Danaos Corp expressed “serious concern” on Tuesday over Eagle Bulk Shipping’s “unilateral” decision to adopt a poison pill that blocks the Greek firm from increasing its stake in the Gary Vogel-led company.
Eagle Bulk’s decision “to adopt the poison pill without seeking the prior approval of shareholders raises the question of whether the board is truly acting in the best interests of stockholders”, Piraeus-based Danaos — Eagle Bulk’s largest shareholder — said in an outspoken public letter to the company’s management.
John Coustas-led Danaos, which currently controls 16.7% of Eagle Bulk’s outstanding shares, negatively contrasted the board’s poison-pill tactics to their parallel decision to buy back Oaktree Capital Management’s 28% stake in the outfit.
The Danaos letter said the buyback constituted a “preferential treatment” of Oaktree over other shareholders who never got the chance to tender their Eagle Bulk shares at a similar “elevated price, while simultaneously bearing the burdens of financing the share repurchase”.
“We struggle to understand how the company’s decision to repurchase Oaktree’s shares benefits all Eagle Bulk shareholders and question whether the decisions taken by the company were the most effective, considered, or beneficial route for all shareholders,” Danaos said.
Danaos’ letter stopped short of declaring war on the board despite asking them to explain their moves and stating that the decisions of Eagle Bulk’s management “fundamentally alter the makeup of the company”.
“We look forward to constructive engagement with the board on moving the company forward in a positive direction,” it concluded.
Danaos’ letter is the latest development in a flurry of activity surrounding Eagle Bulk.
On 17 June, Danaos announced it had increased its holding to 11.3% after taking an initial position of 10% a week earlier
Five days later, Eagle Bulk agreed to buy up Oaktree’s 3.8m shares in the company at a 19% premium to the stock’s latest closing price in New York.
On 23 June, Eagle Bulk adopted a shareholder rights agreement — informally known as a “poison pill” — into its bylaws that will in effect cap any pursuer at 15% of the stock.
In its letter on Tuesday, Danaos said it had told Eagle Bulk management beforehand that it would buy company shares in the open market.
Danaos — a container ship owner that is also listed in the US — argued that its approach did not constitute the “abusive tactics” that Eagle Bulk said it was aiming to prevent through its defensive poison-pill measure.
“Perhaps the [Eagle Bulk] board could elaborate on how an open-market purchase followed by a prompt 13G filing constitutes an abusive tactic, especially in light of the board’s preferential deal with Oaktree?” the Greek company asked.
Danaos said Oaktree — a $164bn behemoth — always had “the knowledge and means” to acquire Eagle Bulk, but no poison pill was ever in place against them.
