February 28, 2017
News

Spurned again by DHT, Frontline goes bargain shopping

Written by Nick Blenkey

FEBRUARY 28, 2017 — John Fredriksen’s Frontline Ltd. (NYSE/OSE: FRO) today reported unaudited results for the quarter and year ended December 31, 2016. The company reported net income of $18.3 million, or $0.12 per share, for the fourth quarter of 2016 and $117.0 million, or $0.75 per share, for the year ended December 31, 2016.

The company also disclosed today that it had made an improved stock-for-stock offer to acquire DHT Holdings (NYSE:DHT ), in which it already holds approximately 16.4% of the stock upping its offer from 0.725 to 0.80 Frontline shares for each DHT share. This offer was again declined by the DHT Board.

The company also reported that it had agreed with Ship Finance to terminate the long term charter for the 1998 built VLCC Front Century upon the sale and delivery of the vessel to a third party and that it had
acquired two VLCC resales delivering Sep. and Oct. 2017 from shipbuilder DSME, Korea, at $77.5 million net per vessel

Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS commented:

“The improvement in crude tanker rates in the fourth quarter was attributable to seasonality as we approached winter in the Northern Hemisphere as well as a strong increase in OPEC volumes ahead of the implementation of production cuts. We remain of the opinion that 2017 will see pressure on freight rates as further newbuildings are delivered. As DHT’s largest shareholder we are surprised that DHT’s Board has declined our repeated attempts to discuss a business combination that we believe is clearly in the best interest of all shareholders. We continuously evaluate various ways to expand our fleet and are pleased to have acquired two VLCC resales at historically low prices without adding to the size of the global fleet. We continue to maintain our leading position in the tanker market, supported by our very low cash breakeven rates, large commercial scale and consistent access to capital. These are clear differentiators that the market has consistently ascribed value to.”

DHT sees things a little differently. It says this:

After a comprehensive review, conducted in consultation with its financial and legal advisors, the DHT Board concluded that the revised Frontline proposal continues to be wholly inadequate and not in the best interests of DHT or its shareholders. The Board notes, in particular, that Frontline’s revised proposal continues to significantly undervalue the contribution that DHT’s business and fleet would make to a combined company, including with respect to net asset value and profit contribution.

DHT received the revised offer on Friday, February 24, 2016. The DHT Board informed Frontline of its decision on Sunday, February 26 and, in its response letter, offered to have DHT’s co-CEOs meet with Frontline over the coming days. Frontline turned down offers to meet on either Tuesday, February 28 or Wednesday, March 1.

The response of the DHT Board to Frontline is available HERE

FRONTLINE RESULTS