DNB Will Support Frontline Through Tanker Industry’s Slump

DNB ASA, a lender to oil-tanker operator Frontline Ltd., said it will back the shipping company through an industry slump that slashed returns from hauling crude at sea.

“We’ll support them through the downturn,” Harald Serck- Hanssen, DNB’s Oslo-based head of global shipping, offshore and logistics, said by phone today. “We’re sure they’ll be one of the winners in the consolidation process that will come as a result of this downturn.”

 

He spoke a day after Frontline said it will seek talks with creditors and may run out of cash next year. The shares plunged 44 percent, the most since at least 1998, in Oslo trading. Returns are only covering operating costs and ship prices have slid as much as 50 percent, said Frontline, the world’s biggest operator of supertankers.

 

Serck-Hanssen declined to say how much DNB has lent to Hamilton, Bermuda-based Frontline. The company has $1 billion of bonds and public loans maturing in the next decade, data compiled by Bloomberg show. That includes $363 million of outstanding loans due to mature in 2017 organized by DNB and Nordea Bank Norge ASA.

 

34% Holding

Nordea Bank Norge said yesterday it has “trust and confidence” in Frontline’s main shareholder, a company indirectly controlled by the tanker operator’s chairman, Norway- born billionaire John Fredriksen. Hemen Holding Ltd. owns a 34 percent stake, according to the company’s last annual report.

 

Frontline operates a fleet of 67 vessels with a further seven ordered, according to its website. The company, like many competitors, was experiencing the effect on the market of a glut of vessels, said Hans Christian Kjelsrud, Nordea’s head of shipping.

 

“A successful restructuring of the company will require contributions from all of the company’s stakeholders; owners, lessors, bond holders and banks,” Kjelsrud said by e-mail yesterday.

 

DNB is seeking a “balanced solution” in any Frontline reorganization including contributions from banks as well as the tanker company’s owners, according to Serck-Hanssen. Lenders typically will offer “some kind of amortization relief” in exchange for an additional cash injection from a company owner, he said.

 

Vessel Loans

“As long as you have an owner willing to support and you finance reasonably modern ships, that’s not too problematic,” the DNB manager said. Owners of crude tankers comprise some 10 percent of the bank’s $35 billion of shipping and offshore loans, he said.

 

Frontline has earned $3.5 billion since 2004, according to Serck-Hanssen. This year’s net loss comes to $185.9 million so far including yesterday’s third-quarter figures, data compiled by Bloomberg shows.

 

“We’ve had the longest period of sustained upturn in the history of the tanker markets until 2008,” Serck-Hanssen said. The market has worsened for two years, Frontline said yesterday.

 

General Maritime Corp., the second-largest U.S. owner of oil tankers, filed for bankruptcy on Nov. 17 after falling oil demand and a vessel surplus led to two years of losses.

 

Related news

Latest news

New contract: Windcat 41 - no 17 in the Servogear series

Servogear announces the signing of a new contract with Windcat Workboats BV for the delivery of Servogear Controllable Pitch Propellers (CPP)  for their new vessel Windcat 41. 

Seacat Enterprise to be launched January 12th

Seacat Services, is preparing to launch its first High Speed Utility Vessel (HSUV), Seacat Enterprise at January 12th.

Norsafe Signs Contract with the Swedish Coast Guard (KBV)

On Wednesday 21st December, Norsafe signed yet another new contract with the Swedish Coast Guard (KBV) to deliver nine new Magnum 750 MKII boats.

A Unique Second-generation Tomograph is Developed

A new gamma-ray tomograph designed to image up to 4” diameter pipes, is developed by CMR Prototech for the Saskatchewan Research Council (SRC) in Canada.

Sohome launches a new website

Sohome has launched a new website that makes it easier to find key information. 

Sohome AS receives orders for Johan Sverdrup Project

Sohome AS is proud to be a sub-contractor to Intelecom AS for the Johan Sverdrup Project. 

New 55'' Ultra High Definition Chart and Planning table passes Type Approval testing

Most advanced maritime display system ever produced, the 55'' Ultra High Definition Chart & Planning table, enables Integrated Bridge System manufacturers to develop new multi-data solutions.

Norsafe's experience in the Polar Code Pays Off

In readiness for the introduction of the Polar code, Norsafe has become the first LSA supplier to have executed full scale tests and trials 

Øglænd System Group winner of Business of the Year Award

Øglænd System Group won the Business of the Year Award in the Stavanger-region 2016.