John Fredriksen’s Frontline has introduced its acquisition of two dozen Very Massive Crude Carriers (VLCCs) from Euronav, solidifying its place as the biggest publicly-listed pure play tanker firm at a vital time within the tanker market.
The acquisition comes as a part of a decision to Frontline’s year-long impasse with Compagnie Maritime Belge (CMB) over management of Belgian tanker firm Euronav.
Underneath the settlement, Frontline will purchase a fleet of 24 ECO VLCCs with a median age of 5.3 years, for a complete buy worth of $2.35 billion. In alternate, Frontline and Fredriksen-aligned Famatown Finance Restricted have agreed to promote their 26.12% stake in Euronav to CMB at a worth of $18.43 per share. Proceeds from the sale will assist to fund the vessel acquisitions.
CMB will stroll away because the controlling shareholder of Euronav, proudly owning 49.05% of Euronav’s issued shares, representing 53% of the voting rights.
This acquisition marks a pivotal second for Frontline after it terminated its earlier merger settlement with Euronav following opposition from CMB in January. The merger would have created the world’s largest publicly-listed oil tanker proprietor and operator.
Frontline mentioned that the deal will bolster its place within the tanker trade, making it the biggest publicly-listed pure play tanker proprietor when it comes to deadweight tonnage (dwt) and enhance its fleet to 89 vessels. Out of the the 24 VLCCs, 22 are in-built Korea and 9 are fitted with scrubbers. The addition of the vessels is anticipated to considerably increase the Frontline’s free money flows and earnings per share potential, whereas additionally bettering its dividend capability.
Frontline highlighted the timing of the deal, noting that: “All vessels are on the water, in an atmosphere of lengthy lead instances for brand new capability to be obtained.” The acquisition will increase Frontline’s operational leverage within the VLCC phase, which has the bottom orderbook-to-fleet ratio, presently at about 2%, the corporate mentioned.
“I firmly imagine in constructing best-in-class firms by means of consolidation,” mentioned John Fredriksen. “This transaction will solidify Frontline’s place because the main publicly listed tanker firm and considerably broaden our publicity in the direction of trendy environment friendly VLCCs at an opportune time within the cycle.”
The completion of the sale and acquisition is topic to approval by Euronav shareholders and customary anti-trust approvals. The method is anticipated to shut within the fourth quarter of 2023.
“This transaction displays our platform’s capacity to behave decisively on giant scale fleet transactions with the assist of our largest shareholder and key relationship banks,” mentioned Lars H. Barstad, Chief Government Officer of Frontline Administration AS. “The construction of the transaction will considerably enhance Frontline’s working leverage as we enter a interval of historic low deliveries of latest capability within the tanker market.”
Funding for the acquisition will come from the sale of Frontline’s shares in Euronav, money available, drawdown below an current credit score facility below an current credit score facility provided by Fredriksen’s Hemen Holdings, and a brand new time period mortgage facility.
Lastly, as a part of the settlement, all arbitration motion filed by Euronav in opposition to Frontline will even be terminated.
