UK: Frontline Plans to Acquire Five VLCC Newbuilding Contracts

The restructuring of Frontline has been approved by the Board of the Company and will in the next few days be put forward to our creditors and counterparties for approval. The proposed solution has been made possible through a massive commitment from Frontline’s major shareholder; Hemen Holding Ltd.

The major part of the restructuring consists of the following elements:

A new company, Frontline 2012, will be established and registered on the NOTC list in Oslo. Frontline 2012 will acquire five VLCC newbuilding contracts, six modern VLCCs and four modern Suezmax tankers from Frontline at fair market value. The value of these vessels, including the value of one time charter agreement, is based on independent appraisals, set at $1,121 million. In addition, Frontline 2012 will assume a total of $666 million in bank debt attached to the newbuilding contracts and vessels and a further $325.5 million in remaining newbuilding commitments. Further Frontline will be paid for working capital related to the assets acquired. The transaction will be supported by a fairness opinion.

Frontline 2012 plans to raise new equity in the amount of $250 million, of which Frontline will subscribe for 10 percent. A commitment for the underwriting of the remaining equity issuance has been received from Hemen. This commitment is subject only to final agreement with the banks and major counterparts. The purchase of the assets from Frontline is based on fair market value supported by independent appraisals. However the Board of Frontline 2012 and the guarantor of the Frontline 2012 equity will to the extent permissible by securities law, seek to give preference to Frontline equity holders to subscribe to the new capital in Frontline 2012. In view of the fact that the transaction is based on current market values there will not be given any tradable rights for subscription.

The Chief Executive of Frontline Management AS, Jens Martin Jensen, says in a comment: “In this very difficult situation we are extremely pleased with the understanding and flexibility shown by our leading banks and the major counterparts. We feel that significant upside will be kept for Frontline’s existing equity holders through the massive reduction in debt and newbuilding obligations that the proposed solution will bring. With the restructured cash break even rates Frontline will be extremely well positioned to meet the challenges the current oversupply of tankers has created and also benefit from a recovery in the tanker market going forward. We want to thank all the parties who have contributed to this solution, which ultimately, if implemented, will give significant extra value to our creditors, counterparties and equity holders.”

Frontline 2012’s ambition is to grow and become the consolidator in the tanker market when timing is right.

Shipbuilding Tribune Staff, December 6, 2011; Image: frontline

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Posted on December 6, 2011

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Marintec South America

Marintec – South American Maritime Exhibition for Shipbuilding, Platform and Maintenance

As part of the UBM/Seatrade portfolio, Marintec South America is a trade-show for anyone who wants to stay ahead in the maritime market.

Why visit?

  • Be inspired by thousands of products and services on show
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Why Exhibit in Rio de Janeiro/ Brazil?

  • Rio de Janeiro is the headquarter of Petrobras and its mains shipyards / ship owners
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  • Brazil produces over 2 million barrels of oil per day and the offshore production will double this by 2020
  • The Brazilian shipbuilding industry has been grown 19,5% per year since 2000
  • Investments in the industry should exceed BRL 200 billion before 2020
  • The oil and gas industry reached about 12% of the total Brazilian GDP and may reach 20% by 2020
  • The offshore exploration will move R$ 3.7 trillion over the next 30 years and will generate 87 million jobs
  • Petrobras’ total pre-salt needs estimate: 97 platforms, 510 support vessels and 140 oil tankers

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IBC’s ‘LNG Bunkering Summit’ returns for the 3rd time, with a view to profile latest developments and opportunities in key trade routes globally, and particularly in Singapore.

Join your industry partners as they crack the ‘chicken and egg’ dilemma while focusing on first-mover benefits, infrastructure, supply and pricing that makes switching to LNG a viable option.

The 3rd LNG Bunkering Summit is part of a suite of events in The Bunkering Week, which incorporates 3 co located conferences and will attract over 200 top decision makers. LNG Suppliers, Traders, Ship Owners and builders will convene to address commercial, regulatory, supply-demand, price and global market issues.

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Mail: IBC Asia (S) PTE LTD, 111 Somerset Road, TripleOne Somerset #10-06 Singapore 238164

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7th Bunkering in Asia 2015 Conference

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What then should the industry response be? How can we look ahead and determine strategies that have a positive impact on our business? If tapping successfully into new market segments was high priority, assessing watertight alternatives to protect your business is of equal importance.

Part of The Bunkering Week, the 7th Bunkering in Asia is back in Singapore to provide networking, expert viewpoints, and commercial opinions that matter.

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Scrubber Summit Conference 2015

When reviewing the Exhaust Gas Cleaning System investment, vessel route, the amount of time spent in an ECA region and long term HFO – MGO differentials are just some of the issues ship owners’ are grappling with.

The drop in oil prices though has shifted the market economics of investments in Exhaust Gas Cleaning Systems. Long touted as a viable option for complying with low sulphur regulations, the industry is now actively evaluating HFO – Scrubber economics, and taking decisions to embraced scrubber technology.

The Scrubber Summit is your platform to raise questions and get commercial and technical solutions from technology experts and ship owners. It is part of a suite of events in The Bunkering Week, which incorporates 3 co located conferences and will attract over 200 top decision makers.

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Contact Details:
Email: register@ibcasia.com.sg
Telephone: +65 6508 2401
Fax: +65 6508 2407
Mail: IBC Asia (S) PTE LTD, 111 Somerset Road, TripleOne Somerset #10-06 Singapore 238164

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