NEW YORK (TheStreet) -- Shares of Frontline (FRO) are plummeting, sharply down 18.47% to $2.34 on heavy trading volume Tuesday afternoon, following the oil tanker shipping company's announcement of a new debt-for-equity exchange.
Bermuda-based Frontline said that it signed a private deal to exchange $22.5 million of its 4.5% convertible bond for 3.9 million shares at $3.12 per share, which represents a 9% premium to Monday's closing price.
The exchange also includes $9.6 million in cash, plus accrued interest.
The company will issue an additional 760,377 shares to bondholders on December 23 if the five-day volume-weighted average price of its shares for the period ending December 22 is lower than the exchange price.
About 4.43 million shares of Frontline traded hands as of 2:29 p.m. Tuesday, compared to its average trading volume of about 1.43 million shares a day.
Separately, TheStreet Ratings team rates FRONTLINE LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate FRONTLINE LTD (FRO) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."