Days after being called out by a leading equity analyst for purportedly lacking sufficient scale, Genco Shipping & Trading disclosed it is adding a capesize to its fleet.
The New York-listed shipowner is taking in an unidentified 2016-built, 180,000-dwt bulker for $47.5m, it said in a release prior to the opening of trading on Monday on the New York Stock Exchange.
The new vessel is to be renamed Genco Intrepid and be delivered within 30 days.
It will be funded through a combination of cash on hand and a drawdown from Genco’s revolving credit facility.
Chief executive John Wobensmith said: “The purchase is consistent with our stated objective of reinvesting proceeds from the sale of older, less fuel-efficient vessels into high-quality capesize vessels to increase our earnings power and further modernise our fleet.”
Genco said it had invested $285m in fleet renewal and expansion since 2021, when it switched to its current capital allocation strategy that has featured aggressive debt reduction and a higher dividend payout.
“Moving ahead, we believe Genco’s significant financial strength, highlighted by $328m of undrawn revolver capacity at the end of Q2, will enable us to continue to capitalise on growth opportunities,” Wobensmith said.
Given the nature of such transactions, it is almost certainly coincidental that the announcement follows so quickly on the heels of a kerfuffle with Stifel analyst Ben Nolan over Genco’s size as a company.
As TradeWinds reported on Thursday, Nolan spent time with Genco management on a non-deal roadshow and followed up with a client note suggesting that the company should sell out.
“I’m a little surprised by it,” Wobensmith told TradeWinds of Nolan’s note. “We’ve never thought of ourselves as sub-scale, but we do have aspirations to grow.
“The statement that we can’t grow is just false. We have $330m in capacity on our revolving loan facility. Just with that, we can grow our capesize fleet by 50% with no new shares.”
And within days, there was another capesize in the fleet.
In a telephone interview following the release of the note, Nolan clarified that he was voicing his own opinion and not anything more.
“It’s not something that management said, and, in fact, it’s not even something I expect them to do,” he said.
“It’s purely my opinion. They’re trading at a pretty steep discount to NAV and I just feel it will be difficult for them to grow the company.”
Before the deal, Genco owned and operated 43 bulkers: 16 capesizes, 15 ultramaxes and 12 supramaxes. The average age was 12.7 years.
