Press release from Ship Finance International Limited - 07.11.2013
Press release from Ship Finance International Limited, November 7 2013.
Ship Finance International Limited (NYSE:SFL) ("Ship Finance" or the "Company"), today announced that it has agreed to sell the 1998 and 1999 built VLCCs Front Champion and Golden Victory to unrelated third parties. The Company has simultaneously agreed to terminate the corresponding charter parties with a subsidiary of Frontline Ltd. ("Frontline").
The vessels are expected to be delivered to the new owners in November 2013 and Ship Finance expects to receive cash proceeds of approximately $43 million, including approximately $11 million upfront payment from Frontline. In addition, we will receive approximately $79 million in 7.5% amortizing notes from Frontline.
The amortization profile and maturity of the notes will match the current charters for the two vessels, with reduced rates until 2015 and full rates from 2016. Front Champion and Golden Victory were acquired in 2005 with the highest charter rates across the vessels on charter to Frontline, and the level of compensation payments for early termination is a reflection of this.
While the spot VLCC market has currently shown some signs of recovery, there is still a fundamental oversupply in the market, and the retirement of older vessels will contribute to a balancing of the market going forward. The decision to phase out Front Champion and Golden Victory has been made on the basis of individual assessments of the vessels and the costs of taking them through expensive drydockings later this year.
Divesting of older vessels is a part of the Company's strategy to renew and diversify the fleet. The majority of our charter revenues are currently sourced from the offshore segment, and in the second quarter of 2013, the adjusted EBITDA from the vessels on charter to Frontline was limited to only 18% of the total. Following this sale, the number of vessels on charter to Frontline will be reduced to 20 vessels, including 15 VLCCs and five Suezmax crude oil carriers.
The Board of Directors Ship Finance International Limited Hamilton, Bermuda
Questions can be directed to Ship Finance Management AS: Ole B. Hjertaker, Chief Executive Officer: +47 23114011 Magnus T. Valeberg, Senior Vice President: +47 23114012
About Ship Finance
Ship Finance is a major ship owning company listed on the New York Stock Exchange (NYSE: SFL). Including newbuildings, the Company has a fleet of 68 vessels, including 22 crude oil tankers (VLCC and Suezmax), two chemical tankers, 12 drybulk carriers, 19 container vessels (including eight newbuildings), two car carriers, six offshore supply vessels, two jack-up drilling rigs (including one newbuilding), two ultra-deepwater semi-submersible drilling rigs and one ultra-deepwater drillship. The fleet is one of the largest in the world and most of the vessels are employed on long-term charters.
More information can be found on the Company's website: www.shipfinance.org
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.