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Frontline Ltd. (FRO)

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Tuesday 06 December, 2011

Frontline Ltd.

FRO - Restructuring






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 
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(i) the releases contained herein are protected by copyright and 
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(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
    
Source: Frontline Ltd. via Thomson Reuters ONE

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