 1/60th of the loan amount, with the 20th payment equal to the remaining amount outstanding on the loan. The loans bear interest at three-month LIBOR plus a margin of 3.4% per annum. The Deutsche Bank Facility is secured by first priority cross-collateralized ship mortgages on the financed vessels, charter assignments and, insurance and earnings assignments and is guaranteed by the Guarantor. The Deutsche Bank Facility includes certain negative covenants, including limitations on changes of ownership or control, additional indebtedness and the payment of dividends or other distributions until March 31, 2015, after which the Company may only pay dividends if no event of default has occurred or is continuing. The Deutsche Bank Facility also requires that the aggregate fair market value of the financed vessels exceeds 130% of the outstanding loans under the Deutsche Bank Facility. The Deutsche Bank Facility includes also the following financial maintenance covenants, which are applicable to the Guarantor:

•

maximum ratio of total liabilities to total assets (on a market value adjusted basis) of less than 70%;

•

minimum EBITDA to interest ratio of 2.0x, tested annually for 2014 and 2015, and 2.5x thereafter; and

•

minimum liquidity of the greater of (x) $10,000 and (y) $500 in unencumbered cash per vessel directly or indirectly owned by the Guarantor.

CEXIM Facility

On March 21, 2014, the Company executed a binding term sheet and on June 26, 2014, Oceanbulk entered into a loan agreement with the Export-Import Bank of China (the “CEXIM Facility”) for financing in an aggregate amount of $57,360, which will be available in two tranches of $28,680, to partially finance the construction cost of two Capesize bulk carriers currently under construction at SWS (Hulls HN 1312-SWS and HN 1313-SWS), with expected delivery in April and June 2015, respectively. Each tranche will mature ten years from the delivery date of the last delivered financed vessel and will be repayable in 20 semi-annual installments of $1,147 plus a balloon payment of $5,736, the first installment being due on the first January 21 or July 21 six months after the delivery of each vessel. The loan will bear interest at six-month LIBOR plus a margin of 3.25% per annum. The CEXIM Facility will be secured by first priority cross-collateralized ship mortgages on the financed vessels, charter assignments and, insurance and earnings assignments and will be guaranteed by the Guarantor. The CEXIM Facility will include certain negative covenants, including limitations on changes of ownership or control. The CEXIM Facility also requires that the aggregate value of the financed vessels exceeds 125% of the outstanding loans under the CEXIM Facility and that each vessel owning company must maintain minimum cash of not less than $500. The CEXIM Facility will include the following financial maintenance covenants, which are applicable to the Guarantor:

•

minimum equity ratio calculated based on book value of equity to total book value of assets of no less than 30%;

F-43

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

8.	Long-term debt – continued:

•

minimum book value of equity of not less than $250,000 after December 31, 2015; and

•

minimum liquidity of $500 in unencumbered cash per vessel directly or indirectly owned by the Guarantor.

HSBC Facility

On April 1, 2014, the Company executed a binding term sheet and in June, 2014, Oceanbulk entered into a loan agreement with HSBC Bank plc. (the “HSBC Facility”) for financing in an aggregate amount of $86,600, to partially finance the acquisition cost of the second hand vessels Kymopolia (ex Shiga), Mercurial Virgo (ex Mineral Pearl), Pendulum (ex Christina Victory), Amami (ex GL Xiushan) and Madredeus (ex GL Zhoushan), all of which have been delivered. The loan, which was drawn in June 2014, matures in June 2019 (59 months from the drawdown date) and is repayable in 20 quarterly installments, commencing three months after the drawdown, of $1,555 plus a balloon payment of $55,500 due together with the last installment. The loan bears interest at LIBOR plus a margin of 3.3% per annum, as long as the fair value of the vessels to the outstanding loan ratio (including any interest rate swap exposure) (“ACR”) exceeds 143% or 4.10% per annum, as long as the ACR falls below 143%. The HSBC Facility is secured by first priority mortgage over the financed vessels and, general and specific assignments and is guaranteed by the Guarantor. The HSBC Facility includes certain negative covenants, including limitations on changes of ownership or control, other than as part of an initial public offering and as long as the borrowers are not in an event of default and shareholding thresholds applicable to the Pappas family interests. It also includes dividend restrictions if an event of default has occurred or is continuing, or if the ACR falls below 143% while it also requires that the aggregate ACR exceeds 135% and minimum free liquidity to be maintained by the borrowers in the aggregate of $2,500. In addition, a portion of 10% of the initial HSBC Facility shall be prepaid from the proceeds of the first capital increase of the Corporate Guarantor after January 1, 2016. The HSBC Facility also includes the following financial maintenance covenants, which are applicable to the Guarantor:

•

maximum leverage ratio (calculated based on long term debt net of available cash divided by market value adjusted total assets net of available cash) not to exceed 70%;

•

minimum EBITDA to interest expense ratio of 2.0x, in relation to the proceeding four fiscal quarters, effective from the second anniversary of the execution date; and

•

minimum liquidity to exceed $500 in free cash balances per vessel owned by the Guarantor.

As of June 30, 2014, the Company was in compliance with the financial and other covenants contained in its loan agreements. In addition, the Company requested and obtained from its lenders their consent for the Merger with Star Bulk discussed in Note 3 above.

F-44

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

8.	Long-term debt – continued:

As of June 30, 2014, no amounts have been drawn under the CEXIM Facility. In addition, as of June 30, 2014, the following aggregate principal payments will be required over the next five years and throughout the term of the various facilities:


Year	Amount
July to December 2014	$	8,725
2015		17,451
2016		17,451
2017		27,103
2018		44,897
2019		72,610

Total Debt	$	188,237
Less: Long-term debt – current portion	$	(17,451	)

Long-term debt – non-current portion	$	170,786

Interest expense for the six month periods ended June 30, 2014 and 2013, amounted to $1,930 and $nil, respectively, and is included in Interest and finance costs in the accompanying unaudited interim combined statements of operations.

9.	Members’ Loans:

On October 9, 2012, the Members entered into a limited liability company agreement (the “Oceanbulk Shipping LLC Agreement”) with respect to Oceanbulk Shipping LLC, a limited liability company formed under the laws of the Republic of the Marshall Islands on October 4, 2012. On April 11, 2013, the Members entered into a similar limited liability company agreement (the “Oceanbulk Carriers LLC Agreement”) with respect to Oceanbulk Carriers LLC, a limited liability company formed under the laws of the Republic of the Marshall Islands on April 5, 2013.

So long as the Members’ Loans were outstanding and had not yet been converted into equity, based on the applicable accounting guidance for debt instruments (ASC Topic 470 “Debt”) and for derivatives and hedging instruments (ASC Topic 815 “Derivatives and Hedging”), the Company determined that all proceeds from any Members’ Loans should be reflected as debt within the Company’s non-current liabilities, with no bifurcation of any of the embedded features.

F-45

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

9.	Members’ Loans – continued:

On May 28, 2014, at the election of the majority holders, the then outstanding Members’ Loans of $415,037 were converted into 373,533 and 41,504 Class A Units issued by each of Oceanbulk Shipping LLC and Oceanbulk Carriers LLC to Oaktree and Millennia respectively. The outstanding balance of the Members’ Loans at May 28, 2014 (date of conversion) and as of December 31, 2014 is analyzed as follows:


	May 28, 2014 (date of conversion)		December 31, 2013
Members’ Loans by Oaktree OBC Holdings LLC	$	368,291	$	200,828
Members’ Loans by Millennia LLC		40,921		22,314

Principal of Members’ Loans	$	409,212	$	223,142

Accrued Interest on Members’ Loans		5,825		2,863

Total	$	415,037	$	226,005

Out of the total accrued interest as of May 28, 2014 and December 31, 2013, an amount of $2,207 and $1,284, respectively, has been capitalized and is reflected within “Advances for vessels under construction” in the accompanying combined balance sheets (Note 7) and $222 and $ nil respectively, has been capitalized and is reflected within “Vessels, net”. Interest on Members’ Loans for the six month periods ended June 30, 2014 and 2013 amounted to $1,816 and $427, respectively and is separately reflected in the accompanying unaudited interim statements of operations.

10.

Fair Value of Financial Instruments:

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

•

Cash and cash equivalents, restricted cash, accounts receivable, due from/to related parties and accounts payable: The carrying values reported in the combined balance sheets for those financial instruments are reasonable estimates of their fair values due to their short-term nature. The carrying value of these instruments is separately reflected in the accompanying balance sheets.

•

Long-term debt: The fair values of the loan facilities discussed in Note 8 approximate their recorded value due to the variable interest rates payable. The carrying value of the outstanding loans as of June 30, 2014 and December 31, 2013 amounted to $188,237 and $86,585, respectively.

•

Members’ Loans: The Members’ Loans had a fixed rate of interest, which accrued quarterly and if not paid in cash, determined at the option of the majority of the holders, it increased the outstanding principal amount. The fair value of a Members’ Loan outstanding as of December 31, 2013 was not able to be reliably estimated due to the interest settlement options held by the Members (Note 9).

•

Derivative financial Instruments: The fair values of the Company’s derivative financial instruments presented in combined balance sheet equate to the amount that would be paid or received by the Company if the agreements were cancelled at the reporting date and is determined by primarily by observable inputs (i.e., LIBOR swap yield curves).

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

F-46

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

11.

Derivative Financial Instruments:

Interest Rate Swaps

The Company is exposed to interest rate fluctuations associated with its current and expected variable rate borrowings and its objective is to partially manage the impact in the cash flows of its borrowings. In this respect, the Company uses interest rate swaps to manage net exposure to interest rate fluctuations related to these borrowings and to lower its overall borrowing costs.

During the third quarter of 2013, the Company entered into five interest rate swaps with Goldman Sachs Bank USA, effective from October 1, 2014. The swaps mature on April 1, 2018. Under the five swaps, the Company will make quarterly payments to the counterparty at fixed rates ranging between 1.79% to 2.07% per annum, based on an aggregate notional amount beginning at $186,307, and increasing up to $461,264 during the period from July 1, 2015 to October 1, 2015. The counterparty will make quarterly floating rate payments at three-month US$ LIBOR to the Company based on the same notional amount. During the three month period ended March 31, 2014, the swaps were not designated as accounting hedges and accordingly changes in their fair value in the three month period ended March 31, 2014 of $1,118 were reported in earnings as a Loss on Derivative Financial Instruments. On April 1, 2014 the Company designated the swaps as cash flow hedges in accordance with ASC Topic 815 “Derivatives and Hedging”, and accordingly the effective portion of these cash flow hedges during the second quarter of 2014 were reported in Accumulated Other Comprehensive Income (loss) on the June 30, 2014 combined balance sheet with the outstanding fair value (based on Level 2 inputs of the fair value hierarchy) as of the same date and as of December 31, 2013 being separately reflected as Derivative Financial Instruments within current and non current liabilities. The aggregate fair value of the respective agreements as at June 30, 2014 and December 31, 2013 was $6,027 and $1,423. Any ineffective portion of these cash flow hedges is reported as gain or loss in the Statement of Operations for the relevant period.

F-47

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

11.

Derivative Financial Instruments – continued:

The amounts of gain/(loss) recognized in Other Comprehensive Income/(Loss) (effective portion) which is reflected in the 2014 Statement of Comprehensive Income/ (loss) are analyzed as follows:


Statement of Comprehensive Loss	June 30, 2014			June 30, 2013
Unrealized losses from hedging interest rate swaps recognized in Other Comprehensive Loss before reclassifications	$	(3,454	)	$	—
Reclassification adjustments of interest rate swap losses transferred to Combined Statement of Operations into Interest and finance costs line		—			—

Unrealized losses from hedging interest rate swaps, net	$	(3,454	)	$	—

The amounts of losses on Derivative Financial Instruments recognized in the Statement of Operations are analyzed as follows:


Statement of Operations	June 30, 2014		June 30, 2013

Unrealized losses from interest rate swaps before hedging designation (April 1, 2014)	$	1,118	$	—
Ineffective portion of cash flow hedges following hedging designation		31		—
Reclassification adjustments of interest rate swap losses transferred to Combined Statement of Operations from Other Comprehensive Loss		—		—

Losses on derivative financial instruments	$	1,149	$	—

An amount of approximately $0.2 million is expected to be reclassified into earning during the following 12- month period when realized.

