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2015-08-26

Frontline Ltd.: FRO - Second Quarter and Six Months 2015 Results

Highlights

* Frontline reports net income attributable to the Company of $17.4 million
for the second quarter of 2015, equivalent to earnings per share of $0.11.
* Frontline reports net income attributable to the Company of $48.5 million
for the six months ended June 30, 2015, equivalent to earnings per share of
$0.35.
* The Company issued 18.8 million new shares in the second quarter under its
ATM program and this program is fully utilized.
* In April 2015, the remaining outstanding balance on the convertible bond of
$93.4 million was repaid in full upon maturity.
* In June 2015, the Company agreed with Ship Finance to amend the long term
charter parties relating to 17 vessels such that the fixed charter payments
to Ship Finance are expected to decrease by approximately $283 million.
* In July 2015, the Company and Frontline 2012 entered into an agreement and
plan of merger.

Second Quarter and Six Months 2015 Results

The Board of Frontline Ltd. (the "Company" or "Frontline") announces net
income attributable to the Company of $17.4 million in the second quarter,
equivalent to earnings per share of $0.11, compared with net income of $31.1
million for the previous quarter, equivalent to earnings per share of $0.25.

The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the second quarter by the Company's VLCCs and Suezmax
tankers were $50,600 and $33,800 compared with $49,400 and $33,100 in the
previous quarter. The spot earnings for the Company's VLCCs and Suezmax
vessels were $53,600 and $38,000 compared with $52,200 and $35,000 in the
preceding quarter.

Operating expenses in the second quarter were $5.0 million higher than the
previous quarter. An increase in dry docking costs accounted for $5.9 million
in the quarter, as four vessels were dry docked in the second quarter
compared with no vessels in the previous quarter.

Contingent rental expense represents amounts accrued following changes to
certain charter parties in December 2011 and was in line with the first
quarter.

Frontline announces a net income attributable to the Company of $48.5 million
for the six months ended June 30, 2015, equivalent to earnings per share of
$0.35. The average daily TCEs earned in the spot and period market in the six
months ended June 30, 2015 by the Company's VLCCs and Suezmax tankers were
$50,000 and $33,400, respectively, compared with $23,400 and $19,800,
respectively, in the six months ended June 30, 2014. The spot earnings for
the Company's VLCCs and Suezmax vessels were $52,800 and $36,400,
respectively, in the six months ended June 30, 2015 compared with $22,600 and
$19,800, respectively, in the six months ended June 30, 2014.

In August 2015, the Company estimates average daily total cash cost breakeven
rates for the remainder of 2015 on a TCE basis for its VLCCs and Suezmax
tankers of approximately $24,500 and $21,000 respectively.

Fleet Development

In August 2015, the Company agreed with Ship Finance to terminate the long
term charter for the 1995 built Suezmax tanker Front Glory. Ship Finance has
simultaneously sold the vessel to an unrelated third party. The charter with
Ship Finance is expected to terminate during the third quarter of 2015. The
Company will receive a compensation payment of approximately $2.2 million
from Ship Finance. The number of vessels on charter from Ship Finance will
then be reduced to 16 vessels, including 12 VLCCs and four Suezmax tankers.

Corporate

In February 2015, the Company bought $33.3 million notional principal of its
4.50% Convertible Bond Issue 2010/2015 at a purchase price of 99% and
recorded a gain of $0.3 million in the first quarter of 2015.

In April 2015, Frontline issued 12,900,323 new shares under the ATM program
and in May 2015, Frontline issued 5,941,251 new shares under the ATM program
and the existing ATM program is fully utilized.

In April 2015, the remaining outstanding balance on the convertible bond of
$93.4 million was repaid in full upon maturity.

In June 2015, the Company and Ship Finance agreed to amend the terms of the
long term charter agreements for 17 vessels on charter from Ship Finance with
an average remaining charter period of 7.7 years. The new agreement took
effect from July 1, 2015. The general terms of the agreement are the
following: new time charter rates for the VLCCs of $20,000 per day; new time
charter rates for Suezmax tankers of $15,000 per day; new operating expenses
for all vessels of $9,000 per day payable by Ship Finance; a new profit split
of 50%/50% above the new time charter rates; and in connection with entering
into the agreement the Company issued 55.0 million of its common shares to
Ship Finance. The chartering counterparty will continue to be a subsidiary of
the Company, and in exchange for releasing the Company from its current
guarantee obligation, a cash buffer of $34.0 million ($2.0 million per
vessel) will be built up in the chartering counterparty. The new profit split
arrangement started accruing from July 1, 2015 and will be calculated and
payable on a quarterly basis. Going forward, profit split payments will not
be subject to the previous $50.0 million threshold. The shares issued to Ship
Finance as a result of the new agreement represented approximately 27.7% of
the Company's shares and votes. The Company has registered those common
shares for resale with the Securities and Exchange Commission.

