Posted on January 3, 2023
Tanker operator Frontline completed the final steps preparing to launch its offering to combine its operations with Euronav setting the stage for a new contest between famed investor John Fredriksen and the Saverys family for control of the tanker company. The company announced today, December 30, that the Registrar of Companies and Official Receiver of the Republic of Cyprus has issued a temporary re-domiciliation certificate, meaning that they have completed the re-registration of the company moving its incorporation from Bermuda to Cyprus.
Shareholders of Frontline approved the move in the incorporation of the company during a Special General Meeting of Shareholders on December 20. At the same time, they also approved several technical steps for the company and also approve an increase of Frontline’s authorized share capital from $500 million to $600 million. Shareholders approved the creation of an additional 100 million ordinary shares of Frontline.
Management told shareholders that it believed re-domiciliation would, among other things, provide legal, administrative, and other similar efficiencies. As a well-established shipping and ship management center, they said Cyprus is expected to provide many benefits to the company, including recruitment of experienced commercial and administrative and management personnel, a comprehensive tonnage tax regime, and a geographically advantageous position between its key market time zones. The completion of the re-domiciliation was also a condition of launching and closing the tender offer and the merger with Euronav.
The company now needs to file the offering documents with regulators and once it goes effective, they can begin the offer for Euronav. The terms call for an exchange ratio of 1.45 Frontline shares for every 1.0 Euronav share. Frontline needs a simple majority of the shares to consolidate Euronav as a publicly-traded subsidiary but the Saverys with 25 percent of Euronav’s shares can block the second step which would have been a completed merger of the two companies.
The Saverys have repeated their opposition to the transaction saying that they believe the combination would create a convoluted structure with inherent conflicts. They also have said that they do not believe in the benefits cited by Frontline and question the strategic direction.
Having completed the reincorporation in Cyprus, Frontline is now poised to proceed during the first quarter of 2023 with the exchange offer. So far both sides in the battle for control of Euronav have shown no signs of changing their positions. The Saverys family had called for further discussions after announcing that increased their position to 25 percent of the shares outstanding of Euronav.