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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 , 2000
Frontline Ltd.
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(Translation of registrant's name into English)
Mercury House, 101 Front Street, Hamilton, HM 12, Bermuda
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(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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FRO: YEARLY RESULT
Frontline reports a net loss of $18.6 million for the fourth
quarter of 1999 (1998 - net loss of $3.0 million) and a net loss
of $86.9 million for the year ended December 31, 1999 (1998 - net
income of $31.9 million). Earnings per share for the quarter were
$(0.31), (1998 - $0.07), and for the year $(1.76), (1998 -
$0.69). The results for 1999 include ICB Shipping AB which has
been consolidated with effect from January 1, 1999. The results
for 1998 are restated to reflect the inclusion of ICB using the
equity method.
(in thousands of $)1998
Oct-Dec1999 Oct-Dec1999 Jan-Dec1998 Jan-Dec
Net operating revenue 45,104 53,614 253,214 203,860
Operating profit
before depreciation 22,228 21,469 79,225 124,114
Operating profit after
depreciation 8,278 1,480 (12,210) 72,455
Net income (loss)
after tax and minority (3,047) (18,551) (86,896) 31,853
Earnings (loss) per share (0.07) (0.31) (1.76) 0.69
FRONTLINE 1999 RESULTS
- - Frontline reports a net loss of US$18.6 mill for the fourth
quarter of 1999.
- - The 1999 full year loss amounts to US$86.9 million, which
includes US$45.9 million in accounting loss attributable to
the full consolidation of ICB.
- - As a result of the consolidation of ICB, the book equity of
Frontline is increased from US$511 million to US$560 million.
- - Frontline takes delivery of the two Suezmaxes, Front Archer
and Front Sky, and acquires 40% of the 1993 built VLCC, Toba.
- - The Board expects a return to profit in the first quarter of
2000 and anticipates a strong recovery in tanker rates in the
period 2000 - 2002.
FOURTH QUARTER RESULTS
Frontline reports a net loss of $18.6 million for the fourth
quarter of 1999, compared with a net loss of $3.0 million for the
fourth quarter of 1998, as the weak market conditions continued
to effect the Company's result. Earnings before interest, tax,
depreciation, and amortisation (EBITDA) for the quarter,
including earnings from associated companies were $22.6 million,
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compared with $24.8 million for the 1998 period. The average
daily time charter equivalents ("TCEs") earned by the VLCCs,
Suezmax tankers, and Suezmax OBO carriers were $16,700, $14,500
and $14,400, respectively, (1998 - $34,200, $22,200 and $18,600,
respectively). These TCEs do not include the vessels on time
charter to BP since the earnings are subject to subsequent semi-
annual adjustment.Total days offhire in the 1999 quarter were 10
which related to the Suezmax fleet. The acquisition of ICB
Shipping AB ("ICB") and continued expansion of the Frontline
fleet has led to increased total operating costs, administrative
expenses and depreciation. Through economies of scale the average
daily administrative and operating costs are, however,
decreasing.
Net other expenses for the quarter were $21.1 million (1998 -
$13.9 million). This reflects an increase in the average debt
resulting from the fleet expansion and the further investment in
ICB.
Earnings per share for the quarter were $(0.31), (1998 -
$(0.07)). On December 20, 1999, the Company issued 1,910,000
shares in connection with a vessel acquisition transaction
discussed below, resulting in 60,961,860 shares outstanding at
December 31, 1999 and a weighted average number of shares
outstanding for the quarter of 59,300,990 (as at December 31,
1998 and for the quarter then ended - 46,106,860). Cashflow per
share for the quarter was $0.02, compared with $0.24 for the same
quarter in 1998.
ANNUAL RESULTS
For the year ended December 31, 1999, the Company incurred a net
loss of $86.9 million (1998 - net income of $31.9 million) and
EBITDA of $82.3 million (1998 - $137.1 million). The average
daily TCEs earned by the VLCCs, Suezmax tankers, and Suezmax OBO
carriers were $20,000, $16,700 and $16,800 respectively, compared
with $31,800, $22,400 and $21,800 in 1998.
The average daily operating costs of the VLCCs, Suezmaxes and
Suezmax OBOs, including drydocking and insurance costs were
$5,900, $5,400 and $5,700 compared with $7,600, $6,400 and $6,700
for 1998. The Board is very satisfied with the reduction in
operating costs which are attributable to reduced insurance costs
and the implementation of a cost cutting program in the first
quarter of 1999 which aimed to reduce the overall cost structure
by between $500 and $750 per day.
