Deal With Myself for Maximum Leverage

"It is not necessary to own everything to control everything. Fredriksen is not the first to discover this, but rarely has anyone known to use it to such an extent. Since Fredriksen raided Swedish Frontline back in 1996, he has made countless transactions with himself on both sides of the table. It started with the sale of large parts of the private fleet to Frontline in exchange for shares, which gave Fredriksen complete control of the company, and has been a steady stream since."

"In addition to buying and selling ships, construction contracts, options, and loans from himself, there are many lesser touchpoints between Fredriksen and the stock companies he controls. Frontline leases services to the other listed companies and to Fredriksen's private enterprises, and all of them rent premises at Aker Brygge. By Fredriksen privately. No one asks about anything."

"The issue does not only concern Frontline, it is the same for all the companies in the Fredriksen group. Deals are constantly made where Fredriksen is actually dealing with himself; whether it's buying or selling, construction contracts, options, or freight agreements. And there are not always clear rules like in the case of Frontline. While Northern Offshore was listed on the stock market, John Fredriksen had other offshore interests privately. "Negotiations" to sell them to Northern Offshore did not succeed."

"John Fredriksen bought his first Frontline shares in the open market and paid with money. No one can criticize that. But the operations that followed had all the hallmarks of being a business within a business: Through Frontline, the shipowner had a golden opportunity to sell ships to himself and let others pay for it. Sven H. Salen had barely left the door before John Fredriksen made his first gigantic deal with himself. Within a few weeks in August, six oil tankers were sold from Fredriksen privately to Frontline for 357 million dollars, about 2.2 billion kroner. The transaction was made by Frontline taking over the ships with 208 million dollars in debt and giving Fredriksen 44 million Frontline shares as part of the purchase. This brought his ownership up to 64 percent of the shipping company. Admittedly, the matter was processed in the board and at the general meeting, but in practice, no one could oppose him – least of all the employees in Stockholm who now depended on the shipowner’s mercy."