Eagle Bulk acquires all of Oaktree’s 28% equity interest.
US-based Eagle Bulk Shipping Inc. (NYSE: EGLE) announced that its board of directors has unanimously agreed to an agreement with Oaktree Capital Management to repurchase approximately 3.8 million shares of Eagle common stock for approximately $219.3 million has agreed.
The buyback includes Oaktree’s entire 28 percent interest in the bulk shipping company.
The purchase price, $58.00 per share, represents a discount of approximately $11 per share from Thursday’s close, or approximately 16% to net asset value based on financial data as of March 31, 2023 and current fleet valuations .
Eagle Bulk said the buyback will be funded by cash and drawings under the company’s credit facility. The Company’s outstanding common shares will be reduced to approximately 9.3 million shares as a result of a transaction.
“We expect the transaction to be materially accretive to net asset value per share and earnings per share in future periods given historically strong supply-side fundamentals,” said CEO Gary Vogel. “Looking ahead, we will continue to execute on our growth and renewal strategy, including building on our 33 past ship acquisitions, and remain committed to acting opportunistically to create value for all of our shareholders.”
Oaktree became a shareholder in Eagle Bulk in October 2014.
The Eagle Bulk Board of Directors has also unanimously adopted a Shareholder Rights Plan to prevent any person or group from using abusive tactics to gain control of the company without paying a reasonable control premium to all shareholders or allowing the Board of Directors adequate time to make informed decisions meet in the best interests of all shareholders.
Eagle Bulk Chairman Paul Leand Jr. said the transaction is in the best interests of shareholders, both financially and strategically. “It ensures shareholders continue to have an opportunity to realize the value of their investment in Eagle Bulk and eliminates potential disruptions resulting from the sale of a very significant interest in the company,” he said.
As of March 31, 2023, Eagle Bulk reports a strong balance sheet with approximately $188 million in liquidity. The company’s announcement said it would maintain its current dividend policy of 30% of net income and pay off term debt.
Under the Shareholder Rights Plan, Eagle Bulk will award one right for each common share outstanding at the close of business on July 3, 2023.
Headquartered in Stamford, Connecticut, Eagle Bulk operates primarily in the mid-size bulk carrier segment and owns one of the largest fleets of Supramax/Ultramax vessels in the world, consisting of 52 vessels with a deadweight tonnage of 3.2 million tonnes and an average age of 9 ,8 years.
Eagle Bulk stock is up about 5% in after-hours trading on Wednesday.