Frontline Again Asks DHT to Engage in Talks

In a written response to the board of DHT Holdings, John Fredriksen’s tanker operator Frontline has again requested that the company’s board engage in “good faith negotiations” on the earlier proposed business combination between the parties.

Additionally, Frontline asked the board of Bermuda-based DHT Holdings to redeem the poison pill and permit the tanker operator to take its offer directly to DHT’s shareholders.

DHT earlier argued that there is nothing stopping Frontline from making a formal tender offer directly to your shareholders, however, “that is misleading, because Frontline will not be able to close any tender offer it makes without triggering the punitive dilution provisions of the Shareholder Rights Plan you implemented precisely to prevent such an offer by Frontline,” Robert Hvide Macleod, Frontline’s Principal Executive Officer, said in the letter.

He continued that DHT “largely exempted BW Group Limited from these provisions of the poison pill and granted BW Group a matching right which acts as a significant deterrent not just in relation to Frontline but also to other potential bidders,” thereby providing BW Group with a pathway to seize control of DHT whilst preventing Frontline from doing so.

Frontline added that it remains “willing to discuss our offer and negotiate with you in good faith, provided that the DHT Board meets its fiduciary duties by agreeing to suspend the Shareholder Rights Plan and Investor Rights Agreement, which prevent Frontline (and any other bidder) from competing with BW Group’s efforts to seize control of DHT.”

The response letter was sent after DHT Holdings’ Board of Directors once again unanimously rejected Frontline’s proposal which was submitted on April 25 to acquire all of the outstanding shares of common stock of DHT at a ratio of 0.8 Frontline shares for each DHT share.

DHT Holdings’ board then said that the proposal is the “exact same” as the one submitted earlier this year, which the board unanimously rejected, “determining it significantly undervalued the contribution that DHT’s business would make to a combined company.”

Having reviewed Frontline’s latest proposal, made on the back of an increase of DHT’s fleet, the company said that, following that review, DHT’s board has unanimously concluded that the proposal “continues to be wholly inadequate for DHT and its shareholders.”

“The bottom line is that Frontline’s proposed takeover of DHT is so woefully inadequate that we do not believe further engagement will result in a fair offer for the DHT franchise,” the DHT board informed earlier.