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Aegean Marine Petroleum Network under shareholder pressure

The Committee for Aegean Accountability expressed ‘severe concerns’ regarding shareholder value destruction caused by poor financial and operational management.




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The Committee for Aegean Accountability (CAA) on Wednesday delivered a letter to Yiannis Papanicolaou, Chairman of the Board at New York-listed Aegean Marine Petroleum Network (Aegean), identifying concerns.

CAA comprises of a group of shareholders collectively owning more than 12% of the outstanding shares of Aegean.

In short, the letter expressed severe concerns regarding the shareholder value destruction caused by poor financial and operational management.

It also highlighted problematic board conflicts and corporate governance deficiencies while signalling an intent to nominate four independent directors to be elected at Aegean’s 2018 annual meeting.

The full text of the letter is as follows:

December 20, 2017
Aegean Marine Petroleum Network Inc. 
Akti Kondyli 10 
185 45, Piraeus, Greece 
Attention: Mr. Yiannis Papanicolaou, Chairman of the Board

Dear Mr. Papanicolaou:

We are writing to inform you that a group of concerned and long-term shareholders representing more than 12% of the outstanding shares of Aegean Marine Petroleum Network Inc. ("Aegean Marine" or the "Company") have formed The Committee for Aegean Accountability (the "Committee").  We have made every effort in numerous private communications spanning the past eight months to engage in a productive dialogue with the board of directors (the "Board") to remedy the chronic failures in corporate governance, financial management and operations that have impaired shareholder value for far too long. It has unfortunately become clear that the Board is more concerned with entrenching itself and management rather than working with us in good faith regarding the changes required to improve the Company's governance and performance. We were both surprised and disappointed by your recent statement that you are considering reducing the Board to four members from its existing size of seven, which would severely disenfranchise shareholders and suppress their ability to seek due representation on the Board. We are therefore left with little choice but to publicly express our concerns and intention to nominate four highly qualified director candidates for election at the Company's 2018 annual meeting of shareholders (the "2018 Annual Meeting").

We have been shareholders in Aegean Marine for several years, over which time the share price has dramatically underperformed any relevant comparison. In addition, since becoming public in 2006 shares have declined by 75%, underperforming the Russel 2000 Index by more than 200%. The valuation of the Company has also reached an all-time low in relation to its net assets, trading at less than 0.3x tangible book value and well below a conservative estimate of liquidation value. Aegean Marine has chronically traded at steeply discounted multiples of cash flow and net asset value since at least 2010, driven by persistent concerns about corporate governance and management competence due to extensive related party transactions and value destructive capital expenditure projects.

Since its origins as a public company, Aegean Marine's corporate governance has been troubling. The Company was majority owned and controlled by its founder Mr. Melissanidis who, according to the Company's October 25, 2007 registration statement, "has been subject to a number of proceedings, including criminal cases," some of which involved "sham bunkering transactions intended to avoid customs duties and taxes" for which he was indicted but later acquitted. In addition, the Company engaged in various related party transactions with entities controlled by the founder. In acknowledgement of these potential conflicts, the Company sought to mitigate them at the time of the IPO by limiting the founder's influence per the "Framework Agreement" (F-1/A ex. 10.30 filed 11/3/06). This had the effect of precluding the founder from either joining the seven member Board or naming directors that would serve as Board Chairman or Chairman of the Audit and Nominating Committees. In addition, the Company's principal executive offices responsible for all financial and control functions were to be maintained in the U.S.

Given this provenance of already weak corporate governance, it is stunning that shareholders today find themselves with even less aligned representation on the Board. The present shareholder base is comprised nearly entirely of U.S. holders and the founder no longer retains any ownership stake whatsoever (more on this below), yet shareholders are represented by only four seated directors, three of whom were appointed by the founder at the time of the IPO and shortly thereafter. Mr. Fokas is one of these original board members, as well as the Company's General Counsel, and continues to have close ties to the founder, recently acting as the deputy chairman of the Greek gambling monopoly (OPAP) which is partly owned by Mr. Melissanidis. Furthermore, you rightly pointed out in your recent correspondence with us that the majority of current Board members have been with the Company since the IPO, and no new board members have been added since 2009. Considering the value destruction shareholders have endured over the past decade, we hardly view this as a positive.

