0000899140-15-000577.txt : 20150730 0000899140-15-000577.hdr.sgml : 20150730 20150730171713 ACCESSION NUMBER: 0000899140-15-000577 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20150730 DATE AS OF CHANGE: 20150730 GROUP MEMBERS: MDRA GP LP GROUP MEMBERS: MONARCH GP LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SCORPIO BULKERS INC. CENTRAL INDEX KEY: 0001587264 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 000000000 STATE OF INCORPORATION: 1T FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-87971 FILM NUMBER: 151017148 BUSINESS ADDRESS: STREET 1: 9, BOULEVARD CHARLES III CITY: MC STATE: O9 ZIP: 98000 BUSINESS PHONE: (011)377 9798 5716 MAIL ADDRESS: STREET 1: 9, BOULEVARD CHARLES III CITY: MC STATE: O9 ZIP: 98000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Monarch Alternative Capital LP CENTRAL INDEX KEY: 0001281084 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 535 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-554-1700 MAIL ADDRESS: STREET 1: 535 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: Quadrangle Debt Recovery Advisors LP DATE OF NAME CHANGE: 20070125 FORMER COMPANY: FORMER CONFORMED NAME: Quadrangle Debt Recovery Advisors LLC DATE OF NAME CHANGE: 20061013 FORMER COMPANY: FORMER CONFORMED NAME: QDRA LLC DATE OF NAME CHANGE: 20040223 SC 13D/A 1 s14924325a.htm AMENDMENT NO. 2

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*

Scorpio Bulkers Inc.
(Name of Issuer)
Common Stock, par value $0.01
(Title of Class of Securities)
Y7546A106
(CUSIP Number of Class of Securities)
Michael Kelly, Esq.
Monarch Alternative Capital LP
535 Madison Avenue
New York, NY 10022
Telephone: (212) 554-1700
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

Copies to:

Michael A. Schwartz, Esq.
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY  10019-6099
(212) 728-8000

July 28, 2015
(Date of Event which Requires
Filing of this Schedule)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box:  ☒

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See Rule 240.13d-7 for other parties to whom copies are to be sent.

*  The remainder of this cover page shall be filled out for a reporting person's  initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

SCHEDULE 13D

 
CUSIP No.   Y7546A106 
 
  
 
Page 2 of 7 Pages
 

 
1
 
 
NAME OF REPORTING PERSON
 
Monarch Alternative Capital LP
 
2
 
 
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 
 
(a) ☐
(b) ☒
 
3
 
 
SEC USE ONLY
 
 
4
 
 
SOURCE OF FUNDS
N/A
 
 
5
 
 
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
  ☐
 
6
 
 
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
 
 
7
 
 
SOLE VOTING POWER
0
 
 
8
 
 
SHARED VOTING POWER
34,554,850*
 
 
9
 
 
SOLE DISPOSITIVE POWER
0
 
 
10
 
 
SHARED DISPOSITIVE POWER
34,554,850*
 
 
11
 
 
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
34,554,850*
 
12
 
 
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
  ☐
 
13
 
 
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.31%*
 
14
 
 
TYPE OF REPORTING PERSON*
PN, IA

*Reflects beneficial ownership as of July 30, 2015.
 
SCHEDULE 13D

 
CUSIP No.    Y7546A106 
 
  
 
Page 3 of 7 Pages
 

 
1
 
 
NAME OF REPORTING PERSON
 
MDRA GP LP
 
2
 
 
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 
 
(a) ☐
(b) ☒
 
3
 
 
SEC USE ONLY
 
 
4
 
 
SOURCE OF FUNDS
N/A
 
 
5
 
 
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
  ☐
 
6
 
 
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
 
 
7
 
 
SOLE VOTING POWER
0
 
 
8
 
 
SHARED VOTING POWER
34,554,850*
 
 
9
 
 
SOLE DISPOSITIVE POWER
0
 
 
10
 
 
SHARED DISPOSITIVE POWER
34,554,850*
 
 
11
 
 
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
34,554,850*
 
12
 
 
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
  ☐
 
13
 
 
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.31%*
 
14
 
 
TYPE OF REPORTING PERSON*
PN, HC

*Reflects beneficial ownership as of July 30, 2015.
 
