Belgium’s Euronav is threatening legal action against Frontline for pulling out of their tanker tie-up.
The Hugo De Stoop-led shipowner escalated the war of words surrounding the collapse of the deal with a statement accusing the John Fredriksen-headed company of breaching the terms of the combination agreement signed in July last year.
Euronav said it had carried out further detailed considerations of Frontline’s termination letter with legal and financial advisors.
The outfit said: “Euronav has determined that Frontline’s unilateral action in pursuing the termination of the combination agreement has no basis under the terms of the combination agreement between the two companies.”
The VLCC and suezmax owner alleged Frontline had failed to provide a satisfactory reason for its decision to pursue a termination on Monday.
“Euronav has complied with its obligations under the combination agreement and has done everything in its power to make this transaction a success,” the company said.
Euronav added that the supervisory and management boards are now in the process of analysing the company’s options and will take appropriate action to protect and preserve the rights and interests of itself and its stakeholders.
This includes, but is not limited to, potential litigation and/or arbitration.
Euronav’s share price has plunged following the news, while Frontline’s has prospered.
“Euronav will continue to execute on its value creation strategy and is well positioned to seize the opportunities offered by improving market conditions and maximise its value potential for all stakeholders,” the shipowner said.
Talks continue with investors
The company remains in constructive dialogue with its shareholders, the New York and Brussels-listed operator said.
Euronav said it was reserving all its rights under the agreement, following the breaking of the news on Monday.
Frontline has not given any public reason for its move, but chief executive Lars Barstad told TradeWinds that an amicable solution could not be found after Euronav’s largest shareholder — the Saverys family’s shipping company CMB — blocked a full legal merger.
He also said “communications” around the issue at the time that the family achieved the blocking level of 25% ownership called into question the effectiveness of running the fleets in parallel as a result.
On Wednesday, TradeWinds reported that a clause in the agreement states that any actions by CMB would not constitute a valid reason for ending the deal.
Following the latest Euronav statement, Barstad told TradeWinds: “We believe that there are valid grounds for the termination.
“There is of course always a risk of differences of opinion when an agreement is terminated by one of the parties thereto.”
The fallout from the failed transaction continues to grow after CMB said it wanted talks on the future of Euronav and its leadership.
