OSLO (Bloomberg) ? Frontline Ltd., the world?s biggest operator of oil tankers by capacity, plans to give existing owners about 25 percent of its Ship Finance International Ltd. unit, which is slated to start trading in New York next month.

The Bermuda-based company will give each of its existing shareholders one share in Ship Finance for each Frontline share they hold, amounting to about a quarter of the spun-off company, according to a statement to the Oslo exchange. Ship Finance shares are set to trade on the New York Stock Exchange.

Ship Finance has raised $1.63 billion by selling bonds and borrowing from banks to finance taking over 47 tankers from its parent, which will lease the ships back at a fixed rate.

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.

?The distribution is in line with the company?s previous indications,? said Arne Egil Roenning, an analyst at Fondsfinans in Oslo.

?The question remains how quickly Frontline will sell the remaining 75 percent of the company.?

Roenning estimates that Ship Finance will have a market value of more than $700 million when listing.

Surplus cash created by the transaction will be paid to Frontline shareholders as a dividend.

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 of the company, which operates tankers loading a million barrels or more of crude each.

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 is expected to say first-quarter pretax profit jumped 25 percent to a record $223 from a year earlier as freight tariffs climbed because of rising Middle East oil output, according to the median estimate of 10 analysts surveyed by Norwegian news service TDN Finans.

The company plans to report earnings tomorrow.