A group of investors is so displeased with the management at bunker company Aegean Marine Petroleum that it is now trying to replace several members of the board to improve company performance and boost the share price.

The investors' list of criticisms is long and includes poor corporate governance, related party transactions and a lack of a long-term strategy.

The displeased investors have gathered in a group dubbed The Committee for Aegean Accountability, which represents more than 12 percent of the shares in the New York-listed company with Greek roots.

The committee is headed by Tyler Baron, a portfolio manager at US-based fund Sentinel Rock Capital. To curb the problems, the group will now nominate four new candidates for the board of directors.

"We have been very constructive in our private communications with the board, which go back to last spring. When this did not progress, we were forced to form a group of shareholders and go public with our concerns," Baron tells ShippingWatch.

"We are going to put forward a very compelling list of directors with market experience and operational expertise as well as turnaround and financial management expertise. The candidates we’ll be nominating can be instrumental in helping effect a positive change at the company," says Baron.

Aegean is aware of the criticism from the investors, which was first made public in an open letter shortly before Christmas.

"We understand that Mr. Baron is nominating four persons for positions on the company's board of directors, and the company is considering its response," the company informs ShippingWatch in a written statement.

Lacks influence

The investors' dissatisfaction has been stewing for some time and stems from the fact that they feel left without representation at the company of which they own a part. They also feel that the share has underperformed due to what they describe as poor management.

Aegean Marine Petroleum was established by Dimitris Melissanidis in 1995. The Greek businessman also owns one of Greece's biggest oil companies, Aegean Oil, as well as soccer club AEK Athens.

According to Baron, many of the issues can be traced back to the founding of the company, which was listed in New York more than a decade ago, but still has strong ties to Greece.

"The main issue is that minority shareholders do not have proper representation on the board. This is a company that has a legacy of terrible corporate governance, an anachronism rooted in the founding of the company, which used to be controlled by Mr. Melissanidis," says Baron.

As such, Melissanidis' sale of his stake back to the company in August 2016 was seen as a new beginning. But so far nothing has changed, say the critical shareholders.

"Not only do you have the same corporate governance structure and the same degree of related party transactions, but he no longer has any skin in the game, unlike the other shareholders. So what was hoped to be a harbinger of positive change has ended up leaving shareholders in an even worse situation," he says.

He also notes that the board of directors currently only has four active members, of which three were appointed by the founder when the company was listed in 2006, and that minority shareholders are not represented.

Great potential

According to the committee of critical shareholders, the Aegean Marine Petroleum share has dropped 75 percent since the listing in 2006.

Baron points to high costs and inefficient financing as part of the reasons for the share price slide, and he lists the company’s recent exit from Singapore as a symptom of these issues.

But he does see potential in Aegean, one of the biggest players in the bunker sector, not least due to the upcoming IMO sulfur directive, which means that ship fuel after 2020 can only contain 0.5 percent sulfur.

This will make carriers turn to the dominant players in the market, and as such, it is vital that Aegean sets out a strategy for the time after 2020, he explains.

"I think customers are going to be figuring out who they need to rely upon to ensure availability and not just price of bunkers. There are going to be a lot of advantages for operators with scale and fixed assets that can position themselves strategically. The strategic process needs to start now," Baron tells ShippingWatch.

English Edit: Daniel Logan Berg-Munch

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