Fredriksen venture to fund acquisition of six LNG tankers

Shipping magnate John Fredriksen is Norway's richest man, his tanker company Frontline is the world's biggest, and now his week-old gas transport venture Golar LNG has already dwarfed all competitors. Golar LNG raised $ 280 mm in a private placement to fund the acquisition of six highly-prized LNG tankers from another Fredriksen company Osprey Maritime.
But the acquisitions are not yet over, said Tor Olav Troim, Fredriksen's right-hand-man both at Frontline and Golar. Troim told the money raised would also go towards a down-payment on two more LNG tankers to be built at both Daewoo and Hyundai in South Korea, and possibly more at other yards.
Troim said Golar held options to have four more LNG tankers constructed but had yet to decide which of those it would take up. "We're working on it right now," he said. Shipping sources said that alongside Hyundai and Daewoo, the Samsung yard was also in the picture. Through Frontline, Fredriksen has demonstrated a staggering knack for expansion, primarily through the 1997 acquisition of Swedish tanker owner ICB, then through last year's acquisition of the debt-laden London-based Golden Ocean.

Sources said that a presentation on the Golar LNG road show, under the title "management experience", showed Frontline's market capitalisation soaring from $ 50 mm in 1997 to $ 1.8 bn this year.
With 19 % market share, Frontline dominates the mm-barrel crude tanker sector, which plies the oil trades out of West Africa and the Mediterranean. And with more than 32 mm-barrel Very Large Crude Carriers, or 7.5 % market share, Frontline dominates oil trades from the Arabian Gulf.

LNG is a very different sector from crude tankers, with most ships tied in to long-term contracts, no spot market and very few ships controlled by independent operators. Only two independents compete with Golar: Exmar, the LNG division of the Belgian CMB group, with three ships on order and options for four more, and Bergesen with two on order and an option for one more.
With six in hand and two in the pipeline, Golar has already taken the lead. Merger rumours are rife. The six LNG ships that Fredriksen already owns were acquired earlier this year, when he bought out the UK's Barclay Brothers and Indonesia's Suharto family to take control of Osprey Maritime, which was de-listed from the Singapore Stock Exchange. Golar plans to list the company in Oslo next month and in New York in the fourth quarter of 2001.

Following several decades of mixed fortunes, the LNG industry is now hitting a growth explosion with some 90 mm tpy arriving in nine importing countries. Tankers are in short supply and owners have this year forced charter rates to double those at the start of last year.