Reference is made to the announcement dated July 2, 2015, that Frontline and
Frontline 2012 Ltd. ("Frontline 2012") have entered into an agreement and
plan of merger (the "Merger Agreement"), pursuant to which the two companies
have agreed to enter into a merger transaction, with Frontline as the
surviving legal entity ("the "Surviving Company") and Frontline 2012 becoming
a wholly-owned subsidiary of Frontline. Frontline has on August 24, 2015,
filed a registration statement with the United States Securities and Exchange
Commission ("SEC") covering the common shares to be issued by Frontline to
Frontline 2012's shareholders in the merger. The shareholders' meetings of
each of Frontline and Frontline 2012 will be held after the registration
statement is declared effective. The effectiveness of the registration
statement is subject, among other things, to SEC review. This transaction
will be accounted for as a business combination using the acquisition method
of accounting under the provisions of ASC 805, with Frontline 2012 selected
as the accounting acquirer under this guidance.

The Company had an issued share capital at June 30, 2015 of $198,375,854
divided into 198,375,854 ordinary shares (December 31, 2014: $112,342,989
divided into 112,342,989 ordinary shares). The weighted average number of
shares outstanding for the second quarter was 153,281,991.

The Market

The average rate for a VLCC trading on a standard 'TD3' voyage between the
Arabian Gulf and Japan in the second quarter of 2015 was WS 64, representing
an increase of 5 WS points from the first quarter of 2015. The market rate
for a Suezmax trading on a standard 'TD20' voyage between West Africa and
Rotterdam in the second quarter of 2015 was WS 88, representing a decrease of
2 WS points from the first quarter of 2015. The VLCC fleet totalled 639
vessels at the end of the quarter, whilst the Suezmax fleet counted 449
vessels at the end of the quarter.

The order book for tankers represented about 16% of the overall tanker fleet.

Bunkers in Rotterdam averaged $326/mt in the second quarter of 2015 compared
to $280/mt in the first quarter of 2015.

Strategy
and Outlook

The Board of Directors is very pleased with the merger agreement entered into
between Frontline and Frontline 2012. With a large modern fleet, a strong
balance sheet and attractive cash break even rates, the combined companies
should be well positioned to generate significant free cash in a strong
market, and sustain a weak market.

Despite the slowdown seen in the market the last weeks, the Board of Directors
hopes the combined companies will be in a position to start returning cash to
shareholders as quarterly dividends as soon as the merger is completed. The
intention is to pay out excess cash as dividends at the Board's discretion.

The Board believes the combined companies will be well positioned to grow
through acquisition and consolidation opportunities.

Important Information For Investors And Shareholders

This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval. In
connection with the proposed transaction between Frontline and Frontline
2012, Frontline has filed relevant materials with the Securities and Exchange
Commission (the "SEC"), including a registration statement of Frontline on
Form F-4 (File No. 333-206542) , filed on August 24, 2015, that includes a
joint proxy statement of Frontline 2012 and Frontline that also constitutes a
prospectus of Frontline. The registration statement has not yet become
effective. After the registration statement is declared effective by the
SEC, a definitive joint proxy statement/prospectus will be mailed to
shareholders of Frontline 2012 and Frontline. INVESTORS AND SECURITY HOLDERS
OF FRONTLINE 2012 AND FRONTLINE ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able
to obtain free copies of the registration statement and the joint proxy
statement/prospectus (when available) and other documents filed with or
furnished to the SEC by Frontline through the website maintained by the SEC
at http://www.sec.gov. Copies of the documents filed with or furnished to the
SEC by Frontline will be available free of charge on Frontline's website at
http://www.Frontline.bm. Additional information regarding the participants in
the proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed with or
furnished to the SEC when they become available.

Forward Looking Statements

This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon
further assumptions, including Frontline management's examination of
historical operating trends. Although Frontline believes that these
assumptions were reasonable when made, because assumptions are inherently
subject to significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond its control, Frontline cannot give
assurance th...

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