<PAGE>
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 October , 2000
Frontline Ltd.
---------------------------------------------------------------
(Translation of registrants 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-
<PAGE>
GOLDEN OCEAN GROUP LIMITED
Consolidated Financial Statements
(With Independent Auditors Report Thereon)
December 31, 1999
2
<PAGE>
INDEPENDENT AUDITORS REPORT
The Board of Directors and Shareholders
Golden Ocean Group Limited
We have audited the accompanying consolidated balance sheet
of Golden Ocean Group Limited and subsidiaries as of December 31,
1999 and the related consolidated statement of operations and
retained earnings and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of Golden Ocean Group Limited and
subsidiaries as of December 31, 1999, and the consolidated
results of their operations and their cash flows for the year
then ended, in conformity with generally accepted accounting
principles in the United States.
As more fully explained in note 1 to the consolidated
financial statements Golden Ocean Group Limited and two
subsidiaries filed a voluntary petition for relief under Chapter
11 of the United States Bankruptcy Code on January 14, 2000. A
Plan of Reorganisation became effective on October 10, 2000.
3
<PAGE>
As more fully explained in note 26 to the consolidated
financial statements the Company in previous years understated
certain chartering liabilities arising from an agreement with a
third party.
Moore Stephens
Chartered Accountants
St. Pauls House
Warwick Lane
London, England
June 6, 2000
(October 17, 2000 - notes 1, 25 and 26)
4
<PAGE>
GOLDEN OCEAN GROUP LIMITED
CONSOLIDATED BALANCE SHEET
(Expressed in thousands of United States Dollars)
ASSETS DECEMBER 31,
NOTE 1999
CURRENT ASSETS
Cash and cash equivalents 3 $ 11,970
Inventories 631
Trade accounts receivable 42
Prepaid expenses and other accounts receivable 4,145
----------
Total current assets 16,788
Vessels owned, net 4,14 426,552
Vessels under capital lease, net 5 156,880
Vessels under construction 6
Options to purchase vessels 7
Investment in joint ventures 8 (11,045)
Loans to joint ventures 8,9 27,854
Goodwill, net 10 6,160
Deferred note issue costs, net 11 5,573
----------
Total assets $ 628,762
==========
Liabilities and shareholders' equity
CURRENT LIABILITIES
Current maturities of long term debt 13 $ 24,423
Obligations under capital leases 12 10,878
Trade accounts payable and accrued expenses 7,701
Note interest payable 16 9,713
Other accounts payable 24,26 3,875
Time charter income received in advance 3,852
Drydocking and special survey provisions 250
----------
Total current liabilities 60,692
Other loans 14 14,274
Long term debt 13 329,285
Obligations under capital leases 12 158,213
Notes payable 16 255,702
Other accounts payable 24,26 2,625
Amounts due to shareholder 15 10,638
Drydocking and special survey provisions 754
Total liabilities 832,183
----------
Commitments and contingent liabilities 22 -
Minority interest 222
5
<PAGE>
SHAREHOLDERS' EQUITY
Share capital (3,680,000 shares of no par value) 17 -
Additional paid in capital 17,26 74,795
Retained deficit 26 (278,438)
----------
Total shareholders' equity (203,643)
Total liabilities and shareholders' equity $ 628,762
==========
See accompanying notes to the consolidated financial statements
6
<PAGE>
GOLDEN OCEAN GROUP LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Expressed in thousands of United States Dollars)
GOLDEN OCEAN GROUP LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Expressed in thousands of United States Dollars)
NOTE 1999
OPERATING REVENUES
Charter income 20(c) $ 81,445
Brokers' commission (673)
Share of losses of joint ventures 8 (12,427)
----------
Total operating revenues 68,345
OPERATING EXPENSES
Vessel operating costs 14,093
Administrative expenses 8,624
Depreciation and amortisation expense 4,5 26,566
Amortisation of goodwill 10 779
Write down of goodwill 10 11,500
Drydocking and special survey costs 547
Loss on cancellation of shipbuilding contracts 6 52,640
Loss on cancellation of option contracts 7 48,655
Loss on novation of shipbuilding contracts 6 67,407
----------
Total operating expenses 230,811
----------
Net operating loss (162,466)
OTHER INCOME (EXPENSES)
Foreign exchange loss 19 (32,110)
Interest income 1,500
Interest expense (66,833)
Other income (expenses) (1,293)
Loss on disposal of vessels 4 (86)
----------
Net other income (expense) (98,822)
----------
Net loss before minority interest (261,288)
Minority interest (181)
----------
Net loss (261,469)
Retained deficit at beginning of
the year (as restated) 26 (16,969)
----------
Retained deficit at end of the year $(278,438)
7
<PAGE>
==========
See accompanying notes to the consolidated financial statements
8
<PAGE>
GOLDEN OCEAN GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in thousands of United States Dollars)
1999
OPERATING ACTIVITIES
Net loss $ (261,469)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Foreign exchange loss 32,110
Depreciation and amortisation expense 26,566
Share of losses of joint ventures 12,427
Loss on disposal of vessels 86
Loss on cancellation of shipbuilding contracts 52,640
Loss on cancellation of option contracts 48,655
Loss on novation of shipbuilding contracts 67,407
Amortisation of note discount 19,330
Amortisation of goodwill 779
Write down of goodwill 11,500
Amortisation of deferred note issue costs 3,344
Interest receivable on loans to joint ventures (503)
Minority interest 181
Net change in:
Inventories (82)
Trade accounts receivable (15)
Prepaid expenses and other accounts receivable (675)
Trade accounts payable and accrued expenses 3,727
Other accounts payable 3,000
Time charter income received in advance 1,903
Drydocking and special survey provisions (652)
----------
Net cash provided by operating activities 20,259
INVESTING ACTIVITIES
Loans to joint ventures (4,340)
Additions to vessels under construction (143,361)
Proceeds from sale of vessels 73,012
Proceeds from redemption of investments 29,138
----------
Net cash used in investing activities (45,551)
See accompanying notes to the consolidated financial statements
9
<PAGE>
GOLDEN OCEAN GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
(Expressed in thousands of United States Dollars)
1999
FINANCING ACTIVITIES
Proceeds from long term debt 131,011
Repayment of long term debt (90,570)
Repayment of capital leases (8,746)
Amounts due to related party (237)
Repayments to shareholder (2,683)
----------
Net cash provided by financing activities 28,775
----------
Net increase in cash and cash equivalents 3,483
Cash and cash equivalents at beginning of year 8,487
----------
Cash and cash equivalents at end of year $ 11,970
==========
Supplementary disclosure of cash flow information
Interest paid 53,169
Interest capitalised (13,579)
---------
Interest paid, net of capitalised interest $ 39,590
=========
Supplementary schedule of non cash investing and financing activities:
The capital lease obligations for the Golden Disa and Golden Nerina did not
involve cash and therefore the inception values of the leases of $24,327,649
and $24,985,841 respectively have been excluded from the statements of cash
flows.
