Genco Shipping and Trading has unanimously rejected a non-binding indicative proposal from Diana Shipping to acquire all its outstanding shares for $20.60 per share in cash.
Genco stated that the proposal fails to reflect the value of its fleet, commercial operating platform, and strong balance sheet. The company noted the offer is below its net asset value and its 10-year high share price of $26.93.
Concerns were also raised regarding Diana Shipping's high leverage profile and the lack of committed financing for the transaction.
The board instead proposed an alternative structure where Genco Shipping and Trading would acquire Diana Shipping using a mix of cash and stock.
Genco Shipping and Trading said it believes this alternative would provide immediate cash value to Diana Shipping shareholders while allowing them to participate in the upside of a combined company.
The proposed combined entity would own 83 dry bulk vessels and have a net asset value greater than $1 billion along with augmented trading liquidity. It also proposed that the entity would be led by Genco’s management team.
Diana Shipping, which currently owns approximately 14.8 per cent of Genco Shipping and Trading, expressed disappointment at the rejection and the lack of direct engagement. The company stated its $20.60 offer represents a 23 per cent premium to the 30-day and 90-day volume-weighted average price.
Diana Shipping maintains that its offer is backed by a "highly confident" letter from DNB Bank and Nordea Bank for up to $1.1 billion in debt financing. Chief Executive Semiramis Paliou described the Genco board’s acquisition suggestion as a tactic to detract from the cash offer.
Diana Shipping remarked that it is currently considering all options to advance its proposal for Genco Shipping and Trading shares.
