October 16, 2000
Based on acceptance forms from unsecured creditors in the Golden Ocean bankruptcy the total number of shares issued would have been approximately 2.1 million. The Board has, however, used its right to limit the number of shares to the contractual minimum, and pay the excess amount in cash. In total $18.7 million will be paid to external unsecured creditors. The decision was taken after a careful consideration of the issue price, Frontline's limited, existing forward capital expenditures and the company's strong cashflow. The Board thus sought to limit the dilution in future earnings and value development per share for its existing shareholders.
Chairman John Fredriksen commented: "We are very pleased with the fact that we today can include Golden Ocean as a subsidiary of the Frontline Group. When Golden Ocean filed their bankruptcy in January and Frontline started to acquire the unsecured debt the VLCC T/C spot rates were between USD 10 - 15,000 per day. Since then we have been through a strong recovery in the market. We feel that the addition of 13 modern VLCCs to the Frontline fleet positions our Group well for the future, and creates a well timed upside for Frontline's equity holders."
Chairman, CEO and president Craig H. Stevenson, Jr.said that "the company identified certain assets that were attractively priced and sought a fast private offering as a means to partially finance acquisition of the assets. Due to stock market conditions the equity could not be raised at a price which the company believed justified making the acquisitions. It and its advisors therefore determined to terminate the effort. The previously announced acquisition of the new Suezmax and the letter of intent for construction of one 47,000 dwt product tanker (and two options) are not affected by the decision."
OMI also confirmed that its previously announced bank refinancing closed as scheduled on October 12.
OMI's fleet currently comprises 21 vessels, consisting of five wholly-owned Suezmaxes, one bareboat chartered Suezmax, two time-chartered Suezmaxes, eight handysize product carriers, one handymax product carrier, three Panamax dwt product carriers which carry crude oil and one ultra large crude tanker. One new handymax product carrier is scheduled to be delivered in 2000. One additional new Suezmax is to be delivered in November 2000 or January 2001 and OMI has signed a letter of intent for the construction of one handymax product carrier for delivery in February 2002 and options for two additional handymax product carriers which would be delivered in the first half of 2003.
Canadian shipbuilding jobs could more than double
The bill includes: a loan guarantee program, patterned after the U.S. Title 11 program; exemption from Leasing Regulations identical to that given rail cars and trucks; and a refundable tax credit provision mirroring a provision in Quebec's tax regime.
"All major maritime nations, except Canada, see a strong, healthy shipbuilding industry as an important piece of their industrial and transportation infrastructure," said Peter Cairns, President of the Shipbuilding Association of Canada. "The KPMG study confirms that the passage of Bill C-213 would let Canada's shipbuilding industry compete fairly and win contracts against heavily subsidized shipyards around the world."
The report cites that productivity in Canadian shipyards has doubled over the last decade and that GDP per worker "now stands 68% higher than the Canadian average at $84,000." It goes on to say that the shipbuilding industry employs "highly specialized and often skilled positions that enjoy sectoral wages 33% higher than the Canadian average."
"Canadian shipyards are highly sophisticated, employing a skilled labor force and are often located in areas where these kinds of jobs are very hard to come by," Cairns went on to say.
"There are a lot of Canadian and international jobs to compete for," Cairns continued. "The Canadian laker fleet age averages over 25 years and upward of 30 will need to be replaced in the next decade. Offshore oil fabrication is also a Canadian specialty with expertise gained during Hibernia, Terra Nova, Cohasset and Panuke."
"Bill C-213 has been supported by MPs from all sides of the house," Cairns said. "In fact, the Atlantic Liberal Caucus was the first to bring forward the need for a shipbuilding policy to off-set interference in the international industry from foreign governments."
The forum will bring together labor and industry stakeholders and government representatives to provide them with the opportunity to explore, jointly, the challenges facing Canada's marine industrial sector.
"The Canadian shipbuilding and marine infrastructure industry is not reaching its full potential. A decline in work in Canada's shipyards is being experienced from Newfoundland and Labrador to British Columbia," said Premier Tobin. "It is crucial that the federal government move towards a policy of increased support for the industry and position Canada to take advantage of the opportunities in the marine industrial sector at home while becoming more competitive abroad."
The forum will focus on three key areas; opportunities available to Canadians in the area of the marine industrial sector, preparedness of the Canadian shipbuilding workforce, and the changes needed in national policies to secure the industry's future.
"New Brunswick has a long tradition in shipbuilding that requires a clear national policy to ensure its future," said New Brunswick Premier Bernard Lord.
"Shipbuilding is a very important part of the economy in the eastern part of our province," said Prince Edward Island Premier Pat Binns. "We have an extremely efficient and highly trained workforce. What concerns me is that without the ability to compete for and win contracts, this workforce will be lost to us. We need a national shipbuilding policy to assure that Canadian companies can compete."
"This meeting is an opportunity to explore potential development of the marine industrial sector in Nova Scotia and the Atlantic region, particularly, in the area of offshore fabrication for the oil and gas sector," said Nova Scotia Premier John Hamm. "It's a good first step."
Delegates to the forum will have an opportunity to engage key industry, labour and government representatives and assist in the development of a report. The Atlantic premiers will communicate the recommendations of the forum to the Prime Minister, and advocate its incorporation into a national marine industrial strategy.
The agreement with the Machinists was reached after 36 hours of negotiations with mediators in Washington, said Elayne Tempel of the Federal Mediation and Conciliation Service in Portland.
The proposed three-year agreement calls for wage increases of 4 percent, 4.5 percent and 5 percent in three steps, and cuts workers' health care premiums by up to one half, with average savings per worker of $400 to $500 in the first year of the contract. The company has also, reportdely, backed away from some cross-training proposals.
Union members will vote on the contract on October 22.