In relation to the above interest rate swap agreements designated as cash flow hedges and in accordance with ASC Topic 815 “Derivatives and Hedging- Timing and Probability of the Hedged Forecasted Transaction,” the management of the Company considered the creditworthiness of its counterparties and the expectations of the forecasted transactions and determined that no events have occurred that would make the forecasted transaction not probable.

12.

Members’ Equity:

Members’ equity of Oceanbulk Carriers LLC and Oceanbulk Shipping LLC as of June 30, 2014 consisted of 373,533 Class A Units, no par value, held by Oaktree, 41,504 Class A Units held by Millennia and one Class B Unit, no par value, held by Oaktree.

Members’ equity of each of Oceanbulk Carriers LLC and Oceanbulk Shipping LLC as of December 31, 2013 and June 30, 2013 consisted of one Class B Unit held by Oaktree.

F-48

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

13.

Commitments and Contingencies:

Various claims, suits, and complaints, including those involving government regulations and product liability, may arise in the ordinary course of our shipping activities. 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. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying unaudited interim combined financial statements. The Company is a member of a protection and indemnity association, or P&I Club that is a member of the International Group of P&I Clubs, which covers its third party liabilities in connection with its shipping activities. A member of a P&I Club that is a member of the International Group is typically subject to possible supplemental amounts or calls, payable to its P&I Club based on its claim records as well as the claim records of all other members of the individual associations, and members of the International Group. Currently, management is not aware of any such supplementary calls for 2014 and 2013. 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 any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the accompanying unaudited interim combined financial statements. The Company’s protection and indemnity (P&I) insurance coverage for pollution is $1 billion per vessel per incident.

The following table sets forth the future, minimum, non-cancellable charter revenue and purchase commitments as of June 30, 2014:


(+):collections, (-):payments	July to December 2014			2015			2016			2017			2018			2019 and thereafter			Total
	(Amounts in thousands of US Dollars)
Future, minimum, non-cancellable charter revenue⁽¹⁾	$	10,505		$	10,950		$	2,400		$	—		$	—		$	—		$	23,855
Purchase commitments⁽²⁾		(109,395	)		(454,774	)		—			—			—			—			(564,169	)
Bareboat capital leases - upfront fee⁽³⁾		(13,555	)		(30,910	)		(1,134	)		—			—			—			(45,599	)
Bareboat capital leases - charterhire⁽³⁾	$	—		$	(9,775	)	$	(27,159	)	$	(31,444	)	$	(31,413	)	$	(316,135	)	$	(415,926	)

Total	$	(112,445	)	$	(484,509	)	$	(25,893	)	$	(31,444	)	$	(31,413	)	$	(316,135	)	$	(1,001,839	)

(1)	The amounts represent the minimum contractual gross charter revenues to be generated from the existing, as of June 30, 2014, non-cancellable time and freight charter until their expiration, assuming no off-hire days other than those related to scheduled interim and special surveys of the vessels.

(2)	The amounts represent the Company’s remaining obligations under the pipeline of the Company’s newbuilding program discussed in Note 7, excluding those applicable under the bareboat lease agreements classified as capital leases.

(3)	The amounts represent the Company’s commitments under the bareboat lease arrangements under the upfront fee and the charter hire, gross of any address commissions the Company may be entitled to, respectively, discussed in Note 7.

F-49

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

14.

Voyage and Vessel Operating expenses:

The amounts in the accompanying unaudited interim combined statements of operations are analyzed as follows:


	2014		2013
*Voyage expenses*
Bunkers	$	9,207	$	1,525
Commissions		375		39
Port Expenses		875		140
Cargo Expenses		33		2

	$	10,490	$	1,706


	2014		2013
*Vessel Operating expenses*
Crew wages and related costs	$	5,143	$	604
Stores, Spares, Repairs and Maintenance		1,511		147
Insurances		730		93
Lubricants		818		83
Tonnage taxes		300		21
Initial supply upon vessels’ delivery and other delivery costs		2,418		16
Other		340		37

	$	11,260	$	1,001

15.

Interest and Finance Costs:

The amounts in the accompanying unaudited interim combined statements of operations are analyzed as follows:


	2014		2013
Interest on long-term debt (Note 8)	$	1,930	$	—
Amortization of deferred finance fees		136		—
Other bank and finance charges		317		7

	$	2,383	$	7

16.

Subsequent Events:

The following events and transactions occurred after the unaudited interim balance sheet date and up to the date of these financial statements were evaluated, August 8, 2014:

Closing of Merger with Star Bulk: On July 11, 2014, the shareholders of Star Bulk approved the merger agreement between the holding companies of the Company and subsidiaries of Star Bulk (the “Merger”) pursuant to which the Company became a wholly owned subsidiary of Star Bulk (Note 3).

Loan payments: Subsequent to June 30, 2014, the Company paid regular loan installments amounting to $377 for Obelix on August 5, 2014 in total.

F-50

Oceanbulk Shipping LLC & Oceanbulk Carriers LLC

Notes to Unaudited Interim Combined Financial Statements

For the six month periods ended June 30, 2014 and 2013

(Expressed in thousands of United States Dollars, unless otherwise stated)

16.

Subsequent Events – continued:

Amendment to the Deutsche Bank Facility: On July 4, 2014, the Company executed an amendment to the Deutsche Bank Facility in order to add ITF International Transport Finance Suisse AG as a lender and align the loan terms with the effects of the Merger (Note 3).

Payment for new building vessels: In July, 2014, the Company paid $4,780 for scheduled capital commitments under one of its newbuilding Capesize (Hull HN 1312-SWS) discussed in Note 7. The installment was financed by existing cash.

Delivery of vessel Peloreus: On July 22, 2014, Peloreus was delivered from the shipyard at a total cost of approximately $49,235. The delivery installment of $34,625 was partially financed by $32,500 loan under the loan facility with Deutsche Bank AG Filiale Deutschlandgeschäft discussed in Note 8. The remaining amount of the delivery installment of $2,125 was financed by existing cash.

F-51

Exhibit 99.3

INTRODUCTION

On July 11, 2014, pursuant to an Agreement and Plan of Merger (as amended from time to time, the “Merger Agreement”), dated as of June 16, 2014, among Star Bulk Carriers Corp. (the “Company”), two merger subsidiaries of the Company, Oaktree OBC Holdings LLC (the “Oaktree Holdco”), Millennia Limited Liability Company (the “Pappas Holdco”), Oaktree Dry Bulk Holdings LLC (the “Oaktree Seller”) and Millennia Holdings LLC (the “Pappas Seller” and, together with the Oaktree Seller, the “Sellers”), the parties thereto completed a transaction that resulted in a merger (the “Merger”) of the Oaktree Holdco and the Pappas Holdco into the two merger subsidiaries of the Company.

The Oaktree Holdco and the Pappas Holdco were the equity holders of Oceanbulk Shipping LLC (“Oceanbulk Shipping”) and Oceanbulk Carriers LLC (“Oceanbulk Carriers” and, together with Oceanbulk Shipping, “Oceanbulk”). Oceanbulk owned and operated a fleet of 12 dry bulk carrier vessels and owned contracts for the construction of 25 newbuilding dry bulk vessels fuel-efficient Eco-type vessels (one of which, Peloreus, was delivered on July 22, 2014) at shipyards in Japan and China. The consideration paid by the Company in the Merger to the Sellers was 48,395,765 common shares.

The Merger Agreement also provided for the acquisition (the “Heron Transaction”) by the Company of two Kamsarmax vessels (the “Heron Vessels”), from Heron Ventures Ltd. (“Heron”), a limited liability company incorporated in Malta. Oceanbulk Shipping had previously provided a loan to Heron, which is convertible into 50% of Heron’s equity (with the remaining 50% of Heron’s equity to be held by the other joint venture partner), and one of the subsidiaries of the Company now holds the loan as a result of the Merger. The Company issued 2,115,706 of its common shares into escrow as consideration for the Heron Vessels. The common shares will be released from escrow to the Sellers at the time Heron distributes its vessels to its equity holders, whereupon the two Heron Vessels will be transferred to the Company, and the Company expects to pay $25.0 million in cash (for which it may seek financing) in respect of debt that is currently secured by the Heron Vessels.

In addition, concurrently with the Merger, the Company completed a transaction (the “Pappas Transaction”), in which it acquired all of the issued and outstanding shares of Dioriga Shipping Co. and Positive Shipping Company (collectively, the “Pappas Companies”), which are entities owned and controlled by affiliates of the family of Mr. Pappas (collectively, the “Pappas Shareholders”). The Pappas Companies owned and operated a dry bulk carrier vessel (Tsu Ebisu) and had a contract for the construction of a newbuilding dry bulk carrier vessel, HN 5016 (tbn Indomitable). The consideration paid by the Company in the Pappas Transaction was 3,592,728 common shares.

The Merger, the Heron Transaction and the Pappas Transaction are, together, referred to as the “July 2014 Transactions”.

A total of 54,104,200 of the Company’s common shares were issued to the various selling parties in the Transactions, of which 45,460,324 shares were issued to the Oaktree Seller and its affiliated funds (collectively, “Oaktree”), and 8,643,876 were issued to the Pappas Companies and Millennia Holdings (collectively, the “Pappas Shareholders”). As a result, following completion of the July 2014 Transactions, Oaktree became the beneficial owner of approximately 61.3% of our outstanding common shares, and the Pappas Shareholders became the beneficial owners of approximately 12.6% of our outstanding common shares. With certain limited exceptions, as fully agreed under the Oaktree Shareholders Agreement (as defined below), Oaktree effectively cannot vote more than 33% of the Company’s outstanding common shares (subject to adjustment under certain circumstances). The Pappas Shareholders, under the Pappas Shareholders Agreement (as defined below), are also subject to a similar voting limitation of 15%. In addition, at the closing of the July 2014 Transactions, the Company entered into the Registration Rights Agreement (as defined below), which grants Oaktree, the Pappas Shareholders and certain other significant shareholders customary demand, shelf and piggyback registration rights.

This Exhibit 99.3 describes the material terms of:

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the Merger Agreement (which was furnished as Exhibit 99.2 to the Company’s Report on Form 6-K dated June 16, 2014);

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the Shareholders Agreement, dated as of July 11, 2014, among the Company and various Oaktree parties (the “Oaktree Shareholders Agreement) (which was furnished as Exhibit 99.3 to the Company’s Report on Form 6-K dated July 15, 2014)

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the Shareholders Agreement, dated as of July 11, 2014, among the Company and various Pappas Shareholder parties (the “Pappas Shareholders Agreement”) (which was furnished as Exhibit 99.4 to the Company’s Report on Form 6-K dated July 15, 2014);

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the Amended and Restated Registration Rights Agreement, dated as of July 11, 2014, among the Company, various Oaktree parties, various Pappas Shareholder Parties and certain other significant shareholders (the “Registration Rights Agreement”) (which was furnished as Exhibit 99.5 to the Company’s Report on Form 6-K dated July 15, 2014); and

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certain Related Party Transactions of Star Bulk.

The summaries of the foregoing documents are qualified in their entirety by reference to the agreements themselves, which are incorporated by reference in this Exhibit 99.3. You should read the foregoing documents in their entirety.

DESCRIPTION OF THE OAKTREE SHAREHOLDERS AGREEMENT

The following is a summary of the material terms of the Oaktree Shareholders Agreement. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to the Oaktree Shareholders Agreement, which is included as Exhibit 99.3 to the Report on Form 6-K furnished by the Company to the Commission on July 15, 2014 and incorporated herein by reference. The Company urges you to read the entire Oaktree Shareholders Agreement carefully. Capitalized terms that are used in this description of the Oaktree Shareholders Agreement but not otherwise defined in this Exhibit 99.3 have the meanings ascribed to them under the caption, “—Certain Definitions.”

General

The Oaktree Shareholders Agreement was entered into on the date the Merger was completed (July 11, 2014) and governs the ownership interest of Oaktree and its affiliated investment funds that own Common Shares (and any Affiliates (as defined below) of the foregoing persons that become Oaktree Shareholders pursuant to a transfer or other acquisition of Equity Securities (as defined below) of the Company in accordance with the terms of the Oaktree Shareholders Agreement, collectively, the “Oaktree Shareholders”) in the Company following the Merger. Based on the number of outstanding common shares of the Company at August 1, 2014, the Oaktree Shareholders beneficially own approximately 61.3% of the common shares of the Company.

