In its third quarter 2004 results press release Frontline Ltd (the “Company” or “Frontline”) announced that it was in the process of declaring options to buy vessels currently on charter from German KGs. The Board today announces that it will acquire the VLCCs Front Century and Front Champion later this week for a total price of $141.9 million. The vessels will immediately be sold to Ship Finance International Limited (SFL) for $196 million en bloc, and chartered back to Frontline on 199 and 204 month charters, respectively, essentially following the structure in place for the other vessels chartered from SFL. The transaction will release $54 million in cash to Frontline.
At the same time the Board announces that the charter of the Suezmax Front Fighter from SFL has been cancelled in connection with SFL selling this vessel for $68.25 million.
The new time charter rate for Front Century and Front Champion will be $31,368 per day declining to $28,492 per day in 2019 (360 day basis). The charter rate consists of two components – the first part will be the same rate that was in the Front Fighter rate applied on the two vessels, and the second part will be based on the incremental investment made by SFL of $127.75 million.
In addition to the base rates mentioned above, a 20% profit split will apply as for the other vessels chartered from SFL, the profit split calculated by reference to the aforementioned base rates.
The Company is also working on acquiring a third VLCC, Golden Victory, from another German KG. The Board expects to revert with news on this in the near future.
January 24, 2005
The Board of Directors