With the two-year pursuit of Belgian tanker owner Euronav now seemingly failed and left to the lawyers to sort the blame, Norwegian billionaire John Fredriksen this week shifted his attention across the Atlantic to another target, albeit hardly a new one.

New York-based International Seaways has been on Fredriksen’s consolidation radar since at least 2008, when it was still known as the “old” Overseas Shipholding Group, but it has proved to be an elusive prize for shipping’s greatest dealmaker.

Harsh exchange

This week’s exchange of public insults between the two camps probably isn’t getting the tycoon any closer either.

To be fair, Fredriksen stated through an “open letter” to International Seaways shareholders on Tuesday in the most overt language to date that it isn’t control he is seeking.

“Our intention has never been to acquire control of INSW but rather to work constructively with the company to effect meaningful improvements that will benefit INSW and all its shareholders,” reads a portion of the stinging indictment of International Seaways management from Fredriksen’s Seatankers Group.

You will have to forgive International Seaways management if it doesn’t seem to entirely trust the famed Viking raider, who after all did quietly amass a 16.8% position in the New York-listed outfit last year as his Famatown Finance became the largest shareholder.

Fredriksen’s stake surely would have grown larger had International Seaways not responded by blocking him with a “poison pill” in its bylaws, promising massive dilution if any holder moves beyond a 17.5% cap.

What was it that the late US president Ronald Reagan said to the Russians back in the Cold War of the 1980s?

“Trust but verify” was the Russian proverb he liked to repeat.

What seems to have sparked Fredriksen’s ire is International Seaways’ appeal to shareholders to renew the prescription on that pill.

As TradeWinds reported on 15 April, management is asking investors at the 6 June annual meeting to extend the measure — originally scheduled to expire in May — for a further three years. The shareholding cap will be lifted to 20%, but that doesn’t appear to placate Fredriksen.

Seatankers raises a mixed bag of grievances, some more valid than others.

For starters, they are not wrong in saying the poison pill — formally known as a shareholder rights agreement — is perceived as a negative on the corporate-governance front.

The amendment caused International Seaways to fall seven spots to 10th last June in equity analyst Michael Webber’s 2022 ESG Scorecard of 52 public companies. But that was still 10 places higher than Fredriksen’s public tanker owner, Frontline.

Lois Zabrocky, chief executive of International Seaways, has spent nearly her full career at the company and predecessor Overseas Shipholding Group. Photo: David Butler II/Marine Money

“In one sense, it can give the incumbent management team leverage in terms of securing the better value, but it can also create a moat around the target’s status quo and obstruct shareholder value creation,” Webber told TradeWinds at the time.

“Our model doesn’t consider the intent — it evaluates the race car, not the driver.”

International Seaways’ race car is likely to be dinged again when Webber publishes his new rankings, but management no doubt considers this preferable to Fredriksen buying unfettered access to the steering wheel.

Seatankers is also right when it says the trading valuation of International Seaways stock leaves something to be desired.

The New Yorkers were able to nearly close its traditional valuation gap against peers in last year’s tanker bull market, but the share has trailed off so far in 2023.

In one measure, investment bank Jefferies has the owner trading at 64% of net asset value, against a peer group average of 71%. Only Teekay Tankers trades as poorly of the 10 owners ranked. Frontline tops the group at 93%.

The reasons for the discount are hard to pinpoint, but chief executive Lois Zabrocky and chief financial officer Jeff Pribor have worked hard to build investor support since International Seaways was spun off from OSG in 2016.

The recapitalised balance sheet is stronger, the fleet larger partly through the well-timed acquisition of Diamond S Shipping in 2021, and shareholders have seen $370m of capital returned since 2020.

Back in 2012, (from left) Carl Erik Steen, Fredrik Halvorsen, Jane Blankenship and Tor Olav Troim at the Elbow Beach hotel in Bermuda for a general meeting of John Fredriksen companies. Photo: Elin Hoyland/DN

Zabrocky is an International Seaways/OSG lifer of more than 25 years, holder of a 3rd mate’s licence and veteran of a series of increasingly significant chartering jobs.

Pribor is a veteran banker and formerly the longtime CFO of Peter Georgiopoulos’ General Maritime.

The duo are not flashy, but they are industrious, methodical and experienced.

They are not Fredriksen, but then again, who is?

Seatankers is trying to make the case that Zabrocky is overpaid – she received $5.4m in compensation for 2022, mostly in restricted stock — but most analysts Streetwise spoke with this week are not buying it.

An unforced error?

And Fredriksen may have put a foot wrong with the assertion that the best way to reduce the size of International Seaways’ “bloated” board of 10 is to oppose the re-election of both Zabrocky and independent director Kate Blankenship, a former stalwart in the Fredriksen organisation.

At a time when “woke investing” and environmental, social, and corporate governance has gained significant traction, coming out against two of the three women to stand for re-election may prove to be particularly bad optics for the Fredriksen camp, which already has been called out by International Seaways for “targeting” the pair.

The attack on Blankenship, in particular, has raised some eyebrows. She had served as chief accounting officer and company secretary of Frontline and also sat as a director there for more than 15 years.

That close relationship seems to be gone. Blankenship no longer serves on any Fredriksen boards, but she is a director of two companies — Borr Drilling and 2020 Bulkers — launched by Tor Olav Troim, Fredriksen’s estranged business partner and former right-hand man.

In any case, we should know more on 6 June about which camp made a bigger impression on shareholders in this week’s clash.

The John Fredriksen drama series rolls on. Goodbye Antwerp, hello New York.

More ship finance news

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Tanker owner Frontline is reducing interest expenses through a new green loan with Dutch lender ING, agreeing to a senior secured facility for up to $129.4m at “attractive terms”. Click here to read.

Norwegian investment tycoons Arne Fredly and Oystein Stray Spetalen both bought Hoegh Autoliners shares after a sell-off prompted by a discounted private placement. Click here to read.