Board Representation

After the closing of the Merger, the Company and the Board increased the size of the Board from six directors (“Directors”) to nine Directors.

The Oaktree Shareholders are entitled to nominate four (but in no event more than four) Directors (each such nominee, including the persons designated at the closing of the Merger as described in the preceding paragraph the “Oaktree Designees”) to the Board for so long as the Oaktree Shareholders and their Affiliates in the aggregate beneficially own (for purposes of the Oaktree Shareholders Agreement and this summary, as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) 40% or more of the outstanding Voting Securities of the Company. During any period the Oaktree Shareholders are entitled to nominate four Directors pursuant to the Oaktree Shareholders Agreement: (i) if Mr. Petros Pappas is then serving as Chief Executive Officer of the Company and as a Director, then the Oaktree Shareholders are entitled to nominate only three Directors and (ii) at least one of the Oaktree Designees shall not be a citizen or resident of the United States solely to the extent that (x) at least one of the nominees to the Board (other than the Oaktree Designees) is a United States citizen or resident and (y) as a result, the Company would not qualify as a “foreign private issuer” under Rule 405 under the Securities Act of 1933 and Rule 3b-4(c) under the Exchange Act if such Oaktree Designee is a citizen or resident of the United States.

The Oaktree Shareholders are entitled to nominate three Directors, two Directors and one Director to the Board for so long as the Oaktree Shareholders and their Affiliates beneficially own 25% or more, but less than 40% of the outstanding Voting Securities, own 15% or more, but less than 25% of the outstanding Voting Securities and own 5% or more, but less than 15% of the outstanding Voting Securities of the Company, respectively.

After the closing of the Merger, pursuant to the Oaktree Shareholders Agreement, the Company appointed each of Mr. Rajath Shourie and Mses. Emily Stephens and Renee Kemp (each of which was an Oaktree Designee) as a Director whose term expires at the first, second and third annual meeting of the Stockholders following the date of completion of the Merger, respectively.

The Company shall establish and maintain an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”) and a nominating and corporate governance committee (the “Nominating and Corporate Governance Committee”), as well as such other Board committees as the Board deems appropriate from time to time or as may be required by applicable law or the rules of Nasdaq (or other stock exchange or securities market on which the Common Shares are at any time listed or quoted). The committees shall have such duties and responsibilities as are customary for such committees, subject to the provisions of the Oaktree Shareholders Agreement.

The Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall consist of at least three Directors, with the number of members determined by the Board; provided, however, that for so long as the Oaktree Shareholders and their Affiliates in the aggregate beneficially own 15% or more of the outstanding Voting Securities of the Company, the Compensation Committee and the Nominating and Corporate Governance Committee shall consist of three members each, and the Oaktree Shareholders are entitled to include one Oaktree Designee on each such Committee.

The Board shall appoint individuals selected by the Nominating and Corporate Governance Committee to fill the positions on the committees of the Board that are not required to be filled by Oaktree Designees.

Directors shall serve until their resignation or removal or until their successors are nominated and appointed or elected; provided, that if the number of Directors that the Oaktree Shareholders are entitled to nominate pursuant to the Oaktree Shareholder Agreement is reduced by one or more Directors, then the Oaktree Shareholders shall, within 5 business days, cause such number of Oaktree Designees then serving on the Board to resign from the Board as is necessary so that the remaining number of Oaktree Designees then serving on the Board is less than or equal to the number of Directors that the Oaktree Shareholders are then entitled to nominate. However, no such resignation will be required if a majority of the Directors then in office (other than the Oaktree Designees) provides written notification to the Oaktree Shareholders within such 5 business day period that such resignation shall not be required.

If any Oaktree Designee serving as a Director dies or is unwilling or unable to serve as such or is otherwise removed or resigns from office, then the Oaktree Shareholders shall promptly nominate a successor to such Director (to the extent they are still entitled to pursuant to the Oaktree Shareholder Agreement). The Company shall take all actions necessary in order to ensure that such successor is appointed or elected to the Board as promptly as practicable. If the Oaktree Shareholders are not entitled to nominate any vacant Director position(s), the Company and the Board shall fill such vacant Director position(s) with an individual(s) selected by the Nominating and Corporate Governance Committee.

Voting

Except with respect to any Excluded Matter (as defined below), at any meeting of the Company’s stockholders, Oaktree Shareholders shall (and shall cause their Affiliates to) vote, or cause to be voted, or exercise their rights to consent (or cause their rights to consent to be exercised) with respect to, all Voting Securities of the Company beneficially owned by them (and which are entitled to vote on such matter) in excess of the Voting Cap as of the record date for the determination of stockholders of the Company entitled to vote or consent to such matter, with respect to each matter on which stockholders of the Company are entitled to vote or consent, in the same proportion (for or against) as the Voting Securities of the Company that are owned by stockholders (other than an Oaktree Shareholder, any of their Affiliates or any Group (for purposes of the Oaktree Shareholders Agreement and this summary, as such term is defined in Section 13(d)(3) of the Exchange Act), which includes any of the foregoing) are voted or consents are given with respect to each such matter.

In any election of directors to the Board, except with respect to an election of Directors to the Board where one or more members of the slate of nominees put forward by the Nominating and Corporate Governance Committee is being opposed by one or more competing nominees (a “Contested Election”), the Oaktree Shareholders shall (and shall cause their Affiliates to) vote, or cause to be voted, or exercise their rights to consent (or cause their rights to consent to be exercised) with respect to, all shares of the Company beneficially owned by them (and which are entitled to vote on such matter) in favor of the slate of nominees approved by the Nominating and Corporate Governance Committee.

In the case of a Contested Election, Oaktree Shareholders shall (and shall cause their Affiliates to) vote, or cause to be voted, or exercise their rights to consent (or cause their rights to consent to be exercised) with respect to, all shares beneficially owned by them in excess of the Voting Cap in the same proportion (for or against) as all other shares of the Company that are owned by stockholders of the Company (other than the Oaktree Shareholders, any of their Affiliates or any Group which includes any of the foregoing) are voted or consents are given with respect to such Contested Election.

For so long as the Oaktree Shareholders and their affiliates in the aggregate beneficially own at least 33% of the outstanding Voting Securities of the Company, without the prior written consent of Oaktree, the Company and the Board shall not, directly or indirectly (whether by merger, consolidation or otherwise), (i) issue Preferred Stock or any other class or series of Equity Interests of the Company that ranks senior to the shares as to dividend distributions and/or distributions upon the liquidation, winding up or dissolution of the Company or any other circumstances, (ii) issue Equity Securities to a person or Group, if, after giving effect to such transaction, such issuance would result in such Person or Group beneficially owning more than 20% of the outstanding Equity Securities of the Company (except that the Company and the Board shall have the right to issue Equity Securities in connection with a merger or other business combination transaction with the consent of the Oaktree Shareholders), or (iii) issue any Equity Securities of any subsidiary of the Company (other than to the Company or a wholly-owned subsidiary of the Company); or (iv) terminate the Chief Executive Officer or any other officer of the Company set forth in the Oaktree Shareholders Agreement at any time during the 18 months following the closing date, except if such termination is for Cause (as defined in the Company’s 2014 Equity Incentive Plan).

During the 18 months after the closing of the Merger, for so long as the Oaktree Shareholders and their affiliates in the aggregate beneficially own at least 33% of the outstanding Voting Securities of the Company, the affirmative approval of at least seven Directors shall be required to appoint any replacement Chief Executive Officer of the Company.

Standstill Restrictions

For so long as the Oaktree Shareholders and their Affiliates in the aggregate beneficially own at least 10% of the outstanding Voting Securities of the Company, the Oaktree Shareholders and their Affiliates shall not, directly or indirectly, acquire (i) the beneficial ownership of any additional Voting Securities of the Company, (ii) the beneficial ownership of any other Equity Securities of the Company that derive their value from any Voting Securities of the Company or (iii) any rights, options or other derivative securities or contracts or instruments to acquire such beneficial ownership that derive their value from such Voting Securities or other Equity Securities, in each case of clauses (i), (ii) and (iii), if, immediately after giving effect to any such acquisition, Oaktree Shareholders and their Affiliates would beneficially own in the aggregate more than a percentage of the outstanding Voting Securities of the Company equal to (A) the Oaktree Shareholders’ ownership percentage of the Voting Securities of the Company immediately after the closing of the Merger (i.e., approximately 61.3%) plus (B) 2.5%.

The foregoing restrictions shall not apply to participation by the Oaktree Shareholders or their Affiliates in: (i) pro rata primary offerings of Equity Securities of the Company based on number of outstanding Voting Securities held or (ii) acquisitions of Equity Securities of the Company that have received Disinterested Director Approval (as defined below).

For so long as the Oaktree Shareholders and their Affiliates in the aggregate beneficially own at least 10% of the Voting Securities of the Company, unless specifically invited in writing by the Board (with Disinterested Director Approval), neither Oaktree nor any of their Affiliates shall in any manner, directly or indirectly, (i) enter into any tender or exchange offer, merger, acquisition transaction or other business combination or any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company, (ii) make, or in any way participate in, directly or indirectly, any “solicitation” of “proxies,” “consents” or “authorizations” (as such terms are used in the proxy rules of the SEC promulgated under the Exchange Act) to vote, or seek to influence any person other than the Oaktree Shareholders with respect to the voting of, any Voting Securities of the Company (other than with respect to the nomination of the Oaktree Designees and any other nominees proposed by the Nominating and Corporate Governance Committee), (iii) otherwise act, alone or in concert with third parties, to seek to control or influence the management, Board or policies of the Company or any of its Subsidiaries (other than with respect to the nomination of the Oaktree Designees and any other nominees proposed by the Nominating and Corporate Governance Committee), or (iv) enter into any negotiations, arrangements or understandings with any third party with respect to any of the foregoing activities.

However, if (i) the Company publicly announces its intent to pursue a tender offer, merger, sale of all or substantially all of the Company’s assets or any similar transaction, which in each such case would result in a Change of Control Transaction, or any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company and its subsidiaries, taken as a whole, then the Oaktree Shareholders are permitted to privately make an offer or proposal to the Board and (ii) if the Board approves, recommends or accepts a buyout transaction with an Unaffiliated Buyer, the restrictions of the Oaktree Shareholders’ participation in such transaction shall cease to apply, except that any such actions must be discontinued upon the termination or abandonment of the applicable buyout transaction (unless the Board determines otherwise with Disinterested Director Approval).

Limitations on Transfer; No Control Premium

For so long as Oaktree and their Affiliates in the aggregate beneficially own at least 10% of the Voting Securities of the Company, the Oaktree Shareholders and their Affiliates shall not sell any of their Common Shares to a person or group that, after giving effect to such transaction, would hold more than 20% of the outstanding Equity Securities of the Company. Notwithstanding the foregoing, the Oaktree and their Affiliates may sell their shares in the Company to any person or Group pursuant to:

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sales that have received Disinterested Director Approval;

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a tender offer or exchange offer, by an Unaffiliated Buyer, that is made to all stockholders of the Company, so long as such offer would not result in a Change of Control Transaction, unless the consummation of such Change of Control Transaction has received Disinterested Director Approval;

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transfers to an Affiliate of the Oaktree Shareholders that is an investment fund or managed account in accordance with the Oaktree Shareholders Agreement; and

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sales in the open market (including sales conducted by a third-party underwriter, initial purchaser or broker-dealer) in which the Oaktree Shareholder or their Affiliates do not know (and would not in the exercise of reasonable commercial efforts be able to determine) the identity of the purchaser.

For so long as the Oaktree Shareholders and their Affiliates in the aggregate beneficially own at least 10% of the Voting Securities of the Company, neither the Oaktree Shareholders nor any of their Affiliates shall sell or otherwise dispose of any of their Common Shares in any Change of Control Transaction unless the other stockholders of the Company are entitled to receive the same consideration per Common Share (with respect to the form of consideration and price), and at substantially the same time, as the Oaktree Shareholders or their Affiliates with respect to their Common Shares in such transaction.