Notwithstanding the complete turnover of Aegean Marine's shareholder base, the related party transactions persist as the Company still conducts significant business with entities controlled by the founder such as Aegean Oil. In addition, not only are the Company's executive functions, including financial and control, no longer based in the U.S., they are actually housed in the very same offices in Piraeus as the founder's other entities. Incredibly, our review of the Aegean Oil website and corporate magazine revealed that even today Aegean Marine is very much considered to be a subsidiary or sister company despite zero common ownership. But most concerning is the fact pattern related to the transaction last year in which the Company purchased the remaining stake owned by Mr. Melissanidis for $100MM at $8.81 per share. Aegean Marine's use of cash for this transaction caused the company to violate its borrowing base certificate only a few months later, and the subsequent liquidity crunch was cured by a dilutive convertible bond offering which drove the share price down 16%. Within nine months of the transaction the share price had declined by 48%, and today it sits 54% lower.

Finally, per the most recent proxy voting guidelines on director accountability provided by Institutional Shareholder Services ("ISS"), Aegean Marine's governance structure includes seven out of the eight listed "problematic provisions" that inform voting recommendations.

The Company's governance structure and Board composition are artifacts of its origins, when its founder exerted control and influence due to his majority economic stake. While even maintaining that status quo would have been entirely inappropriate given the Company's present ownership, in fact shareholder representation on the Board has degraded and inherent conflicts of interest have grown.

We have already identified and proposed the addition of highly qualified Board candidates with expertise spanning global physical bunkering markets, strategic management, fuel distribution operations, financing and capital markets. Not only will these candidates restore accountability at the Company, their skillsets are particularly well-suited to the challenges and opportunities the Company faces. This includes improving the financing structure and reducing costs of capital, rationalizing the fixed asset base, instilling capital discipline, and effectively positioning for the significant industry changes prompted by IMO 2020 regulations expected to take effect only two years from now.

The financing structure and financial management of Aegean Marine desperately require change.  The Company's inefficiency in accessing its cheapest sources of funds, the borrowing base facilities, has led to a reliance on sources of capital that are much higher cost and are now effectively inaccessible.  Harmonizing commercial and financing decisions will enable qualifying borrowing base collateral at closer to stated advance rates of 80-95 cents on the dollar compared to the 50-55 currently achieved. This could generate potentially hundreds of millions of dollars of low cost liquidity that can be used to retire high cost convertible bonds and shares, or to expand volumes and successfully manage the higher fuel prices expected with IMO 2020.

The Company's capital expenditure projects have destroyed an immense amount of shareholder value. For example, had Aegean Marine simply not constructed the Fujairah terminal, we believe the share price would be well more than double its present level based on the current enterprise value and cash flow valuation multiples. Not only does capital discipline need to be instilled to avoid such calamities, but the current sprawling fixed asset base should be opportunistically rationalized.  Creating an internal entity to manage the Company's logistics assets and charge market rates within the organization will inform "own vs. lease" decisions. Members of management have even described ports in which the cost of operating the Company's owned vessels is millions of dollars higher than that of chartering third party barges. In the context of the Company's $570MM of fixed assets and exceedingly high cost of capital, the opportunity for accretive asset sales is significant.

Finally, we expect IMO 2020 will dramatically increase the complexity of the marine fuel logistics industry and provide opportunities to leverage Aegean Marine's extensive network into improved financial returns. Accordingly, repositioning the asset base ahead of this change is of critical importance. As you know, one of our recommended director candidates is arguably more qualified than anyone in the world to guide these efforts.

The Committee's Schedule 13D filing and notice to nominate four director candidates for election to the Board at the 2018 Annual Meeting will be forthcoming, in accordance with applicable securities laws and the Company's Bylaws. As always, we remain willing to discuss these issues with you at any time. Rest assured, however, we will take whatever actions we may deem necessary to ensure that the best interests of all shareholders remain paramount. 


The Committee for Aegean Accountability

About the Committee for Aegean Accountability
The Committee for Aegean Accountability is a group of five long-term shareholders collectively owning more than 12% of the outstanding shares of the Company and seeking to unlock value on behalf of all shareholders through enhanced corporate governance practices and Board refreshment.

The Committee, led by Tyler Baron, has retained Olshan Frome Wolosky LLP as its legal advisor in connection with its engagement and discussions with the Company.

Investor Contact: 
Tyler Baron
The Committee for Aegean Accountability 
[email protected]

Legal Contact: 
Andrew M. Freedman 
Olshan Frome Wolosky LLP 
[email protected]

Source: The Committee for Aegean Accountability

Published on the Manifold Times:
21 December, 2017
8:20 am Singapore time

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Singapore: Allision between dredger and bunker tanker was not caused by port congestion, says Transport Minister

‘Investigations are still on-going, but preliminary findings show that the allision on 14 June was caused by the dredger experiencing sudden loss of engine and steering controls,’ says Chee Hong Tat.





