Frontline Sells Three VLCCs as 2015 Looms
Rather than go through the costly process of the 15-year special survey, Frontline has agreed to sell three of their 1999-built VLCCs, Front Opalia, Front Comanche and Front Commerce.
Along with the sale, Frontline will also terminate the charter parties with Ship Finance International Ltd. (SFL) for the above vessels as of Q4 2014. In exchange, Frontline will pay SFL a $58.8 early termination fee.
As of June 30, 2014, Frontline has capital lease obligations to SFL of $101.5 million and $608.3 million for these three vessels and the remaining 12 VLCCs and five Suezmax tankers, respectively.
With a 190 million convertible bond loan maturing in April 2015, Frontline highlighted the risk in their first quarter 2014 report of default on that payment if the crude tanker market does not improve and if the company is unable to generate sufficient cash through asset sales, such as this one, and restructuring of charter parties and debt agreements.
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