Frontline could bank more cash from offloading its elderly suezmaxes in the wake of the sale of its five oldest VLCCs.
The Oslo-listed John Fredriksen company confirmed on Friday that it was selling a series of tankers in a $290m en-bloc deal first uncovered by TradeWinds earlier in the week.
Brokers have identified the buyer as South Korea’s Sinokor Merchant Marine as part of a wider VLCC market expansion drive.
Frontline had declined to comment on market speculation but told investors on Friday that the 297,000-dwt non-scrubber-fitted Front Signe and Front Cecilie (both built 2010), along with the 298,000-dwt scrubber-fitted Front Queen, Front Kathrine and 321,300-dwt Front Endurance (all built 2009), had gone.
Cash proceeds will be $207m, with an accounting gain of between $68m and $76m, depending on final delivery dates in the first quarter.
Frontline acquired 24 modern VLCCs for $2.35bn from Euronav last year.
Fearnley Securities said the latest transaction added up in terms of Frontline becoming a pure play on modern tonnage, while at the same time reducing financial leverage.
“Considering the upwards price pressure on modern tonnage, we believe the transaction makes a lot of sense, and sets up Frontline nicely in the early innings of the current tanker upcycle,” added analysts Oystein Vaagen and Fredrik Dybwad.
“Moreover, we wouldn’t be surprised if Frontline further offloaded their oldest suezmaxes.”
The shipowner has five vessels built before 2015, the usual date cited in the industry for the earliest eco ships.
The 156,700-dwt Front Loki, Front Odin and Front Thor (all built 2010) are valued at close to $130m combined by VesselsValue.
The 156,000-dwt sisters Front Brage (built 2011) and Front Ull (built 2014) are worth a further $100m or so, after steep rises in asset values in strong tanker markets.
Their sales would leave the rest of the Frontline fleet as eco vessels built from 2015.
