Press release from Ship Finance International Limited, March 21, 2011
Ship Finance International Limited (NYSE:SFL) (“Ship Finance” or the “Company”), today announced that it has entered into an agreement to acquire two 2010-built 13,800 TEU container vessels Magellan and Corte Real from CMA CGM SA (“CMA CGM” or “the Charterer”) in combination with 15-year time charters back to CMA CGM.
The gross purchase price is $171 million per vessel, which includes a subordinated seller’s credit of $55 million per vessel. The transaction will be financed through a French tax lease structure, where Ship Finance’s investment is limited to $25 million per vessel, or $50 million in total, and secured by junior mortgages.
The vessels will be managed by an affiliate of the Charterer, and the time charter includes a compensation clause whereby Ship Finance will be compensated for any increase in operating expenses. The transaction is expected to generate an annual free cash flow in excess of $7 million, or approximately $0,09 per share, after operating costs and debt service.
The Charterer has been granted several purchase options throughout the term of the charters, the first starting in 2014. The purchase options also include a profit sharing arrangement whereby Ship Finance on certain conditions may receive additional amounts upon the exercise of such purchase options.
The acquisition is expected to be completed within the next couple of weeks and will add approximately $275 million to our charter backlog. The vessels will most likely be accounted for as ‘investment in associate’ similar to our drilling rigs.
Ole B. Hjertaker, CEO of Ship Finance Management AS, said in a comment: “We are very pleased to announce this transaction with CMA CGM, the world’s third largest container line. This transaction expands our presence in the container sector, which is one of the sectors where we see interesting growth opportunities going forward. The transaction will be accretive to earnings and is expected to have a positive impact on our distribution capacity going forward”
March 21, 2011
The Board of Directors
Ship Finance International Limited
Hamilton, Bermuda
Questions should be directed to:
Investor and Analyst Contacts:
Eirik Eide, Chief Financial Officer, Ship Finance Management AS
+47 23114006 / +47 95008921
Magnus T. Valeberg, Vice President, Ship Finance Management AS
+47 23114012 / +47 93440960
Media Contact:
Ole B. Hjertaker, Chief Executive Officer, Ship Finance Management AS
+47 23114011 / +47 90141243
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 72 vessels, including 28 crude oil tankers (VLCC and Suezmax), two chemical tankers, eight oil/bulk/ore vessels, 12 drybulk carriers including nine newbuildings, 11 container vessels, six offshore supply vessels, two jack-up drilling rigs, one ultra-deepwater drillship 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 world wide 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.