Ardmore Shipping's original private equity backer is selling its remaining stake in the company for over $45m.
GA Holdings, part of the Reg Jones-backed Greenbriar Equity Group, is offering 5,579,978 shares at a price of $8.10 per share, the company said today.
The Greenbriar fund was set up in 2007 and has now reached the end of its investment horizon, making the disposal necessary rather than representative of tanker market dynamics, market sources say.
It sold the first half of its shares in the shipowner in 2015 and the sale of its remaining stake was "inevitable", explained Wells Fargo Securities analyst Michael Webber.
He notes the timing is also opportune, with Ardmore shares up 18.9% this year, compared with the 16.2% climb in the S&P 500.
"We note the full exit prevents any lingering overhang, and the offering should help trading volume," he wrote in a note to clients.
Ardmore's shares, which trade on the New York Stock Exchange as ASC, declined 7.7% to $8.12 in early-morning trading.
'Greenbriar's hand was forced'
Webber reiterated its "outperform" rating for Ardmore, while expecting weakness in the stock's performance today following the news of GA Holdings' departure.
Jon Chappell of Evercore ISI says the move is long overdue and questions surrounding when Greenbriar would sell down have been an overhang on the stock for the past two years.
He add the sale is not a call on the market given the improving dynamics and the seeds of a rate recovery being seen today.
“The timing of the GA sale seems curious with Ardmore set to return to profitability in 2018. We do not believe this transaction is a market call, though,” he said.
“The original fund is long in the tooth and we believe GA's hand was forced regarding timing.”
GA Holdings is backed by former Goldman Sachs banker Jones, who worked with Ardmore chief executive Tony Gurnee when Teekay listed in New York in the mid-1990s. They came together again in 2010 to offer Ardmore in an IPO.
Greenbriar sold half of its interest in Ardmore but Jones has remained chairman. He is expected to stay in the position despite the offering this week.
Ardmore said in a prospectus that it plans to give underwriter Morgan Stanley a 30-day option to buy up to 634,497 shares.
Following the close of the GA Holdings sale, Ardmore will also purchase 1,350,000 shares subject to the offering from underwriter Morgan Stanley.
The company will buy another 85,654 shares from GA Holdings in a private deal at the same price paid by Morgan Stanley.
