They call it a “go-shop” period, and one can’t help wondering if it’s yet another marketing pitch after a holiday season full of Black Fridays, Cyber Mondays and VIP sales that seemingly have no end.
This go-shop period has an end, though, and it came on Wednesday.
It wasn’t a flat-screen TV or a new car that was on offer, but rather a shipping company.
And Eagle Bulk Shipping was indeed “on sale” in a way that we’ll try to explain.
Some of Streetwise’s more careful readers may protest that they thought the New York-listed Connecticut shipowner already had a buyer, and that’s largely true.
Serially acquisitive Greek owner Star Bulk Carriers did, on 11 December, announce it had forged an agreement to in effect take over Eagle Bulk in an all-stock deal estimated to be worth $500m.
The catch is that Eagle had 30 days to find a better offer — that’s where “go-shop” comes in — and pay Star Bulk a $10m penalty for the inconvenience of the break-up.
After that time — after Wednesday this week — a rival could still emerge to try prying Eagle from Petros Pappas’ clutches, but the penalty price doubles to $20m.
Now, first things first: Streetwise is not aware of any surprise bidder stepping out of the shadows this week. And to be sure, Eagle has made no public announcement that would indicate its agreement with Star is under challenge.
Further, Eagle’s stock was trading this week just below the implied share valuation indicated in Star’s offer, which means investors expect the acquisition to move forward as outlined.
That does not mean there is no chance. After all, while $10m is a lot of money to most of us, it’s not a huge sum in the context of this deal: the doubled penalty would equate to about $2 per Eagle share as opposed to $1 within the go-shop window.
Shortly after the Star deal was announced, veteran Stifel analyst Ben Nolan reckoned there was a chance of a topping offer, but only about 25%, and it would need to be made in cash rather than stock.
He reasoned that Eagle’s two largest shareholders — fellow shipowners Danaos (15.6%) and Castor Maritime (14%) — might be where to look first. Then too, there is Greek owner Costamare, which was once rumoured to be interested in Eagle.
“Ultimately, any company, particularly [Danaos] or in our view Costamare, which has deep pockets and growing dry bulk businesses, could make a cash bid. But in our view, a share offering would not be of interest and the cash bid would need to do so at a price around [net asset value] near $67/share,” Nolan wrote.
He agrees that the break-up fee, even at $20m, is not “a major deterrent”. And of course, Star would always have the option of improving its offer to meet a challenge.
But at this point, the holiday sale has ended, and most likely the shopping has too.
Whither Maxim?
Star Bulk and Eagle play at the top of the market, with the proposed combination set to create a fleet of 169 bulkers and a market capitalisation of $2.1bn.
But among listed public owners, there are still more minnows than whales, and they continue to make news in their own way.
Streetwise spent much of 2023 writing about the smaller companies, including those that have used US investment bank Maxim Group to get access to equity capital where it otherwise might not be available.
Most of the owners associated with Maxim were Greek, including OceanPal, Performance Shipping, Castor Maritime, Imperial Petroleum and others.
Within the year, the Maxim deals went from all the rage to rather frowned upon. The heavy dilution and plunging share prices often accompanying the raises came under fire both from burned investors and industry leaders upset about the damage to shipping’s public image.
As Streetwise has reported, the Maxim deals slowed to a trickle by the end of the year, and now there may be a new sign of the bank’s waning influence.
Harry Vafias’ StealthGas used the bank to spin off a new public company, Imperial Petroleum, in 2021 in something of a backdoor IPO.
The fledgling Imperial then did its own spinoff, launching an outfit called C3IS last June. It featured two bulkers and a market cap of around $15m.
Now C3IS is looking to raise some money through a stock issuance.
A target raise of $5.9m based on an assumed deal price of $0.66 per share would help pay for “the $38.7m remaining purchase price for the aframax tanker we acquired in July 2023, or acquisitions of additional vessels which we have not yet identified…”
The raise would package common shares with warrants — in short, looking much like any of the Maxim deals done in the past few years by Imperial, OceanPal, Performance Shipping, Castor Maritime and others.
Just one thing: Maxim is not the deal’s underwriter. C3IS has turned to New York’s Aegis Capital as the sole fundraising bank.
Aegis appears to have had little involvement in recent shipping deals. But it has said in marketing materials that it did more IPOs on US exchanges in 2022 than any other investment bank, with its 12 deals topping the eight completed by runner-up — you guessed it — Maxim Group.
Founded in 1984, Aegis is led by CEO Bob Eide and head investment banker Isaac Eide.
Most of its deals came in the healthcare, financial and tech sectors.
There is no mention of shipping. But it might be good to watch this space.
After all, it’s a new year.
More ship finance news
Less than two weeks after disclosing a 5.4% stake in Genco Shipping & Trading, Greek shipowner George Economou has nominated two designees to the New York-based bulker owner’s board. Click here to read.
Floating production storage and offloading unit owner BW Offshore has turned down an offer from parent BW Group to buy its shares in affiliate BW Energy. Click here to read.
BW LPG’s Niels Rigault sold stock worth NOK 18.5m ($1.8m) on Tuesday. The Singapore VLGC owner announced earlier in the day that Rigault was stepping down as executive vice president and head of commercial. Click here to read.