Other Agreements

For so long as the Oaktree Shareholders are entitled to nominate at least one Director, all transactions involving the Oaktree Shareholders or their Affiliates, on the one hand, and the Company or its subsidiaries, on the other hand, shall require Disinterested Director Approval; provided, that Disinterested Director Approval shall not be required for (a) pro rata participation in primary offerings of Equity Securities of the Company based on number of outstanding Voting Securities held, (b) arms-length ordinary course business transactions of not more than $5 million in the aggregate per year with portfolio companies of the Oaktree Shareholders or investment funds or accounts Affiliated with the Oaktree Shareholders or (c) the transactions expressly required or expressly permitted under the Merger Agreement relating to the Heron JV, the Registration Rights Agreement and the Oaktree Shareholders Agreement.

The Company has also agreed to waive (on behalf of itself and its subsidiaries) the application of the doctrine of corporate opportunity, or any other analogous doctrine, with respect to the Company and its subsidiaries, to the Oaktree Designees, to any of the Oaktree Shareholders or to any of the respective Affiliates of the Oaktree Designees or any of the Oaktree Shareholders. None of the Oaktree Designees, any Oaktree Shareholder or any of their respective Affiliates shall have any obligation to refrain from (i) engaging in the same or similar activities or lines of business as the Company or any of its subsidiaries or developing or marketing any products or services that compete, directly or indirectly, with those of the Company or any of its subsidiaries, (ii) investing or owning any interest publicly or privately in, or developing a business relationship with, any Person engaged in the same or

similar activities or lines of business as, or otherwise in competition with, the Company or any of its subsidiaries or (iii) doing business with any client or customer of the Company or any of its subsidiaries (each of the activities referred to in clauses (i), (ii) and (iii), a “Specified Activity”). The Company (on behalf of itself and its subsidiaries) has agreed to renounce any interest or expectancy in, or in being offered an opportunity to participate in, any Specified Activity that may be presented to or become known to any Oaktree Shareholder or any of its Affiliates. However, if and to the extent that from time to time after the closing of the Merger Mr. Petros Pappas may be considered an Affiliate of any Oaktree Shareholder, the foregoing waivers shall not apply to Mr. Petros Pappas, and any provisions governing corporate opportunities set forth in the Pappas Shareholders Agreement with respect to Mr. Petros Pappas and/or any employment or services agreement between the Company and Mr. Petros Pappas shall control.

Certain Exclusions

The restrictions described in “Voting,” “Standstill Restrictions” and “ Limitations on Transfer; No Control Premium” of this summary shall not apply to portfolio companies of the Oaktree Shareholders or their Affiliates unless Oaktree Capital Management, L.P. (or its successor) possesses at least 50% of the voting power of such portfolio companies or an action of such portfolio company is taken at the express request or direction of, or in coordination with, an Oaktree Shareholder or its affiliate investment funds.

The Company has agreed to acknowledge that the Oaktree Shareholders have made investments and entered into business arrangements with Mr. Petros Pappas, his immediate family, the members of Millennia (immediately prior to the Merger) or their respective Affiliates (collectively, the “Pappas Investors”) outside of the Oceanbulk Companies, and may from time to time enter into certain agreements with respect to the holding and/or disposition of Equity Securities of the Company. For purposes of the Oaktree Shareholders Agreement, these arrangements and potential future agreements between the Oaktree Shareholders or their Affiliates, on the one hand, and the Pappas Investors, on the other hand, shall not cause (i) any Oaktree Shareholder to be deemed to be an Affiliate of, or constitute a group or beneficially own any Equity Securities of the Company beneficially owned by, the Pappas Investors, or (ii) the Equity Securities of the Company held by the Pappas Investors to be deemed to be subject to the provisions of the Oaktree Shareholders Agreement.

Certain Definitions

For purposes of the this description of the Oaktree Shareholders Agreement, the following definitions shall apply:

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person, where “control” for purposes of this definition means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor or otherwise.

“Change of Control Transaction” means (a) any acquisition, in one or more related transactions, by any Person or Group, whether by transfer of Equity Securities, merger, consolidation, amalgamation, recapitalization or equity sale (including a sale of securities by the Company) or otherwise, which has the effect of the direct or indirect acquisition by such Person or Group of the Majority Voting Power in the Company; or (b) any acquisition by any Person or Group directly or indirectly, in one or more related transactions, of all or substantially all of the consolidated assets of the Company and its subsidiaries (which may include, for the avoidance of doubt, the sale or issuance of Equity Securities of one or more subsidiaries of the Company).

“Common Shares” means the shares of common stock, par value $0.01 per share, of the Company, or any other capital stock of the Company or any other Person into which such stock is reclassified or reconstituted (whether by merger, consolidation or otherwise) (as adjusted for any stock splits, stock dividends, subdivisions, recapitalizations and the like).

“Disinterested Director Approval” means, with respect to any transaction or conduct requiring such approval pursuant to this Agreement, the approval of a majority of the Disinterested Directors with respect to such transaction or conduct (and the quorum requirements set forth in the charter or bylaws of the Company shall be reduced to exclude any Directors that are not Disinterested Directors for purposes of such approval).

“Disinterested Directors” means any Directors who (a) are not Oaktree Designees and (b) do not have any material business, financial or familial relationship with a party (other than the Company or its subsidiaries) to the transaction or conduct that is the subject of the approval being sought. Notwithstanding the foregoing, Petros Pappas shall not constitute an Oaktree Designee (other than for purposes of the election of directors, the standstill obligations and the transfer limitations applicable to the Oaktree Shareholders and their Affiliates), and the existing agreements and potential future arrangements with respect to the holding and/or disposition of Equity Securities between the Pappas Investors and the Oaktree Shareholders shall not disqualify Petros Pappas or other Pappas Investors from constituting a Disinterested Director for purposes of this Agreement (with certain exceptions).

“Equity Securities” means, with respect to any entity, all forms of equity securities in such entity or any successor of such entity (however designated, whether voting or non-voting), all securities convertible into or exchangeable or exercisable for such equity securities, and all warrants, options or other rights to purchase or acquire from such entity or any successor of such entity, such equity securities, or securities convertible into or exchangeable or exercisable for such equity securities, including, with respect to the Company, the Common Shares and Preferred Shares.

“Excluded Matter” includes each of the following:

(a) any vote of the Stockholders in connection with a Change of Control Transaction with an Unaffiliated Buyer; provided, however, that if the Oaktree Shareholders or their Affiliates are voting in support of such Change of Control Transaction, then such vote shall constitute an Excluded Matter only if such Change of Control Transaction has received the Disinterested Director Approval; and

(b) any vote of the Stockholders in connection with (i) an amendment to the charter or bylaws of the Company or (ii) the dissolution of the Company; provided, however, that if the Oaktree Shareholders or their Affiliates are voting in support of such matter in either case, then such vote shall constitute an Excluded Matter only if such matter has received the Disinterested Director Approval.

“Majority Voting Power” means, with respect to any Person, either (a) the power to elect or direct the election of a majority of the board of directors or other similar body of such Person or (b) direct or indirect beneficial ownership of Equity Securities representing more than 39% of the Voting Securities of such Person.

“Other Large Holder” means, with respect to any matter in which the Stockholders are entitled to vote or consent, any Person or Group that is not an Oaktree Shareholder, an Affiliate of an Oaktree Shareholder or a Group that includes any of the foregoing; provided, however, that if the Oaktree Shareholders, on the one hand, and the Pappas Investors, on the other hand, are entitled to vote on or consent to such matter and a majority of the Voting Securities held by the Pappas Investors are voting on or consenting to such matter in the same manner as a majority of the Voting Securities held by the Oaktree Shareholders (i.e., both positions of Voting Securities are “for” or both positions of Voting Securities are “against”), then an “Other Large Holder” shall mean any Person or Group that is not an Oaktree Shareholder, a Pappas Investor, an Affiliate of either of the foregoing or a Group that includes any of the foregoing.

“Other Large Holder Effective Voting Percentage” means, with respect to an Other Large Holder as of the record date for the determination of Stockholders entitled to vote or consent to any matter, the ratio (expressed as a percentage) of (a) the sum of (i) the number of Voting Securities of the Company beneficially owned by such Other Large Holder as of such record date, plus (ii) the product of (x) the excess (if any) of the number of Voting Securities of the Company beneficially owned in the aggregate by the Oaktree Shareholders and their Affiliates as of such record date, over the number of Voting Securities of the Company that is equal to the product of the total number of Voting Securities of the Company outstanding as of such record date, multiplied by the Voting Cap Percentage applicable with respect to such matter, multiplied by (y) a percentage equal to (I) the number of Voting Securities of the Company beneficially owned by such Other Large Holder as of such record date, divided by (II) the number of Voting Securities of the Company beneficially owned by all Stockholders (other than the Oaktree

Shareholders and their Affiliates) as of such record date and with respect to which a vote was cast or consent given (for or against) in respect of such matter, divided by (b) the total number of Voting Securities of the Company outstanding as of such record date.

“Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Authority.

“Preferred Shares” means the shares of preferred stock, par value $0.01 per share, of the Company, or any other capital stock of the Company or any other Person into which such stock is reclassified or reconstituted (whether by merger, consolidation or otherwise) (as adjusted for any stock splits, stock dividends, subdivisions, recapitalizations and the like).

“Unaffiliated Buyer” means any Person other than (a) an Oaktree Shareholder, (b) an Affiliate of an Oaktree Shareholder, (c) any Person or Group in which an Oaktree Shareholder and/or any of its Affiliates has, at the applicable time of determination, Equity Securities of at least $100 million (whether or not such Person or Group is deemed to be an Affiliate of an Oaktree Shareholder) (provided that this clause (c) shall not be applicable for purposes of Section 4.2 hereof) and (d) a Group that includes any of the foregoing.

“Voting Cap” means, as of any date of determination, the number of Voting Securities of the Company equal to the product of (a) the total number of outstanding Voting Securities of the Company as of such date multiplied by (b) the Voting Cap Percentage as of such date.

“Voting Cap Maximum” means, as of any date of determination, a percentage equal to the Other Large Holder Effective Voting Percentage as of such date multiplied by 110%; provided, that if the Voting Cap Percentage obtained by applying such Voting Cap Maximum would exceed 39%, then the Voting Cap Maximum shall equal the greater of (a) the sum of the Other Large Holder Effective Voting Percentage as of such date plus 1% and (b) 39%.

“Voting Cap Percentage” means 33%; provided, however, that if as of the record date for the determination of Stockholders entitled to vote or consent to any matter, an Other Large Holder beneficially owns greater than 15% of the outstanding Voting Securities of the Company (the “Voting Cap Threshold”), then, subject to the next proviso, for every 1% of outstanding Voting Securities of the Company beneficially owned by such Other Large Holder in excess of the Voting Cap Threshold, the Voting Cap Percentage shall be increased by 2%; provided further, however, that the Voting Cap Percentage shall not exceed a percentage equal to the Voting Cap Maximum as of such record date. For the avoidance of doubt, if multiple Other Large Holders beneficially own more than 15% of the outstanding Voting Securities of the Company, the Voting Cap Percentage shall be adjusted in relation to that Other Large Holder having the greatest beneficial ownership of Voting Securities of the Company.

“Voting Securities” means, with respect to any entity as of any date, all forms of Equity Securities in such entity or any successor of such entity with voting rights as of such date, other than any such Equity Securities held in treasury by such entity or any successor or subsidiary thereof, including, with respect to the Company, Common Shares and Preferred Shares (in each case to the extent (a) entitled to voting rights and (b) issued and outstanding and not held in treasury by the Company or owned by subsidiaries of the Company).

DESCRIPTION OF THE PAPPAS SHAREHOLDER AGREEMENT

The following is a summary of the material terms of the Pappas Shareholders Agreement. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to the Pappas Shareholders Agreement, which is included as Exhibit 99.4 to the Report on Form 6-K furnished by the Company to the Commission on July 15, 2014 and incorporated herein by reference. The Company urges you to read the entire Pappas Shareholders Agreement carefully. Capitalized terms that are used in this description of the Pappas Shareholders Agreement but not otherwise defined in this Exhibit 99.3 have the meanings ascribed to them under the caption, “—Certain Definitions.”

