Latest deal makes Hafnia the largest player in the product tanker sector

In exchange for all outstanding shares in CTI, CTI’s shareholders will receive shares in Hafnia representing 21.5% of the outstanding shares in the combined entity. Following the transaction and based on the current shareholding in CTI, CTI’s major shareholder, funds managed by Oaktree Capital Management will hold 20.4% of the shares in the combined entity.

The deal underscores Hafnia’s stated commitment to grow its platform to maximise stakeholder value, which Hafnia chief executive Mikael Skov made clear during Riviera Maritime Media’s Tanker Leaders webinar.

Consolidation enables Hafnia to achieve improved earnings capability through the shipping cycle. Most importantly, the transaction will complement Hafnia’s existing commercial activities in the Handy and MR segments while enabling enhanced trading flexibility through the ability to carry both clean petroleum products and chemicals, limiting ballast time by optimising triangulation and offering material cost synergies.

Mr Skov said, "The addition of the CTI fleet will help enhance our resilience in the face of volatile markets and create a more sustainable and future-proof transportation business that will include the ability to transport methanol, in addition to many other cargoes.”

He added, “I am grateful to Oaktree and the deal teams on both sides for their hard work towards the completion of the transaction."

For CTI’s shareholders, the transaction represents an opportunity to enhance its returns through access to greater economies of scale, lower cost of debt and upside exposure to a recovering product tanker market.

Oaktree managing director Guillaume Bayol said, "This merger is the culmination of a thorough strategic process. It will allow CTI shareholders to benefit from the scale and commercial capabilities of Hafnia, while enabling Hafnia to expand its platform with a sizeable and young ECO design IMO II product/chemical tanker fleet.”

He added, “The addition of the CTI fleet brings with it new trading capabilities which, combined with Hafnia’s existing fleet and platform, will enhance the combined group earnings generation. We believe we have identified a best-in-class partner in Hafnia and are excited to embark on a promising journey alongside the BW Group and other Hafnia shareholders,” he said.

The transaction remains subject to consent or waivers from some of CTI’s existing financiers, and Hafnia expects to close before 1 February 2022.

Following the transaction, Hafnia will operate a fleet of 233 product and chemical tankers, making it the world’s largest operator in the product and chemical tanker segment.

Its owned and chartered-in fleet will grow to 133 product and chemical tankers ranging in size from 25,000 dwt to 115,000 dwt.

Hafnia has retained Gorrissen Federspiel and Advokatfirmaet Thommessen as legal advisors, while CTI has retained Fearnley Securities and PJT Partners as financial advisors, and Linklaters LLC and Advokatfirmaet Wiersholm as legal advisors in connection with the transaction.

In July 2020, Ardmore rejected a merger proposal from Hafnia.