After struggling mightily to raise $62.5m of fresh equity over five months, New York’s Genco Shipping & Trading is about to scoop up at least $38.6m more in just two days of effort.
Sources familiar with the latest fundraiser say Genco has met surprisingly strong interest in the issue of preferred stock in a private placement that has been marketed Thursday and today.
This has led company management to weigh whether it wants to confine the raise to the $38.6m originally envisaged, or find a way to expand it.
The strong investor reaction may suggest one of two factors, or possibly both.
Investors may be more positive toward Genco with knowledge that it has completed a $400m bank financing on the strength of $125m equity posted by its three largest shareholders: Centerbridge Partners, Strategic Value Partners (SVP) and Apollo Global Management. In other words, it no longer needs “rescue capital,” so is a more attractive investment.
Or the reaction could reflect a wider strengthening sentiment for companies in the long-suffering and distressed dry bulk sector, a development that may bear watching for peers.
In either case, TradeWinds is told that Genco has enough interest in the shares to sell two or three times the intended $38.6m at $4.85 per share. This is the same price that the three insider backers paid in the $125m raise.
Genco stock closed at $5.39 Friday on the New York Stock Exchange.
The preferred shares are being bought by existing Genco shareholders outside the three big private equity firms, and by new investors, according to sources familiar with the offering.
If Genco sticks with the original plan, it will not receive additional net proceeds from the preferred-shares sale. The $38.6m was earmarked to reduce the amount of equity held by the three major shareholders.
Whether the prospect for a larger haul changes those plans remains to be seen, but should be revealed in a company announcement when trading opens at the beginning of the week.
