Euronav confirms CMB sought to quash tie-up with Frontline

Belgium-based tanker shipping giant Euronav informed earlier today that it has received a letter from its biggest shareholder Compagnie Maritime Belge (CMB) seeking termination of the company’s tie-up with Frontline.

The letter was addressed to Euronav’s Supervisory Board, following the publication of a 13D filing in relation to the recent increase of its holdings in Euronav. Specifically, CMB continued buying shares ahead of the upcoming share exchange offer by Frontline, and CMB’s stake in Euronav has reached almost 24 pct.

Under Belgian law, whilst a minority shareholding of more than 25% could potentially be used to seek to block a full merger, it cannot block an operational combination between two companies.

“The fact that this development could take place, has always been planned for in the proposed combination,” Euronav noted.

The share exchange offer, which is expected to be launched in the first quarter of 2023, aims at combining the two companies so that they can act as one group where Frontline will be the parent and Euronav a majority-controlled subsidiary.

Euronav said that the exchange offer is independent of any merger.

According to Euronav, the new Frontline aims to become a leading global independent tanker operator with scale benefits, combing best-in-class leadership from two highly experienced management teams, and a “must-have” stock in the crude tanker market.

The new company has sustainable shipping high on the agenda, aspiring to the highest ESG standards in the industry.

In order to successfully complete the exchange offer, Frontline will need to accumulate a minimum of 50% +1 share of the current outstanding capital. Once Frontline takes control of Euronav, the two companies will be acting as one group.

Euronav pointed out that the majority of its shareholders are supporting the combination ‘as evidenced by the strong market response as well as the massive amount of votes against the appointment of three (3) non-independent directors proposed by CMB at the Euronav AGM last May.’

Euronav shareholders participating in the exchange will receive Frontline shares, at an exchange ratio of 1.45x Frontline share for each Euronav share.

“Euronav shareholders not participating in the exchange offer should be aware that, despite Euronav continuing to comply with all rules applicable to Belgian listed companies, they may face challenges associated with reduced liquidity and investor demand, associated with Euronav’s controlled status and limited float,” the company noted.

“We look forward to developing the combination further early in the new year.”

Frontline intends to formally launch the tender offer, in which case it will deposit a file for this purpose with the Belgian Financial Services and Markets Authority (FSMA), including a draft prospectus. The Euronav Supervisory Board will then examine the draft prospectus and present its detailed opinion in a response memorandum. If Frontline decides not to proceed with the tender offer, it will report about this in accordance with its legal obligations.

At the beginning of December, updating on its tie-up with Euronav, Frontline said that it was in the process of relocating from Bermuda to Cyprus, prior to the launching of the tender offer in the first quarter of 2023.

“A merger will be pursued as soon as possible following the tender offer, with the aim then being to submit the merger to the Frontline and Euronav shareholders’ meetings. In the meantime, the parties will pursue all corporate and other steps necessary for the combination,” the company said.