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Frontline 2012 and Knightsbridge create capesize giant

Frontline 2012 and Knightsbridge create capesize giant
Frontline 2012's remaining 25 capesize newbuilds will be delivered into Knightsbridge Tankers' fleet under a deal announced today.

Five ships will join Knightsbridge this year followed by 14 in 2015 and six in 2016, creating the largest US-listed capesize owner, with 39 vessels.

The announcement follows Knightsbridge's purchase of five capsizes from Frontline 2012 and a further capesize from the Fredriksen family's private trust-controlled company Karpasia in March.

John Fredriksen, chairman of Frontline 2012 commented: "We are very pleased to be able to enter into this transaction with Knightsbridge for the remaining capesize fleet of 25 newbuidings, which is in line with our strategic plan of creating pure plays in different shipping segments through consolidation, divestments and spin offs."

Subject to documentation and shareholder and regulatory approvals, Knightsbridge will issue 62m shares to Frontline 2012, half in September this year and half in March 2015. The deal will leave Knightsbridge 70%-owned by Frontline 2012 and 3% owned by Fredriksen's private investment firm Hemen Holdings.

Outstanding payments for the vessels total $894m, leaving the overbook fully financed with $33m debt per vessel.

"The Frontline 2012 transaction will be a transformative step for the company and will make us the leading US listed capesize owner," said Ola Lorentzon, Knightsbridge ceo.

"With a fleet of 39 modern vessels, of which 34 are "eco design" fuel efficient vessels, which could achieve higher time charter equivalent earnings than existing vessels in any market situation and a targeted break-even rate below $15,000 per day, we are setting the groundwork to be in a unique position to benefit from an expected dry bulk market recovery. As the market recovers we expect this transaction to be highly accretive to our cash flow per share and give us the ability to pay high dividend to our shareholders."