RISK FACTORS

        In evaluating participation in the exchange offer, you should carefully consider, along with the other information set forth in or incorporated by reference into this prospectus, the specific factors set forth under "Risk Factors" for risks involved with an investment in the notes.

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RISK FACTORS

         An investment in the notes involves a high degree of risk. You should carefully consider the following risk factors and other information included in this prospectus before investing in the notes.

Risks Related to the Notes

We may not be able to satisfy our obligations to holders of the notes upon a change of control.

        In the event of a change of control, we may be required to offer to purchase all of the outstanding notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest thereon to the date of purchase. It is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of the notes or that restrictions in our other indebtedness may not allow these repurchases. Our failure to purchase notes that we are required to purchase would be a default under the indenture.

The notes are effectively subordinated to our and the subsidiary guarantors' secured indebtedness.

        The notes and the guarantees will be our and the subsidiary guarantors' unsecured obligations and will be effectively subordinated to our and their secured indebtedness to the extent of the value of the collateral securing that debt. We currently have outstanding senior secured indebtedness of $1.058 billion that is secured by the vessels owned by each of our vessel owning subsidiaries. The effect of this subordination is that upon a default in payment on, or the acceleration of, any indebtedness under our credit facilities or other secured indebtedness, or in the event of our or a subsidiary guarantor's bankruptcy, insolvency, liquidation, dissolution, reorganization or similar proceeding, our assets and those of the subsidiary guarantors that secure indebtedness will be available to pay obligations on the notes only after all indebtedness under our expected credit facilities or other secured indebtedness has been paid in full from those assets. We may not have sufficient assets remaining to pay amounts due on any or all of the notes then outstanding. The notes also will be structurally subordinated to all existing and future obligations, including indebtedness, of any of our future subsidiaries that do not guarantee the notes, and the claims of creditors of our subsidiaries that do not guarantee the notes will have priority as to those subsidiaries' assets.

A court may void the guarantees of the notes or subordinate the guarantees to other obligations of the guarantors.

        Although standards may vary depending upon applicable law, a court could void all or a portion of the guarantees of the notes or subordinate the guarantees to other obligations of the guarantors. If the claims of the holders of the notes against any guarantor were voided or held to be subordinated in favor of other creditors of that guarantor, the other creditors would be entitled to be paid in full before any payment could be made on the notes. If one or more of the guarantees is voided or subordinated, we cannot assure you that after providing for all prior claims, there would be sufficient assets remaining to satisfy the claims of the holders of the notes.

In the future, we intend to pay significant cash dividends on our equity.

        If our equity becomes publicly traded, we contemplate making significant cash dividends to our shareholders to the extent permitted by the indenture and the terms of our credit facilities. In that case we will not likely hold any significant cash reserves other than amounts that our board of directors may from time to time deem necessary for the conduct of our business. Our expected credit facilities and the indenture governing the notes will permit us to make significant distributions on our equity.

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You may be unable to sell the notes because there is no public trading market for the notes.

        The exchange notes will constitute a new issue of securities with no established trading market. We cannot assure you as to the liquidity of any trading market that may develop for the exchange notes. We do not intend to apply to list the notes on any national securities exchange, although we do expect that they will be eligible for trading in the PORTAL market. In addition, although the initial purchasers have advised us that they currently intend to make a market in the notes, they are not obligated to do so and may discontinue market-making activities at any time without notice. If an active market does not develop or is not maintained, the market price and liquidity of the exchange notes may be adversely affected. We cannot assure you as to the liquidity of the market for the exchange notes or the prices at which you may be able to sell the exchange notes.

Risks Relating to Our Business

We depend on the Charterer for all of our operating cash flow.

        All of our vessels are chartered to the Charterer under long term time charters, and the Charterer's payments to us are currently our sole source of operating cash flow. The Charterer is a newly formed entity created to charter our fleet and has no business or sources of funds other than those related to the chartering of our fleet to third parties and no assets other than, initially, $250 million in cash provided by Frontline, which serves to support the Charterer's obligations to make charter payments to us under the charters. Neither Frontline nor any of its affiliates guarantees the payment of the charter payments or is obligated to contribute additional capital to the Charterer at any time.

