Frontline announced that it has entered into a sale and purchase agreement with Trafigura Maritime Logistics and related entities to acquire 10 Suezmax tankers built in 2019 through the acquisition of a TML special purpose vehicle which holds the vessels. As part of the acquisition, Frontline has options to acquire an additional four Suezmax tankers built in 2019 through the acquisition of a second TML special purpose vehicle. Following the acquisition of the 10 tankers from Trafigura, Frontline’s fleet will consist of 75 vessels, including newbuilds, with an aggregate carrying capacity of 14.2 million DWT and an average age of 3.7 yr.
All tankers are built in South Korea and fitted with exhaust gas cleaning systems. The transaction includes $538-547 million in cash and 16,035,856 ordinary shares of Frontline (8.48% of ordinary shares) priced as USD 8.00 per share. Closing is expected between Nov 2019 and Mar 2020, and Frontline will charter the vessels at a daily rate of $23,000 until closing. Frontline will also charter 5 of these vessels back to Trafigura on 3-year time charters at a daily rate of $28,400 plus a 50% profit share above the base rate. Hemen Holding Ltd. has offered $547 million commitment at closing through a three-year facility. Frontline has two separate options to purchase two additional Chinese-built Suezmax tankers which expire on Sep 12 and Sep 24. Options are based on a volume weighted average share price for Frontline over the 20 days prior to the exercise date, and the 2nd option expires if the 1st is not exercised. The deal was announced in August 2019 and closed in March 2020.