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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of March , 1999
________________________________________
Frontline Ltd. (formerly London & Overseas Freighters Limited)
_______________________________________________________________
(Translation of registrant's name into English)
Mercury House, 101 Front Street, Hamilton, HM 12, Bermuda
_______________________________________________________________
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-________
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PRELIMINARY RESULTS FOR 1998
Frontline's Board met for a Board Meeting in Hamilton Bermuda on
March 8, 1999. In the meeting the Board of Directors reviewed
and approved the Company's preliminary results for 1998.
The Board is pleased to announce the best results ever achieved
by the Company. The result is positively influenced by the
increase of the fleet with an additional five units, two of which
were subject to sale and leaseback arrangements in the fourth
quarter of 1998. The fourth quarter produced a net loss due to
significantly lower TCE rates than in the previous quarters. In
1998 the competitive cost profile of the Company has been
improved, while the overall financing cost has increased as a
function of increased borrowing related to the new vessels.
ANNUAL AND FOURTH QUARTER RESULTS
Net income for the year ended December 31, 1998 increased 55%
from $17.4 million in 1997 to $27.0 million. Earnings per share
for the year were $0.59 (1997 - $0.48) and the weighted average
number of shares outstanding was 46,106,731 (1997 - 36,188,509).
For 1998, earnings before interest, tax, depreciation and
amortisation, including earnings from associated companies were
$126.9 million, compared with $116.8 million for the comparable
period. This result reflects the contribution of the expanded
fleet and reduced administrative expenses, offset by lower
trading results in all sectors in which Frontline operates and a
loss on the sale of the two VLCCs to German KGs. The average
daily TCEs earned by the VLCCs, Suezmax tankers, and OBO carriers
were $31,800, $22,400 and $21,800 compared with $32,700, $24,800
and $25,500 for 1997. The total days technical offhire,
including drydockings, were 135 compared with 122 in 1997.
Average daily operating costs have continued to decrease across
the fleet in the fourth quarter as further benefits of the cost
reduction program are realised. The average daily operating
costs of the VLCCs, Suezmax tankers, and OBOs, including dry-
docking and insurance costs, were $7,600, $6,400 and $6,700
compared with $6,700, $7,500 and $7,000 for 1997. The reduction
for the Suezmaxes and OBOs reflects the successful implementation
of new shipmanagement systems. Depreciation has decreased for
the year due to the change in the depreciation schedule for the
fleet from 20 to 25 years in the fourth quarter of 1997.
If the majority holding position in ICB Shipping AB ("ICB") had
been consolidated into Frontline's accounts on an equity
accounting basis, it would have increased EBITDA to approximately
$165 million.
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Net other expenses for 1998 were $48.2 million (1997 - $42.6
million). This increase reflects the increased average level of
debt, offset by a dividend received from ICB in the second
quarter of 1998.
The Board is disappointed to report a loss of $5.2 million for
the fourth quarter of 1998, compared with a net income of $9.2
million for the comparable period in 1997. Earnings per share
for the quarter were $(0.11), (1997 - $0.20). The weighted
average number of shares outstanding for the quarter and at
December 31, 1998 was 46,106,860 (as at December 31, 1997 -
46,105,860 and for the quarter then ended - 45,608,086).
Earnings before interest, tax, depreciation, and amortisation for
the quarter, including earnings from associated companies were
$22.7 million, compared with $37.6 million for the comparable
period. This decline reflects strong TCE earnings across the
fleet in the fourth quarter of 1997 compared with the weak
results in the comparable 1998 period. The average daily TCEs
earned by the VLCCs, Suezmax tankers, and OBO carriers were
$27,100, $17,800 and $17,700, respectively, compared with
$42,500, $26,000 and $24,600 in the fourth quarter of 1997. The
reduction in EBITDA also reflects the loss on the sale of two
VLCCs, which were subject to sale and leaseback transactions in
December 1998. In addition, the fourth quarter of 1998 suffered
due to the drydockings of two vessels, with a total of
approximately 29 days offhire. The TCE results from the
Suezmaxes are negatively influenced by the positioning for the
drydocking.
Net other expenses for the quarter were $13.9 million (1997 -
$15.1 million). This decrease reflects higher average debt
balances, offset by lower interest rates, a reduction in higher
margin debt and the effect of interest capitalisation on the
newbuildings.
In the second quarter of 1998, Frontline consolidated the results
of Independent Tankers Corporation ("ITC") following its
acquisition on May 12, 1998. As previously disclosed, Frontline
subsequently sold this investment to Hemen Holding Limited
("Hemen"). The acquisition and subsequent sale of ITC are
treated as occurring on the same date for accounting purposes and
therefore the results of ITC are not consolidated for any period
in Frontline's financial statements, as a result of a common
control relationship between Frontline and Hemen. This
adjustment to previously reported results has had no significant
impact on the net income of Frontline.