        Although there are restrictions on the Charterer's rights to use its cash to pay dividends or make other distributions if its cash reserves are below the specified minimum reserve requirement, the Charterer is permitted to use its cash reserves to pay charter payments to us and for reasonable working capital purposes. Accordingly, at any given time in the future, its cash reserves may be diminished or exhausted, and we cannot assure you that the Charterer will be able to make charter payments to us. If the Charterer is unable to make charter payments to us, our results of operations and financial condition will be materially adversely affected.

The Charterer's ability to pay charterhire to us could be materially and adversely affected by volatility in the tanker markets.

        The Charterer subcharters our vessels to end users under long term time charters, on the spot charter market, or under contracts of affreightment under which our vessels carry an agreed upon quantity of cargo over a specified route and time period. As a result, it is directly exposed to the risk of volatility in tanker charter rates. Tanker charter rates have historically fluctuated significantly based upon many factors, including:

•

global and regional economic and political conditions;



•

changes in production of crude oil, particularly by OPEC and other key producers;



•

developments in international trade;



•

changes in seaborne and other transportation patterns, including changes in the distances that cargoes are transported;



•

environmental concerns and regulations;



•

weather; and



•

competition from alternative sources of energy.

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        Tanker charter rates also tend to be subject to seasonal variations, with demand (and rates) normally higher in winter months.

        The Charterer's successful operation of our vessels in the tanker charter market will depend on, among other things, its ability to obtain profitable tanker charters. We cannot assure you that future tanker charters will be available to the Charterer at rates sufficient to enable the Charterer to meet its obligations to pay charterhire to us.

We are a wholly owned subsidiary of Frontline and depend on officers and directors of Frontline for our management, which may create conflicts of interest.

        We are a wholly owned subsidiary of Frontline. For so long as Frontline owns at least a majority of our outstanding common shares, it will generally be able to control the outcome of any shareholder vote, including the election of directors. We do not have any employees or officers who are not employees or officers of Frontline. Although we do have one independent director, all of our other directors are directors or executive officers of Frontline. These directors owe fiduciary duties to the shareholders of each company and may have conflicts of interest in matters involving or affecting us and Frontline, including matters arising under our agreements with Frontline and its affiliates. In addition, due to their ownership of Frontline common shares, some of these individuals may have conflicts of interest when faced with decisions that could have different implications for Frontline than they do for us. We cannot assure you that any of these conflicts of interest will be resolved in our favor.

The agreements between us and Frontline and its other affiliates may be less favorable than agreements that we could obtain from unaffiliated third parties.

        The charters, the management agreements, the charter ancillary agreement and the other contractual agreements we have with Frontline and its other affiliates were made in the context of an affiliated relationship and were negotiated in the overall context of the private offering of the notes to the initial purchasers and other related transactions. Because we are a wholly owned subsidiary of Frontline, the negotiation of these agreements may have resulted in prices and other terms that are less favorable to us than terms we might have obtained in arm's length negotiations with unaffiliated third parties for similar services.

Frontline's other business activities may create conflicts of interest with Frontline.

        While Frontline has agreed to cause the Charterer to use its commercial best efforts to employ our vessels on market terms and not to give preferential treatment in the marketing of any other vessels owned or managed by Frontline or its other affiliates, it is possible that conflicts of interests in this regard will adversely affect us. Under our charter ancillary agreement with the Charterer and Frontline, we are entitled to receive annual profit sharing payments to the extent that the average TCE rates realized by the Charterer exceed specified levels. Because Frontline also owns or manages other vessels in addition to our fleet, which are not included in the profit sharing calculation, conflicts of interest may arise between us and Frontline in the allocation of chartering opportunities that could limit our fleet's earnings and reduce our profit sharing payments or charter payments under our charters.

Holders of notes must rely on us to enforce our rights against our contract counterparties.

