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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number 333-26227
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-392-7016
_______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Frontline Ltd., Mercury House,
101 Front Street, Hamilton, Bermuda
(Address of principal executive offices)
(441) 295-6935
(Registrant's telephone number, including area code)
Title of each class Name of each exchange
on which registered
Securities registered or to be registered pursuant to section
12(g) of the Act.
__________________________________________________
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_____ No _______
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
[ ]
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was sold, or the average bid and
asked price of such common equity, as of a specified date within
the past 60 days.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
DOCUMENTS INCORPORATED BY REFERENCE: None
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1. Business..........................................1
Item 2. Properties........................................1
Item 3. Legal Proceedings.................................1
Item 4. Submission of Matters to a Vote of
Security Holders .................................2
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters...................2
Item 6. Selected Financial Data...........................2
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................2
Item 7(a) Quantitative and Qualitative
disclosures about Market Risk.....................2
Item 8. Financial Statements and Supplementary
Data..............................................3
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure........................................8
PART III
Item 10. Directors and Officers of the
Registrant........................................8
Item 11. Executive Compensation............................9
Item 12. Security Ownership of Certain
Beneficial Owners and Management..................9
Item 13. Certain Relationships and Related
Transactions......................................9
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K..........................10
PART I
ITEM 1. BUSINESS
Golden State Petroleum Transport Corporation (the "Company") was
incorporated under the laws of the State of Delaware on December
5, 1996. The Company is a special purpose corporation that has
been organized solely for the purpose of issuing certain mortgage
notes as agent for two affiliated entities, Golden State Petro
(IOM I-A) PLC and Golden State Petro (IOM I-B) PLC (together, the
"Owners"). The mortgage notes were issued on December 24, 1996
and January 6, 1997 and proceeds therefrom were used by the
Owners to finance the construction and acquisition of two very
large crude carriers ("VLCCs" or the "Vessels") for charter to an
unaffiliated third party (the "Initial Charterer"). The mortgage
notes are not obligations of, and are not guaranteed by, the
Company.
Golden State Holdings I, Limited ("GSH"), an Isle of Man company,
is the owner of all of the issued and outstanding shares of the
Company and the Owners. On May 12, 1998, all of the issued and
outstanding shares of GSH (as well as all of the issued and
outstanding shares of certain other companies) were sold by
Cambridge Petroleum Transport Corporation, a Cayman Islands
company ("CPTC") to Independent Tankers Corporation, a Cayman
Islands company ("ITC"). On the same date, all of the issued and
outstanding shares of ITC were sold to Frontline Ltd.
("Frontline"), a publicly listed Bermuda company.
Pursuant to a share purchase agreement dated December 23, 1998,
as amended on March 4, 1999, (the "Share Purchase Agreement"),
Frontline has sold, effective as of July 1, 1998, all of the
issued and outstanding shares of ITC to Hemen Holding Limited, a
Cyprus company ("Hemen"). Hemen is the principal shareholder of
Frontline and is indirectly controlled by Mr. John Fredriksen.
Hemen paid Frontline the same consideration as Frontline paid the
Initial Sellers for all of the issued and outstanding shares of
ITC. Hemen has given Frontline a 5-year call option to buy back
the shares of ITC, and as security for its obligations pursuant
to the option agreement, Hemen has pledged the shares to
Frontline. Frontline and Hemen have no agreement in respect of
the directors of ITC and it is expected that the present
directors will remain in their current positions.
In connection with the sale of the stock of GSH, Frontline or its
designee assumed management responsibilities for the Owners and
the Company.
F-1
CHARTERS
Since the date of its delivery, each of the Vessels (see
"Properties") has been chartered to the Initial Charterer
pursuant to a charter dated as of December 24, 1996 which expires
on the 18th anniversary of the delivery date of the related
Vessel. The Initial Charterer has the right to terminate either
charter on any five optional termination dates which, for each
Vessel, begins on the 8th anniversary of the delivery date and
occurs again on each of the four subsequent two-year
anniversaries thereof.
ITEM 2. PROPERTIES
The Company has no properties. On December 7, 1998, Golden State
Petro (IOM I-A) PLC took delivery of a VLCC, the Frank A. Shrontz
and on March 15, 1999, Golden State Petro (IOM I-B) PLC took
delivery of a VLCC, the J. Bennett Johnson. Both of the Vessels
acquired by the Owners are double-hull tankers, each of
approximately 308,500 deadweight tonnes.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and no such proceedings are known to be contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) There is no established trading market for the Common Stock
of the Registrant.
