FRONTLINE/SCOTIA SHARE SWAP BENEFITS

By Urs M. Dür

On September 24th, Frontline (NYSE: FRO) established an “equity swap line” with The Bank of Nova Scotia (Scotia) for the bank to acquire up to 3.5m of Frontline shares over the next twelve months. The programme is structured so that Scotia can ‘put’ the shares to FRO ‘at cost’ over the 12 month period. Scotia will also receive compensation for carrying the shares plus a margin equaling 4% of the transaction. Frontline can also ‘call’ the shares from Scotia ‘at cost’ at any time. We expect Scotia is under some mandate to buy the shares somewhat swiftly.

Under the programme, the shares purchased by the bank will be owned by the bank and will not be subject to immediate cancellation as if they were bought directly by FRO. This programme is considered part of the 7.5m FRO board-approved share buy-back programme (about 10% of the shares outstanding) which has been going on for some time.

This is only an excerpt of FRONTLINE/SCOTIA SHARE SWAP BENEFITS

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.