        Holders of exchange notes will have no direct right to enforce the obligations of the Charterer, Frontline Management or Frontline under the charters and related agreements, the Frontline performance guarantee or the management agreements with Frontline Management. Accordingly, if any of those counterparties were to breach their obligations to us under any of these agreements, holders of notes would have to rely on us to pursue our remedies against those counterparties. Under the

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indenture, some breaches of these agreements by the counterparties will constitute an event of default under the notes only prior to our completing a successful public listing, after which they will not be an event of default. A distribution by Frontline to its shareholders of 40% of our shares and a listing of our shares with the New York Stock Exchange would constitute a successful public listing for this purpose.

If our charters or management agreements terminate, we could be exposed to increased volatility in our business and financial results.

        If any of our charters terminate, it is unlikely that we would be able to re-charter these vessels on a long term basis with terms similar to the terms of our charters with the Charterer. While the terms of our current charters end between 2014 and 2025, the Charterer has the option to terminate the charters of our non double hull vessels in 2010. One or more of the charters with respect to our vessels may also terminate in the event of a requisition for title or a loss of a vessel. We may acquire additional vessels in the future and we cannot assure you that we will be able to enter into similar charters with the Charterer or with a third party charterer. In addition, under our vessel management agreements with Frontline Management, for a fixed management fee Frontline Management is responsible for all of the technical and operational management of our vessels, and will indemnify us against certain losses of hire and various other liabilities relating to the operation of the vessels. Our current management agreements with Frontline Management may be terminated if the relevant charter is terminated. If our management agreements with Frontline Management were to terminate or we were to acquire additional vessels in the future, we do not believe we could obtain similar fixed rate terms from an independent third party.

        With respect to any vessels we acquire that are not subject to the charter and management agreements with the Charterer and Frontline Management, we will be directly exposed to all of the operational and other risks associated with operating our vessels as described in these risk factors. As a result, our future cash flow could be more volatile and we could be exposed to increases in our vessel operating expenses, each of which could materially and adversely affect our results of operations and business and our ability to meet the debt service obligations on our senior secured indebtedness and the notes.

An increase in interest rates could materially and adversely affect our financial performance.

        We have outstanding approximately $1.058 billion in floating rate debt under a senior secured credit facility as of the date of this prospectus. Although we use interest rate swaps to manage our interest rate exposure from a portion of our floating rate debt, if interest rates rise, interest payments on our floating rate debt that we have not swapped into effectively fixed rates would increase. As of March 22, 2004 we have entered into interest rate swaps to fix the interest on $500.0 million of our outstanding indebtedness. Any such increase could materially and adversely affect our results of operations and our ability to make payments on the notes.

Because we are a newly formed company with no separate operating history, our historical financial and operating data will not be representative of our future results.

        We are a newly formed company with no separate operating history. The predecessor combined carve-out financial statements included in this prospectus have been prepared on a carve-out basis and reflect the historical business activities of Frontline relating to our vessel owning subsidiaries. These predecessor financial statements do not reflect the results we would have obtained under our current fixed rate long term charters and management agreements and therefore are not a meaningful representation of our future results of operations.

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We are highly leveraged and subject to restrictions in our financing agreements that impose constraints on our operating and financing flexibility.

        We have significant indebtedness outstanding and have significant principal amortization requirements during the term of the notes. We may need to refinance some or all of our indebtedness on maturity but we cannot assure you we will be able to do so. We may incur additional debt following this offering subject to limitations under our credit facilities and the indenture. These limitations include:

•

limitations on our incurrence of additional indebtedness, including our issuance of additional guarantees;



•

limitations on our incurrence of liens; and



•

limitations on our ability to pay dividends.

        For more detailed descriptions of these limitations, please see "Description of the Exchange Notes—Certain Covenants" and "Description of Other Indebtedness".

        Our debt service obligations require us to dedicate a substantial portion of our cash flow from operations to required payments on indebtedness and could limit our ability to obtain additional financing in the future for capital expenditures, acquisitions, and other general corporate activities. It also may limit our flexibility in planning for, or reacting to, changes in our business and the shipping industry or detract from our ability to successfully withstand a downturn in our business or the economy generally and place us at a competitive disadvantage against other less leveraged competitors.

