Press release from Frontline Ltd. 17.09.2010
Frontline Ltd. (the "Company" or "Frontline") is pleased to announce that we have agreed with Zhoushan Jinhaiwan Shipyard Co., Ltd. ("Jinhaiwan") to re-structure our VLCC newbuilding program at the yard.
In April and May 2008, Frontline ordered six VLCC newbuildings at Jinhaiwan. In May 2009, two of these newbuilding orders were cancelled and the installments paid-in were transferred to two of the retained newbuildings and the two remaining VLCC newbuildings orders were changed into options.
As a result of the re-structuring Frontline has agreed to maintain the two options and has ordered one additional VLCC newbuilding and is committed to take delivery of five 320,000 dwt VLCC newbuildings, with a total contract price of $525 million. The delivery dates for the vessels have been deferred by three months from the original contractual dates, with the first vessel to be delivered in January 2012 and the last in February 2013. Furthermore, payment terms of the previously ordered vessels have been improved
As of September 17, 2010, Frontlines newbuilding program comprises two Suezmax tankers and five VLCCs, which constitute a contractual cost of $650 million, and in addition two Suezmax newbuilding options. Installments of $162 million have been made on the newbuildings and the remaining installments to be paid amount to $488 million, with expected payments of approximately $64 million in 2010, $95 million in 2011, $185 million in 2012 and $144 million in 2013.
The Company has not yet secured financing for these newbuildings. However, based on recently secured financing for Front Eminence and Front Endurance and indications from banks, we assume 70 percent financing of market value for these newbuildings. The net required equity investment in the remaining installments is approximately $29 million. The equity investment is fully covered through the recent completion of the $225 million convertible bond offering.
Frontline is pleased with the agreement reached with the yard, which reduces the contract price on the VLCC newbuildings to competitive levels, lowers the total capital expenditures on the previously ordered vessels going forward, improves the payment terms and adds one VLCC to its newbuilding program at a competitive contract price. Furthermore, it has been of vital importance for the Board that the newbuilding orders can be executed and financed without impacting Frontline's dividend capacity.
September 17, 2010
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
http://frontline.bm/IR/press_releases/1445008.shtml
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Photo: "Front Commander" 1999 - 311.168 dwt.
