John Fredriksen’s pursuit of Belgian tanker giant Euronav has taken a sharp twist with the revelation that a private entity has taken a 16% holding in New York’s International Seaways, another major tanker owner that has been a close Euronav ally.
A holding by a private Fredriksen-controlled entity, Famatown Finance Ltd, of just over 8m shares in the US-listed owner has been revealed in a filing with US securities regulators.
This would make Famatown and Fredriksen Seaways’ largest stakeholder.
Fredriksen’s public company, Frontline, has secured a similar stake in Euronav and disclosed a signed term sheet aimed at a merger with the Belgian company that would create the largest public tanker company ever.
But the combination is being opposed by Euronav’s largest shareholder, CMB of Belgium, which has vowed a proxy fight for board control at an annual general meeting on 19 May.
CMB, controlled by the Saverys family, proposes a combination with its own subsidiary that is pursuing green-energy alternatives for shipowners.
The Famatown disclosure quickly spurred speculation in New York finance circles on Wednesday night as to what might be Fredriksen’s motives.
“It could be any number of things,” said one veteran banker. “He thinks the tanker market is about to run. It’s a hedge against some of the shareholder antics at Euronav. Or he wants to make it a three-way deal.”
The latter cannot be ruled out given the close history of cooperation between Euronav and Seaways, who jointly own a pair of FSOs and are partners in VLCC pool Tankers International.
With the proposed Frontline-Euronav combination already set to create a $4.5bn entity in a low tanker market, Seaways could add a further $1.1bn at its current share value, which increased about 8.6% in Wednesday trading in New York.
However, other factors could be in play as the Saverys clan promises to make things difficult for the merger to go forward amid its escalating shareholding in Euronav, now over 16%.
“Maybe Fredriksen doesn’t like the way Euronav management is acting. Maybe he wants more control. Maybe he wants to renegotiate the deal,” the banker said.
“It’s a stick that he can hold over Euronav and the deal.”
Fredriksen also may have taken advantage of moves by Seaways’ largest shareholder, Cyrus Capital, to sell down its stake in the stock.
New York-based Cyrus sold down to 2.99m shares in the Lois Zabrocky-led owner, having moved about 1m units in five separate disposals beginning on 6 April, filings show.
Norwegian investment bank Fearnley Securities said the move could be a pure financial investment.
But analysts Peder Nicolai Jarlsby, Erik Gabriel Hovi and Ulrik Mannhart added: “The move largely resembles the modus operandi seen in Euronav which has culminated in a signed term sheet to create the world’s largest public tanker owner.”
They added that International Seaways has over a long period of time traded at a major discount to net asset value (NAV).
Since 2018, Fearnleys estimates this at 70%, with Frontline’s share price at 30% above NAV.
“As such, we believe this (more likely than not) is a financial investment as opposed to an attempt to further consolidate the market,” said the analysts.
International Seaways, along with VLCCs, has a “relatively old” LR1/panamax fleet and about 40 MRs built on average before 2010, they added. Frontline largely holds modern eco vessels.