Net other expenses for the year were $82.0 million (1998 - $53.6
million). This principally reflects an increase in the average
debt resulting from the fleet expansion and the acquisition of
ICB.
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Earnings per share for the 1999 year were $(1.76), (1998 - $0.69)
and cashflow per share was $0.09 (1998 - $1.81). The weighted
average number of shares outstanding for 1999 was 49,467,970.
Accounting Treatment of ICB
US generally accepted accounting principles ("US GAAP") require
restatement of certain previously reported Frontline financial
statements to reflect the step acquisition of ICB. ICB has been
included in the financial statements of Frontline according to
the equity method for periods to December 31, 1998 and on a
consolidated basis from January 1, 1999. This accounting
treatment has resulted in Frontline taking some portion of the
loss on the sale of vessels by ICB which will be reported in the
restated third quarter consolidated results for 1999 and in the
full year result.
THE MARKET
The VLCC market and Suezmax market remained weak during the
fourth quarter. Total OPEC production in the fourth quarter is
estimated to be approximately 26 million barrels, which is
slightly down from the third quarter. Both the VLCC market and
Suezmax market suffered in November and December as a function of
a temporary shut down of Iraqi oil exports.
The most noticeable market development in the quarter was the
accelerated scrapping of tonnage as a result of high bunker cost
and the difficulties finding cargoes for old tonnage. A total 10
VLCC and 9 Suezmaxes were scrapped in the quarter, while the
numbers for the full year were 35 VLCCs and 23 Suezmaxes. A total
of 31 VLCCs and 14 Suezmaxes newbuildings were delivered in 1999.
The breaking in two of the 23 year old tanker, Erika, in December
and the oil spill polluting the coast of Brittany following the
accident, has increased the awareness of quality problems in
certain older vessels. New and stricter regulations for tankers
will be put in place in the European Community as a consequence
of the Erika accident.
CORPORATE AND OTHER MATTERS
The Board of Frontline has taken positive steps in the fourth
quarter to strengthen the Company's position in the VLCC market.
In December, Frontline entered into an agreement with five other
shipowners to establish Tankers International LLC ("Tankers") to
operate a pool of their respective VLCC fleets. Tankers commenced
operations on February 1, 2000, initially operating with 38
VLCCs, and has been met with a positive reaction in the market.
Also in December, Frontline completed an agreement with a German
K/G arranged by Dr. Peters GmbH for the sale and leaseback of the
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1998-built Suezmax vessel Front Warrior to the K/G for a sales
price of US$50.0 million. Frontline will take the vessel back on
charter for a minimum period of eight years with two plus one
plus one year options. The agreement also includes the option for
Frontline to buy back the vessel during the charter period. The
cash released from these transactions has been used to strengthen
the Company's working capital and its liquidity position.
In the fourth quarter of 1999, Frontline focussed on completing
the final stages of the acquisition of ICB and integration of ICB
into Frontline's operations. During this period, the necessary
refinancing of ICB's debt facilities was completed, Frontline
commenced an offer and concurrently commenced a compulsory
redemption process to acquire the remaining outstanding minority
shareholders of ICB. In December an application was made to
delist ICB from the Stockholm Stock Exchange. The management of
the ICB vessels has been transferred to Frontline appointed ship
managers and the Board is optimistic that the close down of the
ICB operations will be completed within an acceptable and
efficient timeframe.
In February, 2000 Frontline took delivery of the Suezmax
newbuilding (the "Front Archer"), purchased in the fourth quarter
of 1999 in a transaction with the Mosvold Farsund Group. The
purchase price of $45.5 million for the Front Archer was part
financed in December 1999 by the issuance of 1,910,000 Frontline
shares to the seller at a price of NOK 37.00, and was further
financed by traditional bank financing. Frontline has the right
to within one year buy back 430.000 of these shares at NOK 37.00
plus 10 % p.a. interest cost.
In February, 2000 Frontline also took delivery of the Suezmax
newbuilding, the Front Sky, and is scheduled to take delivery of
the final Suezmax newbuilding, to be named the Front Sun, in
April, 2000. Both vessels are financed by traditional bank
financing. This will complete the Company's current Suezmax
newbuilding program.
Frontline has, together with two of its partners in Tankers,
acquired the 1993 built VLCC MT Toba for US$ 37.25 million. The
ship, which will be renamed MT Front Toba, is expected to be
taken over in the first half of March and will immediately after
delivery be employed in the Tankers VLCC Pool. Frontline will
have a 40 % ownership interest in the ship.
