FRO - Restructuring
(Thomson Reuters ONE) -
Frontline Ltd. ("Frontline" or the "Company") is pleased to announce that 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 our major shareholder; Hemen Holding Ltd. ("Hemen"). 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's ambition is to grow and become the consolidator in the tanker
market when timing is right.
Frontline has achieved preliminary agreements with its major counterparts
whereby the rates in the existing chartering arrangements are reduced in the
period 2012 to 2015. This includes a rate reduction in the existing Ship Finance
International Limited ("Ship Finance") agreements of $6,500 per day for all
vessels. Frontline will pay Ship Finance an up front compensation of $106
million of which $50 million will be prepayment of profit split and $56 million
will be a release of restricted cash currently serving as security for charter
payments. Frontline will compensate the counterparties with 100 percent of any
difference between the renegotiated rates and the actual market rate up to the
original contract rates. Some of the counterparties will receive some
compensation for earnings achieved above original contract rates.
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 equity raised through the issue will be used to finance the acquisition of
the vessels and newbuilding contracts from Frontline, pay for working capital,
prepay senior secured debt, general corporate purposes and capitalize Frontline
2012 with cash.
Hemen will give a special guarantee of $250.5 million to make sure that all
necessary debt and equity is in place to take delivery of the full remaining
newbuilding program. In addition, Hemen will provide a guarantee of $30 million
to satisfy minimum cash requirements in Frontline 2012. Terms of these guarantee
are still to be finalized, however Hemen have agreed that any guarantee fee
should be paid in shares.
Hemen is giving total guarantees of $505.5 million in order to restructure
Frontline and establish Frontline 2012. These guarantees are valid until
December 31, 2011, and are given on the basis that a successful restructuring
can be agreed prior to December 31, 2011 and Frontline thereby can avoid any
breaches of loan covenants as per year end.
If the proposed solution is approved Frontline should have significant strength
to honor its obligations and meet the challenges created by a very weak tanker
market. The Company's sailing fleet, excluding the non recourse subsidiary ITCL,
will be reduced from 50 units to 40 units. The cash in the Company will be
increased with approximately $125 million. The newbuilding commitments will be
reduced from $437.9 million to $112.4 million. The bank debt will be reduced
from $679 million to $13 million. The gross charter payment commitment will be
reduced by approximately $336 million in the period 2012-2015. When including
the earnings from charter out agreements, the estimated daily cash break even
rates for VLCCs and Suezmaxes in 2012 will be reduced from $25,600 and $20,800
to $17,600 and $12,800, respectively. All the numbers above exclude the non
recourse subsidiary ITCL.
Frontline will, with the restructured cash break even rates and the solid cash
position, be amongst the best positioned tanker companies to serve its
obligations even if the market remains very weak. Until a clearer sign of
recovery can be seen in the tanker market, Frontline will remain cautious and
focus its resources on the present activities.
Through the solution of the sale of a limited amount of the Company's assets,
Frontline will avoid a heavy dilutive new equity offering and will thereby keep
significant upside for the existing Frontline equity holders if the market
recovers in the years to come.
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."
December 6, 2011
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
Questions should be directed to:
Jens Martin Jensen: Chief Executive Officer, Frontline Management AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 76
Forward Looking Statements
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including Frontline management's examination of historical
operating trends. Although Frontline believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond its control, Frontline cannot give assurance that it will achieve or
accomplish these expectations, beliefs or intentions.
Important factors that, in the Company's view, could cause actual results to
differ materially from those discussed in this press release include the
strength of world economies and currencies, general market conditions including
fluctuations in charter hire rates and vessel values, changes in demand in the
tanker market as a result of changes in OPEC's petroleum production levels and
world wide oil consumption and storage, changes in the Company's operating
expenses including bunker prices, dry-docking and insurance costs, changes in
governmental rules and regulations or actions taken by regulatory authorities,
potential liability from pending or future litigation, general domestic and
international political conditions, potential disruption of shipping routes due
to accidents or political events, and other important factors described from
time to time in the reports filed by the Company with the United States
Securities and Exchange Commission.
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Frontline Ltd. via Thomson Reuters ONE
[HUG#1569373]
Unternehmensinformation / Kurzprofil:
Datum: 06.12.2011 - 08:50 Uhr
Sprache: Deutsch
News-ID 94260
Anzahl Zeichen: 10012
contact information:
Town:
Hamilton
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 169 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"FRO - Restructuring"
steht unter der journalistisch-redaktionellen Verantwortung von
Frontline Ltd. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
