Photo: Lukasz Z / Shutterstock
Eagle Bulk repurchases Oaktree’s entire stock ownership of 28%.
U.S.-based Eagle Bulk Shipping Inc. (NYSE: EGLE) has announced that its Board of Directors has unanimously approved an agreement with Oaktree Capital Management to repurchase approximately 3.8 million shares of Eagle common stock for approximately $219.3 million.
The repurchase represents Oaktree’s entire 28% stake in the dry bulk shipping company.
The purchase price, $58.00 per share, represents a premium of approximately $11 per share from Thursday’s closing price or approximately 16% to Net Asset Value based on March 31, 2023 financials and current fleet valuations.
Eagle Bulk said the repurchase will be financed by cash-on-hand and drawings under the company’s credit facility. The company’s outstanding common stock will be reduced to about 9.3 million shares due to a transaction.
“We believe the transaction will be significantly accretive to NAV per share and EPS in future periods based on historically strong supply-side fundamentals,” said CEO Gary Vogel. “Looking ahead, we will continue to execute on our growth and renewal strategy, including building upon our 33 previous ship acquisitions, and remain committed to acting opportunistically to create value for all of our shareholders.”
Oaktree became a shareholder in Eagle Bulk in October 2014.
Eagle Bulk’s Board of Directors has also unanimously adopted a shareholder rights plan to prevent any person or group from gaining control of the company through abusive tactics without paying all shareholders an appropriate control premium or giving the Board of Directors sufficient time to make informed decisions in the best interest of all shareholders.
Eagle Bulk’s Chairman Paul Leand, Jr. said the transaction is in the best interest of shareholders, both financially and strategically. “It ensures that shareholders maintain the opportunity to realize the value of their investment in Eagle Bulk and eliminates any potential disruption resulting from the sale of a very significant interest in the Company,” he said.
Eagle Bulk reports a strong balance sheet with approximately $188 million in liquidity as of March 31, 2023. The company’s announcement noted that it plans to maintain its current dividend policy of 30% of net income and repay term debt.
Under the shareholder rights plan, Eagle Bulk will distribute one right for each share of common stock outstanding as of the close of business on July 3, 2023.
Headquartered in Stamford, Connecticut, Eagle Bulk primarily operates in the midsize drybulk vessel segment and owns one of the largest fleets of Supramax / Ultramax vessels in the world, comprising 52 vessels representing 3.2 million deadweight tonnes and a average age of 9.8 years.
Eagle Bulk’s stock was up about 5% in after hours trading on Wednesday.
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