Agreement and capital adjustments

26.05.2000

FRONTLINE BUYS VLCC NEWBUILDING AND RAISES USD 30 MILLION IN NEW EQUITY





Frontline Ltd. has signed a deal with Golden Ocean Group Limited (“Golden Ocean”) under which Frontline will buy the VLCC newbuilding, Kawasaki 1638, from Golden Ocean for USD 73.8 million. This deal was approved today by the United States Bankruptcy Court for the District of Delaware in Golden Ocean’s chapter 11 bankruptcy case. The ship, which is a sister vessel of two other Golden Ocean controlled vessels currently on bareboat charter to Shell, will be delivered from the yard next week. The ship will be named M/T Front Tina and will immediately after delivery enter the Tankers International pool and be traded in the spot market. This purchase was contemplated under a term sheet executed today by and between Golden Ocean, Frontline and the Official Committee of Unsecured Creditors in Golden Oceans chapter 11 bankruptcy case pursuant to which they agreed to jointly propose a plan of reorganization for Golden Ocean (the “Golden Ocean Plan”). If the effective date of the Golden Ocean Plan does not occur by October 1, 2000, Golden Ocean shall have the right to declare an option to repurchase the vessel back from Frontline at Frontline’s actual cost plus a profit component. The option must be exercised within six months of the date of delivery of the vessel. In the event Golden Ocean timely declares its option, Frontline shall have the right to a six-month time charter at pre agreed rate.



In order to finance the ship Frontline Ltd. has today placed three million shares through a private placement arranged by Fearnley Fonds ASA and Enskilda Securities. The shares have been placed to a group of six US institutional investors. Issue price was USD 10.15 per share.



The Chairman of Frontline, John Fredriksen, says in a comment to the deal: “ With the current strength in the tanker market, we are excited to add another VLCC newbuilding to the Frontline fleet. With an interest in 16 modern VLCCs and an agreed plan to restructure Golden Ocean, which could add another 13 modern VLCCs, Frontline is uniquely positioned to benefit from the fundamental strengthening we now see in the tanker market. The deal should improve future earnings and value development per share.



As a comment to the private placement Fredriksen says: “ We are very pleased with the group of investors who supported us in the private placement. They are all leading US institutions, who we expect will contribute positively to the further development and expansion of our Company, and to increase the interest for the Frontline stock in the US Capital Market.