General

The Pappas Shareholders Agreement, which entered into effect on July 11, 2014, upon the closing of the Merger, governs the ownership interest of Mr. Petros Pappas and his children, Ms. Milena Pappas and Mr. Alekos Pappas, and entities affiliated to them (“Pappas Shareholders”) in the Company following consummation of the Merger. Based upon the number of shares of the Company outstanding as of August 1, 2014, the Pappas Shareholders beneficially own approximately 12.6% of the total issued and outstanding common shares of the Company.

Voting

At any meeting of the Company’s stockholders, the Pappas Shareholders shall (and shall cause their Affiliates to) vote, or cause to be voted, or exercise their rights to consent (or cause their rights to consent to be exercised) with respect to, all shares of the Company beneficially owned by them (and which are entitled to vote on such matter) in excess of the Voting Cap as of the record date for the determination of stockholders of the Company entitled to vote or consent to such matter, with respect to each matter on which stockholders of the Company are entitled to vote or consent, in the same proportion (for or against) as all shares owned by other stockholders of the Company.

Except as described below, in any election of directors to the Board, the Pappas Shareholders shall (and shall cause their Affiliates to) vote, or cause to be voted, or exercise their rights to consent (or cause their rights to consent to be exercised) with respect to, all shares of the Company beneficially owned by them (and which are entitled to vote on such matter) in favor of the slate of nominees approved by the Nominating and Corporate Governance Committee.

At any Contested Election following the later of (i) the date on which Mr. Petros Pappas ceases to be the Chief Executive Officer of the Company or (ii) the date on which Mr. Petros Pappas ceases to be a Director, the Pappas Shareholders shall (and shall cause their Affiliates to) vote, or cause to be voted, or exercise their rights to consent (or cause their rights to consent to be exercised) with respect to, all shares beneficially owned by them in excess of the Voting Cap in the same proportion (for or against) as all shares owned by other stockholders of the Company.

Standstill Restrictions

Under the terms of the Pappas Shareholders Agreement, until the Pappas Shareholders Agreement is terminated, neither the Pappas Shareholders nor any of their Affiliates shall in any manner, directly or indirectly, (i) enter into any tender or exchange offer, merger, acquisition transaction or other business combination or any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company, (ii) make, or in any way participate, directly or indirectly, in any solicitations of proxies, consents or authorizations to vote, or seek to influence any Person other than the Pappas Shareholders with respect to the voting of, any Voting Securities of the Company or any of its Subsidiaries (other than with respect to the nomination of any nominees proposed by the Nominating and Corporate Governance Committee), (iii) otherwise act, alone or in concert with third parties, to seek to control or influence the management, Board or policies of the Company or any of its Subsidiaries (other than with respect to the nomination of any nominees proposed by the Nominating and Corporate Governance Committee), (iii) otherwise act, alone or in concert with third parties, to seek to control or influence the

management, Board or policies of the Company or any of its Subsidiaries (other than with respect to the nomination of any nominees proposed by the Nominating and Corporate Governance Committee), or (iv) enter into any negotiations, arrangements or understandings with any third party with respect to any of the foregoing activities. However, if (i) the Company publicly announces its intent to pursue a tender offer, merger, sale of all or substantially all of the Company’s assets, then the Pappas Shareholders shall be permitted to privately make an offer or proposal to the Board and (ii) if the Board approves, recommends or accepts a buyout transaction the standstill restrictions of the Pappas Shareholders’ participation in such transaction shall cease to apply until such buyout transaction is terminated or abandoned and shall become applicable again upon any such termination or abandonment (unless the Board determines otherwise with Disinterested Director Approval).

No Aggregation with Oaktree

The Company has agreed to acknowledge that the Pappas Shareholders have made investments and entered into business arrangements with the Oaktree Shareholders outside of the Oceanbulk Companies, and may from time to time enter into certain agreements with respect to the holding and/or disposition of Equity Securities of the Company. For purposes of the Pappas Shareholders Agreement, these arrangements and potential future agreements between the Pappas Shareholders and the Oaktree Shareholders shall not cause (i) any Pappas Shareholder to be deemed to be an Affiliate of, or constitute a group or beneficially own any Equity Securities of the Company beneficially owned by, the Oaktree Shareholders, or (ii) the Equity Securities of the Company held by the Oaktree Shareholders to be deemed to be subject to the provisions of the Pappas Shareholders Agreement.

Other Agreements

All transactions involving the Pappas Shareholders or their Affiliates, on the one hand, and the Company or its subsidiaries, on the other hand, shall require Disinterested Director Approval; provided, that Disinterested Director Approval shall not be required for pro rata participation in primary offerings of Equity Securities of the Company based on number of outstanding Voting Securities held.

Corporate Opportunity

From and after the date of the Pappas Shareholders Agreement and through and including the earliest of (x) the date of termination of the Pappas Shareholders Agreement, (y) the 36-month anniversary of the date of the Pappas Shareholders Agreement and (z) the date that Petros Pappas ceases to be the Chief Executive Officer of the Company, if a Pappas Shareholder (or any Affiliate thereof) acquires knowledge of a potential dry bulk transaction or dry bulk matter which may, in such Pappas Shareholder’s good faith judgment, be a business opportunity for both such Pappas Shareholder and the Company (subject to certain exceptions), such Pappas Shareholder (and its Affiliate) shall have the duty to promptly communicate or offer such opportunity to the Company. If the Company does not notify the applicable Pappas Shareholder within five business days following receipt of such communication or offer that it is interested in pursuing or acquiring such opportunity for itself, then such Pappas Shareholder (or its Affiliate) shall be entitled to pursue or acquire such opportunity for itself.

Termination

The Pappas Shareholders Agreement will terminate upon the earlier of (a) a liquidation, winding-up or dissolution of the Company and (b) the later of (x) such time as the Pappas Shareholders and their Affiliates in the aggregate beneficially own less than 5% of the outstanding Voting Securities of the Company and (y) the date that is six months following the later of (i) the date Petros Pappas ceases to be the Chief Executive Officer of the Company or (ii) the date Mr. Petros Pappas ceases to be a Director.

Certain Definitions

For purposes of this description of the Pappas Shareholders Agreement, the following definitions shall apply:

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor or otherwise.

“beneficial owner” means a “beneficial owner”, as such term is defined in Rule 13d-3 under the Exchange Act; “beneficially own”, “beneficial ownership” and related terms shall have the correlative meanings.

“Board” means the Board of Directors of the Company.

“Contested Election” means an election of Directors to the Board where one or more members of the slate of nominees put forward by the Nominating and Corporate Governance Committee is being opposed by one or more competing nominees.

“Disinterested Director Approval” means the approval of a majority of the Disinterested Directors (and the quorum requirements set forth in the Charter or bylaws of the Company shall be reduced to exclude any Directors that are not Disinterested Directors for purposes of such approval).

“Disinterested Directors” means any Directors who (a) are not Petros Pappas, any other Pappas Shareholder or any Affiliate of any Pappas Shareholder and (b) do not have any material business, financial or familial relationship with a party (other than the Company or its Subsidiaries) to the transaction or conduct that is the subject of the approval being sought. Notwithstanding the foregoing, the agreements and relationships between the Pappas Shareholders and the Oaktree Shareholders shall not disqualify any Director designated by Oaktree from constituting a Disinterested Director (except if any such Oaktree designee is Mr. Petros Pappas, any Pappas Shareholder or any Affiliate thereof). Notwithstanding anything to the contrary in the foregoing, any Oaktree designee shall be disqualified from constituting a Disinterested Director for purposes of the standstill provision.

DESCRIPTION OF THE REGISTRATION RIGHTS AGREEMENT

The following is a summary of the material terms of the Registration Rights Agreement. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to the Registration Rights Agreement, which is included as Exhibit 99.5 to the Report on Form 6-K furnished by the Company to the Commission on July 15, 2014 and incorporated herein by reference. The Company urges you to read the entire Registration Rights Agreement carefully.

In addition, the Registration Rights Agreement also provides the Oaktree Seller and its affiliates with certain demand registration rights and provides the Oaktree Seller, Pappas Seller, the Monarch Stockholders and certain affiliates thereof with certain shelf registration rights in respect of any common shares of the Company held by them, subject to certain conditions, including those shares acquired pursuant to the July 2014 Transactions.

In addition, in the event that the Company registers additional common shares for sale to the public following the closing of the July 2014 Transactions, the Company is required to give notice to the Oaktree Seller, the Pappas Seller, the Monarch Stockholders and certain affiliates thereof of its intention to effect such registration and, subject to certain limitations, the Company is required to include common shares of the Company held by those holders in such registration.

The Company is required to bear the registration expenses, other than underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of any holder’s securities pursuant to the Registration Rights Agreement. The Registration Rights Agreement includes customary indemnification provisions in favor of the stockholders party thereto, any person who is or might be deemed a control person (within the meaning of the Securities Act, and the Exchange Act and related parties against certain losses and liabilities (including reasonable costs of investigation and legal expenses) arising out of or relating to any filing or other disclosure made by us under the securities laws relating to any such registration.

On August 28, 2011, the Registration Rights Agreement was amended in conjunction with the Excel Transactions. For a description of the amendments, see “Description of the Amended Registration Rights Agreement” in Exhibit 99.4 to this form 6-K.

DESCRIPTION OF THE MERGER AGREEMENT

The following is a summary of the material terms of the Merger Agreement. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to the Merger Agreement, which is included as Exhibit 99.2 to the Report on Form 6-K furnished by the Company the Commission on June 16, 2014 and incorporated herein by reference. The Company urges you to read the entire Merger Agreement carefully.

General

The Merger Agreement governs the terms and conditions of the Merger and the Heron Transactions.

Heron Consideration

At the closing of the Merger, the Company deposited into escrow certificates in the name of each of the Sellers representing an aggregate of 2,115,706 common shares of the Company, as well as any dividends in respect of or in exchange for such common shares or other securities held in such escrow account during the period from the closing of the Merger until the distribution of such common shares or other amounts from the escrow. Promptly (and not later than one business day) following the distribution of two Kamsarmax vessels owned by Heron (the “Heron Vessels”) to the Company or its subsidiaries in accordance with the terms of the Merger Agreement, any such common shares and any other amounts in such escrow account will be released to the Sellers on a pro rata basis and, following such release date, the Company will pay to the Sellers the amount of dividends and other distributions with a record date after the closing of the Merger but prior to such release date and a payment date subsequent to such release date payable with respect to such common shares. For the avoidance of doubt, the Sellers will not be entitled to vote or dispose of any such common shares prior to distribution from escrow.

Dissolution and Winding Up of Heron

After the closing of the Merger, the Oaktree Seller (the “Sellers’ Representative”) has the right and obligation to assume and control the dissolution, liquidation and winding up of Heron (the “Winding Up Activities”), which includes the following:

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the distribution of (A) all of the Heron Vessels to the Company on the terms and conditions set forth in the Merger Agreement, (B) certain designated vessels (the “ABY Heron Vessels”) to ABY Group Holding Limited (“ABY”) or its designees, and (C) all Heron Distributable Cash (as defined below) as of the time of such distribution to ABY and the Company in such proportion as ABY and Sellers’ Representative mutually agree (collectively, the “Core Vessel Distribution”) (provided, however, that in the event of the loss of a Heron Vessel or ABY Heron Vessel prior to distribution thereof, no distribution of such vessel is required and subsections (A) or (B), as applicable, shall be deemed satisfied with respect to such lost vessel);

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the distribution of other Heron Distributable Cash (as defined below) held by Heron from time to time to ABY and the Company in such proportion as ABY and the Sellers’ Representative mutually agree;

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obtaining the release of any guarantee, indemnification or similar commitment of Oceanbulk or its subsidiaries given with respect to the CiT Facility;

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the sale of all of Heron’s other vessels (the “Non-Core Vessels”); provided, that Company is entitled to participate in an auction for such Non-Core Vessels, and in the event of the loss of any such vessel prior to delivery thereof, no sale of such vessel is required and the foregoing shall be deemed satisfied with respect to such lost vessel; and

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so long as the foregoing commitments have been satisfied and Heron has no other debts or liabilities (including pursuant to the CiT Facility), the distribution of any remaining cash of Heron, the liquidation of any other assets of Heron and the termination of Heron, in each case subject to the requirements of applicable laws.