An acceleration of the current prohibition to trade deadlines for our non-double hull tankers could adversely affect our operations.

        Our tanker fleet includes 18 non-double hull tankers. The United States, the European Union and the International Maritime Organization, or the IMO, have all imposed limits or prohibitions on the use of these types of tankers in specified markets after certain target dates, which range from 2010 to 2015. The sinking of the single hull m.t. Prestige offshore Spain in November 2002 has led to proposals by the European Union and the IMO to accelerate the prohibition to trade of all non-double hull tankers, with certain limited exceptions. In December 2003, the Marine Environmental Protection Committee of the IMO adopted a proposed amendment to the International Convention for the Prevention of Pollution from Ships to accelerate the phase out of single hull tankers from 2015 to 2010 unless the relevant flag states extend the date to 2015. This proposed amendment will take effect in April 2005 unless objected to by a sufficient number of states. We do not know whether any of our vessels will be subject to this accelerated phase-out, but this change could result in a number of our vessels being unable to trade in many markets after 2010. Moreover, the IMO may still adopt regulations in the future that could adversely affect the useful lives of our non-double hull tankers as well as our ability to generate income from them.

Compliance with safety, environmental and other governmental and other requirements may adversely affect our business.

        The shipping industry is affected by numerous regulations in the form of international conventions, national, state and local laws and national and international regulations in force in the jurisdictions in which such tankers operate, as well as in the country or countries in which such tankers are registered. These regulations include the U.S. Oil Pollution Act of 1990, or OPA, the International Convention on Civil Liability for Oil Pollution Damage of 1969, International Convention for the Prevention of Pollution from Ships, the IMO International Convention for the Safety of Life at Sea of 1974, or SOLAS, the International Convention on Load Lines of 1966 and the U.S. Marine Transportation Security Act of 2002. In addition, vessel classification societies also impose significant safety and other

27

requirements on our vessels. We believe our tankers are maintained in good condition in compliance with present regulatory and class requirements relevant to areas in which they operate, and are operated in compliance with applicable safety/environmental laws and regulations.

        However, regulation of tankers, particularly in the areas of safety and environmental impact may change in the future and require significant capital expenditures be incurred on our vessels to keep them in compliance.

We may incur losses when we sell vessels, which may adversely affect our earnings.

        The market value of our vessels will change depending on a number of factors, including general economic and market conditions affecting the shipping industry, competition, cost of vessel construction, governmental or other regulations, prevailing levels of charter rates, and technological changes. During the period a vessel is subject to a charter with the Charterer, we will not be permitted to sell it to take advantage of increases in vessel values without the Charterer's agreement. On the other hand, if the Charterer were to default under the charters due to adverse conditions in the tanker market, causing a termination of the charters, it is likely that the fair market value of vessels would be depressed in such market conditions. If we were to sell a vessel at a time when vessel prices have fallen, we could incur a loss and a reduction in earnings.

Our business has inherent operational risks, which may not be adequately covered by insurance.

        Our tankers and their cargoes are at risk of being damaged or lost because of events such as marine disasters, bad weather, mechanical failures, human error, war, terrorism, piracy and other circumstances or events. In addition, transporting crude oil across a wide variety of international jurisdictions creates a risk of business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts, the potential for changes in tax rates or policies, and the potential for government expropriation of our vessels. Any of these events may result in loss of revenues, increased costs and decreased cash flows to the Charterer, which could impair its ability to make payments to us under our charters.

        In the event of a casualty to a vessel or other catastrophic event, we will rely on our insurance to pay the insured value of the vessel or the damages incurred. Under the management agreements, Frontline Management is responsible for procuring insurance for our fleet against those risks that we believe the shipping industry commonly insures against. These insurances include marine hull and machinery insurance, protection and indemnity insurance, which includes pollution risks and crew insurances and war risk insurance. Currently, the amount of coverage for liability for pollution, spillage and leakage available to us on commercially reasonable terms through protection and indemnity associations and providers of excess coverage is $1 billion per vessel per occurrence. We cannot assure you that we will be adequately insured against all risks. Frontline Management may not be able to obtain adequate insurance coverage at reasonable rates for our fleet in the future. Additionally, our insurers may refuse to pay particular claims. Any significant loss or liability for which we are not insured could have a material adverse effect on our financial condition.

