Tanker companies Frontline and Euronav seem to have found a solution to the deadlock they were in after plans to merge the two companies fell through. Frontline now wants to acquire 24 tankers from Euronav, with the first’s shares in Euronav then passing to Euronav’s biggest shareholder, Compagnie Maritime Belge (CMB).
Yesterday, 5 October, Euronav confirmed that Frontline and CMB NV are in discussions on an integrated solution to the strategic and structural deadlock in Euronav.
The potential transaction comprises the following interdependent elements:
- CMB would acquire Frontline’s 26.12 per cent stake in the company for USD 18.43 per share, to be followed by a public mandatory offer at same price.
- Frontline would acquire 24 VLCC tankers from the Euronav fleet for USD 2.35 billion, subject to completion of the above-mentioned share purchase and to approval by shareholders. This option requires the application of the related party procedure under Belgian law.
- In addition, Euronav’s pending arbitration action against Frontline and affiliates regarding the failed merger would be terminated conditional to the share sale.
Frontline will fully finance the acquisition of the tankers through the sale of its shares in Euronav to CMB and an attractive long term debt package.
Also read: Frontline abandons Euronav merger attempt
No deal yet
According to Euronav, the discussions between the parties are well advanced, but it is yet uncertain that these discussions will lead to an agreement. The aforementioned is in any case subject to all necessary internal approvals of the involved parties.
If the negotiations would result in a formal agreement, such agreement will be subject to customary competition clearance procedures and any required approval procedures with the financial market authorities in Belgium and the US.
Also read: Euronav founder and largest shareholder CMB opposes Frontline merger
