Frontline posts preliminary Q4 and FY 2012 results
The Board of Frontline Ltd. announces a net loss attributable to the company of $16.6 million for the fourth quarter of 2012, equivalent to a loss per share of $0.21, compared with a net loss attributable to the company of $49.0 million and a loss per share of $0.63 for the preceding quarter, the company reports. The net loss attributable to the company in the fourth quarter includes a loss on sale of assets and amortization of deferred gains of $2.6 million, which includes an aggregate deferred gain of $3.7 million relating to the sale and leasebacks of DHT Eagle (ex Front Eagle) and Gulf Eyadah (ex Front Shanghai), a gain of $11.2 million on the termination of the lease for the single hull VLCC Ticen Ocean, a loss of $16.5 million on the termination of the lease for Front Viewer and losses of $0.8 million and $0.2 million on the termination of the leases for Front Driver and Front Climber, respectively.
The company has recorded a vessel impairment loss of $18.9 million in the fourth quarter. This loss comprises $14.2 million, which is the expected loss on the termination of the long term charter for the OBO carrier Front Guider in March 2013 and $4.7 million, which is the expected loss on the termination of the long term charter for the Suezmax tanker Front Pride in late February 2013. Impairment losses are taken when events or changes in circumstances occur that cause the company to believe that future cash flows for an individual vessel will be less than its carrying value and not fully recoverable. In such instances an impairment charge is recognized if the estimate of the undiscounted cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel's carrying amount.
The net loss attributable to the company in the fourth quarter includes a compensation for loss of hire of $35.0 million (gross) resulting from early termination from the charterers of the time charter out contracts on the two OBO carriers, Front Viewer and Front Guider. The amount was recorded in operating revenues. This amount together with the loss of $16.5 million on the termination of the lease for Front Viewer and the $14.2 million impairment loss on Front Guider resulted in a net gain of approximately $4.3 million from this transaction.
The net loss attributable to the company in the preceding quarter includes a gain on sale of assets and amortization of deferred gains of $3.3 million, which includes an aggregate deferred gain of $3.8 million relating to the sale and leasebacks of DHT Eagle and Gulf Eyadah.
The average daily time charter equivalents ("TCEs") earned in the spot and period market in the fourth quarter by the company's VLCCs, Suezmax tankers and Suezmax OBO carriers were $19,300, $14,000 and $35,100, respectively, compared with $12,300, $10,500 and $33,700, respectively, in the preceding quarter. The spot earnings for the company's double hull VLCCs and Suezmax vessels were $18,500 and $14,000, respectively, compared with $13,300 and $10,500, respectively, in the preceding quarter
The contingent rental expense relates to the amended charter parties with Ship Finance International Limited ("Ship Finance") and the amended charter parties for four other leased vessels and is based on the difference between the renegotiated rates and the actual TCE revenues up to the original contract rates.
Ship operating expenses decreased by $7.4 million compared with the preceding quarter due to a decrease in running costs and a decrease in dry docking costs of $4.8 million.
Charter hire expenses decreased by $2.5 million compared with the preceding quarter primarily as a result of the redelivery of vessels.
Interest expense, net of capitalized interest, was $23.1 million in the fourth quarter of which $5.5 million relates to the company's subsidiary Independent Tankers Corporation Limited ("ITCL").
Frontline announces a net loss attributable to the company of $82.8 million for the year ended December 31, 2012, equivalent to a loss per share of $1.06. The average daily TCEs earned in the spot and period market in the year ended December 31, 2012 by the company's VLCCs, Suezmax tankers and Suezmax OBO carriers were $22,200, $15,200, and $33,600, respectively, compared with $22,800, $14,100 and $36,700, respectively, in the year ended December 31, 2011. The spot earnings for the company's double hull VLCCs and Suezmax vessels were $22,400 and $15,200, respectively, in the year ended December 31, 2012.
