London: New York-based law firm Levi & Korsinsky intends to bring a class action lawsuit in the New York Supreme Court challenging the fairness of Genco Shipping & Trading’s buyout of Baltic Trading.
The firm is still in the process of collecting and filing complaints to submit to the court.
The investigation concerns whether the board of Baltic Trading has breached its fiduciary duties to stockholders by failing to adequately shop the company before agreeing to enter into this transaction, and whether Genco is underpaying for shares for Baltic shares.
Under the terms of the takeover agreement, Baltic shareholders will only receive 0.216 of a share of Genco common stock for each share they own. The proposed transaction is valued at $1.69 per share or around $99m in preliminary equity value.
Law firms say this price represents virtually no premium over the price of Baltic stock before the announcement and is significantly lower than at least one analyst’s estimated value of $4.00 per share. At the time of writing, Baltic’s stock is trading at $1.459 per share.
In addition to Levi & Korsinsky, three other law firms have so far announced their intentions to investigate the takeover plan: New York-based Wolf Popper, Pennsylvania-headquartered Brodsky & Smith and Dallas-based Powers Taylor, which has former US SEC attorney Willie Briscoe on its team.
Oslo-listed Genco announced its intention to acquire NYSE-quoted Baltic Trading on April 8. Greek shipping entrepreneur Peter Georgiopoulos is chairman of both companies’ boards of directors.