What will become of John Fredriksen’s stake in International Seaways?
Attention is now turning to his holding in the tanker-owning rival after the Norwegian-born tycoon snagged two dozen VLCCs last week in a deal that will break the deadlock over the future of Euronav.
Nordea analyst Erik Hovi said any takeover attempt at Seaways is unlikely in the short term but suggested there were ways forward for Fredriksen, including potential alliances with other shareholders such as Israeli mogul Idan Ofer or Navig8.
The New York-listed company was always a third wheel in the Frontline-Euronav deal. Fredriksen opened his Seaways account just days after Frontline announced a $4.2bn merger deal with Euronav.
The Seaways stake amounted to just over 8m shares or 16% of the company, and many assumed it was a backup plan should the Euronav deal fall through.
Fredriksen’s camp, meanwhile, maintained it was primarily a financial investment.
Still, while pursuing the Euronav merger, Fredriksen touched off a fight with Seaways management by taking a more activist stance this May.
He said Seaways paid executives too much, opposed a poison pill provision capping his stake at 17.5% and chose to abstain from voting for board members, arguing that the company’s proposed 10-member board was too big.
Seaways shot back, accusing Fredriksen of targeting women on the company’s board and warning shareholders his dealings with Euronav, including eventually dropping the merger offer in January, hurt shareholders.
Euronav and Frontline would eventually work out the deal that would see Fredriksen sell his Euronav shares while agreeing to buy 24 VLCCs for $2.35bn.
Meanwhile, Fredriksen’s stake in Seaways ticked up to 8.3m shares.
However, Hovi said a deal with Seaways would be different.
He noted that tanker equities are trading higher across the board, which makes a deal more difficult, at least needing to see Frontline return to its historic trading premium. And Seaways lacks a prominent controlling shareholder, such as the Saverys family and Euronav.
“It’s not clear who Fredriksen could offload the shares to,” Hovi said.
One option, he pointed out, could be Fredriksen with Israeli mogul Idal Ofer or pool operator Navig8 carving up the company.
Both Ofer, through his Quantum Pacific Shipping, and Navig8 grabbed 5% stakes in Seaways last October.
Leverage in the system
“As long as the poison pill is in play, what it boils down to is Quantum Pacific and maybe Navig8 increasing their stakes too. Those together could make some sort of deal, transaction, or merger,” he said.
“At least that becomes more likely if we see some partners or friends of Fredriksen increase their stakes so they get more leverage in the system. I don’t think it’s something we’re likely to see in the short run.”
For its part, both the Fredriksen camp and Seaways have been relatively quiet about the path forward.
Seatankers was unreachable for comment, while Seaways chief executive Lois Zabrocky joked that she had never heard of either Frontline or Euronav during a Capital Link event in New York last week.
At the same event, New York analysts suggested Frontline still had some latitude to raise funds.
The company still likely has some capacity to take on debt, and it has not yet tapped equities markets, they said.
Meanwhile, Nordea’s Hovi believes the focus of the Fredriksen camp will, for now, remain on pushing the Frontline deal over the line.
“I think there’s been a lot of effort into finalising this very elegant [Frontline] final deal,” he told TradeWinds.
“Even though [the deal] seems to be very firm, the vessels still need to be delivered. That’s the main focus right now. Anything that happens after that is dependent on how Euronav and Frontline are trading and also International Seaways.”
