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LONDON—Frontline Ltd., the oil-tanker company whose
chairman is Norwegian billionaire John Fredriksen,
bought five 1-million-barrel crude carriers for $240
million in total to become the world’s largest owner of
such vessels.
The
shipping line purchased the so-called suezmax tankers,
designed to sail fully loaded through Egypt’s Suez
Canal, from Top Ships Inc., Hamilton, Bermuda-based
Frontline said in a statement distributed by Hugin
Wednesday. It also hired another five carriers from
Eigir Shipping, paying fixed daily rental rates.
“We
have, for several months, looked to increase Frontline’s
exposure to the strong tanker market,” Fredriksen said
in the statement. The transactions were “opportunistic”
and will help to consolidate suezmax operators, the
statement said.
Owners
who run big fleets strengthen their negotiating
positions, often get to hear of available cargoes before
rivals and can normally deploy vessels more efficiently.
They also gather more intelligence about oil-market
trends.
The
purchase and rentals will increase the size of
Frontline’s fleet of 1-million-barrel tankers to 19
vessels and enable the company to tap greater oil
supply. Saudi Arabia, the world’s biggest oil exporter,
plans to raise output next month and pledged further
increases if need be to curb record prices.
The
tankers Frontline bought, constructed between 1992 and
1996, have double hulls to cut the risk of an oil spill
in the event of a collision or running aground.
Typical
15-year-old, double-hull suezmaxes cost between $58
million and $60 million, according to data from
London-based shipbroker Galbraith’s Ltd., which would
give a total price of as much as $300 million for such a
deal. Mark Jenkins, an analyst at Simpson, Spence &
Young Ltd., the world’s largest private ship broker,
said the vessels currently cost about $56 million.
“It’s an
attractive price,” Inger Klemp, chief financial officer
of Frontline’s management unit, said by phone from Oslo.
“It’s just the result of a negotiation.”
Top
Ships, based in Athens, “sold at the top of the market,
Evangelos Pistiolis, chief executive officer, of
Athens-based Top Ships, said by phone from London.
Three of
the carriers are due to enter dry dock for routine
maintenance within the next year, which devalues the
transaction for Frontline by between $20 million and $30
million, he said.
Two of
the ships sold are smaller than normal suezmaxes,
meaning they’re less valuable, he said. Three are on
so-called time-charters, earning fixed daily income,
meaning Frontline won’t immediately be able to lease
them out in the more-profitable single-voyage or spot
market, he said.
The
carriers are Ellen P, Stormless, Edgeless, Limitless and
Endless, he said. Top Ships will make its own statement
once Frontline has paid a 10-percent deposit, he said.
(Bloomberg) |
