SHIP FINANCE AND HORIZON LINES COMPLETE APPROXIMATELY $280 MILLION CONTAINER VESSELS TRANSACTION
Press release from Ship Finance International Limited - 12.04.2006
Further to its announcement of March 17, 2006, Ship Finance International Limited (NYSE:SFL) today announced that it has closed the definitive agreements and related financing documents to acquire five newbuilding container vessels from third parties for a sum of approximately USD 280 million and to place the vessels on long-term charters to Horizon Lines, LLC, a subsidiary of Horizon Lines Inc., (NYSE:HRZ), which will guarantee the charters.
The five sister vessels are being built at Hyundai Mipo in Korea and are scheduled to be delivered over the course of a five-month period to wholly-owned subsidiaries of Ship Finance commencing at the beginning of 2007. The vessels have a carrying capacity of 2,824 TEUs and are capable of a service speed of 23 knots.
The term of each bareboat charter will be 12 years with a 3-year renewal option on the part of Horizon Lines which will operate the vessels in its TP1 service from the U.S. West Coast to Guam and Asia. The vessels will fly the United States flag.
Horizon Lines will have options to buy the vessels after 5, 8, 12 and 15 years.
Tor Olav Trøim, SFL's Chairman, commented: "We are very pleased with this transaction. It expands our business in an interesting segment of shipping. It provides growth for our company and diversifies our fleet risk as well as the client portfolio. The project is financed with approximately 75 % non recourse debt, and it gives our shareholders a very solid return on the equity invested."
"We are delighted to work with Horizon Lines, a true market leader, as they expand their presence in the Pacific market and dynamically position themselves for further growth," concluded Trøim.
Forward Looking Statements
This press release includes "forward-looking statements," as defined by federal securities laws, with respect to financial condition, results of operations and business. All forward-looking statements involve risk and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results.
Factors that may cause actual results to differ from expected results include, among other things, factors affecting the results of operations of our bareboat charterer and its customers, including decreases in shipping volumes; rising fuel prices; labor interruptions or strikes; job related claims, liability under multi-employer pension plans; compliance with safety and environmental protection and other governmental requirements; new statutory and regulatory directives in the United States addressing homeland security concerns; the successful start-up of any U.S. flag or Jones-Act competitor; increased inspection procedures and tight import and export controls; restrictions on foreign beneficial ownership of vessels; repeal or substantial amendment of the Jones Act; escalation of insurance costs, catastrophic losses and other liabilities; the arrest of our vessels by maritime claimants; severe weather and natural disasters; the charterer's inability to exercise purchase options for our vessels; the loss of key management personnel; actions by Horizon's significant stockholder, and legal or other proceedings to which Horizon is or may become subject.
Important factors that, in Ship Finance's view, could cause Ship Finance's actual results to differ materially from those discussed in this press release 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 world wide oil consumption and storage, changes in our operating expenses including fuel oil 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, and potential disruption of shipping routes due to accidents or political events.
In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation and specifically decline any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Please see our filings and submissions with the United States Securities and Exchange Commission for other factors which may affect our performance.