“Heron Distributable Cash” means, as of any date of determination, the cash and cash equivalents then held by Heron, including cash from the proceeds of any sale of a Non-Core Vessel (after repayment of any indebtedness required to be repaid pursuant to the CiT Facility in connection with such sale of a Non-Core Vessel), less an allowance for reserves equal to $5,000,000 or such lesser amounts as may be approved by the Special Committee of the Board of Directors of the Company, such approval not to be unreasonably withheld; provided, that such reserves shall constitute Heron Distributable Cash, and the portion of such Heron Distributable Cash received by the Company shall be paid to the Sellers in accordance with the foregoing provisions.

Indemnification; Directors’ and Officers’ Insurance

The Company agreed that after the closing of the Merger, all rights to indemnification of an officer or director set forth in the organizational documents of Oceanbulk and its subsidiaries and, to the extent in effect as of the date of the Merger Agreement, any directors’ and officers’ liability insurance policy maintained by Oceanbulk or its subsidiaries, will be maintained and will not be amended, repealed or otherwise modified and will continue in full force and effect in accordance with their terms for a period of six years from the date of the closing of the Merger, provided that the Company is not required to maintain any such insurance policy if the cost of such insurance policy exceeds two times the current annual premium for such policy.

Indemnification

The representations and warranties contained in the Merger Agreement and in any certificate or other writing delivered pursuant thereto did not survive the closing of the Merger, except that certain fundamental representations of the Sellers (including with respect to such Sellers’ organization, existence and good standing, power and authority, enforceability of the Merger Agreement, and title to units of the Oceanbulk Holdcos, and in respect of the Oceanbulk Holdcos, Oceanbulk and its subsidiaries as to organization, qualification and limited liability company power, authorization, capitalization, subsidiaries, borrowed indebtedness and cash, fees and commissions in connection with the Merger Agreement and the assets and liabilities of the Oceanbulk Holdcos) and certain fundamental representations and warranties of the Company (including with respect to organization, qualification and corporate power, authorization, fees and commissions in connection with the Merger Agreement, capitalization, subsidiaries, and borrowed indebtedness and cash) will survive for 12 months after the closing of the Merger (the “Survival Date”). Each of the covenants and agreements set forth in the Merger Agreement that were to be performed on or prior to the closing of the Merger will survive until the Survival Date, but the covenants and agreements contained in the Merger Agreement requiring performance after the closing of the Merger will survive the closing of the Merger in accordance with their terms.

Subject to the limitations set forth in the Merger Agreement, from and after the closing of the Merger, each of the Sellers agreed, severally with respect to itself and the Oceanbulk Holdco that it owned prior to the Merger, and pro rata with respect to Oceanbulk, to indemnify, save, and keep the Company, its affiliates (including Oceanbulk and its subsidiaries) and each of their respective officers, directors, managers, partners, members, agents, representatives, successors, assigns and employees harmless against and from all damages sustained or incurred by any such indemnified persons as a result of, or arising out of, the breach or inaccuracy of such fundamental representations as of the date of the closing of the Merger (or, to the extent any such representation and warranty by its terms addresses matters only as of another specified time, as of such other time), any breach of any covenant or agreement made by under the Merger Agreement (subject to certain exceptions), prior to the date of the closing of the Merger, any covenant or agreement by an Oceanbulk Holdco under the Merger Agreement, or certain specified liabilities and obligations relating to the Heron. Additionally, the Company agreed to indemnify, save, and keep each of the Sellers and their respective affiliates and each of their respective officers, directors, managers, partners, members, agents, representatives, successors, assigns and employees harmless against and from all damages sustained or incurred by any such indemnified person as a result of, or arising out of, the breach or inaccuracy of, as of the date of the closing of the Merger (or, to the extent any such representation and warranty by its terms addresses matters only as of another specified time, as of such other time) such fundamental representations, any breach of any covenant or agreement made by the Company or either of the merger subsidiaries under the Merger Agreement (subject to certain exceptions), or any breach following the date of the closing of the Merger of any covenant or agreement made by an Oceanbulk Holdco under the Merger Agreement.

The calculation of damages with respect to any indemnification payments will take into account the interests held by the Sellers and their respective affiliates in the Company, and no indemnified person is entitled to

be indemnified for special, consequential (including diminution in value, lost profits, lost revenues, business interruptions, or loss of business opportunity or reputation), indirect, multiple, punitive or other similar damages, except as finally awarded by a court of competent jurisdiction and actually paid to a third party pursuant to a third party claim. Except with respect to fraud and parties’ rights to specific performance as set forth in the Merger Agreement, the indemnification provisions set forth in the Merger Agreement are the sole and exclusive remedy of the parties to the Merger Agreement following the closing of the Merger for any and all claims arising under, out of or related to the Merger Agreement, the negotiation thereof and the transactions contemplated thereby.

DESCRIPTION OF CERTAIN RELATED PARTY TRANSACTIONS

Set forth below is a description of certain relationships and related party transactions of the Company resulting from the July 2014 Transactions. In addition, you should refer to the section entitled “Major Stockholders and Related Party Transactions” in the Company’s annual report on Form 20-F for the fiscal year ended 2013, filed with the SEC on March 21, 2014, for an overview of the other related party transactions of the Company.

Provision of certain guarantees by Oceanbulk Maritime

Oceanbulk Maritime, which is controlled by certain immediate family members of the Company’s Chief Executive Officer, Mr. Petros Pappas, has provided performance guarantees under the bareboat charter agreements of HN 1061, HN 1062, HN 1063 and HN 1064, which are four vessels being built in the New Yangzijiang shipyard. All of the performance guarantees described above have been counter-guaranteed by Oceanbulk Carriers LLC.

Oceanbulk Maritime has also provided performance guarantees under the shipbuilding contracts for HN 214-HMU (tbn Leviathan), HN 5017-JMU, HN 5055-JMU and HN 5056-JMU, which are four vessels being built at JMU, HN 213-JMU (tbn Peloreus), which was built at JMU and delivered to the Company on July 22, 2014, and HN NE164-NACKS (tbn Honey Badger), HN NE165-NACKS, HN NE166-NACKS, HN NE167-NACKS and HN NE184-NACKS, which are five vessels being built at NACKS. All of the performance guarantees described above have been counter-guaranteed by Oceanbulk Shipping LLC.

Vessel Purchase from MaidenVoyage LLC

In August 2013, Oceanbulk purchased a Supramax dry bulk carrier, Maiden Voyage, from Maiden Voyage LLC, which was a company controlled by certain immediate family members of the Company’s Chief Executive Officer, Mr. Petros Pappas, and Oaktree. The purchase price was $27.3 million.

Profits Interest

Pursuant to an agreement (the “Profits Interest Agreement”) among affiliates of Oaktree, Oceanbulk Maritime, Oceanbulk Carriers, Oceanbulk Shipping and Messrs. Petros Pappas and Hamish Norton, Messrs. Pappas and Norton are eligible for a share of the profits of Oaktree, subject to Oaktree and its affiliates achieving certain internal rate of return and capital multiples on their original investment in Oceanbulk. This award will be payable only by affiliates of Oaktree and not by Oceanbulk. As of June 30, 2014, March 31, 2014 and December 31, 2013, no awards had vested, and no payments had yet been made under the Profits Interest Agreement. While Oceanbulk Carriers and Oceanbulk Maritime are and were, as of June 30, 2014 and March 31, 2014, parties to the Profits Interest Agreement, the Profits Interest Agreement is expected to be amended, as a result of the Merger, to remove Oceanbulk Carriers and Oceanbulk Maritime as parties.

Registration Rights Agreement

For a description of this agreement, see “Description of the Registration Rights Agreement” in this Exhibit 99.3.

Oaktree Shareholders Agreement

For a description of this agreement, see “Description of the Oaktree Shareholders Agreement” in this Exhibit 99.3.

Pappas Shareholders Agreement

For a description of this agreement, see “Description of the Pappas Shareholders Agreement” in this Exhibit 99.3.

Termination Agreement

Pursuant to a termination agreement between the Company and Mr. Spyros Capralos, the Company’s former Chief Executive Officer and current Non-Executive Chairman, dated July 31, 2014, the Company agreed to a severance payment of 168,842 common shares and an amount of €644,000 in cash.

Transactions with Excel Maritime Carriers Ltd. and Associated Transactions

On August 19, 2014, the Company entered into definitive agreements relating to the acquisition of 34 dry bulk carrier vessels (the “Excel Vessels”) from Excel Maritime Carriers, Ltd. (“Excel”) for an aggregate of 29,917,312 common shares (the “Excel Vessel Share Consideration”) and $288.4 million in cash (collectively, the “Excel Transactions”). The Excel Vessels will be transferred to the Company in a series of closings, on a vessel-by-vessel basis, in general upon reaching port after their current voyages and cargoes are discharged. In the case of three Excel Vessels (Christine (tbn Star Martha), Sandra (tbn Star Pauline) and Lowlands Beilun (tbn Star Despoina)), which are being transferred subject to existing charters, the Company will receive the outstanding equity interests of the vessel-owning subsidiaries that own those Excel Vessels (although no liabilities of such vessel-owning subsidiaries will be transferred). The Company expects to complete all of the Excel Vessel closings by the end of 2014. As of September 5, 2014, five of the Excel Vessels had already been transferred to the Company.

Entities affiliated with Oaktree (the “Oaktree Excel Investors”) and entities affiliated with Angelo, Gordon & Co. (the “Angelo, Gordon Excel Investors”) are holders of 48.1% and 24.3%, respectively, of the outstanding equity of Excel. The Excel Transactions were approved by the disinterested members of the Company’s board of directors, based upon the recommendation of a transaction committee of disinterested directors, which considered the Excel Transactions on the Company’s behalf in coordination with its management team. The total consideration was determined based on the average of three vessel appraisals by independent vessel appraisers.

At the transfer of each Excel Vessel, the Company will pay the cash and share consideration for such Excel Vessel to Excel. Excel will use the cash consideration, together with borrowings under a new $231.0 million secured bridge loan facility (the “Excel Vessel Bridge Facility”) extended to the Company by entities affiliated with Oaktree and entities affiliated with Angelo, Gordon & Co. to cause an amount of outstanding indebtedness under its senior secured credit agreement to be repaid, such that all liens and obligations with respect to the transferred Excel Vessel (or vessel-owning subsidiary) are released upon the transfer to the Company. The Company has been informed that Excel expects to distribute the Excel Vessel Share Consideration to its equityholders, including the Oaktree Excel Investors and the Angelo, Gordon Excel Investors.

In connection with the foregoing transactions, the Company entered into an amendment to the Registration Rights Agreement to provide holders of the Excel Vessel Share Consideration with certain customary demand, shelf and piggyback registration rights.

The Excel Vessel Bridge Facility

The Company expects to use cash on hand, together with borrowings under the new $231.0 million Excel Vessel Bridge Facility, extended to it by entities affiliated with Oaktree and entities affiliated with Angelo, Gordon & Co. to fund the cash consideration for the Excel Vessels.

Unity Holding LLC, a direct subsidiary of the Company (“Unity”), is the borrower under the Excel Vessel Bridge Facility, and each individual vessel-owning subsidiary will be a guarantor. The Excel Vessel Bridge Facility matures on February 28, 2016, with mandatory prepayments of $6.0 million each due in March, June and September 2015. Outstanding amounts under the Excel Vessel Bridge Facility bear interest at a rate equal to LIBOR (based on the length of the interest period) plus an applicable margin of 5.00% through February 28, 2015 and 6.00% (thereafter).

Exhibit 99.4

DESCRIPTION OF

EXCEL TRANSACTION DOCUMENTS

On August 19, 2014, Star Bulk Carriers Corp. (the “Company”) entered into definitive agreements relating to the acquisition of 34 dry bulk carrier vessels (the “Excel Vessels”) from Excel Maritime Carriers, Ltd. (“Excel”) for an aggregate of 29,917,312 common shares (the “Excel Vessel Share Consideration”) and $288.4 million in cash (collectively, the “Excel Transactions”). The Excel Vessels will be transferred to the Company in a series of closings, on a vessel-by-vessel basis, in general upon reaching port after their current voyages and cargoes are discharged. In the case of three Excel Vessels (Christine (tbn Star Martha), Sandra (tbn Star Pauline) and Lowlands Beilun (tbn Star Despoina)), which are being transferred subject to existing charters, the Company will receive the outstanding equity interests of the vessel-owning subsidiaries (the “Chartered Companies”) that own those Excel Vessels (although no liabilities of such vessel-owning subsidiaries will be transferred). The Company expects to complete all of the Excel Vessel closings by the end of 2014. As of September 5, 2014, five of the Excel Vessels have already been transferred to the Company.

