Diana Reaffirms Offer to Acquire Genco After Losing Proxy Fight
After losing its proxy fight to place two new directors on Genco’s board, Diana Shipping issued a statement reconfirming its commitment to its outstanding offer to acquire Genco. It is now calling on the reelected board to deliver on the commitments it made to shareholders to create value.
Diana spent more than six months pursuing Genco and has had three prior offers rejected by the board of Genco. The board has repeatedly said the offers did not reflect the net asset value of the company and provide shareholders with a control premium. Diana asserts that the board has not been willing to engage in negotiations.
The day before the shareholder meeting, Diana increased its offer to $24.80 in cash for each share, plus adding one share of its stock, which today is trading at approximately $2.10. The company asserts the offer represents a 53 premium to the share price before last November, when it went public with the merger proposals. They also said it is a six percent premium to Genco’s net asset value (NAV), based on VesselsValue data.
Genco is further asserting that it is making the offer at cyclically high drybulk asset values, which it says are near 15-year highs. It says the offer provides certain cash and the opportunity to participate in the combined company through the new share.
Diana said, Genco board now “bears a clear and heightened responsibility to deliver to all shareholders the significant value and dividends that it promised during the recent proxy campaign…. Our door remains open, and we are eager and available to engage with respect to the attractive offer we have proposed.”
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Genco also highlights that it remains Diana’s largest shareholder. It currently holds more than 6.26 million shares. That equates to more than 14 percent of the company’s outstanding shares and is just below the trigger for Genco’s shareholder rights plan.
While speaking of the value opportunities and strong market for drybulk, Genco’s board said after the shareholder vote that it would “in furtherance of its fiduciary duties” carefully review the revised non-binding proposal received from Diana. However, it pointed to management’s actions to grow its premium earning assets, reduce debt, lower breakeven levels, and increase earnings and dividend capacity, saying they were already paying off for shareholders.