DHT slams Frontline

The war of words between senior management at tanker firms DHT Holdings and Frontline heated up Friday. Frontline, having had its takeover offer rejected by New York-listed DHT had then blasted the board of its takeover target saying a combined entity would be far stronger.

DHT fired back in a letter to shareholders in which it repeated the offer made by the John Fredriksen-led firm was “wholly inadequate” and “substantially undervalued” what DHT was actually worth.

DHT went on to claim that Frontline’s share price was “highly inflated”.

Frontline’s offer of exchanging one share in DHT for 0.725 shares in Frontline is equivalent in value at the present time of about $5 per DHT share.

“Frontline proposed to pay for us in highly inflated Frontline shares that trade significantly above their underlying ship values,” DHT said in a statement, adding: “The result would have been a dilution of more than 20% of net asset value per share for DHT shareholders.  This is clearly unacceptable.”

The DHT board then went on to point out that its VLCC fleet has an average age of about six years whereas Frontline’s VLCC fleet has an average age of almost 11 years.  Frontline’s VLCCs represent about 40% of their total fleet based on broker values.

DHT added a further dig in its final line to shareholders. “[Frontline’s] Suezmaxes and LR2 product tankers are relatively young but are predominantly built at what we consider to be second tier shipyards in China.”

Splash understands Fredriksen has still not given up hope of taking over rival DHT.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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