See accompanying notes to the consolidated financial statements
10
<PAGE>
GOLDEN OCEAN GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
1. General
Golden Ocean Group Limited (the Company) is incorporated
under the laws of Liberia.
Golden Ocean Group Limited, through its subsidiaries and
joint venture companies, owns and operates a fleet of tankers
and bulk cargo vessels. The majority of its revenues are
derived from fixed, long-term time charter arrangements. As
at December 31, 1999 the wholly owned fleet consists of four
Very Large Crude Carriers ("VLCC's"), two capesize bulkers
and one handymax bulker. There are also two capesize
bulkers, two panamax bulkers and two handymax bulkers on
capital lease to the Company and one VLCC on an operating
lease. Additionally, the joint venture fleet comprises three
VLCCs and two handymax bulkers. There are six vessels on
order by subsidiaries and the Company has options to purchase
a further two VLCCs and an obligation to purchase one VLCC.
The fleet is managed by Golden Ocean Services Inc., a
subsidiary company.
The Company's activities are not limited to any geographical
area.
For the year ended December 31, 1999, the Company incurred a
net loss of $261,469,000.
Because of these losses the Company's liquidity deteriorated
during the year. At December 31, 1999 the Company had
negative working capital of $43,904,000 and total liabilities
of $832,183,000.
On January 14, 2000 the Company and its fellow subsidiaries
Golden Ocean Tankers Limited and Channel Rose Holdings Inc.
(the Debtors) filed a voluntary petition under Chapter 11 of
the Bankruptcy Code with the Clerk of the United States
Bankruptcy Court for the District of Delaware.
On July 7, 2000, Frontline Ltd., an unrelated company
incorporated under the laws of Bermuda, filed with the Court
a proposed Plan of Reorganisation (the Plan) which set forth
the manner in which Claims against and Equity Interests in
the Debtors will be treated.
11
<PAGE>
The Plan was agreed by an overwhelming majority of holders of
Claims entitled to vote and was confirmed at a hearing on
September 15, 2000. The Plan became effective on October 10,
2000.
The Company believes that funds generated by operations and
funds made available from Frontline Ltd. will be sufficient
to meet the Company's projected working capital and capital
expenditure needs in the normal course of business at least
through to December 31, 2000. On a proforma basis
shareholders equity has increased by $230,884,000 to
$27,241,000 as a result of the Plan.
In addition to the continuing risks related to the Company's
future liquidity, the Company also faces numerous other risks
associated with its industry. These include dependence on
the performance of charterers of the Company's vessels,
volatile shipping freight markets, intense competition and
fluctuations in the market price of oil.
The Company's financial statements have been presented on the
basis that it is a going concern and accordingly, the
financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities or
any other adjustment that might result should the Company be
unable to continue as a going concern.
2. Accounting policies
The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in
the United States. The preparation of financial statements
in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results
could differ from those estimates. The following are the
significant accounting policies adopted by the Company:
(a) Consolidation
The consolidated financial statements include the assets,
liabilities and results of operations of the Company and its
majority owned subsidiaries. All inter-company balances and
transactions have been eliminated upon consolidation.
Entities in which the Company has a majority of the voting
rights are consolidated. Non-equity financing provided by
12
<PAGE>
the minority interests is accounted for as other loans.
Minority interest in the results of operations of
subsidiaries is allocated in proportion to the total minority
shareholding.
(b) Investment in joint ventures
The Company's investments in joint ventures are accounted for
using the equity method of accounting whereby the carrying
value is cost plus the Company's share of post-acquisition
net income (loss). Dividends received from joint ventures
reduce the carrying value of the investment.
(c) Vessels
The cost of vessels less estimated residual value is
depreciated on a straight-line basis over their estimated
useful lives. The vessels lives are estimated at 25 years
from date of construction.
The Company leases certain vessels under agreements which are
classified as capital leases due to the existence of bargain
purchase options. Amortisation of vessels under capital
lease is calculated in the same manner as owned vessels and
included within depreciation expense in the statement of
operations.
(d) Vessels under construction
The carrying value of the vessels under construction
represents the accumulated costs to the balance sheet date
which the Company has had to pay by way of purchase
instalments and other capital expenditures, together with
capitalised loan interest and other associated financing
fees. Capital commitments under contracts with shipbuilders
are not recorded as a liability until instalments become due
(note 6). No charge for depreciation will be made until the
vessels' delivery.
(e) Accounting for impairment of long-lived assets
In Accordance with SFAS 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
Of", the Company reviews expected future cash flows on a
vessel by vessel basis (undiscounted and without interest
charges) to determine whether the carrying values of its
vessels are recoverable. If the expected future cash flows
are less than the carrying value of the vessel, provision is
made to write down the carrying value of the vessel to the
fair value.
13
<PAGE>
(f) Options to purchase vessels
Payments to acquire options to purchase vessels are
capitalised at the time of execution of the option contract.
The Company reviews expected future cash flows which would
result from exercise of each option contract on a contract by
contract basis to determine whether the carrying value of the
option is recoverable. If the expected future cash flows are
less than the carrying value of the option plus further costs
to delivery, provision is made to write down the carrying
value of the option to the recoverable amount. The carrying
value of each option payment is written off as and when the
Company adopts a formal plan not to exercise the option.
Strike price payments are capitalised and the total of the
option payment and strike price payment is transferred to
cost of vessels, net upon exercise of the option.
