Diana Shipping believes the time has come to offer shareholder returns in two ways in a strong dry bulk market: either through dividends or assets.
As TradeWinds has reported, the Semiramis Paliou-led owner of 37 bulkers announced in late October that it planned to spin off three of its older assets into a separately listed company named OceanPal.
New York-listed Diana said it would give shareholders one share of OceanPal for every 10 owned shares of Diana once the OceanPal transaction is complete, though it has been delayed.
It has already given a $0.10 dividend to Diana shareholders.
After the company reported earnings on Wednesday, analysts quizzed executives about the thinking behind both moves.
"I want to make sure that everybody understood that during this call that the message is that Diana Shipping Inc, we feel that we have entered a period where the yields that we can provide to our shareholders can be substantial," chief financial officer Ioannis Zafirakis said during a third-quarter earnings call on Wednesday.
"This is the message we want to pass across, and it can be substantiated in the form of cash or assets."
The Athens-based bulker owner posted $13.4m in net income attributable to common shareholders for the quarter, versus a $14.6m loss a year earlier, thanks to the highest dry bulk spot rates seen in years.
Everyone's happy
Diana decided to spin off the three older assets as a way to please shareholders who wanted a dividend without selling the company's ships, said Zafirakis, who is also chief strategy officer.
"We said internally, let's create another company ... not related to Diana and try to satisfy all of these voices, and all these shareholders," he said.
President Anastasios Margaronis said Diana started OceanPal with only three ships as opportunities to both make more money off older, debt-free assets and start up a new listed owner.
"They're productive for the time being, and obviously we didn't make this company to remain at three vessels," he said.
"These vessels are cash cows. They have a useful life. They're well-maintained."
Zafirakis said Diana is not presently inclined to expand its fleet as the dry bulk market enters the busy season, but any future purchases would be from the secondhand market.
"Usually when you order a vessel, it takes around two years to get the delivery," he said.
"Waiting two years and then seeing what the market is going to be at that time is a risk that we don't want to take and we don't take."
This story has been amended to reflect that Diana has already given out a $0.10 dividend to shareholders.
