TIDMFRO
Highlights
-- Frontline reports a net loss attributable to the Company of $13.0 million
for the fourth quarter of 2014, equivalent to a loss per share of $0.12.
-- Frontline reports a net loss attributable to the Company of $13.7 million
for the fourth quarter of 2014, when excluding a non-cash gain of $40.3
million arising on the termination of the charter parties for Front
Opalia, Front Comanche and Front Commerce, a non-cash gain of $1.5
million arising on the convertible bond buy back in October and a
non-cash loss of $41.1 million arising on the convertible bond swaps in
October and December, equivalent to a loss per share of $0.13.
-- Frontline reports a net loss attributable to the Company of $162.9
million for the year ended December 31, 2014, equivalent to a loss per
share of $1.63.
-- Frontline reports a net loss attributable to the Company of $37.9 million
for the year ended December 31, 2014, when excluding 'one time' gains and
losses equivalent to a loss per share of $0.38.
-- Frontline agreed with Ship Finance in July 2014 to terminate the long
term charter parties for the 1999 built VLCCs Front Opalia, Front
Comanche and Front Commerce and Ship Finance simultaneously sold the
vessels to unrelated third parties. The charter parties for the Front
Commerce, Front Comanche and Front Opalia terminated on November 4,
November 12 and November 19, respectively.
-- In October 2014, the Company bought $17.8 million notional principal of
its 4.50% Convertible Bond Issue 2010/2015 at a purchase price of
91.654%.
-- In October and December 2014, the Company entered into private agreements
to exchange $45.5 million of the Company's 4.50% Convertible Bond for an
aggregate of 12,996,476 shares and an aggregate cash payment of $19.6
million plus accrued interest.
-- In January 2015, Frontline took delivery of its second and final Suezmax
newbuilding, Front Idun.
-- Frontline issued 10,009,703 and 902,744 new shares under its ATM program
during January 2015 and February 2015, respectively.
-- In January 2015, the Company's ATM program was increased to having
aggregate sales proceeds of up to $150.0 million, from up to $100.0
million.
-- 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%.
Fourth Quarter and Full Year 2014 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces a
net loss attributable to the Company of $13.0 million in the fourth
quarter, equivalent to a net loss per share of $0.12, compared with a
net loss of $59.6 million for the third quarter, equivalent to a loss
per share of $0.60. Net income attributable to the Company in the fourth
quarter includes a non-cash gain of $40.3 million arising on the
termination of the charter parties for Front Opalia, Front Comanche and
Front Commerce, a non-cash gain of $1.5 million arising on the
convertible bond buy back in October and a non-cash loss of $41.1
million arising on the convertible bond swaps in October and December.
The net loss attributable to the Company in the third quarter includes a
vessel impairment loss of $41.5 million and a loss arising on the
de-consolidation of the Windsor group of $12.4 million.
The average daily time charter equivalents ("TCEs") earned in the spot
and period market in the fourth quarter by the Company's VLCCs and
Suezmax tankers were $27,900 and $26,000 compared with $24,600 and
$18,600 in the preceding quarter. The spot earnings for the Company's
VLCCs and Suezmax vessels were $27,400 and $27,200 compared with $23,900
and $19,500 in the preceding quarter.
Contingent rental expense represents amounts accrued following changes
to certain charter parties in December 2011 and increased in the fourth
quarter as compared to the third quarter primarily due to an increase in
actual spot market rates.
Interest expense, net of capitalized interest, was $15.4 million in the
fourth quarter of which $0.8 million relates to the Company's subsidiary
Independent Tankers Corporation Limited ("ITCL").
Frontline announces a net loss attributable to the Company of $162.9
million for the year ended December 31, 2014, equivalent to a loss per
share of $1.63 compared with a net loss attributable to the Company of
$188.5 million for the year ended December 31, 2013, equivalent to a
loss per share of $2.36. Frontline reports a net loss of $37.9 million
for the year ended December 31, 2014, equivalent to a loss per share of
$0.38 when the following 'one time' gains and losses are excluded -
impairment losses and loss on de-consolidation of the Windsor group of
$110.1 million, a non-cash gain of $40.3 million arising on the
termination of the charter parties for Front Opalia, Front Comanche and
Front Commerce, a non-cash gain of $1.5 million arising on the
convertible bond buy back in October, a non-cash loss of $41.1 million
arising on the convertible bond swaps in October and December and a loss
of $15.7 million incurred in the first quarter on the sale of Ulysses.
The average daily TCEs earned in the spot and period market in the year
ended December 31, 2014 by the Company's VLCCs and Suezmax tankers were
$24,800 and $21,100 compared with $17,400 and $13,400 in the year ended
December 31, 2013. The spot earnings for the Company's VLCCs and Suezmax
vessels were $24,100 and $21,500 in the year ended December 31, 2014
compared with $15,400 and $13,400, respectively, in the year ended
December 31, 2013.
As of December 31, 2014, the Company had total cash and cash equivalents
of $64.1 million and restricted cash of $42.1 million. Restricted cash
includes $41.1 million relating to deposits in ITCL.
In February 2015, the Company estimates average total cash cost
breakeven rates for the remainder of 2015 on a TCE basis for VLCCs and
Suezmax tankers of approximately $26,400 and $19,400, respectively.
Fleet Development
In September 2014, the Company agreed to sell the VLCC Ulriken (ex
Antares Voyager) to an unrelated third party and recorded an impairment
loss of $12.4 million in the third quarter. The vessel was delivered to
the new owners in October 2014.