(g) Inventories
Inventories, which comprise lubricating oils and bunkers
where applicable, are stated at the lower of cost or market
value. Cost is determined on a first-in, first-out basis.
Expenditure on other consumables is charged against income
when incurred.
(h) Investments
Investments in marketable securities are recorded at
amortised cost. The Company classifies all investments
with maturity dates within one year of the balance sheet
date as short-term investments. Amortisation of
discount on held-to-maturity securities is included
within interest income.
(i) Goodwill
Goodwill, recognised in business combinations accounted
for as purchases, is being amortised on a straight-line
basis over 25 years. The Company reviews expected
future cash flows from purchases (undiscounted and
without interest charges) to determine whether the
carrying value of goodwill is recoverable. If the
expected future cash flows are less than the carrying
value of each purchase including related goodwill,
provision is made to write down the carrying value of
goodwill to the recoverable amount.
14
<PAGE>
(j) Deferred note issue costs
Deferred note issue costs, comprising professional fees
and other costs directly attributable to the Company's
issue of Senior Notes are capitalised and amortised over
the term to maturity of the Senior Notes. Amortisation
of deferred note issue costs is included within interest
expense.
(k) Drydocking and special survey provisions
Most of the expenditure on repairs and maintenance of
the vessels is incurred during drydockings, which take
place approximately every 30 months, with additional
costs when special surveys are carried out every five
years. Provisions are made so that each year's result
bears a proportion of these costs. Such provisions are
based on estimates made by management of the expected
cost and length of time between drydockings. Changes in
estimates of the expected cost and timing of the drydock
are recorded in the period in which they are determined.
(l) Revenue and expense recognition
Time, voyage and bareboat charter revenues and expenses
are recorded on a daily accruals basis.
(m) Foreign currencies
The Company's functional currency is the U.S. Dollar as
the majority of revenues are received in U.S. Dollars
and the majority of the Company's operating expenditures
are made in U.S. Dollars. Transactions in foreign
currencies during the year are translated into U.S.
Dollars at the rates of exchange in effect at the date
of transaction. Foreign currency monetary assets and
liabilities are translated using rates of exchange at
the balance sheet date. Non monetary assets and
liabilities are translated using historical rates. All
gains or losses are recorded in the statement of
operations. At December 31, 1999 the exchange rate for
Yen was $1=Yen 102.36.
(n) Interest rate swap agreements
The Company enters into interest rate swap transactions
to hedge a portion of its exposure to floating interest
rates on its long-term debt. These transactions involve
paying a fixed rate and receiving a floating rate of
interest on a notional principal amount equivalent to
the loan designated as being hedged. The differential
15
<PAGE>
to be paid or received is accrued as interest rates
change and is recognised as an adjustment to interest
expense. Premiums and receipts, if any, are recognised
as adjustments to interest expense over the lives of the
individual contracts. Any gain or loss realised on the
early termination of an interest rate swap agreement is
recognised as an adjustment of interest expense over the
remaining term of the hedged debt.
(o) Cash and cash equivalents
For the purposes of the statements of cash flows,
certain highly liquid investments with original
maturities of three months or less when purchased are
considered equivalent to cash.
(p) Recently issued accounting standards
SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued in June 1998 and is
effective for fiscal years beginning after June 15,
2000. It establishes accounting and reporting standards
for derivative instruments, including derivative
instruments that are embedded in other contracts, as
well as for hedging activities. The Company intends to
adopt the standard as from January 1, 2001. Management
is currently assessing the impact that SFAS 133 will
have on the consolidated financial statements.
3. Cash and cash equivalents
Included within cash and cash equivalents are amounts
totalling $4,534,000 which have been retained by lenders
to repay the next principal instalments and interest
payments due on certain long term loans (note 13).
Included within cash and cash equivalents is an amount
of $3,000,000 which has been retained by a lender in
satisfaction of a loan covenant whereby the outstanding
amount of the loan is restricted to a percentage of the
current market value of the vessel New Vista. Included
within cash and cash equivalents is an amount of
$4,100,000 which was transferred to Chase Manhattan Bank
on December 23, 1999. These funds were utilised
between January 1 and January 13, 2000 to pay financing
fees due on delivery of the Stena Commerce, Stena
Comanche and Opalia and to pay retainer fees to various
legal advisors in connection with the company's Chapter
XI filing on January 14, 2000.
16
<PAGE>
4. Vessels owned, net
1999
('000)
Cost
At beginning of the year 456,255
Transferred from vessels under construction 102,214
Removed on disposal (78,511)
----------
At end of the year $ 479,958
==========
Depreciation
At beginning of the year 35,366
Charge for the year 20,828
Removed on disposal (2,788)
----------
At end of the year $ 53,406
----------
Net book value $ 426,552
==========
The vessel Golden Victory was delivered on January 7, 1999 and
sold on November 29, 1999. On the date of sale, the Company
entered into an agreement to charter the vessel back for the
period November 29, 1999 until January 7, 2006. The loss on sale
amounted to $2,538,266 and is being amortised over the period of
the charter back.
DATE DEADWEIGHT CHARTER
WHOLLY OWNED FLEET DELIVERED TYPE TONNAGE (M.T.) EXPIRATION
Golden Stream 1995 VLCC 260,000 March 2002
Navix Astral 1996 VLCC 260,000 March 2011
Channel Alliance 1996 Capesize 170,000 October 1999
Channel Navigator 1997 Capesize 170,000 February 2001
New Vanguard 1998 VLCC 298,500 March 2008
New Vista 1998 VLCC 298,500 September 2008
Cos Hero 1999 Handymax 45,000 January 2014
The insured value of owned vessels is $432,500,000 plus Yen
10,000,000,000 (equivalent to $97,699,184).