Maritime claimants could arrest our tankers, which could interrupt the Charterer's or our cash flow.

        Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt the Charterer's or our cash flow and require us to pay a significant amount of money to have the arrest lifted. In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel,

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which is any vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one vessel in our fleet for claims relating to another vessel in our fleet.

As our fleet ages, the risks associated with older tankers could adversely affect our operations.

        In general, the costs to maintain a tanker in good operating condition increase as the tanker ages. Due to improvements in engine technology, older tankers typically are less fuel-efficient than more recently constructed tankers. Cargo insurance rates increase with the age of a tanker, making older tankers less desirable to charterers.

        Governmental regulations, safety or other equipment standards related to the age of tankers may require expenditures for alterations or the addition of new equipment to our tankers to comply with safety or environmental laws or regulations that may be enacted in the future. These laws or regulations may also restrict the type of activities in which our tanker may engage or the geographic regions in which they may operate. We cannot predict what alterations or modifications our vessels may be required to undergo in the future or that as our tankers age, market conditions will justify any required expenditures or enable us to operate our tankers profitably during the remainder of their useful lives.

There may be risks associated with the purchase and operation of secondhand tankers.

        Our current business strategy includes additional growth through the acquisition of secondhand tankers. Although we will inspect secondhand tankers prior to purchase, this does not normally provide us with the same knowledge about their condition that we would have had if such tankers had been built for and operated exclusively by us. Therefore, our future operating results could be negatively affected if some of the tankers do not perform as we expect. Also, we do not receive the benefit of warranties from the builders if the tankers we buy are older than one year.

If Frontline were to become insolvent, a bankruptcy court could pool our or the Charterer's assets and liabilities with those of Frontline under the equitable doctrine of substantive consolidation.

        Under United States bankruptcy law, the equitable doctrine of substantive consolidation can permit a bankruptcy court to disregard the separateness of related entities and to consolidate and pool the entities' assets and liabilities and treat them as though held and incurred by one entity where the interrelationship among the entities warrants such consolidation. Substantive consolidation is an equitable remedy in bankruptcy that results in the pooling of assets and liabilities of a debtor with one or more of its debtor affiliates or, in rare circumstances, non-debtor affiliates, for the purposes of administering claims and assets of creditors as part of the bankruptcy case, including treatment under a reorganization plan.

        Not all jurisdictions that could potentially have jurisdiction over an insolvency or bankruptcy case involving Frontline, us, and/or any of our respective affiliates recognize the substantive consolidation doctrine. For example, we have been advised by our Bermuda counsel that Bermuda does not recognize this doctrine. However, if Frontline or its creditors were to assert claims of substantive consolidation or related theories in a Frontline bankruptcy proceeding in a jurisdiction that recognizes the doctrine of substantive consolidation, such as the United States, the bankruptcy court could make our assets or the Charterer's assets available to satisfy Frontline obligations to its creditors. This could have a material adverse effect on us and on our ability to make payments on the notes.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy our financial and other obligations.

        We are a holding company, and have no significant assets other than the equity interests in our subsidiaries. Our subsidiaries own all of our vessels, and payments under our charter agreements with

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the Charterer will be made to our subsidiaries. As a result, our ability to make required payments on the notes depends on the performance of our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, we will not be able to pay interest or principal on the notes when due, or to redeem the notes upon a change of control, unless we obtain funds from other sources. We cannot assure you that we will be able to obtain the necessary funds from other sources.