Singapore: Allision between dredger and bunker tanker was not caused by port congestion, says Transport Minister

The allision between Netherlands-registered dredger VOX MAXIMA and stationary bunker tanker MARINE HONOUR on 14 June was not caused by port congestion, Transport Minister Chee Hong Tat said on Tuesday (18 June). 

Netherlands-flagged dredger Vox Maxima crashed into a stationary Singapore-flagged bunker vessel Marine Honour on 14 June, causing oil from the bunker vessel’s cargo tank to spill into Singapore waters. 

Chee said some members of the public have asked if this incident was due to congestion in our port waters.

“Investigations are still on-going, but preliminary findings show that the allision on 14 June was caused by the dredger experiencing sudden loss of engine and steering controls,” he said a social media post.

“It is not due to port congestion as our port waters and anchorages are not congested. The earlier reports on delays experienced by container vessels are a separate matter that is due to the bunching of container vessels arriving at PSA.”

Chee added it will take time for Maritime and Port Authority of Singapore (MPA) to complete the full investigations and progressively clean up the oil spill. 

“We seek the understanding of members of the public and businesses who are affected by this incident. We will do our best to complete the clean up as soon as possible.”

Manifold Times previously reported MPA stating that it saw large increases in container volumes and the “bunching” of container vessel arrivals over the previous months due to supply chain disruptions in upstream locations.

Later, MPA confirmed that since the beginning of 2024, Singapore saw a significant increase in vessel arrivals.

In the first four months of 2024, MPA said the monthly average tonnage of container vessel arrivals reached 72.4 million gross tonnage (GT). This is an increase of more than one million GT per month, compared to the same period last year. 

On 20 June, in a joint statement, authorities said the northern part of the Pasir Panjang Container Terminal (PPT) is cleared of oil slicks following the deployment of the Current Buster, an oil recovery and containment system, since 18 June. 

Thorough cleaning of the oil-stained Berth 36 near the allision area using high-pressure jets is on-going.

PPT was the location of the oil spillage following the 14 June allision between Netherlands-registered dredger VOX MAXIMA and stationary bunker tanker MARINE HONOUR. 

“The deployment of the Current Buster at this upstream location is important to prevent surface oil from flowing westwards towards West Coast Park which is unaffected till date, and also eastward towards downstream locations, including Sentosa beaches, Sentosa Cove, Southern Islands, and Keppel Marina,” authorities, including MPA, said.  

Three Current Buster systems have been deployed. Two systems capable of five tonnes of recovered oil per load are deployed off western affected areas at PPT and Sentosa. The other system capable of 35 tonnes load is deployed off eastern affected areas off East Coast and Changi East as a precaution to recover any oil and prevent further spread. Another 35 tonnes-load Current Buster system will be deployed shortly.

Total length of booms deployed since 14 June is 3400 meters. This is more than the approximate 3100 meters originally planned.

Note: The full statement by Singapore authorities including progress of the shore clean-up effort can be found here

Related: Singapore: Oil spill cleanup after allision between dredger “Vox Maxima” and bunker tanker “Marine Honour”
Related: Singapore sees large increases in container volumes, bunkering activities remain unaffected
Related: MPA reports ‘significant increase’ in vessel arrivals in Singapore


Photo credit: Singapore Transport Ministry / Chee Hong Tat
Published: 20 June, 2024

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Mitsubishi Shipbuilding receives orders for Japan’s first methanol-fuelled RoRo cargo ship duo

Two ships will be built at the Enoura Plant of MHI’s Shimonoseki Shipyard & Machinery Works in Yamaguchi Prefecture, with scheduled completion and delivery by the end of fiscal 2027.





Mitsubishi Shipbuilding receives orders for Japan's first methanol-fuelled RoRo cargo ship duo

Mitsubishi Shipbuilding Co., Ltd., a part of Mitsubishi Heavy Industries (MHI) Group, on Wednesday (19 June) said it has received orders from Toyofuji Shipping and Fukuju Shipping for Japan's first methanol-fueled roll-on/roll-off (RORO) cargo ships. 

The two ships will be built at the Enoura Plant of MHI's Shimonoseki Shipyard & Machinery Works in Yamaguchi Prefecture, with scheduled completion and delivery by the end of fiscal 2027.