Entities affiliated with Oaktree (the “Oaktree Excel Investors”) and entities affiliated with Angelo, Gordon & Co. (the “Angelo, Gordon Excel Investors”) are holders of 48.1% and 24.3%, respectively, of the outstanding equity of Excel. The Excel Transactions were approved by the disinterested members of the Company’s board of directors, based upon the recommendation of a transaction committee of disinterested directors, which considered the Excel Transactions on the Company’s behalf in coordination with its management team. The total consideration was determined based on the average of three vessel appraisals by independent vessel appraisers.

At the transfer of each Excel Vessel, the Company will pay the cash and share consideration for such Excel Vessel to Excel. Excel will use the cash consideration to cause an amount of outstanding indebtedness under its senior secured credit agreement to be repaid, such that all liens and obligations with respect to the transferred Excel Vessel (or vessel-owning subsidiary) are released upon the transfer to the Company. The Company has been informed that Excel expects to distribute the Excel Vessel Share Consideration to its equityholders, including the Oaktree Excel Investors and the Angelo, Gordon Excel Investors.

Giving effect to the completion of the Excel Transactions (which the Company expects to occur by the end of 2014), and assuming the full distribution of the Excel Vessel Share Consideration to Excel’s equityholders, Oaktree will beneficially own 57.3% of the Company’s outstanding common shares, and the Angelo Gordon Investors will beneficially own 7.8% of the Company’s outstanding common shares. As a result of the issuance of the Excel Vessel Share Consideration, entities owned or controlled by the members of the family of Mr. Petros Pappas will beneficially own 9.3% of the Company’s outstanding common shares.

Vessel Purchase Agreement

General

The Vessel Purchase Agreement, in addition to the applicable memorandum of agreement (each, an “MOA”) applicable to each vessel delivery other than those owned by the Chartered Companies, governs the terms and conditions of the Excel Transactions.

The following is a summary of the material terms of the Vessel Purchase Agreement. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to the Vessel Purchase Agreement, which is included as Exhibit 99.1 to the Report on Form 6-K furnished by the Company to the SEC on September 3, 2014 and incorporated herein by reference. The Company urges you to read the entire Vessel Purchase Agreement carefully.

Purchase Price Adjustments

The cash consideration for each vessel will be adjusted to account for prepaid revenues, fees and any other amounts received by Excel or its subsidiaries under charters received on account of periods on or after the applicable closing, and any further amounts owed by the Company pursuant to the terms of the applicable MOA.

If the closing of the sale of the Chartered Companies occurs prior to or after certain specified dates, the cash consideration will be increased or decreased, respectively, by an amount equal to (x) the gross revenues earned by such Chartered Company’s vessel from the voyage allocable to each day prior to or after such specified date, if any, less (y) the applicable chartered vessel’s operating expenses so allocable to each such day of early delivery or delay, as applicable.

Representations and Warranties

The Vessel Purchase Agreement has been furnished to the SEC to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Excel or any of their respective affiliates or businesses. The representations, warranties, covenants and agreements contained in the Vessel Purchase Agreement were made only for the purposes of such agreement and as of specified dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Vessel Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors and security holders are not third-party beneficiaries under the Vessel Purchase Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Excel or any of their respective affiliates or businesses. Moreover, the assertions embodied in the representations and warranties contained in the Vessel Purchase Agreement are qualified by information in confidential disclosure letters that the parties have exchanged. Accordingly, investors and security holders should not rely on the representations and warranties as characterizations of the actual state of facts of the Company, Excel or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Vessel Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

The Company made representations and warranties generally qualified by, among other things, filings by the Company with the SEC that are publicly available during the period beginning on January 1, 2013 and ending five days prior to the date of the Vessel Purchase Agreement and a confidential disclosure letter containing non-public information. Some of these representations and warranties were made as of specified dates. The representations and warranties made by the Company relate to, among other things:

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organization, existence and good standing;

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power and authority to enter into the Vessel Purchase Agreement;

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the enforceability of the Vessel Purchase Agreement;

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consents required by governmental authorities;

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the absence of breaches, violations, defaults or conflicts with, or any consents required by, their respective governing documents, laws or certain contracts as a result of entering into the Vessel Purchase Agreement and consummating the transactions contemplated therein and the performance of their obligations thereunder;

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capitalization;

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SEC filings of the Company and the Company’s disclosure controls and procedures and internal control over financial reporting;

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compliance with GAAP in the preparation of financial statements and the fair presentation of the financial condition of the Company and its subsidiaries;

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the absence of a material adverse effect on the Company since December 31, 2013;

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fees and commissions in connection with the Vessel Purchase Agreement and the transactions contemplated thereby; and

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absence of pending or threatened litigation.

A “material adverse effect” means, for purposes of the Vessel Purchase Agreement, when used with respect to the Company, any change, effect, event, occurrence, or development that, individually or in the aggregate, (a) has or would reasonably be expected to have a material adverse effect on the financial condition, business, assets, liabilities or results of operations of the Company and the Company’s subsidiaries, taken as a whole, excluding any

change, effect, event, occurrence, or development resulting from (i) changes in applicable law or GAAP after the date hereof, (ii) changes in the global financial or securities markets or general global economic or political conditions, (iii) changes or conditions generally affecting the industry in which the Company and its subsidiaries operate, (iv) acts of war, sabotage, terrorism or natural disasters, or (v) the announcement or consummation of the transactions contemplated by the Vessel Purchase Agreement; provided that the effect of any matter referred to in clauses (i), (ii), (iii), or (iv) shall only be excluded to the extent that such matter does not disproportionately affect the Company and the Company’s subsidiaries, taken as a whole, relative to other entities operating in the industry in which the Company and the Company’s subsidiaries operate, or that has or would reasonably be expected to materially impair the ability of the Company or the Company’s subsidiaries to perform their respective obligations under the Vessel Purchase Agreement or the ancillary agreements related thereto or materially delay the ability of the Company or its subsidiaries to consummate the transactions contemplated by the Vessel Purchase Agreement or such ancillary agreements.

Excel made representations and warranties generally qualified by, among other things, matters disclosed in a confidential disclosure letter containing non-public information. Some of these representations and warranties were made as of specified dates. The representations and warranties made by Excel relate to, among other things:

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ownership and title to the equity of the entities that own the vessels Christine (tbn Star Martha), Sandra (tbn Star Pauline) and Lowlands Beilun (tbn Star Despoina) (collectively, the “Chartered Companies”);

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organization, existence and good standing;

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power and authority to enter into the Vessel Purchase Agreement;

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the enforceability of the Vessel Purchase Agreement;

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consents required by governmental authorities;

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fees and commissions in connection with the Vessel Purchase Agreement and the transactions contemplated thereby; and

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absence of pending or threatened litigation.

The representations and warranties made by Excel with respect to the vessels and the entities that the own the vessels Christine (tbn Star Martha), Sandra (tbn Star Pauline) and Lowlands Beilun (tbn Star Despoina) relate to, among other things:

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organization, existence and good standing;

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qualification to do business;

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capitalization of the Chartered Companies;

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no subsidiaries of the Chartered Companies;

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authority of Excel to cause its applicable subsidiaries to consummate the transactions contemplated by the Vessel Purchase Agreement and the ancillary agreements related thereto to which such subsidiary is a party, and to cause such subsidiaries to perform its obligations thereunder;

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assets and liabilities of the Chartered Companies;

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the absence of liens (other than certain permitted liens) on the vessels owned by the Chartered Companies;

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material contracts, agreements and instruments, and the performance of obligations and absence of any material default thereunder with respect to the Chartered Companies;

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compliance with laws, orders, and permits; and

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the accuracy of information provided to the Company specifically for use in documents required to be filed or furnished by the Company with or to the SEC or disseminated to its stockholders in connection with the transactions contemplated by the Vessel Purchase Agreement.

Termination

The obligations of the Company and Excel to consummate the sale of any vessel may be terminated prior to the applicable closing of such vessel sale by mutual written agreement of the Company and Excel or by either the Company or Excel if there is any order that prohibits the consummation of such vessel sale and such prohibition shall have become nonappealable.

In the case of a sale of any of the Chartered Companies, the obligations to consummate the sale of such Chartered Company will terminate automatically upon a total loss of the vessel owned by such Chartered Company.

In addition, the obligations to consummate a vessel sale may be terminated by either the Company or Excel if:

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there has been an inaccuracy in or breach by the other party or its subsidiary of any representation or warranty, or breach or default of any covenant or agreement contained in the Vessel Agreement, the applicable MOA or any certificate delivered pursuant thereto such that conditions to closing with respect to such sale would be incapable of being satisfied, or in the case of a breach or default of a covenant or agreement, if curable, has not been cured within 30 days after notice thereof; provided, that the breaching party may not be the terminating party;

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in the case of a sale of a vessel not owned by a Chartered Company, in accordance with the terms of the applicable MOA governing such sale or if any one or more of the conditions set forth in the Vessel Purchase Agreement to consummate such sale (other than those that by their nature are to be satisfied at the applicable closing) have not been fulfilled as of December 31, 2014, subject to extension in accordance with the applicable MOA; provided, however, that the party whose conduct substantially results in the failure of such condition in the applicable MOA or the Vessel Purchase Agreement to be fulfilled may not be the terminating party; and

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in the case of a sale of a Chartered Company, if any one or more of the conditions set forth in in the Vessel Purchase Agreement (other than those that by their nature are to be satisfied at the applicable Closing) with respect to such sale has not been fulfilled as of December 31, 2014, subject to extension in accordance with the terms of the MOA had the vessel owned by such Chartered Company been sold directly to the Company and subject to extension in accordance with the terms of the Vessel Purchase Agreement; provided, however, that the party whose conduct substantially results in the failure of such condition in the applicable MOA or the Vessel Purchase Agreement to be fulfilled may not be the terminating party.

If the applicable subsidiary of the Company does not take delivery of a vessel within the period or on the date specified in clause 5 of the MOA applicable to such vessel sale (when Excel’s subsidiaries is prepared to deliver it in compliance with the requirements of the MOA and absent any force majeure event preventing performance by the Company’s subsidiary), then the Company shall pay, for each day of delay in taking delivery, the following penalty amount in cash (for Handymax Vessels- $6,000 per day, for Panamax Vessels- $7,000 per day, for Kamsarmax Vessels- $8,000 per day, and for Capesize Vessels- $13,000 per day), with such penalty continuing for up to ten (10) days. If the applicable subsidiary of the Company takes delivery on or before the last day of such ten (10)-day period in accordance with the terms of the MOA, such penalty amounts shall constitute liquidated damages. From and after such ten (10)-day period, in addition to any remedies at law or in equity, including, without limitation, any rights to specific performance under the Vessel Purchase Agreement, the applicable subsidiary of Excel shall have the right to cancel the MOA and seek damages for its losses, including incidental, consequential, special or indirect damages (but excluding punitive damages), including loss of future revenue or income, loss of business reputation or opportunity, or diminution of value, caused thereby in accordance with the provisions of the MOA and applicable law. Unless the applicable subsidiary of Excel shall have exercised the right to cancel the MOA, the applicable closing shall occur at the end of such 10-day period in accordance with the terms of the MOA, notwithstanding the fact that the Company shall have paid any penalty.

