Shares of Diamond S Shipping were down about 8% in pre-market trading today following an overnight sale of shares by its two largest backers.
US energy investor First Reserve, the company's oldest major investor, announced intentions to sell up to 4 million shares, or half of its holding, in an overnight deal led by Pareto Securities. The total could rise to 4.6 million if underwriters exercise an over-allotment option.
In comparison, WL Ross is looking to prune its position. The fund formerly controlled by US commerce secretary Wilbur L Ross Jr is selling 661,000 shares (760,000 with over-allotments), or about 7% of its 9.7 million holding.
First Reserve and WL Ross had flagged their intentions to begin selling shares in a US Securities and Exchange Commission (SEC) filing last week. The overnight sale is the first move to act on the initiative by the longtime private equity backers.
Diamond shares were trading around $14 in the pre-market on the New York Stock Exchange, a dip of more than 8% from the previous close of $15.28.
The lower price is likely to roughly approximate the price of the Pareto sale, although no figure has yet been announced.
(UPDATE: Diamond S subsequently announced that the deal had priced at $13.75 per share. This is roughly an 8% discount from Tuesday's close of $14.94, and a 10% discount from Wednesday's close of $15.28.)
Trading volume quickly doubled Diamond's daily average in the first 20 minutes of activity.
While the shares campaign may hurt Diamond's trading price in the short term, it is likely to provide a long-term lift as the private equity "overhang" in the stock is finally reduced.
First Reserve has backed Stevenson for a decade, while WL Ross jumped into Diamond S in 2011.
Prior to the sale, WL Ross owned 24% of shares and First Reserve 20.2%. After the transaction, WL Ross will still hold 22.3%, but First Reserve will have dropped to 10.3%.
