Frontline Ltd says it has struck a deal with China’s ICBC Financial Leasing for the sale-and-leaseback of 10 Marlin-series Suezmaxes it recently agreed to acquire from Trafigura
Frontline acquired the newbuild tankers in a cash plus shares deal, announced in August.
The company secured a commitment from ICBC Financial Leasing Co this month for a sale-and-leaseback agreement for up to US$544M, subject to execution of final transaction documents to both parties’ satisfaction.
The lease is for seven years and includes purchase options throughout the charter and a purchase obligation at the end.
Frontline Management chief financial officer Inger M Klemp said “We are very pleased to have secured the financing commitment from ICBC on highly attractive terms. Through this transaction we extend our capital sources at a very attractive capital cost, maintain our industry-leading cash break-even rates and maximise potential cash flow per share after debt service.”
Frontline revealed the financing in its Q3 results as it posted a net loss of US$10M.
The company also said it would resume paying dividends to shareholders for the first time in two years. This comes after the increase in shipping rates.
Earlier this year, US sanctions on Chinese shipowner COSCO led to supertanker charter rates soaring from US$35,000 to US$200,000 in October.
In light of the IMO 2020 regulations, Frontline reported a record number of vessels were out of service during Q3 due to drydocking or scrubber installations but the company said half of its vessels would have scrubbers installed by Q2 2020.