SFL - Adjusted agreement with Frontline Ltd.
(Thomson Reuters ONE) -
Press release from Ship Finance International Limited, May 29, 2015.
Ship Finance International Limited (NYSE:SFL) ("Ship Finance" or the "Company"),
today announced that it has entered into a heads of agreement to amend the long-
term chartering agreements with Frontline Ltd. ("Frontline").
The Company currently has 17 vessels on charter to subsidiaries of Frontline,
with an average remaining charter term of nearly 8 years. The new agreement will
take effect from July 1, 2015 and will be a combination of reduced long-term
base rates, increased profit split and an ownership share in Frontline. The
operating expenses, including dry-docking, payable to a subsidiary of Frontline
will also be adjusted to current market level.
* New time charter rate for VLCCs: $20 000/day
* New time charter rate for Suezmaxes: $15 000/day
* New opex for all vessels: $9,000/day
* New profit split: 50% above new time charter rates
* 55 million Frontline shares will be issued to Ship Finance
Ship Finance will continue chartering the vessels to a subsidiary of Frontline,
and in exchange for releasing Frontline from their current guarantee obligation
on the charters, a cash buffer of $34 million ($2 million per vessel) will be
built up in the chartering company.
Accrued cash sweep from January through June 2015 based on the existing
agreement, estimated to approximately $20 million, will be paid in cash to Ship
Finance.
Under the current agreement, Ship Finance is entitled to a 25% profit split
above approximately $26,700/day for the VLCCs and $21,100/day for the Suezmaxes,
calculated and payable on an annual basis. Frontline prepaid $50 million of this
profit split in December 2011, and no additional profit split has so far
accumulated in excess of this amount.
The new profit split agreement will start accruing from July 1, 2015 and will
now be calculated and paid on a quarterly basis. Going forward, profit split
payments will not be subject to the previous $50 million threshold.
Based on closing shareprice on May 28, 2015, of $3.06 per share, the market
value of the Frontline shares to be issued to the Company is approximately $168
million, and based on the volume-weighted shareprice last 3 months of $2.64 per
share, the value is approximately $145 million.
When issued, the shares will represent approximately 27.7% of the total shares
in Frontline on a diluted basis. Following customary filing requirements, the
shares received may be distributed to our shareholders as a special dividend or
sold at a later stage. In addition, Ship Finance owns approximately $117 million
of senior unsecured amortizing notes in Frontline, which will remain unchanged
and serviced by Frontline like before.
The release of the charter guarantee relating to our charters is seen as an
important feature to facilitate strategic transactions in Frontline, including
potential mergers and/or acquisitions going forward.
CEO of Ship Finance Management AS, Ole B. Hjertaker said in a comment: "We are
currently enjoying a very strong tanker market, and the new and higher profit
share arrangement is likely to generate higher net cash flows from the vessels
in the near term. Lower base rates will also ensure a more sustainable long term
structure, with a cash buffer to mitigate potential fluctuations in the charter
market.
Since the establishment of Ship Finance in 2004, we have received more than $600
million in cash sweep and profit sharing from Frontline. It has enabled the
Company to grow and diversify the asset base much faster than originally
anticipated with corresponding higher dividend capacity. Changing the
calculation of the profit split to quarterly basis and starting from a lower
level adds interesting optionality for us going forward, with the potential for
increased long term quarterly distribution capacity."
May 29, 2015
The Board of Directors
Ship Finance International Limited
Hamilton, Bermuda
Questions can be directed to Ship Finance Management AS:
Harald Gurvin, Chief Financial Officer: +47 23114009
Andre Reppen, Senior Vice President: +47 23114055
Media Contact:
Ole B. Hjertaker, Chief Executive Officer: +47 23114011
About Ship Finance
Ship Finance is a major ship owning company listed on the New York Stock
Exchange (NYSE: SFL). Including recent acquisitions, the Company will have a
fleet of 72 vessels, including 19 crude oil tankers (VLCC and Suezmax), two
chemical tankers, 22 dry bulk carriers (including 8 acquisitions), 17 container
vessels, two car carriers, six offshore supply vessels, two jack-up drilling
rigs and two ultra-deepwater semi-submersible drilling rigs. 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
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.
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Ship Finance International Limited via GlobeNewswire
[HUG#1924748]
Unternehmensinformation / Kurzprofil:
Datum: 29.05.2015 - 08:01 Uhr
Sprache: Deutsch
News-ID 396722
Anzahl Zeichen: 7805
contact information:
Town:
Hamilton
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 214 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"SFL - Adjusted agreement with Frontline Ltd."
steht unter der journalistisch-redaktionellen Verantwortung von
Ship Finance International Limited (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
