30/10/2014 09:03:17 Free Membership Login

FRO - Frontline Ltd. Successfully Completes Restructuring

Date : 01/02/2012 @ 2:57AM
Source : UK Regulatory (RNS & others)
Stock : Frontline (FRO)
Quote : 97.5  0.0 (0.00%) @ 1:00AM
Frontline share price Chart

FRO - Frontline Ltd. Successfully Completes Restructuring


 
TIDMFRO 
 
Frontline Ltd. ("Frontline" or the "Company") is pleased to announce that the 
restructuring of Frontline has been successfully completed. The major part of 
the restructuring consists of the following elements: 
 
Frontline has completed the sale of five VLCC newbuilding contracts, six modern 
VLCCs including one time charter agreement and four modern Suezmax tankers to 
Frontline 2012 Ltd. ("Frontline 2012") at fair market value of $1,121 million. 
In addition, Frontline 2012 has assumed $666 million in bank debt attached to 
the vessels and newbuilding contracts and $325.5 million in remaining 
newbuilding commitments. Further, Frontline will receive payment for working 
capital related to the assets sold. The estimated book value of the assets sold, 
including the remaining newbuilding commitments, at December 31, 2011 is $1,428 
million. The assets have been sold at fair market values assessed by three 
independent appraisals. The right to subscribe to shares in Frontline 2012 has 
thereby no instant economical value, and no subscription rights have thereby 
been given to Frontlines shareholders. 
 
On December 16, 2011, Frontline 2012 completed a private placement of 
100,000,000 new ordinary shares of $2.00 par value at a subscription price of 
$2.85, raising $285 million in gross proceeds, subject to certain closing 
conditions. These conditions have now been fulfilled and Frontline 2012 was 
registered on the NOTC list in Oslo December 30, 2011. Frontline Ltd. was 
allocated 8,771,000 shares at a subscription price of $2.85, representing 
approximately 8.8 percent of the share capital of Frontline 2012. Frontline 
2012 has used the proceeds from the private placement to acquire the assets from 
Frontline, prepay bank debt with installments for 2012 and capitalize Frontline 
2012. 
 
Frontline has obtained the required consents from lenders whose loans are 
transferred to Frontline 2012 and has further obtained agreements with its major 
counterparts whereby the gross charter payment commitment under existing 
chartering arrangements is reduced by approximately $320 million in the period 
2012-2015. 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 additional 
compensation for earnings achieved above original contract rates. 
 
As a consequence of the restructuring, the Company's sailing fleet, excluding 
the non recourse subsidiary ITCL, is reduced from 50 units to 40 units. The 
newbuilding commitments are reduced from $437.9 million to $112.4 million, which 
relates to two Suezmax tanker newbuiding contracts, and bank debt is reduced 
from $679 million to zero, following a prepayment of $13 million associated with 
a vessel which is not part of the transaction with Frontline 2012. The cash 
proceeds for Frontline following the completion of the transaction is 
approximately $70 million. 
 
The Board of Frontline wants to thank all the parties involved, including 
counter parties and financiers who greatly have contributed to the solution. 
Without the flexibility on terms and timing shown by them, a successful 
restructuring would have been impossible. 
 
Following the restructuring, Frontline should have significant strength to honor 
its obligations and meet the challenges created by a very weak tanker market. 
Through the sale of a limited number of the Company's assets, Frontline has 
avoided 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. 
 
January 1, 2012 
 
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 
 
Matters discussed in this document may constitute forward-looking statements. 
 The Private Securities Litigation Reform Act of 1995 provides safe harbor 
protections for forward-looking statements in order to encourage companies to 
provide prospective information about their business.  Forward-looking 
statements include statements concerning plans, objectives, goals, strategies, 
future events or performance, and underlying assumptions and other statements, 
which are other than statements of historical facts. 
 
Frontline desires to take advantage of the safe harbor provisions of the Private 
Securities Litigation Reform Act of 1995 and is including this cautionary 
statement in connection with this safe harbor legislation. The words "believe," 
"anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," 
"will," "may," "should," "expect" "pending" and similar expressions identify 
forward-looking statements. 
 
The forward-looking statements in this document are based upon various 
assumptions, many of which are based, in turn, upon further assumptions, 
including without limitation, management's examination of historical operating 
trends, data contained in Frontline's records and other data available from 
third parties.  Although Frontline believes that these assumptions were 
reasonable when made, because these assumptions are inherently subject to 
significant uncertainties and contingencies which are difficult or impossible to 
predict and are beyond Frontline's control, you cannot be assured that Frontline 
will achieve or accomplish these expectations, beliefs or projections. Frontline 
undertakes no duty to update any forward-looking statement to conform the 
statement to actual results or changes in expectations. 
 
Important factors that, in Frontline's view, could cause actual results to 
differ materially from those discussed in the forward-looking statements 
include, without limitation: the strength of world economies and currencies, 
general market conditions, including fluctuations in charterhire rates and 
vessel values, changes in demand in the tanker market, including but not limited 
to changes in OPEC's petroleum production levels and world wide oil consumption 
and storage, changes in Frontline's operating expenses, including bunker prices, 
drydocking and insurance costs, the market for Frontline's vessels, availability 
of financing and refinancing, ability to comply with covenants in such financing 
arrangements, failure of counterparties to fully perform their contracts with 
us, 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, vessel breakdowns, 
instances of off-hire and other important factors.  For a more complete 
discussion of these and other risks and uncertainties associated with 
Frontline's business, please refer to Frontline's filings with the Securities 
and Exchange Commission, including, but not limited to, its annual report on 
Form 20-F. 
 
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#1574508] 
 

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