Eagle Bulk Shipping Inc. (NYSE: EGLE) (“Eagle Bulk”, “Eagle”, or
the “Company”), one of the world’s largest owner-operators within
the midsize drybulk vessel segment, today announced that its Board
of Directors has approved an agreement with Oaktree Capital
Management (“Oaktree”) and certain of its affiliates pursuant to
which Eagle has repurchased approximately 3.8 million shares of
Eagle common stock, representing Oaktree’s entire stock ownership
of approximately 28% in the Company, for an aggregate purchase
price of approximately $219.3 million. The purchase price of $58.00
per share represents a discount of approximately $11.00 per share
or approximately 16% to Net Asset Value, as adjusted (“NAV”) per
share-diluted based on March 31, 2023 financials and current fleet
valuations.1
The Board unanimously arrived at its determination after careful
consideration, including consultation with outside legal and
financial advisors.
Eagle’s Chairman Paul Leand, Jr. commented, “Today’s transaction
is in the best interest of our shareholders, both financially and
strategically. 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.”
Eagle’s CEO Gary Vogel added, “We believe the transaction will
be significantly accretive to NAV per share and EPS in future
periods based on historically strong supply-side fundamentals.
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.”
Eagle’s balance sheet remains strong, with total liquidity of
approximately $188 million based on March 31, 2023 financials, as
adjusted for this transaction, previously communicated financing,
and vessel sale and purchase activity. The Company noted that it
remains committed to its balanced capital allocation strategy,
including maintaining its current dividend policy of 30% of net
income, which we believe will be positively impacted by this
transaction, and continued repayment of term debt.
As a result of this transaction, the Company’s outstanding
common stock will be reduced to approximately 9.3 million shares.
The transaction will be financed by cash-on-hand and drawings under
the Company’s credit facility.
Eagle Bulk provided supplemental slides in connection with this
announcement under the “Investors” section of the Company’s website
https://ir.eagleships.com/.
Oaktree became a shareholder in Eagle Bulk in October 2014.
Shareholder Rights Plan
Additionally, the Company announced that its Board of Directors
has unanimously adopted a limited duration shareholder rights plan
(the “Rights Plan”). The Rights Plan is effective immediately and
has a one year duration expiring on June 22, 2024 unless extended
by shareholders. The Rights Plan will reduce the likelihood that
any person or group gains control of the Company through open
market accumulation, or other abusive tactics potentially
disadvantaging the interests of all shareholders, without paying
all shareholders an appropriate control premium or providing the
Company’s Board of Directors sufficient time to make informed
decisions in the best interest of all shareholders. The Rights Plan
is not intended to interfere with any transaction that the Board of
Directors determines to be in the best interests of shareholders,
nor does the Rights Plan prevent the Board of Directors from
considering any proposal.
Pursuant to the Rights Plan, the Company will distribute one
right for each share of common stock outstanding as of the close of
business on July 3, 2023. While the Rights Plan is effective
immediately, the rights generally would become exercisable only if
a person or group (including a group of persons that are acting in
concert with each other) acquires beneficial ownership, as defined
in the Rights Plan, of 15% or more of the Company’s common stock in
a transaction not approved by the Company's Board of Directors. In
that situation, each holder of a right (other than the acquiring
person or group) will have the right to purchase, upon payment of
the then-current exercise price, a number of shares of Company
common stock having a market value of twice the exercise price of
the right. In addition, at any time after a person or group
acquires 15% or more of the Company’s common stock, the Company’s
Board of Directors may exchange one share of the Company’s common
stock for each outstanding right (other than rights owned by such
person or group, which would have become void).
The Rights Plan will expire on the close of business on the
first anniversary of the date of entry into the Rights Plan unless
extended for two more years by shareholders. It could also expire
earlier if prior to such date, the rights are redeemed or
exchanged. The Company’s Board of Directors may consider an earlier
termination of the Rights Plan if market and other conditions
warrant.
Further details regarding the Oaktree transaction and Rights
Plan will be contained in a Current Report on Form 8-K that the
Company will be filing with the U.S. Securities and Exchange
Commission (“SEC”). These filings will be available on the SEC’s
web site at www.sec.gov.
Akin Gump Strauss Hauer & Feld LLP is serving as legal
advisor to the Company. Hogan Lovells US LLP is serving as legal
advisor and Houlihan Lokey is serving as financial advisor to the
Company’s Board of Directors.
About Eagle Bulk Shipping Inc.
