Frontline Ltd. ("Frontline") (NYSE and OSE: FRO), today announced that it has entered into a sale and purchase agreement with Trafigura Maritime Logistics (“TML”), a wholly-owned subsidiary of Trafigura Pte Ltd (“Trafigura”) and certain related entities to acquire ten Suezmax tankers built in 2019 through the acquisition of a TML special purpose vehicle which holds the vessels (the “Acquisition”). As part of the Acquisition, Frontline has options to acquire an additional four Suezmax tankers built in 2019 through the acquisition of a second TML special purpose vehicle.
Acquisition Overview
Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS commented:
“This transaction is backed by our strong belief in tanker market fundamentals and reflects our ability to act swiftly and decisively with the support of our largest shareholder. We welcome Trafigura as a strategic shareholder and believe the Acquisition reflects the value Trafigura ascribes to our equity. In addition to Trafigura being a longstanding customer of Frontline, we now have a unique partnership that we believe will lead to further synergies going forward. The structure of the transaction creates an immediate impact to our earnings at a time when we expect freight rates to increase significantly. Moreover, we expect the Acquisition to boost our dividend capacity going forward.”
Rasmus Bach Nielsen, Global Head of Wet Freight at Trafigura, commented:
“This marks the continuation of an approach that has long been integral to Trafigura’s strategy, namely, investing in infrastructure assets in support of commodity flows and collaborating with a market leader like Frontline to maintain sufficient access to those assets for our trading business. Trafigura trades around 5.5 million barrels per day of oil and petroleum products around the world and has a market-leading position in strategic commodity flows, notably as a leading exporter of crude oil from the U.S. The significant increase in U.S export volumes, an aging global fleet, particularly of crude vessels, and a historically low orderbook all support our constructive outlook for the sector. We therefore see significant upside potential in our equity investment in Frontline, a company with vast commercial scale and capabilities with whom we already enjoy a close working relationship.”
Following the acquisition of the 10 Suezmax tankers from Trafigura, Frontline’s fleet will consist of 75 vessels, including newbuildings, with an aggregate carrying capacity of 14.2 million DWT and an average age of 3.7 years
DNB Markets has acted as mandated advisor between the parties in the transaction.
August 23, 2019
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
Frontline Contact:
Robert Hvide Macleod: Chief Executive Officer, Frontline Management AS
+47 23 11 40 84
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 76
Trafigura Contact:
Trafigura’s Global Press Office: +41 22 592 45 28 or media@trafigura.com
Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. Words, such as, but not limited to "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Frontline believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the control of Frontline, Frontline cannot assure you that they will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and Frontline disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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