Fredriksen to merge Frontline and Frontline 2012 back together

Buoyed by the turnaround in tanker markets Frontline and Frontline 2012 have agreed a merger as the two companies eye further consolidation opportunities.

The merged company will be known as Frontline with Frontline 2012 becoming a wholly-owned subsidiary.

The new Frontline will have a fleet of about 90 vessels including 25 VLCCs, 17 suezmax tankers, 16 MR product tankers and 10 LR2 aframax tankers, and 20 vessels on time charter or under commercial management. It will also have 22 newbuildings on order.

"By merging Frontline and Frontline 2012 we will regain Frontline's position as a leading tanker company.  The combined company will have a large fleet and a strong balance sheet which puts us in a position to gain further market share through acquisitions and consolidation opportunities,” commented Fredriksen, chairman of both Frontline and Frontline 2012.

Shareholders in Frontline 2012 will receive 2.55 shares in Frontline for each share in Frontline 2012 under the merger agreement. The merged company will continue Frontline’s three listings on the New York Stock Exchange, the Oslo Stock Exchange and the London Stock Exchange.

“With the current strong tanker market and attractive cash breakeven rates, we believe the combined company will generate significant free cash. The intention is to pay out excess cash as dividends at the board's discretion. I am very pleased with this merger and I am determined to develop and grow the company further," Fredriksen added.

Frontline 2012 was created at the end of 2011 as part of a restructuring of Fredriksen’s flagship tanker company Frontline, taking over many of its newbuilding contracts taking over around $2bn worth of assets, debt and newbuildings. Fredriksen's Hemen Holdings provide $500m to guarantee the deal.

The merger will be subject to shareholder approval with a minimum 75% approval required from Frontline shareholders and 50% by Frontline 2012 shareholders.

Following the merger Hemen Holdings will own 52% of voting shares in the combined company while 7% will be owned by Ship Finance International.