Eagle Bulk chairman fires back at Danaos, saying shareholder shakeup required poison pill

A conversation that started with a “pleasant lunch” between Eagle Bulk Shipping’s chairman and his company’s new big shareholder has turned into a public war of words over the decision to adopt a poison pill to fend off a potential takeover.

Paul Leand, the leader of the bulker owner’s board, has penned a letter to Danaos Corp chief executive Joun Coustas defending the poison pill plan.

The document, made public in a filing with the US Securities and Exchange Commission on Friday, is the latest chapter in a dramatic change in Eagle Bulk’s shareholder base that effectively saw the shipowner outbid suitors for the stake of what had been its largest shareholder, Oaktree Capital Management.

Danaos, a Greek container ship owner listed in New York, ultimately gobbled up a 16.7% stake on the open market to become the new top dog on shareholder rolls before Eagle Bulk adopted the poison pill to prevent it from growing that stake and before Cyprus-based Castor Maritime grabbed the second largest stake.

“We believe that the limited duration rights plan was necessary given the rapid and significant change in our recent shareholder base,” Leand said of the poison pill.

“Additionally, the rights plan reduces the likelihood that any entity, person or group gains control of Eagle through open market accumulation of common stock without paying all shareholders an appropriate control premium.”

As TradeWinds has reported, Coustas lashed out at the poison pill, questioning whether Eagle Bulk was acting in the best interest of shareholders by adopting it without their approval.

And he complained that the purchase of the Oaktree stake represented preferential treatment.

Rebuttal

Leand disagreed on both counts.

He said Oaktree had effective control of the company, so its exit created a unique circumstance.

The Eagle Bulk chairman said Coustas confirmed over their lunch that Danaos had made an offer for the Oaktree stake at or around net asset value (NAV) for the bulker company, and he said there were others.

And he noted that Eagle Bulk bought Oaktree’s shares at a discount to NAV and below Danaos’ offer.

‘Accretive’ deal

“Intrinsically, therefore, I’m sure we both look forward to what we believe will be a transaction that will be significantly accretive to NAV per share and EPS [earnings per share] in future periods based on historically strong supply-side fundamentals,” Leand wrote.

Danaos could not be reached for comment after business at its Piraeus office or through its media contact in New York.

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In his letter, Leand expressed surprise that Danaos published the letter via newswires, and he complained that it contained factual inaccuracies.

“We appreciate your interest in Eagle and are pleased to have you as a shareholder,” Leand wrote.

‘Open-minded’

“As we discussed in our pleasant lunch a few weeks back, our board has always engaged constructively with our stakeholders and has consistently been open-minded to hearing views and perspectives from shareholders and non-shareholders alike.”

Leand said no Eagle Bulk board member received the letter directly and that the company prefers to have collaborative and constructive discussions in private instead of a public exchange of letters.

Leand said Danaos — a significant shareholder that is able to rapidly accumulate Eagle Bulk shares — should appreciate the need to protect the Connecticut bulker owner and its shareholders from the potential that such stakes creep their way up into a controlling position.

“If Danaos does not have an intention of seeking to control or influence control of Eagle, then the adoption of the rights plan should have no effect on you,” he said, noting that the poison pill is not aimed at interfering with considering proposals or entering into transactions that are in the best interest of shareholders.

“You will note from this morning’s Castor Maritime filing, Eagle has attracted other significant interest. I’m sure you can appreciate the safeguards we implemented now work to protect your interests as an Eagle shareholder as well.”