CMB, Frontline agree deal that carves up Euronav fleet

CMB has published a list of vessels from Euronav’s fleet that are set to be sold to Frontline. The two dozen vessels have an average age of 5.3 years, according to Frontline, and will cost the company US$2.35Bn. 

All built from 2015 onwards, the VLCCs Mr Fredriksen is taking from the fleet are all in the region of 300,000 dwt. One of the vessels was built in 2015, nine in 2016, five in 2017, one each in 2019 and 2020, four in 2021 and three in 2023. Nine of the vessels have scrubbers and 22 of the 24 were built in South Korean yards.

The move builds Frontline’s fleet from 65 to 89 vessels, making the company "the largest pure-play tanker owner in the public domain measured by dwt," Frontline said. The fleet sale is funded by money from the sale of Frontline’s shares in Euronav and credit and lease arrangements totalling more than US$2Bn. Just over US$500M of that amount could come in the form of an unsecured shareholder loan, but Frontline said it is exploring other routes to access capital that could include re-leveraging part of the existing Frontline fleet on better loan terms or selling some of its "non-core assets".

"This transaction will solidify Frontline’s position as the leading publicly listed tanker company, and significantly expand our exposure towards modern efficient VLCCs at an opportune time in the cycle,” Mr Fredriksen said.

In return, the Saverys family-controlled CMB said it will acquire John Fredriksen’s entire stake, including Frontline’s and investment holding company Famatown Finance’s shareholdings, in Euronav, that amounts to 26.12% of the company. CMB currently holds 22.93% of Euronav, and the transaction will take its holdings to 49.05% and holding 53% of the voting rights. 

The vessel sale to Mr Fredriksen’s entities is subject to completion of the share purchase transactions, which is subject to merger control approvals and approval by Euronav’s shareholders. Once the transaction has completed, CMB said Euronav will terminate its arbitration proceeding against Frontline. Finally, in Q4 2023, CMB said it expects to launch a mandatory public takeover bid on the remaining shares in Euronav at the same price (US$18.43/share) that the company acquired Mr Fredriksen’s stake. The bid price will be paid in cash.

"As CMB intends to maintain Euronav’s listing on Euronext Brussels and the New York Stock Exchange, it has no intention to launch a squeeze-out bid following the closing of the mandatory bid," CMB said.

The vessel sale and share sales as well as the termination of arbitration proceedings have all been approved by Euronav’s supervisory board, working on the advice of its directors. Finalising the transactions and the change in control of the company requires a vote from shareholders, which will take place at a special general meeting, CMB said.

Euronav chief financial officer and interim chief executive Lieve Logghe said, “After many months of uncertainty, the transaction announced today leverages the value that Euronav and its people have created through many years of hard work. It represents a balanced outcome for shareholders, who now have the choice between realising that value in cash or following Euronav in a new strategic direction under a new controlling shareholder.”

Along with publishing a fleet list of its 94 vessels, Belgian company CMB said it intends to diversify the remaining Euronav fleet, setting out options including acquiring vessels, ordering newbuildings or combining fleets with the group’s other companies, CMB and CMB.Tech. Low- and zero-carbon fuels including hydrogen and ammonia are targets in making the fleet "future-proof," according to CMB.

"CMB wants to diversify the fleet of Euronav into different shipping segments to decrease the dependence on the transport of crude oil. This does not mean exiting the tanker business altogether, but a gradual decrease of the share of revenues coming from pure crude oil transport by adding different shipping asset types to the Euronav portfolio. This diversification could be realiaed through: the acquisition of secondhand future-proof tonnage, the ordering of future-proof newbuildings, the acquisition of part or the totality of the CMB and CMB.Tech’s future-proof fleet. Future-proof in CMB’s view means efficient low-carbon emitting ships and/or ships powered by hydrogen and/or ships powered by ammonia."

Decarbonisation and optimisation are driving forces in its continuing operations, once the fleet and share sale transactions have completed, CMB said.

"It will be crucially important to dedicate significant amounts of capital from the industry and shipping companies to the development of low-carbon engines, fuel supply systems and the production of low-carbon fuels. CMB wants Euronav to play a leading role in the decarbonisation of the shipping industry and be the reference shipowner when it comes to green ships," the company said.