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Euronav Seeks Emergency Arbitration in Frontline Takeover Saga

Mike Schuler
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January 18, 2023

Belgian tanker company Euronav (NYSE: EURN & Euronext: EURN) has informed shareholders that is has filed for an application request for emergency arbitration in relation to Frontline’s (NYSE: FRO & OSE: FRO) termination of their definitive combination agreement.

The request comes as Euronav is seeking to suspend the termination in an effort to push the deal through. It accuses Frontline of “unilateral action” that “has no basis” under the terms of the combination agreement signed in July.

Frontline maintains that it was within its rights to terminate the agreement.

The combination would have created the world’s largest publicly-listed oil tanker owner and operator with a market capitalization of more than $6 billion and 146 vessels, consisting of 68 VLCC, 56 Suezmaxes, 20 LR2/Aframax and 2 FSO vessels.

“Euronav reiterates its determination that Frontline’s unilateral action in pursuing the termination of the combination agreement has no basis under the terms of the combination agreement and that Frontline failed to provide a satisfactory reason for its decision to pursue termination,” Euronav said in a statement on Wednesday. “After careful consideration, the Supervisory Board, entirely composed of independent directors, has considered that this decision is in the corporate benefit of Euronav.”

Frontline issued a statement that it “once again confirms that its decision to terminate the combination agreement was entirely lawful.”

The latest action comes after Norwegian billionaire John Fredriksen, who controls Frontline, increased his stake in Euronav to 20.31% through Famatown Finance Limited, which is indirectly controlled by trusts settled by Fredriksen for the benefit of his family.

Euronav said the emergency arbitration request is being taken as “a precautionary measure” amid Fredriksen’s increased stake in the company that could qualify him, through various entities within his orbit, as a related party.

On Tuesday, Euronav’s largest shareholder, the Saverys family-controlled Compagnie Maritime Belge (CMB), which controls more than 25% of the Euronav and has sought to quash the combination, requested to convene a general shareholders meeting during which CMB will seek to replace Euronav’s existing Supervisory Board with members of its own choosing. According to Belgian law, the meeting must take place within three weeks.

The definitive combination agreement agreed to in July 2021 envisioned a stock-for-stock transaction with an exchange ratio of 1.45 Frontline shares for every 1 Euronav share, where Frontline would be the parent and Euronav a majority-controlled subsidiary.

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