Economou instigates boardroom battle at Performance Shipping

Greek shipowner George Economou plans to ask for a board seat at fellow tanker owner Performance Shipping and is seeking resignations from four existing directors.

Economou, who recently bought into the Nasdaq-listed owner of eight aframaxes via his investment vehicle Sphinx, is proposing former chairman of OceanFreight and ex-board member of Ocean Rig John Liveris for election to the Performance Shipping board at the next annual meeting of shareholders.

In a regulatory filing to the US Securities and Exchange Commission (SEC) Sphinx also revealed an advisory non-binding proposal that the Performance Shipping board be declassified prior to the first annual meeting and asked for shareholders to vote for the resignation of chief executive Andreas Michalopoulos, along with three other board members.

The move follows accusations by one of the largest Greek owners, with over 100 ships in the dry bulk, tanker and LNG segments, that Performance Shipping’s dual-class capital structure, together with the 2022 exchange offer through which the company effected such a structure, violate both Marshall Islands law and Nasdaq listing rules.

Specifically, Economou is asking the board to look into how CEO Michalopoulos, the husband of Performance chairperson Aliki Paliou, indirectly acquired ‘Series C Preferred Shares’ in the 2022 exchange offer alongside Paliou and to investigate late filings regarding these transactions, amongst other things, including an explanation behind the increase from 10.9m common shares to 11.3m outstanding during the last two weeks of August.

In his letter to Performance, Economou also demanded the inspection of books and records, including copies of minutes of meetings of the board at which the company’s 2022 exchange offer was discussed.

Performance denied any wrongdoing and described the allegations as baseless, adding that it is “deeply concerned by the actions taken by Sphinx and its principal, George Economou”. 

The company said in a SEC filing that after “stealthily” taking a large position in its stock, Economou has proceeded with increasingly aggressive actions towards the company.

“We are open to engaging with Sphinx and Mr. Economou as we would with any shareholder. However, given they have taken these steps without being clear about their goals and while hiding behind their lawyers, we can only assume the worst,” Performance said.

“Economou’s record of destroying shareholder value and enriching himself through self-dealing and poor corporate governance speaks for itself. We note that the nominee proposed by Sphinx, John Liveris, has aided Mr. Economou in some of his most egregious transactions, including at Ocean Rig and OceanFreight,” the company added.

Shareholders will have the opportunity to vote on Economou’s nomination and proposals at the company’s 2024 annual meeting, which has yet to be scheduled. 

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