US-listed bulker company Diana Shipping said on Tuesday it will spin off at least three of its older vessels in a separate vehicle with a view to distribute its shares to the company's shareholders.
Upon completion of the envisaged transaction around 9 November, Diana shareholders will obtain a cash dividend of $0.10 per share, the company said in a statement.
The spin-off is to be called OceanPal and start life with Diana's 73,600-dwt Protefs (built 2004), 73,700-dwt Calypso (built 2005) and 171,800-dwt Salt Lake City (built 2005).
Furthermore, OceanPal has been granted right of first refusal over another six Diana bulkers, which the filings do not identify.
The three ships OceanPal is known to be entering business are currently earning rates below current market levels. The Calypso is employed at a gross $10,400 per day in a one-year timecharter with Viterra that expires in December.
The Protefs and Salt Lake City will be employed until the second quarter of next year, earning $10,650 per day and $13,000 per day respectively.
OceanPal's sale pitch seems to be that these ships will fetch significantly higher rates when they're available for new employment again.
“Management of Diana Shipping believes that the distribution of a separate, publicly traded dry bulk company focusing on older vessels with shorter duration charters will further enhance shareholder value by providing greater exposure to the shorter-term charter market,” said in the statement Diana chief executive officer Semiramis Paliou, who will also serve as OceanPal's chairperson and director.
Furthermore, the move would allow Diana to “continue to focus on its disciplined long-term managed growth”, she added.
Following OceanPal's listing, the two companies will trade independently, with separate boards of directors and management. At the time of the spin-off, however, there will be considerable executive overlap.
OceanPal's chief executive officer will be Eleftherios Paratrifon, who is Diana's chief operating officer. Diana's chief strategy and chief financial officer Ioannis Zafirakis will serve as OceanPal's president and interim chief financial officer.
All common shares of OceanPal will be distributed to Diana shareholders of record as of 29 October. Diana will also receive preferred shares in OceanPal that will entitle the company to preferred dividends and voting rights.
Some of these preferred shares will give Diana 34% of voting rights in the new vehicle. Others will have a cumulative preferred dividend of 8% and will be convertible into common OceanPal shares at Diana's option.
According to its website, Diana’s fleet consists of 36 bulkers from panamax to newcastlemax size. The oldest among them are the Protefs, the Calypso and the Salt Lake City, which are to enter the OceanPal fleet.
Diana's next oldest vessels are the 76,200-dwt Melia (built 2005), the 180,200-dwt Aliki (built 2005), the 177,200-dwt Baltimore (built 2005) and the 76,900-dwt Artemis (built 2006).
On 1 October, Olam fixed the Baltimore for about 90 days at $56,000 per day.