SCHEDULE: Oaktree Sells TORM Stake to Hafnia for $311M

OCM Njord Holdings, an Oaktree affiliate, has agreed to sell 14.45% of TORM plc's Class A shares to Hafnia Limited for $311.4 million, subject to regulatory and governance conditions.

Summary

• OCM Njord Holdings S.a r.l., an affiliate of Oaktree Capital Management, L.P., has entered into a Sale and Purchase Agreement to sell 14,156,061 Class A common shares of TORM plc to Hafnia Limited.
• The sale price is $22.00 per share, totaling $311,433,342 in aggregate cash proceeds for OCM Njord.
• This transaction represents approximately 14.45% of TORM's issued Class A share capital, based on 97,952,429 shares outstanding as of June 4, 2025.
• The closing of the Purchase is expected to occur before February 11, 2026, and is subject to several conditions.
• Key closing conditions include the appointment of a Nominee (selected by OCM Njord in consultation with Hafnia) as a director and chair of TORM's board of directors.
• Further conditions involve no new material non-arm's length transactions by TORM exceeding US$1,000,000 (single) or US$5,000,000 (aggregate) between the agreement date and closing.
• Regulatory approvals are required from Brazil (Administrative Council for Economic Defense CADE) and Denmark (foreign direct investment authorization).
• Additional regulatory approvals or clearances under Antitrust Law and/or Foreign Direct Investment Law in any jurisdiction may be required if deemed material by Hafnia or if a 'Call-In' for review occurs.
• TORM has provided undertakings to the Seller to use reasonable endeavors to prevent material value transfers to shareholders (excluding certain dividends), spin-outs, demergers, share splits, reclassification of rights, or creation of new share classes prior to closing.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. The filing details a clear, significant transaction with defined terms and a strategic buyer. While subject to conditions, the agreement itself represents a structured exit for Oaktree and a strategic entry for Hafnia, which can be viewed favorably for market clarity and potential future strategic developments for TORM. No negative operational news for TORM is present.

Positives

• OCM Njord Holdings is monetizing a significant equity stake in TORM plc, realizing substantial cash proceeds of $311,433,342.
• Hafnia Limited is making a strategic investment in a peer company, acquiring a 14.45% stake in TORM plc.
• The transaction includes a condition for the appointment of a Nominee, selected in consultation with Hafnia, as a director and chair of TORM's board, potentially enhancing corporate governance and strategic alignment.
• The defined terms and conditions of the Sale and Purchase Agreement provide clarity for all parties involved.

Negatives

• The transaction is subject to multiple closing conditions, including regulatory approvals and board appointments, which could delay or prevent its completion.
• The exit of a major financial investor like Oaktree Capital Management, L.P. could be interpreted by some as a signal of reduced long-term conviction, although it aligns with private equity investment cycles.
• Hafnia is obliged to accept Regulatory Remedy Actions unless they result in a Material Adverse Effect exceeding US$100,000,000, which could impose unforeseen costs or divestitures.

Risks

• Failure to satisfy the Chair Appointment Condition, requiring the appointment of a Nominee as a director and chair of TORM's board.
• Non-satisfaction of the Transaction Integrity Condition, which prohibits new material non-arm's length transactions by TORM exceeding US$1,000,000 (single) or US$5,000,000 (aggregate) prior to closing.
• Inability to obtain required regulatory approvals from the Administrative Council for Economic Defense (CADE) in Brazil and foreign direct investment authorization in Denmark.
• Failure to obtain other necessary approvals or clearances under Antitrust Law and/or Foreign Direct Investment Law in any jurisdiction, particularly if a 'Call-In' for review occurs.
• Potential for Regulatory Remedy Actions to be imposed by authorities, which could have a Material Adverse Effect on the Purchaser Group if they exceed US$100,000,000 in value.
• The Long Stop Date of February 11, 2026, could be extended, indicating potential for prolonged uncertainty regarding the transaction's completion.

Future Outlook

The transaction is expected to close before February 11, 2026, subject to the satisfaction of various conditions, including regulatory approvals and the appointment of a new director and board chair for TORM plc. The parties will cooperate to finalize regulatory screening and filings, with Hafnia leading the process. The Long Stop Date may be extended by one month under specific circumstances related to regulatory reviews.

Industry Context

This transaction involves two prominent companies in the shipping industry, TORM plc and Hafnia Limited, with Oaktree Capital Management, L.P. as a significant financial investor. Hafnia's acquisition of a substantial stake in TORM suggests a strategic move within the tanker sector, potentially indicating consolidation or a strategic partnership. The involvement of a major private equity firm like Oaktree in divesting its stake is a common occurrence as funds reach maturity or investment theses evolve.

Management Changes

Corporate Governance

Related Party Transactions

• A closing condition stipulates that no new material transactions or arrangements concerning TORM that are not on arm's-length terms and with a value exceeding US$1,000,000 (or US$5,000,000 in aggregate for multiple transactions) are approved or implemented between the date of the Sale and Purchase Agreement and Closing.
• The Seller also undertakes to procure that TORM does not approve transactions or series of connected transactions with an aggregate value in excess of US$1,000,000.00 between any member of the Company Group and the Seller Group without the Purchaser's consent.

Stakeholder Impact

• Shareholders: OCM Njord Holdings (Seller) will exit a significant portion of its investment, while Hafnia Limited (Purchaser) will become a new major strategic shareholder, potentially influencing future corporate strategy and dividend policy. Other shareholders will see a change in the ownership structure and board leadership.
• Board of Directors: A new Nominee will be appointed as a director and chair, bringing new perspectives and potentially shifting board dynamics.
• Management: The pre-closing conduct of business clauses impose certain restrictions on TORM's actions, requiring consent from the Purchaser for significant strategic decisions, which may affect management's autonomy during this period.
• Employees, Customers, Suppliers: While not directly addressed, a change in significant ownership and board leadership could lead to strategic shifts that indirectly impact these stakeholders in the long term, though no immediate operational changes are indicated.

Next Steps

• OCM Njord Holdings and Hafnia Limited will cooperate to satisfy all closing conditions, including regulatory approvals in Brazil and Denmark.
• Hafnia will lead the preparation and submission of regulatory filings and communications with relevant authorities.
• OCM Njord Holdings will select a Nominee, in consultation with Hafnia, for appointment as a director and chair of TORM's board of directors.
• TORM plc is expected to facilitate the appointment of the Nominee and adhere to undertakings regarding material transactions and shareholder value transfers prior to closing.
• The transaction is expected to close before February 11, 2026, upon satisfaction or waiver of all conditions.

Key Dates

Recommendation

This filing details a significant change in TORM plc's ownership structure, with a major financial investor (Oaktree) selling a substantial stake to a strategic peer (Hafnia). While the transaction itself is a positive step for Oaktree's monetization and Hafnia's strategic positioning, it does not provide new information on TORM's operational performance or financial health. The entry of a new strategic shareholder and the associated board changes could lead to future strategic shifts for TORM. A seasoned investor would likely 'hold' to observe the implications of this new ownership structure, the successful completion of the transaction, and any subsequent strategic announcements or operational guidance from TORM under the new board leadership before making a definitive 'buy' or 'sell' decision.

Keywords

TORM plc, Hafnia Limited, Oaktree Capital Management, Equity Sale, Shipping, Tanker, SEC Filing, Schedule 13D, Investment, Corporate Governance, Regulatory Approval, Shareholder Transaction