Frontline buys 1992 Suezmax
Frontline Ltd. (NYSE: FRO) today announced that it has completed a private placement of $15.7 million in new equity, by issuing 300,000 shares to institutional investors at a purchase price of NOK 352 per share. Enskilda Securities ASA acted as placement agent for the issue.
The proceeds from the offering will be used to finance the acquisition of the Suezmax tanker Marble, 142,000 dwt. The 1992 built vessel is a sister ship of six vessels already controlled by Frontline. Frontline has acted as commercial and technical manager for the seller, and therefore has in-depth knowledge of this vessel.
The forward market for modern Suezmaxes for 2005 is approximately $51,000 per day. Assuming this rate is actually obtained in the freight market, the purchase price of the vessel will be paid down to its scrap value in less than 18 months of trading says Frontline.
Under existing rules, this vessel should be able to trade worldwide for another 6 years. Frontline believes that the prospective strong short term cashflow will significantly reduce the risk to the company in the transaction. Assuming continuing positive conditions in the freight markets, the Board anticipates that the purchase of this vessel will lower the company's overall cash break even, improve earnings per share and increase the ompany's dividend capacity.
The Board has attached particular importance to this vessel's entering s fleet as soon as possible. Accordingly, the vessel enters the Frontline fleet as of today. The vessel was fixed in the spot market yesterday and is already contributing to earnings.
MORE NEWS STORIES