Frontline Sells Tankers to OMI

Tuesday, June 10, 2003
The Bermuda-based Frontline Ltd. have agreed to sell two 2000 built Suezmax tankers, the Front Sun and the Front Sky to OMI Corporation (OMI), for $49.25 million per vessel, consisting of $43.25 million cash and one million shares of OMI common stock valued at $6.00 per share, with a share price guarantee from OMI at $5.70 over a six month period. Frontline will pay to OMI any shortfall of time charter equivalent earnings per vessel below an average of $20,000 per day for one year from delivery. Deliveries are expected early in the third quarter. Both vessels will continue in Alliance Chartering, the cooperation between OMI and Frontline. Frontline expects to book a profit of approximately $4 million on the sale, and generate $39 million in cash after repaying the loans outstanding on the vessels, in addition to receiving 2,000,000 OMI shares. Frontline signed an agreement, which includes the sale of two of the Company's 2001 built Suezmax tankers, the Front Melody and Front Symphony, to two German K/Gs promoted by Dr. Peters GmbH. The vessels are expected delivered to the new owners this month. The vessels will be chartered back on 12.5 years time charter arrangement, including options for the Company to buy back the vessels at the end of the charter period. The Company has reached an agreement with partners Euronav Luxembourg SA (Euronav) and Overseas Shipholding Group, Inc. (OSG) to swap interests in six joint companies, which each own a VLCC. These agreements will result in the Company selling its interest in the vessel Pacific Lagoon to Euronav; acquiring, jointly with OSG, Euronav's interest in the Ariake and Sakura I increasing its share in such vessels to 50.1% each; and exchanging its interest in the Ichiban (33.33%) with Euronav for a portion of Euronav's interest in the Tanabe and Hakata increasing its interest in these vessels to 50.1% each. OSG will continue as partner with the remaining interest in the four last mentioned vessels. Commercial management for Ariake and Sakura I will be transferred from the Tankers International Pool to Frontline's commercial operations in Oslo. The same transfer of commercial management will take place for the vessel Edinburgh, this vessel will keep its current ownership structure intact.
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