HAMILTON, Bermuda (September 22, 1997)--Frontline Ltd. (Oslo Stock Exchange: FRO) and London & Overseas Freighters Limited ('LOF') (Nasdaq/NM:LOFSY; LSE:LOF) announced that they have signed a definitive agreement to amalgamate LOF and Frontline in a two-step transaction. Pursuant to the agreement, Frontline is expected to commence a cash tender offer for a minimum of 50.1% and a maximum of 90% of LOF's outstanding ordinary shares (including American Depositary Shares each representing ten LOF ordinary shares) and related rights, on or about September 29, 1997.
The tender offer price will be $1.591, net to the seller in cash, per LOF ordinary share (or $15.91 per LOF American Depositary Share). (For informational purposes only, this translates to approximately £0.99 per LOF ordinary share at the U.S. Dollar Pounds Sterling exchange rate prevailing at the close of business on Friday, September 19, 1997.) The terms of the offer will be set forth in the related Offer to Purchase and letter of transmittal that will be sent to LOF's shareholders. Assuming successful completion of the tender offer, Frontline will take control of a majority of LOF's Board of Directors. The shareholders of the two companies will then vote on a proposal for an amalgamation in which LOF will be the surviving company, LOF shareholders will retain their LOF shares not purchased in the tender offer and Frontline's shareholders will receive LOF ordinary shares and 26,000,000 warrants in the aggregate in exchange for their Frontline shares. The exchange ratio for converting Frontline shares to LOF ordinary shares in the amalgamation will be based on the prevailing market price for Frontline's shares and values each LOF ordinary share at $1.591.
The completion of the tender offer by Frontline will, subject to the conditions of the offer, including the 50.1% minimum tender condition, occur prior to and is not dependent on the approval of or completion of the amalgamation. The amalgamation is subject to shareholder approval, effectiveness of the registration statement to be filed with the U.S. Securities and Exchange Commission relating to the LOF ordinary shares and warrants to be issued to Frontline's shareholders in the amalgamation, and certain other customary conditions. Closing of the amalgamation is expected to take place in late 1997.
Commenting on the proposed transaction, John Fredriksen, Frontline's Chairman and Chief Executive Officer, said, 'Frontline has been steadily expanding its presence in the tanker industry. LOF is a well known, first class ship operator with a high quality, modern fleet. This friendly combination will help confirm our position as a leading publicly-traded ship owner and operator. In addition, our combination with LOF will enable Frontline to gain access to the U.S. capital markets.'
Miles Kulukundis, LOF's Chief Executive Officer, said, 'This business combination is the culmination of our Board's continuing efforts to enhance shareholder value. We are pleased that the two-step structure presents shareholders the choice of securing substantially all cash for their shareholding as an alternative to retaining their equity investment in LOF.'
Frontline operates a substantially modern fleet of 24 vessels consisting of nine Oil/Bulk/Ore carriers, five Very Large Crude Carriers (VLCCs), five Suezmax tankers, three woodchip carriers and two dry bulk vessels, in addition to one Suezmax tanker that Frontline has agreed to purchase, three Suezmax tankers on order and options to order four VLCCs. The total tonnage of Frontline's existing fleet equals approximately 4.0 million dwt.
LOF operates three Suezmax and three Panamax tankers with an aggregate dwt of approximately 0.6 million. LOF's fleet operates in the crude oil and oil products trades with a principal concentration on serving U.S. and European import and export requirements.
Lazard Frères & Co. LLC is acting as financial advisor to Frontline. Gleacher Natwest Inc. and NatWest Securities Limited are acting as financial advisors to LOF. Fearnley Fonds A/S assisted Frontline with the effect of the transaction on its Oslo listing.
Contact:Frontline Ltd. Contact:London & Overseas John Fredriksen Freighters Limited 47-23-11-40-00 Miles Kulukundis 44-171-583-5888