Risks relating to the exchange offer

        If you do not exchange your outstanding notes for exchange notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes described in the offering circular distributed in connection with the private offering of the outstanding notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act of 1933 and applicable state securities laws. Except as required by the registration rights agreement that we entered into with Jefferies & Company, Inc. and Citigroup Global Markets Inc., to whom we refer as the initial purchasers in this prospectus, we do not intend to register resales of the outstanding notes under the Securities Act of 1933. You should refer to the section of this prospectus entitled "The Exchange Offer" for information about how to tender your outstanding notes. The tender of outstanding notes pursuant to the exchange offer will reduce the outstanding principal amount of the outstanding notes, which may have an adverse effect on, and increase the volatility of, the market price of the outstanding notes due to a reduction in liquidity.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

        The unaudited pro forma statement of operations and balance sheet for the year ended December 31, 2003 gives effect to the following events as if they had occurred on and from January 1, 2003.

•

Our purchase from Frontline of our subsidiaries that own a fleet of 46 crude oil tankers and an option to acquire the vessel Oscilla , which assumes: The exercise of our option to acquire the vessel Oscilla , the exchange of Frontline's interests in six associated companies for three wholly owned companies, each owning a VLCC, and a deemed equity contribution from Frontline of $525 million, establishment of an opening cash balance of $5 million and forgiveness of certain historical intercompany balances.



•

The charter by us of the fleet to the Charterer under long term fixed rate charters.



•

Our entry into the charter ancillary agreement with the Charterer.



•

Our entry into the vessel management agreements and the administrative services agreement with Frontline Management.



•

The refinancing of our subsidiaries' existing senior secured indebtedness.

        The unaudited pro forma financial information is provided for illustrative purposes only and does not represent what our statements of operations or balance sheet would actually have been if the transactions had in fact occurred on those dates and is not representative of our results of operations for any future periods. Investors are cautioned not to place undue reliance on this unaudited pro forma financial information.

        The footnotes to the pro forma financial information contain a more detailed discussion of how adjustments to reflect the events described above are presented. The unaudited pro forma statements of operations should be read in conjunction with our predecessor combined carve-out financial statements and the related notes and other financial information included elsewhere in this offering circular. The historical statement of operations and the historical balance sheet as of and for year ended December 31, 2003 are derived from the stand alone statement of operations and stand alone balance sheet included elsewhere in this registration statement.

        All of the 47 vessels we have purchased from Frontline are currently under voyage, bareboat or time charter to third parties. The majority of existing charter arrangements will expire prior to March 31, 2004 and the remainder will expire on or before December 31, 2008. We also acquired from Frontline an option to purchase one additional VLCC tanker, which we expect to exercise before the end of 2004.

        The cash flow obligations from our charters with the Charterer became effective as of January 1, 2004, however, we have not reflected any change in the status of the current charter arrangements with third parties for those that expire after March 31, 2004 in either the pro forma statement of operations or the pro forma combined balance sheet. We have determined that we would account for 34 of the long term charters to the Charterer as sales type leases under U.S. GAAP. The remaining 13 vessels will initially be accounted for as chartered under operating leases. We refer you to footnote A to the unaudited pro forma statements of operations for further information regarding the lease classification of our charters. Classification of charters as sales type leases or as operating leases is determined with reference to, among other things, assumptions about useful lives, fair values and scrap values of our vessels. The lease classification of our charters for the purposes of preparing this unaudited pro forma financial information is based on assumptions which reflect our current estimates and reasonably available information. These estimates and available information may change between now and the date of inception of each charter and may cause us to classify our charters differently than the classification we have applied in preparing this unaudited pro forma financial information.

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        The following table summarizes our key assumptions about fair values, useful lives and scrap values which we used in classifying our charters as operating leases or sales type leases. Fair values of vessels are generally estimated using the average of three independent broker valuations (which assume a sale between a willing buyer and a willing seller under no compulsion to sell).

Notes to Adjustments to Unaudited Pro Forma Statements of Operations

        A.    We have chartered all of the 47 vessels we acquired from Frontline to the Charterer under long term charters. All of these vessels are currently under charter to third parties. We refer you to the introduction to this section and to "Business—Our Fleet" in this registration statement for key information regarding the vessels that we acquired and chartered to the Charterer.

