Frontline: ‘Ready To Meet Challenges’
Bermuda-headquartered Frontline Ltd. today [Feb.17] reported a significantly wider fourth-quarter net loss attributable to the company of $343.67 million or $4.41 per basic share versus year-ago quarter’s $11.84 million or $0.15 per basic share loss.
Excluding losses and gains on sale of assets, amortization of deferred gains and vessel impairment loss, net loss attributable to Frontline Ltd. amounted to $30.8 million in the fourth quarter of 2011, the company said.
Total operating revenues dropped to $181.98 million from $226.16 million in the comparable period a year early. In addition, the board has decided not to declare a dividend for the 2011 fourth quarter.
For the full year, the net loss for John Fredriksen’s tanker vehicle was $529.6 million.
The company also said that the net loss, excluding losses and gains on sale of assets, amortisation of deferred gains and vessel impairment loss, was $100.3 millionh for the full year.
During 4Q11, Frontline completed the restructuring of its business by selling certain assets to a newly incorporated company — Frontline 2012 — in which Frontline took an 8.8% interest. This had the effect of reducing breakeven rates, eliminating all bank debt and financial covenants and reducing the newbuilding commitments.
In addition, the company entered into an agreement with Nordic American Tankers to commercially combine their Suezmaxes in the Orion Pool.
As for the fleet, the long term charterparty with Ship Finance International for the ore-bulk-oil [OBO] “Front Striver” was terminated. In addition, Frontline sold four 1992-1996 built double hull Suezmaxes; “Front Hunter”, “Front Fighter”, “Front Delta” and “Front Beta”. The company also redelivered three very large crude oil carriers [VLCCs] and one Suezmax from timecharters.
As mentioned, the net loss in 4Q11 included a loss on sale of assets and amortisation of deferred gains of $312.9 mill, which included a loss of $307 million on the sale of 10 vessels and five newbuilding contracts at fair market value to Frontline 2012, a loss of $9.3 mill on the termination of the long term charterparty for “Front Striver” and deferred gains of $1.8 million and $2 million relating to the sales and leasebacks of “Front Eagle” and “Front Shanghai”, respectively.
The average daily TCEs earned in the spot and period market in 4Q11 by the company’s VLCCs, Suezmaxes and Suezmax OBOs were $19,100, $13,900 and $41,600, respectively, compared with $17,000, $9,500 and $38,200, respectively, in the preceding quarter.
For the same period, the spot earnings for the VLCCs and Suezmaxes were $16,800 and $12,400, respectively, compared with $12,600 and $7,800, respectively, in 3Q11.
The Gemini Suezmax pool had spot earnings of $12,000 in 4Q11, compared with $7,600 in the preceding quarter. The company’s double hull VLCCs, excluding the spot index timecharter vessels, saw spot earnings of $18,400 in 4Q11 compared with $14,600 in the third quarter.
As of 31st December, 2011, Frontline had total cash and cash equivalents of $160.6 mill and restricted cash of $100.6 mill. Restricted cash includes $99.3 mill relating to deposits in ITCL.
The company also estimated average total cash cost breakeven rates for 2012 on a TCE basis for its VLCCs and Suezmaxes was about $23,900 and $16,400, respectively.
Following the restructuring completed in December 2011, the cash break even rates for the company have been substantially reduced. Furthermore, cash at hand increased by $64 million.
Based on current forward rates, Frontline said that it should have significant strength to honour its obligations and meet the challenges created by the current very weak tanker market over the next couple of years.
