OSLO (Bloomberg) ? Frontline Ltd., the world?s biggest oil tanker company by capacity, said on Friday that banks have underwritten a $1.06 billion loan as part of a plan to spin off its ships in a new company.

The loan will help Frontline?s Ship Finance International Ltd. unit, which in December sold $580 million in bonds, to take over 47 tankers from Bermuda-based Frontline, which will lease the ships back at a fixed rate. Frontline plans for the ship- owning unit to sell shares to the US public. The bonds and bank loan will pay for the ships and excess cash may go to shareholders.

?The loan has been underwritten. Still, there is a fair amount of paper work remaining,? Tom Jebsen, chief financial officer at Frontline Management AS, said in a telephone interview from Oslo. ?The separate listing of Ship Finance International? will probably happen late in the second quarter, he said.

Citigroup Inc., the world?s biggest financial-services provider, and Nordea AB, the Nordic region?s biggest bank, helped organise the participation of 16 banks in the loan, Jebsen said.

The shares rose 1.4 percent to close at 215.5 kroner ($30.8) in Oslo. The price matches the highest close ever from May 21, 2001, when shares rose to a record of 222 kroner.

The remaining part of Frontline will seek to make a profit trading the leased ships on the oil-tanker market. The split is aimed at getting a higher combined value for the two companies than today?s Frontline, analysts have said. Surplus cash generated from the transaction may be returned to shareholders as a dividend, according to Frontline.

The split, a strong tanker market in this year and the fourth quarter of 2003, may allow Frontline to pay as much as $19 a share in dividends through the second quarter, said Bjoern Giaever, an analyst at DnB NOR Markets in Oslo. Frontline paid $4.40 a share in dividends last year.

?The size of the dividend will depend on how they structure the split,? said Giaever, who recommends clients buy the stock. ?Whether they do an IPO by handing shares to existing shareholders, or sell the unit to new investors.?

Norwegian shipping tycoon John Fredriksen, who controls about 48 percent of Frontline, is the biggest owner. Fund managers such as Neuberger Berman Inc. and Fidelity International Ltd. are also among the top shareholders.

The transaction comes after the tanker industry in 2003 had its most profitable year since the 1973 Arab oil embargo, with freight rates surging to record levels on higher demand for oil transport.

Frontline has postponed its fourth-quarter reporting date to March 1. from Feb. 24, according to a statement today. Pretax profit probably jumped 60 percent to $107 million from the year- ago period as freight tariffs surged, according to the median estimate of 10 analysts surveyed by Norwegian news service TDN Finans.