George Economou’s public company DryShips has acquired full ownership of Connecticut-based pools operator Heidmar and installed Pankaj Khanna as the new chief executive.
DryShips has paid what appears to be a bargain-basement price of $17m to buy out the 49.8% holding of financial giant Morgan Stanley and a 0.4% stake held by Heidmar’s employees, according to sources familiar with the deal.
DryShips already owned the other 49.8% after buying it from Economou’s private holding in August 2017.
Current Heidmar chief executive James Pippard has been removed to make way for Khanna under the new ownership structure.
Independent development
In a statement on Monday, Economou said: “We are excited to complete the acquisition of 100% of Heidmar and to simplify its ownership structure that will allow us to develop Heidmar to its full potential as an independent business line.”
I look forward to working with all of the Heidmar stakeholders to deliver a first-class service always consistent with Heidmar’s core values of transparency, relationships and performance
Pankaj Khanna
Khanna added: “I look forward to working with all of the Heidmar stakeholders to deliver a first-class service always consistent with Heidmar’s core values of transparency, relationships and performance.”
Khanna was instrumental in hiring Pippard after returning to Economou’s stable as an executive of TMS Management. He has also been a Heidmar board member.
Khanna is the former CEO of Economou offshore unit Ocean Rig.
Value eroded
The numbers reflect the erosion of Heidmar’s value over the years as its pool numbers have dwindled from more than 100 to about 65.
Founder Per Heidenreich sold the company in 2006 to Morgan Stanley for about $210m.
Two years later, Economou — then a pool member — bought his 49% stake for what TradeWinds understands was $89m.
Morgan Stanley has been trying to unload its ownership for some time.
It initiated a sales process in 2016 under which its shares and Economou’s were on the market, with an initial target price exceeding $100m.
US financial firm Fortress Investment Group emerged from the long tender process as the apparent winner with an offer of between $68m and $70m, according to sources.
However, the deal failed when Economou pulled back his shares at the 11th hour.
DryShips then moved in for Economou’s shares at a valuation that was difficult to calculate, but which was ultimately placed at $34m on the public company’s books.
Within the past year, Heidmar’s value appears to have halved.
Drawing on 25 years' experience at Teekay Corp, Pippard placed his own stamp on Heidmar, initiating divisions for bunkers and freight forwarding agreements and basing more of the business at his London offices.
However, he struggled to stem Heidmar’s falling pools membership — a factor that seems to be directly linked to the decline in the company’s value.
Bone of contention
TradeWinds understands that rebuilding the pools will be Khanna’s priority, with Heidmar now an independent subsidiary of DryShips.
But sources indicate there are no plans for Economou to contribute any of his ships to the operation.
This has been a bone of contention, market sources say, as some prospective pool participants question why they would place their ships in pools when the company’s owner will not do the same.
However, the practice is portrayed within the DryShips camp as avoiding conflict of interest and establishing that Heidmar is truly a business independent from Economou’s vessel-owning entities.
Heidmar’s pools are in the aframax, suezmax and VLCC sectors.
