Frontline Posts Deeper Third-Quarter Loss

Front Warrior, image: Frontline

OSLO, Nov 25 (Reuters) – Frontline, once the world’s biggest crude oil tanker company, reported a bigger than expected third-quarter loss on Tuesday and said it is still considering options to restructure its debt and lease obligations.

The Oslo-listed tanker business of shipping tycoon John Fredriksen said its results were weighed down by one-off impairment charges related to the termination of charter contracts.

The depressed market, however, has been showing signs of improvement as the company continues to grapple with close to $1 billion of debt.

“The tanker market has shown some strength in the fourth quarter,” Frontline said. “A strong market creates some flexibility for the company going forward.”

“The board is continuing to consider several alternatives in restructuring the company’s debt and capital lease obligations.”

The market took a less optimistic view and Frontline shares were down 6.5 percent by 0848 GMT.

The tanker sector was badly hit by the global financial crisis as new vessels ordered during the boom times created overcapacity as demand grew well below expectations.

Frontline, already restructured once in 2012, said its net loss widened to $59.6 million in the third quarter from $36.4 million a year earlier, trailing expectations for a $29 million loss in a Reuters poll of analysts..

The bottom line, however, included a $41.5 million hit from the one-off impairments.

One of Frontline’s biggest near-term financial hurdles is a convertible bond due in April but the firm has been slowly reducing the outstanding amount through buybacks and debt-for-equity swaps.

Still, it had $956 million in debt at the end of the quarter and cash or cash equivalents of $104.6 million.

Frontline said that the total cash cost break-even rate for its very large crude carriers (VLCCs) would be about $22,900 per day for the remainder of the fourth quarter, having earned $24,600 a day in the third quarter. (Reporting by Balazs Koranyi; Editing by David Goodman)