Shipowner-turned-activist investor George Economou is not happy with Genco Shipping & Trading and is trying to take its chairman’s head in a proxy fight.
Economou, whose GK Investor is a 5.4% shareholder, issued a scathing review of company management in a securities filing on Monday.
New York-listed, Manhattan-headquartered Genco has rebuffed his demands to bolster the stock price through share buybacks, Economou said.
The Greek magnate is also continuing to push for his own nominee, veteran businessman Robert Pons, to the board of directors ahead of the dry bulk shipowner’s next annual shareholders meeting.
Economou is asking shareholders to withhold their votes for Genco chairman James Dolphin, an executive with Connecticut-based AMA Capital Partners.
Dolphin has failed to do what is necessary to bring Genco’s share price in line with its net asset value, Economou complained.
“Mr Dolphin is seeking to empire-build and believes that his board knows better than Company shareholders how Company shareholders should spend their own money,” he charged.
“Mr Dolphin has fostered a Board culture that is dismissive of shareholder points of view and … seeks to have a Board comprised of persons pliant to his will as opposed to persons who will engage in the robust debate a good board needs in order to ensure that it makes good decisions.”
Genco management has been approached for comment.
Economou began accumulating Genco shares in November and continued into December, at which point he revealed his holding of 2.3m shares or 5.4% of the company.
The veteran shipowner opened the curtain for the first time on the behind-the-scenes talks he has had with Genco management in recent weeks, and the reviews were not positive.
Economou described the response from management as “hostile, evasive and/or disingenuous”.
As TradeWinds reported on 5 March, Genco has previously rejected Economou’s nomination of Pons and veteran financier Randee Day to its board, instead opting to add Rio Tinto veteran Paramita Das to become its seventh director.
Economou is now taking his case directly to Genco shareholders in a proxy battle that could cost him up to $1m, according to Monday’s filing.
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.
Many observers find irony in the campaign because Economou was regarded as a corporate governance laggard when he ran New York-listed bulker owner DryShips between 2005 and 2019.
DryShips finished last in watchdog Michael Webber’s corporate governance “scorecard” and faced its own litigation after shareholders charged that it destroyed more than 99.9% of its equity value through dilutive stock sales accompanied by reverse splits.
While there is no sign of legal action in the Genco case, Economou appears to believe he has found a weak spot in the company’s share price. There is widespread agreement among equity analysts following the shipowner that Genco trades below NAV, although this hardly makes it unique among public bulker owners.
For example, Clarksons Securities said on 26 February that “despite last week’s peer-leading share price performance, [Genco] is still trading at 0.80 times price to NAV and remains among the cheapest dry bulk stocks in our coverage universe”.
Genco was trading at $19.87 per share at that time. It has firmed further since, trading around $20.50 on Monday.