Pursuant to an early termination agreement between three of the
Company's subsidiaries, which were accounted for under the equity method,
and Chevron; (1) the bareboat charters for the Altair Voyager, Cygnus
Voyager and Sirius Voyager were terminated as of October 1, 2014; (2)
the charter hire payments paid in connection with the early termination
agreement were used to redeem the remaining outstanding debt related to
these vessels; and (3) the three vessels were sold. This transaction was
cash neutral to the Company, except for an amount of $0.6 million which
became available to the Company.
The charter parties for the Front Commerce, Front Comanche and Front
Opalia terminated on November 4, November 12 and November 19,
respectively. These terminations resulted in a non-cash gain of $40.3
million in the fourth quarter.
Newbuilding Program
At December 31, 2014, the Company had one Suezmax newbuilding contract
and was committed to make newbuilding installments of $40.9 million. The
Company took delivery of this newbuilding, Front Idun, in January 2015
and drew down the remaining $30.0 million balance on its $60.0 million
term loan facility in order to part finance this vessel.
Corporate
In October 2014, the Company bought $17.8 million notional principal of
its 4.50% Convertible Bond Issue 2010/2015 at a purchase price of
91.654%. This transaction resulted in a non-cash gain of $1.5 million in
the fourth quarter.
In October 2014 and December 2014, the Company entered into private
agreements to exchange $45.5 million of the outstanding principal amount
of the Company's 4.50% Convertible Bond Issue 2010/2015 for an aggregate
of 12,996,476 shares and a cash payment of $19.6 million plus accrued
interest. These bond exchanges resulted in a non-cash loss of $41.1
million in the fourth quarter.
The Company had an issued share capital at December 31, 2014 of
$112,342,989 divided into 112,342,989 ordinary shares (December 31,
2013: $86,511,713 divided into 86,511,713 ordinary shares). The weighted
average number of shares outstanding for the quarter was 105,667,604.
In January 2015, the Company filed with the United States Securities and
Exchange Commission a prospectus supplement covering the second
amendment and restatement of its previously announced equity
distribution agreement with Morgan Stanley & Co. LLC, ("Morgan Stanley"),
under which the amount of new ordinary shares the Company may offer and
sell, at any time and from time to time through Morgan Stanley in an
at-the-market offering, was increased to having aggregate sales proceeds
of up to $150.0 million, from up to $100.0 million.
Frontline issued 10,009,703 and 902,744 new shares under the ATM during
January 2015 and February 2015, respectively. Following such issuance,
Frontline has an issued share capital of $123,255,436 divided into
123,255,436 ordinary shares.
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%.
The Market
The market rate for a VLCC trading on a standard 'TD3' voyage between
the Arabian Gulf and Japan in the fourth quarter of 2014 was WS 52,
representing an increase of WS 7 points from the third quarter of 2014
and WS 1 point lower than the fourth quarter of 2013. The flat rate
decreased by 6.7 percent from 2013 to 2014.
The market rate for a Suezmax trading on a standard 'TD5' voyage between
West Africa and Philadelphia in the fourth quarter of 2014 was WS 87,
representing an increase of WS 16 points from the third quarter of 2014
and an increase of WS 21 points from the fourth quarter of 2013. The
flat rate decreased by 6 percent from 2013 to 2014.
Bunkers at Fujairah averaged $447/mt in the fourth quarter of 2014
compared to $598/mt in the third quarter of 2014. Bunker prices varied
between a high of $568/mt on the 1(st) of October and a low of $320/mt
on December 19(th) .
The International Energy Agency's ("IEA") February 2015 report stated an
OPEC crude production of 30.5 million barrels per day (mb/d) in the
fourth quarter of 2014. This was unchanged from third quarter of 2014.
The IEA estimates that world oil demand averaged 93.5 mb/d in the fourth
quarter of 2014, which is an increase of 0.4 mb/d compared to the
previous quarter. IEA estimates that world oil demand in 2015 will be
93.4 mb/d, representing an increase of 1.1 percent or 1 mb/d from 2014.
The VLCC fleet totalled 638 vessels at the end of the fourth quarter of
2014, four vessels up from the previous quarter. Five VLCCs were
delivered during the quarter, one was removed. The order book counted 82
vessels at the end of the fourth quarter, which represents approximately
13 percent of the VLCC fleet.
The Suezmax fleet totalled 450 vessels at the end of the fourth quarter,
same as at the end of the previous quarter. Two vessels were delivered
during the quarter whilst two were removed. The order book counted 63
vessels at the end of the fourth quarter, which represents approximately
14 percent of the Suezmax fleet.
Strategy and Outlook
In the fourth quarter of 2014 and in the first quarter of 2015, the
Company reduced the outstanding balance on its convertible bond loan,
which matures in April 2015, from $190.0 million at September 30, 2014
to $93.4 million through bond buy backs and debt/equity swaps. Based on
existing cash resources, cash expected to be generated from operations
and monetizing or borrowing against shares in Frontline 2012 Ltd., the
Board is confident that Frontline will be able to repay all of its
convertible bond loan in April 2015.
The target is to rebuild Frontline into a leading tanker company.
The continued positive development in the crude tanker market into the
first quarter is likely to give an improved operating result (excluding
one time gains and losses) in the first quarter.
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
February 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.
4th Quarter 2014 Results: http://hugin.info/182/R/1897541/673501.pdf
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#1897541
http://www.frontline.bm/
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