Frontline is proud to announce the new agreement the Company has
signed with the Angolian state oil company Sonangol. Through this
agreement, Frontline has been selected as the commercial manager
for their three Suezmax newbuildings, out of which one is already
delivered.
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The positive development in Frontline's share price during the
fourth quarter of 1999, has continued into 2000. Since October 1,
1999 the share price on the Oslo Stock Exchange has increased
from NOK 35 (US$4.38) to NOK 58 (US$7.06). An effectively priced
equity is seen by the Board as the main condition for Frontline's
future growth.
The Board is pleased to announce that Ola Lorentzon, Managing
Director of ICB Shipping AB, will take over as Managing Director
of Frontline Management from Tor Olav Troim, effective April 3,
2000. Mr. Lorentzon's appointment will substantially strengthen
Frontline's organisation. Mr. Troim will continue in his position
as Vice President of Frontline Ltd. In this capacity, he will
concentrate his future work on corporate transactions, and
continuing to develop Frontline's relationship with the capital
market.
OUTLOOK
It is encouraging to see that the consolidation work Frontline
has promoted is effective. Both Tankers International (VLCCs)
which has been effective from February 1, 2000, and Alliance
Chartering (Suezmaxes), have world leadership market positions,
which should lead to superior earnings for our shareholders.
The market has so far in 2000 shown positive development. The
high degree of scrapping has continued and so far this year 13
VLCCs have been scrapped. The positive development in ship values
which started in the third quarter 1999 has continued into 2000.
Based on interest from potential buyers, it is anticipated that
the value of 1990 - 1995 built Suezmax and VLCC tonnage has
increased approximately 10% since the third quarter of 1999. The
Korean yard industry has, as a result of the Won strengthening
against the US Dollar, quoted higher newbuilding prices.
The market rates for VLCCs remained weak in January but has
presently improved to a TCE level around US$25 - 30,000 per day.
The Suezmax market strengthened in December and daily TCE rates
have since been in the US$20 - 25,000 level with some peak
fixtures in excess of US$30,000 per day.
Taken into view the results for January and February and the
current trend for March it is anticipated that Frontline will be
able to return to profit in the first quarter of 2000. The Board
remains increasingly optimistic about the market for the coming
two years. With increased OPEC production and a controlled order
backlog it is likely that we will see a strong recovery in tanker
rates. Frontline is well positioned to benefit from this
development.
February 25, 2000
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The Board of Directors
Frontline Ltd.
Contact: Tor Olav Troim/ Tom E.Jebsen
+47 23 11 40 00
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FRONTLINE GROUP FOURTH QUARTER REPORT (UNAUDITED)
1998 1999 INCOME STATEMENT 1999 1998
Oct-Dec Oct-Dec (in thousands of $) Jan-Dec Jan-Dec
61,852 86,871 Freight revenues 369,876 270,405
(16,748)(33,257)Voyageexpenses (116,662) (66,545)
45,104 53,614 Net operating revenues 253,214 203,860
(1,736) -Gain (loss) from sale of
vessels (37,779) (1,514) 14,907
21,146 Ship operating expenses 92,708 55,586
4,159 7,838 Charterhire expenses 31,719 14,889
2,074 3,161 Administrative expenses 11,783 7,757
22,228 21,469 Operating profit before
depreciation 79,225 124,114
13,950 19,989 Depreciation 91,435 51,659
8,278 1,480 Operating profit (loss)
after depreciation (12,210) 72,455
1,041 2,453 Interest income 7,561 2,998
(15,351) (23,495) Interest expense (88,728) (59,320)
2,582 1,111 Results from associated
companies 3,067 12,985
398 (96) Other financial items (840) 2,765
(3,050) (18,547) Income (loss) before
taxes and minority
interest (91,150) 31,883
- (13) Minority interest 4,245 -
3 (9) Taxes (9) 30
(3,047) (18,551) Net income (loss) after
tax and minority
interest (86,896) 31,853
(0.07) (0.31) Earnings (loss) per
Share ($) (1.76) 0.69
Income on timecharter basis
($ per day per ship)*
27,100 16,700 VLCC 20,000 31,800
17,800 14,500 Suezmax 16,700 22,400
17,700 14,400 Suezmax OBO 16,800 21,800
* Basis = Calendar days minus off-hire. Figures after deduction of broker
commission
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BALANCE SHEET
(in thousands of $)
1999 1998
Dec 31 Dec 31
(restated)
ASSETS
Short term
Cash and bank deposits 66,267 75,950O
Other current assets 61,438 30,439
Long term
Newbuildings 32,365 75,681
Vessel and equipment, net 1,523,112 1,078,956
Marketable securities 18,595 -
Associated companies 2,344 239,887
Goodwill 12,203 -
Deferred charges and other assets 10,469 4,501
Total assets 1,726,793 1,505,415
