Highlights
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Frontline reports net income
attributable to the Company of $17.4 million for the second quarter
of 2015, equivalent to earnings per share of $0.11.
-
Frontline reports net income
attributable to the Company of $48.5 million for the six months
ended June 30, 2015, equivalent to earnings per share of
$0.35.
-
The Company issued 18.8 million new
shares in the second quarter under its ATM program and this program
is fully utilized.
-
In April 2015, the remaining
outstanding balance on the convertible bond of $93.4 million was
repaid in full upon maturity.
-
In June 2015, the Company agreed with
Ship Finance to amend the long term charter parties relating to 17
vessels such that the fixed charter payments to Ship Finance are
expected to decrease by approximately $283 million.
-
In July 2015, the Company and Frontline
2012 entered into an agreement and plan of merger.
Second Quarter
and Six Months 2015 Results
The Board of Frontline Ltd. (the
"Company" or "Frontline") announces net income attributable to the
Company of $17.4 million in the second quarter, equivalent to
earnings per share of $0.11, compared with net income of $31.1
million for the previous quarter, equivalent to earnings per share
of $0.25.
The average daily time charter
equivalents ("TCEs") earned in the spot and period market in the
second quarter by the Company's VLCCs and Suezmax tankers were
$50,600 and $33,800 compared with $49,400 and $33,100 in the
previous quarter. The spot earnings for the Company's VLCCs and
Suezmax vessels were $53,600 and $38,000 compared with $52,200 and
$35,000 in the preceding quarter.
Operating expenses in the second
quarter were $5.0 million higher than the previous quarter. An
increase in dry docking costs accounted for $5.9 million in the
quarter, as four vessels were dry docked in the second quarter
compared with no vessels in the previous quarter.
Contingent rental expense
represents amounts accrued following changes to certain charter
parties in December 2011 and was in line with the first
quarter.
Frontline announces a net income
attributable to the Company of $48.5 million for the six months
ended June 30, 2015, equivalent to earnings per share of $0.35. The
average daily TCEs earned in the spot and period market in the six
months ended June 30, 2015 by the Company's VLCCs and Suezmax
tankers were $50,000 and $33,400, respectively, compared with
$23,400 and $19,800, respectively, in the six months ended June 30,
2014. The spot earnings for the Company's VLCCs and Suezmax vessels
were $52,800 and $36,400, respectively, in the six months ended
June 30, 2015 compared with $22,600 and $19,800, respectively, in
the six months ended June 30, 2014.
In August 2015, the Company
estimates average daily total cash cost breakeven rates for the
remainder of 2015 on a TCE basis for its VLCCs and Suezmax tankers
of approximately $24,500 and $21,000 respectively.
Fleet
Development
In August 2015, the Company agreed
with Ship Finance to terminate the long term charter for the 1995
built Suezmax tanker Front Glory. Ship Finance has simultaneously
sold the vessel to an unrelated third party. The charter with Ship
Finance is expected to terminate during the third quarter of 2015.
The Company will receive a compensation payment of approximately
$2.2 million from Ship Finance. The number of vessels on charter
from Ship Finance will then be reduced to 16 vessels, including 12
VLCCs and four Suezmax tankers.
Corporate
In February 2015, the Company
bought $33.3 million notional principal of its 4.50% Convertible
Bond Issue 2010/2015 at a purchase price of 99% and recorded a gain
of $0.3 million in the first quarter of 2015.
In April 2015, Frontline issued
12,900,323 new shares under the ATM program and in May 2015,
Frontline issued 5,941,251 new shares under the ATM program and the
existing ATM program is fully utilized.
In April 2015, the remaining
outstanding balance on the convertible bond of $93.4 million was
repaid in full upon maturity.
In June 2015, the Company and Ship
Finance agreed to amend the terms of the long term charter
agreements for 17 vessels on charter from Ship Finance with an
average remaining charter period of 7.7 years. The new agreement
took effect from July 1, 2015. The general terms of the agreement
are the following: new time charter rates for the VLCCs of $20,000
per day; new time charter rates for Suezmax tankers of $15,000 per
day; new operating expenses for all vessels of $9,000 per day
payable by Ship Finance; a new profit split of 50%/50% above the
new time charter rates; and in connection with entering into the
agreement the Company issued 55.0 million of its common shares to
Ship Finance. The chartering counterparty will continue to be a
subsidiary of the Company, and in exchange for releasing the
Company from its current guarantee obligation, a cash buffer of
$34.0 million ($2.0 million per vessel) will be built up in the
chartering counterparty. The new profit split arrangement started
accruing from July 1, 2015 and will be calculated and payable
on a quarterly basis. Going forward, profit split payments will not
be subject to the previous $50.0 million threshold. The shares
issued to Ship Finance as a result of the new agreement represented
approximately 27.7% of the Company's shares and votes. The Company
has registered those common shares for resale with the Securities
and Exchange Commission.