17
<PAGE>
5. Vessels owned, net
1999
(.000)
Cost
At beginning of the year 111,258
Transferred from vessels under construction 54,720
----------
At end of the year 165,978
----------
Amortisation
At beginning of the year 3,360
Charge for the year 5,738
----------
At end of the year $ 9,098
==========
----------
Net book value $ 156,880
==========
DATE DEADWEIGHT CHARTER
LEASED FLEET DELIVERED TYPE TONNAGE (M.T.) EXPIRATION
Golden Poteme 1996 Capesize 150,000 November 2000
Channel Poteme 1997 Capesize 170,000 February 2012
Golden Protea 1998 Handymax 45,000 September 20 10
Golden Aloe 1998 Handymax 45,000 September 2010
Golden Disa 1999 Panamax 75,000 March 2011
Golden Nerina 1999 Panamax 75,000 August 2011
The insured value of leased vessels is $224,000,000.
18
<PAGE>
6. Vessels under construction
1999
('000)
Cost
At beginning of the year 132,276
Purchase instalments and capital expenditure 123,057
Interest capitalised 13,627
Pre-delivery expenses 2,127
Other associated financing fees capitalised 5,894
Loss on cancellation of shipbuilding contract (52,640)
Loss on novation of shipbuilding contract (67,407)
Transferred to vessels owned, net (102,214)
Transferred to vessels under capital lease, net (54,720)
----------
$ -
==========
At end of the year
DEADWEIGHT SCHEDULED
VESSEL HULL # TYPE TONNAGE (M.T.) DELIVERY
Stena Commodore 5988 VLCC 298,500 January 2000
T.B.N. 6378 VLCC 298,500 February 2000
Oscilla 1628 VLCC 300,000 March 2000
T.B.N. 6388 VLCC 298,500 March 2000
Otina 1638 VLCC 300,000 May 2000
T.B.N. 6398 VLCC 298,500 June 2000
By an agreement dated November 3, 1999, the Company novated its
interest in a shipbuilding contract for the vessel Opalia (ex
hull #1618) to Kismet Shipping Limited (Kismet), an unrelated
company incorporated under the laws of the Isle of Man. Kismet
assumed all remaining liabilities due under the shipbuilding
contract.
The Company has an obligation to purchase the Opalia on expiry of
its current charter which is for two years from delivery with an
optional further two years. The purchase price is equal to 100%
of the outstanding mortgage debt under three loan agreements
between lenders and Kismet. As at December 31, 1999 the
outstanding mortgage debt of Kismet amounted to $62,000,000 plus
Yen 2,218,216,870 (equivalent to $21,671,798).
By an agreement dated January 13, 2000, the Company novated its
interest in a shipbuilding contract for the vessel Stena
Commodore (ex hull #5988) to Eskdale Maritime Limited (Eskdale),
19
<PAGE>
an unrelated company incorporated under the laws of the Isle of
Man. Eskdale assumed all remaining liabilities due under the
shipbuilding contract. In exchange for its interest in the
shipbuilding contract, Eskdale granted the Company an option to
purchase the vessel.
The option is exercisable at any time from delivery of the vessel
(February 14, 2000). The strike price is equal to 100% of the
outstanding mortgage debt under three joint loan agreements
between lenders and Eskdale. On delivery of the Stena Commodore,
the outstanding mortgage debt of Eskdale amounted to $60,000,000
plus Yen 2,924,530,298 (equivalent to $28,572,422).
By an agreement dated March 30, 2000, the Company novated its
interest in a shipbuilding contract for the vessel Oscilla (ex
hull #1628) to Seacrest Shipping Limited, an unrelated company
incorporated under the laws of the Isle of Man. Seacrest
Shipping Limited assumed all remaining liabilities due under the
shipbuilding contract.
On the same date, Seacrest granted the Company an option to
acquire the vessel Oscilla on expiry of a five year time charter
which commenced on delivery of the vessel on March 31, 2000. The
strike price is equal to the outstanding mortgage debt under four
loan agreements between lenders and Seacrest.
By an agreement dated June 1, 2000, the Company novated its
interest in a shipbuilding contract for the vessel Front Tina (ex
hull #1638) to Otina Inc. (Otina), an unrelated company
incorporated under the laws of Liberia. Otina assumed all
remaining liabilities due under the shipbuilding contract.
On the same date, Otina granted the Company an option to acquire
the vessel Front Tina. The option is exercisable at any time
between delivery of the vessel (June 1, 2000) and the earlier of
six months later and the effective date of a plan of
reorganisation under the United States Bankruptcy Code for the
Company. The strike price is equal to the sum of $78,387,900
plus Otinas reasonable fees and expenses related to the financing
of the vessel.
During the year, the Company cancelled contracts for hulls #6288
and #1668. On January 7, 2000 the Company cancelled contracts
for hulls #6378, #6388 and #6398. All losses on cancellation
have been recorded in the consolidated statement of operations
for the year. Losses on cancellation amounted to $52,640,000.
20
<PAGE>
7. Options to purchase vessels
1999
(.000)
Cost
At beginning of the year 48,654
Expenses capitalised I
Written off on cancellation of contract (48,655)
----------
At end of the year $ -
==========
A summary of the Company's options as at December 31, 1999 is as
follows:
DEADWEIGHT OPTION
VESSEL HULL TYPE TONNAGE (M.T.) EXPIRY
Stena Commerce 5788 VLCC 298,500 December 2004
Stena Comanche 5888 VLCC 298,500 December 2004
By agreements dated December 14, 1999, the Company was granted
options to purchase the vessels SteDa Commerce and Stena Comanche
from Heatherfield Maritime Limited (Heatherfield) and Aster
Maritime Limited (Aster) respectively. Heatherfield and Aster are
unrelated companies incorporated under the laws of the Isle of
Man. The options are exercisable at any time between delivery of
the vessels (December 15, 1999) and five years later. The strike
prices are equal to 50% of the outstanding mortgage debt under
three joint loan agreements between lenders and Heatherfield and
Aster for each vessel. The options must be exercised
simultaneously.
As at December 31, 1999 the outstanding mortgage debt of
Fleatherfield and Aster amounted to $122,000,000 plus Yen
6,023,797,541 (equivalent to $58,852,011).
During the year, the Company cancelled options to purchase hulls
#6618, #6668, #6678, #6688, #6698, #1688 and #1698. Losses on
cancellation of these options amounted to $48,655,000.
