Frontline Restructuring Plans Hope to Avoid Cash Depletion in 1Q12

Research reports have been published on Frontline

concerning the company's ~40% drop in shares since market open today. According to Deutsche Bank, Frontline reported, "adjusted Q3 EPS loss of $0.62, ahead our estimated of loss of $0.69 and Consensus at a loss of $0.70. Our adjusted EPS excludes gains on the sale of assets and amortized deferred gains of $3.8 million ($0.05/share) as well as vessel impairment losses of $121.4 million ($1.56/ share). FRO also announced the suspension of its regular quarterly dividend." Frontline has been releasing information regarding its restructuring plans to break its trend of break-even that will lead to its eventual cash-depletion in 1Q12, as it predicts. According to Sterne Agee, Chairman John Fredriksen issued a press release that stated the company's restructuring would "likely include a new equity contribution, and that the company's major shareholder will likely contribute to the solution. Whether the contribution will take the form of a straight equity contribution or an unsecured loan is unclear at this point. But FRO indicated it could raise as much as $300M, which we note at $5 per share would be about 40% dilutive to existing shareholders." Frontline is currently trading down $2.12 from yesterday's $5.19 closing price and has a 52-week valuation range of $2.97-$28.73. Shares may be at an attractive entry point should the company's restructuring plan prove successful.