Frontline is to repay loans from major shareholder John Fredriksen as it refinances 24 of its tankers.
The Oslo-listed shipowner will also use cash from recent vessel sales to clear funding arranged with the tycoon to part-finance the $2.35bn acquisition of 24 VLCCs from Euronav last year.
Frontline said in its fourth-quarter report that it is in the process of refinancing eight suezmax tankers and 16 LR2s in deals worth around $900m.
This is expected to generate net cash proceeds of $408m.
The owner also has cash in the bank from selling its five oldest VLCCs, built in 2009 and 2010, and one of its oldest suezmax tankers dating from 2010, for $335m in January.
After the repayment of existing debt on the vessels, the transactions are expected to generate net cash proceeds of $238m.
This all means the company will have a total of $646m to fully repay a shareholder loan granted by Fredriksen’s private Hemen Holding, and the amount drawn under a $275m senior unsecured revolving credit facility arranged with an affiliate of Hemen.
Frontline had earlier indicated that the Hemen shareholder loan may not be fully drawn due to it exploring other alternatives to free capital, including re-leveraging part of the existing fleet and/or the sale of older non-eco vessels.
Finance chief Inger Klemp said: “In January and February 2024, we executed on this with the agreement to sell six, older non-eco vessels and the ongoing process of refinancing 24 vessels on what we believe are attractive terms.”
The move to pay off these amounts will “maintain our competitive cash breakeven rates”, she added.
High cost
The $275m Hemen revolver was extended to 2026 in October last year at an interest rate of 10%.
In December, the company drew down $99.7m for the Euronav deal.
Up to $100m remains available under the facility.
In November, Hemen loaned up to $539.9m to the company over five years.
Frontline drew down $235m of this shareholder facility in December, and another $60m in January.
The company also revealed it had signed a new deal this month worth up to $94.5m with KfW bank to refinance two LR2s.
The five-year funding carries interest at the secured overnight financing rate (SOFR) plus 1.8%.
And a commitment has been secured to refinance eight suezmaxes and eight LR2s from Export-Import Bank of China and DNB to the tune of $606.7m.
The nine-year deal’s interest rate will be in line with current loans, the owner said.
Frontline is also in the final stages of agreeing a senior secured term loan facility worth up to $219.6m with a syndicate of banks to refinance six LR2 tankers.
This is expected to be a five-year loan at SOFR plus 1.8%.
