Stelmar seeks new backers

The Greek shipping company is searching for new private equity buyers after a proposed $703m buyout by Fortress was rejected by shareholders.

The management of Greek oil shipping company Stelmar is seeking new buyers for the company after the planned $703 million (€529 million) public-to-private buyout by New York-based private equity house Fortress Investment Group was rejected by shareholders.
 
Founder and major shareholder Stelios Haji-Ioannou, who rallied shareholders to reject the bid, has refused to join the committee investigating new potential buyers unless key members of the company's management resign. The company has hired law firm Norton Rose to investigate his allegations of mismanagement.
 
Stelmar is an Athens-based oil shipping company that owns a fleet of 40 tankers. The company went public on the New York Stock Exchange for a price of $13 a share in June 2001.
 
Fortress's offer of $38.55 per share, giving a total deal value of $677 million, was unanimously approved by the company's board of directors in September.
 
However, in a vote on November 16, shareholders rejected the deal, despite being offered a sweetener of $40 per share, bringing the total value up to $703 million. Lloyds List cites figures from Haji-Ioannou stating that only 16.9 percent of stakeholders voted for the sale, compared to the 45.5 percent that voted against it.
 
Haji-Ioannou, whose family owns around 20 percent of the shares and who also chairs easyJet operator easyGroup, was reported by Platts to have rallied shareholders against the bid, calling it a 'pathetic attempt' to 'steal' the company. He argued that the bid significantly undervalued the firm at a time when the shipping market is booming.
 
Stelmar announced on November 22 that a committee of independent directors had begun soliciting and reviewing new bids for the company. Associated Press reports that interested parties include an unidentified suitor who has privately offered Haji-Ioannou $42 per share for the company, and that four entities involved in the original auction have been released from standstill agreements to allow them to submit new offers.

Fortress Investment is a New York-based global private equity house, and is currently investing a $1.25 billion fund raised in 2003. Its deals this year included the €3.5 billion privatisation of German real estate company GAGFAH in July.