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Frontline Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: FRO

I would then ask you to move to Slide 4, highlights and transactions. The chartered-in VLCC Hampstead was redelivered on April 22, 2012. And on May 29, 2012, Frontline was allocated 3,546,000 shares in a private placement in Frontline 2012. That was a total placement of the 6 million [indiscernible] shares at subscription price of $3.75 per share. And following this private placement, the company has an ownership of 7.9% in Frontline 2012.

In June 2012, Frontline terminated a long-term charter party for the OBO carrier Front Rider. The charter party terminated July 22, and the company paid a cash compensation to Ship Finance of $400,000 for the early termination of the charter.

The transaction will reduce obligations under capital leases by $2.4 million, and we recorded an impairment loss of $4.9 million in the second quarter of 2012.

In August 2012, Frontline terminated a long-term charter party for the OBO carrier Front Climber. The charter party is expected to terminate late September 2012. The company will make a cash compensation to Ship Finance of approximately $600,000 for the early termination of the charter. The transaction will reduce obligations under capital leases by $1.7 million, and we recorded an impairment loss of $4.2 million in the second quarter of 2012.

Then I would like you to move to Slide 5, financial highlights. Frontline reports net loss, excluding vessel impairment losses of $11.2 million, equivalent to a loss per share of $0.14 in the second quarter 2012. Frontline has recorded a vessel impairment loss of $13.1 million in the 3- and 6-month period ended June 30. That is equivalent to a loss per share of $0.17. This loss relates to the 3 OBO vessels: the Front Rider, with $4.9 million; the Front Climber, with $4.2 million; and the Front Driver with $4 million. The losses relating to Front Driver -- sorry, Rider and Climber are the expected losses on the termination of the long-term charter parties in July and September, respectively.

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