Frontline has cancelled four VLCC newbuildings it had on order at South Korea’s STX Offshore & Shipbuilding.
The NYSE-listed tanker company ordered the quartet at a combined contract price of $364.3m. The tankers had been scheduled to arrive in 2017.
Today, Frontline said it had been released from all its obligations relating to the contracts, and has been refunded all the installment payments it had made to STX, minus a $500,000-per-vessel cancellation fee.
“The company believes the market will continue to present attractive opportunities, and we will assess on-the-water and resale assets, which are at historically low prices,” Frontline commented in a filing.
The news will doubtless be a blow for STX, which filed for court protection in May and is currently trying to sell off some of its assets to generate liquidity. Thousands of workers have been laid off.
Investment banks submitted their final due diligence report to the bankruptcy court in August, which concluded that STX’s going-concern value would be KRW 1.26tr ($1.2bn). The group’s liquidation value was assessed at just KRW 918.5bn ($828.1m).