John Fredriksen's Frontline is looking to tap equities markets to the tune of $100m amid a push to expand its fleet.
The New York-listed tanker owner announced Wednesday that investment bank Morgan Stanley will act as a sales agent for an at-the-market offering of its shares, which could see stock sold "from time to time".
The move comes three weeks after Frontline Management chief executive Robert Hvide Macleod told analysts the company had considered some of the ships put up for sale in recent weeks, but ultimately backed off.
"The net proceeds of this offering will be used to opportunistically fund growth opportunities and for general corporate purposes," the company said in a statement announcing the offering.
During the analyst call, Macleod said Frontline was focused on the secondhand market for additions to its owned fleet of 48 tankers, despite declines in newbuilding prices. He said companies with the ability to secure financing for new ships had, until that point, remained on the sidelines.
In that secondhand market, Clarksons said tanker prices have remained steady over the last three months, with a 5-year-old VLCC going for $72m and similarly aged suezmaxes and aframaxes for $50m and $39m respectively. Prices for all three asset classes are roughly in line with prices year-over-year.
The shipbroker has 13 tankers sold through 29 May, versus 17 in April, the latest a three ship en bloc VLCC sale to the Hunter Group for an undisclosed sum. The seller was not disclosed, but VesselsValue identified it as another Fredriksen company, SFL Corp.
Tuesday, Fearnleys Securities suggested that rates would decline through the second half of the year, falling to the $20,000 per day range in August, dragging asset values down by as much as half.
Meanwhile, a VLCC newbuilding can be had for $89m, Clarksons data shows, $59.5m for a suezmax or $48.5m for an aframax.
Those figures are $3m and $2m lower for VLCCs and suezmaxes from 2019 year-end figures and flat for an aframax.
Wednesday, Frontline shares opened down $0.06 to $8.32.
Over the last 52 weeks, shares have traded as high as $13.33 and as low as $6.09.
At current prices, Frontline would sell roughly 12m new shares.
