Shipping Group Completes Share Buyback, Plans More, And Completes Sale Of Two Tankers At Highly Favorable Price — What's Next?

United Maritime Corp. USEA completed a stock buyback program and is planning to do more of the same.

The Greek company, which specializes in worldwide seaborne transportation services, said it bought back approximately 1.86 million shares, which equates to about 20% of the company’s share capital.

The average buyback price was $1.6095. The company’s share price rose from approximately $1.55 to almost $2 on the announcement. The stock was as low as $1.21 on Sept. 1.

The company’s board of directors also announced the possible buyback of an additional $3 million worth of company shares, representing a massive 26% of the outstanding shares.

“Considering the attractive valuation environment and positive earnings outlook of the tanker sector, we maintain our view that our share price is significantly undervalued at these levels,” United Maritime Chairman and CEO Stamatis Tsantanis said. “Therefore, we are proceeding with another substantial buyback plan.”

Addtiionally the company announced the completed sale of two Aframax tankers along within delivery of two LR2 tankers. United Martime reported that the net sale price of the vessels represented approximately 150% of their acquisition price.

The estimated profit from the sale of the vessels represents a significant amount, roughly 125% of the company’s market capitalization as of October 6, 2022. 

The US Energy Information Administation describes the ship type saying that “Aframax vessels refer to ships between 80,000 and 120,000 deadweight tons. This ship size is popular with oil companies for logistical purposes, and, therefore, many ships have been built within these specifications.”

Spinning Off

United Maritime’s fleet consists of four tanker vessels and one dry bulk vessel with an aggregate cargo carrying capacity of approximately 616,884 deadweight tonnage (dwt). The company is the result of a spinoff by Seanergy Maritime Holdings Corp. SHIP in July.

Seanergy reported a net income of $5.9 million in the second quarter of 2022 compared to $2 million in the same period in 2021, leading it to announce a dividend of $0.025 per share.

The company operates the biggest conventional dry bulk boats, known as Capesize vessels that, because of their size, cannot travel through the Suez or Panama canals. Instead, the vessels, which average 170,000 to 180,000 dwt each, must transport their dry bulk cargo such as coal or iron ore around either Cape Horn or the Cape of Good Hope to get to their destinations. 

United Maritime’s fleet consists mainly of tankers, both crude oil and product tankers exceeding 100,000 dwt tones each. The initial spinoff to form United Maritime centered around what was Seanergy’s oldest Capesize vessel, the M/V Gloriuship.

Other bulk shipping companies listed in the United States include Diana Shipping Inc. DSX and Eagle Bulk Shipping Inc. EGLE.

Share buybacks generally occur when company management considers a company’s stock undervalued. There are advantages and potential disadvantages to such a move.

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