Frontline Ltd. is pleased to announce that it has entered into a definitive Combination Agreement with Euronav NV for a stock-for-stock combination based on an exchange ratio of 1.45 FRO shares for every 1.0 EURN share (the “Combination”), which was unanimously approved by all the members of Frontline’s Board of Directors and by all members of Euronav’s Supervisory Board. The agreement memorialises the principal aspects of the previously announced term sheet that was signed on 7 April 2022.
Combination Structure
• The proposed Combination is structured as a voluntary conditional exchange offer (the “Tender Offer”) by Frontline for all outstanding shares of Euronav at an exchange ratio of 1.45 Frontline shares for 1.0 Euronav share, possibly followed by a simplified squeeze out, with the aim to then propose a merger of Euronav into Frontline to Frontline’s and Euronav’s shareholders as soon as possible thereafter (the “Merger”).Based on Frontline share price USD 8.34 per share (as of US close 8th July 2022), the proposed exchange rate represents a value of USD 12.09 per Euronav share. The combined Net Revenue and EBITDA for the two companies in 2021 was approximately USD 668 million and USD 246 million, respectively.
• Assuming all Euronav shares are tendered in the Tender Offer, and following the private acquisitions of Euronav shares in exchange for Frontline shares undertaken in May and June, the combined company will be held as follows: approximately 55% by existing Euronav shareholders and approximately 45% by existing Frontline shareholders.
• The completion of the Tender Offer will be conditioned upon Frontline owning post Tender Offer at least 50% +1 of all the outstanding shares in Euronav (excluding treasury shares unable to be tendered), the relocation of Frontline to Cyprus, the absence of material adverse change, the receipt of required regulatory approvals and other customary conditions. Frontline together with its affiliate Famatown Finance Limited currently already own 37,881,478 shares in Euronav or 18.8% of the total outstanding shares (excluding treasury shares)1.
• Prior to the Tender Offer completion, Euronav will be allowed to pay a dividend for a total amount of USD 0.09 per Euronav share and Frontline will be allowed to pay a dividend of USD 0.15, both with no impact on the exchange ratio; for any dividends from Frontline in excess of such amount, the Euronav shareholders accepting the Tender Offer will receive a compensation per Euronav share equal to the dividend amount per Frontline share times 1.45.
• The combined group will be named Frontline, incorporated and headquartered in Cyprus and will in addition continue to operate from various offices in Europe and Asia including Belgium, Norway, UK, Singapore and Greece
• The combined group will be listed on Euronext Brussels, OSE and NYSE upon Tender Offer completion
Following completion of the Tender Offer, the governance and senior leadership of the combined group will be as outlined under the header “senior leadership and governance”. Euronav and Frontline will endeavour to complete a full legal merger. Should after completion of the Tender Offer a simplified squeeze-out or legal merger of both companies not yet be feasible, then during such interim period to the full merger, Euronav will retain its separate listing on Euronext Brussels and the New York Stock Exchange, and Euronav governance as well as further integration, joint projects and synergies shall be further organized taking into account legal obligations of Euronext Brussels listed issuers, including article 7:97 of the Belgian Code of companies and associations.
Senior Leadership and Governance
The combined group will be headed by Mr. Hugo De Stoop as Chief Executive Officer. Hugo De Stoop has a strong track record of sustainable value creation. His experience will support the speed of execution of the Combination, allowing the combined group to manoeuvre with efficiency in a tanker industry undergoing rapid and fundamental changes.
The combined group will benefit from an efficient governance structure designed to promote effective performance, with a one-tier Board limited to seven directors, the majority of whom, including the Chair, will be independent.
Upon completion of a legal merger or as soon as Frontline holds 75% or more of Euronav’s outstanding shares (excluding treasury shares held by Euronav), three of the current independent directors of Euronav will be appointed to the combined group’s board. Up to two non-independent directors will be nominated by Frontline’s largest shareholder Hemen Holding Ltd. (“Hemen”), and two new independent directors will be identified by Euronav and Hemen jointly, including the Chair of the board of the combined group. Frontline CEO, Mr. Lars H. Barstad, will join the Board of the combined group as a representative of Hemen Holding Ltd.
Should there be an interim period between completion of the Tender Offer and the completion of a legal merger (or as soon as Frontline holds less than 75% of Euronav’s outstanding shares (excluding treasury shares held by Euronav), then upon completion of the Tender Offer a one-tier board comprising seven directors will be implemented by Frontline, with the following nomination rights to reflect a proper balance of representation within the boardroom: three of the current independent directors of Euronav will be appointed to the combined group’s board as independent directors, up to three non-independent directors will be nominated by Hemen, and one new independent director—the Chair of the combined group—will be identified by Euronav and Hemen jointly.
In order to ensure efficient execution of the Combination, an integration committee is preparing the integration plan to be implemented immediately following the closing of the Tender Offer.
Indicative Timetable and Next Steps
Frontline will be relocated from Bermuda to Cyprus prior to the launch of the Tender Offer. The Tender Offer is expected to be launched in Q4 2022, once the relocation is achieved, and Frontline intends to proceed with a simplified squeeze out if the conditions therefore are met.
The 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 the corporate and other steps necessary for the Combination.
Advisors
Lazard is serving as financial advisor to Euronav. Freshfields Bruckhaus Deringer LLP is serving as legal counsel to Euronav. ABG Sundal Collier ASA is serving as financial advisor to Frontline and DNB Markets, a part of DNB Bank ASA, has acted as financial advisor to the independent part of the Frontline Board. Advokatfirmaet Schjødt AS, Allen & Overy LLP, Seward & Kissel LLP and MJM Limited are serving as legal counsel to Frontline in connection with the combination. KPMG is advising Frontline on tax related matters.
NO FORMAL NOTIFICATION OF TAKEOVER BID UNDER BELGIAN TAKEOVER RULES
This notice is merely an expression of an intention and does not constitute a formal notification of a takeover bid within the meaning of the Royal Decree of 27 April 2007 and the Law of 1 April 2007 on Public Takeover Bids.
If Frontline decides to formally launch the Tender Offer, 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.
Source: Hellenic Shipping News
