Frontline restructuring moves ahead

f_commandFrontline Ltd., the world's largest tanker company, today issued an update on progress with the restructuring plan it announced December 6. That plan is backed by more than $505 million in guarantees from Frontline's largest shareholder, John Fredriksen controlled Hemen Holdings. It will see the company carved into two, with a new company Frontline 2012, acquiring five VLCC newbuilding contracts, six modern VLCCs and four modern Suezmax tankers from Frontline at fair market value. Frontline 2012 will also assume a total of $666 million in bank debt attached to the newbuilding contracts and vessels and a further $325.5 million in remaining newbuilding commitments.

Today, Frontline said that Frontline 2012 has completed a private placement with a small group of large institutional investors 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 to Frontline 201211.

Frontline Ltd. has been allocated 8,771,000 shares at a subscription price of $2.85, representing approximately 8.8 percent of Frontline 2012.

"When the Private Placement and restructuring is closed, Frontline will, if practically possible, seek to give Frontline's shareholders the possibility to participate in Frontline 2012," says a statement issued today. "This possibility represents no instant value. It might include a sale of Frontline's holding in Frontline 2012 to its shareholders at the issue price. Frontline's main shareholder, Hemen, that has subscribed for and been allocated 50,000,000 shares in Frontline 2012, will in the event that Frontline's holding in Frontline 2012 is not sufficient to satisfy the demand from Frontline's shareholders for Frontline 2012 shares, be positive to contribute."

If the proposed restructuring of Frontline is consummated, Frontline will receive $1,121 million in consideration for the sale of assets to Frontline 2012. The book value of the assets to be sold, including the remaining newbuilding commitments, was as of 30.09.2011 $1,433 million.

Frontline has received a fairness opinion from SEB Enskilda concluding that the consideration to be received by Frontline for the sale of assets referred to in the press release from Frontline dated December 6, 2011 is fair from a financial point of view.

Frontline is still negotiating with its banks and counterparts with the target of complete the restructuring prior to December 31, 2011.

December 16, 2011

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