Frontline Ltd. has entered into a contract to buy the 1993-built VLCC M/T General Ace (275,000 dwt) for USD 53 million. The ship is scheduled for delivery to Frontline October 10, and will immediately start trading in the Tankers International pool. The ship is fully financed and will be named M/T Front Ace.
The ship, which is built by Hitachi, Japan, has since delivery been financed and operated by Japanese interests. A party related to Frontline's major shareholder, Hemen Holding, has since delivery been obliged to purchase the ship. In view of the non-competitive commitment Hemen Holding has given to Frontline in order to avoid a conflict of interest, the parties have agreed that the ship will be taken over by Frontline. Frontline has asked three independent shipbrokers to assess the value of the ship. The agreed purchase price of USD 53 million reflects the average of these three valuations less a discount of USD 1.0 million.
The purchase of General Ace brings the total number of Frontline controlled VLCCs to 30.
Frontline's Managing Director, Ola Lorentzon, says in a comment to the deal:
"We are very pleased with the transaction. The acquisition of Front Ace improves Frontline's earnings and value development per share.
Hemen Holding's non-competitive commitment has given us access to a promptly delivered VLCC at a reasonable price at a very interesting time in the market.
The rate level indicated for 5 years + T/C deals will write the ship down over 6 years. Based on today`s spot rate the whole investment will be repaid in less than three years".
Further, Frontline will take delivery of the two Suezmaxes the Company has acquired from Euronav on October 3 and 10.