Frontline Nets Financing for Eight Newbuilds, Eyes More

Image Courtesy: Frontline

Tanker owner and operator Frontline has secured a commitment for a senior secured term loan facility worth up to USD 328.4 million with China Exim Bank that will be used to finance eight newbuildings.

Specifically, the facility will be secured by four Suezmax tankers and four LR2 tankers, it matures in 2029 and has an amortization profile of 18 years.

This is in addition to a senior unsecured facility of up to USD 275 million from a company affiliated with Frontline’s largest shareholder, Hemen Holding Ltd, totaling in commitments for up to USD 603.4 million of new financing. The loan will be used to part finance the company’s current newbuilding program and potential acquisitions, Frontline said.

The ship owner added that it has also received a term sheet and is in the process of obtaining a commitment for a second facility with China Exim Bank in an amount of up to USD 324.6 million. It matures in 2033 and has an amortization profile of 15 years. This facility is insured by SinoSure, will be used to finance eight of the company’s newbuildings and will be secured by four Suezmax tankers and four LR2 tankers.

Six newbuilding deliveries expected in 2016

“The company has thus far obtained commitments for up to USD 394.4 million of bank debt financing for six LR2 tankers and four Suezmax tankers and is in the process of obtaining further commitments for up to USD 324.6 million for four LR2 tankers and four Suezmax tankers. Assuming we receive commitment for a further USD 324.6 million of bank debt financing, the remaining unfinanced instalments for our newbuildings will be USD 573.9 million,” Frontline said.

Based on committed and assumed bank debt of up to USD 1.05 billion, Frontline needs further USD 237 million to secure delivery of its current newbuilding program.

Frontline achieved net income of USD 78.9 million, for the first quarter of 2016.

“We are very pleased to report yet another strong quarter with net income attributable to the company of USD 78.9 million or USD 0.50 per share. Significantly, this was Frontline’s first full quarter following its merger with Frontline 2012 Ltd. Our performance, particularly in the VLCC segment was strong, despite some market weakness in February and March,” Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS commented.

Total operating expenses of USD 124.3 million in the first quarter were higher than the previous quarter due to the significant increase in the fleet size as a result of the merger, which impacted the entire first quarter compared with only one month of impact in the previous quarter.

Frontline took delivery of four LR2 tanker newbuildings in the first quarter and one LR2 tanker newbuilding in May 2016.

An additional six newbuilding deliveries are expected in 2016, and the final 17 newbuilding vessels are expected to be delivered in 2017.

 “These vessels have the capability to transport both crude and refined products, and while our primary focus has always been on the transportation of crude oil, our increasingly diversified fleet also provides us leverage to create value in refined product trades and helps to maximize our chartering strategy,” he added.

The company has ordered four VLCC newbuildings at STX Offshore & Shipbuilding Co (STX) shipyard which applied for court receivership last week, scheduled for delivery in 2017.

“Frontline has refund guarantees in place from first class banks and the remaining commitments total USD 319 million. The company is following the situation carefully and has commenced discussions with STX,” the company pointed out.

As of March 31, 2016, the company’s fleet consisted of 83 vessels, including newbuildings, with an aggregate capacity of approximately 15 million DWT.

In terms of outlook, Frontline believes that it is in a “unique position to take advantage of a strong tanker market.”

“Due to the size and diversity of our fleet, as well as our very low cash breakeven rates, we believe we will continue to generate solid high returns for our shareholders. We have a long track record of doing so, and we seek to carry on that tradition as we increase our leadership role in the market,” the company said.

Share this article

Follow World Maritime News

In Depth>


<< Nov 2017 >>
30 31 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 1 2 3

Maritime Information Warfare 2017

Maritime Information Warfare will focus on the growing need for navies to develop their information exploitation capabilities…

read more >


The Summit will gather key marine experts and companies around the globe which have a big influence in the industry…

read more >

The CWC 18th Annual World LNG Summit & Awards Evening

The CWC World LNG Summit will continue to give you access to premium networking opportunities as it brings together the who’s who…

read more >

Marintec China 2017

The largest maritime event in Asia Pacific, Marintec China connects maritime professionals from the entire shipbuilding supply chain together.

Over the years, Marintec China has grown to reflect the size and importance of the Asian maritime market. 2015 event is another record-breaking edition with the largest exhibition area and the highest number of industry professionals attending ever. The encouraging figures proven that China remains one of the major shipbuilding nations and Marintec China has been the most authoritative platform in Asia.

With the maritime industry facing great opportunities but also many challenges, it is important for the industry to connect and engage more to ultimately win new business in globally-significant markets. A visit to Marintec China is a great way to learn about the latest technology and innovation of the supply industry, a platform for industry professional to meet face to face, make connection and do business.

Marintec China is poised to be the definitive event and is undoubtedly a must-attend for all involved in the maritime industry.

Marintec China will be held from 5 to 8 December 2017 at the Shanghai New International Expo Centre in Shanghai, China and continue its dedication to serve as the “LEADING” platform “CONNECTING” the community and “STRENGTHENING” the maritime industry.

Marintec China offers the perfect opportunity for companies serving the maritime market to showcase their innovations, products and services to a wide audience. A platform for face to face meetings in business, creating new relationships and consolidating existing ones.

More info

read more >