Hamilton, Bermuda (October 28, 1997) - In connection with the agreement for a business combination between Frontline Ltd. (Oslo Stock Exchange: FRO) and London & Overseas Freighters Limited ('LOF') (Nasdaq National Market: LOFSY; London Stock Exchange: LOFS), Frontline and LOF today announced that the exchange ratio which would be applicable to the proposed amalgamation between Frontline and a wholly-owned subsidiary of LOF has been determined.
As previously announced, the proposed business combination between Frontline and LOF involves a two-step transaction, a cash tender offer by Frontline 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, followed by an amalgamation between Frontline and a wholly-owned subsidiary of LOF. The first-step Frontline cash tender offer was commenced on September 29, 1997 and is expected to expire on October 28, 1997, unless extended in accordance with its terms. As of the close of business in New York on Monday, October 27, 1997, approximately 49,354,000 LOF ordinary shares, representing approximately 67% of the outstanding LOF ordinary shares, have been tendered pursuant to the Frontline cash tender offer.
Subject to the closing of the Frontline tender offer and certain other terms and conditions (including effectiveness of the registration statement relating to the issuance of LOF ordinary shares in the amalgamation) set forth in the definitive amalgamation agreement entered into by Frontline and LOF, Frontline will amalgamate with a wholly-owned LOF subsidiary in the second step pursuant to which each Frontline ordinary share would be cancelled in exchange for (1) 3.2635 LOF ordinary shares and (2) a fraction of a newly issued LOF warrant to purchase one LOF ordinary share at a price of $1.591 per share exercisable after the consummation of the amalgamation.
Pursuant to the amalgamation agreement, the exchange ratio was calculated based on, among other things, the average closing price of Frontline ordinary shares on the Oslo Stock Exchange on randomly selected trading days from the date of announcement of the proposed business combination to October 24, 1997, prevailing U.S. Dollar-Norwegian Kroner currency exchange rates and a value of $1.591 for each LOF ordinary share. In the event that the Frontline tender offer is extended in accordance with its terms and the terms of the amalgamation agreement, the above exchange ratio will be void and re-determined at a later date.
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.
Contact: Frontline Ltd. John Fredriksen +47 (23) 11-40-00
London & Overseas Freighters Limited Miles Kulukundis +44 (171) 583-5888