8. Investment in joint ventures
The Company has 50% interests in Golden Fountain Corporation,
Golden Tide Corporation, Middleburg Properties Ltd. and Reese
Development Inc. and a 45% interest in Golden Lagoon Corporation,
which are vessel owning/operating joint ventures. Details of the
21
<PAGE>
vessels owned by joint ventures at December 31, 1999 are as
follows:
DATE DEADWEIGHT CHARTER
VESSEL NAME DELIVERED TYPE TONNAGE (M.T) EXPIRATION
Golden Fountain 1995 VLCC 280,000 -
Golden Daisy 1998 Handymax 46,902 February 2010
Golden Rose 1998 Handymax 46,902 April 2010
New Circassia 1999 VLCC 305,000 December 2000
Pacific Lagoon 1999 VLCC 305,000 June 2001
The Golden Fountain was trading on the spot market at the
balance sheet date.
The insured value of joint venture owned vessels is
$324,500,000.
The Company's share of undistributed (losses)/earnings of
joint ventures included in consolidated retained earnings is
$(11,045,000) and is summarised as follows:
1999
('000)
At beginning of the year 1,382
Share of net loss (12,427)
---------
At end of the year $(11,045)
=========
The combined assets and liabilities of the joint venture
companies (prepared under United States generally accepted
accounting principles) were as follows:
22
<PAGE>
1999
('000)
Total current assets 4,292
Vessels owned, net 282,034
----------
Total assets $ 286,326
==========
Total current liabilities 21,059
Long term liabilities 233,056
Due to third party joint venture partners 32,533
Due to die Company 32,705
---------
Total liabilities $ 319,353
=========
Net liabilities $(33,027)
=========
Company's share of net liabilities (15,896)
Elimination of intercompany interest 4,851
---------
Company's total share of net liabilities $(11,045)
=========
The results of joint venture operations (prepared under
United States generally accepted accounting principles) are
summarised as follows:
23
<PAGE>
1999
('000)
Operating revenues
Net time charter revenues 26,629
----------
Total operating revenues 26,629
----------
Operating expenses
Vessel operating costs 8,908
Depreciation on vessels 9,204
Administrative expenses 358
Drydocking and special survey costs 687
---------
Total operating expenses 19,157
---------
---------
Net operating income 7,472
Other income (expense)
Foreign exchange loss (28,863)
Interest expense (6,975)
Interest income 11
--------
Net other income (expense) (35,827)
--------
--------
Net loss $(28,355)
=========
Company's share of net loss (13,559)
Elimination of intercompany interest 1,132
---------
Company's share of loss of joint ventures $(12,427)
========
Joint venture revenues were derived wholly from shipping
activities.
9. Loans to joint ventures
Loans to joint venture companies represent advances to finance
joint venture operations. These advances are subordinate to the
rights of long term debt holders. Interest accrues at rates
between 2% and 7%. Loans will only be repaid out of profits
arising from operations or the sale of joint venture vessels.
24
<PAGE>
10. Goodwill, net
1999
('000)
Cost
At beginning of the year 19,479
Written off on novation of shipbuilding contracts (12,684)
---------
At end of the year $ 6,795
=========
Amortisation
At beginning of the year 1,040
Charge for the year 779
Written off on novation of shipbuilding contracts (1,184)
--------
At end of the year $ 635
========
--------
Net book value $ 6,160
--------
Goodwill results from the acquisition of certain minority
interests in subsidiaries.
11. Deferred note issue costs
The carrying value of deferred note issue costs represents
deferred costs of $12,973,000 less accumulated amortisation
of $7,400,000. Amortisation is included within interest
expense in the statement of operations.
12. Obligations under capital leases
The vessels known as the Golden Poteme, Channel Poteme,
Golden Protea, Golden Aloe, Golden Disa and Golden Nerina
have been acquired (in substance) due to the effect of
bargain purchase options in the bareboat charter agreements
with the legal vessel owners. The options (denominated in
Yen) can be exercised at any point during the term of the
charter. The option prices reduce on a sliding scale over the
term of the agreements. The Golden Poteme and Channel Poteme
have both been acquired under fifteen year bareboat charters
while the Golden Protea, Golden Aloe, Golden Disa and Golden
Nerina have been acquired under ten year bareboat charters.
25
<PAGE>
The Company has the following commitments under capital
leases (in source currency and U.S. Dollar equivalents):
1999
-----------------------------
('000,000) ('000)
2000 Yen 1,613 $ 15,761
2001 1,628 15,906
2002 1,645 16,067
2003 1,661 16,231
2004 1,680 16,411
---------- ----------
2005 and later 12,053 117,754
Minimum lease payments 20,280 198,130
Less imputed interest 2,972 29,039
---------- ----------
Present value of obligations
under capital leases Yen 17,308 $169,091
========== =========
13. Long term debt
The outstanding secured loans at December 31, 1999 are
repayable as follows:
Yen denominated Dollar denominated Total
debt debt debt
('000,000) ('000) ('000) ('000)
2000 1,106 10,803 13,620 24,423
2001 1,147 11,204 14,822 26,026
2002 1,189 11,620 58,108 69,728
2003 1,233 12,050 10,876 22,926
2004 1,279 12,497 11,723 24,220
2005 and later 10,807 105,583 80,802 186,385
---------- -------- --------- ---------
Yen 16,761 $163,757 $ 189,951 $ 353,708
========== ======== ========= =========
Interest is payable based on Yen and Dollar Libor plus
margins of between 1.25% and 1.75% on all loans except for
Yen 6,450,074,473 (approximately equivalent to $63,016,701)
of debt which bears interest at 3.66% and Yen 2,837,240,817
(approximately equal to $27,719,611) of debt which bears
interest at 3.2%. At December 31, 1999, Yen and Dollar
Libor were 0.2% and 5.5% respectively.
26
<PAGE>
Loans to vessel owning subsidiaries are secured by first and
second mortgages on the vessels, assignments of earnings and
insurance proceeds and pledges of shares. Covenants in the
loan agreements prohibit subsidiaries from paying dividends
or issuing guarantees. These covenants were waived to enable
the subsidiaries to guarantee the Company's obligations to
holders of Notes payable (note 16) and to pay dividends.
Loan covenants still prohibit subsidiaries from issuing
further guarantees.