(b) As of March 12, 1999 with respect to the Common Stock there
was one (1) holder of record of the Registrant's Common
Stock.
ITEM 6. SELECTED FINANCIAL DATA
Inapplicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
F-2
CONDITION AND RESULTS OF OPERATION
The Company is a special purpose corporation that has been
organized solely for the purpose of issuing certain mortgage
notes as agent for the Owners. In the period ended December 31,
1996, the Company earned $5,000 as aggregate compensation for
services as agent in the issuance of the mortgage notes and,
correspondingly, paid equivalent transaction fees to its then
ultimate parent, Cambridge Petroleum Transport Corporation.
Since that date the Company has had no activity.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Inapplicable.
F-3
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
(A wholly-owned subsidiary of Golden State Holdings I, Limited)
BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1997
1998 1997
ASSETS
Cash
$ 2 $ 2
Accounts receivable - -
--------- ---------
TOTAL ASSETS $ 2 $ 2
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ - $ -
--------- ---------
TOTAL LIABILITIES - -
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, no par value; 100 shares authorized;
2 shares issued and outstanding 2 2
Retained earnings - -
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 2 2
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 2 $ 2
========= =========
See accompanying Notes to Financial Statements
F-4
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
(A wholly-owned subsidiary of Golden State Holdings I, Limited)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
for the years ended December 31, 1998 and 1997 and the period
from December 5, 1996 (commencement of operations) to December
31, 1996
1998 1997 1996
REVENUE
Agency fees $ - $ - $ 5,000
--------- --------- ---------
EXPENSES
Transaction expenses - - 5,000
--------- --------- ---------
NET INCOME $ - $ - $ -
========= ========= =========
Retained earnings, beginning
of year/period - - -
--------- --------- ---------
Retained earnings, end of
year/period $ - $ $ -
========= ========= =========
See accompanying Notes to Financial Statements
F-5
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
(A wholly-owned subsidiary of Golden State Holdings I, Limited)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1998 and 1997 and the period
from December 5, 1996 (commencement of operations) to December
31, 1996
1998 1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES
NET INCOME $ - $ - $ -
Changes in assets and liabilities
Decrease (increase) in
accounts receivable - 5,000 (5,000)
(Decrease) increase in
accounts payable - (5,000) 5,000
--------- --------- ---------
Net cash provided by
operating activities - - -
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution - - 2
--------- --------- ---------
Net cash provided by
financing activities - - 2
--------- --------- ---------
Cash at beginning of
year/period 2 2 -
--------- --------- ---------
Cash at end of year/period $ 2 $ 2 $ 2
========= ========= =========
See accompanying Notes to Financial Statements
F-6
GOLDEN STATE PETROLEUM TRANSPORT CORPORATION
(A wholly-owned subsidiary of Golden State Holdings I, Limited)
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY
Golden State Petroleum Transport Corporation (the "Company")
was incorporated under the laws of the State of Delaware on
December 5, 1996. The Company is a special purpose
corporation that has been organized solely for the purpose of
issuing certain mortgage notes as agent for two affiliated
entities, Golden State Petro (IOM I-A) PLC and Golden State
Petro (IOM I-B) PLC (collectively, the "Owners"). The
mortgage notes were issued on December 24, 1996 and January
6, 1997 and proceeds therefrom were used by the Owners to
finance the construction and acquisition of two very large
crude carriers for charter to an unaffiliated third party.
The mortgage notes are not obligations of, and are not
guaranteed by, the Company.
The Company is a wholly-owned subsidiary of Golden State
Holdings I, Limited, an Isle of Man holding company, which is
a wholly-owned subsidiary of Independent Tankers Corporation
("ITC").
Basis of Presentation
The financial statements have been prepared in accordance
with accounting principles generally accepted in the United
States of America.
Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions in determining the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities on the dates of the
financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could
differ from those estimates.