SCHEDULE 13D

 
CUSIP No.    Y7546A106 
 
  
 
Page 4 of 7 Pages
 

 
1
 
 
NAME OF REPORTING PERSON
 
Monarch GP LLC
 
2
 
 
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
 
 
(a) ☐
(b) ☒
 
3
 
 
SEC USE ONLY
 
 
4
 
 
SOURCE OF FUNDS
N/A
 
 
5
 
 
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
  ☐
 
6
 
 
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON WITH
 
 
7
 
 
SOLE VOTING POWER
0
 
 
8
 
 
SHARED VOTING POWER
34,554,850*
 
 
9
 
 
SOLE DISPOSITIVE POWER
0
 
 
10
 
 
SHARED DISPOSITIVE POWER
34,554,850*
 
 
11
 
 
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
34,554,850*
 
12
 
 
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
  ☐
 
13
 
 
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.31%*
 
14
 
 
TYPE OF REPORTING PERSON*
OO, HC

*Reflects beneficial ownership as of July 30, 2015.
 
This Amendment No. 2 to Schedule 13D, dated July 30, 2015 (this “Amendment No. 2”), amends the Schedule 13D originally filed on June 9, 2015 (the “Original 13D”) by Monarch Debt Recovery Master Fund Ltd, Monarch Alternative Capital LP (“Monarch”), MDRA GP LP (“MDRA GP”) and Monarch GP LLC (“Monarch GP”), as amended by Amendment No. 1 filed on June 30, 2015 (the Original 13D, and as amended by such Amendment No. 1 and this Amendment No. 2, the “Schedule 13D”).  This Amendment No. 2 is being filed on behalf of Monarch, MDRA GP and Monarch GP (collectively, the “Reporting Persons”).  This Amendment No. 2 relates to the common stock, par value $0.01 per share (the “Common Stock”), of Scorpio Bulkers Inc., a Marshall Islands corporation (the “Company”). Monarch is the investment advisor to a variety of funds (any such funds, as applicable, collectively the “Funds”). The Reporting Persons are filing this Amendment No. 2 to amend Items 3, 4, 5 and 7 of the Schedule 13D as follows:

Item 3.                Source and Amount of Funds or Other Consideration

Item 3 is hereby amended and restated in its entirety to read as follows:
The Funds expended an aggregate of approximately $157,313,044.36 of their own investment capital in direct transactions with the Company and in open market transactions to acquire the 34,554,850 shares of Common Stock held by them.
Item 4.                   Purpose of the Transaction
Item 4 is hereby amended by adding thereto the following:
For nearly a month, Monarch has been privately trying to arrange a meeting with independent directors of the Company outside the presence of members of management to discuss concerns Monarch has with certain management decisions and the Company’s corporate governance.  Monarch believes that independent directors have a unique responsibility to shareholders and sought to engage in a dialogue with the Company’s independent directors outside of the presence of the management team that they are responsible for evaluating.  Because the Company has repeatedly rejected such a meeting, on July 28, 2015, Monarch sent a letter to the Company’s independent directors, a copy of which is attached hereto as Exhibit 99.2 and incorporated herein by reference.
Item 5.                Interest in Securities of the Issuer
Items 5(a) and 5(b) are hereby amended and restated in their entirety to read as follows:
(a)            Each of Monarch, MDRA GP and Monarch GP indirectly beneficially own 34,554,850 shares of Common Stock.  Such shares represent 10.31% of the 335,310,465 shares of Common Stock outstanding.  The percentages used herein and in the rest of this Amendment No. 2 are calculated based upon a number of outstanding shares consisting of 335,310,465 shares of Common Stock reported as outstanding in the Company’s Form 6-K, dated as of June 26, 2015 (the “Form 6-K”).  None of the individual Funds own a number of shares of Common Stock representing more than 5% of the outstanding shares of Common Stock.

(b)            Monarch, MDRA GP and Monarch GP share voting and dispositive power over 34,554,850 shares of Common Stock held directly by the Funds with each applicable Fund directly holding such shares.

Item 5(c) is hereby amended by adding thereto the following:

(c)            On July 28 and 30, 2015, respectively, the Funds acquired in the open market 250,000 shares of Common Stock at a price of $1.75 per share and 300,000 shares of Common Stock at a price of $1.80 per share.

Item 7.                    Material to be filed as Exhibits
Item 7 is hereby amended by adding thereto the following:
Exhibit 99.2 – Letter from Monarch to the independent members of the board of directors of the Company, dated July 28, 2015.
[Signatures on following page]
 
SIGNATURES

After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

Dated: July 30, 2015
MONARCH ALTERNATIVE CAPITAL LP
   
By: MDRA GP LP, its General Partner
   
   
By: Monarch GP LLC, its General Partner
   
   
 
By:
/s/ Michael Weinstock                                      
   
Name:  Michael Weinstock
   
Title:  Chief Executive Officer
   
   
Dated: July 30, 2015
MDRA GP LP
   
By: Monarch GP LLC, its General Partner
   
 
By:
/s/ Michael Weinstock                                     
   
Name:  Michael Weinstock
   
Title:  Member
   
   
   
