FRONTLINE LTD. - PURCHASE OF PERTAMINA VLCCS ( Hugin )
Jun 14, 2004 (Hugin via COMTEX) -- PT Pertamina (Persero) announces that it has
entered into a definitive Sale and Purchase Agreement pursuant to which Windstar
Marine Inc. and Speed Shipping Corp. two single purpose companies nominated by
Frontline Ltd. ("Frontline") in accordance with the Terms of Reference for Bid,
but presently controlled by Frontline's majority shareholder Hemen Holding
Limited ("Hemen"), have agreed to acquire Pertamina's two Very Large Crude
Carriers ("VLCC") which are currently being constructed by Hyundai Heavy
Industries Co. Ltd.
More than 40 bidders were invited to participate in the bidding process and
finalists were short listed including the Buyers, Essar Shipping Ltd. of India
and Overseas Shipholding Group Inc. of USA.
Frontline is a major Bermuda based tanker company listed on the New York, London
and the Oslo Stock Exchanges. Frontline has a market capitalization of over US$
2.8 billion and currently has 35 VLCCs under its ownership or management.
The total consideration paid for the two vessels is USD 184 million.
Hemen has initially backed the transaction financially in order to give the
Frontline group the time to structure financing, charter agreement and security
package in an optimum way. It is the intention that vessels during the next six
months ultimately will be taken over by Ship Finance Int. Ltd. Ship Finance will
seek to charter the vessels long term to Frontline.
The Ship Finance take-over is dependent that agreements can be reached on
financing and long-term charter agreement. Frontline is considering to offload
some exposure by using the present strong market to charter the vessel out to
third party for short to medium term. Such a charter will generate a strong
initial cash flow and thereby substantially reduce the risk in the remaining
charter period.
CEO of Frontline Management, Mr. Oscar Spieler, is pleased that a solution is
found with the major shareholder, which gives Frontline and Ship Finance time to
structure the transaction in an optimum way. In the current strong market with
more OPEC production to come we feel that this investment is a very attractive
opportunity to increase the market exposure at the right time. Compared to
ordering ships with delivery in 2007 - 2008 at the same price level we feel this
deal has a substantially higher upside and a much better risk profile. If
consummated it will create growth in Ship Finance and confirm Frontline's
position as the world's largest operator of modern crude oil tankers.
Frontline and Ship Finance have no financial exposure to the transaction until
financing and charter have been arranged and a purchase has been agreed with
Hemen.
14 June 2004
Contact persons: Tor Olav Troim +44 77 34 97 65 75 Oscar Spieler +47 23 11 40 00
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Copyright (c) 2004, HUGIN AS. All rights reserved.
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KEYWORD: Norway
SUBJECT CODE: Finance
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