Fredriksen Regroups

Oil tanker shipping company Frontline Ltd. and Frontline 2012 Ltd. have entered into an agreement and plan of merger, pursuant to which Frontline will remain as the surviving legal entity and Frontline 2012 as a wholly-owned subsidiary.

Commenting on the transaction, Chairman of Frontline Ltd. and Frontline 2012 Ltd., John Fredriksen said: “By merging Frontline and Frontline 2012 we will regain Frontline’s position as a leading tanker company. The combined company will have a large fleet and a strong balance sheet which puts us in a position to gain further market share through acquisitions and consolidation opportunities.

“With the current strong tanker market and attractive cash break even rates, we believe the combined company will generate significant free cash. The intention is to pay out excess cash as dividends at the Board’s discretion.”

After the merger is completed the combined company will have a total fleet of approximately 90 vessels, consisting of approximately 25 VLCCs, 17 Suezmax tankers, 16 MR product tankers and 10 LR2 Aframax tankers. This includes approximately 20 vessels on time charter in or under commercial management. The combined company will also have a newbuilding program of approximately 22 vessels, which are scheduled to be delivered in the period 2015 – 2017.

Upon the merger completion, shareholders in Frontline 2012 will receive shares in Frontline as merger consideration. One share in Frontline 2012 will give the holder the right to receive 2.55 shares in Frontline. Frontline is expected to issue a total of approximately 584 million shares to shareholders in Frontline 2012.

Completion of the merger is subject to the execution of certain definitive documents, customary closing conditions and regulatory approvals. The merger is also subject to approval by the shareholders of Frontline and Frontline 2012 in special general meetings expected to be held in the fourth quarter of 2015 and the merger is expected to close as soon as possible thereafter.

Following completion of the merger, Frontline will have approximately 782 million shares outstanding and it is expected that Frontline’s current two largest shareholders, Hemen and Ship Finance, will own approximately 52% and 7%, respectively, of the shares and votes in the combined company.