Description of business and basis of preparation
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 was organized solely for the purpose of issuing, as agent for two affiliated entities, Golden State Petro (IOM I-A) PLC and Golden State Petro (IOM I-B) PLC (collectively, the "Owners"), Serial and Term mortgage notes (together, the "Notes"). These Notes were issued on December 24, 1996 and January 6, 1997 and the proceeds 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 Serial Notes were fully repaid on February 1, 2006.
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"). ITC is controlled by Frontline Ltd. ("Frontline"), a publicly listed Bermuda company.
In February 2008, Frontline established an intermediary holding company, Independent Tankers Corporation Limited ("ITCL"), to hold its investment in ITC. Frontline then distributed 17.53% of ITCL's common shares to Frontline's common shareholders. These shares trade on the Norwegian over-the-counter market. The balance of ITCL's common shares are indirectly owned by Frontline.
In accordance with a management agreement between each of the Owners and Frontline, Frontline provides administrative, management and advisory services to the Owners at an annual fee of $50,000 each, payable semi-annually. All costs of administering the Owners and the Company are payable by Frontline from the management fee. The management agreement is effective until termination by either party upon 30 days prior written notice.
The interim financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements are unaudited and should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2011. The Company follows the same accounting policies in the preparation of interim reports. In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial condition, results of operations and cash flows of the Company for the interim periods presented and are not necessarily indicative of a full year's results. The Company does not have any Other Comprehensive Income.