Frontline Ltd. (NYSE/OSE: FRO) has
previously disclosed that it has submitted several proposals to the
management and Board of DHT Holdings Inc. (NYSE: DHT) to effectuate
a business combination between Frontline and DHT. Since at
least the date of the proposal made on January 27, 2017, Frontline
has actively sought to engage the management and Board of DHT on
the good faith understanding that they would take actions that
would be in the best interests of DHT's shareholders.
Frontline has now approached the
Board of Directors of DHT to consider a proposed new business
combination, which includes the ships already delivered and yet to
be delivered by BW Group Ltd. to DHT under the Vessel Acquisition
Agreement ("VAA") entered into by DHT and BW on March 23, 2017. The
offer would be effected at an exchange ratio of 0.8 Frontline
shares for each DHT common share. Frontline's offer is further
detailed in the April 25, 2017 letter to the DHT board, which is
set out below.
The proposed new combination of
Frontline and DHT, which represented a 18% premium to DHT's volume
weighted average price for the 10 days immediately prior to the
opening market price on April 21, 2017, and 15.8% premium to the
latest 30-day volume weighted average price, is expected to yield
increased benefits. In particular, it is expected that the
combination would create the largest public tanker company by fleet
size, market capitalization and trading liquidity; DHT shareholders
would benefit from a substantially lower G&A cost per vessel
and profit from synergy values. Frontline's superior access
to debt and equity capital markets should enhance free cash flow
generation further.
Frontline trusts that the Board of
DHT will now engage with Frontline in order to negotiate mutually
satisfactory transaction documents, and will halt all efforts to
give effect to the various entrenchment measures it has implemented
aimed at thwarting Frontline's offers. The effect of the VAA
and the Investor Rights Agreement, combined with DHT's staggered
board of directors and the Shareholder Rights Plan it introduced on
January 29, 2017 in response to Frontline's offer, has been to give
BW an unassailable advantage over any other bidder for DHT and
ensure that there is no realistic opportunity for any other offer
to emerge for DHT, except for an offer from BW.
Robert Hvide Macleod, Chief
Executive Officer of Frontline Management AS says:
"We are convinced
that the proposed new combination of Frontline and DHT will
maximize value for both sets of shareholders. We believe that this
outcome is in the best interests of shareholders of both companies
and will seek to ensure that shareholders of DHT have an
opportunity to consider our offer. We look forward to engaging DHT
management and its Board to achieve a mutually beneficial
combination with Frontline."
Copy of the Offer
Letter sent by Frontline to the DHT Board on April 25, 2017
DHT Management AS
Haakon VIIs GT.1, 7th floor
POB 2039 Vika, 0125 Oslo,
Norway
For the attention of: Erik A.
Lind, Chairman of the Board of Directors
Oslo, 25 April 2017
Terms for the
proposed combination of Frontline, Ltd. and DHT Holdings,
Inc.
Dear Mr Lind,
We write to ask the Board of
Directors of DHT Holdings, Inc. ("DHT") to
consider a proposed business combination ("offer") with Frontline Ltd. ("FRO"
or "Frontline"), which may be effected by way
of a one-step merger, tender offer or other appropriate
structure.
The offer includes the ships
delivered and to be delivered by BW Group Limited ("BW") to DHT under the Vessel Acquisition Agreement
("VAA") and takes into account shares of
common and preferred stock of DHT issued and to be issued to BW
thereunder.
The offer would be effected at an
exchange ratio of 0.8 Frontline shares for each DHT common
share.
The terms of the offer have been
approved by Frontline's Board of Directors, are not subject to any
financing condition and are conditioned only on fulfilment (or
waiver by Frontline) of the following conditions: (a) the
negotiation and execution of mutually satisfactory transaction
documents between Frontline, DHT and, if applicable, BW; (b)
approval from the requisite majority of DHT stockholders of any
one-step merger with Frontline or Frontline receiving acceptances
from stockholders which, together with its and its affiliates'
holdings, represent not less than 50.01% of the outstanding voting
stock of DHT (including both common and preferred stock voting as a
single class, as well as shares to be issued pursuant to the VAA);
and (c) termination of, or the grant by a court of competent
jurisdiction of permanent injunction(s) in respect of: (i) the DHT
Rights Agreement dated as of January 29, 2017; and (ii) the
Investor Rights Agreement ("IRA") with BW and,
in particular, those provisions of the IRA which prevent or
preclude Frontline from consummating the offer if approved or
accepted as contemplated by (b) above (collectively, the "poison pill arrangements").
