Euronav and Gener8 Maritime have agreed to settle shareholder lawsuits against their pending merger in order to remove a hurdle to an expected closing of the deal this quarter.
Word of the settlement is disclosed in an updated proxy document filed by Euronav with US securities regulators today.
The two crude-tanker companies will make “supplemental disclosures” to satisfy complaints brought by two separate shareholders in US District Court for the Southern District of New York in March.
In return, plaintiffs Joseph Fragapane and Tom Mohr have agreed in principle to voluntarily dismiss the litigation, which claims Gener8 received inadequate valuation, failed to disclose key information and breached fiduciary duties to shareholders in agreeing to the $504m all-shares buyout.
“The defendants believe that the claims asserted in the complaints are without merit and no supplemental disclosure is required under applicable law,” Euronav said in its filing.
“However, in order to avoid the risk of adverse effect or delay in connection with the transaction and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the defendants have determined to voluntarily supplement this proxy statement/prospectus to address claims asserted in the complaints…”
Euronav adds that “the plaintiffs in the actions have agreed in principle to voluntarily dismiss the actions in light of, among other things, the supplemental disclosures".
The defendants continue to deny all allegations in the complaints.
Plaintiffs had asked the US court to issue an injunction against completion of the merger.
As TradeWinds reported in March, plaintiffs claim that the private equity and hedge funds making up a large chunk of Gener8’s ownership forced through an undervalued deal because it served their interests over those of the company and other shareholders.
Quebec resident Fragapane charged that because members of Gener8’s “transaction committee” — the sub-panel of board members who essentially sought out and negotiated merger and acquisition options — were either currently or formerly employed by Gener8’s private equity owners, their actions were “extremely problematic” and “not disinterested”.
They included one former employee of a major shareholder — Ethan Auerbach of BlueMountain Capital Management — and two current employees of leading holders: Adam Pierce of Oaktree Capital Management and Steven D Smith of Aurora Management.
“The fact that so many members of the board were simply stand-ins for large private equity funds is problematic given the divergent nature of the interests of these funds and those of the public stockholders of Gener8 writ large,” Fragapane’s complaint argued.
There is no indication in available court filings that either potential class-action complain has as yet been withdrawn or dismissed.
