Diana Shipping Withdraws Genco Offer
Diana Shipping has announced, that following nine months of what it called “avoiding engagement,” Genco Board has demanded consideration valued at approximately $36.91 per share — a 57% premium to Genco’s undisturbed share price at the time of Diana’s last offer.
“Genco’s demands are completely disconnected from the reality of what a credible buyer could reasonably be expected to pay,” said the company in a statement, announcing the withdrawal of its offer to acquire outstanding shares.
Diana Shipping is a global shipping company specializing in the ownership and bareboat charter-in of dry bulk vessels that is the largest shareholder of Genco Shipping & Trading Limited.
“Diana continues to have significant conviction in the strategic and financial merits of a combination with Genco, but is withdrawing its offer because the Genco Board has adopted a position that Diana believes no credible acquiror could realistically meet and that raises serious and legitimate questions about whether the Genco Board’s interests remain aligned with those of Genco’s shareholders.”
Genco shareholders deserve to understand why the Genco Board has adopted this position, said Diana Shipping, and how management intends to deliver equivalent or superior value if Genco remains independent.
“The answer to those questions may lie in a simple and uncomfortable reality. By going to all lengths to avoid a transaction, management keeps its positions, its compensation, and its control. Shareholders, on the other hand, lose the opportunity to receive a substantial and certain premium at a high point in the shipping cycle.”
Semiramis Paliou, Diana’s Chief Executive Officer, commented: “I want to be clear: we are not going away. Diana remains Genco’s largest shareholder, and we will continue to monitor its performance closely, raise these issues publicly, and hold the Genco Board and management team accountable for every commitment made to shareholders throughout this process, including commitments about standalone value, dividend growth, and a Comprehensive Value Strategy that they strenuously argued is superior to what Diana offered. That case will now be tested in the market.”
Back in July, Genco said Diana continues to ascribe $2.54 per share value to the stock consideration in its offer. "We encourage shareholders to understand:
"Diana’s closing stock price on June 16, the day prior to announcing its revised proposal, was $2.30, and Diana’s closing stock price on July 24 was $2.25;
"The proposed new share issuance in connection with the transaction may result in substantial dilution of Diana’s current outstanding shares that could lead to a materially lower share price, reducing the consideration received by Genco shareholders;
"Diana’s proposed subsequent sale of 16 Genco vessels to Star Bulk at below market prices could further negatively impact the value of Diana shares; and
"Given the high voting preferred shares held by insiders at Diana, the common share consideration offers extremely limited shareholder rights and therefore poses significant risks to Genco shareholders."
