FRO – Strategic Fleet Renewal and Expansion

Core Viewpoint - Frontline plc is undertaking a strategic fleet renewal initiative that includes the sale of older vessels and the acquisition of new, more efficient vessels to enhance its operational capabilities and environmental performance [1]. Group 1: Sale of Older Vessels - The company has agreed to sell eight of its oldest 1 generation ECO VLCCs, built between 2015 and 2016, for a total sales price of $831.5 million, with delivery scheduled for the first quarter of 2026 [2]. - After repaying existing debt on these vessels, the transaction is expected to generate net cash proceeds of approximately $486.0 million, with an anticipated gain of about $217.4 million to $226.7 million recorded in the first quarter of 2026 [2]. Group 2: Acquisition of New Vessels - Concurrently, the company has entered into an agreement to acquire nine latest generation scrubber-fitted ECO VLCC newbuilding contracts for an aggregate purchase price of $1,224.0 million [3]. - Six of these vessels are under construction at the Hengli shipyard and three at the Dalian shipyard in China, with delivery scheduled between the third quarter of 2026 and the second quarter of 2027 [3]. - The payment schedule for these acquisitions is primarily due upon delivery, and the company plans to finance this with cash and long-term debt [3]. Group 3: Management Commentary - The CEO of Frontline Management AS stated that these transactions will allow the company to replace older vessels with modern, fuel-efficient ones, aligning with its strategy to operate a cost-effective fleet [4]. - The acquisition supports the company's goal of increasing its exposure to the VLCC segment without increasing overall vessel supply, contributing to improved fuel efficiency and reduced carbon emissions [5]. Group 4: Fleet Composition Post-Transaction - Following the completion of these transactions, Frontline's fleet will consist of 81 vessels, including 42 VLCCs, 21 Suezmax tankers, and 18 LR2/Aframax tankers [5].