Latest news of maritime industry by Berita Kapal.
John Fredriksen’s tanker vehicle Frontline could run out of cash by the first quarter of next year, the company warned.
It admitted that it was seeking talks with its creditors to resolve the situation.
In an interview with Bloomberg, leading Norwegian bank DNB said that it would support the company through the downturn.
Bloomberg’s data showed that Frontline has $1 bill of bonds and public loans maturing in the next decade. DNB said that it was seeking a “balanced solution” to any company re-organisation, including contribution from the banks and Frontline’s owners, led by the Fredriksen-controlled company – Hemen Holdings.
DNB also revealed that tanker owners make up around 10% of its $35 bill shipping and offshore loan portfolio.
Reporting on its 3Q11 and nine month results, Frontline said that it sustained net losses of $44.7 mill for 3Q11 ($35.2 mill 2Q11) and $64.5 mill for the first nine months of this year.
These figures excluded impairment losses, which were $121.4 mill for the third quarter and first nine months of 2011.
This impairment losses related to five Suezmaxes built between 1992 and 1996 and also included losses of $27.1 mill, $30.6 mill and $18.5 mill, which were realised in the fourth quarter on the disposals of the ‘Front Fighter’, ‘Front Hunter’ and ‘Front Delta’, respectively, Frontline said.
The average daily TCEs earned in the spot and period market in 3Q11 by the VLCCs, Suezmaxes and Suezmax OBOs were $17,000, $9,500 and $38,200, respectively, compared with $26,100, $15,800 and $31,300, respectively, in 2Q11.
Frontline’s spot earnings for the double hull VLCCs and Suezmaxes were $12,600 and $7,800, per day respectively, compared with $23,900 and $14,500, in 2Q11. The Gemini Suezmax pool had spot earnings of $7,600 per day in 3Q11, compared to $16,200 per day in the previous quarter.
The company's double hull VLCCs, excluding the spot index timecharter vessels, had spot earnings of $14,600 per day in 3Q11, compared with $25,700 in 2Q11.
Highlighting the problem was that for November, Frontline reported average total cash cost VLCC and Suezmax breakeven rates for the remainder of 2011 on a TCE basis of about $30,200 and $23,600 per day, respectively, way above their current earnings, as shown above.
As of 30th September, 2011, the company said it had total cash and cash equivalents of $191 mill and restricted cash of $157.2 mill. The latter includes $96.8 mill, relating to deposits in ITCL and another $58 mill in Frontline, which is restricted under the charter agreements with Ship Finance.
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