FRO - Response from Frontline to the letter from the Board of DHT Holdings Inc. dated 7 May, 2017.

Frontline Ltd. (NYSE/OSE: FRO) today announced that Frontline has sent a response to the Board of DHT Holdings Inc. to the letter received from the Board of DHT Holdings Inc. dated May 7, 2017. 

Please find below a copy of the reponse letter sent by Frontline to the DHT Board:

Dear Mr. Lind,

We write in response to the 7 May 2017 letter from the Board of Directors ("Board") of DHT Holdings, Inc. ("DHT") regarding our 25 April 2017 letter proposing a business combination ("offer") between DHT and Frontline Ltd. ("Frontline").

Although your letter claims that the DHT Board is "open to exploring alternatives" that could enhance DHT shareholder value, it is clear from your response and prior conduct that this is untrue. You have repeatedly refused to allow DHT shareholders a realistic opportunity to consider our offer, and that, combined with your use of legal mechanisms to entrench the Board and management of DHT, can in our view only harm shareholder value and confirm the market's persistent view that DHT's share price should be discounted relative to NAV.

Your criticism of our offer is self-serving and misleading, particularly in light of the fact that DHT itself has deemed the offer "non-coercive". You focus solely on what percentages DHT would contribute to the combined company in terms of NAV, EBITDA and EPS, and fail to give due consideration to, first, the immediate value creation that our offer of 0.8 Frontline shares per DHT share would provide to your shareholders and, second, the increased upside potential of being invested in Frontline shares to which the market has consistently ascribed a premium to NAV, as opposed to DHT shares to which the market has consistently ascribed a discount to NAV.

You argue that there is nothing stopping Frontline from making a formal tender offer directly to your shareholders. 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 (i.e., the "poison pill") you implemented precisely to prevent such an offer by Frontline. In addition, you largely exempted BW Group Limited ("BW Group") 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. By your actions, you have provided BW Group with a pathway to seize control of DHT whilst simultaneously preventing Frontline (or any other bidder) from doing so. In particular, you have permitted BW Group to increase its holdings to 45% of DHT (while all other active shareholders are held under 10%). You have also given BW Group the ability to veto competing offers, in addition to its exclusive ability to make an offer directly to shareholders, as Frontline has been blocked from doing by the poison pill. The net effect of your actions (amongst other entrenchment mechanisms you have erected such as a staggered board of directors) has been to deprive your shareholders of any opportunity to properly consider Frontline's offer (an offer DHT has already determined is "non-coercive").