        Thirty four of these vessels will complete their current voyage or time charter prior to March 31, 2004 and are assumed to be free and available as of January 1, 2003 for the purposes of this unaudited pro forma financial information. Charters of these vessels have been accounted for as sales type leases and our net investment in the lease is recorded at the inception of the lease. For sales type leases, we will remove the depreciated cost of the associated vessel from our balance sheet and record a net investment in sales type leases. The net investment in a sales type lease is calculated as the sum of the net present values of the minimum lease cash flows, calculated at the inception of the lease. In the unaudited pro forma financial information we have recorded the difference between the depreciated

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cost of the vessel and the initial net investment in a sales type lease as a gain or loss recorded in the determination of invested equity at the date of inception of the lease.

        Lease cash flows from sales type leases, net of executory costs, are allocated between sales type lease income and a reduction in the balance of the net investment in a manner that results in a constant periodic return based on the reducing balance of the net investment. Management fees payable in respect of vessels with charters classified as sales type leases will be classified as executory costs, and, as such will be recorded as a component of sales type lease cash flows.

        For the purposes of this unaudited pro forma financial information the remaining 13 vessels will be classified as initially chartered under operating leases in accordance with U.S. GAAP. These 13 vessels are currently on charters that end after March 31, 2004 and are therefore assumed by us to be not free and available as of January 1, 2003. When existing charters expire and our new charters to the Charterer take effect for accounting purposes, we will evaluate whether they should be classified as sales type or operating leases.

        Lease cash flows from operating leases are recorded wholly as revenues. Management fees payable in respect of vessels with charters classified as operating leases will be recorded as ship operating expenses. For these vessels, pro forma charter revenues reflect the rates due under existing charter arrangements. These charters will be accounted for as operating leases until the expiration of the existing charters.

        As the economic effect of the new charters to the Charterer took effect January 1, 2004, we will pay to or receive from the Charterer the difference between the new charter rates and the underlying charter rates until vessels complete their current charter arrangements.

        Current charter arrangements for the 12 vessels on charters expiring after March 31, 2004 expire as follows:

        The pro forma adjustments for the year ended December 31, 2003 are calculated as follows:

        Assuming we entered into the sales type leases as of January 1, 2003, we estimate that we would have recognized a gain of $82.2 million in the determination of our deemed equity.

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        In addition to the charters to the Charterer which are given effect in this unaudited pro forma financial information, we entered enter into a profit sharing agreement with the Charterer. Under the terms of this agreement, beginning with the final 11-month period in 2004 and for each calendar year thereafter, the Charterer has agreed to pay us a profit sharing payment equal to 20% of the charter revenues for the applicable period, calculated and paid annually in arrears on a TCE basis, realized by the Charterer for our fleet in excess of a weighted average rate of $25,575 per day for each VLCC and $21,100 per day for each Suexmax tanker. We have assumed that there would be no profit sharing payments made to us and no adjustment has been made to this pro forma financial information to reflect any effect of this arrangement.

        B.    This adjustment is to recognize ship operating expenses for the 47 vessels we acquired and to reflect the $6,500 per day per vessel that we will pay under the vessel management agreements. These management fee payments will be recorded as ship operating expenses for the 13 charters accounted for as operating leases. Management fees will be recorded as executory costs for the 34 charters accounted for as sales type leases and as such will be recorded, with the charter payments, as a component of sales type lease cash flows.

        C.    This adjustment is to recognize the depreciation charge relating to the 13 vessels accounted for as chartered under operating leases and to adjust depreciation to reflect the acquisition of Oscilla from January 1, 2003.

        D.    This adjustment is to recognize administrative expenses of $20,000 per year payable by us and each of our subsidiaries under the administrative services agreement. No adjustment has been made to the amount of third party expenses of the Company which comprise out of pocket expenses incurred on behalf of the service recipients, including legal fees, independent auditors, printers, mailing costs, depositories, transfer agents, insurance, proxy solicitors, filing fees, self-regulatory agencies, listing fees, stock exchange maintenance fees, directors' fees as set by the relevant service recipient, and similar fees and expenses. These costs are not covered by the administrative services agreement and will be borne by the Company.

