Frontline plc tanker giant has agreed to refinance 10 suezmax tankers in a sale-and-leaseback transaction.
The company said that in October it entered into a sale-and-leaseback agreement with CMB Financial Leasing Co., Ltd in an amount of up to $512.1m to refinance an existing sale-and-leaseback agreement for 10 suezmax tankers.
The lease financing has a tenor of 10 years, Frontline said, carries an interest rate of SOFR plus a margin of 180 basis points and has an amortization profile of 20.6 years commencing on the delivery date from the yard and includes purchase options for Frontline throughout the term of the agreement.
The refinancing is expected to generate net cash proceeds of approximately $101.0m in the fourth quarter of 2024, Frontline reported in its unaudited results for the three and first nine months of 2024.
Meanwhile, the company delivered in October to the new owner the vessel it sold earlier this year. The shipowner agreed in June to sell its oldest suezmax tanker, built in 2010, for a net sale price of $48.5m.
After repayment of existing debt on the vessel, the deal generated net cash proceeds of $36.5m, and the company expects to record a gain of approximately $18m in the fourth quarter of 2024.
Furthermore, Frontline achieved average daily spot time charter equivalent earnings for VLCCs, suezmax tankers and LR2/aframax tankers in the third quarter of $39,600, $39,900 and $36,000 per day, respectively.
Inger M. Klemp, chief financial officer of Frontline Management AS, said: “In 2024 we have optimized the capital structure of the company by refinancing debt of 36 vessels, which has extended maturities and improved margins, divesting eight older vessels and the subsequent repayment of the Hemen shareholder loan and the $275.0 million senior unsecured revolving credit facility with an affiliate of Hemen in an aggregate amount of $470.0 million”.
As of September 30, the company’s fleet consisted of 82 vessels owned by the company (41 VLCCs, 23 suezmax tankers, 18 LR2/aframax tankers), with an aggregate capacity of approximately 17.9 million dwt.
