Frontline Plc (FRO) 2003 Q4 法說會逐字稿

Hello everybody, and welcome to Frontline and Ship Finance web call. This is Tom Jebsen. I'm CFO of Frontline and Ship Finance, and with me today I have Oscar Spieler, the CEO of Frontline management. I will leave a word for Oscar to comment on some initial remarks. Then I will do the accounts and also take you through the Ship Finance structure before I give a word back to Oscar to go on the market items. So Oscar, the word is yours.

Good morning. My name is Oscar Spieler. I am the Chief Executive Officer of Frontline. Let me start with (indiscernible) the number one and two, so we just go into number three. Before we start on number three, I would just say that we are a bit delayed on the presentation of the year 2003 due to the (indiscernible) through in connection with the refinancing of Ship Finance. I am happy to announce that we have released escrow accounts, the $580 million is on our accounts today.

I am also happy to announce that we are about to present the best results of Frontline ever and we are in a quarter where we will most probably present the best quarter result ever. The fleet -- number three. The fleet have changed slightly since the last time. We have unwinded the joint venture, sold a number of these (indiscernible) are reduced. But it is more or less the same equivalent -- the equivalent number of less is the same.

The cash breakeven is 21,400 and then we go down to the Suezmaxes where we have a cash breakeven of 15,900 on the same for OBOs. The average age of the vessels are reaching or getting closer to the industry average but they are still younger and we still have a higher percentage of double the tonnage of industry average. During Q4 in 2003 we formed Ship Finance in October 2003 as presented earlier. We have dividend out $1.3 per share in for Q3 and Front Hawk was sold in Q4 as well. We will go back to that later on. As I said, we have issued 580 million U.S. dollar Senior Notes at 8.5 percent in December 2003 and they are also negotiated at long-term loan of $1.58 billion. Tom will now take you through the financing and I will came back to remark on that markets.

Okay. We move onto slide number five, and as you can see we ended up the year 2003 making a net income of $443 million. And in the fourth quarter the same figure was $70.5 million. This gave us an earnings per share for the quarter of 96 cents and for the year as a whole of $5.92. We have today announced that we are paying out a dividend of $4.50 per share, and for the year as a whole we will thereby have paid out for 2003 $8.90. A $4.50 dividend is composed of the regular 25 cent quarterly dividend, another 75 cents which is based on the stronger earnings in the quarter we just left. And finally there is $3.50 in dividend which is related to the liquidity, the good liquidity that the company has realized due to the refinancing that we've been through. You see further that the EBIT or operating income after depreciation is $454 million for full year, $85 million for the quarter, and EBITDA is similar, $601 million for the year and $123 million for the quarter.

We have on the second topline, you see that we made a loss in the fourth quarter of $2.7 million which is related to Front Hawk. We felt at the time, back in November, that we were selling at a very good price, $4 million above the latest attained price. But obviously ten days later we -- if we didn't feel like fools we at least didn't feel smart. Obviously the vessel was sold at a too early stage in the upturn. If we move onto slide six, you can see the topline broken down into time charter equivalents on a daily basis per vessel.

And for the fourth quarter we managed for the VLCCs, that is the combined spot and contract volume, to earn $40,600 per day again in the fourth quarter. For the year as a whole, $42,300, and then as you can see we of course made a stronger earnings spot related vessels and weaker on the contracted vessels. Same figures for the Suezmaxes, were $32,600 per day in the fourth quarter and the OBO's, which we for the most part have fixed on long-term contracts, earned $27,900 per day. We move onto slide seven, you see ship operating expenses. We have in the past been presenting these figures on a segment basis.

We have decided that is a little bit too detailed, so we think it is in everybody's interest to show for a combined for the total fleet. In the fourth quarter we spent $6,106 per day per vessel. We had 63 days of hire which mostly is related to the three drydockings that we did during the quarter, as you can see on the graph below. Move onto slide eight. The first-line shows the ship operating expenses which basically figures in million dollars from a previous slide.

And then we have charter hire expenses, which is vessels that we have chartered in. This concludes in addition to several vessels we have on operational leases, also four vessels that we chartered in from British Petroleum. That time chart arrangement has come to an end at the end of last year. We still handle the cargo volume for British Petroleum, but they no longer charter out their vessels as they have done over the last year to us.

