Frontline Ltd. (“Frontline”) announces that on 14th August 2006 it has sold its entire holding of 3,860,000 shares in General Maritime Corporation (“General Maritime”) for USD $40 per share. The shares were sold to World Wide Shipping. Frontline will record a gain of approximately USD $ 9.7 million in the third quarter as a result of this sale. Frontline has, during the holding period, also recorded dividend income on the same investment of approximately USD $13.3 million.
At the same time Frontline is pleased to announce that it intends to firmly declare four further newbuilding Suezmaxes orders from Jiangsu Rongsheng Heavy Industries Group Co. Ltd. (“Rongsheng”) in China. The vessels which are 156,000 dead weight tons will be delivered in 2009. Two of these Suezmaxes will be offered as an investment to Frontline’s affiliated company, Ship Finance International Limited. The four Suezmax newbuildings are in addition to the two newbuildings already declared. Frontline is also in the process of discussing a further two fixed priced options for similar vessels. The payment terms and contract price are considered favourable to other alternative ways to renew and grow the Frontline Suezmax fleet.
The decision to sell the General Maritime investment and order the Suezmaxes included a comparison between the Rongsheng 2009 newbuildings and the implicit pricing of an existing General Maritime newbuilding. With a price differential of more than USD $20 million, the Frontline Board feels that significant discount is given for a later delivery.
The re-organisational cost of General Maritime and the large Aframax exposure further prevented Frontline from pursuing further action in the General Maritime investment. Frontline, as General Maritime’s largest shareholder, had a constructive dialogue with General Maritime regarding its investment.
The Board of Frontline hopes that the sale of the General Maritime investment to another industry player will still have a positive consolidation effect on the tanker market. The proceeds from the sale will be allocated to repayment of debt, equity financing of the Rongsheng investments as well as increased dividend capacity.
August 14, 2006
The Board of Directors