Alexander Saverys: ‘Euronav has enormous potential as an independent company’

The shipping company CMB continues to oppose the merger of the tanker shipping companies Euronav and Frontline. CMB CEO Alexander Saverys has questions about the planned exchange ratio and the promised value creation. “Sooner or later we will have to sit down again.”

In a detailed press release, CMB, the shipping group owned by the Saverys family, listed all its objections to the merger of Euronav and Frontline on Tuesday morning. CMB does not believe that a merger of the two tankers will create added value, it mentions the swap relationship between Euronav

and Frontline

not transparent and fears dilution for Euronav’s shareholders.

The continued opposition from the Saverys family, Euronav’s largest shareholder with almost 40 million shares, threatens to make a squeeze-out and a full merger of Euronav and Frontline impossible. Alexander Saverys, CEO of CMB, is also aware of this.

CMB sounds very specific in the press release. What do you want to achieve with it? Is the intention to dissuade Euronav’s shareholders from accepting the swap offer?

Alexander Saverys: ‘Scare? No, certainly not. We just want to make it clear that we do not see any added value in the project. Our position is not a surprise to Euronav’s management. We remain very surprised that Frontline and Euronav have decided to proceed with their merger plans. ‘

Have there been contacts with Euronav?

save money: ‘We had contact not only with Euronav, but also with Frontline. We did not say anything earthquake there. We have reiterated that we do not like the merger. We believe that Euronav as an independent company has enormous potential. In our view, Euronav must continue with a strategy that focuses not only on tankers, but also on making the fleet and its activities greener. ‘

In the press release, we read that it is not your intention that Euronav will sell its tankers at once, but that the cash flows from the transport of oil will be reinvested in diversification and the greener fleet. Has your strategy not become clearer in this way?

save money: “People have wanted to say that Saverys would sell all tankers, just as the tanker market is in an upward cycle. That is completely wrong, we are not that stupid now. We have already proven that we can handle such a transition by reinvesting it. We want to achieve the same with Euronav. Instead of fully distributing the profits in dividends, the tanker company could invest them in greener ones. ‘

We are still very surprised that Frontline and Euronav have decided to proceed with their merger plans.

Alexander Saverys


The question is whether shareholders also see it that way. Most are in Euronav because they believe that transporting oil creates value for them.

save money: ‘It is true. They see Euronav as an oil share, and there is nothing wrong with that. However, we had hoped that a large part of the shareholders would also look in the future. But short-term thinking dominated the General Assembly. ‘

“However, we all know that oil is a limited story. If you explain the need to make shipping greener to people, especially young people, 99.9 percent think it’s pretty stupid that greener is the trend. That’s my big frustration. in the merger debate. ‘

You also fall over the swap relationship between Euronav and Frontline.

save money: “In our opinion, it does not bode well for Euronav. Further information is required. Frontline and Euronav dance around the hot porridge. They still have not explained how the exchange ratio of 1.45 Frontline shares for 1 Euronav share arose. At the general meeting in May, Hugo De Stoop, CEO of Euronav, refused to give any explanation. ‘

“However, it is easy to determine the value of shipping companies. You take the value of the fleet, deduct its debt, and you get the intrinsic value. We suspect that there will be a dilution for Euronav’s shareholders. The explanation is simple: Frontline traditionally trades above its intrinsic value on the stock exchange, Euronav below its intrinsic value. ‘

CMB’s continued opposition threatens to create a complex structure: a new Frontline, which – perhaps – owns the majority of Euronav, and Euronav, which is largely owned by the new Frontline. CMB becomes a ‘difficult’ minority shareholder in this. Is it usable?

save money: “Such a structure is certainly not optimal. Not for us or for the other shareholders. It’s the hallucination throughout history. Incidentally, we were not aware that Frontline would announce a swap offer on Monday. ‘

“In fact, one of the major driving forces behind this merger project is simply the inheritance planning of John Fredriksen, the Norwegian owner of Frontline. The combination of Frontline with Euronav will dilute its stake to 20 percent. That way, it will be easier for his daughters to sell their share. Everything else is water under the bridge

‘It is, of course, Fredriksen’s right, just as Euronav’s management can turn against us. But it is also our right to say that we do not agree. No one seems to question whether the merger project will create value. And where is the Belgian anchor if there is an alternative with CMB to keep the company in Belgium? Why should we sell it when there is a great plan on the table? ‘

In fact, one of the major driving forces behind this entire merger project is simply Frontline owner John Fredriksen’s legacy planning.

Alexander Saverys


What’s next?

save money: ‘We’ll see where the ship runs aground. We have a lot of patience. But sooner or later we will have to sit down again, even if Frontline should buy up more than 50 percent in Euronav. The complex structure that will arise will simply become useless. Everywhere shall conflict of interest emerge.’

Do you think Euronav and Frontline want to put pressure on CMB, on the Saverys family, by going through the merger?

save money: ‘You should ask them that. But we have a de facto blocking majority. I do not think there will be a day when 80 percent of Euronav’s shareholders attend a general meeting. ‘

“We are against the merger with Frontline because we believe that there is a better plan for the future. That is why we have built up a large stake in Euronav. Is it a very important investment for us? Yes. Is it a big investment for Fredriksen? None.’

“Bringing a company on the stock exchange takes an enormous amount of time and energy. It takes time to achieve a story like Euronavs. It is a company with a good balance sheet that will generate good cash flows over the next two years. Besides, we know it well. “

‘But we did not expect two things: that Fredriksen would set his sights on Euronav, and that the management would change completely.’

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