In addition to this time, the final line shows you we have administrative expenses. It has increased from 12.8 million in 2002 to 17.9 in 2003. All of that increase is due to the expending of options under the employee stock option programs which is due to the tremendous performance of the Frontline share over the last 15 months. Move onto slide nine. You see we get to financial items. As you can see in the fourth quarter we had net interest expense of approximately $20.3 million. In addition to that we made a profit on the share results from associate companies and please note that in the coming year the figures that we have attained under that line will decrease substantially because we've gone from a situation where we have eight, nine, ten vessels that are joint ventures into now a situation from the first quarter of only having two vessels that go into that line.

So the effect of that will partly be to pump up, all else being equal, you should see a stronger operating income before depreciation, after depreciation, due to the fact that we basically have moved some vessels, by them becoming 100 percent owned vessels, further up in the P&L. You can all see on the very last slide on slide nine, that foreign currency exchange losses during the quarter were $5 million. This is due to approximately $150 million of our debt being denominated in yen, which strengthened it from approximately 109 yen per dollar to 107 yen per dollar during the quarter.

Finally I should mention that under depreciation we've changed our depreciation policy slightly during the quarter. We had a few vessels that we previously have depreciated down to scrap by 2017. We have moved that scrap date up to 2015 based on the latest IMO rulings. Move onto slide ten. You see the balance sheet, the asset side, and you can see that we have $681 million of cash at year-end. Of that, $565 million was on escrow. Basically that was proceeds, the net proceeds from the bond indenture that we raised in December. We have during the quarter or let's say in December, prepaid loans in the amount of $93 million, and therefore the cash amounts, that is the reason why the cash amounts went even higher. And you can partly see that prepayment coming through in preferred last line of that slide by investments in increasing substantially since we basically pumped in more shareholder loans to prepay the bank debt related to the joint ventures.

I should mention that we have one accounting issue which is also brought up in the last paragraph in the first section of our press release based on the latest revision of FIN 46. We now have a situation where it is likely that we have to consolidate Independent Tankers Corporation, that is a company which we in the past have only accounted for as an option we hold.

We will have to possibly consolidate that from the first quarter this year. If that happens, we will basically load on $950 million of extra debt into Frontline, and personally we find that a very unfortunate thing to happen, but we can only say that that is part of a change that has taken place under U.S. accounting regime in the aftermath of Enron and WorldCom. Move onto slide 11. We have associate companies here and basically what you see is that by the end of the quarter we -- at the end of the quarter we had eight joint ventures.

Now we stand in first day of March, it is only the last one and the first one that are still joint ventures, and the six in between have been split between us and our joint venture partner, OSG. Move onto slide 12. Here we see the liability side of the balance sheet. Not really much to tell here except for obviously as I will get back to later, we plan to spin off the shares in Ship Finance to make it an independently split company and when that happens all of the charters that we have between Frontline and Ship Finance will be, by all likelihood, be termed to be capital leases.

In which case you will see a slight change in the liability side of Frontline's balance sheet whereby there will be a substantial increase in obligations under capital lease and of course a reduction on the line just above that one. Ship Finance, on the other hand, will basically look like we will have it -- let's say a balance sheet, which pretty much resembles a leasing company. Moving onto slide 13, just a little bit on interest exposure and Japanese yen exposure.

I mentioned that we have yen exposure today of in excess of $160 million in connection with us refinancing a substantial part of fleet. We have also refinanced the yen denominated yen -- excuse me -- debt. What we've done there is basically to enter into forward contracts to keep our yen exposure at approximately $150,$160 million. We also have floating debt at this point in time since the end of last year of $1 billion. And total debt, including our share of associated companies' debt and capital leases of $2.2 billion.

We have after year end entered into $500 million of five-year interest rate swaps under ship finance umbrella, which I will get back to later. Final comment on the balance sheet is please remember that four of our vessels are on operational leases, and therefore are not included in the balance sheet. That is the ones mentioned on slide 14. Slide 15 takes you to the statement of cash flows. I don't see any point in going through that. Slide 16 shows you the breakeven rate. They have increased since last time we had a web cast, which of course is due to the 580 million we raised at 8.5 percent per annum.

We currently have cash breakeven rates of $21,400 and $15,000 for VLs and $15,900 for the Suezmaxes and OBOs. When Frontline divests or bifurcates Ship Finance, the remaining Frontline will see further increases in the cash breakeven rates, and that is due to the fact that the agreement with Ship Finance is for the VLs to be chartered in that $25,500 per day and the Suezmaxes at $21,100 per day. So then you will see another increase in the cash breakeven rates for let's say remaining Frontline.