The Company also enters into interest rate swap agreements
in order to reduce its exposure to changes in interest
rates. At December 31, 1999 the Company had interest rate
swap agreements as follows:
Company pays Company receives Principal amount Expiry
7.288% Dollar Libor + 1.25% $63,913,297 March 7, 2006
7.49% Dollar Libor + 1.25% $67,595,821 August 28, 2008
The notional principal amounts of the interest rate swaps
decrease over the terms of the agreements.
14. Other loans
Other loans represent advances by minority interests in two
subsidiaries engaged in VLCC newbuildings. Interest accrues
at rates between 7% and 12%. The loan plus accrued interest
is payable on the sale of the vessels. The Company has
guaranteed the return of the principal of certain loans
amounting to $10,908,000 within two years of delivery of
the vessel. The vessels delivered in September 1998 and
January 1999.
15. Amounts due to shareholder
Amounts due to shareholder are interest free and have no
specified terms of repayment. Imputed interest has not been
recorded in these financial statements. Imputed interest
for the year calculated at 7% amounts to $1,066,000.
Advances from the shareholder in the year were used to
provide additional working capital.
16. Notes payable
On August 27, 1997, the Company issued $150 million
principal amount of 10% Senior Notes (the Notes) and a
further $50 million principal amount on September 11, 1997
27
<PAGE>
at a price of $732 per $1,000 principal amount. Each $1,000
principal amount of the Notes included a non-transferable
Note warrant and a separately transferable share warrant.
Two Note warrants entitled the holder to purchase $1,000
principal amount of Notes at a price of $756.60 at the
exercise date of March 1, 1998. Each share warrant entitles
the holder to purchase one common share of the Company at an
exercise price of $46.20 per common share. The share
warrants can be exercised on or prior to August 31, 2001.
On March 2, 1998, the Company issued a further $91,382,000
principal amount of 10% Senior Notes at a price of $756.60
per $1,000 principal amount as a result of the Note warrant
holders exercising the Note warrants. After fees of
$2,813,627, and use of $13,645,372 to purchase investments
to be held in Trust to fund interest payments due on August
31, 1998, March 1, 1999 and August 31, 1999, the Company
received net proceeds of $52,680,622.
At December 31, 1999, the unamortised portion of the Note
discount amounted to $35,680,000.
None of the proceeds of the Notes have been allocated to the
separately transferable share warrants as additional paid in
capital as the amount allocable to the share warrants was
deemed to be immaterial based on the fair value of the share
warrants on the issue date.
The Notes are due on August 31, 2001 and are senior
unsecured obligations of the Company, ranking senior in
right of repayment to all existing and future subordinated
indebtedness of the Company. The Notes are guaranteed by
all of the subsidiaries and certain of the joint ventures of
Golden Ocean Group Limited. Net assets of non-guarantor
joint ventures at December 31, 1999 amounted to a deficit of
$27,931,621. Net income of non-guarantor joint ventures for
the year ended December 31, 1999 was a loss of $26,641,153.
The Company has a 50% share in the non-guarantor joint
ventures. Waivers of covenants in loan agreements were
obtained to enable subsidiaries to guarantee the Company's
obligations to Note holders and to pay dividends to the
Company (note 13).
17. Share capital and additional paid-in capital
By a resolution dated August 22, 1997, the Company's
authorised share capital was increased from 500 to
50,000,000 bearer shares of no par value. Accordingly on
August 26, 1997 the Company declared a share dividend of
7,359 shares for each share held increasing issued share
capital from 500 to 3,680,000 issued and outstanding shares
28
<PAGE>
of no par value. All of the issued shares are owned by
Golden Ocean Limited, a company incorporated under the laws
of Liberia.
The Company is subject to restrictions on the payment of
dividends imposed by covenants entered into in connection
with the issue of Notes payable (note 16).
There are a total of 320,000 share warrants in issue
comprising 200,000 share warrants which were issued to
subscribers to the Company's issue of Notes payable (note
16) and 120,000 warrants which were issued to the placement
agents. Each share warrant entitles the holder to purchase
one common share of the Company at an exercise price of
$46.20 per common share. The share warrants can be
exercised on or prior to August 31, 2001.
Additional paid in capital of $3,000,000 in 1999 represents
contributions to meet certain chartering liabilities which
the shareholder agreed to meet (note 26).
18. Leasing arrangements
The Company has arranged long term charters for its vessels
under which payments are received in Yen and Dollars.
Future minimum rentals on non-cancellable operating leases
at December 31, 1999 are as follows:
Vessels Owned (note 4)
Yen denominated Dollar denominated Total
income income income
------------------ ------------------ -------
('000,000) ('000) ('000) ('000)
2000 2,405 23,493 64,120 87,613
2001 2,398 23,429 57,454 80,883
2002 2,398 23,429 46,877 70,306
2003 2,398 23,429 43,917 67,346
2004 2,405 23,493 42,924 66,417
2005 and later 15,836 154,714 138,515 293,229
------- -------- -------- -------
Yen 27,840 $271,987 $393,807 $665,794
====== ======== ======== ========
29
<PAGE>
19. Foreign exchange loss
The foreign exchange loss of $32,110,000 primarily relates
to converting yen denominated obligations into US dollars
using the balance sheet exchange rate.
20. Financial instruments
(a) Fair values
The following methods and assumptions were used by the
Company in estimating fair value disclosures for
financial instruments:
Long term debt (at floating rates): The carrying
amounts reported in the balance sheet for these
instruments approximate their fair value as the
interest rates are based on a floating rate.
Long term debt (at fixed rates): The fair value of the
Company's fixed rate debt is estimated using discounted
cash flow analysis, based on interest rates currently
available for debt with similar terms and maturities.
Loans to joint ventures/other loans: The carrying
amounts reported in the balance sheet for these
instruments approximate their fair value as the fixed
interest rates approximate current market rates for
similar loans.
Other assets and liabilities: The fair values of trade
accounts receivable, amount due to related party, other
accounts receivable and trade accounts payable
approximate their carrying value due to their short
term nature.
Interest rate swaps: The fair value of interest rate
swaps is the estimated amount that the Company would
pay or receive to terminate the swaps at the reporting
date.
