Euronav: Frontline wins a round as merger ding dong continues

Hugo De Stoop: “With a new Supervisory Board and strong representation from the two core shareholders, now is an appropriate time for Euronav to open a new chapter in its development.”

For those who like ongoing sagas, the Euronav drama continues to deliver. Today, John Fredriksen’s Frontline plc (NYSE: FRO – OSE: FRO) reported that emergency arbitration claims filed by Euronav on January 18, had been fully dismissed by the emergency arbitrator.

Euronav had filed the emergency request in an attempt to suspend Frontline’s decision to terminate the tanker mega merger combination deal between the two companies announced in April last year.

Frontline said today that, in addition to fully dismissing the claims, the Emergency Arbitrator had ordered Euronav to pay Frontline all costs of the Emergency Arbitration proceedings, including full compensation for legal costs incurred.

As those who have been following the soap opera will recall, the merger has been strongly opposed by the Saverys family and their Compagnie Maritime Belge (CMB) and, on March 23, Euronav will hold the special general meeting requested by CMB at which the main item on the agenda will be whether to replace the entire Euronav board with a slate of CMB nominees.

In its press release on the decision, Euronav left out the bit about having to pay the costs, but said that only a request for arbitration on the merits that it filed January 28 will decide on the merits of the validity of the termination.

Meantime, of course, despite all these distractions, Euronav has continued to operate as a tanker company and on February 2 it reported fourth quarter results that saw it deliver its highest earnings since second quarter 2020.

“Constrained vessel supply conditions within all segments of the large crude tanker market were supplemented further by two key factors during Q4 2022,” said CEO Hugo De Stoop. “Firstly, seasonal demand for crude gained traction as consumption rose into the 22/23 winter. Secondly, the EU embargo on Russian oil, effective 5 December 2022, created additional shipping demand as crude trading patterns required longer voyages and therefore captured more shipping capacity. These supportive catalysts helped drive freight rates to a 30-month high and we believe that the solid base of sector fundamentals (orderbook, fleet age, incoming regulations) will continue to underpin positive conditions within the tanker market for multiple quarters ahead.”

“Recent events have also been dynamic but have never affected the operational performance of the company as we remain focused and committed to maintain our position of market leadership and have managed to rejuvenate the fleet at a critical time in the market cycle both in buying and ordering modern vessels at good prices as well as be patient and dispose of older assets when the value became interesting,” said De Stoop. “Whilst we regret the current situation, we will continue to act professionally and to work to a solution which is in the interests of all of our shareholders and stakeholders.”