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Frontline plc published one release on January 8 carrying two transactions. It had agreed, in December, to sell eight of its oldest first-generation ECO VLCCs, hulls of 2015 and 2016 build, for $831.5 million in total to an unrelated third party. And it had agreed to acquire nine latest-generation scrubber-fitted ECO VLCC newbuilding contracts for an aggregate $1,224.0 million from what the release calls, in its own words, “an affiliate of Hemen Holding Limited, the Company’s largest shareholder”. DNB Carnegie advised Frontline and rendered a fairness opinion. The obvious question about that price is whether it was right, and the release itself contained the first thing a reader could measure it against. Divide the purchase across nine hulls and the average newbuilding cost $136.0 million. Divide the sale across eight and the average ten-year-old vessel fetched $103.9 million. On Frontline’s own two prices, struck weeks apart, a new hull carried a premium of about 31 percent over a decade-old one. This desk has retrieved no contemporaneous benchmark that would say whether a premium of that order was wide or narrow, and Frontline publishes none. What happened next is the part worth reading. In July Frontline agreed to sell two of its own VLCCs, built in 2017, to an unrelated party for $270.0 million, an average of $135.0 million a hull. Against the same newbuilding average, the premium had fallen to about one percent. All three figures are averages of aggregates and Frontline publishes no per-vessel price on any of them. Read together, they say the related-party purchase did not look cheap when it was struck. Between those two prices sit six months of a rising market and one to two years of vintage, and Frontline publishes nothing that separates them.
📋 In This Issue:
⚖️ The Story:
What the January release actually contained and when each leg was agreed, the three-price ladder inside Frontline’s own disclosures and what it does to the fairness question, the delivery schedule that was rewritten three times, what the newbuildings earned within weeks of handover, who Hemen is in the filings and where Fredriksen sits in that structure, the sentence the reporting persons wrote about control after a Seatankers sale and purchase director joined the board, the guidance that was restated in March, the Chinese state export credit behind five of the nine, and the one number in the transaction that has never been published.
📊 By The Numbers:
The $1,224.0 million and what it works out at per hull, the $103.9 million and $135.0 million that sit under it, the 35.6 percent shareholding and the trust chain above it, the $120,000 a day against a $23,800 breakeven, the $759.1 million on the two dividends now on the table, and the restated guidance that came in on the proceeds and $1.1 million short on the gain.
🔍 Why It Matters:
What changes for the VLCC owner, the sale and purchase broker, the minority shareholder and the ship finance banker.
👀 What To Watch:
The five markers, including the finding that would prove this reading wrong.
🚨 Gosships Signal:
What it means when a company’s own disposals bound a related-party price from below and still cannot set it.
