Hafnia/BW merger details revealed

Jan 04 2019

Hafnia Tankers has called an extraordinary general meeting to be held in Malmö, Sweden on 10th January 10 to allow its shareholders to consider, and approve a proposal for a triangular merger between Hafnia, BW Tankers and BW Tankers Corp.

It has been proposed that Hafnia and BW Tankers Corp, a Marshall Island subsidiary of BW Tankers, will merge under the laws of the Marshall Islands. The proposal was signed by the three entities on 21st December, 2018.

This agreement stipulates that BW Tankers Corp will acquire Hafnia's assets and liabilities, contracts, rights and obligations in their entirety. Hafnia’s shareholders will as a result receive consideration for their shares in the form of common shares of BW Tankers Limited.

Detailing the proposals, Hafnia said that merger will be carried out and completed, in accordance with the Business Corporations Act of the Marshall Islands. BW Tankers Corp shall be the surviving and continuing entity following the merger, and will continue to be a wholly-owned subsidiary of BW Tankers.

BW Tankers will issue common shares of par value $0.01 each of BW Tankers to Hafnia’s shareholders immediately prior to the merger as consideration for their shares being cancelled by the merger.

As soon as practically possible after the effective date of the merger, BW Tankers Corp will merge with BW Tankers. The latter will be the surviving entity of the second merger, and as such, it will be the ultimate purchaser of Hafnia's assets and liabilities, contracts, rights and obligations.

As a result of the merger, Hafnia’s shares will be cancelled. Hafnia’s shareholders will on the effective date - expected to be on or about 14th January, 2019 - receive common shares in BW Tankers by way of the issue of new, fully paid common shares in BW Tankers.

Following satisfactory completion of a mutual due diligence process and final negotiations, BW Tankers and Hafnia have agreed an exchange ratio of 42.8% to the shareholders in Hafnia and 57.2% to the shareholders in BW Tankers in relation to the issued share capital of BW Tankers after the merger. Deloitte has issued a fairness opinion that this exchange ratio is fair.

BW Tankers’ common shares will from the completion of the merger be registered in the Norwegian VPS system.

Its completion and the issuance of the consideration shares are expected to take place on or about 14th January, 2019, providing certain conditions are fulfilled.

The rationale behind the merger is that the management and board believed freight rates will rise in the future across the markets in which Hafnia operates, which will in turn lead to an uplift in both valuation and institutional investor interest in the business.

The combined company will have an attractive and high quality fleet active across all relevant segments, and the combined company will be one of the largest pure-play product tanker businesses in the world with a fleet of 86 vessels (including newbuilds and excluding sale and leaseback vessels).

Hafnia’s management said it expected that there will be a number of important synergies to be achieved with this combined entity, including improved financing terms, a global commercial platform with chartering teams in Singapore, Houston and Copenhagen and increased efficiency with both in-house technical, from BW Tankers and use of third party providers.

Following the merger, the technical departments will be based in Singapore, and commercial management headquartered in Copenhagen. Mikael Skov will be the CEO and Perry Van Echtelt will be the CFO. The board of directors will consist of Andreas Sohmen-Pao (Chairman), Chris Gradel, Alexis Atteslis, Gregory Feldman, Erik Bartnes, John Ridgway and Peter Read.

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