Pangaea Logistics Solutions has set a 2 December date for a shareholder vote on its agreement to acquire the 15-bulker fleet of MT Maritime Management in a $295m shares-based deal.
The vote is required under the rules of New York’s Nasdaq exchange because Pangaea is issuing more than 20% of its existing shares count to MTM in payment for the handysize fleet.
Privately owned MTM will become Pangaea’s largest shareholder in the transaction, with the exact ratio to be determined by Pangaea’s share price. The holding will range between 25% and 30%.
The $295m acquisition price includes Pangaea assuming about $102m of debt on the fleet.
Pangaea chief executive Mark Filanowski told shareholders: “I enthusiastically support this transaction and join the other members of our board of directors in recommending that you vote [for it].”
The consolidation move is the largest in Pangaea’s history and allows it to expand its owned fleet from 26 bulkers to 41.
The expansion could make the difference between Pangaea being considered an acquisition candidate itself and one that could be a sector consolidator, some finance sources suggest.
Meanwhile MTM — owned by the husband-and-wife team of Douglas MacShane and Christina Tan — will gain access to the public markets and potentially the ability to monetise its holding.
The company, headquartered in the Southport section of Fairfield, Connecticut, is contributing 15 bulkers ranging in size from 33,000 dwt to 40,000 dwt and with an average age of 10.5 years.
MTM also owns 24 chemical carriers and two product tankers.
The benefits to both sides of the deal have become increasingly clear to equity analyst Poe Fratt of Alliance Global Capital.
Fratt initially questioned the benefit to MTM in paying Pangaea at a net asset value of $10.20 for its shares, as the previous closing price had been just $6.45 on 20 September before the deal was announced.
But he told TradeWinds that he has come to have a greater appreciation of the benefits to MTM, which is gaining a potential “control” shareholding in the combined company, along with two board seats.
The largest current shareholder with about 17.8% is Lagoa Investments, a company owned by Pangaea co-founder Claus Boggild.
Fratt took the analysis further in a recent client note.
“In our view, the willingness of MT Maritime to accept equity valued using Pangaea’s NAV, instead of the last closing price, is a strong endorsement of the current management team and the unique business strategy,” he told clients.
“While we were initially surprised by the significant premium over the last closing price, we believe that the premium might have been driven by several factors, including current high asset values, uncertain dry bulk market outlook, the age profile and the ability to sell 15 handys en bloc.
“Also, board representation and the potential control position were likely very attractive.”
