Capital adjustments – Increase in issued capital

The Board of Frontline has approved two capital transactions that will increase Frontline’s future financial flexibility. The Company has issued NOK 201,250,000 or approximately US$ 24,0 million in equity through a private placement to a limited group of Norwegian and international financial institutions. In addition approximatelly US$ 30 million of the remaining US$ 54 million subordinated loan from Metrogas has been converted into equity. In connection with the conversion, Metrogas will offer US$ 14 million of the resulting ordinary shares to Frontline shareholders and warrant holders as of February 25. Totally 7.85 million shares will be issued in the two equity issues. Issue price for both issues is NOK 57.50.



Frontline Completes Equity Financing.



The Board of Frontline wants the Company to continue to be the driving force in the much needed consolidation process, which currently takes place in the tanker industry. In order to prepare the Company for future growth the Board has approved two capital transactions, which substantially increase Frontline’s financial flexibility.



– Frontline has issued NOK 201,250,000 or approximately US$ 24.0 million in equity through a private placement. A total of 3,500,000 shares were placed to a limited group of Norwegian and International Institutional Investors at an issue price of NOK 57.50. The transaction was successfully placed by Fearnley Fonds ASA and Christiania Markets AS.



– Metrogas Ltd., a company controlled by Frontline’s major shareholder Hemen Holding Ltd., has converted into equity approximately US$ 30 million of the original US$ 89 million subordinated loan given to Frontline. At an issue price of NOK 57.50 a total of 4,350,000 shares were issued. Hemen has agreed with Frontline that all of Frontlines existing shareholders on record date February 25, 2000, excluding Hemen and the new shareholders arising from the private placement referred to above, will be given pre-emptive right to buy approximately 2,000,000 of these shares. Such a solution secures that all shareholders in Frontline will have the right to obtain their prorate part of this issue. The subscription period for this transaction is estimated to take place in March 2000. Fearnley Fonds and Christiania Markets will organise the sale of these shares. The Metrogas loan to Hemen is after this conversion reduced to approximately US$ 24 million.



The execution of transaction 1. and 2. is carried out within the Board’s existing authority to issue new shares.



The total number of shares outstanding in Frontline after completion of this transaction will be 68,811,860.



The combined transaction will increase Frontline’s equity by US$ 54 million, and will improve the liquidity with US$ 24 million. The proceeds from the transactions will be used to strengthen the company financially, finance the acquisition of the 1993-built VLCC MT Front Toba, and fund future growth.



Frontline’s Chairman John Fredriksen says in a comment:” We are entering a very interesting period in the tanker industry. The major part of the old tonnage will be scrapped during the next three years. At the same time we see strong increase in demand for oil. OPEC will be forced to increase production and the newbuilding program for the next two years are already fixed. All factors point in the direction of a very tight market balance.



Frontline has since 1996 been one of the leading consolidators in the tanker industry. Through the acquisitions executed and through the establishment and participation in Tankers Int. and Alliance Chartering Frontline has been established as a company with superior trading flexibility and material economic benefits of scale. It is our idea to continue this process. We are continuously working on ideas, which will further increase the size of Frontline. The two equity issues fall into our overall plan. Financial flexibility is critical in order to be able to act quickly.”