Thursday, March 23, 2017

DHT Expands Tanker Fleet with Acquisition

BW Group Become Major Shareholder
Shipping News Feature
BERMUDA – Crude oil tanker company DHT Holdings, has entered into an agreement to purchase global maritime firm BW Group fleet of eleven very large crude carriers (VLCCs) and two new buildings due for delivery in 2018, in a deal worth $538 million. DHT expects the VLCCs to be delivered during the second quarter of 2017 and as a result of the acquisition, will have a fleet with an average age of 6.9 years, consisting of 30 VLCCs, including four new builds for delivery in 2018, and two Aframaxes.

DHT will finance the acquisition by issuing approximately $256 million of DHT capital stock, consisting of approximately 32 million shares of DHT common stock and 15,700 shares of preferred stock that are mandatorily convertible into 15.7 million shares of DHT common stock subject to DHT shareholder approval. The implied value of the DHT common stock issued to BW is $5.37 per share.

DHT will also pay BW Group $177.36 million in cash and assume approximately $104.16 million in remaining obligations with respect to the two new buildings. The cash requirements associated with the purchase are expected to be financed with bank debt.

Following BW Group's delivery of all vessels and novation of newbuilding contracts to DHT, BW Group Limited and its affiliates will own approximately 33.5% of DHT's outstanding share capital and will be granted customary rights, including the right to appoint two directors to DHT's board. Trygve Munthe and Svein Moxnes Harfjeld, Co-CEOs of DHT, commented:

"This is a great transaction for DHT and its shareholders. It is projected to be accretive to DHT's earnings and will deliver cost synergies by lowering G&A expenses per ship. Importantly, it will further improve our already competitive cash break-even levels. We have identified this as a time to expand again and this acquisition signifies our ability to execute on our plans. The BW Group has a long history and a strong track record in the VLCC market, and they are aligned with our business model and strategy. We are truly excited about our new shareholder and their support of our growth strategy."