Transportation

Shipper Prices Share Offering; Watch Shares Sink (EGLE, DRYS, EXM, GNK, DSX, FRO, NM, RBS, SAN)

Dry bulk shipper Eagle Bulk Shipping Inc. (NASDAQ: EGLE) filed a Form S-3 with the SEC this morning announcing the sale of up to 3.15 million shares of common stock priced at $2.84. Shares closed at $3.14 last night, working out to a discount of nearly 10% for today’s offering.

Rising fuel costs and a slowing global economy has hit the dry bulk shippers hard. Cargoes of iron ore and coal have decreased, and day rates all but collapsed at one point. The Baltic Dry Index has recently come back to nearly 1,000, although that’s still very low, and fuel costs have moderated somewhat. Shippers like DryShips Inc. (NASDAQ: DRYS), Excel Maritime Carriers, Ltd. (NYSE: EXM), Genco Shipping & Trading Ltd. (NYSE: GNK), Diana Shipping Inc. (NYSE: DSX), Frontline Ltd. (NYSE: FRO), and Navios Maritime Holdings Inc. (NYSE: NM) have all lost at least 67% of their value in the past five years and all are down -32% or more for the past 12 months.

The shares are being sold for current shareholders and Eagle will receive no proceeds from the sale. The shares on offer were issued on June 20th to warrant holders at a strike price of $0.01. According to the filing:

One-third of the warrants are exercisable immediately, the next third when our stock price reaches $10.00 per share (subject to certain customary adjustments in the event of stock splits, reverse stock splits and certain distributions to all holders of common stock) and the last third when our stock price reaches $12.00 per share (subject to the aforementioned adjustments). Unexercised Warrants expire on June 20, 2022.

Sellers include the Royal Bank of Scotland plc (NYSE: RBS) and a branch of Spain’s Banco Santander S.A. (NYSE: SAN), among others.

Shares of Eagle fell -13% yesterday to close at $3.14 in a 52-week range of $2.51-$11.00. Shares are down -2.6% in the pre-market this morning, at $3.06.

The full filing is available here.

Paul Ausick

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