Frontline 2012 is also promising further additions to a newbuilding orderbook which has already reached 53 ships with options and fresh contracts expected to add to the tally shortly.
Its super-aggressive spending is set to be backed up not only by Fredriksen’s offshore drilling cash but a US listing within two years, its fourth quarter report reveals.
And in a fashion fitting the Frediksen empire, spin-off companies could then follow, it explains.
"The company is currently in the process of concluding one of the most aggressive new building programs ever executed with vessels in the crude, product, LPG and dry bulk segments," it said.
"Frontline 2012's target is to position the company for an anticipated recovery of the shipping markets in the next two to three years,” it added.
“In order to achieve this, the company follows the strategy of aggressive growth through placing large orders for new efficient tonnage at historically low prices with the main focus on crude tankers and dry bulk.”
Frontline 2012 today has 53 newbuildings worth a massive $2.598bn, of which only $315m has been paid, its report says.
This is up from 16 ships of $1.11m at the end of 2012, despite the cancellation in January of the second in a series of five VLCCs inherited from Frontline.
“The company also holds a significant number of fixed price options for newbuilding contracts declarable in the coming months,” the report said.
“The company has in addition entered into specific discussions with existing and new yard relations with the target to increase the newbuilding orderbook further. The board will target newbuildings with deliveries in 2014 and 2015.
“The final size of the total newbuilding program including options is still under negotiation and will be reported to shareholders as soon as practically possible.”
Frontline 2012’s rapid growth, which has seen 38 new vessels ordered in less than three months, is feeding its vision to be the leading global commodity shipping company with a sole focus on modern fuel efficient tonnage within three years.
State-side IPO awaits
Frontline 2012 says a New York listing will replace its present junior flotation in Oslo within 10 to 16 months.
“As markets develops, the board targets a dividend strategy, and a refinement of the fleet profile through sale of assets or spin-offs,” it explained.
It revealed its staggering expansion at the same time as a stronger than anticipated results which left its rivals trailing.
Frontline 2012’s quarterly report have been eagerly awaited in the market following its much-rumoured order activity which has captured a string of TradeWinds' headlines in recent months.
Its report did not contain a breakdown of its newbuilding orderbook, which Clarksons lists at only 35 vessels - including the cancelled VLCC.
“The board is of the opinion that the current historically low newbuild prices and the significant fuel efficiency of the new tonnage materially reduce the risk of this major investment,” it said.
“Most of the tonnage the company has ordered will, based on the improved fuel efficiency and low capital cost, be profitable at rate levels where existing tonnage barely covers operating costs.
“The global interest in the new building market has recently increased although from a very low level.
“The low and, in some cases, negative margins for the shipyards has led to a significant scale down of yard capacity, particularly in China and Japan.”
It added: “We have seen some upward price movements in some of the sectors in the recent months however, no significant movement should be expected before more activity is generated from the Container sector.
“The board will in view of the limited downside risk endeavor to optimize the Company's debt to equity level with the target to increase the equity return going forward. This includes aggressive use of debt financing and yard financing.”
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