Eagle Bulk Shipping Inc. (“Eagle” or the “Company”) is a
US-based, fully integrated shipowner-operator providing global
transportation solutions to a diverse group of customers including
miners, producers, traders, and end users. Headquartered in
Stamford, Connecticut, with offices in Singapore and Copenhagen,
Eagle focuses exclusively on the versatile midsize drybulk vessel
segment and owns one of the largest fleets of Supramax / Ultramax
vessels in the world. The Company performs all management services
in-house (including strategic, commercial, operational, technical,
and administrative) and employs an active-management approach to
fleet trading with the objective of optimizing revenue performance
and maximizing earnings on a risk-managed basis. For further
information, please visit our website: www.eagleships.com.
Investor and Media
Contactinvestor@eagleships.com +1 203 276 8100
Supplemental Information - Non-GAAP
Financial Measures
This release includes Net Asset Value per share-diluted, a
non-GAAP financial measure as defined under the rules of the SEC.
We believe non-GAAP measures provide important supplemental
information to investors regarding the information discussed in
this release. However, you should not rely on any non-GAAP
financial measure alone as a measure of our performance. We believe
that non-GAAP financial measures reflect an additional way of
viewing our business that, when taken together with GAAP results
and the reconciliations to corresponding GAAP financial measures
that we also provide, give a more complete understanding of factors
and trends affecting our business. We strongly encourage you to
review all of our financial statements and publicly-filed reports
in their entirety and to not solely rely on any single non-GAAP
financial measure. Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial
measures with other companies’ non-GAAP financial measures, even if
they have similar names.
(Amounts in thousands, other
than per share data) |
|
|
As ofMarch 31,2023 |
|
Total stockholders' equity (GAAP) |
|
|
$ |
811,709.0 |
|
|
Vessels Fair Market Value
Adjustments (Non-GAAP) |
|
|
$ |
277,591.0 |
|
A |
Advances for BWTS and other
assets |
|
|
$ |
(2,507.0 |
) |
B |
Deferred drydock costs,
net |
|
|
$ |
(43,268.0 |
) |
B |
Other fixed assets, net of
accumulated depreciation |
|
|
$ |
(295.0 |
) |
B |
Operating lease right-of-use
assets |
|
|
$ |
(24,129.0 |
) |
B |
Current portion of operating
lease liabilities |
|
|
$ |
21,778.0 |
|
B |
Net Debt Discount and Issuance
Costs for Global Ultraco Debt Facility (Non-GAAP) |
|
|
$ |
(6,346.0 |
) |
C |
Convertible Bond Debt, net of
debt discount and debt issuance costs |
|
|
$ |
103,595.0 |
|
D |
Noncurrent portion of
operating lease liabilities |
|
|
$ |
3,583.0 |
|
B |
Net Asset Value (March
31, 2023) (Non-GAAP) |
|
|
$ |
1,141,711.0 |
|
|
Common stock outstanding –
diluted |
|
|
|
16,618.945 |
|
|
Net Asset Value/Share
– diluted |
|
|
$ |
68.70 |
|
|
|
|
|
|
|
Net Asset Value (March
31, 2023) (Non-GAAP) |
|
|
$ |
1,141,711.0 |
|
|
Cash and cash equivalents |
|
|
$ |
(5,625.0 |
) |
E |
Vessels Fair Market Value
Adjustments (Non-GAAP) |
|
|
$ |
16,000.0 |
|
F |
Advances for vessel
purchases |
|
|
$ |
(6,020.0 |
) |
F |
Net Asset Value (March
31, 2023), as adjusted (Non-GAAP) |
|
|
$ |
1,146,066.0 |
|
|
Common stock outstanding -
diluted |
|
|
|
16,618.945 |
|
|
Net Asset Value/Share-
diluted |
|
|
$ |
68.96 |
|
|
|
|
|
|
|
|
|
|
|
|
- This Non-GAAP value is the Vessels' book value adjusted to fair
market value as per the average of two third-party broker
valuations as of June 12, 2023.The Vessels GAAP amount is $900,659
and the as adjusted amount is $1,178,250.
- GAAP Balance Sheet line item excluded from Stockholders Equity
for the purpose of calculating Net Asset Value.
- This is a Non-GAAP number that represents the difference
between $169,154.0 of Long-term debt - Global Ultraco Facility, net
debt discount and debt issuance as of March 31, 2023 and $175,500,
which represents Long-term debt for Ultraco debt facility without
netting out debt discount and issuance costs associated with such
long-term debt as of March 31, 2023.
- Convertible Bond Debt, net of debt discount and debt issuance
costs is added back to Stockholders Equity for the purpose of
calculating Net Asset Value.
