Frontline banks near $1bn loan package to finance Euronav VLCC deal and product tankers

Norwegian tanker giant Frontline has completed a series of loan deals worth $921m as it draws the line under its purchase of 24 VLCCs from Euronav.

The John Fredriksen company said 24 suezmaxes and LR2s have been refinanced through transactions in Norway, Germany and China.

The deals will allow the owner to repay major shareholder John Fredriksen, who contributed cash to enable the $2.35bn Euronav acquisitions.

With vessel sales, Frontline generated $692m that was used to repay $100m drawn under the $275m loan provided by Fredriksen’s Hemen Holding.

The company also plans to pay off $295m drawn under a separate Hemen loan.

Chief financial officer Inger Klemp said: “This completes our strategy of freeing up capital through re-leveraging part of the existing fleet and the sale of older non-eco vessels to finance the acquisition.”

The owner sold its five oldest VLCCs, built in 2009 and 2010, and one of its oldest suezmax tankers dating from 2010, for $335m in January.

Frontline said on Thursday that in February it had fixed a secured term loan of $94.5m with KFW Bank in Germany to refinance two LR2s.

The loan matures over five years at interest of the secured overnight financing rate plus 1.8%.

In March, the owner refinanced six more LR2s with a syndicated loan of $219.6m.

The term is again five years at the same interest rate. These two deals generated net cash proceeds of $139m.

Cash raised in China and Norway

And this month, Frontline has entered into a senior secured term loan of $606.7m with Export-Import Bank of China and DNB of Norway.

The facility will refinance eight suezmaxes and eight LR2s and is insured by China Export & Credit Insurance Corp.

This loan matures over nine years at a margin “in line with the company’s existing loan facilities”, the shipping company said.

Net cash proceeds are expected to be $278m.