Frontline has today entered into an agreement which includes a sale and lease back of two of the Company’s VLCCs to  German K/Gs promoted by Dr. Peters GmbH. The vessels, Front Tina and Front Commodore, both built in 2000 will be sold to the new owners for USD 75 million each. The vessels, which are expected to be delivered to the new owners during the next month, will after delivery be chartered back to Frontline for a period of 12.5 years. Frontline also has an option to buy back the vessels starting at the end of year 8. If Frontline exercises the purchase option the total cost of capital is calculated to max. 7.7 % p.a. but could be less. The transaction is expected to generate USD 70 million in cash. A low historic spread to long-term interest rates, the sales price and the large liquidity generated has made this into an attractively priced transaction. Frontline’s VLCC daily cash break even rate is as a result of the transaction expected to increase to USD 21,200 per day.
As a function of the transaction the Board expects the dividend to be paid for the third quarter to be increased from USD 0.25 per share to USD 0.50 per share. The remaining liquidity generated from the sales, approximately USD 50 million, will for the time being go to increase the Company’s cash position.  A further dividend increase for the third quarter may come from improved market conditions in the rest of the third quarter or in the beginning of the fourth quarter, or as a result of further refinancing of the Company.
Frontline has, as a function of the strength in the dry bulk market, taken a strategic decision to start an opportunistic trade of the OBO carriers in the dry market. So far 5 of the 8 OBO carriers have been fixed in the dry market for periods between 30 days and up to 6 months at TC rates between USD 30,000 and USD 40,000 per day. It is expected that the remaining three OBO carriers will be moving into the “Cape” market shortly.
The Board will in the current market situation have a dynamic approach to the employment of the OBO carriers, and will seek employment which is expected to generate the highest TC income short-term. The transfer of the OBO carriers to the dry market will improve the overall “Suezmax” segment earnings for the third quarter.
18 August 2003
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda