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Billionaire shipowner changes tack

A strategy change for the next three years The latest start-up by John Fredriksen, the world's highest-profile shipowner, plans to turn itself within three years into a world-leading owner of all types of bulk ships, in a surprise strategy change announced alongside first-quarter results.The board of Frontline 2012, founded at the start of this year, said that it planned to invest in carriers for dry-bulk commodities such as iron ore, liquefied petroleum gas carriers and other forms of bulk shipping besides the crude oil tankers it already owned.The announcement marks a significant departure for a company associated with Mr Fredriksen, whose publicly listed companies generally specialise in specific shipping areas. Frontline, until recently the world's largest independent crude oil tanker owner, specialises in the largest oil tankers, while Golden Ocean owns dry-bulk carriers and Golar LNG operates liquefied natural gas carriers.It also appears to signal Mr Fredriksen's determination to use his personal fortune - which he puts at between $8bn and $13bn, depending on market conditions - to take advantage of other shipowners' current weakness.Mr Fredriksen owns 50 per cent of Frontline 2012, which is listed on Oslo's over-the-counter exchange. But he put up $505m in personal guarantees from his ...

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Frontline commits to Inmarsat XpressLink for 100+ vessels

Communications package for Frontline Inmarsat, provider of global mobile satellite communication services, announced that Frontline, the world leader in the international seaborne transportation of crude oil, has committed to Inmarsat XpressLink for more than 100 vessels from its existing fleet and its planned new builds."We evaluated the providers and made a purely commercial decision about XpressLink from Inmarsat," said Kjell S. Langva of Frontline Management AS. "The choice was made after a year of positive experience with VSAT from Ship Equip"."The cost-benefit profile and the unmatched failover capability, which offers unlimited usage on Inmarsat FleetBroadband, was key to the decision. Also Inmarsat's ability to deliver made up the additional element in making the choice," he said."With XpressLink's internet and voice services, communications onboard the vessel will be greatly enhanced, supporting operations and improving overall efficiency. It also allows the crew to stay in touch with family and friends, and handle their personal affairs, at a very low cost, which has been an important issue for Frontline," said Mr Langva."We are delighted that Frontline has selected Inmarsat XpressLink against competition with other major communications providers", said Frank Coles, President, Inmarsat Maritime. "The contract with Frontline is a landmark agreement for XpressLink. ...

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Fredriksen saves shipping empire

pPlans to save his company Frontline and his fellow investors As expected, self-made shipping tycoon John Fredriksen seems to have a plan to save his vast tanker-owning company Frontline and his fellow investors. Shares initially soared on the news, but then settled back again this week.Major Norwegian banks had said from the outset that they had strong faith in Fredriksen, even after his right-hand man Olav Troim had to report heavy third-quarter losses last month. A miserable market for Fronline's huge oil tankers, with daily charter rates generating far less than what it costs to operate a super tanker, meant the company would run out of cash shortly after New Year.Now Fredriksen plans to split Frontline in two, with its 10 newest vessels being sold along with the contracts for five new 300,000-dwt tankers to a new company called Frontline 2012. The rest of Frontline will be an operations company. Meanwhile, Fredriksen will put up a guarantee of NOK 1 billion."It's easer to discuss a solution (for a company) when you have a main shareholder who comes forward in this manner," the boss for ship finance at one of Fredriksen's banks, Nordea, told newspaper Dagens Næringsliv (DN). Frontline 2012 will ...

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Frontline restructures – forms new company

Frontline 2012 will be established and registered on the NOTC list in Oslo Cash-strapped Frontline is to form a new company, as part of a restructuring programme.Frontline 2012 will be established and registered on the NOTC list in Oslo.The new company will acquire five VLCC newbuilding contracts, six modern VLCCs and four modern Suezmaxes from Frontline at fair market value.The value of these vessels, including the value of one timecharter agreement, is based on independent appraisals, and was set at $1,121 mill.In addition, Frontline 2012 will assume a total of $666 mill in bank debt attached to the newbuilding contracts and vessels, plus a further $325.5 mill in remaining newbuilding commitments.In addition, Frontline will be paid for working capital related to the assets acquired. The transaction will be supported by a fairness opinion.The company's restructuring was approved by the board this week and will in the next few days be put forward to creditors and counterparties for approval.This solution has been made possible through a large commitment from Frontline's major shareholder - Hemen Holding - which is fronted by John Fredriksen.Frontline claimed that it had agreed preliminary arrangements with its major counterparts whereby the rates in the existing chartering contracts ...

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Tankers left to idle as growth in fleet outstrips global oil demand

The ships are underemployed thanks to growth in the world tanker fleet Anyone looking out over the Bay of Algeciras by the Rock of Gibraltar over the next few months can expect to see plenty of ships. The bay is a popular spot to moor oil tankers - Algeciras's busy oil refinery is nearby and the bay's strategic location makes it an excellent place for temporarily idle ships.The ships are underemployed thanks to growth in the world tanker fleet that far outstrips the 1.3 per cent world oil consumption growth projected for this year and the 1.8 per cent projected for 2012.Figures from Fearnleys, an Oslo-based shipbroker, put this year's growth in the world fleet of very large crude carriers - the largest commonly used kind - at 14 per cent if none is scrapped. The figure for 2012 should be 9 per cent.The question is how many of the world's tanker owners can withstand the prolonged slump in earnings that the glaring imbalance is producing.Andreas Sohmen-Pao, chief executive of BW Maritime, part of his family's Hong Kong-based BW Group, says the market is "exceptionally weak"."Earnings are pretty close to zero, while break-even rates are close to $30,000 a day," ...

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Shipping companies suffer as the supply of tankers vastly exceeds the need for ships

Global demand for oil is rising and the price of crude is surging Global demand for oil is rising and the price of crude is surging but companies in the business of shipping the valuable commodity by sea are suffering as the supply of tankers vastly exceeds the need for ships.For supertanker shipping companies, its a hangover from the prerecession boom in orders for new vessels, huge ships that take several years to build.The increase could be as much as 14 per cent for the worldwide fleet, which is predicted to reach 627 by the end of the year, compared with 548 last December.As the price to move oil plunges, and shipping companies see their profits evaporate, it is unclear whether oil producers or consumers will benefit. Competition among sellers of oil moved by supertanker, such as Saudi Arabia, might slightly shave prices to gain advantage against competitors, helping consumers, or could pocket the shipping savings.Respite for shipping companies will take time, according to the worlds leading supertanker company, Frontline Ltd., which on Wednesday reported quarterly earnings and an 81-per-cent decline in profit.It is hard to see a strong recovery in the tanker market, Frontline said in its assessment.The weak ...

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Frontline Supertanker owner says market remains weak

The tanker industry is at the start of a 5-year downturn Frontline owner, the Norwegian-born John Fredrikson noted that leasing their ships to oil companies is currently facing a weak market and forces the company to become more passive, and possibly even sell assets, including vessels.The tanker industry is at the start of a 5-year downturn, according to Tor Olav Troeim, who is a director at Frontline and several other companies at a conference near Oslo on Tuesday.According to the Baltic Exchange, VLCCs that reaped $177,036 a day in 2008 were last at $8,900. These vessels would need $29,700 a day in order to simply break even for Frontline.Frontline will pay a dividend of 10 cents a share for the first quarter after net profit dropped from over $79 million to $15.5 million in one year, as released in a statement.In a statement released by Frontline, the board explained the low results from the first quarter, seem to be extending well into the second quarter and makes for a grim projector of the quarters to come. The board doesnt see a turnaround for the tanker market in the near future, as they believe the supply of ships is growing more ...

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