Moving onto Ship Finance International, passing onto slide 18. I assume that most of you have seen this slide before but just to repeat, we established Ship Finance back in October last year. It is a Bermuda company. It is 100 percent owned by Frontline Ltd. at this stage. Then we have during the last few months sold 47 vessels or interest in vessels from Frontline Ltd. into Ship Finance. And basically that is the ship-owning subsidiaries you know see below the Ship Finance box.

The ship owning entities have then chartered back the vessels to another Frontline subsidiary, Frontline Shipping, which in turn then pays the mentioned charter hires of 25,000, 21,000 for the two segments back to Ship Finance and the ship owning subsidiaries. The vessels have then been -- the management of the vessels have then been outsourced at a fixed rate per day to Frontline management. So basically Ship Finance has limited its technical risk through that transaction. The whole idea behind this if we move onto slide 19, has been to -- we've noted for a long time that due to the high end industry cyclicality that shipping companies have typically been trading at low valuation multiples.

And we basically think that due to the cyclicality of the industry, our shares of many other shipping company shares have not been attractive for certain type of institutional and private wealth investors. So the solution for us has been to bifurcate the business, leaving all the assets and the stable cash flow in Ship Finance and keeping Frontline Ltd. as a growth company with shipping industry characteristics. And we also note that other industries have basically performed similar transactions, just to mention a few, the hotel industry and pipeline industries and certainly many other types of utilities.

And we hope that by doing this we will be able to create a more efficient pricing of our different capital instruments and thereby bring down the average weighted cost of capital in this company compared to our industry peers. Move onto slide 20. Just a few key elements of ship finance. I mentioned that it was opened up or established in 2003, in October. We agreed to take over and we have taken over 47 vessels from Frontline Ltd. They were basically bought at book value at that time. And the charters back to Frontline have of duration either the end of 2010, in the case of single hauls, or for 90 percent of the remaining expected useful life of a double hulls.

And in that calculation we assume that all double hulls will last until they are 25 years old. The Senior Notes, as Oscar mentioned, $580 million closed in December 2003. It is -- the funds were put on escrow until we had completed the purchase, and as Oscar mentioned, that was released on Friday. The Ship Finance has an additional -- in addition to the initial rate of 25 five hundred and 21 one hundred for the two segments, also a right for a bonus payment of 20 percent of a day rate achieved in excess of the initial rates.

And just to give you an idea what that -- what sort of kick in that can potentially be, if you had applied that system over the last five years, then Ship Finance would have been receiving on average $30 million per year. Or if you apply it to the 2003 earnings environment, Ship Finance would have been receiving $45 million for 2003. The contracts are noncancelable except for constructive total loss. Getting onto my final slide on slide 21, the charter has -- in addition to the charter payments we tried to create a credible credit story by putting in $250 million into the Frontline subsidiary, Frontline Shipping.

Distributions to Frontline Ltd. are prohibited if cash is below $250 million after any dividend payments. The next line we've already taken, the turnkey rates. We should mention that the management services are guaranteed by Frontline. However, the performance -- the financial, there is no financial guarantee given by Frontline Ltd. to the chartering company, Frontline Shipping. In addition to doing the high yield indenture, we have also closed a big bank facility. At that time I believe it was the biggest tanker banking facility done. A few weeks after, it was surpassed by Worldwide Shipping, I believe. And the whole deal closed in February 17. Interest rate at the London Interbank rate plus a margin of 1 1/4, and we have during the last few weeks swapped in $500 million of this facility into five-year fixed interest rates at 3.4 percent.

And of course you have to have the margin of 1.25 on top of the 3.4 percent. I should also mention that we, during the raising of the bonds got a rating from Standard & Poor's for Ship Finance of BB-, which implies the high yield bonds were rated a single B at the time. The cash flow of Ship Finance is expected to be approximately $200 million during 2004. And that is free cash flow before any installments or repayments under the banking facility.

There will be approximately $100 million of repayments, so the cash flow, I would say the free cash flow will be $100 million, then. And we expect to be paying dividends of approximately, starting somewhere between $50 and $65 million during the first year -- or excuse me, on an annual basis, because we will not be paying any dividends before sometime in second-quarter, I assume. We have mentioned in the press release that we intend to flow 20 percent of the shares to Frontline shareholders.

