Diana Gives Genco Shareholders Two More Weeks on the Tender Offer
Diana Shipping is continuing its battle to acquire Genco despite having been rebuffed by Genco’s board and losing in its attempt to put new directors on the board of directors. The company reports that nearly 30 percent of Genco’s shares have been tendered, and it has now extended the tender deadline from July 10 to July 24.
“We are pleased that additional shareholders have tendered their shares, but this transaction cannot move forward through a tender offer alone,” commented Semiramis Paliou, Diana’s Chief Executive Officer of Diana Shipping. “To unlock the compelling value of this combination, both of our leadership teams and advisors must come together to negotiate in good faith, with a shared commitment to delivering full value for Genco shares at a high point in the shipping cycle.”
The two companies agree that dry bulk shipping is on the upswing, but disagree on how to realize value for the shareholders. The merger would create a leader in the dry bulk space with a fleet that could top 80 vessels.
Diana asserts it is offering a 53 percent premium to Genco’s share price before it went public with the merger proposals last November. It also asserts it is offering a six percent premium to net asset value (NAV) while noting that values are near or at 15-year highs for the segment.
Diana says it is offering $24.80 in cash per share plus one share of its stock. It reported that 29.7 percent of the shares had been tendered as of the close of business on Friday, July 10. In addition, it continues to own more than 14 percent of Genco’s shares, making it the largest shareholder.
Genco’s board, however, reiterated its assertion that Diana is misleading, as the tender offer has not been revised to add the one share for each shareholder. It says the tender currently is only the $24.80 per share in cash.
The board calls Diana’s offer ”inadequate” and says it has already unanimously rejected the offer. It has said it is reviewing the higher offer but is waiting for Diana to revise the tender offer.
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It repeated its position that the offer “continued to meaningfully undervalue the company and its assets.” The board contends it is below the net asset value and still says it does not include any control premium. Genco’s board points to the strength of the market and, assuming the forward freight rate curve for the balance of the year, notes shareholders would receive a dividend of possibly $2.50 per share this year.
The two companies remain entrenched in their positions, showing no movement or opportunities to discuss a potential agreement. Shareholders are left to decide where they think the best true potential is for their investment.
