BW LPG Withdraws Proposal to Combine with Dorian
(Oslo, 8 October 2018)
BW LPG Limited (“BW LPG”, the “Company”, OSE ticker code “BWLPG”) today
announces that it withdraws its proposal to combine with Dorian LPG Ltd.
(“Dorian”) (NYSE: LPG) due to Dorian’s continued refusal to give a meaningful
response to BW LPG’s outstanding proposal, engage in constructive two-way
discussions, or schedule its annual meeting. In connection with the withdrawal
of its offer, BW LPG will also withdraw the candidates it previously intended to
nominate to stand for election to the Dorian board at Dorian’s 2018 Annual
Meeting of Shareholders.
Below is the text of the letter sent on October 8, 2018 to John Hadjipateras,
Chairman, President and Chief Executive Officer of Dorian.
Mr. John Hadjipateras
Chairman, President and Chief Executive Officer
Dorian LPG Ltd.
c/o Dorian LPG (USA) LLC
27 Signal Road
Stamford, Connecticut 06902
It has been over four months since we proposed a combination of BW LPG and
Dorian, and nearly three months since we improved our proposal. To date, we have
not had a formal response to our increased offer, and our meetings with you have
not given any indication that you are willing to work towards a mutually
Although we continue to believe in the benefits of the proposed merger, and that
a combination would be highly beneficial for your shareholders, we are first and
foremost committed to acting in the best interests of BW LPG’s shareholders.
Accordingly, we hereby withdraw our proposal. It is not normal practice nor in
the best interest of our shareholders to hold a proposal open indefinitely,
especially when it is highly favorable to the counterparty. We have shared the
facts with you on multiple occasions and include our specific reasoning here by
way of explanation:
Dorian was offered 46% of the combined company despite only contributing 30%
of the revenue-generating units and 25% of the revenue to the combined entity
(see slide 1 of the attached presentation).
As per the latest consensus estimates for EBITDA, net income and free cash
flow (CY2019-2020), and accounting for our respective leverage, Dorian would
have an implied equity share of no more than 16% of the combined company, but
was offered 46% ownership. This significant value accretion for Dorian is even
greater in an improved market environment (see slide 2).
Dorian’s operating cost is on average $5,600/day higher than BW LPG. This is
a result of our lower opex, lower G&A, lower financing cost, and lower capital
deployed per owned VLGC (see slide 3).
You have consistently stated that your eco-ships are more favorable than our
fleet. We accept that there is a fuel cost advantage to modern ships, but with
21 eco ships in the BW LPG fleet against 19 in the Dorian fleet, and with the
cost advantage of our vessels across the board, the current bunker cost of
$500/ton would have to exceed $2,000/ton before this becomes relevant (see slide
Our return on equity based on historically achieved TCEs is more than double
the level for your fleet given our optimization of operating cost and leverage
(see slide 5).
From a governance point of view, we are concerned by the lack of a meaningful
response, and it has become apparent that your approach to shareholder value
creation differs from ours. We note that an Annual Meeting of Shareholders has
not been called to date, more than 12 months after your last shareholder
meeting. We believe that this is neither shareholder-friendly nor in line with
good governance practices.
In the absence of constructive engagement, we have determined not to move
forward at this time. In light of our withdrawal, we will also retract the
nomination for independent directors that we put forward for election to the
We believe this is a lost opportunity for Dorian shareholders and for the
industry, but remain open to a future conversation should your board and
shareholders become convinced of the merits of consolidation.
Chairman of the Board of Directors
Citigroup Global Markets Inc. is acting as financial advisor to BW LPG and
Cleary Gottlieb Steen & Hamilton LLP, Cadwalader, Wickersham & Taft LLP and
Advokatfirmaet Thommessen AS are acting as legal advisors.
About BW LPG
BW LPG is the world’s leading owner and operator of LPG vessels, owning and
operating Very Large Gas Carriers (VLGC) and Large Gas Carriers (LGC) with a
total carrying capacity of over 4 million cbm. With four decades of operating
experience in LPG shipping and experienced seafarers and staff, BW LPG offers a
flexible and reliable service to customers. More information about BW LPG can be
found at www.bwlpg.com.
