Frontline in debt-for-equity swap

John Fredriksen

DECEMBER 16, 2014 — John Fredriksen’s Frontline Ltd. (NYSE:FRO) looks to be taking advantage of stronger share prices to knock down the size of its bond repayment bill through swaps.

On Friday, the company’s shares soared more than 38% on reports that record numbers of VLCCs are headed for China, which is taking advantage of cheap crude prices to fill its stock piles.

Today, Frontline announced that it has entered into a private agreement to exchange $22,500,000 of the outstanding principal amount of the Company’s 4.5% Convertible Bond Issue 2010/2015 (the “Bonds”) for an aggregate of  3,984,375 shares at an exchange price of $3.12 per share, and a cash payment of  $9,562,500 plus accrued interest.  In addition, under the exchange agreement, Frontline has agreed to issue, on December 23, 2014, up to an additional 760,377 shares to the holders of the Bonds based on an agreed formula if the 5-day volume-weighted average price (VWAP) of the Company’s shares, for the period ending December 22, 2014, is lower than the exchange price, subject to a minimum VWAP price of $2.62 per share.The  issuance of the  common shares to  the holders of  the Bonds is expected to close on December 19, 2014.

Today’s debt for equity agreement follows one announced October 28 that saw Frontline knock $23 million off its bond indebtedness.