Private equity firm Oaktree Capital Management has found a buyer for its stake in Eagle Bulk Shipping.
And that buyer is Eagle Bulk Shipping.
The New York-listed bulker owner has agreed to buy up Oaktree’s 3.8m shares, which amounts to a 28% stake, for more than $219m.
The price tag of $58 per share represents a premium on the $48.61 closing price for Eagle’s shares when the New York Stock Exchange closed for the day on Thursday.
But Connecticut-based Eagle Bulk is also taking a major chunk of its shares off the market at a roughly 16% discount to what the company calculates is its net asset value (NAV) per diluted share.
“Today’s transaction is in the best interest of our shareholders, both financially and strategically,” Eagle chairman Paul Leand said of the deal.
“It ensures that shareholders maintain the opportunity to realize the value of their investment in Eagle Bulk and eliminates any potential disruption resulting from the sale of a very significant interest in the company.”
Chief executive Gary Vogel said the transaction will be accretive to NAV and to the company’s future earnings per share.
“Looking ahead, we will continue to execute on our growth and renewal strategy, including building upon our 33 previous ship acquisitions, and remain committed to acting opportunistically to create value for all of our shareholders,” he said.
Investors have so far reacted positively to the announcement of the deal, which was released after the market close. In after-market trading, the shares have gained 3.5% to $50.29.
Oaktree, one of shipping’s biggest private equity investors, had been Eagle’s largest shareholder, and there had been questions for months about whether it wanted to exit, as TradeWinds’ Streetwise newsletter reported in April. The financial firm had been a shareholder since October 2014.
The deal with Eagle Bulk results in a more successful exit than its attempt to sell 5m shares in product tanker owner Torm in March. A negative market reaction led Oaktree to pull the plug on that effort.
Taking Oaktree’s shares off the market will leave Eagle with 9.3m shares on the market.
Eagle Bulk said it will pay for the transaction by using cash on hand in addition to drawing down a credit facility.
The company is not the only high-profile buyer of its shares on Thursday.
Greek container ship owner Danaos Corp told the US Securities & Exchange Commission that it lifted its stake in Eagle Bulk to 11.3%, with 1.55m shares in its account.
The percentage is certain to grow as Oaktree’s stake is taken off the market, which is also likely to make Danaos the largest investor in Eagle Bulk.
At today’s closing price, the Greek company’s position is worth nearly $75.5m.
The latest disclosure by New York-listed Danaos comes less than a week after the company unveiled a 10% position in Eagle’s shares.
