Restructuring clock watch


John Fredriksen could combine Frontline and Frontline 2012 before the end of the year, Arctic Securities says.

John Fredriksen

John Fredriksen

Arctic analyst Erik Nikolai Stavseth says yesterday’s appointment of Robert Macleod as chief executive was the first act of a restructuring process.

In a report this morning Stavseth said the union of Fredriksen’s two tanker companies will take place before 15 April 2015 when a convertible bond payment is due and “potentially before year-end”.

Frontline presently controls a 5\% share of Frontline 2012, that has a value of around $80m.

A reverse merger of Frontline 2012 into the original platform has been on analysts’ lips for some time and yesterday’s announcement that Macleod would take over from Jens Martin Jensen merely intensified the discussion.

As TradeWinds reported yesterday, some suggest the appointment of Macleod – who manages Frontline 2012’s products fleet via Highlander Tankers – could will see Fredriksen keep his crude and products fleets together rather than spinning off the clean ships.

Analysts at RS Platou Markets also believe Frontline and Frontline 2012 are headed for a merger.

In a report today Platou Markets said: “It is natural to speculate that the product tankers will also be spun off at some point and that the crude tankers will eventually find their way back home to where they came from, old Frontline which is approaching a restructuring.”

Frode Morkedal and Herman Hildan’s comments came as they upgraded Frontline 2012 to buy given falls in its share price during the past few weeks.

Frontline 2012, which has 10 crude tankers, six MRs and 12 LR2s (which are expected to trade dirty), is projected a post a profit of $10m in the third quarter.

Consensus has Frontline heading for a $17m loss in the same period.

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