After paying the existing debt on the vessels, the transaction is expected to generate net cash proceeds of approximately US$207M, and the company expects to record a gain in Q1 2024 in the range of approximately US$68M to US$76M, depending on the date of delivery of each vessel to the new owner.
Following this transaction and the completion of the delivery of 24 VLCCs acquired from Euronav, Frontline’s fleet will consist of 84 vessels comprised of 41 VLCCs, 25 Suezmax tankers and 18 LR2/Aframax tankers with an aggregate capacity of approximately 18.2M dwt and average age of 5.9 years.
Frontline Management chief executive Lars H Barstad said, “We are very pleased with this transaction, capturing firm pricing for 14-15-year-old vessels. Frontline has increased its position significantly in the VLCC segment during 2023 and this divestment of our remaining non-eco VLCCs is in line with our strategy of running the most modern, fuel-efficient fleet in the market.”
In October 2023, Frontline and its controlling shareholder John Fredriksen agreed to a deal with rival Euronav shareholding group Compagnie Maritime Belge’s (CMB’s) Saverys family to carve up the Euronav fleet. The deal saw Frontline take 24 VLCCs from Euronav’s fleet at a cost of more than US$2.3Bn as well as Mr Fredriksen’s collective stake in Euronav.
The two dozen vessels have an average age of 5.3 years, according to Frontline, and all were built from 2015 onwards. The VLCCs are all in the region of 300,000 dwt. One of the vessels was built in 2015, nine in 2016, five in 2017, one each in 2019 and 2020, four in 2021 and three in 2023. Nine of the vessels have scrubbers and 22 of the 24 were built in South Korean yards. The deal made Frontline the largest public pure-play tanker operator, by deadweight tonnage.