The war of words between shipowner George Economou and Genco Shipping & Trading has erupted again.
Economou has written another message to shareholders criticising the US-listed dry bulk company — which then hit back once more.
The Greek tycoon is trying to remove Genco chairman James Dolphin, an executive with Connecticut-based AMA Capital Partners, and address what he calls Genco’s persistent underperformance to unlock shareholder value.
He has proposed businessman Robert Pons as an independent director.
Economou’s GK Investor company has 5.3% of Genco.
“For years, Genco’s share price has consistently lagged significantly behind the company’s net asset value,” the shipping magnate said in a letter to Genco shareholders.
“This is a direct result of the failure of the current board of directors to take actions, in particular with respect to capital allocation, that are in the best interests of all shareholders.”
He cited a resistance to returning a sufficient amount of its excess money to shareholders.
“In our view, the board has failed to articulate a credible alternative use for that cash,” he wrote.
Economou claimed he has tried to engage for months with directors.
Hostility and lawyers
“Unfortunately, our good faith efforts have not only been ignored but also have been met with hostility and Kabuki-theatre ‘engagement’ by the board,” the TMS Group founder wrote.
“In fact, the company’s response to our very first communication copied a litigator.”
The reference to the classical Japanese dramatic art form appears to equate Genco’s response to some sort of performative pantomime.
Economou also cited “intransigence” among Genco’s top brass, especially on the part of long-time chairman Dolphin, whom he called “overbearing”.
“Now is the time for shareholders to send a clear message that change is needed,” he concluded.
Genco hit back in a statement saying: “George Economou’s letter is nothing more than name-calling.”
It said directors had conducted extensive analysis with financial advisers and shared their conclusions with the tycoon.
“At which point Economou agreed that his initial suggestions of selling ships to fund a buyback were not advisable,” Genco added.
$100m share tender plan
“Hours later he came back with an idea of [a] $100m tender at a premium, which the board also duly considered and rejected for a number of reasons, including the levels of debt it would require the company to take on and the ways in which it would limit our future flexibility, including our ability to pay dividends.
“We encourage Genco shareholders to vote for our board’s nominees and discard any proxy materials they receive from Economou.”
This was Economou’s second message to shareholders this month.
His pressure on Genco is part of a broader campaign in which he is acting as an activist investor in several other shipowners, most of them Greek.
Economou has filed lawsuits against two of them.
He is suing tanker owner Performance Shipping — founded by fellow Greek Simeon Palios — in the New York Supreme Court, while targeting capesize bulker owner Seanergy Maritime and principal Stamatis Tsantanis with litigation in the Marshall Islands.
