Frontline Ltd. ("Frontline" or the "Company") has agreed with Ship Finance International Limited ("Ship Finance") to terminate the long term charter parties for the 1999 built VLCCs Front Opalia, Front Comanche and Front Commerce and Ship Finance has simultaneously sold the vessels to unrelated third parties. The charter parties are expected to terminate in the fourth quarter of 2014.
The decision to terminate the long term charter parties was taken in view of the required investment to take the vessels through the 15 year special survey.
Frontline has agreed an aggregate compensation payment to Ship Finance of approximately $58.8 million for the early termination of the charter parties, of which approximately $10.5 million will be paid upon termination and the balance will be recorded as notes payable, with similar amortisation profiles to the current lease obligations, with reduced rates until December 2015 and full rates from 2016.
As of June 30, 2014, the Company has capital lease obligations to Ship Finance of $101.5 million and $608.3 million for these three vessels and the remaining 12 VLCCs and five Suezmax tankers, respectively.
Hamilton, Bermuda headquartered Frontline Ltd. is the world leader in the international seaborne transportation of crude oil, with one of the world's largest fleets of VLCC and Suezmax tankers and Suezmax OBO carriers.
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