July 13, 2004
Frontline raises $21,5 million, buys single skin Suezmaxes
Frontline Ltd. (NYSE: FRO) today announced that it had completed a private placement of $21.5 million in new equity, by issuing 600,000 shares to several institutional investors at a purchase price of NOK 246 per share. Carnegie ASA, Enskilda Securities ASA and Fearnley Fonds ASA acted as placement agents for the issue.
The total purchase price for the vessels is $66.3 million. The vessels are sister vessels of four vessels already controlled by Frontline.
"The deal should not be seen as a strategic move away from modern double hull tonnage," says Frontline, but "as an opportunistic deal to maximize Frontline's cash flow in the current strong tanker market. "
"Based on achieving the rate which is indicated by the forward market for the next 18 months for modern Suezmaxes i.e. TC Income$37,000 per day, the vessels will be written down to today's scrap level before end 2005," says Frontline. The existing rules allow trading of the vessels until 2010. The sister vessels controlled by Frontline have in the first half of 2004 achieved a TC income of USD 42,000 per day.
Frontline says it "anticipates that the deal will lower the cash break even, improve earnings per share and increase dividend capacity."