John Fredriksen controlled Frontline Ltd. (NYSE and OSE: FRO) reports that it has entered into an agreement for the resale acquisition of six latest-generation ECO-type VLCC newbuilding contracts.
The six VLCCs are currently under construction at the Hyundai Heavy Industries shipyard in South Korea and are being acquired for an aggregate purchase price of $565.8 million, including an estimated $25.7 million in additions and upgrades to the standard specifications.
POTENTIAL FOR ZERO EMISSIONS
Designed to operate on different fuels, including biofuel, the vessels have the potential to be converted or retrofitted to operate on fuels such as LNG or ammonia. Consequently, says Frontline, “there is an ability to cut CO2 emissions to zero when technology, logistics and the regulatory framework allows for it.”
The newbuildings will also be fitted with exhaust gas scrubber technology, high-end anti fouling systems and digital energy performance solutions. They will also be compliant with specific Exxon Mobile lightering requirements to allow for maximum trading flexibility.
Frontline says the delivery schedule is “very attractive,” with five vessels delivering during 2022, starting in Q1, and the last vessel in Q1 2023.
The payment profile for this transaction means that the largest portion of the installments on each vessel will be made on delivery of each vessel. Frontline will meet the financing of the acquisition with existing borrowing facilities and will establish long term financing closer to delivery of the vessels.
“This transaction is consistent with our core company goals to increase exposure to the VLCC market without adding to existing vessel supply,” said Lars Barstad, Interim CEO of Frontline Management AS. “It further cements Frontline’s position in respect of owning a modern, high quality, fuel efficient fleet. The delivery schedule for these vessels is particularly attractive, in a timing window regarded closed for new orders. With this acquisition, Frontline is tangibly moving on our journey towards lower carbon emissions.”