Frontline Ltd. (“Frontline” or the “Company”) has agreed with Ship Finance International Limited (“Ship Finance”) to terminate the long term charter party between the companies for the OBO carrier Front Leader. Ship Finance has simultaneously sold the vessel. The termination of the charter is expected to take place in April 2011. Frontline will make a compensation payment to Ship Finance of approximately $7.7 million for the early termination of the charter. Furthermore, the transaction will reduce the Company’s obligations under capital leases with approximately $10.2 million.
Front Leader was recently redelivered to Frontline after completing a three year time charter agreement. The Company has evaluated new employment possibilities for the vessel but given the uncertainty and current low rates in the drybulk market combined with an expensive upcoming drydocking an early termination of the charter was determined to be the most sensible alternative.
Frontline has seven remaining OBO carriers on charter in from Ship Finance expiring in 2015. The current contract coverage for these vessels is 79%, 49% and 26% with average rates of $47,200, $53,700 and $63,900 per day in the remainder of 2011, 2012 and 2013, respectively.
April 4, 2011
The Board of Directors
Questions should be directed to:
Jens Martin Jensen: Chief Executive Officer, Frontline Management AS
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 00
Cautionary Statement Regarding Forward Looking Statements
This press release may contain forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including Frontline management’s examination of historical operating trends. Although Frontline believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, Frontline cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.
Important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in this presentation include the strength of world economies and currencies, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the tanker market as a result of changes in OPEC’s petroleum production levels and world wide oil consumption and storage, changes in the Company’s operating expenses including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports filed by the Company with the United States Securities and Exchange Commission.
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)