Frontline seals $544m sale and leaseback with ICBC for Trafigura suezmaxes

John Fredriksen’s Frontline says it has struck a deal with China’s ICBC Financial Leasing for the sale-and-leaseback of ten suezmaxes it recently agreed to acquire from Trafigura.

Frontline had acquired the newbuild tankers in a cash plus shares deal, announced in August. The subsequent financing deal with ICBC is worth up to $544m, which covers the cash portion of the Trafigura deal.

The lease is for a period of seven years and includes purchase options throughout the charter and includes a purchase obligation at the end.

Inger M. Klemp, chief financial officer of Frontline Management, commented: “We are very pleased to have securedthe financing commitment from ICBCL on highly attractive terms, which marks an important transaction between ICBCL and Frontline. Through this transaction we extend our capital sources at a very attractive capital cost, maintain our industry leading cash break-even rates and maximise potential cash flow per share after debt service.”

Frontline revealed the financing in its latest quarterly results here it posted a net loss of $10m.

“We expect a negative share price reaction on open, with main focus on the weaker than expected top-line,” Cleaves Securities said of the results, although maintained a BUY recommendation.