And we currently have filed with the SEC on a confidential basis a prospectus with a goal of getting registered both the bond Notes and the Ship Finance shares. We expect that registration statement to be approved by the SEC by mid-April, at which time we will be able to -- or excuse me, the board will be able to dividend -- declare a dividend of 20 percent of Ship Finance shares to its shareholders. We have so far, or the company has so far not decided what to do with the remaining 80 percent. That is we definitely intend to divest them but whether they also will be dividended out to Frontline shareholders or sold out right to in the market is still to be decided.

I should finally mention that we have also, since we have a pretty good liquidity in Ship Finance and haven't had time to look into new projects, we have bought back $10 million of high yield Notes over the last few weeks. And with that, I'll leave a word for Oscar to continue.

The fourth quarter has been extremely strong, as you know, and it's been extremely volatile. We have seen record (indiscernible) segment with rates up to 90,000 to 100,000 used dollar per day due to, most probably due to the Bosporus congestion and also the fact that the 5 to 7 percent of the Suezmaxes which are the old builds which can transport both oil and dry cargo are converted to dry molt (ph). This means that the Bosporus took away 5 to 7 percent and the OBO's have taken away another 5 to 7 percent.

We've seen a strong demand in the world oil demand, up to 3.5 percent in 2003, which is about what is previously reported. We see also that the export from the Middle East is increasing, and the import to U.S. is also increasing quite a lot. The U.S. in (indiscernible) is low. The ship values have increased quite a lot, and the yards are quoting for 2007. The new building yards are filled up and they (indiscernible) for LMG (ph), bulk carriers, and also tankers.

So you can't actually order on a vessel and deliver it before 2007. The EU and IMO have implemented new rules which should also have reduced flexibility of the fleet, the worldwide fleet. Our earnings in Q4 is reflected that there has been a time lag from the Q3 fixing. This you will see on the slides later on.

The next slide is explaining the supply of VLCCs and Suezmaxes. And as you see, there is a slight increase in the fleet next year, but however long-term there will be, up to 2007 there will be quite a balanced supply of VLCCs and Suezmaxes. If you look at the next slide you see that the volatility during the year has been quite high and it has actually oscillated at a higher level, which is the average is most probably due to around 45,000 U.S. dollar.

What is quite interesting to see is that during one week you can see increases from a level of 20,000 U.S. dollar up to 90,000 U.S. dollar in only seven days. That is quite dramatic and it is of course difficult to predict this sort of fluctuations. Coming back to Bosporus, you will see the -- when compared the Suezmax rates, the number of waiting days in Bosporus. You can also (indiscernible) it is the good market, the tanker market or opposite which is increasing the market.

But it is the congestion of the good market is actually giving the congestion, but the correlation is pretty high. As I mentioned earlier, a lot of have the OBO owners have converted their OBOs to dry and we have done the same and all of our eight OBOs are now converted to dry. And we have recently fixed two of our vessels to 40,000 U.S. dollar per day starting in 2004. Three years, yes. If you look at how outlook for second-quarter, we believe there will be another quarter with high volatility and traditionally you see that there is a strong dip in rates.

But we believe that it is unlikely (indiscernible) due to the, again due to the strong demand for oil reported by IEA. You see that the growth in U.S. is high and you also see the (indiscernible) is extremely high and there are other countries like India which is also increasing their oil consumption quite dramatically. You see that the refinery utilization, some margins are high and there is a strong demand for imported gas line and under a high natural gas prices.

We have seen that there is an increase of one billion barrels per day to U.S. This is equivalent, if you take this one billion and export it from the Middle East, that is equivalent to a utilization of around 33 VLCCs on a yearly basis. The crude oil price is high, and we do not believe that the cut in production will (indiscernible) on these levels. As I mentioned, China is a strong increase and we can see that the dry market is extremely high which is sign that there is big industrial activity in China which also will demand a lot of oil.

What we see in generally also is a lot of the short haul oil like Alaska, like the North Sea, like Venezuela and other countries which is nearby the consumers, have a decreasing production and this is actually them replaced by oil from (indiscernible) which means an increased (indiscernible). The main threat for the market today is (indiscernible) shock, like for example the SARS epidemic a few years back and all the events which is impossible actually to forecast. If we look at the company going forward now, before I start on this one for Q1 we have fixed 83 percent of the VLCC at the rate of 85,000 U.S. dollar.

