International Seaways has answered an open letter from its largest shareholder with a robust defence of its shareholder practices and value creation by its management.
International Seaways’ statement on Tuesday came a day after Famatown Finance ripped a decision by Seaways’ board to place a “poison pill” in its bylaws blocking further share accumulation by the John Fredriksen entity.
Famatown has amassed a 16.6% stake in the past month but will face significant dilution if it goes above 17.5%, thanks to the “stockholder rights agreement” announced by New York-listed Seaways on Monday.
In response to criticism of the poison pill defence, Seaways said: “It is particularly appropriate where, as here, affiliates of one of the company’s competitors have quickly and secretly amassed a significant stake in the company.”
Nonetheless, it said it would “carefully evaluate” proposals made in the Famatown letter, which include adding two directors to the board with joint input from the Seatankers Group and consulting Seatankers on ways to run the company better.
The bulk of Seaways’ statement, however, was directed at defending the record of current management, led by chief executive Lois Zabrocky and chief financial officer Jeff Pribor.
“We have taken decisive steps over the past 18 months to strengthen our industry position, enhance our scale, solidify our balance sheet, optimise our fleet and position ourselves to succeed in today’s improving rate environment,” Seaways said.
It cited the $2.2bn all-stock acquisition of Diamond S Shipping in 2021 as one of the highlights, having “doubled our net asset value, tripled our fleet size and enhanced our earnings power, in particular by adding attractive product tankers that are now leading the market recovery”.
All this had produced “substantial” momentum, the company argued, with stock up 52% year to date at 27 April, when Famatown disclosed its stake.
Seaways also defended the quality of its 10-member board, which it said had an average of 20 years’ experience in energy or transport, with a diverse set of expertise.
Seatankers said on Monday it is “extremely disappointed” at Seaways adopting the poison pill, which “will hinder communication with shareholders regarding strategic decisions and will not allow shareholders to realise the full value of their investments”.
Seatankers asserted that it can assist International Seaways management in capital allocation, including dividends, debt refinancing, cost reduction, including vessel operating expenses, chartering and strategic advice.
Fredriksen, meanwhile, is attempting to merge with Belgian tanker giant Euronav despite resistance from that company’s largest shareholder, CMB, and a proxy fight scheduled at its annual general meeting next week.
