Safe Bulkers launched an exchange offer for certain preferred shares, which will see holders of preferred share holders receive cash and new common stock. But the move will also mean savings in paying out dividends on the preferred shares.
The Monaco-based shipowner said it began an exchange offer for any and all of its outstanding 8% Series B preferred shares. Each share will be exchanged for $22.50 in cash and two shares of newly issued common stock.
The exchange offer roughly values each Series B share at $25.68 per share, based on the closing price of Safe Bulkers common shares as of Thursday.
Safe Bulkers' Series B shares were up $1.59 to $25.10 per share in early trading.
Some 800,000 in Series B preferred shares were issued and sold in June 2013 to an entity controlled by Polys Hajioannou.
Hajioannou is listed as the largest holder of the Series B shares with some 480,000 shares held directly and through Chalkoessa Maritime. Another 309,000 shares are listed as held by executive officers and directors as a group.
A total of some 1.485 million Series B preferred shares are outstanding, according to Safe Bulkers last annual report.
The transaction could see the issuance of an additional 2.9 million common shares if all the holders agree to the transaction, which would increase Safe Bulkers' current share float of some 99.3 million.
But one source familiar with the transaction says the company will be able to save roughly $4m in preferred share dividends to be paid on through July 2018. The Series B shares also have a "failure to redeem" feature which would cause the dividend to increase in the future.