Sixty-five percent of the Suezmaxes at $62,000, 100 percent of the OBOs at 26,000 U.S. dollar per day. We are focusing on the spot market and we will continue to do that in the future. We are -- we delivered the four BP vessels that we chartered in last year which was very profitable for us. And these were delivered back in December and January, and we are in discussions with BP for renewal of the contract. This contract consisted of all (indiscernible) of time chartered in and the contract of (indiscernible) with BP and we are presently negotiating this contract on the freight with BP.

We have concluded a deal with Shell where we are -- they are (indiscernible) four VLCCs out on market related charter and also going on charter in March, April. As we mentioned earlier we have unwinded the joint venture with OSV (ph). This is not (indiscernible) change in exposure, as I said earlier. In addition to that, we have taken this (indiscernible) charter from Shell. We have taken the commercial and technical management of the (indiscernible) vessels. Three of them are fixed on long-term charter and two of them will be operated in spots. Thank you very much.

Operator, could you open for the question-and-answer session please?

(OPERATOR INSTRUCTIONS). (indiscernible) from Juan (ph) Investments.

A couple questions. Just if you can confirm that the amount of cash ultimately needed at the holding company, i.e after you transfer the 250 down to the charter company, you are still in the range of 50 to 80 million?

That is right. Obviously you understand the point, but I would just like to mention to the other people around that in addition to 47 vessels that are in the Ship Finance Frontline shipping structure there's another 13, 14 vessels that are outside of that structure. And as the gentlemen is pointing here, we do need to have some cash as working capital cash to handle also those 13, 14 vessels. And again yes the amount is still $50 to $100 million.

And it remains the intent of other cash from the bond sale and other operating cash flow out of the charter company and so on, will be dividended out to shareholders, there is no change in that strategy?

That would be the intention. Obviously as I mentioned during the Ship Finance part of the presentation, if we succeed in creating a competitive working capital -- excuse me, corporate capital structure, then we will also be looking at doing acquisitions. And you could easily (indiscernible) let's say, Ship Finance was doing, was buying a large fleet that they could then charter out that fleet to Frontline, which of course would then need to have to put up another entity, which would contain a box, 250 million whatever, depending on the new fleet size. Which by doing it that way we are able to grow both Ship Finance and Frontline. But if we don't come over any projects like that, then the intention is to pay it out to shareholders.

What is the timeframe for making that sort of analysis on those projects, i.e. if you IPO your interest in Ship Finance with those projects? Would the consideration of those projects remain a possibility or would you, are you going to hold cash against that possibility up through the IPO or what is the timeframe for holding such amount of cash against that eventuality?

Obviously over time we are going to see the Frontline and Ship Finance will become more and more independent of each other. But we don't think we're going to have any problem convincing both shareholders in one company but not in the other. Excuse me. What I meant was shareholders who are maybe just a shareholder in one of the companies, that this is a good transaction even for them who are only a participant in part of the deal. So hopefully if you look at the Frontline over last six, seven, eight years you see that we have had a tremendous deal growth. And you can be sure that we are always working on projects to see if that we can continue to grow the company.

But will you be holding -- there's been an assumption that you'd be dividending out the second part of 580 million raise plus any proceeds in the IPO Ship Finance. It sounds as though you may be holding onto more cash for longer. Is it possible to get some clear view on what you intend to do in terms of holding onto cash?

I'm sorry. I don't really think I can say very much than what I already have. And again, I'm CFO and Oscar is CEO, but really it is the board that decides.

Okay. Has the Ship Finance IPO been underwritten yet?

I beg your pardon?

Ha the Ship Finance IPO been underwritten yet?

No, the way that we are doing it right now is that we are actually doing a registration statement without the help of any investment bank and we will simply dividend out shares to shareholders and our understanding is that we will be able to get an approval from the New York Stock Exchange to get listed immediately.

We -- and then the second part is really when you start marketing the company, obviously either we continue to dividend out shares but it's probably also likely that we will be selling shares to help establish a price and establish liquidity in the share. And of course that part should involve investment banks, but the first stage does not involve any investment banks.

Okay. Why have you chosen this route rather than a traditional IPO?

Basically because currently we have lots of institutional investors in Frontline, and our intention was to do what you seem to be thinking would have been the natural thing, that's do an IPO. But they basically came to us and said that they wouldn't like to see that we dividended out the shares, some shares which they would like to have ownership in. So we were actually encouraged by institutional investors in Frontline to look at this alternative by just dividending out shares.

And you have done this this way rather than a preferential allocation or anything like that?

I beg your pardon?