2. RELATED PARTY TRANSACTIONS
In the period ended December 31, 1996 the Company earned
$5,000 as aggregate compensation for services as agents in
the issuance of the mortgage notes and, correspondingly, paid
equivalent transaction fees to its then ultimate parent,
Cambridge Petroleum Transport Corporation ("CPTC"). These
amounts are reflected as agency fees and transaction expenses
F-7
in the statement of operations and retained earnings for
1996.
On May 12, 1998, beneficial ownership of Golden State
Holdings I, Limited was acquired by Frontline Ltd. through
the special purpose entity ITC. Frontline Ltd. subsequently
sold its investment in ITC to Hemen Holding Limited, with
effect from July 1, 1998. Hemen Holding Limited is the
majority shareholder in Frontline Ltd.
3. ADOPTION OF NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income" is effective for fiscal
years beginning after December 15, 1997. SFAS No. 132,
"Employers' Disclosures about Pensions and Other
Postretirement Benefits" is effective for fiscal years
beginning after December 15, 1997. SFAS No. 133, "Accounting
for Derivatives and Hedging Activities", is effective for all
fiscal quarters of all fiscal years beginning after June 15,
1999 (January 1, 2000 for the Company) and requires that all
derivative instruments be recorded on the balance sheet at
their fair value. The Company anticipates that the adoption
of SFAS No. 130, SFAS No. 132 and SFAS No. 133 will not have
a material effect on the presentation of the Company's
balance sheet or results of operations and retained earnings.
4. CAPITALIZATION
The Company's capitalization is nominal and it has no source
of income and has no direct employees.
F-8
Report of Independent Certified Public Accountants
To the Board of Directors
Golden State Petroleum Transport Corporation
We have audited the accompanying balance sheets of Golden State
Petroleum Transport Corporation (a wholly-owned subsidiary of
Golden State Holdings I, Limited) as of December 31, 1998 and
1997, and the related statements of operations and retained
earnings, and cash flows for the years then ended and for the
period from December 5, 1996 (commencement of operations) to
December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Golden State Petroleum Transport Corporation at December 31,
1998 and 1997, and the results of its operations and its cash
flows for the years ended December 31, 1998 and 1997 and for the
period from December 5, 1996 (commencement of operations) to
December 31, 1996 in conformity with generally accepted
accounting principles.
Grant Thornton LLP
New York, New York
March 15, 1999
F-9
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On March 5, 1998, Coopers & Lybrand L.L.P. resigned as the
Company's certifying accountants. Coopers & Lybrand's opinion on
the Registrants' financial statements as of March 31, 1997 and
for the period from inception of the companies (December 5, 1996
- - Golden State Transport Corporation and December 24, 1996 for
the Owners), contained no adversities, disclaimers, uncertainties
or qualifications.
The resignation of Coopers & Lybrand L.L.P. was not recommended
or approved by the Company's Board of Directors as it was the
decision of Coopers & Lybrand L.L.P. not to continue as the
Company's auditors.
Certain persons who previously served as officers or directors of
the Registrant also served as officers of one or more companies
affiliated with the Registrant. In the course of performing
audits for certain of those affiliates (none of which has any
class of securities registered under the federal securities
laws), Coopers & Lybrand L.L.P. ("C&L") informed management of
those affiliates that C&L was no longer willing to rely on the
representations of management of those affiliates or of the
Registrant, because of C&L's belief that management of those
affiliates had failed to disclose to C&L certain matters relating
to those affiliates (but unrelated to the business or financial
condition of the Registrant) in a timely manner. Although
management of those affiliates of the Registrant has advised C&L
that it believes that it did make disclosure to C&L in a timely
manner of all material matters regarding those affiliates, C&L
resigned as the accountants for those affiliates as well as all
other companies affiliated therewith, including the Registrant.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company does not have operations nor does it have any
employees involved in management. The following table sets forth
the name, age and principal position with the Company of each of
its executive directors.
NAME AGE POSITION WITH THE COMPANY
Tor Olav Troim 36 Director and President
Kate Blankenship 34 Director, Secretary, Chief Executive
Officer, Chief Financial Officer and
Chief Accounting Officer
F-10
Officers are appointed by the Board of Directors and will serve
until they resign or are removed by the Board of Directors.
