SFL - Sale of three VLCCs and a jack-up rig
July 13 2018 - 6:28AM
Ship Finance International Limited (NYSE: SFL)
("Ship Finance" or the "Company") announces that it has agreed to
sell the 2007-built jack-up drilling rig Soehanah to an unrelated
third party and three 2002-built VLCCs to ADS Crude Carriers Ltd.
("ADS"), a newly established company in which Ship Finance has
acquired a 17% interest.
Ole B. Hjertaker, CEO of Ship Finance Management
AS, said in a comment: "Divesting of older vessels is a part of the
Company's strategy to renew and diversify the fleet. Over the last
three months, Ship Finance has taken delivery of 19 vessels with
long-term charters, increasing our fixed charter backlog by nearly
$600 million. We see further growth opportunities across our target
market segments, and we expect to reinvest the proceeds from these
vessel sales in new assets.
The sales price for the Soehanah is
confidential, but the transaction is expected to generate a book
profit, and the rig is debt free. Delivery is expected to
occur in the second half of 2018, and the Company will continue to
receive a bareboat charter rate of approximately $10,000 per day
from the current charter to an affiliate of Indonesia-based
Apexindo in the meantime.
The three VLCCs, Front Page, Front Stratus and
Front Serenade, are among the few vessels remaining from the
Company's inception in 2004, and delivery to ADS is expected to
occur in the third quarter. Net proceeds from the sale will be
approximately $77.6 million, including $10.1 million in the form of
an interest-bearing loan note from Frontline Limited. The aggregate
book value of the three vessels is approximately $99 million, and a
book impairment is therefore expected to be recorded in the second
quarter. Following this transaction, only five vessels will remain
on charter to a subsidiary of Frontline Limited.
ADS has raised $58 million in equity capital
from a wide group of investors, including Ship Finance, and $30
million in the form of a non-amortizing secured debt facility. ADS
intends to list its shares on the Oslo Mercur Market, and targets a
100% payout of net cash flow. ADS plans to upgrade the vessels with
scrubbers prior to 2020 in order to maximum the benefit of the
anticipated spread between various fuel types after the
implementation of new emissions controls regulations.
For Ship Finance, the participation in the new
venture is an opportunistic financial investment where a portion of
the sales proceeds from the vessels has been reinvested in ADS. We
believe we are close to a low point in the tanker cycle, with
limited downside to current recycling values, and our investment as
a minority shareholder in ADS could therefore give us significant
upside potential with very low risk exposure at the tail end of
these vessels' commercial life.
July 13, 2018
The Board of DirectorsShip Finance International
LimitedHamilton, Bermuda
Questions can be directed to Ship Finance
Management AS:
Investor and Analyst Contacts: Harald
Gurvin, Chief Financial Officer, Ship Finance Management AS +47 23
11 40 09 André Reppen, Senior Vice President, Ship Finance
Management AS +47 23 11 40 55
Media Contact: Ole B. Hjertaker, Chief
Executive Officer, Ship Finance Management AS +47 23 11 40 11
About Ship Finance
Ship Finance International Limited (NYSE: SFL)
has a unique track record in the maritime industry, being
consistently profitable and paying dividends every quarter since
2004. The Company's fleet of more than 80 vessels is split between
tankers, bulkers, container vessels and offshore assets, and Ship
Finance's long term distribution capacity is supported by a
portfolio of long term charters and significant growth in the asset
base over time. More information can be found on the Company's
website: www.shipfinance.bm
Cautionary Statement Regarding Forward
Looking Statements
This press release may contain forward looking
statements. These statements are based upon various assumptions,
many of which are based, in turn, upon further assumptions,
including Ship Finance management's examination of historical
operating trends. Although Ship Finance believes that these
assumptions were reasonable when made, because assumptions are
inherently subject to significant uncertainties and contingencies
which are difficult or impossible to predict and are beyond its
control, Ship Finance cannot give assurance that it will achieve or
accomplish these expectations, beliefs or intentions. Important
factors that, in the Company's view, could cause actual results to
differ materially from those discussed in this presentation include
the strength of world economies and currencies, general market
conditions including fluctuations in charter hire rates and vessel
values, changes in demand in the tanker market as a result of
changes in OPEC's petroleum production levels and worldwide oil
consumption and storage, changes in the Company's operating
expenses including bunker prices, dry-docking and insurance costs,
changes in governmental rules and regulations or actions taken by
regulatory authorities, potential liability from pending or future
litigation, general domestic and international political
conditions, potential disruption of shipping routes due to
accidents or political events, and other important factors
described from time to time in the reports filed by the Company
with the United States Securities and Exchange Commission.
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