A US hedge fund is seeking to reverse a high-profile deal between Frontline, controlled by shipping magnate John Fredriksen, and one of Belgium’s oldest shipping dynasties.
Under an agreement announced last year, Frontline bought $2.35bn of oil tankers from crude oil shipping group Euronav, in exchange for selling a shareholding in the business to Compagnie Maritime Belge.
The transaction was meant as a solution to a deadlock between the two companies over control of Euronav.
But New York-based activist FourWorld has turned to the Belgian courts to unwind the deal, which made CMB the biggest shareholder in Euronav. FourWorld chief investment officer John Addis told the Financial Times it was “one of the most egregious cases we have ever seen” of a majority shareholder taking advantage of minority interests.
The hedge fund’s complaint, filed in Belgium on Monday, is the latest twist in the saga surrounding New York and Brussels-listed Euronav.
Founded in 1989, the group and CMB, which is owned by the Saverys family, became a joint venture partner in 1995. In 2022, Euronav announced a $4.2bn all-share merger with Frontline, to create what could have been the world’s biggest oil tanker group.
But the Saverys family, which owned some 13 per cent of Euronav at the time, was against the merger. Describing it as “value destructive”, CMB chief executive Alexander Saverys started increasing CMB’s stake in Euronav, which reached 25 per cent in December 2022. There would be “no legal merger without our support”, he said.
Frontline pulled out of the Euronav transaction in January 2023, prompting legal action by Euronav to try to make it happen. By March, CMB and Frontline had seats on its board, outnumbering independent non-executives. Two months later, Euronav chief executive Hugo De Stoop left the company.
Then in October, the Saverys family and Frederiksen reached an agreement they said would help end the deadlock. Frontline would buy 24 large, modern oil tankers from Euronav for $2.35bn, Euronav would drop arbitration proceedings, and CMB would buy the 26 per cent stake of Euronav owned by Frontline and affiliated groups for $18.43 a share.
FourWorld said it opposed this deal because Euronav had dropped its arbitration proceedings against Frontline, which the hedge fund said would have had an “extraordinarily strong chance” of winning “large-scale damages” that would have benefited minority shareholders.
Saverys said winning the arbitration case was not a given. “The company would have had to proceed with the case for years and years, incurring a lot of costs, keeping the company in deadlock for an indefinite period of time and all of this, for a very uncertain outcome,” he said.
He added: “We are adamant that we are in the right and that we have done nothing wrong. We will vigorously defend ourselves against these claims that have no merit.”
Lars Barstad, Frontline chief executive, said the company had yet to be served with legal papers by FourWorld, but added: “[We] insist that all [Frontline’s] dealings in relation to Euronav have been in accordance with applicable law and regulation.”
FourWorld has also included in its legal complaint objections to an agreement between Euronav and CMB made in December. Under this, the oil tanker group would use the proceeds from the Frontline transaction to buy CMB’s green energy business, CMB.Tech, for $1.15bn.
FourWorld described this as “extremely detrimental to the interests of the company and its minority shareholders”.
A Euronav investor document from May 2022 said it had received “multiple proposals” from CMB to buy CMB.Tech, but that its supervisory board thought this would “would not be in Euronav’s best interest and would most likely destroy shareholder value”.
Saverys said the green energy business was “totally different from where it was two years ago” and that the board’s rejection of a deal in 2022 “should also be seen in light of what was then the strategy of Euronav (ie pure focus on crude oil) and management’s preference for a combination with Frontline”.
In February this year — after the deadlock over Euronav had been resolved and the acquisition of CMB.Tech agreed — a tender offer by CMB for the rest of Euronav’s shares was triggered at $18.43. Most shareholders accepted.
Euronav is trading at about $16.40 and only about 9 per cent of its shares remain in free float.
FourWorld has also pursued legal action in Belgium’s markets court and a US district court. In the latter case, it failed to convince the judge to block the tender offer, but she did reject an effort by CMB to seal documents related to the case.
