Frontline, Ltd. FRO
Q1 2010 Earnings Call Transcript
Operator: Good day and welcome to the Frontline Quarter One 2010 Results Presentation Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jens Martin Jensen, CEO and Inger M. Klemp, CFO. Please go ahead, gentlemen.
Jens Martin Jensen - CEO: Good morning and afternoon and welcome to our Q1 2010 presentation. I think we had a pretty good result in the first quarter of the year, especially when we compare to what our benchmark competitors has reported.
We will follow our usual program for this presentation, with our CFO, Inger Klemp going through Q1 highlights and transactions, financial review of the quarter and the update of our newbuilding program and finance of the same. Then I'll go through some market slides and sectors and outlook on how we see our sales and after that there should be time for some questions.
Inger, please?
Inger M. Klemp - CFO: Thanks, Jens and good morning and good afternoon, ladies and gentlemen. I will guide you through the highlights and the financial review in the first quarter of 2010, together with a run-through of the newbuilding program.
Moving to slide four, in March 2010, Frontline announced the successful completion of its $225 million convertible bond offering. The receipts from this bond will be used for general corporate purposes, financing on the remaining equity investments in the Company's newbuilding program, and will improve the Company's ability to react to attractive market opportunities.
In January, March and May 2010, we took delivery of three out of total four Suezmax newbuildings from Rongsheng, and a compensation payment for delayed delivery were negotiated with the yard for all these three vessels.
In April 2010, Frontline announced the acquisition of two 2009-built double hull VLCC tankers; and the first vessel, was renamed Front Eminence, was delivered on May 18, 2010, and the second vessel is expected to be delivered in June 2010 and will be renamed Front Endurance.
In May, we secured long-term bank financing for these vessels, representing 70% of the purchase price.
In February 2010, Frontline agreed with Ship Finance to reduce the restricted cash deposits relating to 31 double hull crude oil tankers and OBOs by approximately $112 million. Further, the parties agreed a net upfront payment of charterhire less operating expenses of approximately $74 million, covering 80% of the payments due over to the next six months. This change of structure took effect from April 1, 2010. This solution will reduce Frontline's cash breakeven level for these vessels and improve Frontline's free cash balance by approximately $112 million during the next two quarters.
From April 1, 2010, the restricted cash is thereby reduced to $62 million.
In March 2010, Frontline agreed with Ship Finance to terminate the long-term charter party for the single hull VLCC Golden River. Termination of the charter took place in April 2010, and Ship Finance has made a compensation payment to Frontline with approximately $2.9 million for the early termination of the charter party. In April 2010, we chartered out the OBO Front Striver for four to six months.
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