TOR OLAV TROIM: Mr. Troim was appointed President of Golden
State Petroleum Transport Corporation on July 30, 1998 and has
been a Director of the Company since November 1, 1998. Mr. Troim
serves as director and vice-president of Frontline Ltd. He also
serves as a director of Frontline AB, a wholly-owned subsidiary
of Frontline, and is the Chief Executive Officer of Frontline
Management AS, which company supports Frontline Ltd. in the
implementation of decisions made by the Board of Directors. Mr.
Troim also serves as a consultant to Sea Tankers. He is a
director of Aktiv Inkasso ASA and Northern Offshore ASA, both
Norwegian publicly listed companies. Prior to his service with
Frontline from January 1992, Mr. Troim served as managing
director and a member of the Board of Directors of DNO AS, a
Norwegian oil company.
KATE BLANKENSHIP: Mrs. Blankenship was appointed Secretary of the
Company on July 30, 1998 and has been a Director, the Chief
Executive Officer, Chief Financial Officer and Chief Accounting
Officer of the Company since November 1, 1998. She has served as
group financial controller and secretary of Frontline Ltd.
(formerly, London & Overseas Freighters Limited) since 1994.
Prior to joining Frontline, she was a manager with KPMG Peat
Marwick in Bermuda. Mrs. Blankenship is a member of the
Institute of Chartered Accountants in England and Wales.
ITEM 11. EXECUTIVE COMPENSATION
None of the directors or executive officers of the Company
receive any compensation in connection with their respective
positions. The Company has not entered into any affiliate
transactions, other than the original agency agreement for the
issuance of the notes.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table provides information as of March 31, 1999
with respect to the ownership by each person or group of persons,
known by the registrant to be a beneficial owner of 5% or more of
the Common Stock.
Except as set forth below, the Registrant is not aware of any
beneficial owner of more than 5% of the Common Stock as of close
of business on March 31 ,1999.
F-11
Beneficial Ownership
Name and Number
Class of address of of Percent
Shares Beneficial Owners Shares of Class
- ------- ----------------- ------ --------
Ordinary Shares Hemen Holding Limited(1) 2 100%
1 The issued and outstanding shares of the Company are owned by
GSH. All of the issued and outstanding shares of GSH are
owned by ITC. All of the issued and outstanding shares of
ITC are owned by Hemen, a Cyprus company. Hemen is
controlled by John Fredriksen, a resident of Cyprus and a
citizen of Norway.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of January 31, 1999, each of the Owners has entered into a
management agreement with an affiliate, Frontline. Frontline is
a Bermuda company, whose ordinary shares trade on the London
Stock Exchange and the Oslo Stock Exchange. Frontline's American
Depository Receipts trade on the NASDAQ National Market.
Frontline will provide administrative, vessel management and
advisory services to the Owners. Frontline is an affiliate of
Hemen. Hemen is the indirect parent of the Company and the
Owners. Frontline's primary business is owning and operating
vessels that transport crude oil and oil products.
Some of the oil tankers owned by Frontline may operate in
competition with the Vessels. When the charters with the Initial
Charterer end, Frontline might have a conflict of interest
between its duties as manager of the Owners and the Vessels, and
its interests as a competing tanker owner.
F-12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this Annual
Report:
1. Financial Statements
Balance Sheets at December 31, 1998 and 1997
Statements of Operations and Retained Earnings for the Years
Ended December 31, 1998 and 1997 and the period from December 5,
1996 (commencement of operations) to December 31, 1996
Statements of Cash Flows for the Years Ended December 31, 1998
and 1997 and the period from December 5, 1996 (commencement of
operations) to December 31, 1996
Notes to Financial Statements
Report of Grant Thornton LLP, Independent Certified Public
Accountants
(b) Reports on Form 8-K
On December 30, 1998 the Company filed Form 8-K with respect to
the sale of Golden State Holdings I, Limited by Cambridge
Petroleum Transport Corporation.
F-13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Golden State Petroleum Transport
Corporation
___________________________________
(Registrant)
Date March 31, 1999 By /s/ Tor Olav Troim
___________________ __________
Tor Olav Troim
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
Golden State Petroleum Transport
Corporation
___________________________________
(Registrant)
Date March 31, 1999 By /s/ Kate Blankenship
______________________________
Kate Blankenship
Director, Chief Executive
Officer, Chief Financial
Officer, Chief Accounting
Officer
Date March 31, 1999 By /s/ Tor Olav Troim
__________________________
Tor Olav Troim
Director
14
02089007.AA7