The ships will be approximately 169.9 meters in overall length and 30.2 meters in breadth, with 15,750 gross tonnage, and loading capacity for around 2,300 passenger vehicles.

A windscreen at the bow and a vertical stem are used to reduce propulsion resistance, while fuel efficiency is improved by employing MHI's proprietary energy-saving system technology combing high-efficiency propellers and high-performance rudders with reduced resistance. 

The main engine is a high-performance dual-fuel engine that can use both methanol and A heavy fuel oil, reducing CO2 emissions by more than 10% compared to ships with the same hull and powered by fuel oil, contributing to a reduced environmental impact. 

In the future, the use of green methanol(2) may lead to further reduction in CO2 emissions, including throughout the lifecycle of the fuel. Methanol-fueled RORO ships have already entered into service as ocean-going vessels around the world, but this is the first construction of coastal vessels for service in Japan.

In addition, the significant increase in vehicle loading capacity and transport capacity per voyage compared to conventional vessels will provide greater leeway in the ship allocation schedule, securing more holiday and rest time for the crew, thereby contributing to working style reforms.

Mitsubishi Shipbuilding, to address the growing needs from the modal shift in marine transport against the backdrop of CO2 reductions in land transportation, labor shortages, and working style reforms, will continue to work with its business partners to provide solutions for a range of societal issues by building ferries and RORO vessels with excellent fuel efficiency and environmental performance that contribute to stable navigation for customers.


Photo credit: Mitsubishi Shipbuilding
Published: 20 June, 2024

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VPS and Normec Verifavia to offer data-driven and verified emissions data

Both firms signed a partnership agreement with Normec Verifavia to support improved vessel data for MRV / EU ETS reporting and beyond.





VPS and Normec Verifavia to offer data-driven and verified emissions data

Marine fuels testing company VPS on Monday (17 June) said it has signed a partnership agreement with Normec Verifavia to support improved vessel data for MRV / EU ETS reporting and beyond. 

In the face of tightening regulations and focus, VPS said large parts of the maritime industry are in the midst of stepping up their efforts to collect high-quality emissions data from vessel operations. 

“To meet this demand, VPS and Normec Verifavia will offer vessel owners and the wider maritime ecosystem to have indisputable emission numbers produced in a data-driven way,” the firm said.

“For vessel owners, this ensures compliance with upcoming MRV and EU ETS requirements where reported emission numbers need to be verified by a certified verification body.”

The partnership will combine the strengths that VPS have in data-driven decarb and Normec Verifavia´s position as an agile and independent third-party data verifier. The two companies offer a plug-and-play setup, where the vessel owner can experience a seamless and integrated experience in the handling and verification of fleet fuel- and emission numbers. 

 The first step of the partnership is to offer verification for VPS customers using the Maress system for data-driven decarbonisation. Maress is a leading tool in the offshore industry, handling the complexities around fuels- and emissions optimization and assisting crew and onshore personnel in making informed decisions on how to reduce vessel and fleet footprint. Maress is used by a diverse set of stakeholders in the offshore sector, such as vessel owners, contractors, management companies, charterers and more.  

Further, VPS also offers the Emsys technology for precise and real-time measurement of the emissions going through the vessel smokestack. This data can be fed directly to Maress and subsequently verified by Normec Verifavia to provide full control of all aspects of the fuels- and emissions related to vessel operations.

Jan Wilhelmsson, COO, Digital & Decarbonisation of VPS

Jan Wilhelmsson, COO, Digital & Decarbonisation of VPS

Jan Wilhelmsson, COO, Digital & Decarbonisation of VPS, said, "We see a rapid development where the market is no longer willing to take the risk of not knowing -precisely- what the emissions from operations are. We are excited about the fact that the partnership with Normec Verifavia enables all Maress users to get their emission numbers verified. It will literally be a one stop shop for data collection, analytics, collaboration and verified emission reporting."

Yuvraj Thakur, Managing Director & VP Commercial, Normec Verifavia, said: “The maritime industry faces a crucial challenge: achieving transparency and driving progress towards a decarbonised future. Normec Verifavia's collaboration with VPS represents a significant step forward in this direction.”

“By leveraging their expertise in data-driven decarbonization tools like Maress, we can empower asset owners to streamline the entire emissions data lifecycle. This will not only enhance the accuracy of reported data but also significantly reduce the administrative complexities faced by many stakeholders. This collaborative effort strengthens the foundation for a more sustainable maritime industry.”

The ability for Maress customers to verify emission numbers will be immediately commercially available.

Photo credit: VPS
Published: 20 June, 2024

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