Reference is made to the
announcement dated July 2, 2015, that Frontline and Frontline 2012
Ltd. ("Frontline 2012") have entered into an agreement and plan of
merger (the "Merger Agreement"), pursuant to which the two
companies have agreed to enter into a merger transaction, with
Frontline as the surviving legal entity ("the "Surviving Company")
and Frontline 2012 becoming a wholly-owned subsidiary of Frontline.
Frontline has on August 24, 2015, filed a registration statement
with the United States Securities and Exchange Commission ("SEC")
covering the common shares to be issued by Frontline to Frontline
2012's shareholders in the merger. The shareholders' meetings
of each of Frontline and Frontline 2012 will be held after the
registration statement is declared effective. The effectiveness of
the registration statement is subject, among other things, to SEC
review. This transaction will be accounted for as a business
combination using the acquisition method of accounting under the
provisions of ASC 805, with Frontline 2012 selected as the
accounting acquirer under this guidance.
The Company had an issued share
capital at June 30, 2015 of $198,375,854 divided into 198,375,854
ordinary shares (December 31, 2014: $112,342,989 divided into
112,342,989 ordinary shares). The weighted average number of shares
outstanding for the second quarter was 153,281,991.
The Market
The average rate for a VLCC
trading on a standard 'TD3' voyage between the Arabian Gulf and
Japan in the second quarter of 2015 was WS 64, representing an
increase of 5 WS points from the first quarter of 2015. The market
rate for a Suezmax trading on a standard 'TD20' voyage between West
Africa and Rotterdam in the second quarter of 2015 was WS 88,
representing a decrease of 2 WS points from the first quarter of
2015. The VLCC fleet totalled 639 vessels at the end of the
quarter, whilst the Suezmax fleet counted 449 vessels at the end of
the quarter.
The order book for tankers
represented about 16% of the overall tanker fleet.
Bunkers in Rotterdam averaged
$326/mt in the second quarter of 2015 compared to $280/mt in the
first quarter of 2015.
Strategy
and Outlook
The Board of Directors is very
pleased with the merger agreement entered into between Frontline
and Frontline 2012. With a large modern fleet, a strong balance
sheet and attractive cash break even rates, the combined companies
should be well positioned to generate significant free cash in a
strong market, and sustain a weak market.
Despite the slowdown seen in the
market the last weeks, the Board of Directors hopes the combined
companies will be in a position to start returning cash to
shareholders as quarterly dividends as soon as the merger is
completed. The intention is to pay out excess cash as dividends at
the Board's discretion.
The Board believes the combined
companies will be well positioned to grow through acquisition and
consolidation opportunities.
Important
Information For Investors And Shareholders
This communication does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. In
connection with the proposed transaction between Frontline and
Frontline 2012, Frontline has filed relevant materials with the
Securities and Exchange Commission (the "SEC"), including a
registration statement of Frontline on Form F-4 (File No.
333-206542) , filed on August 24, 2015, that includes a joint proxy
statement of Frontline 2012 and Frontline that also constitutes a
prospectus of Frontline. The registration statement has not
yet become effective. After the registration statement is
declared effective by the SEC, a definitive joint proxy
statement/prospectus will be mailed to shareholders of Frontline
2012 and Frontline. INVESTORS AND SECURITY HOLDERS OF FRONTLINE
2012 AND FRONTLINE ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders will be able to obtain free copies of the
registration statement and the joint proxy statement/prospectus
(when available) and other documents filed with or furnished to the
SEC by Frontline through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with or furnished
to the SEC by Frontline will be available free of charge on
Frontline's website at http://www.Frontline.bm. Additional
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed
with or furnished to the SEC when they become available.
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.
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
August 25, 2015
Questions should be directed
to:
Robert Hvide Macleod: Chief
Executive Officer, Frontline Management AS
+47 23 11 40 84
Inger M. Klemp: Chief Financial
Officer, Frontline Management AS
+47 23 11 40 76
This information is subject to the disclosure
requirements pursuant to section 5-12 of the Norwegian Securities
Trading Act.
2nd Quarter 2015 Results
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Frontline Ltd. via Globenewswire
HUG#1947564
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