A Greek dry bulk owner made a serious run at Eagle Bulk Shipping last September — and it was not Star Bulk Carriers, which now has a pending agreement to acquire the New York-listed company.

Star is paying $500m for its rival in a deal that continues a decade of consolidation by the company.

The deal in late 2023 took many in the market by surprise. Now it has emerged, Star CEO Petros Pappas was not the only interested party.

The rival suitor: Diana Shipping made a previously undisclosed run at Eagle with a mixed cash/shares offer but was rebuffed, according to a public filing and sources familiar with Eagle’s discussions.

Diana is never mentioned by name in a proxy statement filed by Star and Eagle in support of their proposed all-shares combination, which seems headed to a vote this quarter.

However, Semiramis Paliou-led Diana is indeed the mysterious “Party A” discussed in the chunky filing with US securities regulators, according to sources familiar with the discussions.

Diana’s offer came as an unsolicited proposal on 7 September that valued Eagle at $54 per share, broken down into two components: $29.70 in the acquirer’s public stock and $24.30 in cash.

After consideration, Eagle management called Diana four days later with a “no thanks,” citing these factors: “the projected profile of the combined company, including the anticipated market capitalization, post-combination merger makeup … and the fact that Party A’s common stock had historically traded at a large discount to NAV [net asset value].”

What would have stoked Diana’s interest? A cheap entry point on price, a high-quality Eagle fleet and a chance to jump a class in scale from its current stable of 40, ranging from newcastlemaxes to ultramaxes. Eagle owns 52 ships in the ultramax and supramax sectors.

Unlike other Greek owners rumoured and then later confirmed to have interest in Eagle stock, Diana never surfaced in the market chatter. A Diana representative declined to comment when approached by TradeWinds this week.

Eagle Bulk chairman Paul Leand first learned of Oaktree Capital Management’s talks to sell its 27.6% stake in his company last February. Photo: Joe Brady

At the point Eagle rebuffed Diana, it had already received a 4 July draft term sheet from Star. This was made on a stock-for-stock basis at respective NAVs. Eagle decided a few days later not to pursue a deal while continuing to evaluate its strategic options.

The story of the Star-Eagle courtship and the surprise entry of Diana is set out for the first time in the proxy documents. But it is not much different from the scenario laid out by TradeWinds in previous reports on Eagle throughout 2023.

It was first publicly reported in TradeWinds’ financial newsletter Streetwise on 6 April that a pair of Greek owners were investigating a purchase of Oaktree Capital Management’s 3.8m shares (a 27.6% stake) in Eagle, potentially leaving the outfit vulnerable to a takeover.

That situation burst into the open in June when Eagle pre-emptively bought the entire Oaktree stake. Around the same time, Greece’s Danaos Corp disclosed a 16.7% stake in Eagle, while Cyprus-based Castor Maritime revealed a 14.9% holding.

Fresh twist in proxy

As TradeWinds has reported, it was the instability created by Oaktree’s desire to exit after backing Eagle for a decade that set the dominoes in motion.

A new twist in the recent proxy indicates that Eagle chairman Paul Leand — an investment banker who leads AMA Capital Partners — first became aware of Oaktree’s negotiations with an unnamed “third party” last February.

“Eagle immediately began considering potential options,” the filing states, later hiring Hogan Lovells and Akin as legal advisers and Houlihan Lokey as financial adviser.

Star’s first approach in early July and the overture by Diana in September turned out to be the only formal offers to be received in the following months.

The Star negotiations would rekindle in early October when Leand reached out to Hamish Norton, the former investment banker who is Star’s president, to see whether his company was still interested.

Star was, and the two sides used the next two months to iron out the terms that became the final agreement.

Sticking point

One brief sticking point was negotiating terms of a “go-shop” clause under which Eagle would win 30 days to solicit bids from the two shipowner stakeholders, Danaos and Castor.

One of these owners took Eagle up on a non-disclosure agreement that would allow it access to confidential financial data. The filing does not say which one, but the money would be on Danaos, given its scale and formidable balance sheet. In any case, that party elected not to proceed with an offer.

One Greek shipowner that has long been linked to potential interest in Eagle, Costamare, is not mentioned in the filing documents. Costamare originated as a container ship lessor but has been building out a large platform in dry bulk.