Notes payable: The fair value of Notes was determined
from quoted market prices at which the Notes traded.
A summary of fair values of the Company's financial
instruments as at December 31, 1999 is as follows:
30
<PAGE>
1999
---------------
Carrying Fair
amount value
Long term debt 353,708 355,632
Notes payable 255,702 29,138
Note warrants - -
Interest rate swap agreements - 3,148
Guarantees: It is not practicable to determine the fair value of
guarantees. Further information on guarantees is provided in
note 22.
(b) Market risk
Market risk exists with respect to changes in foreign
currency exchange rates. At December 31, 1999, the
Company had a long-term debt of Yen 16,761,000,000
which is equivalent to $163,757,000. None of this
exposure is hedged through purchasing forward exchange
currency contracts. However, the Company has charter
contracts denominated in Yen with contracted payments
as outlined in note 18. Also, since a portion of the
Company's long term debt bears interest at a rate
linked to LIBOR, it is exposed to movements in interest
rates.
(c) Concentrations of risk
There is a concentration of credit risk with respect to
cash and cash equivalents to the extent that
substantially all of the unrestricted cash amounts are
carried with Bank of America (Jersey) Ltd. However,
the Company believes this risk to be remote.
The following are the charterers that comprise 10 per
cent or more of charter income.
1999
('000)
Bocimar n.v. $13,523
Kawasaki Kisen Kaisha 12,534
Hong Kong Ming Wah Shipping Co. Ltd 18,250
S.A. Marine 10,947
31
<PAGE>
Bocimar and S.A. Marine charter dry-bulk carriers. Other
charterers mentioned above charter VLCCs.
21. Financial information relating to segments
The Company organises its business principally into two
operating segments. Both segments use the same accounting
policies as described in note 2. These segments and their
respective operations are as follows:
VLCC fleet includes vessels that normally carry crude oil
and related dirty products with a deadweight tonnage of over
200,000 m.t.
Dry-bulk carrier fleet includes vessels that normally carry
dry cargoes such as grain, coal, ore, wood and steel products
etc. This fleet includes three sizes of vessel, Handymax,
Panamax and Capesize.
A summary of operations by major operating segments for the
year ended December 31, 1999 is as follows:
1999
----
('000)
Revenues
VLCC fleet 46,278
Dry-bulk carrier fleet 34,494
------
80,772
Share of losses of joint ventures (12,427)
68,345
$ ========
Share of losses of joint ventures
VLCC fleet (11,570)
Dry-bulk carrier fleet (857)
--------
$ (12,427)
========
32
<PAGE>
1999
----
('000)
Interest income
VLCC fleet 298
Dry-bulk carrier fleet 1
--------
299
Non-segment 1,201
1,500
$ ========
Interest expense
VLCC fleet 22,631
Dry-bulk carrier fleet 5,880
--------
28,511
Non-segment 38,322
--------
$ 66,833
========
Depreciation
VLCC fleet 16,162
Dry-bulk carrier fleet 10,404
$ 26,566
========
Exchange gains/(losses)
VLCC fleet (5,817)
Dry-bulk carrier fleet (26,293)
--------
$ (32,110)
=========
33
<PAGE>
1999
----
('000)
Net income
VLCC fleet (168,304)
Dry-bulk carrier fleet (23,715)
--------
(192,019)
Non-segment (57,023)
Share of earnings/(losses) of joint ventures (12,427)
--------
$(261,469)
========
Identifiable assets
VLCC fleet 325,561
Dry-bulk carrier fleet 272,815
-------
598,376
Non-segment 41,431
Share of net assets of joint ventures (11,045)
-------
$ 628,762
========
Expenditure for identifiable assets
VLCC fleet 78,621
Dry-bulk carrier fleet 64,740
-------
$ 143,361
========
34
<PAGE>
1999 Adjustment Proforma
---- ---------- --------
CURRENT ASSETS
Cash and cash equivalents $ 11,970 $ 11,970
Inventories 631 631
Trade accounts receivable 42 42
Prepaid expenses and other
accounts receivable 4,145 4,145
-------- --------
Total current assets 16,788 16,788
Vessels owned, net 426,552 426,552
Vessels under capital
lease, net 156,880 156,880
Investment in joint
ventures (11,045) (11,045)
Loans to joint ventures 27,854 27,854
Goodwill, net 6,160 6,160
Deferred note issue
costs, net 5,573 (5,573) - (1)
--------
Total assets $ 628,762 $ 623,189
========= ======== ========
CURRENT LIABILITIES
Current maturities of
long term debt $ 24,423 $ 24,423
Obligations under
capital leases 10,878 10,878
Trade accounts payable
and accrued expenses 7,701 7,701
Note interest payable 9,713 (9,713) - (2)
Other accounts payable 3,875 (3,216) 659 (3)
Time charter income
received in advance 3,852 3,852
Drydocking and special
survey provisions 250 250
-------- --------
Total current liabilities 60,692 47,763
Other loans 14,274 (4,844) 9,430 (4)
Long term debt 329,285 329,285
Obligations under capital
leases 158,213 158,213
Notes payable 255,702 (206,167) 49,535 (5)
Other accounts payable 2,625 (2,179) 446 (3)
Amounts due to shareholder 10,638 (10,338) 300 (6)
Drydocking and special
survey provisions 754 754
-------- --------
Total liabilities 832,183 595,726
35
<PAGE>
Commitments and contingent
liabilities - -
Minority interest 222 222
SHAREHOLDERS' EQUITY
Share capital (3,680,000
shares of no par value) - -
Additional paid in capital 74,795 74,795
Retained deficit (279,438) 230,884 (47,554)
-------- --------
Total shareholders' equity (203,643) 27,241
Total liabilities and
shareholders' equity $ 628,762 $ 623,189
======== ========
(1) Adjusted to remove capitalised fees relating to Senior Notes
(2) Accrued interest on Senior Notes not paid
(3) Other accounts payable settled at S6,500,000 @ 17c/S
(4) Other loans settled at $8,325,000 admin claim plus $6,500,000 @1 7c/$
(5) Senior Notes $291,382,000 @1 7c/$
(6) Shareholder loan settled at $300,000
22. Commitments and contingent liabilities
(a) The Company insures the legal liability risk for its
shipping activities with The Steamship Mutual
Underwriting Association (Europe) Limited in respect of
dry cargo vessels and The Swedish Club in respect of
tankers. As a member of this protection and indemnity
association, the Company is subject to calls payable to
the association based on the Company's claims record in
addition to the claims record of all other members of
the association. A contingent liability exists to the
extent that the claims records of the members of the
association in the aggregate show significant
deterioration which result in additional calls on the
members.
