FRO Frontline

 
TIDMFRO 
 
 
   Frontline Ltd. (NYSE/OSE: FRO) (the "Company" or "Frontline") today 
announced that the Company has entered into a heads of agreement to 
amend the terms of the long term charter agreements with Ship Finance 
International Limited ("Ship Finance") for the remainder of the charter 
period. 
 
   A subsidiary of Frontline has 17 vessels on charter from Ship Finance 
with an average remaining charter period of 7.7 years. The new agreement 
will take effect from July 1, 2015 and will reflect a combination of 
reduced long-term base rates, increased profit split to Ship Finance, 
increased operating expenses payable by Ship Finance, release of 
Frontline's guarantee for the charters and an ownership interest in 
Frontline for Ship Finance. 
   -- New time charter rates for VLCCs: $20,000/day 
 
   -- New time charter rates for Suezmax tankers: $15,000/day 
 
   -- New opex for all vessels: $9,000/day payable by Ship Finance (previously 
      $6,500/day) 
 
   -- New profit split: 50%/50% above new time charter rates 
 
   -- 55 million Frontline shares will be issued to Ship Finance 
 
 
   The chartering counterparty will continue to be a subsidiary of 
Frontline, and in exchange for releasing Frontline from the current 
guarantee obligation on the charters, a cash buffer of $34 million ($2 
million per vessel) will be built up in the chartering counterparty. 
 
   Accrued cash sweep by Ship Finance from January through June 2015 based 
on the existing agreement, estimated to be approximately $20 million, 
will be paid to Ship Finance in July, 2015. 
 
   In the current charter arrangement, Ship Finance is entitled to a 25% 
profit split above an average of $26,737/day for the VLCCs and an 
average of $21,100/day for the Suezmax tankers, calculated and payable 
on an annual basis. Frontline prepaid $50 million in profit split in 
December 2011 and no additional profit split has so far accrued in 
excess of this amount. 
 
   The new profit split arrangement will start accruing from July 1 and 
will be calculated and payable on a quarterly basis. Going forward, 
profit split payments will not be subject to the previous $50 million 
threshold. 
 
   The estimated reduction in fixed charter payments to Ship Finance under 
the amendments to the charter agreements is approximately $283 million. 
In addition, the new agreement significantly strengthens Frontline's 
balance sheet and reduces its financial risk. 
 
   Based on closing share price on May 28, 2015, of $3.06 per share, the 
market value of the Frontline shares to be issued to Ship Finance is 
approximately $168 million, and based on the volume-weighted share price 
last 3 months of $2.64 per share, the value is $145 million. 
 
   The shares to Ship Finance will be issued concurrently with completion 
of the new agreement, representing approximately 27.7% per cent of the 
shares and votes in Frontline following completion of the share issue. 
Frontline has agreed to register those shares for resale with the US 
Securities and Exchange Commission. 
 
   In addition, Ship Finance owns approximately $116 million of senior 
unsecured amortizing notes in Frontline, which will remain unchanged. 
 
   CEO of Frontline Management AS, Robert Hvide Macleod said in a comment: 
"The new structure will reduce Frontlines cash break-even rates 
significantly and ensure a more sustainable long-term structure. This 
agreement significantly strengthens Frontline's balance sheet and 
reduces its financial risk. The board and management can now shift the 
focus from balance sheet restructuring to business development and 
growth. This represents a major milestone for the company." 
 
   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. 
 
   May 28, 2015 
 
   The Board of Directors 
 
   Frontline Ltd. 
 
   Hamilton, Bermuda 
 
   Questions should be directed to: 
 
   Robert Hvide Macleod: 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 
 
   This information is subject to the disclosure requirements pursuant to 
section 5-12 of the Norwegian Securities Trading Act. 
 
   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#1924866 
 
 
  http://www.frontline.bm/ 
 

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