Centerbridge Partners has filed to sell more than half of its stake in New York-listed Genco Shipping & Trading, making it the third of the bulker owner's top-three shareholders to either sell down or sound a negative note in recent weeks.
Centerbridge said it has agreed with US investment bank Jefferies to sell up to 5.64m of the 10.5m shares it holds in the Manhattan-based shipowner, which would substantially pare its 25% holding.
Centerbridge is one of three private equity firms that came to Genco's aid in a 2016 financial restructuring in return for large stakes in the John Wobensmith-led owner.
TradeWinds reported on 16 December that the second-largest holder, Strategic Value Partners, had said in a public filing that it "recently became less constructive" on the stock even as its lone representative on the board abruptly resigned.
Strategic Value Partners' comments came after the third-largest holder, Apollo Management, sold just over 1m shares on 11 December, trimming its holding to 4.4m shares, or 10.5%.
The combined actions by the three finance firms might at first blush come off as a loss of confidence in the owner.
However, given the longevity and size of their combined holdings, there is equal reason to view the developments positively.
Trading liquidity limited
The large combined shareholding made up a huge portion of Genco's shares base and limited its trading liquidity among outside investors.
It has been a prime example of the "private equity overhang" that has troubled some public shipowners, not only in limiting stock turnover but also in weighing on any price upside for the stock. This is because of the presumption that the large holders eventually will sell, creating downward sentiment on the price.
While a significant reduction by the top holders might indeed create such pressure in the short term, it also has the effect of "ripping off the Band-Aid" on such pain, allowing better conditions moving forward.
Genco management declined to comment on the Centerbridge filing.
Public securities filings indicate Centerbridge entered into the securities sales agreement with Jefferies on 18 December.
The sales are already underway, with Centerbridge having disposed of a total 637,380 shares worth nearly $5m between 22 December and 7 January.
