The heat has been turned up on International Seaways’ management by the fresh public attack from top shareholder John Fredriksen, but it is not likely to burn hot enough to start a consolidation fire.
That is the nutshell view of the current kerfuffle between Fredriksen’s Seatankers Group and Seaways leadership that was revived in an open letter from the shareholder, as seen by veteran Stifel shipping analyst Ben Nolan in a client note on Tuesday.
Nolan sees some validity to the Fredriksen complaints. Valuation could be better, Seaways’ “poison pill” leaves a bad taste and an annual shareholder vote on executive pay could be helpful, he said.
But the researcher is turning his thumbs down on Seatankers’ demands that the New York-based company reduce its board size by blocking the reappointment of chief executive Lois Zabrocky and Kate Blankenship.
And Nolan also does n’ot buy the argument that Seaways management is currently overcompensated.
“From Famatown’s perspective, hit your adversary where it hurts. We don’t view International Seaways’ compensation as excessive,” Nolan said, referencing the Seatankers subsidiary that nominally holds 17% of Seaways shares.
Fredriksen is agitating for change ahead of the 6 June annual shareholders’ meeting, where investors are being asked to approve a three-year extension of the “shareholder rights” language introduced last spring to stop the Norwegian billionaire from accumulating more than 17.5% of the stock.
The “pill” promises serious dilution if Fredriksen or anyone else acquires shares above that threshold, and Seatankers wants it removed.
“This would be very beneficial for Famatown and probably also for common shareholders. Effectively, without a poison pill, Famatown will be allowed to take a larger position without being required to offer a takeout premium for control, which is highly valuable,” Nolan wrote.
“However, adding to the position would likely push the share price higher even without a formal offer, so a win for shareholders. Generally, we and public shareholders do not like poison pills, and this is no exception.”
Nolan also offers some support to Seatankers’ contention that the New York-listed tanker owner isn’t valued as highly as it might be.
While the shares traded well last year, they’ve been weak since January and are currently at 73% of net asset value (NAV) in Stifel’s estimate, which is below peers.
“From the time of investment by Famatown in April 2022, INSW’s valuation has improved, but largely as a function of improvements across the space, particularly for names with heavy product tanker exposure,” Nolan said, using Seaways’ ticker symbol INSW.
“Ultimately, we expect continued fighting from Famatown, and we would like to see a consolidation with Frontline, but expect such an event might have a low probability.”
Seaways shares were trading off more than 2% on Tuesday afternoon to $37. The stock has seen a low of $17.89 and a high of $53.25 over the past 52 weeks.
Other tanker shares also were selling off on Tuesday, however, with Fredriksen’s public tanker company Frontline down 1.5% to $14.92.