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THE MARKET
The world's consumption of oil for 1998 is estimated to be
approximately 74 MBPD, which includes growth of approximately
0.5%. The consumption in Asia was reduced by 2%, mainly through
a negative development in Korea and Japan, while Western
consumption is still influenced by strong economic growth.
The downward trend in VLCC rates experienced from August 1998
continued in the fourth quarter as the effects of the Asian
crisis, an oversupply of available ships in the Arabian Gulf and
the negative effects of the OPEC production cut persisted in the
market. During 1998 we have seen a continued trend towards more
flexibility in VLCC trading. North Sea and West Africa have, in
addition to AG, become important cargo areas for VLCCs. This
should increase the trading results of VLCCs but may have
negative effects for the smaller tanker segments.
A total of 13 VLCCs were delivered in 1998, while 15 have been
sold for scrap and two converted for other purposes. It is
interesting to observe that scrapping accelerated when the market
was weak in the fourth quarter. Ten of the 15 units were
scrapped in the fourth quarter, while only three units were
delivered. At the end of the year there was a VLCC order book of
87 vessels against a total fleet of 433 vessels.
The negative trend in the Suezmax market also continued into the
fourth quarter. A pipeline closure in Nigeria, shutdowns in the
North Sea, and interruptions in the Iraqi delivery out from
Turkey all had significant negative effects on the Suezmax
market. The bulk market remained weak and the Suezmax OBOs have
just been trading with oil in the quarter. Two cargoes under the
Hadeed contract have been relet to third party tonnage, and
generated a modest profit.
A total of 21 Suezmaxes were delivered in 1998, while 15
Suezmaxes have been scrapped in the same period. At the year end
there was a Suezmax orderbook of 48 units against a total fleet
of 313 vessels. Ten of these vessels on order are dedicated as
shuttle tankers and will thereby not compete directly with the
existing tonnage.
The fall in newbuilding prices and second hand prices that
occurred during the first half of 1998 also remained a feature in
the fourth quarter. However, the relative strengthening of the
Yen and the Won compared to the US$, which took place in the
fourth quarter, has reduced the yards' ability to further lower
the prices.
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CORPORATE AND OTHER MATTERS
In July and December 1998, the first two of the five VLCC C-class
newbuildings (Front Century and Front Champion, respectively)
were delivered. In December 1998, Frontline entered into two
sale and leaseback transactions with German KGs under which it
has sold these two vessels to two German KGs for a gross price of
US$81.5 million each. Frontline will take the vessels back on
charter in an 8+2+1+1 year deal. The deals also include the
option for Frontline to buy back the vessels during the period.
The cash released from these transactions has been used to
strengthen the Company's working capital and its liquidity
position.
In January 1999, the next VLCC C-class newbuilding, the Front
Chief, was delivered. Frontline has received committed financing
for the next VLCC, Front Commander, scheduled to be delivered in
April, while the company is considering different financing
alternatives offered for the fifth vessel to be delivered in June
1999, the Front Crown.
The Company's investment in ICB has been recorded in Frontline's
balance sheet at closing prices at Stockholm Fondbors on
December 31, 1998. ICB has, in their preliminary results for
1998 published February 4, 1999, estimated the value of their
shares to be approximately SEK 77 per share. The difference
between the real value of the ICB investment and the booked value
in Frontline's accounts amounted as of year end to US$41.8
million.
The debt attached to the ICB position has been reduced to US$56.5
million in the first quarter of 1999 and will be reduced further
in the second quarter of 1999. Frontline will continue to work
for a long-term influence in ICB, but currently does not see a
short-term solution to the situation. Frontline has continued to
increase its ownership in ICB during the fourth quarter of 1998.
The book equity per Frontline share amounts to US$9.93 per share
at year end. It should be noted that a ship by ship valuation of
the Frontline fleet would show an undervaluation compared to the
booked value of the fleet. However, based on expected cashflows
over the remaining life of the assets, the Board has concluded
that it is neither necessary nor appropriate to write down the
value of the fleet.
Frontline's major shareholder, Hemen Holding Limited, had
outstanding as of December 31, 1998, a specific loan provided to
Frontline of US$89.0 million. This loan is in the process of
being converted to two separate long-term financing facilities.
Such facilities will substantially strengthen Frontline's long-
term financial position without diluting the equity interest.
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In order to make our company even more competitive in the future,
the Board has in the first quarter of 1999, initiated a new cost
cutting program, which will seek to maximise the economic
benefits of the increased fleet. The goal for the program is to
cut the overall cost structure by between US$500 and US$750 per
ship per day and to reduce the days of technical offhire.
As described in the third quarter report, the Board is working
actively with the purpose of strengthening the Company's
liquidity. After completion of the two KG financings the Board
is satisfied with the Company's current liquidity position.