Is there a reason why you wouldn't just do a preferential allocation, an IPO, or something like that?

I think it can partly be -- in the U.S. it is more common maybe to do preferential allocation, but it is -- and especially with the current largest shareholder holding 47 percent, we don't think that would be appropriate to do.

Okay. Just a last question. Have you seen any scrapping or operational obsolescence trends which are also driving your strong outlook on Q2?

Scrapping is more -- it is not that many vessels left to scrap, (indiscernible) vessels from the 70's and we have not seen any increase in scrapping, no.

Okay. Thank you.

(OPERATOR INSTRUCTIONS). Mr. Boudoni (ph) from Deutsche Asset Management.

With respect to this FIN 46, is there any implications for the capital structure of Ship Finance, or is this solely a Frontline Ltd. issue?

You're right, solely a Frontline Ltd. issue.

With respect to the bank financing at the Ship Finance level, the amortization requirements, are they as you envision them when you marketed the transaction?

Yes, we -- what do you say, dead on? Is that the expression you use? It is absolutely at the right level, $95 million the first year, increases slightly.

Okay. That 95 million actually holds for four or five years, is that correct?

Yes, that's right for the first few year. I'm not sure -- I'm sorry, I'm not sure whether it is three or five years, but you're right basically. Basically the changes since we did market the bond is that we -- everything has gone very much according to plan. We have been successful in getting a slightly lower margin than what we envisaged to the investors on the bank facility. And also we have managed to close the 500 million interest rate swaps at 40 basis points lower than what we anticipated at the time. So that is a few million dollars more of free cash flow per year, but that is really all.

Okay, and as you go forward with this and you start to spin off or dividend the shares, how will you be reporting the Ship Finance numbers? Will they still be reported together with Frontline, will you start to break out separately for investors when you have calls and whatnot?

From the next quarter you will see a separate Ship Finance report, and you will also see a separate Ship Finance conference call. The reason we didn't do that today is simply because if you look at Ship Finance balance sheet at year end, it was basically a liability of $580 million, and capitalized fees of $15 (ph) million, and $565 million on escrow. So there was really nothing, as we saw it, no point in bifurcating that part of a company at this stage. But we will do it next time, in three-months time.

That was really a perspective question. Lastly if my memory serves me right, the Ship Finance even though you just took ownership of the vessels in February everything was dated retroactive back to the beginning of the year. Is that correct?

That's absolutely correct. Basically the cash flow has been moving as it should since January 1.

Okay. Thank you very much.

One point there is that as the profit (technical difficulty) from first of February, so the first month of this year, there is (indiscernible) to Ship Finance.

Okay.

(OPERATOR INSTRUCTIONS). Peter Testa (ph) with (indiscernible).

Is it possible to say to the extent to which your view on doing corporate acquisitions in this market are current asset prices, the extent to which you find current asset prices attractive to do deals?

If we're going to do deals at this level we have made it very plain to the market that when you have a strong earnings environment, then obviously asset prices which may be inflated, then we definitely should be issuing shares as part of a transaction. So obviously -- we definitely wouldn't be looking for letting the company borrow money or use its own cash only to do such a transaction.

Okay, but you said at Frontline Ltd. you would be maybe putting up the minimum cash balance, which require (indiscernible) investing capital of Frontline Ltd. in such a transaction.

That's right.

How is that different from what you have described? You say you wouldn't want to be using -- you wouldn't want to be buying at maybe what would be inflated asset prices.

Well, in the model I described it would be Ship Finance that would be buying the vessels, and Ship Finance would then -- Ship Finance would I think, as part of such an acquisition, it would be natural that Ship Finance would also issue shares and not only borrow money and issue bonds, if you understand.

Yes.

So that was basically my idea. Now I am really more thinking aloud, but let's say that we got on speaking terms with a ship owner and obviously the thing to do would be to offer him shares in Ship Finance as part of the sales proceeds that he is to receive.

Right, okay. Can you say to the extent to which there are any opportunities which have been discussed since you've announced the structure at the end of last year?

Again, as I mentioned earlier, anybody who has been looking at Frontline's history over the last eight years will have seen that we've done probably something like 25 different corporate transactions. So you can be sure we are working on it now.

We are very active in analyzing a lot of different (indiscernible) at the moment.

Okay, thank you.

There are no further questions now.

Okay, then we would just like to thank you all for listening in and if you have more questions don't hesitate to contact us here in Oslo either by e-mail or phone. Thank you, and goodbye.