BW LPG is associated with BW Group, one of the world’s leading shipping groups.
BW’s fleet of over 250 vessels includes oil tankers, LNG and LPG carriers,
floating storage and regasification (FSRU) units, chemical tankers, dry cargo
carriers and floating production storage and offloading (FPSO) units.
This information is subject to disclosure requirements pursuant to Sections 5-2
and 5-12 of the Norwegian Securities Trading Act.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
include, but are not limited to, statements regarding BW LPG’s proposed business
combination transaction with Dorian (including the benefits, results, effects
and timing of a transaction), all statements regarding BW LPG’s (and BW LPG’s
and Dorian’s combined) expected future financial position, results of
operations, cash flows, financing plans, business strategy, budgets, capital
expenditures, competitive positions, growth opportunities, plans and objectives
of management, and statements containing the words such as “anticipate,”
“approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,”
“would,” “should,” “will,” “intend,” “may,” “potential,” “upside,” and other
Statements in this press release concerning the business outlook or future
economic performance, anticipated profitability, revenues, expenses or other
financial items, and product or services line growth of BW LPG (and the combined
businesses of BW LPG and Dorian), together with other statements that are not
historical facts, are forward-looking statements that are estimates reflecting
the best judgment of BW LPG based upon currently available information. Such
forward-looking statements are inherently uncertain, and shareholders and other
potential investors must recognize that actual results may differ materially
from BW LPG’s expectations as a result of a variety of factors, including,
without limitation, those discussed below. The forward-looking statements in
this press release are based upon various assumptions, many of which are based,
in turn, upon further assumptions, including without limitation, management’s
examination of historical operating trends, data contained in BW LPG’s records
and other data available from unrelated parties.
Such forward-looking statements are based upon management’s current expectations
and include known and unknown risks, uncertainties and other factors, many of
which BW LPG is unable to predict or control, that may cause BW LPG’s actual
results, performance or plans with respect to Dorian to differ materially from
any future results, performance or plans expressed or implied by such
forward-looking statements. These statements involve risks, uncertainties and
other factors discussed below and detailed from time to time in BW LPG’s filings
with the Oslo Bors contained on BW LPG’s website.
Risks and uncertainties related to the proposed transaction with Dorian include,
but are not limited to, uncertainty as to whether BW LPG will further pursue,
enter into or consummate the transaction on the terms set forth in the proposal
or on other terms, potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the transaction,
uncertainties as to the timing of the transaction, adverse effects on BW LPG’s
stock price resulting from the announcement or consummation of the transaction
or any failure to complete the transaction, competitive responses to the
announcement or consummation of the transaction, the risk that regulatory or
other approvals required for the consummation of the transaction are not
obtained or are obtained subject to terms and conditions that are not
anticipated, costs and difficulties related to the integration of Dorian’s
businesses and operations with BW LPG’s businesses and operations, the inability
to obtain, or delays in obtaining, cost savings and synergies from the
transaction, unexpected costs, liabilities, charges or expenses resulting from
the transaction, litigation relating to the transaction, the inability to retain
key personnel, and any changes in general economic and/or industry specific
Many of these factors are beyond BW LPG’s control. BW LPG cautions investors
that any forward-looking statements made by BW LPG are not guarantees of future
performance. BW LPG disclaims any obligation to update any such factors or to
announce publicly the results of any revisions to any of the forward-looking
statements to reflect future events or developments.
This press release is provided for informational purposes only and does not
constitute an offer to purchase or sell or the solicitation of an offer to
purchase or sell any securities.
Elaine Ong, CPA, CA
Chief Financial Officer
BW LPG Limited
Tel: +65 6705 5506
Head of Investor Relations
BW LPG Limited
Tel: +65 6705 5519
MacKenzie Partners, Inc.
Paul R. Schulman / David Whissel / Bob Marese
Tel: +1 212-929-5364
Joele Frank, Wilkinson Brimmer Katcher
Andy Brimmer / Andrew Siegel / Matthew Gross
Tel: +1 212-355-4449
Ekstern link: http://www.newsweb.no/index.jsp?messageId=460841
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