SFL - Adjusted agreement with Deep Sea Supply Plc.
(Thomson Reuters ONE) -
Press release from Ship Finance International Limited, July 22, 2016.
Ship Finance International Limited (NYSE: SFL) ("Ship Finance" or the
"Company"), today announced that it has agreed to amend the terms of the long-
term chartering agreements with an affiliate of Deep Sea Supply PLC ("DESS").
Our current charter guarantor, Deep Sea Supply BTG AS ("DESS BTG"), is a 50/50
owned joint venture between DESS and the Brazilian company BTG Pactual ("BTG").
DESS and BTG have now agreed that DESS will acquire the remaining shares in DESS
BTG, with settlement in shares, warrants and some cash. The agreement is subject
to standard closing conditions, including approval by the DESS's shareholders of
the issuance of the warrants. Following the acquisition, DESS will be our
charter guarantor going forward.
Concurrently, DESS will amend its financing terms and effectively defer up to
$68 million of scheduled debt amortization until March 31, 2018 and also extend
maturity of three loan facilities which were originally due later this year.
As part of the overall transaction, Ship Finance has agreed to reduce the
charter rates until May 2018, in exchange for extending the charter period by 3
years and introducing a 50/50 profit share on charter revenues earned by the
vessels. This will be combined with a prepayment of $17 million on our bank loan
facilities, equal to scheduled amortization until May 2018, and certain other
adjustments. The net effect on our distributable cash flow will be neutral, with
reduced charter hire balanced by reduced loan amortization and lower interest
expenses.
The proposed transaction will preserve DESS' liquidity position and better
position the company through the current market downturn in the segment, while
Ship Finance will effectively increase its backlog by approximately $21 million
and still maintain the distributable cash flow from the vessels. In addition we
will now have a 50% profit share which could be valuable in a market recovery
scenario.
Ole B. Hjertaker, CEO of Ship Finance Management AS, said in a comment: "The
DESS charters were agreed back in 2007, and we have now enjoyed the cash flow
from these assets for nearly nine years and depreciated the vessels to a
comfortably low level. The reduction in charter rates is balanced by the
extended charter period, and the value of optionality relating to the new profit
share could be significant, as illustrated by the arrangement we have on our
tanker assets.
We will receive base charter rates which are clearly in excess of what can be
achieved in the spot market today and we will have a stronger counterpart with a
good liquidity position and low cash break-even rates. The uncertainty relating
to our offshore asset exposure should then be reduced, without impacting our
distribution capacity."
The Board of Directors
Ship Finance International Limited
Hamilton, Bermuda
About Ship Finance
Ship Finance International Limited (NYSE: SFL) has an unprecedented track record
in the maritime industry, being consistently profitable and paying dividends
every quarter since 2004. The Company's fleet of more than 70 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.
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#2030210]
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