Seeking Alpha

Frontline lower after debt exchange

  • Frontline (FRO -6.4%) announces a private debt-for-equity exchange in which $25M of the company's convertible bonds will be swapped for 5.8M shares priced at $2.41 a pop.
  • The company will grant an additional 1.2M shares to the bondholders if other financial conditions are met.
Comments (6)
  • DeepValueLover
    , contributor
    Comments (8602) | Send Message
     
    This wasn't unexpected.

     

    Frontline is a "buy now for a 8x gain by 2017" play.

     

    In the near term, however, things are going to be quite ugly.
    11 Oct 2013, 11:21 AM Reply Like
  • King Rat
    , contributor
    Comments (710) | Send Message
     
    I'm missing the math here. I guess $25million was the par value and $2.41 for the 5.8million (MM) represented the market value, but that still means the bonds traded at a 40% discount.
    $2.41 seems an odd number to convert at otherwise.
    11 Oct 2013, 11:45 AM Reply Like
  • MOYAM
    , contributor
    Comments (26) | Send Message
     
    $25mm par X .54 = $13.5mm current mkt value (see FINRA Trace)

     

    So for $13.5mm in cvt notes the holder gets:

     

    5.8mm shares FRO
    $2.25mm cash (see Frontline Ltd press release)
    and 1.2mm additional shares issued next week.

     

    11 Oct 2013, 12:22 PM Reply Like
  • jbassbia
    , contributor
    Comments (365) | Send Message
     
    FRO is the weakest weak sister of the sector. Much less risk in DSX which is expanding or SB and SDRL which pay dividends while we wait. DRYS offers the drilling sector -as we wait for the long term upturn in rates.FRO only offers a near bankruptcy price and there is reason to fear it may not survive.
    11 Oct 2013, 12:23 PM Reply Like
  • Lionel Yeo
    , contributor
    Comments (322) | Send Message
     
    DSX is a dry bulk shipper. DRYS has Ocean Rig mixed in. SDRL is a offshore rig company. They are in completely different shipping markets.
    13 Oct 2013, 03:38 AM Reply Like
  • jbassbia
    , contributor
    Comments (365) | Send Message
     
    Their market makes for portfolio profits - unlike FRO .In creating a portfolio you have to consider buying the " best of " - not the bargain basement. Shipping sector reviews available at http://www.amp2012.com
    13 Oct 2013, 11:21 AM Reply Like
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