Eagle shelves

Eagle Bulk Shipping has filed a $500m shelf registration to potentially issue new shares, but executives have characterised the filings as "good housekeeping" rather than a rush for cash.

Also, chief executive Sophocles Zoullas said in a Tuesday conference call that the New York bulker owner's charterers are in good standing.

Eagle Bulk filed an amendment to a so-called automatic shelf registration allowing it to issue up to $500m in new shares or other securities over the next three years.

That figure includes an equity distribution deal with UBS Securities to issue up to $100m of new shares "from time to time" at the market.

May never be used

But Eagle Bulk executives pointed out that the company may not exercise the ability to issue new shares.

"Look for us to be very responsible with this," Zoullas said.

As stock prices have plunged, Eagle Bulk and other owners have seen their market capitalisation fall to below the $700m threshold that allows for a more streamlined automatic shelf registration for new shares with no specified maximum dollar amount.

Eagle's $500m amendment is part of a US Securities and Exchange Commission (SEC) procedure to convert to a traditional shelf registration, which requires companies to set a maximum dollar amount for potential new shares.

The filing "permits the company to offer securities up to that number without having to go back through the Sec review process each time it wants to go to the market," finance chief Alan Ginsberg said in the call.

The UBS deal would allow Eagle Bulk to use the proceeds from the $100m to buy vessels or pay down debt, among other potential uses, according to SEC documents. But before any of the cash used, Eagle says it plans to first put it in "capital preservation" investments, such as government securities or bonds.

Meanwhile, Zoullas addressed concerns Tuesday about Eagle Bulk's exposure to potential charter defaults.

'Good standing'

"We believe all of our charters are in good standing," he said, but he also provided details of charter default insurance that he says gives the company a "strong competitive advantage."

He acknowledged that some charterers have proposed charter rate reductions, but those proposals have included time period extensions that would have matched or improved overall cash flow.

"To date, all of these proposals have been rejected by Eagle Bulk," he said.

Eagle Bulk's Nasdaq-listed shares fell by 7% Tuesday, reaching $2.93 in late-morning trading.

The company owns 23 handymax and supramax bulkers, and it has 24 newbuilding contracts.