LIABILITIES AND STOCKHOLDERS' EQUITY
Short term
Short term interest bearing debt 157,306 170,551
Other current liabilities 49,739 27,952
Long term
Long term interest bearing debt 922,380 712,470
Other long term liabilities 21,117 10,867
Minority interest 18,951 -
Stockholders' equity 557,300 583,574
Total liabilities and stockholders' equity1,726,793 1,505,414
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FRO: CAPITAL ADJUSTMENTS - INCREASE IN ISSUED SHARE CAPITAL
The Board of Frontline has approved two capital transactions that
will increase Frontline's future financial flexibility. The
Company has issued NOK 201,250,000 or approximately US$ 24,0
million in equity through a private placement to a limited group
of Norwegian and international financial institutions. In
addition approximatelly US$ 30 million of the remaining US$ 54
million subordinated loan from Metrogas has been converted into
equity. In connection with the conversion, Metrogas will offer
US$ 14 million of the resulting ordinary shares to Frontline
shareholders and warrant holders as of February 25. Totally 7.85
million shares will be issued in the two equity issues. Issue
price for both issues is NOK 57.50.
Frontline Completes Equity Financing.
The Board of Frontline wants the Company to continue to be the
driving force in the much needed consolidation process, which
currently takes place in the tanker industry. In order to prepare
the Company for future growth the Board has approved two capital
transactions, which substantially increase Frontline's financial
flexibility.
1. Frontline has issued NOK 201,250,000 or approximately US$
24.0 million in equity through a private placement. A total
of 3,500,000 shares were placed to a limited group of
Norwegian and International Institutional Investors at an
issue price of NOK 57.50. The transaction was successfully
placed by Fearnley Fonds ASA and Christiania Markets AS.
2. Metrogas Ltd., a company controlled by Frontline's major
shareholder Hemen Holding Ltd., has converted into equity
approximately US$ 30 million of the original US$ 89 million
subordinated loan given to Frontline. At an issue price of
NOK 57.50 a total of 4,350,000 shares were issued. Hemen has
agreed with Frontline that all of Frontlines existing
shareholders on record date February 25, 2000, excluding
Hemen and the new shareholders arising from the private
placement referred to above, will be given pre-emptive right
to buy approximately 2,000,000 of these shares. Such a
solution secures that all shareholders in Frontline will have
the right to obtain their prorate part of this issue. The
subscription period for this transaction is estimated to take
place in March 2000. Fearnley Fonds and Christiania Markets
will organise the sale of these shares. The Metrogas loan to
Hemen is after this conversion reduced to approximately US$
24 million.
The execution of transaction 1. and 2. is carried out within the
Board's existing authority to issue new shares.
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The total number of shares outstanding in Frontline after
completion of this transaction will be 68,811,860.
The combined transaction will increase Frontline's equity by US$
54 million, and will improve the liquidity with US$ 24 million.
The proceeds from the transactions will be used to strengthen the
company financially, finance the acquisition of the 1993-built
VLCC MT Front Toba, and fund future growth.
Frontline's Chairman John Fredriksen says in a comment:" We are
entering a very interesting period in the tanker industry. The
major part of the old tonnage will be scrapped during the next
three years. At the same time we see strong increase in demand
for oil. OPEC will be forced to increase production and the
newbuilding program for the next two years are already fixed. All
factors point in the direction of a very tight market balance.
Frontline has since 1996 been one of the leading consolidators in
the tanker industry. Through the acquisitions executed and
through the establishment and participation in Tankers Int. and
Alliance Chartering Frontline has been established as a company
with superior trading flexibility and material economic benefits
of scale. It is our idea to continue this process. We are
continuously working on ideas, which will further increase the
size of Frontline. The two equity issues fall into our overall
plan. Financial flexibility is critical in order to be able to
act quickly."
February 28, 2000
Contact person : Tor Olav Troim - Tel 47 - 23 11 40 00
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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.
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(Registrant)
Date March 3, 2000 By /s/ Kate Blankenship
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Kate Blankenship
Secretary
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