Frontline Plc — M&A Activity 2019

Aug 23, 2019

FRO - Frontline to acquire a fleet of Suezmax tankers from Trafigura

FRO - Frontline to acquire a fleet of Suezmax tankers from Trafigura

Frontline Ltd. ("Frontline") (NYSE and OSE: FRO), today announced that it has

entered into a sale and purchase agreement with Trafigura Maritime Logistics

("TML"), a wholly-owned subsidiary of Trafigura Pte Ltd ("Trafigura") and

certain related entities to acquire ten Suezmax tankers built in 2019 through

the acquisition of a TML special purpose vehicle which holds the vessels (the

"Acquisition"). As part of the Acquisition, Frontline has options to acquire an

additional four Suezmax tankers built in 2019 through the acquisition of a

second TML special purpose vehicle.

Acquisition Overview

* Frontline to acquire ten Korean 2019-built Suezmax tankers all fitted with

exhaust gas cleaning systems

* Transaction consideration to consist of (i) 16,035,856 ordinary shares of

Frontline at an agreed price of USD 8.00 per share issuable upon signing;

and (ii) a cash amount ranging from USD 538 to 547 million, payable upon the

closing of the Acquisition

* Closing of the Acquisition is targeted as soon as practically possible with

November 15, 2019 being the earliest and March 15, 2020 being the latest

expected date

* To obtain earlier exposure to the vessels, Frontline has agreed to time

charter all the ten vessels from Trafigura until closing of the Acquisition

at a daily rate of approximately USD 23,000

* Frontline has also agreed to charter five of these vessels back to Trafigura

on three-year time charters at a daily base rate of USD 28,400 with a 50%

profit share above the base rate

* Frontline is in discussions with leading lending banks who have indicated an

interest in providing financing for the Acquisition. An affiliate of Hemen

Holding Ltd., Frontline's largest shareholder, has offered a USD 547 million

commitment at closing of the Acquisition through a three year facility at

terms viewed as attractive

* Following the closing of the Acquisition, Trafigura will own approximately

8.48% of the ordinary shares of Frontline, and Frontline will have a total

of 189,153,166 outstanding shares par value USD 1.00 each

* Frontline has two separate options to acquire two plus two additional

Suezmax tankers that expire on September 12, 2019 and September 24, 2019.

The second option will expire if the first option is not validly exercised.

The transaction structure for the four optional vessels will be similar to

that of the ten firm vessels. The number of ordinary shares to be issued if

one or both of the options are exercised will be based on the volume

weighted average trading price of Frontline's ordinary shares on the NYSE

over the 20 days prior to the option exercise date. All four option vessels

are 2019 Chinese built and fitted with exhaust gas cleaning systems

Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS

commented:

"This transaction is backed by our strong belief in tanker market fundamentals

and reflects our ability to act swiftly and decisively with the support of our

largest shareholder. We welcome Trafigura as a strategic shareholder and believe

the Acquisition reflects the value Trafigura ascribes to our equity. In addition

to Trafigura being a longstanding customer of Frontline, we now have a unique

partnership that we believe will lead to further synergies going forward. The

structure of the transaction creates an immediate impact to our earnings at a

time when we expect freight rates to increase significantly. Moreover, we expect

the Acquisition to boost our dividend capacity going forward."

Rasmus Bach Nielsen, Global Head of Wet Freight at Trafigura, commented:

"This marks the continuation of an approach that has long been integral to

Trafigura's strategy, namely, investing in infrastructure assets in support of

commodity flows and collaborating with a market leader like Frontline to

maintain sufficient access to those assets for our trading business.  Trafigura

trades around 5.5 million barrels per day of oil and petroleum products around

the world and has a market-leading position in strategic commodity flows,

notably as a leading exporter of crude oil from the U.S. The significant

increase in U.S export volumes, an aging global fleet, particularly of crude

vessels, and a historically low orderbook all support our constructive outlook

for the sector. We therefore see significant upside potential in our equity

investment in Frontline, a company with vast commercial scale and capabilities

with whom we already enjoy a close working relationship."

Following the acquisition of the 10 Suezmax tankers from Trafigura, Frontline's

fleet will consist of 75 vessels, including newbuildings, with an aggregate

carrying capacity of 14.2 million DWT and an average age of 3.7 years

DNB Markets has acted as mandated advisor between the parties in the

transaction.

August 23, 2019

The Board of Directors

Frontline Ltd.

Hamilton, Bermuda

Frontline Contact:

Robert Hvide Macleod: Chief Executive Officer, Frontline Management AS

+47 23 11 40 84

Inger M. Klemp: Chief Financial Officer, Frontline Management AS

+47 23 11 40 76

Trafigura Contact:

Trafigura's Global Press Office: +41 22 592 45 28 or media@trafigura.com

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking

statements. Forward-looking statements include statements concerning plans,

objectives, goals, strategies, future events or performance, and underlying

assumptions and other statements, which are other than statements of historical

facts. Words, such as, but not limited to "believe," "anticipate," "intends,"

"estimate," "forecast," "project," "plan," "potential," "may," "should,"

"expect," "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various

assumptions, many of which are based, in turn, upon further assumptions.

Although Frontline believes that these assumptions were reasonable when made,

because these assumptions are inherently subject to significant uncertainties

and contingencies which are difficult or impossible to predict and are beyond

the control of Frontline, Frontline cannot assure you that they will achieve or

accomplish these expectations, beliefs or projections. The information set forth

herein speaks only as of the date hereof, and Frontline disclaims any intention

or obligation to update any forward-looking statements as a result of

developments occurring after the date of this communication.

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.