Frontline shares fell as much as nine percent yesterday after the world's largest oil tanker group said that a subsidiary has not repaid a $48 million loan due March 30th.
The shares lost as much 6.5 kroner to 66. Golden Stream, a unit of Frontline's Golden Ocean subsidiary, has not repaid its debt to Griffin Shipping, which may claim default. If there is a default, other Golden Ocean loans may become repayable immediately, according to a filing with the Securities and Exchange Commission.
Frontline is working to “renegotiate payment terms and to reschedule payment of the outstanding amount,” the company said in the filing. “Golden Ocean would be forced to sell assets to pay any shortfall due to Griffin” if this fails.
Frontline's first quarter profit dropped by ninety two percent as lower oil production slashed demand for its ships, pushing down the rates it could charge customers. Tanker rates slid further to a fifteen year low in April. Analysts expect the company to post a second quarter loss.