BW Group Limited and DHT Holdings, Inc. (NYSE:DHT) are pleased to jointly announce today the acquisition of BW Group’s VLCC fleet by DHT. The fleet consists of 11 VLCCs, including two newbuildings due for delivery in 2018.
BW Group’s VLCC fleet has a value of approximately $538 million at prevailing broker valuations. 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 newbuildings. 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.
DHT expects that BW Group’s VLCC fleet will be delivered during the second quarter of 2017. As a result of the acquisition, DHT will have a fleet with an average age of 6.9 years, consisting of 30 VLCCs (including four newbuildings for delivery in 2018), and two Aframaxes.
BW Group’s CEO Carsten Mortensen said: “DHT Holdings is a leading crude oil tanker company in the maritime industry. DHT already has a modern and high quality fleet, and the addition of BW’s 11 VLCCs including newbuildings will make the company one of the world’s largest independent VLCC owners. We look forward to being a shareholder in this strong tanker platform”.
DHT’s Co-CEOs Trygve P. Munthe and Svein Moxnes Harfjeld 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.”
Cravath, Swaine & Moore LLP is serving as legal counsel to DHT. Sidley Austin LLP is serving as legal counsel to BW Group.