Dated: July 30, 2015
MONARCH GP LLC
   
 
By:
/s/ Michael Weinstock                                    
   
Name:  Michael Weinstock
   
Title:  Member
EX-99.2 2 s14924325b.htm LETTER FROM MONARCH TO THE INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS
Exhibit 99.2
July 28, 2015
Independent Members of the Board of Directors
c/o Scorpio Bulkers Inc. (the “Company”)
Le Millenium, 9, Boulevard Charles III
Monaco, 98000
Monaco


 Dear Sirs:
I write on behalf of Monarch Alternative Capital LP, the investment manager for certain investment funds that own shares of the Company (collectively, “Monarch”).
As you know, Monarch is a founding shareholder of the Company and remains one of its largest shareholders.  We are deeply disappointed that the stock of the Company has declined in price by 80% since its IPO.  We believe that a meaningful portion of the decline in stock price could have been avoided with better decisions by management and the Board and better corporate governance procedures.
Because of our concerns with management’s decisions and the Company’s corporate governance, we asked for a meeting with you, the independent directors of the Company, outside of the presence of management, so that we could have a constructive discussion regarding these matters.  We believe that the independent Board members have a unique responsibility to shareholders and we hoped to have the opportunity to engage in a dialogue with you outside of the presence of the management team that you are responsible for evaluating.
Following nearly a month of attempts, we have been unable to secure the Company’s agreement (through the Board’s Chairman) to make at least one independent director available to us without a member of senior management present.  Because of the Company’s refusal, while we would have preferred a face-to-face meeting to begin a dialogue on these matters, we believe that we have no alternative but to speak to the independent directors through this letter.
We believe that the first steps towards remedying the problems we refer to above, reducing the discount at which the Company’s stock trades relative to its peers and improving the corporate governance of the Company are as follows:
1) The Company should resume its asset sale program and use the proceeds to buy back stock.  The Company’s stock trades at a deep discount to net asset value (“NAV”) and any buybacks of stock will be accretive to NAV.
2) The Company should add two new independent directors to the Board, chosen in consultation with the largest shareholders, including Monarch, in order to better align the Company with shareholder interests.
3) The Company should improve shareholder communications with the Board by making the lead independent director available for quarterly meetings with the largest shareholders and by hiring an investor relations firm reporting directly to an independent committee of the Board to inform directors of the manner in which the Company and its
 
 
management are perceived by investors and the reasons why the Company’s common stock trades at a meaningful discount to its peer group.  We believe this feedback from sophisticated investors will help the Board make better decisions and give the Company a valuable source of information separate and apart from management.
 
 
 4) The Board should institute special procedures for equity offerings given how poorly previous equity offerings have been received by investors.  The Board should hire an independent advisor to advise it on future equity offerings and should also be directly involved in discussions with underwriters.  Note that independent advisors on equity offerings are paid out of the spread on the offerings and do not result in any incremental cost to the Company.  We believe that greater involvement by directors in the recent equity offering would have resulted in more favorable terms for the Company.
5) The Board should remove the poison pill it recently put in place to encourage large shareholders such as Monarch to know they are welcome as shareholders of the Company.  We believe that a consolidation of the Company’s shareholder base with a strong lead shareholder would help eliminate the discount at which the Company’s stock trades relative to its peers.
6)
The Company should publicly disclose (i) full copies of (and any amendments to) all material agreements with the Scorpio Group and its affiliates that have not been previously disclosed, (ii) all current and historical business relationships and personal relationships between the independent directors and Scorpio Group and its principals, (iii) an itemization of amounts paid or to be paid to Scorpio Group or its affiliates in connection with publicly disclosed vessel sales and (iv) the compensation structure of management and management’s employment contracts.  This information would assist shareholders in evaluating the performance of management and the Company’s ongoing relationship with the Scorpio Group. 
 
We renew our request for a meeting with either the lead independent director or all of the independent directors as a group outside of the presence of management to discuss the above proposals as well as the circumstances surrounding the recent equity offering and other concerns that we have.  We believe that the unwillingness of the Company to make the independent directors available for a meeting, free of management, is an indication that the independent directors are not operating independently of management.  We call on the independent directors to reconsider this position and look forward to hearing from you at your earliest convenience.
Thank you.
Best regards,
Monarch Alternative Capital LP, on behalf of certain of its advisory clients




By:  s/ Michael Weinstock                          
Name:
Michael Weinstock
Title:
Chief Executive Officer