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Frontline cancels four VLCC newbuilds at STX

In a not unexpected move John Fredriksen’s Frontline has cancelled four VLCC newbuildings ordered at bankrupt STX Offshore & Shipbuilding.

In its second quarter results Frontline flagged-up it was in discussion with STX over the four VLCC newbuildings and that it was unclear if they would be delivered.

The tanker owner has now cancelled the four VLCCs due for delivery in 2017 which were contracted for $364.3m. Frontline had so far made installment payments of $45.5m and has been returned all payments less $500,000 cancellation fee per newbuilding.

The company will meanwhile continue looking at buying up secondhand or re-sale vessels, which it sees as being at historically low prices. “Frontline's low cash breakeven levels, and access to attractively priced capital, gives the company significant operating leverage and positions Frontline to take advantage of price dislocations in the market,” it said.

In June this the company snapped up to VLCC newbuilding resales at Hyundai Heavy Industries for $84m each.

Frontline’s fleet comprising 73 vessels, including newbuildings, totaling 13.5m dwt.

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