“Selling Euronav to the Vikings is not a good idea,” Alexander Saverys said a year and a half ago. Now the Norwegian John Fredriksen is sailing away with a significant part of the oil tanker company’s fleet. Still, Saverys is satisfied. ‘I know people have been waiting until this moment to invest in Euronav.’
‘No, I’m not going to repeat this every two years.’ Alexander Saverys smiles green when we speak to him on the day that, after a two-year feud, he can finally present a deal with the Norwegian John Fredriksen. As reference shareholders of the Belgian oil tanker shipping company Euronav – once founded and grown by Alexander’s father Marc Saverys – the two were diametrically opposed to each other for months.
Commitment? The future of Euronav. Fredriksen was looking for a merger with his own shipping company Frontline, but the Saveryses did not like to see that happen. They resisted with all their might and several millions and once again increased their interest in Euronav through their shipping holding company CMB. The two sides reached an agreement on Monday (see inset). CMB will acquire all Euronav shares of Fredriksen, representing 26.1 percent. Fredriksen in turn buys 24 supertankers from Euronav for 2.35 billion dollars (2.23 billion euros).
Deal done
The deal between the reference shareholders of the oil tanker shipping company Euronav has been completed. He foresees that the Saveryses will acquire all Euronav shares of the Norwegian Frontline and John Fredriksen (26.1%). Their interest therefore increases to 49 percent. They will then make an offer for the remainder of the capital at $18.43 per share. In parallel, 24 Euronav large VLCC tankers are sold to Frontline for $2.35 billion. Furthermore, the arbitration procedure between Euronav and Frontline is terminated. The Saverys family wants to maintain Euronav’s listing in Brussels and New York. There will therefore be no buyout offer after the takeover bid ends. It wants to diversify Euronav’s fleet to become less dependent on the transport of crude oil, make it greener to emit less and sell older or less efficient ships or replace them with new or young second-hand ones.
“Selling Euronav to the Vikings is not a good idea,” said Saverys, the CEO of CMB and the kingmaker in the negotiations with Fredriksen, in April last year when Euronav’s management announced the merger plans. Today he can finally hoist the Belgian tricolor, although it came at a price. Euronav has lost most of its supertankers.
Alexander Saverys: ‘We have sold 24 of the 69 ships. The Vikings were very strong. Fredriksen is the richest man in Norway, the richest man in shipping. And he owned 28.5 percent of Euronav. Then it is normal for him to take a third of the Euronav fleet to Norway in his drakar. But I don’t see that as plunder. He takes that in exchange for a lot of cash: 2.35 billion dollars. That’s not nothing. We will accelerate investing those dollars in other ship types, in better assets than tankers.’
Is Euronav changing its strategy? From the largest oil tanker shipping company in the world to a green player?
Saverys: ‘All shipping companies that transport oil have an end date. Oil will continue to be transported for a long time, but this will gradually decline. For Euronav I don’t want to pin myself down on that. I think we have to be pragmatic about that. We want to reduce the importance of our oil transport turnover. You can do this in two ways: you sell your oil ships or you purchase other, new ship types. We’re going to do a little bit of both.’
It is quite surprising that the pure oil investors will not agree with our vision.
‘For us, the greening plan is very clear: investing in ship engines running on hydrogen and ammonia. By 2040 we want our entire fleet to run on these fuels. But our business model will not change. We have an asset and we rent it to the operator. And he pays for the green fuel.’
Euronav was a pure oil player. There are probably few shareholders who have signed up for such green ambitions. Do you see the interest in the bid for the remaining shares as a popularity poll for the new strategy?
Saverys: ‘Those pure oil investors are certainly there. It is quite strange that they do not agree with our vision. But they have either already left the shareholding, or they will leave it by accepting this offer. But I think there is also a group that finds our proposal music to their ears and that will remain. And then I hope we reach a new group: the ‘grey to green’ shareholders. These are people who realize that to really participate in greening, they have to invest in companies that are gray today and that are polluting. I know there are people who have been waiting for this moment to invest until they were confident we could execute our strategy.”
If we make a lot of money, we like to pay dividends. But when there is a crisis, we keep them to get through the crisis or to invest when the market is low.
This has already cost you hundreds of millions of euros. How will CMB further finance the deal, which is a billion-dollar transaction?
Saverys: ‘We see it as an investment. We buy out Fredriksen at a much higher price, but also simultaneously sell a large part of the fleet for a good price. In terms of appreciation, that applies. The bank financing has been completed for all the shares outstanding. It will be a two-stage rocket. We are first going to buy Fredriksen’s shares, then we have to go through the bidding procedure until the end of March. To repay those debts afterwards, we have many sources: dividends, asset sales or refinancing.
What plans do you have for the dividend?
Saverys: ‘We can’t say much about dividends today. We are not yet in discussions about this with the board of directors or with management. That update will only be available after the general meeting at the end of November. But in the long term – and I know many investors have that question – it is very clear: we are going to maintain a dividend policy that is dependent on shipping cycles and our capital needs. If we make a lot of money, we like to pay dividends. But when there is a crisis, we keep them to get through the crisis or to invest when the market is low.’