Diana sells part of Genco holding, presses ahead with bid

The US-listed Greek owner said on 18 May that it intends to maintain a significant ownership stake in Genco, but added that, at current price levels, “it is prudent to realise a profit on its considerable investment.”

Diana said proceeds generated from the stock sales would be used, alongside the US$1.4Bn financing package, to fund the acquisition of Genco’s outstanding shares at US$23.50 per share cash offer, should an agreement be reached with the company.

“Importantly, Diana’s decision to sell shares does not in any way diminish its commitment to acquiring Genco. In fact, it strengthens both Diana’s conviction in the transaction opportunity and its ability to complete it in the most cost-effective manner,” the Greek owner said.

Diana further argued that Genco’s current share price has been artificially inflated by its cash offer and warned that, without the bid, the stock could return to trading at the persistent discount to net asset value (NAV) seen historically.

“This is a very substantial risk, as Genco’s board and management team have spent millions of dollars trying to defeat Diana’s offer, knowing very well that doing so could seriously damage shareholder value,” Diana added.

The company once again urged Genco shareholders to vote in favour of each of its six independent nominees. The tender offer is set to expire on 2 June, while the annual general meeting is scheduled for 18 June.

“A vote for our nominees is a vote to find out what Genco is truly worth through consideration of all value-creation opportunities – and the historical record makes the alternative perfectly clear,” said Diana chief executive Ms Paliou.

Genco rejects offer

On 15 May, US-headquartered Genco announced that its board had unanimously rejected Diana’s offer.

Following consultations with external financial and legal advisers, Genco said its board had concluded that the proposal undervalued the company’s assets and business, failed to provide a control premium, and was not in the best interests of shareholders.

Genco noted that the current mean analyst NAV estimate stands at US$26.54 per share, while the median estimate is US$26.80, against a backdrop of rising asset values across the shipping industry.

According to the company, Jefferies and Morgan Stanley each delivered oral opinions to the board and strategic committee – later confirmed in writing – stating that the consideration offered by Diana was inadequate from a financial perspective for Genco shareholders.

Genco’s board said it believes continuing to pursue the company’s standalone strategy will deliver substantially greater value to shareholders than Diana’s proposal.

In a separate letter to shareholders issued on 18 May, Genco chairman and chief executive John Wobensmith urged investors to re-elect the company’s six directors and advised them not to tender their shares into Diana’s “inadequate and highly conditional offer.”

Mr Wobensmith highlighted Genco’s dividend policy, expanding fleet of “premium earnings” vessels, and industry-low leverage breakeven levels, while warning that allowing “Diana’s handpicked nominees to take control of the board would introduce significant risks to Genco’s strategy, governance and future value creation.”