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Eagle Bulk Shipping Inc. (EGLE): Oaktree Discloses New Stake Amid Financial Restructuring

Howard MarksOaktree Capital Management has revealed a major position in Eagle Bulk Shipping Inc. (NASDAQ:EGLE) in a new filing with the US Securities and Exchange Commission. Oaktree reported holding around 15.71 million shares of the company, which represent almost 42% of the company’s common stock. The stake is activist by nature.


Oaktree disclosed its stake amid some important news revealed by the company. On October 15, Eagle Bulk Shipping Inc. (NASDAQ:EGLE) said that it has completed its restructuring plan, under which it managed to cut its debt by 80%, which represents around $1 billion in value. The fund added in the filing that OCM Opps EB Holdings, Ltd., a firm affiliated with Oaktree previously held debt of Eagle Bulk Shipping.

At the end of the second quarter, Christopher Pucillo‘s Solus Alternative Asset Management held some 848,400 shares of the company and Geoffrey Raynor‘s Q Investments (Specter Holdings) initiated a stake during the April-June period and held 393,500 shares. Prior to the company filing for bankruptcy its stock dropped by almost 50%. However, under the terms of the reorganization plan, each equity holding in Eagle Bulk Shipping Inc. (NASDAQ:EGLE) was cancelled.

Moreover, the plan allowed Eagle Bulk Shipping Inc. (NASDAQ:EGLE) to secure around $275 million in a new credit facility, including $50 million revolving credit facility.

The new refinancing plan will help Eagle Bulk Shipping Inc. (NASDAQ:EGLE) to deal with the problems caused by the excess capacity in the shipping industry, which has forced many other companies into bankruptcy. Genco Shipping & Trading Limited (OTCMKTS:GNKOQ) filed for bankruptcy in April. Another company, Overseas Shipholding Group Inc. (OTCMKTS:OSGIQ), filed for chapter 11 bankruptcy in 2012, and emerged from it earlier this year.

Oaktree is known for its strategy to follow alternative investments and to focus on distressed debt corporate debt and convertible securities. Last month, the fund added Molycorp Inc (NYSE:MCP) to its equity portfolio, holding some 24.50 million shares and Tembec Inc (USA) (OTCMKTS:TMBCF), of which it owns around 6.13 million shares. Molycorp slightly appreciated since Oaktree revealed its stake, while Tembec lost around 4%. Moreover, the fund’s largest holding at the end of the second quarter, EXCO Resources Inc (NYSE:XCO) lost around 60% over the last two years, while the second-largest, Dynegy Inc. (NYSE:DYN), surged by some 55%.

With this in mind, Bulk Shipping Inc. (NASDAQ:EGLE)’s stock might still have some room to grow, taking into account that the company manages to get back on the track after its restructuring plan. Mr. Marks’ backing the stock is also important since large investors usually spend a lot of time and resources while researching the stocks they plan to invest in.

Disclosure: none

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