Frontline Ltd.

Last updated
Frontline PLC
Type Publicly traded limited company
OSE: FRO
NYSE:  FRO
Russell 2000 Company
Industry Oil tanker shipping
Founded1985
HeadquartersLimassol, Cyprus
Key people
 John Fredriksen (Chairman and President) [1]
Revenue US$956.38 million (2019)
US$139.97 million (2019)
Total assets US$3.798 billion (end 2010) [2]
Total equity US$759.0 million (end 2010) [2]
Owner John Fredriksen (40.2%) [1]
Number of employees
70 (end 2010) [2]
Website frontline.bm

Frontline PLC is the world's fourth largest oil tanker shipping company , based in Limassol, Cyprus and controlled by John Fredriksen. Its primary business is transporting crude oil. As of 2008 the company had one of the world's largest tanker fleets consisting of VLCC, Suezmax and Suezmax OBO carriers (82 tankers in total with 18 more on order). [3]

Contents

History

Frontline has its origin in Frontline AB, which was founded in 1985, and which was listed on the Stockholm Stock Exchange from 1989 to 1997. Hemen Holding (a company indirectly controlled by the largest shareholder and chairman of Frontline, John Fredriksen) became the largest shareholder of Frontline in 1996. In May 1997, a decision was made at the general meeting in Frontline AB to change its domicile from Sweden to Bermuda and to list its shares on the Oslo Stock Exchange. The change of domicile was executed through a share for share exchange offer from the then newly formed Frontline in Bermuda.

Under Fredriksen the company absorbed several other companies: London and Overseas Freighters (1997), ICB (1999), and Golden Ocean (2000). These takeovers made Frontline the world's largest tanker company, a position it has retained to the present day. [4] [5]

Today

As of 31 December 2010, Frontline's tanker and OBO fleet consisted of 73 vessels. The fleet consists of 44 VLCCs, which are either owned or chartered in, 21 Suezmax tankers which are either owned or chartered in and eight Suezmax OBOs which are chartered in. Frontline also had five VLCC newbuildings and two Suezmax newbuildings on order and three VLCCs under their commercial management. The company's largest shareholder is Hemen Holding Ltd., a company indirectly controlled by the chairman of Frontline, billionaire John Fredriksen, Norway's highest net worth person.

The freight market is very volatile, with standard deviations of up to 70%. From an options perspective, this is a possibility for a very large up and downside—part of this downside can be hedged away via freight derivatives. AG-Japan clean and dirty are the most liquid routes traded in the derivatives market. Frontline has a very high dividend yield, both in cash and in Ship Finance (SFL) stocks; for example, in late 2007 its annual dividend ran between 12 and 18%, depending on the fluctuating share price. SFL is an offshoot of Frontline; the offshoot is estimated to have generated 25% gains to shareholders due to the different risk in Frontline and SFL. Golden Ocean Group (GOGL), a dry bulk carrier firm, was also spun off of Frontline and listed on the Oslo Stock Exchange. GOGL is a volatile stock, and as with Frontline, dry freight derivatives are available. In 2006, Frontline started a new Floating Production Storage and Offloading (FPSO) project, Sea Production.

In June 2007, Frontline sold its entire holding of 25,500,000 shares in Sea Production. The sale of the shares was in line with Frontline's strategy to remain a pure crude oil transportation company. Frontline and Sea Production will continue a strategic partnership with respect to conversion of crude oil tankers into oil storage and production units.

On 7 April 2022 there was announced a merger between Euronav and Frontline Ltd. pending regulatory approval and ironing out of the last details. [6] [7] The merger would have created the world's largest publicly listed tanker company. Euronav's largest shareholder, Compagnie Maritime Belge, opposed the merger and on 9 January 2023, Frontline announced that the merger would not take place. [8] On 9 October 2023, Frontline sold its 26% stake in Euronav to Compagnie Maritime Belge. As part of the sale, Frontline acquired 24 of Euronav's oil tankers for an aggregate purchase price of $2.35 billion USD. [9]

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References

  1. 1 2 "FRONTLINE LTD. : Stock Price | BMG3682E1277 | MarketScreener".
  2. 1 2 3 "Annual Report 2010" (PDF). Frontline. Retrieved 22 April 2011.
  3. ↑ Frontline Ltd. Q2 2008 presentation
  4. ↑ Kennedy, Will (13 December 2004). "Frontline Considers Takeover Bid for Oil Tanker Rival Genmar". Bloomberg News . Archived from the original on 21 October 2012. Retrieved 20 August 2017.
  5. ↑ Nordseth, Pål (28 February 2008). "Flink pike får lønn for strevet". Dagbladet (in Norwegian). Archived from the original on 3 March 2016. Retrieved 20 August 2017. Article on John Fredriksen's daughters and their connections with Frontline.
  6. ↑ Hand, Marcus (7 April 2022). "Frontline and Euronav plot merger in all stock deal". Seatrade Maritime News. Retrieved 7 April 2022.
  7. ↑ Dixon, Gary (7 April 2022). "World-leading tanker giant born as Frontline and Euronav reveal $4.2bn merger". TradeWinds. Retrieved 7 April 2022.
  8. ↑ "Oil tanker groups Frontline and Euronav scrap $4.2 billion merger". Reuters. 10 January 2023. Retrieved 6 December 2023.
  9. ↑ "FRO – Fully funded acquisition of 24 modern VLCCs from Euronav NV". Frontline. Retrieved 6 December 2023.
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