Northern Offshore

"However, Fredriksen was encouraged by his surroundings. The court brokers at Pareto did their utmost to get the world's most decisive shipping man out of his mental moorings and fully into the rig market. At a meeting in Amsterdam on February 9, Fredriksen, Trøim, and brokers from Pareto discussed the entire situation for the group. In a summarizing email the day after, Stein Schie wrote to Fredriksen that he was not where things were happening at the time; "this is the market that is set to boom, and you are not in it." He admitted that Fredriksen had indeed made a couple of hundred million dollars on Northern Offshore, and that the Russian rigs were a steal, but it was too insignificant. Particularly because they missed the opportunity to take over the rig company TODCO. Schie recommended a much more aggressive strategy. Fredriksen should buy into the American giant Pride, as one of the main shareholders, First Reserve, was about to sell out. Once inside, it opened up many opportunities. The other important recommendation was to order four new jack-up rigs in Singapore. Financing was no problem, Schie had seen in a private email that the FELS-yard in Singapore offered full financing to Danish Maersk. Fredriksen should receive the same."

"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."

"Fredriksen has always had a weakness for offshore, whether it's rigs or floating production. At times, it has also gone well, the operation with Northern Offshore yielded one and a half billion in profit, but many sour investors. It is the knack for timing in buying and selling that is again Fredriksen's trademark. Therefore, it should have been a signal to everyone when he bought four old, jack-up Russian rigs in the spring of 2004. The purchase price was a whole billion. Two that were in lay-up were sold on with a nice profit after a short time, the two that had assignments were kept. Later in the year, he took over two small, floating production ships, another of Fredriksen’s favorites. Even for the hard-pressed investors in the fiasco Northern Offshore there were glimmers of hope. Finally, the market started to notice the drill ships again, and thus the fear of bankruptcy was much reduced. The bond loan, which had been trading at a quarter of its face value on the stock exchange, doubled in two months, there was hope of recouping the money for those who hadn't long since dumped shares and bonds in despair. There was life in the dead cat."