OSLO: Hafnia Limited announced that it has made a proposal to combine with Ardmore Shipping Corp in an all-stock transaction.  On June 19, 2020, Hafnia sent a letter to the chairman of the board of directors of Ardmore outlining its proposal and inviting the Ardmore Board to engage in a discussion regarding a transaction that would benefit the shareholders of both companies.

Less than two weeks later, Ardmore informed us that the Ardmore Board has rejected our proposal. Though Ardmore indicated in its response that the Ardmore Board has conducted a thorough review, to date there have been no substantive follow-up discussions or negotiations between Ardmore and Hafnia or our respective advisors.

“We are disappointed by Ardmore’s response and continue to believe that our proposal is in the best interests of Ardmore shareholders. A centerpiece of our business plan is our focus on creating shareholder value. We believe that large and well-capitalized shipping companies can be more cost-competitive in operations and financing, better equipped to make the necessary environmental investments to meet new regulations, and better able to provide public shareholders with scale and liquidity.  By optimizing for these benefits, we are confident that the combined company would provide significantly higher value for Ardmore and Hafnia shareholders in both the short- and the long-term,” a statement said.

Hafnia proposal to Ardmore contemplated:

• Demonstrable synergies and economies of scale to drive profits and improve value for customers. Hafnia has a weighted average funding margin of 170 bps over LIBOR and G&A costs at $843 per operating day, combined with leading commercial results, and expects synergies of $15-20 million per year from a combination.
• A net asset value (“NAV”)-to-NAV transaction valuing Ardmore’s shares at NAV, which implies a premium of approximately 70% to Ardmore’s trading price on June 12, 2020 (based on publicly available information).
• Control of approximately 17.9% of the combined entity, which would be a global industry leader in the oil product tanker market, with a controlled fleet of 210 vessels.
• A company with a combined NAV of approximately $1.5 billion and significantly improved market cap, with potential for greater liquidity and dividend capacity for its shareholders. Hafnia paid a quarterly dividend for Q1 2020 of $38.5 million equivalent to an annualized dividend yield of approximately 24%.
• Ownership of shares that are dual-listed on the New York Stock Exchange and Oslo Stock Exchange (“Oslo Bors”).

While no discussions between Hafnia and Ardmore are ongoing, this information is shared for market transparency and Hafnia remains open to consolidation discussions in the future.

Hafnia is one of the world’s leading oil product tanker owners and operators. Hafnia provides transportation of oil and oil products to leading national and international oil companies, major chemical companies, as well as trading and utility companies. Hafnia operates a fleet of 184 vessels in pools including newbuilds, of which 102 are owned or chartered-in including six owned LR2s, 27 owned and nine chartered-in LR1s, 41 owned and six chartered in MRs and 13 owned Handy vessels.

Hafnia has a strong history and reputation in chartering, operations and technical management and strives to offer customers the best integrated solution for their transportation needs. Hafnia is committed to maintaining high environmental, social and governance standards. The company has a global presence with offices in Singapore, Copenhagen and Houston and Mumbai.

Hafnia is affiliated with the BW Group, an international shipping organization that has worked in oil and gas transportation, floating gas infrastructure, environmental technologies and deep-water production for over 80 years, with six publicly listed affiliates.