- Adjusted for cash related solely to Vessel Sales and Purchases
activity after March 31, 2023
- Adjusted for Vessel Sales and Purchases after March 31,
2023.
|
Forward-Looking StatementsMatters discussed in
this release may constitute forward-looking statements that may be
deemed to be “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E
of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, and are intended to be
covered by the safe harbor provided for under these sections. These
statements may include words such as “believe,” “estimate,”
“project,” “intend,” “expect,” “plan,” “anticipate,” and similar
expressions in connection with any discussion of the timing or
nature of future operating or financial performance or other
events. Forward-looking statements in this release reflect
management’s current expectations and observations with respect to
future events and financial performance. Where we express an
expectation or belief as to future events or results, including
future plans with respect to financial performance, the payment of
dividends and/or repurchase of shares, such expectation or belief
is expressed in good faith and believed to have a reasonable basis.
However, our forward-looking statements are subject to risks,
uncertainties, and other factors, which could cause actual results
to differ materially from future results expressed, projected, or
implied by those forward-looking statements.
Where we express an expectation or belief as to future events or
results, such expectation or belief is expressed in good faith and
believed to have a reasonable basis. However, our forward-looking
statements are subject to risks, uncertainties, and other factors,
which could cause actual results to differ materially from future
results expressed, projected or implied by those forward-looking
statements. The principal factors that affect our financial
position, results of operations and cash flows include market
freight rates, which fluctuate based on various economic and market
conditions, periods of charter hire, vessel operating expenses and
voyage costs, which are incurred primarily in U.S. dollars,
depreciation expenses, which are a function of the purchase price
of our vessels and our vessels’ estimated useful lives and scrap
value, general and administrative expenses, and financing costs
related to our indebtedness. The accuracy of the Company’s
assumptions, expectations, beliefs and projections depends on
events or conditions that change over time and are thus susceptible
to change based on actual experience, new developments and known
and unknown risks. The Company gives no assurance that the
forward-looking statements will prove to be correct and does not
undertake any duty to update them. Our actual results may differ
materially from those anticipated in these forward-looking
statements as a result of certain factors which could include the
following: (i) volatility of freight rates driven by changes in
demand for seaborne transportation of drybulk commodities and in
supply of drybulk shipping capacity; (ii) changes in drybulk
carrier capacity driven by levels of newbuilding orders, scrapping
rates or fleet utilization; (iii) changes in rules and regulations
applicable to the drybulk industry, including, without limitation,
regulations of the International Maritime Organization and the
European Union (the “EU”), requirements of the Environmental
Protection Agency and other governmental and quasi-governmental
agencies; (iv) changes in U.S. and EU economic sanctions and trade
embargo laws and regulations as well as equivalent economic
sanctions laws of other relevant jurisdictions; (v) actions taken
by regulatory authorities including, without limitation, the U.S.
Treasury Department’s Office of Foreign Assets Control (“OFAC”);
(vi) changes in the typical seasonal variations in drybulk freight
rates; (vii) changes in national and international economic and
political conditions including, without limitation, the current
conflict between Russia and Ukraine, the current economic and
political environment in China and the environment in historically
high-risk geographic areas such as the South China Sea, the Indian
Ocean, the Gulf of Guinea and the Gulf of Aden; (viii) changes in
the condition of the Company’s vessels or applicable maintenance or
regulatory standards (which may affect, among other things, our
anticipated drydocking costs); (ix) the duration and impact of the
novel coronavirus (“COVID-19”) pandemic and measures implemented by
governments of various countries in response to the COVID-19
pandemic; (xi) volatility of the cost of fuel; (xii) volatility of
costs of labor and materials needed to operate our business due to
inflation; (xiii) any legal proceedings which we may be involved
from time to time; and (xiv) other factors listed from time to time
in our filings with the SEC.
We have based these statements on assumptions and analyses
formed by applying our experience and perception of historical
trends, current conditions, expected future developments and other
factors we believe are appropriate in the circumstances. The
Company’s future results may be impacted by adverse economic
conditions, such as inflation, deflation, or lack of liquidity in
the capital markets, that may negatively affect it or parties with
whom it does business. Should one or more of the foregoing risks or
uncertainties materialize in a way that negatively impacts the
Company, or should the Company’s underlying assumptions prove
incorrect, the Company’s actual results may vary materially from
those anticipated in its forward-looking statements, and its
business, financial condition and results of operations could be
materially and adversely affected.
Risks and uncertainties are further described in reports filed
by Eagle Bulk Shipping Inc. with the SEC.
1 This is a non-GAAP financial measure. A reconciliation of GAAP
to this non-GAAP financial measure has been provided in the
financial table included in this press release.
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