Widely varying shipbroker valuations of the VLCC fleet Euronav sold to Frontline last year seemed to align with their clients’ interests, a Belgian court has found.
Brussels Market Court ruled on Friday that John Fredriksen’s company underpaid for 24 modern VLCCs by $104m as a deal was struck to end a shareholder impasse between the tycoon and the Saverys family.
Euronav shareholder FourWorld Capital Management had gone to court to try to increase the mandatory bid price paid by the Saverys’ private Compagnie Maritime Belge for the remaining Euronav shares in March, after Fredriksen and Frontline sold out as part of the $2.35bn fleet transaction.
The court ruled the price should have been $0.52 per share higher than the $17.86 level CMB offered.
The ruling said it was “noteworthy that the ranking of the three brokerage estimates corresponds exactly to the interest of their respective principal”.
The highest valuation of the 24 tankers was that of Arrow Shipbroking, appointed by seller Euronav, at $2.449bn.
CMB’s chosen valuer, VesselsValue, came in at $2.314bn, while Fearnleys, Frontline’s appointee, assessed the VLCCs as worth $2.286bn.
“Mathematically, there is a one-in-six chance that this is a pure coincidence,” the court added.
“One cannot rule out the possibility that each party deliberately chose an estimator who was generally known to be habitually rather generous or rather reserved in their judgments,” the ruling read.
The court also said it was “notable that the assignment of the three shipbrokers was to value all of Euronav’s ships individually, with the underlying idea that the value of the fleet would then simply be its sum”.
“However, it is not self-evident that this sum method is necessarily market-based,” it added.
Reliable judgment?
If the transactions had taken place on market terms, Frontline would have paid a price of $2.45bn, the court found.
This is closest to Arrow’s figure of $2.449bn.
“The reliability of this estimate finds confirmation in the fact that it comes very close to the result of another plausible scenario, in which it is assumed that Euronav would have been able to push through, in direct negotiations, the highest of the three brokerage valuations, particularly that of Arrow which it had selected itself,” the decision reads.
Euronav, CMB and Frontline have not commented.
Fearnleys told TradeWinds all its valuations are done on standard market terms, at arm’s-length distance.
Arrow and VesselsValue have been contacted for comment.
