Frontline has as of March 8, 2000 acquired US$ 46.75 million of Golden Ocean Limited US$ 296 million Senior Notes due in August 2001. The Notes have been acquired at an average price of approximately 11 % of par value.
Golden Ocean Group (the “Group”) is a shipping group, which controls 17 VLCC built after 1995. Five of the VLCCs are still under construction. In addition, the Group controls 11 modern bulkcarriers. Most of the delivered tonnage is presently employed on medium to long term charters.
Golden Ocean filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, as of January 2000 and has through this protection been given a period of up to 135 days to file a petition for reorganisation. It is likely that any restructuring solution will give the bondholders a new debt instrument as well as the overwhelming majority equity stake in the Golden Ocean Group.
Frontline, which since 1996 has been one of the leading consolidators in the tanker industry, views the limited investment in Golden Ocean as an opportunity to accelerate this consolidation process further. As one of Golden Ocean’s largest creditors, Frontline will seek to be actively involved in the restructuring process. Frontline will, on request from the company and the creditors, be prepared to act as manager for the Golden Ocean Group. Such a management solution could substantially reduce the administration costs in Golden Ocean, and thereby improve the company’s tight cashflow position. Management by Frontline, which today is the world’s largest independent tanker owner, should also increase Golden Ocean’s commercial credibility.
Frontline feels that the Golden Ocean Bonds are fully valued at this time and will currently not seek to acquire more bonds in Golden Ocean. Frontline alone, or together with other industry partners, could however at acceptable terms, be prepared to advance new cash equity or new debt instruments into the Golden Ocean Group. These proceeds would be used to secure the financial stability of the Group. The most immediate need is to secure adequate equity financing for the remaining five VLCC newbuildings from Hitachi and Kawasaki, and ensure the Group has adequate working capital to continue its business.
Frontline Ltd. is the world largest tanker company, with a fleet of 26 modern Suezmaxes and 13 VLCCs all built after 1990. Total transport capacity is approximately 55 million barrels of oil. The Company is domiciled in Bermuda, and is listed in Oslo, New York and London. Current market capitalisation is approximately US$ 500 million.