Dorian LPG went on the offensive this week to deflect a public bid by BW LPG to merge the two shipping companies, saying the offer undervalues the former and is not in its best interests.
Dorian released a letter, dated Tuesday, June 26, 2018, that details its chairman's objections to the BW LPG offer, which is called an "unsolicited and conditional proposal to combine with Dorian in a stock-for-stock transaction."
Singapore-based BW LPG - which owns 14.2 percent of Dorian LPG - earlier in the week announced that it had sent an "open letter" to the board of directors of Dorian and its chairman, John Hadjipateras, citing the benefits of such a merger. Moreover, the former complained that its representatives were not invited to brief Dorian's board members on the proposal.
In a press release, Hadjipateras stated:
“We have received today’s letter restating BW LPG’s proposal that has already been rejected by our board. Our board has been and will remain responsive to the views of our shareholders. Of note, to date, we have received letters from shareholders (other than the BW Group) representing less than 5% of our outstanding shares showing openness to a combination, including from a shareholder that has a long-term position in BW LPG.
In contrast, our board, whose members are beneficial owners of more than 25% of our outstanding shares, has unanimously concluded that BW LPG’s proposal undervalues Dorian and is not in the best interests of Dorian and its shareholders. To cite a few key financial metrics, the proposed transaction would be dilutive to Dorian’s shareholders’ earnings in 2018, would create a more leveraged enterprise from Dorian’s perspective and fails to recognize that Dorian’s equity contribution to the combined enterprise would exceed 50% of the total, based on 2018 relative EBITDA and existing debt levels.”
Hadjipateras also denied the assertion that Dorian was shunning contact with BW LPG.
“...we have offered to meet with BW LPG to discuss an acquisition of BW LPG’s ECO-ships, to no avail. Our board is always open to opportunities that would enhance value for our shareholders and we are in regular communication with them. BW LPG’s wish to have Dorian’s shareholders subsidize its fleet renewal is not a reason compelling enough to divert us from our strategy to serve our own shareholders,” he said.