However, in order to be prepared for a potential decline in the
market the Board is evaluating the following alternative ways to
increase the liquidity further: refinancing of three existing
ships; a flattening of the repayment profile of one of the
leading syndicates; different alternative lease financing, as
well as different alternative debt instruments.
OUTLOOK
The development in the market in 1999 and 2000 will be determined
by the following three factors:
1. World economic growth with special focus on the Asian
situation;
2. Amount of scrapping of old tonnage; and
3. Increased AG crude oil production/export as a function of a
low oil price.
The Board supports the market consensus that it is highly likely
that TCE rates will show a negative development for the latter
part of 1999 and 2000 compared to 1998. The main reason for this
is the large number of newbuildings being delivered especially
within the VLCC segment. However, the Board remains cautiously
optimistic about the future. Firm decisions from oil companies
like Vela and BP not to accept any ships over 25 years or trading
in HBL condition, will accelerate scrapping. Combined with the
strong increase of long haul AG - West trades, which has been
seen in the last two quarters, there is room for positive
surprises.
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The development for our tonnage in 1999 has been positive both
for VLCCs and Suezmaxes. Based on TCE earnings generated so far
in the first quarter of 1999, Frontline expects to be back in a
profitable situation for the first quarter of 1999. The results
for the remainder of the year will depend on the developments in
the three factors described above.
March 8, 1999
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
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<TABLE>
Frontline Group Fourth Quarter Report (unaudited)
<CAPTION>
1997 1998 1997 1998 Income Statement 1998 1997
July-Sept July-Sept Oct-Dec Oct-Dec (US$ 1000) Jan-Dec Jan-Dec
(audited)
_________ _________ _______ _______ ________________ _______ _________
<S> <C> <C> <C> <C> <C> <C>
62,698 70,415 80,331 61,852 Freight revenues 270,405 259,695
-12,371 -16,796 -19,661 -16,748 Voyage expenses -66,545 -62,498
50,327 53,619 60,670 45,104 Net operating revenues 203,860 197,197
0 0 0 -1,736 Gain from sale of vessels -1,514 0
-11,460 -12,577 -15,503 -14,907 Ship operating expenses -55,586 -48,076
-6,946 -3,562 -6,778 -4,159 Charterhire expenses -14,889 -25,734
-2,472 -1,360 -1,919 -2,074 Administrative expenses -7,757 -11,190
Operating profit before
29,449 36,120 36,470 22,228 depreciation 124,113 112,197
-15,128 -14,406 -13,270 -13,950 Depreciation -51,659 -56,721
Operating profit after
14,321 21,714 23,200 8,278 depreciation 72,454 55,476
1,073 329 1,345 1,041 Interest income 2,998 3,126
-10,332 -16,411 -16,477 -15,351 Interest expense -59,320 -45,945
0 0 0 0 Dividends 5,324 0
Results from associated
1,143 587 1,169 427 companies 2,807 4,598
0 2,164 6 398 Other financial items 2,765 183
6,205 8,383 9,243 -5,206 Income before taxes 27,028 17,438
-3 -34 -37 -3 Taxes -30 -43
6,202 8,349 9,206 -5,203 Net profit/loss after tax 26,998 17,395
0.18 0.18 0.20 -0.11 Earnings per Share (US$) 0.59 0.48
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Income on timecharter basis
(US$ per day per ship)*--
37,300 34,200 42,500 27,100 VLCC 31,800 32,700
23,300 22,200 26,000 17,800 Suezmax 22,400 24,800
27,000 18,600 24,600 17,700 OBO 21,800 25,500
* Basis = Calendar days minus off-hire. Figures after deduction of broker commission
</TABLE>
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<TABLE>
<CAPTION>
Balance Sheet 1998 1997
(US$1000) Dec 31 Dec 31
(unaudited)
_____________ ______ ___________
<S> <C> <C>
Assets
Short term
Cash and bank deposits 75,950 86,870
Marketable securities 110,157 187,231
Other current assets 30,439 33,602
Long term
Newbuildings 75,499 48,474
Vessel and equipment, net 1,078,956 970,590
Associated companies 3,837 3,754
Deferred charges and other
assets 4,683 2,603
Total assets 1,379,521 1,333,124
Stockholders' equity and
liabilities
Short term
Short term interest bearing
debt 170,551 247,072
Other current liabilities 27,952 35,757
Long term
Long term interest bearing
debt 712,470 526,078
Other long term liabilities 10,867 4,933
Stockholders' equity 457,68 519,284
Total stockholders' equity
and liabilities 1,379,521 1,333,124
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorised.
Frontline Ltd.
__________________________
(Registrant)
Date March 9, 1999 By /s/ Kate Blankenship
___________________ ___________________________
Kate Blankenship
Secretary
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02089009.AA0
