FRO - Termination of charter-in contracts of VLCCs
November 07 2013 - 08:06AM
Frontline Ltd. ("Frontline" or the
"Company") has agreed with Ship Finance International Limited
("Ship Finance") to terminate the long term charter parties for the
1998 and 1999 built VLCCs Front Champion and Golden Victory and
Ship Finance has simultaneously sold the vessels to unrelated third
parties. The charter parties are expected to terminate in November
2013.
The decision to terminate the long
term charter parties was taken in view of the required investment
to take the vessels through the 15 year special survey and current
market rates. While the VLCC spot market has recently shown some
signs of recovery, there is still a fundamental oversupply in the
market and the retirement of older vessels should assist in
balancing the market going forward.
Frontline has agreed an aggregate
compensation payment to Ship Finance of approximately $90 million
for the early termination of the charter parties, of which
approximately $11 million will be paid upon termination and the
balance will be recorded as notes payable, with similar
amortisation profiles to the current lease obligations, with
reduced rates until 2015 and full rates from 2016. Front Champion
and Golden Victory have the highest charter rates among the vessels
Frontline has chartered in from Ship Finance and the level of
compensation is a reflection of this.
These transactions will reduce the
Company's obligations under capital leases by approximately $105
million and the remaining obligations under capital leases
following these terminations will be approximately $735 million
related to 15 VLCCs and five Suezmax tankers.
November 7, 2013
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 00
Inger M. Klemp: Chief Financial Officer, Frontline Management
AS
+47 23 11 40 00
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#1741504
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