        E.    We refinanced the senior secured indebtedness of our subsidiaries at the time that we acquired them from Frontline with the proceeds of a new senior secured credit facility. This new credit facility has an original principal balance of $1,058 million and is repayable over six years. This adjustment is to recognize the change in interest expense that we would have incurred if our refinancing had taken place as of January 1, 2003. We assumed repayments of $93.7 million in 2003 based on the repayment profile of the new credit facility. The pro forma adjustments for the year ended December 31, 2003 are calculated as follows:

        Interest on the new credit facility is payable at an interest rate based on LIBOR plus a margin of 1.25%. We estimated interest payable on the new credit facility using an average LIBOR rates of 1.235% the year ended December 31, 2003. These rates are based on an average of three month LIBOR over the applicable period. An increase or decrease in assumed interest rates of 0.125% would increase or decrease estimated interest expense $1.3 million in the year ended December 31, 2003 respectively.

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        Under our new credit facility we are required to enter into new interest rate swap agreements to effectively fix the interest rate payable on at least $500 million of our new credit facility for five years. We have not made any adjustments to this unaudited pro forma combined financial information to reflect the estimated effect of our new interest rate swap agreements. We estimate that had we entered into new interest rate swap agreements on or around January 1, 2003 we would have effectively fixed the interest rate payable at 3.34%, which was the five year swap rate at January 1, 2003, on the amount so fixed. The estimated effect of effectively fixing our interest rate at 3.34% on $500 million principal amount of debt would be to record additional interest expense of $4.3 million for the year ended December 31, 2003. We have not estimated the effect of changes in market values of interest rate swap contracts in this unaudited pro forma combined financial information.

        F.     This adjustment is to reflect the interest expense on the notes at an interest rate of 8.5% per year. Interest on the notes is estimated to be $49.3 million in the year ended December 31, 2003.

        G.    This adjustment represents the estimated adjustment of amortization of deferred charges and financing fees resulting from our refinancing. The pro forma adjustments for the year ended December 31, 2003 are calculated as follows:

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Notes to Adjustments to Unaudited Pro Forma Combined Balance Sheet

        A.    These adjustments reflect the effect of our purchase from Frontline of our subsidiaries that own a fleet of 47 crude oil tankers, which assumes: The exercise of Frontline's option to acquire the vessel Oscilla , the exchange of Frontline's interests in six associated companies for three wholly owned companies, each owning a VLCC, and a deemed equity contribution from Frontline of $525 million. We paid Frontline $950 million to acquire our subsidiaries. The subsidiaries assets and liabilities (adjusted for the pro forma exercise of Frontline's option to acquire the Oscilla) consist of $25.5 million of cash balances, $2,098.0 million of vessels at book value, $4.5 million of deferred charges, $2.9 million of current liabilities and $1,028.6 million of secured debt and related interest rate swap derivatives.

        The pro forma adjustments to cash and cash equivalents for the year ended December 31, 2003 is calculated as follows:

        B.    These adjustments reflect the drawdown of our new senior secured credit facility and payment of estimated finance fees on this facility.

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        C.    These adjustments reflect the effect of the repayment of our subsidiaries' existing senior secured indebtedness. In addition they reflect the estimated adjustment to deferred charges and financing fees resulting from the repayment of that existing indebtedness.

        D.    These adjustments reflect the effect of a deemed dividend payable by us to Frontline out of the surplus cash remaining after our acquisition of the fleet from Frontline, our refinancing of the existing senior secured indebtedness of our subsidiaries and the establishment of an opening cash balance of $5.0 million.

        E.    These adjustments reflect our entry into the charters with the Charterer. For the 13 vessels with charters that are classified as operating leases (we refer you to footnote A to the adjustments to the unaudited pro forma statements of operations above) there is no change in the classification of the vessels. For the remaining 34 vessels, the charters will be accounted for as sales type leases and the net investment in sales type leases will be recorded at the inception of the leases. For those 31 vessels the book value of the vessels is eliminated on the sale of the vessels and the charter is recognized by recording the net investment in the sales type lease. The difference between the sales price and the net investment is recorded as invested equity. The pro forma effect on invested equity of entering into these sales type leases as of December 31, 2003 would be to recognize a gain of $82.2 million.

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