Bermuda-registered tanker company, Frontline, has alleged that the board of directors of take-over target, ICB Shipping AB, may have contravened Swedish law.

Frontline has been stymied in its attempt to take control of ICB in a ships for shares deal, but will continue to pursue the matter.

At an ICB shareholder meeting a week ago today, a special investigator was appointed, who this Monday delivered an oral report at another shareholder meeting.

Frontline said yesterday: "The preliminary report indicates that the board of ICB may have acted in a way that could include serious breach of Swedish corporate law, such action to include potential misuse of corporate funds.

"Frontline will await the final report from the special investigator before any decision to pursue this matter against the individual board members is taken.'' The two firms signed a conditional agreement this summer to terminate an impasse blocking the deal, subject to the agreement of both companies' boards.

The transaction would have substantially improved Frontline's operating activities. But the ICB board said no.

Frontline tried again to get the shares that blocked the plan, but eventually saw no future in pursuing them.

In an earnings release yesterday, the board of directors said, "No further constructive dialogue between the parties has taken place. The board feels that a solution to the situation with ICB seems unlikely at this stage.

"They however observe that recent comments made by representatives from ICB support the idea of consolidation of the tanker market. As our shareholders will know, this was Frontline's main idea behind our investment in ICB.'' The company said that in order to prepare for a long period until it gets direct control over ICB Shipping, the board has focused on reducing the debt attached to the ICB investment. Frontline, whose registered office is Mercury House, 101 Front Street, Hamilton, provides shipping and shipbuilding services. The company operates a fleet of ships, including dry cargo vessels, tankers, bulk and oil ships and combination vessels.

Meanwhile, Frontline has recorded the highest quarterly operating profit before depreciation ever achieved by the company.

And third quarter profit to September 30 was $8.3 million, up from $6.2 million for the same period last year.

Earnings before interest, tax, depreciation, and amortisation for the quarter, including earnings from associated companies were $36.7 million, compared with $30.6 million for the comparable period.

This increase reflects the increased size of the fleet, which helped to offset reductions in the TCEs (time charter equivalent) earned across the fleet.

TCE is a monetary measure of the earnings from the chartering out of the vessels to those shipping oil and other commodities.

Average daily operating costs have continued to decrease across the fleet in the third quarter as further benefits of a cost reduction programme are realised. Net income for the nine month period increased to $32.2 million from $8.2 million in the first nine months of 1997.

Earnings before interest, tax, depreciation and amortisation, including earnings from associated companies were $104.3 million, compared with $79.2 million for the comparable period.