As of December 31, 2012, the company had total cash and cash equivalents of $137.6 million and restricted cash of $87.5 million. Restricted cash includes $86.3 million relating to deposits in ITCL.
The company estimates average cash cost breakeven rates for 2013 on a TCE basis for its VLCCs and Suezmax tankers of approximately $24,200 and $18,800, respectively.
In August 2012, Frontline announced that it had agreed with Ship Finance to terminate the long term charter party for the OBO carrier Front Climber and that Ship Finance had simultaneously sold the vessel. The charter party was terminated on October 15, 2012. The company made a compensation payment to Ship Finance of $0.6 million for the early termination of the charter. The company recorded an impairment loss of $4.2 million in the second quarter and a loss of $0.2 million in gain (loss) of sale of assets and amortization of deferred gains in the fourth quarter.
In September 2012, the company agreed with Nordic American Tankers Ltd that Frontline's nine Suezmax vessels would leave the Orion Suezmax pool due to Frontline's wish to be more flexible in the operation of its vessels. All of the Company's Suezmax vessels left the pool during the fourth quarter.
In October 2012, the company announced that it had agreed with Ship Finance to terminate the long term charter party for the OBO carrier Front Driver and that Ship Finance had simultaneously sold the vessel. The charter party was terminated November 20, 2012. The company made a compensation payment to Ship Finance of $0.5 million for the early termination of the charter. The company recorded an impairment loss of $4.0 million in the second quarter and a loss of $0.8 million in gain (loss) of sale of assets and amortization of deferred gains in the fourth quarter.
In October 2012 the company terminated the bareboat charters on the two single hull VLCCs Ticen Ocean and Titan Aries and the vessels were delivered to the buyers (as announced in September, 2011) in November 2012 and January 2013, respectively. The company re-delivered the chartered-in VLCC Gulf Eyadah to its owner in December 2012.
In December 2012, the cCompany agreed to an early termination of the time charter out contracts on the two OBO carriers, Front Viewer and Front Guider, and received a compensation payment in December 2012 from the charterers for loss of hire due to the early termination of $35.0 million. This amount was recorded in operating revenues. The company also agreed with Ship Finance to terminate the long term charter parties for these two OBO carriers. The charter party for Front Viewer terminated in December 2012 and the charter party for the Front Guider is expected to terminate in March 2013 after its present voyage. The company paid $23.5 million to Ship Finance as compensation for the early termination of the charters and the estimated loss of contingent rentals relating to the two vessels. As previously advised the company recorded in the fourth quarter loss on termination of the lease for Front Viewer of $16.5 million and a vessel impairment loss of $14.2 million on the expected loss on termination of the lease on Front Guider in March 2013.
In February 2013, Frontline agreed with Ship Finance to terminate the long term charter party for the Suezmax tanker Front Pride and Ship Finance has simultaneously sold the vessel. The charter party was terminated February 15, 2013. Frontline will make a compensation payment to Ship Finance of approximately $2.1 million for the early termination of the charter. The transaction will reduce the company's obligations under capital leases by approximately $5.1 million and the company has recorded an impairment loss of $4.7 million in the fourth quarter.
Newbuilding Program
As of December 31, 2012, the company's newbuilding program comprised two Suezmax tankers, and the company was committed to make newbuilding installments of $87.9 million with expected payment in 2013.
In January 2013, the company was allocated 1,142,857 shares in a private placement by Frontline 2012 Ltd. of 59 million new ordinary shares at a subscription price of $5.25 per share. Following the private placement, the Company' has an ownership of 6.3% in Frontline 2012 Ltd..In February 2013, the Security and Exchange Commission ("the SEC") declared the company's Form F-3 Registration Statement effective. The Board of Directors has decided not to declare a dividend for the fourth quarter of 2012.
77,858,502 ordinary shares were outstanding as of December 31, 2012, and the weighted average number of shares outstanding for the quarter was 77,858,502.