A disgruntled activist investor has filed a complaint with the US Securities and Exchange Commission (SEC) against Navios Maritime Partners and its CEO Angeliki Frangou.
MRMP-Managers, which has a 5.8% ownership stake in the LP interests of NMM, has voiced serious concerns regarding the current management and direction of the company.
Ned Sherwood of MRMP commented that he and his company have been confused by some of Frangou’s recent financial decisions – decisions which he wrote seem “imprudent and illogical”, arguing that they run counter to sound business principles.
“While we are only holders of LP interests in NMM, we have serious concerns regarding Angeliki’s decisions that seem designed to benefit other entities in the Navios group. We believe these decisions run counter to her duty as Chairman & CEO of NMM,” MRMP stated in a release.
NMM’s share price has been struggling in recent months, despite the surging container and dry bulk markets.
In a letter sent to Frangou’s Monaco address, Sherwood states that analyst reports and recent sales of comparable ships indicate that the asset value of NMM’s fleet is likely worth much more than the aggregate market value of NMM’s stock market capitalisation with the undervaluation estimated at 50% or more.
“In other words,” Sherwood wrote, “if analysts are correct, buying an LP share of NMM at the current market is like buying the underlying ships at half price.”
Sherwood went on to detail NMM management’s recent announcement of $200m of at the money (ATM) offerings of LP interests as well as the purchases of approximately $185m of ships at market values, largely from related parties.
“This is the exact opposite of what any responsible management team or GP would do. In other words, why would anyone with a fleet of ships valued at approximately 50 cents on the dollar sell them to others at this discount (which is essentially what issuing ATM equity is doing) in order to buy more ships at 100 cents on the dollar?,” Sherwood questioned, going on to demand that these ATM offerings ought to cease immediately and certain value creating policies be instituted as well as a conflict of interest investigation.
“Given the curious behavior and policies of Angeliki Frangou as GP, we believe an independent investigation should be undertaken to determine whether the GP’s actions are in any way due to conflicts of interest with other related entities. The investigation also should review ship management contracts and compare rates against other ship management entities,” Sherwood demanded.
Navios has yet to respond to the damaging allegations made by MRMP.