(b) The Company has guaranteed the yen and dollar long term
borrowings of joint ventures for amounts of Yen
22,809,756,560, which is equivalent to $222,849,461, and
$27,845,810.
(c) The Company has contractual commitments to participate
in the profits and losses of the time charterer's
subcharters of the Channel Poterne and in the profits
only of the New Vanguard, New Vista, Channel Alliance
and Golden Victory. A joint venture participates in the
time charterer's profits and losses on subcharters of
36
<PAGE>
the Pacific Lagoon. The Company has accrued the revenue
or expense arising from these arrangements to the
balance sheet date.
(d) The charterers have contractual rights to participate in
the profits on sale of five vessels. In the case of the
Channel Poterne, Channel Alliance and Cos Hero, the
charterer is entitled to 50% of the profit realised on
any qualifying sale. The Channel Alliance may only be
sold if the profit from the sale will exceed $1.0
million. The Cos Hero may only be sold if the profit
from sale will exceed $3.0 million. Profit is defined
as sale proceeds less debt outstanding in the relevant
profit share agreements. If the New Vanguard or New
Vista are sold, the charterer is entitled to claim up to
$1 million to cover losses incurred on subcharters of
the vessel. These vessels may only be sold after the
second anniversary of delivery. Any remaining profit is
to be split 60:40 in favour of the owner.
23. Taxation
Under current Liberian law, the Company is not required to
pay any taxes in Liberia on either income or capital gains.
24. Other accounts payable
Other accounts payable are interest free and have the
following repayment terms:
$3,875,000 due January 14, 2000; $875,000 due January 14,
2001; $875,000 due January 14, 2002; $875,000 due January 14,
2003.
25. Subsequent Event
On January 14, 2000, Golden Ocean Group Limited and its
wholly owned subsidiaries, Golden Ocean Tankers Limited and
Channel Rose Holdings Inc. (collectively, the Debtors) filed
with the Clerk of the United States Bankruptcy Court for the
District of Delaware a voluntary petition for relief under
chapter 11 of the Bankruptcy Code.
On July 7, 2000, Frontline Ltd., an unrelated company
incorporated under the laws of Bermuda, filed with the Court
a proposed Plan of Reorganisation (the Plan) which set forth
the manner in which Claims against and Equity Interests in
the Debtors will be treated.
37
<PAGE>
The following table briefly summarises the classification and
treatment of Claims and Equity Interests under the Plan.
-----------------------------------------------------------------------------
Type of Allowed
Claim or Equity Estimated
Class Interest Treatment Recovery
-----------------------------------------------------------------------------
- Administrative Unimpaired; paid in full in 100%
Claims Cash on the effective Date or
as soon as practicable
thereafter, or in accordance
with the terms and conditions
of transactions or agreements
relating to obligations
incurred in the ordinary course
of business during the pendency
of the Chapter 11 Cases or
assumed by the Debtors in
Possession
- Tax Claims Unimpaired; at the option of 100%
Reorganized GOGL either
(i) paid in full in Cash on the
Effective Date or as soon as
practicable thereafter as
possible, or (ii) paid over a
six-year period from the date
of assessment, as provided in
section 1129(a)(9)(C) of the
Bankruptcy Code with interest
payable at a rate of 8% per
annum or as otherwise
established by the Court.
1 Secured Claims Unimpaired 100%
2 Other Priority Unimpaired; paid in full in 100%
Claims Cash on the Effective Date or
as soon as practicable
thereafter as possible.
3 Unsecured Claims Impaired; (a) at the option of 17 to 20%
the claimant, (i) Frontline plus
common stock with a value of Litigation
up to 20% of each Allowed Trust Units
Claim or (ii) 17% of each
Allowed Claim in Cash and
(b) Pro Rata Share of
Litigation Trust Units.
38
<PAGE>
4 Vessel Mortgage Impaired; reinstated in full 100%
Guarantee Claims
5 Old Common Stock Impaired; will not receive or 0%
retain any property or interest
under the Plan.
6 Old Stock Rights Impaired; will not receive or 0%
and Claims retain any property or interest
under the Plan.
7 Securities Claims Impaired; will not receive or 0%
retain any property or interest
under the Plan.
8 GOGLs 100% Unimpaired 100%
interest in
Subsidiaries
9 Intercompany Impaired 0%
Claims
The Plan was agreed by an overwhelming majority of holders
of Claims entitled to vote and was confirmed at a hearing on
September 15, 2000.
The Plan became effective on October 10, 2000.
The following pro-forma balance sheet shows the consolidated
balance sheet of Golden Ocean Group Limited as at December
31, 1999 as adjusted for adoption of the Plan.
The pro-forma impact on net income reported in the year
ended December 31, 1999 amounts to an increase in net income
of $230,820,000 arising from adjustments (1) to (6) above.
26. Prior Period Adjustment to Retained Deficit
The Company through its subsidiary Channel Rose Holdings
Inc. entered into an agreement with a third party whereby
the Company agreed to bear certain chartering liabilities
reported by that third party. The shareholder, Golden Ocean
Limited, orally agreed to meet and has met the Company's
obligations under this agreement.
Neither the liabilities to the third party nor the
additional paid in capital provided by the shareholder were
reported by the Company in previous years. The result of
this omission is a prior period adjustment against income of
$8,134,000 (being 1996 - $668,000, 1997 - $1,082,000 and
39
<PAGE>
1998 $6,385,000) which was offset by additional paid in
capital of the same amount.
40
<PAGE>
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 October 26, 2000 By /s/ Kate Blankenship
---------------- ---------------------
Kate Blankenship
Company Secretary
41
02089009.AC3
