Tanker consolidation continues apace with news today that Singapore’s BW Group has sold its fleet of 11 VLCCs, including two newbuildings, to New York-listed DHT Holdings in a deal worth $538m.
DHT, the subject of a takeover bid by John Fredriksen’s Frontline earlier this year, will finance the acquisition by issuing approximately $256m of DHT capital stock. DHT will also pay BW Group $177.36m in cash and assume approximately $104.16m in remaining obligations with respect to the two newbuildings. The cash requirements associated with the purchase are expected to be financed with bank debt.
Following BW Group’s delivery of all vessels and novation of newbuilding contracts to DHT, BW Group and its affiliates will own approximately 33.5% of DHT’s outstanding share capital and will be granted customary rights, including the right to appoint two directors to DHT’s board.
As a result of the acquisition, DHT will have a fleet with an average age of 6.9 years, consisting of 30 VLCCs – including four newbuildings for delivery in 2018, and two aframaxes.
BW Group’s CEO Carsten Mortensen said: “We look forward to being a shareholder in this strong tanker platform.”
DHT’s Co-CEOs Trygve P. Munthe and Svein Moxnes Harfjeld said in a joint comment today: “This is a great transaction for DHT and its shareholders. It is projected to be accretive to DHT’s earnings and will deliver cost synergies by lowering G&A expenses per ship. Importantly, it will further improve our already competitive cash breakeven levels. We have identified this as a time to expand again and this acquisition signifies our ability to execute on our plans.”
VLCCs have been a bulwark of the BW empire, dating back to pre-Bergesen days, when World-Wide founder Sir Y K Pao made tens of millions of dollars from adroit dealings in the sector.
Latterly, the focus of BW, now run by Pao’s grandson, Andreas Sohmen-Pao, has expanded more into gas and offshore with also a return into dry bulk.
DHT’s acquisition will also likely fend off any more aggressive manoeuvres by Fredriksen who had repeated bids for the company rejected earlier this year.