Frontline and Ship Finance International Limited (SFL) have agreed to terminate the long term charter parties for two vessels which have simultaneously been sold.

The vessels, 1998 and 1999-built VLCCs Front Champion and Front Golden Victory, have the highest charter rates of the vessels Frontline has charted-in from SFL.

Frontline will pay $90m to SFL for the early termination of the charters, $11 m on termination later this month, with the remainder payable as 7.5% amortising notes, in line with the current lease obligations. As well as the notes, SFL will receive a total of $43m in cash proceedsfrom the sale and temrination.

The move to sell the vessels was spurred by the cost of getting them through upcoming 15 year special surveys, and the current depressed VLCC market, "there is still a fundamental oversupply in the market and the retirement of older vessels should assist in balancing the market going forward," stated Frontline.

For Frontline's books, obligations under capital leases will be reduced by $105m, leaving approximately $735 million related to 15 VLCCs and five suezmax tankers.

SFL commented, "divesting of older vessels is a part of the company's strategy to renew and diversify the fleet. The majority of our charter revenues are currently sourced from the offshore segment... following this sale, the number of vessels on charter to Frontline will be reduced to 20 vessels, including 15 VLCCs and five suezmax crude oil carriers."