When it is commenced, the offer to
all DHT's shareholders will remain open for at least 45
days.
The poison pill arrangements,
together with the DHT Board of Directors' decision not to permit
DHT shareholders to consider and vote on any of our prior offer
proposals, contravene the duties DHT's Board owes to all its
shareholders. Moreover, the poison pill arrangements threaten
to inflict irreparable harm on DHT, as well as Frontline, by
effectively blocking any entity besides BW from engaging in a
business combination with DHT.
We therefore demand that you
immediately halt all efforts to enforce, give effect to or permit,
the poison pill arrangements, and that you permit DHT stockholders
the opportunity to consider and vote on the offer. Please
confirm by 12 noon, New York time, tomorrow (April 26, 2017) that
you will immediately halt all efforts to enforce, give effect to or
permit, the poison pill arrangements and will commence negotiations
with Frontline on mutually satisfactory transaction documents.
The proposal outlined in this
letter is based on publicly available information.
Yours sincerely,
Robert Hvide Macleod
Principal Executive Officer
Frontline Ltd.
April 25, 2017
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
Contacts:
Robert Hvide Macleod: Chief
Executive Officer, Frontline Management AS
+47 23 11 40 84
Inger M. Klemp: Chief Financial
Officer, Frontline Management AS
+47 23 11 40 76
Additional Information
This communication does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. This
communication relates to a proposed business combination
transaction with DHT proposed by Frontline, which may become the
subject of a registration statement filed with the Securities and
Exchange Commission (the "SEC"). This material is not a substitute
for the prospectus and/or proxy statement Frontline would file with
the SEC regarding the proposed transaction if such a negotiated
transaction with DHT is reached or for any other document which
Frontline may file with the SEC or send to DHT or Frontline
stockholders in connection with the proposed transaction. INVESTORS
AND SECURITY HOLDERS OF Frontline AND DHT ARE URGED TO READ ANY
SUCH DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF
AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Such documents would be
available free of charge through the web site maintained by the SEC
at www.sec.gov
Forward-Looking Statements
Matters discussed in this
communication may constitute forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides safe
harbor protections for forward-looking statements, which include
statements concerning plans, objectives, goals, strategies, future
events or performance, and underlying assumptions and other
statements, which are other than statements of historical facts.
Words such as "believe", "anticipate", "intends", "estimate",
"forecast", "project", "plan", "potential", "may", "should",
"expect", "pending" and similar expressions identify
forward-looking statements. The forward-looking statements in this
communication are based upon various assumptions. Although we
believe that these assumptions were reasonable when made, because
these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible
to predict and are beyond our control, we cannot assure you that we
will achieve or accomplish these expectations, beliefs or
projections. The information set forth herein speaks only as of the
date hereof, and we disclaim any intention or obligation to update
any forward-looking statements as a result of developments
occurring after the date of this communication. In addition to
these important factors and matters discussed elsewhere herein,
important factors that, in our view, could cause actual results to
differ materially from those discussed in the forward-looking
statements include DHT's failure to accept Frontline's proposal and
enter into a definitive agreement to effect the transaction,
fluctuations in the value of Frontline common shares issued in
connection with the proposed acquisition, the strength of world
economies, fluctuations in currencies and interest rates, general
market conditions, including fluctuations in charter hire rates and
vessel values, changes in demand in the dry bulk market, changes in
our operating expenses, including bunker prices, drydocking and
insurance costs, the market for our vessels, availability of
financing and refinancing, changes in governmental rules and
regulations or actions taken by regulatory authorities, potential
liability from pending or future litigation, general domestic and
international political conditions, potential disruption of
shipping routes due to accidents, political events or acts by
terrorists, and other important factors described from time to time
in the reports filed by the Frontline with the Securities and
Exchange Commission.
This information is subject to the
disclosure requirements of section 5-12 of the Norwegian Securities
Trading Act.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Frontline Ltd. via Globenewswire
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