Euronav’s first capital distribution since the ending of its shareholder tussle with John Fredriksen will help the Saverys family’s private Compagnie Maritime Belge cut its debt, analysts believe.
The US and Brussels-listed tanker company is proposing a hand-out of $4.57 per share, equating to $924m.
This will be a combination of a dividend and a repayment from the share issue premium.
Euronav could not pay dividends during the transaction to buy Fredriksen’s shareholding and sell 24 VLCCs to the tycoon, or the subsequent mandatory offer by CMB for Euronav’s shares that saw the Saverys clan reach a shareholding of 88.6%.
CMB will now receive $810m of the payout, Arctic Securities calculated.
Fearnley Securities said the payout was equivalent to a direct yield of 31%.
The dividend will be paid mostly through repayment of the share premium, which accounts for more than 90% of the sum, it added.
The size of the dividend was always going to be dependent on the mandatory bid, Arctic Securities said.
CMB acquired 69.2m shares for a total of $1.235bn during the offer.
“The dividend will help deleverage the parent, by receiving $810m in proceeds, and represent closure to the Euronav takeover chapter,” analysts Alexander Jost and Kristoffer Barth Skeie said.
“We believe a dividend was expected by the market, as management has made it clear that it intends to increase the leverage of the firm,” they added.
Arctic Securities calculates Euronav’s loan-to-value rising from 48% to 61% on the back of the dividend.
Euronav has also announced the sale of three VLCCs built in 2008 and 2009 for a capital gain of $83.5m while ordering a VLCC and two newcastlemaxes prepared for ammonia power.
“We view the fleet renewal as credit-neutral, and part of the normal course of business for Euronav,” the Arctic Securities team said.
“All else equal, large shareholder distributions increase the credit risk, and the balance sheet impact of the transaction is significant,” they added.
“That said, this is somewhat offset by the market expecting a dividend, strong market outlook and relatively short time to maturity for the bonds (2.5 years),” the analysts concluded.
Euronav booked a gain of $323m in the fourth quarter from selling the 24 VLCCs for $2.35bn, with a further $374m to follow in the first quarter of this year.
The company is also merging with the Saverys’ clean shipping company CMB.Tech.
Chief financial officer Ludovic Saverys told an earnings call that many stakeholders and analysts had been asking about the capital return policy.
He explained: “Previous management and Euronav as a stand-alone pure-play tanker company had aimed to dividend out 80% of its net profits.”
In the future, if the CMB.Tech deal is completed in March, “the board of directors has decided that the dividend policy will be a full discretionary one,” the CFO said.