Indemnification

The representations and warranties contained in the Vessel Purchase Agreement, in the MOAs and in any certificate or other writing delivered pursuant thereto shall not survive the closing of the applicable sale of a vessel or of a Chartered Company, except that certain fundamental representations of Excel (including with respect to Excel’s title to the interests of the Chartered Companies and its other ship-owning subsidiaries, organization, existence and good standing, power and authority, enforceability of the Vessel Purchase Agreement, and fees and commissions in connection with the Vessel Purchase Agreement, and in respect of the vessels and the Chartered Companies as to organization and authorization, qualification, capitalization, assets and liabilities of the Chartered

Companies and contracts of the Chartered Companies), certain fundamental representations and warranties of the Company (including with respect to organization, qualification and corporate power, authorization, capitalization and fees and commissions in connection with the Vessel Purchase Agreement) will survive for six months after the final closing under the Vessel Purchase Agreement (the “Survival Date”). In addition, the representation in each MOA with respect to encumbrances will survive the applicable closing pursuant to such MOA in accordance with the terms of the MOA and the representation with respect to the absence of liens (other than certain permitted liens) on the vessels owned by the Chartered Companies will survive each applicable closing. Each of the covenants and agreements set forth in the Vessel Purchase Agreement that were to be performed on or prior to the applicable closing will survive until the Survival Date (other than the covenants of Excel with respect to pre-closing insurance coverage, which shall survive indefinitely), but the covenants and agreements contained in the Vessel Purchase Agreement requiring performance after an applicable closing shall survive the applicable closing in accordance with their terms.

Subject to the limitations set forth in the Vessel Purchase Agreement, from and after the applicable closing of each vessel sale, Excel shall indemnify, save, and keep the Company, its subsidiaries (including the Chartered Companies) and each of their respective officers, directors, managers, partners, members, agents, representatives, successors, assigns and employees harmless against and from all damages sustained or incurred by any such indemnified persons as a result of, or arising out of, the breach or inaccuracy of such fundamental representations as of the date of the applicable closing (or, to the extent any such representation and warranty by its terms addresses matters only as of another specified time, as of such other time) and any breach of any covenant or agreement made by under the Vessel Purchase Agreement (subject to certain exceptions), prior to the date of the applicable closing. Additionally, the Company shall indemnify, save, and keep each of Excel, its subsidiaries, affiliates and each of their respective officers, directors, managers, partners, members, agents, representatives, successors, assigns and employees harmless against and from all damages sustained or incurred by any such indemnified person as a result of, or arising out of, the breach or inaccuracy of, as of the date of the applicable closing (or, to the extent any such representation and warranty by its terms addresses matters only as of another specified time, as of such other time) such fundamental representations or any breach of any covenant or agreement made by the Company or any of its subsidiaries under the Vessel Purchase Agreement (subject to certain exceptions).

The calculation of damages with respect to any indemnification payments will take into account the interests held by Excel and its affiliates in the Company, and no indemnified person is entitled to be indemnified for special, consequential (including diminution in value, lost profits, lost revenues, business interruptions, or loss of business opportunity or reputation), indirect, multiple, punitive or other similar damages, except as finally awarded by a court of competent jurisdiction and actually paid to a third party pursuant to a third party claim. Excel’s liability for any damages shall be satisfied solely and exclusively from the Subject Shares (as defined below) then held by it on or prior to the Survival Date, and in no event shall any such damages, other than from the Subject Shares, be payable by Excel.

Except with respect to fraud, post-closing claims related solely and exclusively to Clause 9 of each MOA and made pursuant thereto (which shall be entitled to the remedies available under such MOA) or the representation with respect to the absence of liens (other than certain permitted liens) on the vessels owned by the Chartered Companies of the Vessel Purchase Agreement and parties’ rights to specific performance as set forth in the Vessel Purchase Agreement, the indemnification provisions set forth in the Vessel Purchase Agreement are the sole and exclusive remedy of the parties to the Vessel Purchase Agreement following the applicable closing for any and all breaches or alleged breaches of any representations, warranties, covenants or agreements (whether written or oral) of the parties and for any and all other claims arising under, out of or related to the Vessel Purchase Agreement, or the negotiation or execution thereof.

Retention of Shares

Excel has agreed that, without the prior written consent of the Company (which consent may be withheld in its sole discretion), except as set forth in the exception listed below, it will not, directly or indirectly, during the period beginning on the date of the Vessel Purchase Agreement and ending on the Survival Date, (i) offer, issue, assign, pledge, hypothecate, grant a security interest in, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, make any short sale, or otherwise transfer, encumber or dispose of any of the Subject Shares (as defined below) or (ii) enter into any swap or other agreement

or arrangement (including a monetization arrangement or hedging or similar transaction) that transfers, in whole or in part, any of the economic consequences of ownership of the Subject Shares, whether any such transaction described in clause (i) or (ii) above (each, a “Transfer”) is to be settled by delivery of common shares or other securities convertible into common shares, in cash or otherwise; provided, however, that, if at the Survival Date there is an outstanding claim for indemnification pursuant the Vessel Purchase Agreement, a number of Subject Shares reasonably sufficient to satisfy such claim shall be retained by Excel and remain subject to the foregoing restrictions until such claim is resolved.

As used in the Vessel Purchase Agreement, “Subject Shares” means as of any date of determination, a number of shares of common stock of the Company equal to (i) the excess of (x) (A) $2,500,000 multiplied by (B) (I) the aggregate value of the consideration delivered at all closings under the Vessel Purchase Agreement to such date over (II) the aggregate value of all consider being delivered under the Vessel Purchase Agreement over (y) the aggregate amount of any cash payments made by Excel pursuant to the indemnification provisions of the Vessel Purchase Agreement as of such date (ii) divided by the average of the volume weighted average price per share of the Company’s common stock on Nasdaq (as reported on Bloomberg or, if not reported thereby, another alternative source as reasonably agreed by the Company and Excel) for the five (5) consecutive trading days ending on and including the date of the Vessel Purchase Agreement (this clause (y), the “Buyer Stock Volume-Weighted Average Price”).

Notwithstanding the foregoing, Excel may Transfer all or a portion of the Subject Shares without the Company’s prior written consent if either (i) the greater of (x) the net proceeds received upon the Transfer of such Subject Shares and (y) the Buyer Stock Volume-Weighted Average Price multiplied by the number of such Subject Shares, is placed by Excel into an escrow account reasonably acceptable to the Company until the Survival Date to satisfy the Sellers’ indemnification obligations pursuant to the Vessel Purchase Agreement or (ii) Excel causes to be delivered to the Company a guaranty of its indemnification obligations pursuant to the Vessel Agreement from a person with liquidity characteristics and a net worth reasonably satisfactory to Company, which guaranty shall be in form and substance reasonably satisfactory to the Company. Substantially concurrently with the delivery of such guaranty, the parties to the Vessel Purchase will cause any amounts placed by Excel into escrow pursuant to the preceding clause (i) to be released to Excel.

Amendment No. 1 to Registration Rights Agreement

The following is a summary of the material terms of Amendment No. 1 to the Registration Rights Agreement. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to Amendment No. 1 to the Registration Rights Agreement, which is included as Exhibit 99.2 to the Report on Form 6-K furnished by the Company to the SEC on September 3, 2014 and incorporated herein by reference. The Company urges you to read Amendment No.1 to the Registration Rights Agreement carefully.

On July 11, 2014, the Oaktree Seller, the Pappas Seller, certain stockholders of the Company affiliated with Monarch Alternative Capital LP (the “Monarch Stockholders”) and certain affiliates thereof entered into the Registration Rights Agreement. Pursuant to the terms of the Registration Rights Agreement, the Company had, among other things, committed to prepare and a registration statement within 30 days after the closing date of the July 2014 Transactions covering the resale of shares owned by such stockholders (which was filed on August 5, 2014). On August 28, 2014, the Company, the Oaktree Seller, the Monarch Stockholders, Excel Maritime Holding Company LLC (“Excel Holding”) and certain holders of equity interests in Excel (such holders, the “Excel Holders”) entered into an Amendment to the Registration Rights Agreement. Pursuant to the terms of the Amendment to the Registration Rights Agreement, the Company has, among other things, committed to prepare and file a resale registration statement within 30 days after the initial closing date of the transactions contemplated under the Vessel Purchase Agreement, dated as of August 19, 2014, by and between the Company and Excel. The resale registration statement shall cover the resale of shares owned by the stockholders party to the Registration Rights Agreement as well as certain new stockholders of the Company (the “New Holders”), which shall consist of, (i) immediately following the initial closing of the Excel Transactions, Excel, (ii) after the distribution of Company shares by Excel to Excel Holding, Excel Holding, and (iii) after the distribution of Company shares by Excel Holding to the Excel Holders based on their pro rata ownership of equity interests in Excel Holding, the Excel Holders that are party to the Amendment to the Registration Rights Agreement.

In addition, the Registration Rights Agreement, as amended, also provides the Oaktree Seller and its affiliates with certain demand registration rights and provides the Oaktree Seller, Pappas Seller, the Monarch Stockholders, the New Holders and certain affiliates thereof with certain shelf registration rights in respect of any common shares of the Company held by them, subject to certain conditions, including those shares acquired pursuant to the July 2014 Transactions and the Excel Transactions.

Excel Vessel Bridge Facility

The following is a summary of the material terms of the Excel Vessel Bridge Facility. The description may not contain all of the information that may be important to you and is qualified in its entirety by reference to the Excel Vessel Bridge Facility, which is included as Exhibit 99.3 to the Report on Form 6-K furnished by the Company to the SEC on September 3, 2014 and incorporated herein by reference. The Company urges you to read the entire Excel Vessel Bridge Facility carefully.

On August 19, 2014, the Company, through Unity Holding LLC, a direct subsidiary of the Company (“Unity”), entered into that 231.0 million Senior Secured Credit Agreement, dated August 19, 2014, among Unity, as Borrower, the initial lenders named therein, as Initial Lenders, and the other lenders from time to time party thereto, as Lenders, and Wilmington Trust, National Association, as Administrative Agent (the “Excel Vessel Bridge Facility”). The initial lenders under the Excel Vessel Bridge Facility are entities affiliated with Oaktree and entities affiliated with Angelo, Gordon & Co.

The Company expects to use cash on hand, together with borrowings under the “Excel Vessel Bridge Facility” to fund the cash consideration for the Excel Vessels.

Unity, is the borrower under the Excel Vessel Bridge Facility, and the Company is, and each individual vessel-owning subsidiary of Unity (with one exception) will be, a guarantor. The Excel Vessel Bridge Facility matures on February 28, 2016, with mandatory prepayments of $6.0 million each due in March, June and September 2015. Outstanding amounts under the Excel Vessel Bridge Facility bear interest at a rate equal to LIBOR (based on a one month interest period) plus an applicable margin of either 5.00% per annum through February 28, 2015 and 6.00% per annum thereafter.

The Excel Vessel Bridge Facility will be secured by 33 of the Excel Vessels acquired by the Company as well as related bank accounts, earnings and insurance proceeds and the equity of each vessel-owning subsidiary of Unity. The Excel Vessels are divided into 22 “Core Collateral Vessels” and 11 “Non-Core Collateral Vessels.” As of September 5, 2014, five of the Excel Vessels had been delivered to the Company, and $29.2 million of borrowings were outstanding under the Excel Vessel Bridge Facility.

The Excel Vessel Bridge Facility requires Unity and its subsidiaries to maintain in pledged accounts a minimum amount of cash or cash equivalents in an aggregate amount of not less than (i) $500,000 multiplied by (ii) the number of Excel Vessels securing the Excel Vessel Bridge Facility at such time. The Excel Vessel Bridge Facility also requires Unity to maintain a ratio of (i) the aggregate outstanding principal amount of loans under the Excel Vessel Bridge Facility to (ii) the aggregate fair market value of the Core Collateral Vessels at such time of not greater than 0.75 to 1.0.

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no default or event of default shall have occurred and be continuing or would result from such payment;

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on a pro forma basis after giving effect to such payment, Unity is in compliance with its financial maintenance covenants; and

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either:

(1) if the distribution is being made using the proceeds of a vessel disposition, (A) 25% of the net cash proceeds from sales of Core Collateral Vessels and (B) 100% of the net cash proceeds from sales of Non-Core Collateral Vessels may be distributed, in each case, within 5 Business Days of receipt, to the extent that the ratio of (x) the aggregate outstanding principal amount of loans under the Excel Vessel Bridge Facility (after taking account of mandatory prepayments) to (y) the aggregate fair market value of the Core Collateral Vessels is not greater than 0.55 to 1.00; or

(2) if the distribution is being made from other sources, on a pro forma basis after giving effect to such payment, (x) the aggregate outstanding principal amount of loans under the Excel Vessel Bridge Facility (after taking account of mandatory prepayments) to (y) the aggregate fair market value of the Core Collateral Vessels is not greater than 0.70 to 1.00.

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